The Free State Provincial Government has taken note of the consolidated report of the PFMA audit outcomes for the 2015/16 financial year as released by the Auditor-General, Mr. Kimi Makwetu, on 16 November 2016.
The regression in the overall audit outcomes of the Free State Provincial Departments for the 2015/16 financial year is a disappointing reversal of the steady progress made in previous financial years. We, however, congratulate the Free State Provincial Legislature and the Fleet Management Trading Entity on retaining the “clean audit” status obtained in the prior years.
The audit process of the 2015/16 financial year was characterized by rigorous engagements between provincial auditees and the Office of the Auditor-General. We are confident that our coordination of the audit process ensured the active participation and involvement of accounting officers, chief financial officers and other senior management members of auditees in the audit process. It has also ensured a consistency in approach to transversal audit-related matters.
The Audit Committees of four affected departments did not accept the report of the Auditor-General. After due consideration of the finalized audit findings and reports, the accounting officers of the affected departments declared disputes on the audit outcomes. These disputes were declared after due and careful consideration of the principles underlying the respective matters.
These disputes essentially relate to the interpretation of legislation and regulations as well as the Modified Cash Standards, including;
- Interpretation of the SITA Act (Provincial Treasury)
- Discretion of accounting officers to approve deviations (Department of Agriculture and Rural Development)
- Classification of expenditure resulting from the appointment of implementing agents / service providers acting on behalf of beneficiaries (Departments of Agriculture & Rural Development as well as Economic & Small Business Development, Tourism and Environmental Affairs)
- Classification of expenditure relating to a national asset (Department of Sport, Arts, Culture and Recreation)
- Write-off of irregular expenditure deemed irrecoverable and classification of expenditure as accruals and/or commitments (Department of Human Settlements)
The Free State Provincial Treasury, on behalf of the Free State Provincial Government, has referred various matters in dispute to National Treasury for review and this process is currently unfolding. The recent Constitutional Court judgement in the matter of the Department of Transport and Others vs Tasima has also been noted and may have implications on the further resolution of these matters.
The Department of Sport, Arts, Culture and Recreation has referred another matter to the Office of the Auditor-General in terms of the Public Audit Act, 2004. This matter is also in the process of being addressed.
We have taken note of the progress reported by the Auditor-General in the areas of the reporting on performance information and the IT control environment whilst acknowledging the remaining challenges in these two areas.
The Free State Provincial Government remains committed to ensuring that it reverses the disappointing audit outcomes of the 2015/16 financial year. The Free State Provincial Treasury has strengthened its coordination and monitoring of the implementation of the audit action plans developed by all auditees to address the identified shortcomings. Additional emphasis has also been placed on improving and/or strengthening the internal control environment within the broader provincial government sphere.
The Free State Provincial Government has engaged with the Auditor-General and his extended management team on the consolidated findings as reported. The views and concerns shared have laid a foundation from which we will continue to work together to enable us to deliver on our respective mandates.
Please direct all media enquiries to:
Media Strategy and Liaison Unit
Department of the Premier
Tel: 051 405 4628
E-mail: Pulane.tsupane@fspremier.gov.za / nthabiseng.diphoko@fspremier.gov.za
