Cape Town – Auditor – General (A-G) Tsakani Maluleke has found that the Department of Basic Education did not take effective and appropriate steps to prevent R1.4 billion in irregular expenditure in the 2021-22 financial year.
“The majority of the irregular expenditure was caused by the non-compliance with the procurement and contract management prescripts by the implementing agents for school infrastructure projects,” Maluleke said.
She made her findings in the audited financial statements contained in the annual report tabled in Parliament recently.
Maluleke said she found that the department’s management did not implement effective preventative controls to facilitate reliable reporting and compliance with legislation.
She also said some of the contracts were awarded to bidders that did not score the most points in the evaluation process.
According to Maluleke, she found two instances of material irregularities during the financial year under review.
The department paid an implementing agent R78 001 000 on March 31, 2017 for purchases of bulk materials for which the department did not receive equivalent value of materials.
“The payment of R78 001 000 by the department is a prepayment made for goods or services not required by a contractual arrangement, which is in contravention of Treasury Regulation.
“The non-compliance non-compliance is likely to result in a material financial loss for the Department of Basic Education, if not recovered,” she said.
Maluleke also said she found that payment was not made within 30 days, resulting in the withdrawal of the contractor from a site and cancellation of the contractual arrangement.
The contractor was appointed for demolition work and the construction of new schools in the Eastern Cape as part of the accelerated schools infrastructure delivery initiative (Asidi) programme.
“The department eventually made payment, however, this was after the contractor had cancelled the contract based on the material breach due to non-payment.
“The cancellation was confirmed by an order of the court on March 17, 2019,” she said.
Maluleke said the department paid for the materials currently on site which were never used due to the late payment of invoices.
She said the non-compliance was likely to result in material financial losses in the form of damages claimed by the contractor and the losses on materials currently on site which have been exposed to the elements and damaged by bad weather.
“It further resulted in material financial loss for the Department of Basic Education of R233 000 for the payment of interest,” she said.
The A-G said she would follow up on the implementation of planned actions on the material irregularities in her next audit in both incidents.
The department’s internal audit committee said the department would be monitored to improve controls to prevent further irregular expenditure and fruitless and wasteful expenditure.
It also said areas of concern would be to improve Asidi project management, preparation of financial statements and strengthening of internal controls.
“Capacity in those areas of weaknesses is critical,” the committee said.
Cape Times
