KwaZulu-Natal Premier Senzo Mchunu has assured the Auditor-General Terence Nombembe that the provincial government will deal with all issues that have been identified as risk areas. He was speaking in the KwaZulu-Natal (KZN) Legislature after the tabling of the 2012/13 Audit Outcomes Report of Provincial Government.
“At the outset, I want to point out that we are very fortunate as KwaZulu-Natal Provincial Government that we have been visited by the Auditor General Mr Terence Nombembe more than two times in one month. What makes us feel special is we all have the opportunity to wish him well before his last day in office.”
“I personally had the opportunity to share the podium with the AG two weeks during the Assemble of the South African Local Government on the 14th November at the Olive Convention Centre in Durban.”
“His attendance did not only afford him the opportunity to bid farewell to the mayors and councillors but enabled him to reinforce for the last time the message he has always been conveying that elected representatives should not delegate the responsibility of practicing prudent financial management to the Chief Financial Officers.”
“Starting from the premier, the members of the executive council, Director General, HODs and CFOs, we took upon ourselves to be at the forefront of all efforts aimed at improving financial management and achieving clean audits. It was no surprising when we ended the 2011/2012 financial year with substantial saving.”
“We believe that our improved financial management will better enable this province to grow and prosper. In managing public money properly, we have demonstrated that we are ready to take charge of our future. Honourable Members, The 2012/13 audit report indicates positive outcomes for the provincial government when compared to the 2011/12 audit outcomes:
- Nine (24%) auditees improved their results by obtaining clean audits,
- Six (16%) sustained clean audits,
- Sixteen auditees (41%) sustained their unqualified status with findings on other matters.
- Quality of performance reporting improved with twenty five (76%) having no findings on their service delivery information, compared to twenty two auditees (71%) in the prior year Of concern is the increase in the number of qualified audit opinions.
- Six (15%) auditees had qualified audit opinions.
- This is a 5% increase compared to the previous year.
“I wish to focus briefly on Risk Areas identified by the Auditor General as well as proposed interventions by the Provincial Government. According to the AG, the first Risk Area is the quality of submitted financial statement and this relates to misstatements of financial information.”
“I wish to report to the members of this house and the Auditor General that the provincial government will ensure adequate preparation of quarterly financial statements. The Provincial Treasury Financial Management Unit has already initiated joint projects to assist all qualified departments and entities.”
The following qualified departments are being assisted:
- Health (asset management)
- Education (leave balances )
- Social development (assets and transfers)
- Arts and culture (library books)
“In addition, the Provincial Treasury Internal Audit have started reviews of the Annual Financial Statements of all 15 provincial departments and 8 public entities prior to submission to the AG on an annual basis. The AG has also identified Supply Chain Management (SCM) as the second Risk Area which requires immediate attention. His report states that SCM units are not fully capacitated with competent staff due to suspension and delayed recruitment processes. There is a lack of Contract Management, which results to month-to-month contracts and irregular expenditure as well as failure to manage suppliers' performance.”
“The Auditor General points out high numbers of unnecessary transactions undertaken through the quotation processes and he says this provides fertile ground for fraud and corruption. He further cites the lack of SCM related Document Management as cause for concern.”
“We do acknowledge as the provincial government that SCM unit in any government department is an area which is too vulnerable to corrupt practices such as bribery and fraud. Cabinet instructed Treasury to establish an interventions section to assist departments lacking capacity in their SCM units. This unit is already hard at work.”
“Contract Management system is currently being rolled out to all provincial departments to ensure increased governance and control in the management of contracts. The Provincial SCM Unit is introducing transversal period contracts to be utilised by all provincial departments. The online and traditional Travel Agency bids have already been awarded and are currently in use.”
“The Provincial Treasury is in the process of identifying a suitable E-procurement system for the purpose of SCM audit trail and price bench-marking. Importantly, the Provincial Treasury has created a pool of SCM experts to be deployed in departments to assist with SCM matters. Conflict of interest reviews and numerous audits on supply chain management are planned to be conducted by the Internal Audit Unit during this current financial year.”
The third Risk Area which the AG has cited is the Human resource management.
“The Internal audit has planned to conduct 21 reviews of HRM processes which include leave management, performance management, disciplinary and grievance processes as well as following up on weaknesses that were previously reported to management by the Unit.”
“With regard to the vacancy rate of 32% in key positions, all departments have been directed to comply with the DPSA directive to fill all vacant funded posts within 4 months of such posts becoming vacant. All unfunded posts are currently being removed from Persal system, and also due to cost-cutting measures Cabinet resolved that only critical funded posts must be filled. We are therefore proud to report that the vacancy rate in the province is 8%”
“The concerns by the Auditor General in relation to slow pace in which managers respond-45%; coupled with lower levels of competency by officials - 21%, are currently being addressed by Heads of Department working with the Public Service Academy and PALAMA. Senior Managers will all be receiving training on financial management ( the non-financial managers) a project driven by the Office of the Premier and Provincial Treasury in an attempt to capacitate managers at all levels.”
The fourth Risk Area, which is an area of concern according to the AG is the Information Technology.
“As Members of this House would know, our IT environment is largely controlled by State Information Technology Agency (SITA), but the province has a functional Provincial Government Information Technology (PGITO) Council that deals with all IT matters. We are implementing a biometrics system in the Province to ensure that only authorised Users access BAS payment system. Internal audit has embarked on the audit of the IT Strategy which is aimed at ensuring that the accountings Officers are aware of the role that IT should play in enhancing the strategic and operational activities of the Departments.”
“With the emphasis put on departments by Department of Public Service and Administration to have the IT Governance Framework fully implemented by 2015, our Internal Audits IT Risk and Advisory Units will be involved closely in order to guide provincial government departments on how to implement the various phases of the IT governance.”
“Honourable Members, as we bid farewell to the Auditor General, we want to express, once again, our appreciation to him for the guidance since the beginning of this term of office. Members of this house, myself and all members of the executive and have enjoyed cordial working relations with you and your office. Through your guidance, we have been able to create an image of a clean provincial government which is intolerant of fraud and corruption.”
“As we speak, the financial health of the provincial government is sound. The net cash position of all Paymaster general accounts and the Exchequer accounts as at 31 March 2013 was a positive amount of R 5, 037 billion. We want to report that certain departments were in overdraft but this was due to unauthorised expenditure. These amounts would however be cleared when the unauthorised bill is passed by the legislature.”
“Internal Audit is conducting a review of the key financial internal controls at certain provincial departments and this review entails reviewing financial governance, financial oversight and financial controls over payments and revenue processes.
We can also report to this house that internal audit is also currently conducting a follow up on AG findings for all 15 provincial departments to provide accounting officers with a status of the adequacy and effectiveness of actions implemented to address weaknesses identified by AG during the 2012/13 audit.”
“It is important to also emphasise that the Internal Audit is responsible for providing assurance on the effectiveness of risk management, controls and governance processes and will continue to provide these services to 15 provincial departments and 8 public entities. The Unit has planned to conduct about 300 internal audit projects at these institutions during the 2013/14 financial year.”
“Importantly, the Internal Audit will be conducting a review of the effectiveness of the Internal Control Units/functions at the Department of Health and the Department of Education. Given the reality of fraud and corruption, our government has introduced a variety of mechanisms to promote integrity and combat corruption. These include minimum anti-corruption capacity requirements, a Code of Conduct, financial disclosure framework for senior managers and official in finance and Supply Chain Management components.”
“The financial disclosure framework is being reviewed to compel all officials in government to disclose their financial interests irrespective of their ranks or responsibility. This way we compel individuals to declare honestly acquired assets and action is guaranteed to those who flout this provision.”
“I wish to report that R25, 412 million has been allocated to strengthen the work of the Integrity Management Unit in the Office of the Premier during 2013/14 financial year. The Integrity Management Unit works closely with the Provincial Treasury's Internal Audit Unit. The strategic objective of the component is to integrate, coordinate and provide strategic leadership and direction for the provincial government on all matters relating to fraud and corruption.”
“The two units have joined hands with South African Police Services and other organizations within the forensic fraternity to identify and investigate a variety of fraud and corruption activities involving provincial departments and other entities that serve as agents of specific departments and municipalities.”
Enquiries:
Ndabezinhle Sibiya
Spokesperson for the Premier
Cell: 082 375 4742
