1. STANDING COMMITTE ON PUBLIC ACCOUNTS Director-General: Basic Education
DEPARTMENT OF BASIC EDUCATION IRREGULAR EXPENDITURE AND FRUITLESS AND WASTEFUL EXPENDITURE
STANDING COMMITTE ON PUBLIC ACCOUNTS
9 November 2016
MR HM MWELI
Director-General: Basic Education

2. PRESENTATION OUTLINE Purpose Irregular expenditure
Fruitless and wasteful expenditure
Measures taken to avoid similar occurrence
Recommendation(s)

3. PURPOSE
To present to SCOPA irregular, fruitless and wasteful expenditure as stated in the Annual Report of the Department for the 2015/16 financial year.
To inform SCOPA of the measures taken to avoid the recurrence of the irregular and fruitless and wasteful expenditure in future.

4. IRREGULAR EXPENDITURE

5. IRREGULAR EXPENDITURE FOR 2015/16
Implementing Agent/ service provider
2014/15
R'000
2015/16
TOTAL
Coega: Eastern Cape
19 327
1 870
21 197
DBSA
Mvula Trust -
51 942
Adopt a school
7 033
Deloitte and Touche
3 297
SAB&T
54 916
23 723
78 639
ESKOM
24 185

6. IRREGULAR EXPENDITURE INCURRED
Company involved
Date of incidence
Amount involved in R’000
Official(s) involved
Investigation
Outcome of investigation (Concluded/ not concluded)
Action taken
Coega: Eastern Cape
DBSA
2012/13
2011/12
21 197
Coega CEO
ASIDI Officials
DBSA CEO ASIDI Officials
Auditor- General & Internal Investigation
Internal Investigation
After the Auditor-General’s report, an internal investigation ensued to confirm the findings of the AG.
Result:
Coega and DBSA did not follow supply chain management processes in accordance with the PFMA in all instances.
Some CIDB certificates were not valid, BBBEE certificate not submitted and VAT certificates not certified.
Letters issued to Implementing Agents insisting on following the SCM processes according to the PFMA.
Two meetings held with all Implementing Agents to discuss audit findings and compliance matters.

7. IRREGULAR EXPENDITURE INCURRED
Company involved
Date of incidence
Amount involved in R’000
Official(s) involved
Investigations
Outcome of investigation (Concluded/ not concluded)
Action taken
Rigorous monitoring on a monthly basis to check compliance with all PFMA prescripts for all Implementing Agents
DBSA
30/09/2015
ASIDI programme officials
Auditor- General & Internal
Contract expired while the projects were continuing.
Final written warning letters were issued to relevant officials
Matter regularized and contract renewed

8. IRREGULAR EXPENDITURE INCURRED
Company involved
Date of incidence
Amount involved
R’000
Official(s) involved
Investigation
Outcome of investigation (Concluded/not concluded)
Action taken
Adopt-a- school
19/08/2013
7 033
The Executive Authority
No investigation
The Executive Authority gave the directive to appoint the service provider and informed the Minister of Finance of the decision.
Model chosen because it was cost effective and huge saving for DBE.
No action taken

9. IRREGULAR EXPENDITURE INCURRED
Company involved
Date of incidence
Amount involved
R’000
Official(s) involved
Investigation
Outcome of investigation (Concluded/ not concluded)
Action taken
Mvula Trust
2011/12
51 942
The Accounting Officer/ASIDI officials
Auditor-General & Internal
In the MoA, it was agreed that Mvula Trust will use their own procurement processes which were deemed to be free and fair. It was later established that their processes were not always in line with the PFMA.
MoA was amended. Mvula Trust has to follow Government procurement processes.
All procurement process are being monitored.

10. IRREGULAR EXPENDITURE INCURRED
Company involved
Date of incidence
Amount involved
R’000
Official(s) involved
Investigations
Outcome of investigation (Concluded/ not concluded)
Action taken
Deloitte and Touché
25/05/2015
3 297
Department’s HR Unit
Auditor-General
The matter was referred to DPSA. The DPSA’s legal unit indicated that the Department followed correct procedures in the appointment of Deloitte and Touché.
However, the Auditor-General did not accept the explanation of the Department as well as the ruling by the DPSA.
AG’s office requested to liaise with DPSA on the matter.

11. IRREGULAR EXPENDITURE INCURRED
Company involved
Date of incidence
Amount involved
R’000
Official(s) involved
Investigations
Outcome of investigation (Concluded/ not concluded)
Action taken
SAB&T
30/08/2013
78 639
Responsibility will be determined through the investigation
Auditor- General, Internal & External
Internal investigation confirmed findings of AG.
A service provider has been appointed to investigate the process and determine responsibility
Awaiting the outcome of the investigation
ESKOM
31/03/2015
24 185
ASIDI programme officials
Auditor- General & Internal
Contract expired while the projects were continuing.
Final written warning letters were issued to relevant officials
Matter regularised and contract renewed
TOTAL

12. FRUITLESS AND WASTEFUL EXPENDITURE

13. FRUITLESS AND WASTEFUL EXPENDITURE FOR 2015/16
PROGRAMME
2015/16
R'000
Kha Ri Gude
44 305
TOTAL

14. FRUITLESS AND WASTEFUL EXPENDITURE INCURRED
Company involved
Date of incidence
Amount involved
R’000
Official(s) involved
Investigation
Outcome of investigation (Concluded/ not concluded)
Action taken
Kha Ri Gude volunteers
2015/16
44 305
Kha Ri Gude officials
Auditor-General, Internal
Internal investigation is still in progress. Departmental officials are confirming the actual amount of fruitless and wasteful expenditure.
External- a service provider has been appointed to investigate the matter. .
Final written warning letters have been issued to officials.
Deductions amounting to R have already been effected from some of the volunteers.

15. FRUITLESS AND WASTEFUL EXPENDITURE INCURRED
Company involved
Date of incidence
Amount involved
R’000
Official(s) involved
Investigation
Outcome of investigation (Concluded/ not concluded)
Action taken
Kha Ri Gude volunteers
2015/16
44 305
Kha Ri Gude officials
External
External- a service provider has been appointed to investigate the matter. .
The service will determine if fraud occurred.
TOTAL

16. MEASURES TAKEN TO AVOID SIMILAR OCCURENCES

17. MEASURES TAKEN TO AVOID SIMILAR OCCURENCES
TYPE
Measures taken
Irregular Expenditure
Final written warning letters issued to relevant officials.
MoAs with Implementing agents were amended ( Mvula Trust).
Letters to Implementing Agents on following the SCM processes
Departmental officials are now part of the bid committees to ensure compliance with the PFMA.
Rigorous monitoring process in place.
Fruitless and Wasteful Expenditure
Identity numbers of learners are verified with Department of Home Affairs before payments of stipends are processed to volunteers.
Training sessions were held with Volunteer Coordinators where processes and procedures were explained to them.

18. DISCLOSURE FOR 2016/17
Despite the measures taken with regard to irregular expenditure, it must be noted that in some instances irregular expenditure incurred straddles over financial years. For the 2016/17 financial year, the Department will have to disclose irregular expenditure on the following:
Expenditure incurred on expired MoAs before they were extended in the 2016/17 financial year to cater for projects in progress.
Projects that are in progress/completion phase where SCM processes were not followed completely.

19. RECOMMENDATIONS
That SCOPA accepts the explanation given by the Department on the matter and also accepts the corrective measures put in place to ensure that expenditure is managed according to the prescripts of the PFMA.