Ministries of Health, Education, Housing and Public Works Fail 2021 Audits

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The South African Institute of Chartered Accountants (Saica) and the Auditor General of South Africa (AGSA) hosted a panel discussion on Friday 4 February on the results of the audit of the Public Financial Management Act (PFMA) 2020/2021.

Panelists included Natashia Soopal (Saica Senior Executive: Public Sector and Enabling Skills), Bongi Ngoma (Head of AGSA Audit), Mkhuleko Hlengwa, Chairman of the Standing Committee on Public Accounts (Scopa), Lindy Bodewig ( Chief Director of the National Treasury) and Wayne Duvenage, CEO of the organization Undoing Tax Abuse (Outa).

The AGSA is responsible for conducting annual audits of national and provincial government departments, municipalities and municipal entities, and certain public entities.

Audit results

Each year, the AGSA has to deal with late submission of annual financial statements, poor quality financial statements, rejection of auditees on audit findings, as well as poor record keeping by auditees .

Only 117 of 425 (27%) audited received an unqualified audit (2020: 109 of 418; 26%).

Public entities (SOEs) as well as key service delivery departments of health, education, housing and public works are lagging behind.

Out of 15 public companies audited, only one received an unqualified audit.

Four received unqualified audits with findings.

Irregular expenditure reported in financial statements increased to R166.85 billion (2020: R109.82 billion).

High levels of wasteful and wasteful spending continue, with 224 auditees losing a total of R1.72 billion in the current year.

The AGSA was unable to audit contracts worth R2.14 billion because information was missing or incomplete, while 69% of audited entities did not materially comply with the legislation ( 2020: 71%).

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Financial mismanagement of key service delivery departments of health, education, housing and public works directly affects their ability to deliver services to citizens. There are no consequences for underperforming entrepreneurs. In addition, contractors are not paid on time.

Provincial health departments failed to keep adequate records to defend themselves in medical negligence claims – and paid R1.76 billion for these claims, while the estimated settlement value of the unpaid claims at the end for the year was R124.15 billion.

92% of audited entities had a weak IT control environment, 81% had weak IT security controls, 62% had weak disaster recovery controls, and 63% had weak IT governance practices. This comes as cyberattacks on government are on the rise, as government systems become more automated.

Scopa chair not impressed

Hlengwa expressed concern about the lack of consequence management, the action taken against those responsible and the lack of political will.

He said that Scopa submits reports to the President, but there are reports dating back many years that have not been addressed.

He said this laissez-faire attitude towards consequence management emboldens the facilitators of corruption.

Speaking on the skills gap, he warned that people who loot know what they are doing and therefore the skill base must be able to match them. He added that ensuring accountability requires enforcement, and stressed that the anti-corruption task force must be resuscitated.

He mentioned that tenders are the bane of supply chain management and the government needs to crack down or rethink the current tendering system. More needs to be done to protect listeners and whistleblowers.

Scopa has worked with various law enforcement agencies including the Special Investigations Unit (SIU), the South African Police Services Directorate for Priority Crime Investigation (the Hawks) and the National Prosecuting Authority of South Africa (NPA) to follow up on cases. investigation.

“The framework deployment is wrong,” Hlengwa said. “A job on the basis that a job was obtained for you is a mistake.”

I’m mad

Duvenage said the AGSA report reads like a horror story.

“If they were listed companies, they would be delisted.

“The trust deficit is widening and our tax dollars are being used and abused.

“What we need to emphasize is that it is not enough for 27% of auditees to have clean audits, we need 100%.

“Even if we add the 31% [of clean audits with findings]it’s diabolical – it’s outrageous.

Agencies such as the SIU and Scopa must be ruthless in carrying out their duties against accountants, he said.

Duvenage asked why the lack of consequences for mismanagement continues, why many people are simply suspended with full pay, and why many who are found guilty move on to other positions.

Duvenage also mentioned the worrying trend of many departments increasing their own revenue, for example, the Department of Transport charging for driver’s licenses.

“It’s additional taxes” and departments are building their own empires, he said.

He added that a lot of money is flowing into ministries, away from Treasury oversight – “they throw money at people”; Department CEOs can earn salaries of up to R10 million. “It’s going from bad to worse.”

Duvenage said the country needs more oversight, transparency and more accountability.

He turned to Saica’s Soopal and said there had been so much errant behavior from chartered accountants – and there were more Anoj Singhs out there.

Anoj Singh (former CFO of Transnet) appears to be the only CA(SA) involved in the state capture to have been stripped of the CA(SA) designation).

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