FINANCE AND ECONOMIC OPPORTUNITIES
(a) What are the details of the (i) irregular expenditure and (ii) fruitless and wasteful expenditure that has been incurred by each provincial department and entity in (aa) 2019, (bb) 2020 and (cc) 2021;
(b) How many of these were incurred as a result of not adhering to (i) National Treasury and (ii) Provincial Treasury instructions over the same period of time; and
(c) What are the (i) details of these instructions and (ii) reasons for not adhering to them?
[a][i] Details of irregular expenditure incurred by Departments and provincial entities
|
NATURE OF EXPENSE |
DEPARTMENT/ PROVINCIAL ENTITY |
2018/19 R’000 |
2019/20 R’000 |
2020/21 R’000 |
|
*IRREGULAR EXPENDITURE |
DEPARTMENTS |
|||
|
Office of the Premier |
2 349 |
994 |
537 |
|
|
Provincial Treasury |
1 161 |
1 879 |
10 |
|
|
Community Safety |
138 |
1 369 |
517 |
|
|
Education |
185 |
3 275 |
2 566 |
|
|
Health |
13 260 |
11 929 |
23 405 |
|
|
Social Development |
55 |
792 |
616 |
|
|
Human Settlements |
3 278 |
265 156 |
307 352 |
|
|
Environmental Affairs and Development Planning |
0 |
815 |
184 |
|
|
Transport and Public Works |
1 |
118 |
8 032 |
|
|
Agriculture |
76 |
29 |
213 |
|
|
Economic Development and Tourism |
500 |
0 |
1 469 |
|
|
Cultural Affairs and Sports |
259 |
64 |
0 |
|
|
Local Government |
82 |
0 |
469 |
|
|
|
21 344 |
286 420 |
345 370 |
|
|
PROVINCIAL ENTITIES |
||||
|
WC Cultural Commission |
0 |
0 |
0 |
|
|
WC Gambling & Racing Board |
0 |
1 555 |
0 |
|
|
WC Investments and Trade Promotion Agency [WESGRO] |
0 |
0 |
61 |
|
|
WC Language Committee |
0 |
0 |
0 |
|
|
WC Liquor Authority |
11 988 |
4 070 |
4 215 |
|
|
WC Nature Conservation Board |
0 |
0 |
0 |
|
|
Saldanha Bay IDZ |
0 |
0 |
0 |
|
|
Heritage WC |
0 |
0 |
0 |
|
|
Government Motor Transport |
0 |
0 |
0 |
|
|
Casidra [Pty] Ltd |
0 |
0 |
695 |
|
|
Atlantis SEZ |
0 |
0 |
0 |
|
|
|
11 988 |
5 625 |
4 971 |
|
*Information sourced from the Audited Annual Financial Statements
[a][ii] Details of fruitless and wasteful expenditure incurred by Departments and provincial entities
|
NATURE OF EXPENSE |
DEPARTMENT/ PROVINCIAL ENTITY |
2018/19 R’000 |
2019/20 R’000 |
2020/21 R’000 |
|
*FRUITLESS AND WASTEFUL EXPENDITURE |
DEPARTMENTS |
|
|
|
|
Office of the Premier |
46 |
9 |
242 |
|
|
Provincial Treasury |
18 |
17 |
1 |
|
|
Community Safety |
3 |
0 |
86 |
|
|
Education |
30 |
8 |
392 |
|
|
Health |
0 |
0 |
0 |
|
|
Social Development |
3 |
7 |
0 |
|
|
Human Settlements |
0 |
0 |
0 |
|
|
Environmental Affairs and Development Planning |
0 |
0 |
0 |
|
|
Transport and Public Works |
0 |
0 |
15 |
|
|
Agriculture |
10 |
18 |
0 |
|
|
Economic Development and Tourism |
0 |
0 |
1 |
|
|
Cultural Affairs and Sports |
0 |
0 |
0 |
|
|
Local Government |
2 |
9 |
0 |
|
|
|
112 |
68 |
737 |
|
|
PROVINCIAL ENTITIES |
|
|
|
|
|
WC Cultural Commission |
0 |
0 |
0 |
|
|
WC Gambling & Racing Board |
24 |
0 |
3 |
|
|
WC Investments and Trade Promotion Agency [WESGRO] |
25 |
0 |
0 |
|
|
WC Language Committee |
0 |
0 |
0 |
|
|
WC Liquor Authority |
9 |
0 |
0 |
|
|
WC Nature Conservation Board |
0 |
0 |
0 |
|
|
Saldanha Bay IDZ |
0 |
0 |
0 |
|
|
Heritage WC |
0 |
0 |
0 |
|
|
Government Motor Transport |
0 |
0 |
0 |
|
|
Casidra [Pty] Ltd |
0 |
0 |
0 |
|
|
Atlantis SEZ |
0 |
0 |
0 |
|
|
|
58 |
0 |
3 |
*Information sourced from the Audited Annual Financial Statements
[b][i] How many of these were incurred as a result of not adhering to National Treasury and [ii] Provincial Treasury instructions over the same period of time
Fruitless and wasteful expenditure is not incurred as a result of non-adherence to National Treasury or Provincial Treasury instructions. Fruitless and wasteful expenditure is defined in the Public Finance Management Act, 1 of 1999, as “expenditure which was made in vain and would have been avoided had reasonable care been exercised".
To the best of my knowledge, based on inputs received from my Department, all National Treasury and Provincial Treasury instructions are generally implemented by the Province in full to the extent that they are applicable and implementable. However, there may still be isolated instances of non-adherence to National Treasury and Provincial Treasury instructions by departments and provincial entities.
To the best of my knowledge, based on inputs received from my Department, the main contributor to the irregular expenditure referred to in question [a][i] above was isolated instances of non-compliance with procurement requirements that emanated from National Treasury instructions and circulars. Much of this expenditure can be attributed to a difference of opinion between provincial departments and entities, and the auditors on the interpretation of National Treasury instructions and circulars.
It should be noted that many instances of reported irregular expenditure and fruitless and wasteful expenditure are instances of non-compliance, where repeat findings are not prevalent, and that the AGSA, in their audit report, did not report on any fraud or corruption in relation to the reported irregular and fruitless and wasteful expenditure.
Number of instances of non-adherence to National Treasury and Provincial Treasury instructions that resulted in irregular expenditure
|
DEPARTMENTS |
2018/19 |
2019/20 |
2020/21 |
|
Office of the Premier |
26 |
14 |
4 |
|
Provincial Treasury |
3 |
3 |
3 |
|
Community Safety |
7 |
4 |
6 |
|
Education |
4 |
41 |
21 |
|
Health |
560 |
143 |
287 |
|
Social Development |
0 |
3 |
3 |
|
Human Settlements |
1 |
4 |
4 |
|
Environmental Affairs and Development Planning |
0 |
1 |
4 |
|
Transport and Public Works |
1 |
1 |
2 |
|
Agriculture |
7 |
8 |
9 |
|
Economic Development and Tourism |
5 |
0 |
0 |
|
Cultural Affairs and Sports |
12 |
3 |
1 |
|
Local Government |
1 |
0 |
3 |
|
|
627 |
225 |
347 |
|
PROVINCIAL PUBLIC ENTITIES |
2018/19 |
2019/20 |
2020/21 |
|
WC Cultural Commission |
0 |
0 |
0 |
|
WC Gambling & Racing Board |
2 |
1 |
0 |
|
WC Investments and Trade Promotion Agency [WESGRO] |
0 |
0 |
1 |
|
WC Language Committee |
0 |
0 |
0 |
|
WC Liquor Authority |
4 |
3 |
3 |
|
WC Nature Conservation Board |
0 |
0 |
0 |
|
Saldanha Bay IDZ |
0 |
0 |
0 |
|
Heritage WC |
0 |
0 |
0 |
|
Government Motor Transport |
0 |
0 |
0 |
|
Casidra [Pty] Ltd |
0 |
9 |
0 |
|
Atlantis SEZ |
0 |
0 |
0 |
|
|
6 |
13 |
4 |
[c][i] What are the details of these instructions and [ii] reasons for not adhering to them
This question should be directed to the individual Provincial Ministers in respect of the departments and provincial entities for which they are responsible, as the Accounting Officer / Accounting Authority of each department / provincial entity is responsible for accounting in this regard.
To the best of my knowledge, based on inputs received from my Department, the details of the National Treasury and Provincial Treasury instructions that were, in isolated instances, not adhered to by my department and provincial entities for which I am responsible, during [aa] 2019, [bb] 2020 and [cc] 2021, which non-adherence resulted in the incurrence of irregular expenditure, as well as the reasons for the non-adherence are listed below.
Provincial Treasury
|
No. |
Details of Instruction not adhered to and [ii] reasons for not adhering to it |
Amount |
|
2018/19 |
||
|
1. |
Non-compliance with Treasury Regulation 8.2.1 – An official of an institution may not spent or commit public money except with the approval [either in writing or by dually authorised electronic means] of the Accounting Officer or a properly delegated or authorised officer. Prior approval was not obtained for additional services.
|
R 18,080.00 |
|
2. |
Non-compliance with paragraph 4.18 of National Treasury Instruction No 3 of 2017/18 - Cost Containment – Expenditure may not be incurred by departments, constitutional institutions, and public entities on corporate branded items of clothing or goods for personal use of employees [other than uniforms, office supplies and tools of trade] unless costs related thereto are recovered from those employees that are availed the items. The Department procured branded clothing items for staff for the Better Together Games.
|
R 73,065.25 |
|
3. |
Non-compliance with Treasury Regulation 8.2.1 – An official of an institution may not spent or commit public money except with the approval [either in writing or by dually authorised electronic means] of the Accounting Officer or a properly delegated or authorised officer. An official utilised alternative accommodation without prior approval.
|
R 1,074.00 |
|
|
R 92,219.25 |
|
|
2019/20 |
||
|
1. |
Non-compliance with paragraph 16A5.5.3d[iii] of Provincial Treasury Instructions Competitive bids must also be advertised and awards published in the Government Tender Bulletin as required in terms of Treasury Regulation 16A.6.3[c] and [d] respectively. Bid was advertised for 17 days and not for 21 days
|
R 2,212,345.19 |
|
2. |
Non-compliance with paragraph 3.6 of National Treasury Instruction 9 of 2017/18 – Foreign suppliers with neither South African tax obligations nor history of doing business in South Africa must complete the questionnaire on the SBD 1. Where a recommendation for award of a bid has been made to a foreign bidder accounting officers and accounting authorities must submit the bidder’s completed SBD 1 to SARS. SARS will issue a confirmation of tax obligations letter to the accounting officer or accounting authority confirming whether or not the foreign entity has tax obligations in South Africa. Request for confirmation letter of tax obligations of foreign supplier was not submitted to SARS.
|
R 734,756.13 |
|
3. |
Non-compliance with Treasury Regulation 8.2.1 – An official of an institution may not spent or commit public money except with the approval [either in writing or by dually authorised electronic means] of the Accounting Officer or a properly delegated or authorised officer. Prior approval was not obtained for additional services.
|
R 68,901.40 |
|
|
R 3,016,002.99 |
|
|
2020/21 |
||
|
1. |
Non-compliance with paragraph 5.2.2 of National Treasury Instruction No 4 of 2017/18 – Revised Cost Containment measures related to travel and subsistence – Delegations to the same event, conference, consultation or meeting may only exceed 3 officials including persons appointed on grounds of policy considerations if approved in advance by the relevant Accounting Office, Accounting Authority or delegated authority - Four [04] officials attended the engagement and no approval for deviation was obtained.
|
R 2,739.47 |
|
2. |
Non-compliance with paragraph 5.4.1 and 5.4.4 of National Treasury Instruction No 4 of 2017/18 – Revised Cost Containment measures related to travel and subsistence – 5.4.1 “Accounting officers and accounting authorities must ensure that domestic accommodation expenditure do not exceed the maximum allowable rates as set out in the Domestic Accommodation Grid
5.4.4 “Accounting officers and accounting authorities must ensure that overnight accommodation for employees is limited to instances where the distance travelled by road [by the traveller exceeds 300 kilometres to and from the destination [return journey] unless approved otherwise by the accounting officer or accounting authority or delegated official” No approval was obtained to utilise 4 Star accommodation and return journey did not exceed 300 km.
|
R 5,190.00 |
|
3. |
Non-compliance with paragraph 5.4.1 and 5.4.4 of National Treasury Instruction No 4 of 2017/18 – Revised Cost Containment measures related to travel and subsistence – 5.4.1 “Accounting officers and accounting authorities must ensure that domestic accommodation expenditure do not exceed the maximum allowable rates as set out in the Domestic Accommodation Grid 5.4.4 “Accounting officers and accounting authorities must ensure that overnight accommodation for employees is limited to instances where the distance travelled by road [by the traveller exceeds 300 kilometres to and from the destination [return journey] unless approved otherwise by the accounting officer or accounting authority or delegated official” No approval was obtained to utilise 4 Star accommodation and return journey did not exceed 300 km.
|
R 1,717.00 |
|
|
R 9,646.46 |
|
Western Cape Gambling and Racing Board
|
No. |
|
Amount |
|
2018/19 |
||
|
1. |
Non-compliance with paragraph 16A3.8.3 of Provincial Treasury Instructions - Before an accounting officer or accounting authority enters into any contract with an entity for the sale [excluding the sale of movable assets to an employee], lease or supply of goods or services, the entity must, in the prescribed manner, disclose any business interest that an employee or a family member of an employee who is in the service of the state has in that entity. No disclosure of interest was obtained from service provider.
|
R 12 115.17 |
|
2. |
Non-compliance with paragraph 3.5 of National Treasury Instruction 9 of 2017/18 - Where goods and services are procured from foreign suppliers with tax obligation in South Africa, proof of tax compliance status must be obtained from the supplier. The tax compliance status of the foreign supplier was not obtained.
|
R 450,342.03 |
|
|
R 462,457.20 |
|
|
2019/20 |
||
|
1. |
Non-compliance with paragraph 16A5.4.3 of Provincial Treasury Instructions 16 - An accounting officer or accounting authority may: [a] lower, but not increase, the various threshold values specified in paragraphs 5.4.1 [a] to [c]; or [b] direct that: [i] price quotations be obtained for any procurement of a transaction value lower than R2 000; and [ii] competitive bidding processes be followed for any procurement of a transaction value lower than R500 000. Limited bid process was followed opposed to an open bidding process for the procurement of office furniture. |
R1 554 894.00 |
|
2020/21 |
||
|
|
Not applicable |
|
Department of Economic Development and Tourism
|
No. |
|
Amount |
|
2018/19 |
||
|
1. |
Instruction: The National Treasury Circular on the classification of transfer and subsidies issued 28 May 2018. Non-adherence: The transfer payment transactions were deemed irregular expenditure because of additional guidance provided by National Treasury on Transfer Payments. The Department, Provincial Treasury and the Auditor General regarded the transactions as technical non-compliance matters because the guidance received by provincial departments from the National Treasury was done so after the Department had entered into the transactions with beneficiaries. |
R6 588 000.00 |
|
2. |
Instruction: The Preferential Procurement Policy Framework Act, 2000: Preferential Procurement Regulations 2017 Non-adherence: The SCM transaction [Koketso] was identified by the Auditor General in 2017/2018 and deemed irregular due to non-compliance to SCM processes. To ensure that no elements of fraud, theft and corruption was related to the transaction, the Accounting Officer submitted the case to the Provincial Forensic Services unit [PFS] for further investigation. The PFS investigation concluded that no elements of fraud, theft or corruption and consequently no bidder was disadvantaged during the process. |
R1 388 520.00 |
|
|
R7 976 520.00 |
|
|
2019/20 |
||
|
1. |
This was brought forward from the 2018/2019 financial year Instruction: The National Treasury Circular on the classification of transfer and subsidies issued 28 May 2018. Non-adherence: The transfer payment transactions were deemed irregular expenditure because of additional guidance provided by National Treasury on Transfer Payments. The Department, Provincial Treasury and the Auditor General regarded the transactions as technical non-compliance matters because the guidance received by provincial departments from the National Treasury was done so after the Department had entered into the transactions with beneficiaries. |
R6 588 000.00 |
|
2. |
This was brought forward from the 2018/2019 financial year Instruction: The Preferential Procurement Policy Framework Act, 2000: Preferential Procurement Regulations 2017 Non-adherence: The SCM transaction [Koketso] was identified by the Auditor General in 2017/2018 and deemed irregular due to non-compliance to SCM processes. To ensure that no elements of fraud, theft and corruption was related to the transaction, the Accounting Officer submitted the case to the Provincial Forensic Services unit [PFS] for further investigation. The PFS investigation concluded that no elements of fraud, theft or corruption and consequently no bidder was disadvantaged during the process. |
R1 388 520.00 |
|
|
|
R7 976 520.00 |
|
2020/21 |
||
|
1. |
Instruction: National Treasury Regulation 8.2.1 Non-adherence: The official did not adequately follow the procurement process and thereby did not obtain approval from the delegated authority. It was however determined that the Department did not incur any loss as the service was delivered. |
R1 440 000.00 |
|
2. |
Instruction: Practice Note No. 8 of 2007/8 Par 3.3 Non-adherence: The Department did not obtain 3 quotes in the procurement of services which resulted in the irregular expenditure. The root cause has been identified as an oversight on the part of the Procurement unit however no losses were incurred as the service was delivered. |
R29 325.00 |
|
|
|
R1 469 000.00 |
|
No. |
|
Amount |
|
2018/19 |
||
|
1. |
Instruction: The National Treasury Circular on the classification of transfer and subsidies issued 28 May 2018. Non-adherence: The transfer payment transactions were deemed irregular expenditure because of additional guidance provided by National Treasury on Transfer Payments. The Department, Provincial Treasury and the Auditor General regarded the transactions as technical non-compliance matters because the guidance received by provincial departments from the National Treasury was done so after the Department had entered into the transactions with beneficiaries. |
R6 588 000.00 |
|
2. |
Instruction: The Preferential Procurement Policy Framework Act, 2000: Preferential Procurement Regulations 2017 Non-adherence: The SCM transaction was identified by the Auditor General in 2017/2018 and deemed irregular due to non-compliance to SCM processes. To ensure that no elements of fraud, theft and corruption was related to the transaction, the Accounting Officer submitted the case to the Provincial Forensic Services unit [PFS] for further investigation. The PFS investigation concluded that no elements of fraud, theft or corruption and consequently no bidder was disadvantaged during the process. |
R1 388 520.00 |
|
|
R7 976 520.00 |
|
|
2019/20 |
||
|
1. |
Not applicable |
|
|
2020/21 |
||
|
|
Not applicable |
|
Western Cape Investments and Trade Promotion Agency [WESGRO]
|
No. |
|
Amount |
|
2018/19 |
||
|
|
Not applicable |
|
|
2019/20 |
||
|
|
Not applicable |
|
|
2020/21 |
||
|
1. |
Non-compliance with Treasury regulation 8[2] of the Preferential Procurement Regulations, 2017 - The promotional masks were advertised without specifying 100% local content resulting in the procurement being assessed as irregular by the Auditor General. This was despite the suppliers being obtained from the CSD database [National Treasury] under the specified textile categories. This mitigation control was not accepted by the Auditor General during their review
|
R 60 500 |
Saldanha Bay Industrial Development Zone [SBIDZ]
|
No. |
|
Amount |
|
2018/19 |
||
|
|
Not Applicable |
|
|
2019/20 |
||
|
|
Not Applicable |
|
|
2020/21 |
||
|
|
Not applicable |
|
Atlantis Special Economic Zone [ASEZ]
|
No. |
|
Amount |
|
2018/19 |
||
|
|
Not Applicable |
|
|
2019/20 |
||
|
|
Not Applicable |
|
|
2020/21 |
||
|
|
Not applicable |
|
