Terence Nombembe – praag.org

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

SA’s terrible municipal audits

It was announced on Tuesday that only seventeen of South Africa’s 278 municipalities have received clean audits for the financial year 2011-2012.

The Auditor-General (AG) Terence Nombembe released the latest report in Pretoria.

It showed that while a handful of municipalities performed better than the previous year, the majority remained in the red.

Along with the 278 municipalities, a further 60 municipal entities are included in the results.

Of those which received clean audits, only three municipalities and three municipal entities improved their results over the previous year to achieve a clean audit, while just over 30 others improved their results, but remained negative.

The three successful municipalities, George, Langeberg and Mossel Bay, are all in the Western Cape.

A further 50 auditees regressed from their previous year’s results.

The majority maintained mostly negative results from previous years.

None of the country’s eight metropolitan municipalities managed to secure a clean financial bill.

The AG’s office said metros were setting a bad example to their smaller counterparts.

“Unfortunately, the metropolitan municipalities faltered in their crucial role of providing exemplary leadership to smaller municipalities.”

Nombembe says the high vacancy rate in municipalities is partly to blame, saying a lack of chief financial officers (CFO’s) in municipalities is particularly problematic.

“At 73 percent of the auditees, vacancies in key positions and key officials without the minimum competencies and skills continued to make it difficult for these auditees to produce credible financial statements and performance reports.”

Clean audits have now been sitting at a level of five percent for the past three years.

Earlier this year, Nombembe warned that billions were being spent on consultants to do work that should be handled internally.

It appears the trend has remained, sending expenses spiralling among more than two thirds of municipalities simply for consultants handling financial matters.

The report is Nombembe’s last as AG as his seven-year contract will expire in November.

Parliament has begun the search for a replacement. – EWN

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

Public works department in financial disarray

Financial chaos continues to dog the public works department, according to the Auditor General (AG).

This resulted in AG Terence Nombembe giving the department another disclaimer for the 2011/12 financial year — one of the worst audit opinions possible.

Nombembe said he could not rely on information provided by the department about, among other things, how many properties it owned and leased to sister departments and other state entities, and the accuracy of irregular, fruitless and wasteful expenditure.

“I was unable to obtain sufficient appropriate audit evidence to satisfy myself as to the completeness of irregular expenditure relating to the current year stated at R171,127,000 (2011: R1,396,000).”

The department’s financial statements indicated there was over R69 million in fruitless and wasteful expenditure.

Nombembe said he could not rely on this figure either, as the department did not have a system in place to identify this type of spending.

The lease problems at the department continued.

“I was unable to obtain sufficient appropriate audit evidence for operating lease expenditure transactions with an estimated value of R48,513,867,” said Nombembe.

Action against department officials accused of wrongdoing was lacking in various instances.

“Investigations have not been conducted into all allegations of financial misconduct committed by officials, as required by treasury regulations.”

As a result of this failure, disciplinary steps were also not taken against officials suspected of such conduct.

On the supply chain management side, the department was faring poorly by contravening treasury regulations and procuring goods and services of a transaction value higher than R500,000.

Nombembe took aim at officials who played a part in awarding relatives, friends, partners or associates lucrative public works contracts

Some of these officials had not been sanctioned for fraud and corruption.

The department’s leadership was criticised for not holding officials accountable for their actions.

“Instability in key leadership positions had a negative impact in providing effective leadership in the department.”

There have been various changes and turnaround plans in the department in the past few years.

Public works has had three ministers at its helm in the past two years following Cabinet reshuffles by President Jacob Zuma. – Sapa