Water department contests R2.4bn waste ‘it wasn’t going to disclose’

The department of water and sanitation (DWS) has hit out at reports that irregular expenditure had rocketed to over R6 billion, saying such figures were premature as the auditing process had not yet been completed.

The office of the auditor-general (AG) yesterday told parliament irregular expenditure at the department had risen to R6.4 billion.

The AG’s office said the irregular expenditure was significantly high around 2014-15 and 201617 financial years, and was now R2.4 billion higher than the R4 billion initially disclosed.

Andries Sekgetho of the AG’s office told MPs that R2.4 billion had not been disclosed by the department, although the AG’s office made them aware of the deficit after an audit.

The department told the AG’s office R2.4 billion was not going to be disclosed. “So the overall amount of irregular expenditure is R6.4 billion and not the R4 billion that was disclosed,” he said.

But, in a statement, DWS said it would like to put it on record the financials that would have indicated such an escalation, or even a decline, were still in the process of finalisation, with the end date of May 31.

“These financials as would be finalised by the DWS acting chief financial officer would then be audited accordingly by the AG’s office, which audit must be finalised by July 31. That process, together with the requisite engagement with the AG’s office, will indicate what the ultimate figure would be.

“All matters relating to the final outcomes of this process should be articulated once the process is completed. The DWS takes the work and articulation of the AG’s office seriously and the cooperation between the DWS and the AG’s office is regarded as paramount to ensure the DWS is properly accountable to South Africans on matters involving the fiscus.”

Sekgetho was briefing the portfolio committee on the department’s financial position and contested audit outcomes.

He said financial management at the department had regressed due to qualification areas of last year not being addressed and the fact that there were no effective plans in place. Oversight and monitoring also regressed due to instability in leadership.

In terms of the revenue decline, Sekgetho said one of the matters that contributed was a lot of expenditure that had no budget.

“Among others was the war on leaks programme. In the current financial year, an amount of R542 million has already been spent and this was not included in the budget. So before you start implementing your normal projects that you have budget for, you are already on the back foot with half-a-billion rands.

“This will result in you depicting or disclosing a deficit at the end of the financial year because you are expensing and there is no revenue, or the money did not come in,” he said.

The department incurred a net loss of R89 million, overdraft of R194 million and unauthorised expenditure of R406 million during the year ended March 31, 2017.

The department’s current liabilities exceeded its total assets by R454 million.

“It is an indication that a material uncertainty exists that may cast significant doubt on the department’s ability to continue as a going concern – thus its ability to undertake its objectives where the vote has been depleted.”

In addition, there has been a decline in the operational activity of the unit due to construction work being awarded to implementing agents or awarded to external service providers.

On certain projects, due to budget constraints, projects had to be halted, which resulted in fruitless and wasteful expenditure, Sekgetho said. – ANA