The KwaZulu-Natal Department of Health incurred irregular expenditure of R9,92 billion in 2019/20 according to damning findings of the auditor-general.
Durban - The KwaZulu-Natal Department of Health incurred irregular expenditure of R9,92 billion in 2019/20 according to damning findings of the auditor-general.
The AG’s report tabled before the Standing Committee on Public Accounts in the Provincial Legislature this week, revealed that the department had received a qualified audit with findings.
The AG also noted that the special investigations unit at the department was performing investigations relating to allegations of incorrect awarding of certain contracts, accusations of theft, employees performing unauthorised remunerative work outside the public service. The investigations were still in progress at the date of the report.
“The financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework and supported by full and proper records, as required by section 40(1)(a) and (b) of the PFMA. Material misstatements identified by the auditors in the submitted financial statements were not adequately corrected and the supporting records could not be provided subsequently, which resulted in the financial statements receiving a qualified opinion,” the AG said in the report.
The report found that the root cause for the R9,92 bn irregular expenditure was the flouting of supply chain management (SCM) procedures.
“Procurement is approved without due regard for the SCM requirements to be followed in terms of the related practice note or the Department's own SCM policy. Adequate review and monitoring is not undertaken by the head office SCM unit to ensure that all SCM processes have been followed at head office level as well as institutional level,” the auditor found.
In addition, the department did not correctly record movable tangible capital assets and minor assets in accordance with regulations.
“The department incorrectly applied criteria to fair value its assets. I was unable to determine the impact of the misstatements on movable tangible capital assets and minor assets as it was impracticable to do so. Furthermore, I was also unable to obtain sufficient and appropriate audit evidence for movable tangible capital assets and minor assets,” the AG found.
“I was unable confirm these assets by alternative means. Consequently, I was unable to determine whether any further adjustments were necessary to the movable tangible assets stated at R5,5 billion (2019: R3,74 billion) as well as minor assets stated at R944 million (2018: R1,07 billion).”
According to the report the department did not adequately record contingent liabilities - claims against the department - meaning the AG was unable to determine whether any further adjustment to contingent liabilities stated at R27,04 bn was necessary.
The report also had findings about goods and services that the department had paid for.
“I was unable to obtain sufficient appropriate evidence that payments made were in respect of goods and services that were actually received by the department, as internal controls had not been established to confirm the receipt of goods and services. Consequently, I was unable to determine whether any further adjustments were necessary to goods and services stated at R14,19 billion,” the report said.
Some of the goods and services with a transaction value below R500 000 had been procured without obtaining the required price quotations, and some of the goods and services of a transaction value above R500 000 were procured without inviting competitive bids. Deviations were approved by the accounting officer but it was practical to invite competitive bids, as required by treasury regulations, the AG found.
“Sufficient appropriate audit evidence could not be obtained that contracts were awarded only to bidders who submitted a declaration on whether they are employed by the state or connected to any person employed by the state…Some of the contracts were awarded to suppliers whose tax matters had not been declared by the South African Revenue Services to be in order.” The AG found.
The AG also found that “sufficient appropriate audit evidence could not be obtained that awards to suppliers who committed a corrupt or fraudulent act in competing for the contract were rejected” as required by treasury regulations.
Some of the contracts were awarded to bidders who did not score the highest points in the evaluation process, and people in service of the department who had a private or business interest in contracts awarded failed to disclose their interests.
“Persons in service of the department whose close family members, partners or associates had a private or business interest in contracts awarded by the department failed to disclose such interest. Similar non-compliance was reported in the previous year and disciplinary action was not taken against the officials involved,” the report said.
The Mercury