into Limpopo International Transport Convention (ITC)
23 May 2006
Polokwane - The AG today tabled a report highlighting financial and
procedural mismanagement of the ITC by the Limpopo Department of Roads and
Transport.
The ITC was held at the Gateway International Airport, in Polokwane from 15
to 22 May 2005.
During a meeting held on 24 August 2005, the Limpopo Standing Committee on
Public Accounts requested the AG to audit all vouchers for income and
expenditure of the ITC which was held by the department. The special
investigation and subsequent report covers the period October 2004 to July
2005. It was performed in terms of the internal guidelines of the AG for the
planning, execution, reporting and follow-up of special investigations. The
AG's report highlights the following key findings:
1. No proper ITC income and expenditure budgets could be submitted. Since
the department did not accurately budget for the convention, its identified
income budget of R25,5 million was overstated by 91,4 percent or R23,3 million.
The department only received R2,2 million in income. The department incurred a
total expenditure of approximately R25,6 million which amounts to R3,6 million
more than the original expenditure budget of R22 million. This resulted in the
expenditure budget being understated by 16,1 percent.
2. There was a lack of control to ensure that all income was received and
collected. While an amount of R981 590 remains uncollected, the issue is that
no evidence can be found that this was reported to the executive authority and
the provincial treasury. When the R12 million which was identified as
âgovernment contributionâ failed to materialise the department was forced to
use its own budgeted funds to pay ITC expenses. In order to replace the funds
spent on the ITC and enable the department to continue with its existing
projects, it then requested R11 million from the Urban Transport Fund's (UTF)
budget that was approved by the Urban Transport Fund's Board.
3. Procurement policies were not strictly adhered to and tenders were
unjustly disqualified. Reasons for disqualifying bidders were not always valid
and the evaluation criteria were not equally applied to all bidders. This
resulted in the department often paying more for the required service. An
example of this is the R1,4 million paid by the department for cleaning and
security services. A better bid of R300 000 was disqualified and the reason for
the disqualification given was that the total bid price was below the
benchmark, when in fact no benchmark had been set.
4. Contract management was found to be lacking. Companies were often paid in
advance, without the approval of the department and for services not rendered.
Evidence of this is funding of a R5,6 million permanent 10 000-seat grandstand
which was never built. Instead permission was given for the money to be used on
other infrastructural needs such as boreholes, irrigation and two water tanks.
When asked, the department was unable to provide the AG with specific details
as to the cost of the boreholes, irrigation and tanks.
"It is the responsibility of the Department of Roads and Transport to ensure
through the oversight of management, the integrity of the department's
accounting and financial reporting systems and that appropriate controls are in
place, including those for monitoring risk, financial control and compliance
with the law," said the AG, Mr Shauket Fakie.
In her reply the Acting Head of the Department undertook to ensure that
corrective measures including effective planning, the application of correct
procedures and budgetary control would be taken to ensure that situations of
this nature were prevented in future.
âIt is hoped that this report will constructively contribute to the
establishment and implementation of proper management measures, controls,
processes and systems for events such as the Convention and, consequently, to
improved value for money and service delivery,â Fakie added.
Enquiries:
Adri van der Merwe
Tel: (012) 426 8175
Cell: 082 787 5291
E-mail: adrivdm@agsa.co.za
Issued by: Auditor-General of South Africa
23 May 2006
Source: Auditor-General of South Africa (http://www.agsa.co.za)
