Department of Public Works (DPW) and Property Management Trading Entity (PMTE) and Department of Communications (DOC) Overview of audit outcomes for 2009/10 23 February 2011

2 Reputation promise/mission The Auditor-General of South Africa has a constitutional mandate and, as the Supreme Audit Institution (SAI) of South Africa, it exists to strengthen our country’s democracy by enabling oversight, accountability and governance in the public sector through auditing, thereby building public confidence.

33 Overview of audit outcomes Entity 2009/10 Audit outcome Department of Public Works Qualified:  Immovable tangible capital assets  Irregular expenditure (not complete) Emphasis of matter:  Basis of accounting  Fruitless and wasteful expenditure Property Management Trading Entity Qualified:  Revenue and receivables  Related parties  Expenditure and payables  Irregular expenditure (not complete) Emphasis of matter:  Restatement of corresponding figures

44 Overview of audit outcomes Entity 2009/10 Audit outcome Department of Communications Qualified: Irregular expenditure (not complete) Emphasis of matter: Basis of accounting Irregular expenditure Fruitless and wasteful expenditure

5 Irregular expenditure The departments did not follow the proper procurement process for all procurement which resulted in irregular expenditure. The departments did not have adequate systems and procedures to identify and record all irregular expenditure. Sufficient and appropriate audit evidence could not be obtained to determine the completeness of the irregular expenditure disclosed in the financial statements of both DPW and PMTE. These audit qualifications occurred as a result of a lack of oversight responsibility by leadership over reporting and compliance with laws and regulations and internal control. Department of Public Works (Note 24 pg 114 of annual report) Property Management Trading Entity (Note 12.2 pg 160 of annual report) Department of Communications (Note 30.1 and 30.2 p.198 and p.199 of Annual Report) 2009/102008/092009/102008/092009/102008/09 Identified during financial year R27,402 million -R264,180 million R1,943 million R24,202 million R5,111 million

6 Unauthorised, fruitless and wasteful expenditure Department of Public Works (Notes 9 and 10 pg 106 of annual report) Property Management Trading Entity (Note 12.1 pg 160 of annual report) Department of Communications (Note 31 pg 200 of annual report) 2009/102008/092009/102008/092009/102008/09 Unauthorised expenditure Current year-R48,840 million Not applicable Awaiting authorisationR58,495 million R105,476 million Not applicable Fruitless and wasteful expenditure Current year----R54 000R3 000 Awaiting recovery/write-offR R30,7 million-R7,952 millionR51 000R3 000

77 Non-compliance for year ended 31 March 2010 DPWPMTEDOC  Treasury Regulation and section 38(1)(f) of the PFMA (creditors not paid within 30 days from receipt of an invoice)  Contrary to section 38(1)(g) of the PFMA the accounting officer did not immediately report the particulars of irregular expenditure discovered to the National Treasury.  Treasury Regulation 16A.7.4, the department did not obtain approval for letting immovable state property at tariffs lower than market-related rates.  Treasury Regulation , payments in excess of R2 000 effected without necessary approval.  Contrary to the requirements of Treasury Regulation the accounting officer did not implement effective, efficient and transparent processes of financial and risk management to prevent and detect irregular expenditure.

88 Non-compliance for year ended 31 March 2010 DPWPMTEDOC  Public Service Regulations, 2001 (PSR) 1/III/B2(d), an approved human resource plan for the medium-term expenditure framework was not in place.  Treasury Regulation 16A9.1(c), no process to ensure that no recommended bidder nor any of its directors appear on National Treasury’s database as being prohibited from conducting business with public sector.  Treasury Regulation 16A6.4, did not report within 10 working days to National Treasury and Auditor- General where deviations from normal procurement process were approved for transactions in excess of R1 million.

99 Report on predetermined objectives Findings reported for 2008/09Findings reported for 2009/10  Lack of effective, efficient and transparent systems and internal controls regarding performance management  Planned and reported performance targets not specific, measurable and time bound  Planned and reported indicators and measures not verifiable due to a lack of source documentation  Reported performance information changed during the printing of the annual report (thus version in annual report not audited)  Lack of effective, efficient and transparent systems and internal controls regarding performance management  Inadequate content of strategic plan  Reasons for major variances between planned and actual targets not explained  Planned and reported performance targets not specific, measurable and time bound  Planned and reported indicators and measures not well defined  Planned and reported indicators and measures not verifiable