Wednesday, 09 December 2020

Pretoria: While steady progress has been made in curbing COVID-19 related plunder, non-compliance continued to plague the disbursement of relief funds and procurement of goods and services, an Auditor-General (AG) report has revealed.

The sordid tale is contained in newly appointed Auditor-General Tsakani Maluleke’s office’s second COVID-19 relief funds audit. The first was released by the late former AG, Kimi Makwetu.

The report is part of a series of special reports on the financial management of government’s R500 billion COVID-19 relief package which was announced by President Cyril Ramaphosa in March. The package was in response to the impact of the COVID-19 pandemic on the economy.

While the relief package totalled R500 billion, the AG reports focus on R147.4 billion allocated through the supplementary budget of June 2020.

The second report once again highlighted significant deficiencies in the procurement and contract management processes, said Maluleke. The report also zeros in on the inadequate controls meant to ensure that payments are only made for goods and services that are delivered at the right time, price and quality.

She noted that progress had been made in addressing the previously identified system weaknesses, such as a lack of validations and incorrect calculation.

However, she said, since most of these enhancements were made during September, they still identified payments that will need to be investigated, although there are far fewer.

Maluleke said the response to the first special report was “very positive” and it was commendable that most accounting officers and executive authorities took action to address audit observations and findings and implement the recommendations. In some cases,  even disciplinary steps were taken.

Addressing reporters on Wednesday, Maluleke said R95.84 billion (65%) of the R148 billion audited had been spent by 30 September 2020.

Of this, R31 billion (of the allocated R41 billion) had been spent to support vulnerable households for special relief grants and food parcels.

In the report, the audit office again reports that the information technology systems, processes and controls used in government were not agile enough to respond to the changes required.

In the first report, the AGSA reported various incorrect Temporary Employee/Employer Relief Scheme (TERS) payments made and flagged a high number of payments that required further investigation. These payments included payouts to people who are below the legal age of employment, deceased, working in government, receiving social grants, or receiving other Unemployment Insurance Fund (UIF) benefits.

She said this was after efforts were made to improve the system to prevent incorrect calculation of payment to ineligible persons.

Maluleke, in this regard, noted that significant inroads had been made to reverse the precarious situation, with around R3.4 billion recovered from the incorrectly disbursed funds. By September, the fund had disbursed R37.1 billion.

She said the second audit had picked up on significant deficiencies in the procurement and contract management processes. The report also points to inadequate controls to ensure that payments are only made for goods and services that were delivered on time, correctly priced and of quality.

Issues of payments to people with other sources of incomes, duplicate payments, and inconsistencies in identifying beneficiaries remained consistent in almost all relief fund schemes, the report reveals.

Personal Protective Equipment (PPE) procurement

Turning her attention to personal protective equipment (PPE) procurement, the AG said this element was hamstrung by non-compliance with non-competitive processes resulting in contracts being awarded to specific suppliers or groups without the necessary motivation or approval for such deviations. Suppliers, she added, at times were not fairly treated by others and were contracted despite not meeting requirements.

PPE, she said, was at times procured at prices that were higher than market-related rates, as determined by the National Treasury. Departments still paid despite at times supplies delivered not meeting required specifications or arriving late.

Emergency water supply

Maluleke said the AGSA could at times not reconcile information on the registers of water tanks of Rand Water with what was found at the community site. She said there were also shortcomings in the coordination, monitoring and oversight between the departments, water boards and municipalities.

Department of Defence

The AGSA also noted shortcomings in the planning, procurement, transportation, warehousing and recording of medicines procured by the Department of Defence in relation to an unregistered medical drug procured from Cuba.

She said the manual process used to manage the receipt, accounting and distribution of PPE also exposed the department to losses.

Her office, she said, will continue to audit COVID-19 funding and follow-up on progress made in addressing audit observations. The third report, focusing on municipal spending, will be released in mid-2021, she said.