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It is clear that accounting officers in the Department of Public Works over the period 2010/2011 failed to fulfil their responsibilities as outlined in the Public Finance Management Act (PFMA). Accordingly, they should be criminally charged.

The Standing Committee on Public Accounts (SCOPA) is currently meeting to hear feedback on the 2010/2011 Annual Reports and Financial Statement of the Department of Public Works.

We will use our representation on this Committee to push for criminal proceedings to be instituted against the individuals responsible for this Department’s consistent mismanagement of public funds.

The financial statements for 2010/2011 received a disclaimed audit opinion, with the Auditor General (AG) stating that he was “unable to obtain sufficient and appropriate audit evidence to provide a basis for an audit opinion”.

This means that we do not know whether the financial reports are accurate. We do know, however, that the financial affairs of the Department, and thus the money of ordinary South Africans, have been grossly mismanaged.

Key findings in the AG’s report on the financial management in the Department include:
Insufficient evidence to satisfy him as to the completeness, existence, rights, valuation and allocation of properties recorded in the immovable assets register of the Department stated at R3.5 billion;
No adequate system in place for identifying and recognising all irregular expenditure;
An understatement of R16.5 million in irregular expenditure, made in contravention of supply chain management requirements;
A lack of audit evidence for expenditure transactions with an estimated value of R154.6 million; and
An understatement of R20 million in lease expenditure.
In terms of Section 38 of the PFMA, the accounting officer must:
ensure that the Department maintains “effective, efficient and transparent systems of financial and risk management and internal control”;
take “effective and appropriate steps to prevent unauthorised, irregular and fruitless and wasteful expenditure and losses resulting from criminal conduct”;
report irregular expenditure; and
take “effective and appropriate disciplinary steps” against any official who “makes or permits an unauthorised expenditure, irregular expenditure or fruitless and wasteful expenditure”.
Section 86 of the PFMA Act allows for criminal proceedings to be instituted where an accounting officer “wilfully or in a grossly negligent way” fails to comply with a provision of Section 38.

The AG’s report clearly indicates that officials in the Department of Public Works did not consistently comply with the requirements of the PFMA. In fact, this failure to act was already evident in March 2010, when officials accounted to SCOPA for the previous financial year.

Recommendations made by SCOPA in 2010 in terms of the improvement of financial controls and the finalisation of pending investigations appear to have been completely ignored by the Department and many aspects of non-compliance appear to have further deteriorated.

This time around we will not be satisfied with recommendations to the Department. The Department has let down South Africans – especially the poor who rely on government to spend its funds wisely. A slap on the wrist and further recommendations will not suffice. Someone now has to go to jail; public finance law demands it.