irregularities of R84 million in low-cost housing subsidies
7 April 2006
The Auditor-Generalâs (AG) performance audit of the approval and allocation
of housing subsidies by the Gauteng Department of Housing has highlighted
discrepancies of almost R84 million in subsidy allocation. In addition,
exception reports highlighting further potential irregularities to the value of
R28 million were handed over to the department for further investigation. These
figures were revealed in the performance audit report tabled on 7 April
2006.
The figures are based on a calculated potential amount of R15 000,00 per
applicant and were found in 8 806 exceptions out of a national total of 53 426.
On a national level, subsidies incorrectly awarded across all nine provinces
represent a monetary value of some R322 million. The audit procedures applied
during the performance audit stemmed mainly from the comparison of the Housing
Subsidy System (HSS) with various databases to create exception reports. Based
on the comparison between HSS and PERSAL, governmentâs payroll system, as well
as the Home Affairs database of deceased individuals.
Of the 326 533 beneficiaries approved in Gauteng, irregularities found
are:
1. 2 188 applicants are government employees earning salaries in excess of the
housing subsidy threshold (national figure: 7 353)
2. 1 708 subsidy approvals after the applicantâs date of death (national
figure:
5 335)
3. 1 185 duplicate subsidy approvals for the same applicant and 552 duplicate
subsidy approvals for the same household (national figures: 1 618 and 1 981
respectively)
4. 352 potential instances where subsidies were approved for individuals under
the age of 21 (national figure: 6 708)
5. 11 potential instances of subsidies awarded to individuals receiving monthly
payments from the Government Employee Pension Fund (national figure: 111)
6. 1 556 potential instances of subsidy approvals to applicants with invalid ID
numbers (national figure: 4 471)
7. 1 254 potential multiple subsidies approved for the same property (national
figure: 25 849)
âThe purpose of this report is to facilitate public accountability by
bringing the irregularities and limitation in the current low-cost housing
subsidy process to the attention of the legislature, and to assist in improving
service delivery and value for the tax payersâ money.
âIt is further hoped that this report will enable the Gauteng Department of
Housing to take the corrective steps required to improve the management
measures, controls, processes and systems in the approval and allocation
process of low-cost hosing subsidies,â said the Auditor-General, Mr Shauket
Fakie. Like Gauteng, separate reports on audits conducted in the other eight
provincial housing departments have been or will be submitted to the respective
provincial legislatures for consideration.
Most of the findings originated from deficient management measures that were
generic throughout. It is hoped that the reports will assist the provincial
housing departments in identifying subsidy applicants who should not have
received a housing subsidy or who should have received a reduced subsidy in
accordance with the national housing code.
Inadequate management measures identified include the following:
1. Applicants made misrepresentations and supplied outdated information to the
department on their subsidy application forms.
2. Officials manipulated the Housing Subsidy System (HSS) without proper
verification of the electronic search results. Therefore, subsidies were
awarded to applicants who did not quality for a housing subsidy.
3. Subsidy application forms were not always verified for correctness and
completeness by users and system administrators.
4. The HSS system failed to detect that applicants were deceased at the time
that the subsidy application was approved.
5. The department did not have adequate management measures to ensure the
safekeeping of completed subsidy application forms.
In his response the head of the department indicated that action will be
taken against those officials who have defrauded government. Mandated by the
Constitution of the Republic of South Africa, 1996, the Auditor-General is
responsible for the auditing of national and provincial state departments and
administrations, all municipalities and any other institution or accounting
entity required by national and provincial legislation to be audited by the
Auditor-General.
As an independent organisation, the Auditor-General is answerable and
accountable only to Parliament.
Mandated by the Constitution of the Republic of South Africa, 1996, the
Auditor-General of South Africa is responsible for the auditing of national and
provincial state departments and administrations, all municipalities and any
other institution or accounting entity required by national and provincial
legislation to be audited by the AG. Its purpose is to promote public
accountability in all tiers of government. As an independent organisation, the
Auditor-General is answerable and accountable only to Parliament.
Enquiries:
Adri van der Merwe
Tel: (012) 426 8175
Cell: 082 787 5291
Issued by: Auditor-General of South Africa
7 April 2006
Source: Auditor-General of South Africa (http://www.agsa.co.za)
