Treasury’s spending comes under fire
Racked up R770m in irregular expenditure, splashed out R67m on goods and services it didn’t receive, A-G reveals
IN A DAMNING report, Auditor-General Kimi Makwetu has found that the National Treasury racked up nearly R770 million in irregular expenditure and paid another R67m for goods and services not received.
In his report on the audit of the Treasury’s 2017/18 financial statements, Makwetu observed that contracts were awarded to suppliers whose tax matters had not been declared by the SA Revenue Service.
”Some of the contracts were awarded to bidders who did not score the highest points in the evaluation process as required by of the Preferential Procurement Policy Framework Act and the Preferential Procurement Regulations,” read the report.
According to Makwetu, Treasury, which received an unqualified audit opinion, incurred irregular expenditure of R768.9 million, as it did not follow proper tender processes.
It also did not properly approve its expenditure.
The auditor-general found that bidders who failed to submit mandatory documents were evaluated for preferential points.
This non-compliance related mainly to transversal term contracts facilitated by the department.
Transversal term contracts are centrally facilitated and arranged by the National Treasury for goods or services that are required by one or more than one government department or state institution.
Makwetu also identified significant internal control deficiencies, lack of adherence to supply chain management regulations, procuring goods and services without inviting competitive bids as well as approval of deviations when it was practical to invite competitive bids, among other findings.
”Lack of formal business case, proper project management and inadequate budget monitoring for the IFMS (Integrated Financial Management System) programme may result in failure to deliver the overall quality solution on time and within the funds allocated,” the auditor-general said in his findings.
Last year, it was estimated that the second phase of the IFMS would cost R4.3 billion, including the R1.2bn spent on the abandoned first phase, and was expected to be fully implemented by June 2021.
The payment of R67m, which was declared fruitless and wasteful expenditure for services not received was a result of technical support and maintenance of the IFMS.
The government hoped that the IFMS would replace legacy information technology systems. These include the Basic Accounting System, Logistical
Makwetu’s audit report fitted the picture of the general decline in financial management in government institutions
Information System, Personnel and Salary Administration System and Vulindlela. They are meant to improve procurement, human resources, financial and catalogue management as well as the payroll integrated data exchange.
In March, National Treasury undertook to act speedily and decisively if any corruption or wrongdoing was identified by a forensic process – following findings of its internal audit unit that consultants working on the IFMS were made to monitor themselves, among other findings.
Chairperson of the National Assembly’s standing committee on public accounts Themba Godi told Independent Media yesterday that they expected National Treasury to present the findings of the forensic investigation it commissioned into IFMS in the next few weeks.
He said Makwetu’s audit report fitted the picture of the general decline in financial management in government institutions.
He said that the Treasury was not well staffed and that it had been rocked by instability both politically and administratively, with several senior officials leaving.
The National Treasury did not respond to questions this week.