auditor general – praag.org

Auditor-general calls Joburg’s bluff

The auditor-general’s office has called Johannesburg’s bluff. The City of Johannesburg gave a glowing account of the metro’s financial health, claiming increased capital expenditure and improved revenue, but it was a lie.

The office uncovered huge revenue losses, corruption, flawed procurement processes and weak internal controls – leaving city manager Trevor Fowler with no place to hide.

The city lost over R851-million on unauthorised water consumption. A further R308-million was lost due to “non-technical problems”.

The city lost R1.5-billion due to unauthorised electricity consumption and a further R742-million as a result of ” non-technical” causes.

Furthermore, several big power users – including luxury car dealerships, shopping centres and a hotel – have been implicated in an electricity meter-rigging scam.

The A-G’s report said Johannesburg was R15.4-billion in arrears.

Previously, Fowler had said the city’ s total revenue had increased by 13% to R39-billion, while its surplus had increased by 21% to R4.2-billion.

Chief financial officer Reginald Boqo also claimed that the city was on top of its billing problems.

He said of the R28-billion that was billed, R26-billion was collected.

The municipal public accounts committee found numerous causes of concern and berated the city’s internal audit committee for failing to identify and curb breaches in the protocol for the awarding of contracts.

Floyd Rikhotso, an audit manager at the auditor-general’s office, said the council would have to make several adjustments before the city could receive an unqualified audit.

Government wastes R31 billion

Government departments and other public entities wasted almost R31-billion in unauthorised, irregular and fruitless spending during the financial year to the end of March.

This is according to a consolidated general audit report for the 2012-2013 financial year released in parliament yesterday by outgoing auditor-general Terence Nombembe.

Nombembe lambasted the government for not implementing his recommendations for improving financial controls.

Government departments awarded R233-million in tenders to companies in which public servants or their close family members had an interest – even though Public Service and Administration Minister Lindiwe Sisulu has prepared legislation to ban public servants from trading with the state.

The report identified several areas in which the risk of incurring unauthorised, irregular or fruitless spending was greatest, including: poor supply-chain management, weak IT systems, lax human resources management and poor preparation of financial statements.

Nombembe criticised cabinet ministers, saying “it is apparent that almost half of the executive authorities do not yet have a direct impact” in turning around the poor financial management of their departments.

The report found:

That 32 government departments incurred R2.3-billion in unauthorised expenditure;
That 294 departments and public entities irregularly spent R26.4-billion; and
That 227 entities and departments incurred fruitless and wasteful expenditure of R2.1-billion, with four provincial departments being responsible for half that amount.
Nombembe said most of the improper expenditure was in provincial departments of health, education, and public works “right across the country”.

Sisulu said that – together with Minister in the Presidency for Performance Monitoring and Evaluation Collins Chabane – she would ensure that all ministers were able to supervise financial management in their departments.

“Politicians must take accountability for what happens in their departments,” she said. – timeslive.co.za

AG: Almost a billion awarded in nepotist contracts

Almost a billion, or R885-million. That’s how much municipalities paid to companies owned by government employees, councillors and their close family members in the 2011/12 financial year.

The vast majority of the contracts – R793,4-million worth – went to companies directly under the control of government employees and councillors, some of whom work within the municipality where the contracts originate. Others work in other government departments.

The payments are in violation of government supply chain management regulation 44, the Auditor General has said in his detailed provincial reports on spending in municipalities. These contracts form a large part of the R9,27 billion in irregular expenditure in municipalities.

With R464,4-million in contracts for government staff, Limpopo tops the list of offenders. The province has been plagued by allegations of corruption and maladministration, and earlier this year Premier Cassel Mathale resigned.

“A total of 20 (69%) auditees made awards to the value of R464, 64 million to suppliers in which officials, councillors and officials of other state institutions had an interest. This represents a significant increase from the R1, 2 million identified in the previous year,” the AG’s report on Limpopo said.

“Where interest was identified, the suppliers did not declare the interest in 41% of the instances and the employee did not declare in 23% of the instances,” the Limpopo report reads.

In Gauteng, R280-million was paid to companies owned by government staff and councillors. “The majority of these contracts were awarded by the Tshwane municipality – with 281 contracts going to staff and councillors in the employ of the municipality. Another 2074 contracts went to the companies owned by government employees in other institutions. “This was a significant increase from R89,4-million in the prior year,” the AG says in the report. The AG also noted that the tripling of contracts awarded to municipal staff “indicates that auditees did not make progress in the screening of tenders to employees and councillors”.

“The City of Tshwane ran computer-assisted audit techniques to detect and prevent awards to employees, close family members of employees and councillors. However, awards made to officials of other organs of state, who made false declarations on their tender documents, were difficult to detect due to a lack of adequate systems to identify instances of false declarations,” the report said. – eNCA

Govt. gives Terence Nombembe a R6 million back-dated pay rise!

Auditor General Terence Nombembe has received a salary increase of close to a million rand a year, backdated for more than six years.

Details of the increase are contained in a letter, dated May 23 this year, sent by President Jacob Zuma to Parliament. The letter was published this week in a parliamentary document.

“[The president has determined that] the annual salary package of the Auditor General Mr TM Nombembe be increased from R1,708,600 per annum to R2,650,000 per annum with effect from December 1, 2006.”

This meant Nombembe’s salary package would increase by R941,400 a year, backdated for six-and-a-half years, a windfall of well over R6 million.

The date of December 1, 2006 is the day on which Nombembe — who replaced Shauket Fakie, who retired — was appointed to the post.

The letter also announces a huge increase in Nombembe’s termination benefits.

“[The] Auditor General’s termination benefit [is to] be increased from 10 percent of the average term compensation for each year of service, to 50 percent of the average term compensation for each year of service… .”

According to the letter the payment of back pay would be done in accordance with the guidelines applicable to the AG’s office.

Zuma’s decision to increase Nombembe’s salary package was based on a recommendation of the parliamentary committee on the Auditor General. – Sapa