Strong internal controls and capacity building key to meeting 30-day payment deadline
The Portfolio Committee on Public Service and Administration/Performance Monitoring concluded successful public hearings on compliance to the payment of suppliers by government departments within 30 days. The Committee is of the view that lack of internal controls and capacity constraints within some departments represents one of the biggest challenges impacting on the ability of departments to pay within the stipulated time frame.
Lax internal controls include the inability to verify banking details and documents such as tax clearance certificate resulting in departments not having updated banking details of suppliers; lack of internal controls for tracking of invoices from date of receipt until payment is made; poor budgeting and lack of alignment between budget and procurement plan; unresolved invoice discrepancies; lack of human capacity within the departments as well as slow information communication and technology (ICT) systems.
The Committee remains acutely aware of the dire impact of non compliance, not only on businesses but to the entire economy. “The non-compliance stifles the economy, especially the township economy, which has been identified as an area of great growth potential. The Committee is of the view that non-compliance goes against the spirit of the National Development Plan, which seeks to achieve inclusive economic growth, create job opportunities, eliminate poverty and reduce inequality,” the Chairperson of the Committee, Mrs Bertha Mabe, said.
Furthermore, it remains unacceptable that departments fail to comply, especially because the stipulation is a legislative requirement contained within the Public Finance Management Act as well as National Treasury regulations. “In light of this, non compliance is tantamount to breaking the law,” Mrs Mabe emphasised.
While the Committee acknowledge the intensive focus placed by the current administration on this area, it remains concerned that some departments continue to fail service providers. “Interventions such as the requirement for all Directors-General to report to the Forum of South African Directors-General (FOSAD) on their timeous payment to suppliers as well as bi-monthly exception reports submitted to National Treasury and the Department of Planning, Monitoring and Evaluation have the potential to make a positive impact,” Ms Mabe emphasised.
Of major concern remains payment by provincial departments and municipalities, which represents the hub of service delivery. The average rand value of invoices older than 30 days and not paid by provincial government departments for the period March 2014 to April 2014 was R2.7bn compared to R3.1bn for the corresponding period in 2015 (March 2015 to April 2015), a regression of 14.8% or R400m.
Best practises can be learned from the Northern Cape Provincial Department of Social Development, which pays its service providers within one week of presenting a legitimate invoice. This shows that the payment of service providers can be accelerated and achieved if there is leadership, commitment and effective systems to achieve this.
The Committee calls for the speedy implementation of a Cabinet directive for the establishment of a new special unit that will be a trilateral partnership between the Department of Performance Monitoring and Evaluation, the National Treasury. The mandate of the Special Unit will include investigating cases where there is late or non-payment of correct invoices within 30 days, identifying causes for delays and non-payment in aforementioned cases, facilitating the process for instituting misconduct proceedings to ensure that there are consequences for late and non-payment of correct invoices and supporting/intervening in cases of continuous non-compliance. The Committee is of the view that this unit will play a central role in dealing with these challenges.
The Committee further calls for the inclusion of compliance within 30 days as a key performance area in performance contracts of Directors-General, Heads of Departments and Municipal Managers. The Committee will continue to monitor this area as it regards it as a driver in efforts to create more jobs
and fight the triple threat of unemployment, poverty and inequality.
Enquiries:
Malatswa Evans Molepo
Tel: 021 403 m8438
Cell: 081 512 7920
E-mail: mmolepo@parliament.gov.za
