Wasteful expenditure: it’s basic maths

Education Department comes under fire for failing to stop the rot in irregular and fruitless payments

THE Basic Education Department has come under fire from Auditor-General Kimi Makwetu for failing to prevent “significant control deficiencies” in its infrastructure programme.

This emerged in an audit report in which Makwetu found financial statements submitted for audit were not prepared in accordance with financial reporting framework and supported by full and proper records, as required by the Public Finance Management Act.

He said the department recorded R154million in irregular expenditure in the 2017/18 financial year after supply chain processes were not followed.

“Effective and appropriate steps were not taken to prevent irregular expenditure amounting to R154 478 000. The majority of the irregular expenditure was caused by the appointment of implementing agents,” Makwetu said in his report

Effective and appropriate steps were not taken to prevent irregular expenditure KIMI MAKWETU Auditor-General

tabled in Parliament last week.

Payments were made to agencies such as Coega Eastern Cape, Mvula Trust, Independent Development Trust, Adopt A School, Mhlathuze Water, Development Bank of southern Africa and TCN Architects, among others, as far back as 2012.

The amount is likely to increase as another R33m in irregular expenditure was still under investigation.

The department has also disclosed that R83m in fruitless and wasteful expenditure was still under investigation. The Auditor-General said he identified “significant control deficiencies” in the oversight function by the department on the infrastructure programme.

“The control deficiencies relating to the infrastructure programme have been reported over the past years, but have not been adequately addressed,” he said.

Matanzima Mweli, the department’s director-general, said one of the contracts was awarded to four implementing agents in 2012 because, with the volume of tenders received, it was taking the department a long time to complete the process of evaluating the tenders. “This was done to ensure there was a fair spread of allocation of contracts.”

Mweli also said that, in another tender awarded to SAB&T, appointed to manage the Kha Ri Gude programme in 2015/16, one of the stages of evaluation was misinterpreted when site visits should have been done with all bidders.

He added that implementing agents appointed for the building of schools did not comply with supply chain processes, as agreed to in the memorandum of agreement signed with the department.

Mweli also said that when contractors were underperforming or liquidated, the implementing agents did not follow supply chain management processes when replacing them.

“In replacing the contractors, the implementing agent appointed contractors that were performing well to continue with the construction of schools.”

Mweli said he has appointed a team to investigate all cases of irregular expenditure.

“The team has written two reports to the accounting officer and shared these reports with the standing committee on public accounts. A request for donation of irregular expenditure has been submitted to the National Treasury,” he said.

But Makwetu said his audit also found misstatements in the financial statements submitted for auditing, which had not been prepared in accordance with prescribed financial reporting framework and were not supported by full and proper records.

These related to capital assets, accruals and payments not recognised; commitments and works in progress which were corrected; and supporting documents provided to auditors during the audit process.

“But the remaining uncorrected material misstatements resulted in the financial statements receiving a qualified opinion,” he stated.

Makwetu blamed the misstatements on inadequate daily and monthly controls, especially on the infrastructure programme and performance reporting on pupils.

“Misstatements identified in the financial statements and performance reports were also attributable to monthly, quarterly and year-end reconciliation processes not being effective,” he added.