Staff Reporter
Free State Treasury is the only provincial department that achieved a clean audit in the 2019-20 financial year with only two others slightly improving their results, Auditor General of South Africa Tsakani Maluleke has revealed.
This is the first time since 2016-17 that the province has produced a clean audit.
But Maluleke was quick to point out that lack of accountability remains a problem in most departments in the Free State.
“This is the second consecutive year of improvement, but a lack of accountability continued to result in pervasive non-compliance and deteriorating financial health,” Maluleke said, with a particular emphasis on procurement-related issues.
“A culture of no consequences has been created through the political and administrative leadership’s inability to implement consequence management for the pervasive non-compliance with legislation,” she added in the report released on Wednesday.
The auditor general said this left state resources vulnerable to misappropriation, wastage and the abuse.
The Fleet Management Trading Entity usually referred to as the government garage and the Office of the Premier were the only other auditees that improved their audit outcomes.
The Free State Development Corporation regressed to a disclaimed audit outcome with findings.
A disclaimed outcome is issued when an auditor cannot obtain sufficient and appropriate financial statements to draw a conclusion or support their opinion.
Other departments, namely Cooperative Governance and Traditional Affairs; Education; Police, Roads and Transport; Provincial Legislature; as well as Public Works and Infrastructure were unchanged and received unqualified audit opinions with findings.
The departments of Agriculture and Rural Development; Central Medical Trading Account; Economic, Small Business Development, Tourism and Environmental Affairs; Health; Social Development; and Sport, Arts, Culture and Recreation got unqualified audit outcomes with findings like in the previous year.
Maluleke said the continued transgression of supply chain management prescripts was reflected in the significant amount of irregular expenditure incurred annually.
She said leadership has been unable to curb this behaviour and was slow to respond by investigating the irregularities.
“The Free State Department of Police, Roads and Transport serves as an example of the continued disregard for procurement prescripts, and was the highest contributor of irregular expenditure,” said the auditor general.
The department racked up a bill of over R1 billion in irregular expenditure for the period 2019-20.
“The department irregularly appointed a panel of suppliers for the repair and maintenance of roads,” she said.
“It was concerning that, in the previous year, the department had cancelled contracts relating to the irregular appointment of a panel.
“Yet, in the current year, the department appointed another panel irregularly, for similar services as the previously cancelled contracts.”
The provincial education department also incurred material irregularities due to non-compliance with supply chain management prescripts, resulting in likely financial losses.
Maluleke said some provincial departments had shown an improvement in the level of assurance provided by the political leadership.
She was however worried that in some cases, the administrative leadership and senior management did not create a culture that promoted accountable, effective and efficient provincial government.
The auditor general cited the Free State Department of Health as an example of where preventative controls were not in place.
She said as a result of failure to ensure that adequate supporting documentation was available before making packing payments, the department actually paid for infrastructure assets already received.
Investigations into the overpay are still going on.
“This compromised effective monitoring and oversight by all assurance providers. We applaud the provincial treasury for the support they provided to auditees throughout the year and their assistance with coordinating the audit process,” said Maluleke.
The auditor general said it is only through the strengthening of the controls environment and the implementation of preventative controls that the province will be able to maintain its clean audit and ensure that more departments progress to a sustainable clean audit status.
The political leadership, according to Maluleke, should lead from the front and improve the assurance they provide.
She said they should also ensure that the administrative leadership is held accountable for their actions.
“Proper planning and budgeting, effective staff performance management as well as firm and timely consequences for poor performance and transgressions should be implemented,” said Maluleke.