SCOPA's findings on provincial finance
Honourable Zingisa Mkabile; Chairperson of Standing Committee on Public Accounts, (SCOPA), expressed concern regarding the state of Provincial financial management and public accountability. This was revealed in a Provincial Legislature's sitting held today at the Good News Christian Centre.
Analysing the Provincial finance management and accountability for the financial year ending 31st March 2008, SCOPA tabled its findings on the Auditor-General reports, other financial information contained within the annual reports and hearings held with Accounting Officers of the following Departments:
- Health
- Education
- Social Development
- Premier
- Provincial Legislature
- Provincial Treasury
- Safety and Security
- Housing & Local Government
- Public Works
- Economic Affairs
Detailed findings and recommendations made by SCOPA regarding public accountability and financial management of the above cited departments is provided in the attached copy of the SCOPA report.
In his opening remarks; Honourable Zingisa Mkabile said "the findings of this report point to the fundamental challenge of lack of proper control systems, monitoring and requisite policy implementation and evaluation system which generally plague the Provincial Public Administration"
The findings of the SCOPA were cited as follows:
• I. Office of the Premier
SCOPA learnt that the Office of the Premier received an "except for" qualification report from Auditor General for the year ending 31st March 2008 as a result of capacity problems in the OTP's asset management unit
The committee also learnt that the Premier's Office did develop requisite policies for addressing valuation of immovable property challenges.
With regards to the above cited findings, SCOPA recommended that Senior Management in the OTP be trained on matters of governance. "It should be noted that the committee will be making a follow up on this issue, and that updates on training of senior management on matters of governance will be requested from the Accounting Officer" said Honourable Mkabile
SCOPA's report also compel the Director General to strengthen internal control units of the OTP by recruiting properly qualified personnel and providing adequate training to all staff. "This should be coupled with proactive steps to ensure that internal control services provided by Shared Internal Audit are performed as well as the establishment of a capacitated risk management unit"
Health
The Committee learnt that a significant number of documents supporting transactions in the annual financial statements could not be produced for the Auditor General" said Honourable Mkabile regarding financial management and public accountability of the Department of Health.
SCOPA's report also revealed significant misallocation of transactions in the 2007/08 financial statements. The report also alleges that the Accounting Officer bypassed a number of procurement procedures resulting to ex-post facto payments totalling R1.5 million being irregularly approved.
Payments totalling R464.6 million were paid to consultants, contractors and for special services. However, service level agreements relating to such payments were not adequately monitored." The Committee reported that the Department of Health incurred over R160 million unauthorised expenditure in the year 2007/08.
In light of the above, SCOPA recommended that:
The Accounting Officer of the Department of Health be charged with financial misconduct and that disciplinary proceedings be instituted in terms of section 84 of the PFMA.
Despite the uncertainty of the amount of unauthorised expenditure incurred by the department, the Committee has to pronounce on any unauthorised expenditure incurred by departments as part of its mandate. The report tabled went on to indicate that Health's Accounting Officer failed to convince SCOPA about the legitimacy of the unauthorised expenditure incurred.
Against the above background SCOPA reported that it cannot approve the unauthorised expenditure incurred by the department and recommended that the provisions of section 34(2) of the PFMA apply, ie the department must ascertain the amount of unauthorised expenditure (estimated by the Committee to be over R160 million) and charge that amount against appropriated funds allocated for the 2009/10 budget.
• II. Social Development
The Committee noted the following in relation to financial management in the Department of Health for 2007/08
The completeness and accuracy of transfer payments amounting to R343 million could not be determined
A significant or material amount of payments to NGOs could not be validated and a significant number of payments to NGOs were made irregularly.
The completeness, valuation and existence of assets (R51 million) could not be confirmed. Also, assets amounting to R27 million bought in the year under review were not included in the asset
The Committee provided the Accounting Officer an opportunity, both in the formal questions raised by the Committee and during the hearing for oral evidence, to explain gross mismanagement in his department. The responses provided by the Accounting Officer were found to be inadequate.
"The Committee could not find any reason why the Accounting Officer should not be charged with financial misconduct in terms of section 81 of the PFMA. The accounting officer failed to convince the Committee that there was no wilful or element of neglect in his failure to properly account for the department's financial affairs" said Honourable Mkabile
With regards to the findings and recommendations of the SCOPA, the House thus adopted the Committee recommendations as resolutions to be implemented by government departments. Departments are expected to report within 30 days to the Legislature on the implementation of the resolutions of the committees.
PS: find attached report on Safety & Security
Issued by the Eastern Cape Provincial Legislature- For more information, kindly liaise with Zukisa Nduneni - Senior Manager: Media Liaison & Protocol @ 0716886714/ znduneni@ecleg.gov.za
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