Despite poor supply chain management (SCM) practices, audit outcomes in Eastern Cape state departments and entities have improved in the past four years.
This is according to national auditor-general (AG) Kimi Makwetu’s general report on national and provincial audit outcomes for 2016-17 financial year, a report which was tabled in the National Assembly recently.
Makwetu said provincial audit outcomes had improved by 39% in the four years.
He does 25 audits in the province, including 14 departments and 11 state-owned entities (SOEs).
The most significant improvement occurred in 2015-16, he said.
In the 2016-17 assessment only the treasury, rural development and agrarian reform, and safety and liaison departments were awarded outright clean audits.
Three SOEs – the East London Industrial Development Zone, Eastern Cape Parks and Tourism Agency, and Eastern Cape Rural Development Agency – had clean bills of health.
Makwetu said treasury played “a significant role through not only responding to our recommendations, but actively seeking our advice”.
“The leadership of the provincial treasury is recognised for the significant role it played in the province’s improved audit and sustained outcomes by proactively engaging our office on transversal audit issues, technical issues and specific audit matters.
“However, the province continued to be plagued by poor SCM practices and projects and service delivery failures, for which there was little accountability and consequences,” Makwetu said. The control environment of those entities “remained a concern”.
“The slow response by accounting officers and senior managers to implement our recommendations relating to enforcing a culture of basic daily, weekly and monthly financial management disciplines and adhering to good controls, contributed to these poor control environments,” said the AG, adding that controls in the IT environment also “remained concerning”.
Makwetu said instability in leadership at the provincial education department resulted in a lack of accountability and good governance and a weak control environment.
“Appreciation of the role of applying consequences for transgressions and poor performance was not evident in restoring the integrity of the department’s management practices.”
The AG revealed that the quality of financial statements had improved over the past four years, though the quality of performance reports had not – they had stagnated, with 62% of them requiring material adjustments.
It was also a concern for the AG that the provincial accounting officers used their own discretion to appoint targeted suppliers without ensuring that the requirements of the Public Finance Management Act and SCM regulations were correctly applied.
He said his team also identified weak control environments and a lack of proper systems and processes around project execution and commissioning as areas that require the most leadership attention.
“Inadequate supervision and monitoring of contractors, poor quality management, and projects not completed within budget or within the planned time, is still a concern”.
He said in order for the province to grow the economy to the target of 5% per year set out in the Medium-Term Strategic Framework (MTSF) and to provide the social services as promised, its strategic departments and entities had to be financially viable.
“All assurance providers should improve their monitoring and oversight to ensure internal controls are effective and further improvements in audit outcomes are achieved.
“The lack of accountability and the failure to adhere to financial management disciplines at education department should be dealt with swiftly to salvage this department,” he urged. — email@example.com