The auditor-general stated that the Department of Education had regressed from an unqualified audit opinion with findings to a qualified opinion
PROVINCIAL government departments incurred irregular expenditure of R5 billion during the 2018/19 financial year, with the auditor-general expressing concern about a “culture” of procuring goods and services without complying with legislation.
It was pointed out that the departments of Education and Health in the Northern Cape would start the 2019/20 financial year with part of their budgets “effectively pre-spent”.
It was highlighted that irregular expenditure was not being investigated in the Province and was not “rigorous enough” to hold officials accountable for their actions.
None of the government departments in the Northern Cape showed an improvement in their overall audit outcomes, while two departments regressed to qualified audit opinions.
The number of qualified audit opinions decreased from three to one, while the number of clean audits decreased from three to two.
The auditor-general stated that the Department of Education had regressed from an unqualified audit opinion with findings to a qualified opinion.
This was due to inadequate controls to monitor the progress of capital projects, which resulted in misstatements in immovable assets.
The auditor-general also found non-compliance with supply chain management and over-payments that were made to a supplier where services were not rendered to the provincial Department of Health.
The irregularities have been referred to National Treasury for investigation.
It was also pointed out that an R82 million maintenance project for health facilities in the Northern Cape did not follow the required competitive bidding processes when the service provider was appointed.
The project was funded through the health facility revitalisation grant.
The auditor-general stated that R117 million was deemed to have been spent on the project in an irregular manner because supply chain management processes were not followed.
“An amount of R0.599 million paid to the contractor further constituted fruitless and wasteful expenditure as the value of the work on site could not be verified. We identified poor quality work, such as sagging ceilings due to roof leakages, incomplete ceilings, no door handles on toilet doors, old or sub-standard taps, office spaces not being used due to leakages in open spaces, incomplete electrical work and chipped flooring in the receiving area not meeting warehouse standards.”
The Department of Economic Development and Tourism regressed from a clean audit opinion to a qualified opinion.
This was as a result of inadequate monitoring of service level agreements. The department was consequently unable to determine the amount owed to it by parties to whom transfer payments were made.
The audit outcomes of the Department of Health and the Northern Cape Provincial Legislature were still outstanding at the time of the cut-off date for inclusion on September 2.
It was noted that the provincial legislature was still in the process of submitting its financial statements on September 3 due to challenges arising from office accommodation that hampered the preparation of financial statements.
The report identified a 100 percent slow response by departments in improving internal controls and addressing risk areas, where 73 percent of departments showed inadequate leadership controls and 82 percent were assessed as having inadequate financial and performance management controls.
No areas of instability were found regarding officials lacking appropriate competencies or arising from vacancies in key positions.
Eighteen percent of departments received clean audits compared to 27 percent that achieved the same audit outcome during the 2017/18 financial year.
During the 2018/19 financial year, 36 percent of departments’ expenditure exceeded revenue, where the auditor-general pointed out that departments were effectively failing to manage their spending.
The auditor-general also remarked that the quality of financial statements remained a “significant concern”, where departments relied on the external audit process to produce credible financial statements.
It was reported that 73 percent of financial statements that were submitted for auditing did not comply, while 64 percent did not adhere to procurement and supply chain management procedures.
The audit report pointed out that the four departments that were still experiencing challenges with the design of information technology controls lacked adequate oversight and decisive action plans for IT issues.
It was advised that officials should be held accountable for their actions and that controls be tightened to prevent and detect irregular expenditure.