Sassa criticised in A-G’s report

Poor control over irregular expenditure

AUDITOR-GENERAL Kimi Makwetu has found that the South African Social Security Agency (Sassa) failed to take effective steps to prevent R67.1 million in irregular expenditure in 2018-19.

According to Sassa’s annual report tabled in Parliament, irregular expenditure disclosed in the financial statement stood at R1.8billion.

The report said R67.1m in irregular expenditure was incurred in the year under review, R75.6m was reversed by the National Treasury because it had not been properly condoned, and R5.14m related to a prior year error.

In his audit report, Makwetu said effective steps had not been taken to prevent R67.1m in irregular expenditure as required by the Public Finance Management Act.

“The majority of the irregular expenditure resulted from extensions and deviations of contracts and lease agreements that were not approved.”

He added that effective steps had not been taken to prevent fruitless and wasteful expenditure totalling R77.8m.

“The majority of the fruitless and wasteful expenditure resulted from payments for services not utilised or rendered,” Makwetu said.

“Leadership did not implement effective controls to ensure accurate financial reporting, nor did they exercise adequate oversight responsibility over compliance with applicable legislation, which resulted in material adjustments made to the financial statements as well as instances of irregular and fruitless and wasteful expenditure not being prevented.”

Makwetu noted that Sassa conducted investigations into fraud and corruption as well as non-compliance with supply chain management.

“Seventy-one cases were referred to the SAPS during the year for investigation. The SAPS completed investigating two cases for the year under review and 11 suspects were arrested for being in the unlawful possession of beneficiary cards,” he said.

The Hawks were also undertaking ongoing investigations into social assistance grant fraud.

Sassa chief executive Busisiwe Memela-Khambula said in the Sassa report that a number of officials had been taken through disciplinary processes for financial misconduct.

Memela-Khambula said that out of 283 financial misconduct cases, 21 were concluded through labour relations processes in 2018-19.

“Seven officials were given final written warnings, 12 were given written warnings, one official was found not guilty and one case was withdrawn,” she said.

She added that at end of March there were still a number of cases being investigated, with some officials still going through disciplinary hearings.

“The agency implemented a project to review existing contracts and to ensure that new contracts are reviewed for supply chain management compliance,” she said.

Meanwhile, the Supreme Court of Appeal (SCA) yesterday upheld a ruling of the North Gauteng High Court that ordered Cash Paymaster Services (CPS) to repay R316m to Sassa. The matter related to a variation of the contract that CPS had with Sassa for social grant payments. As a result of the variation agreement, R316m was paid to CPS by Sassa.

Corruption Watch brought an application in the high court to review and set aside the agreement.

The high court ruled in the organisation’s favour last year, but CPS took the decision to the SCA.

The SCA found that there was no lawful basis to vary the agreement and no lawful basis for the decision to pay CPS the R316m.

David Lewis, executive director of Corruption Watch, said: “This is a very important judgment. Let it be noted by those who enter into agreements with the state that are either corrupt or do not follow the rules governing public procurement, that they will be required to pay back money received in this way.”

“Leadership did not implement effective controls Kimi Makwetu AUDITOR-GENERAL