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Johannesburg - Most of the liquor traders in Gauteng were operating their businesses without valid licences and the provincial Department of Economic Development must carry the blame for the mess.
This was Auditor-General Terence Nombembe’s findings into the affairs of the Gauteng Liquor Board - a government entity charged with the responsibility of regulating the issuing of liquor licences and the application of the liquor laws
Nombembe’s audit report for the financial year 2012/2013 showed that the liquor board was struggling to improve the management of its finances for the second time in a row.
He said he could not verify whether the board had indeed made a profit of more than R26 million from licences.
“The trading entity did not have adequate internal controls to maintain records of revenue from liquor licences due to inadequate record-keeping.
“The entity’s records did not permit the application of alternative audit procedures regarding liquor licences revenue.
“Consequently, I was unable to obtain sufficient and appropriate audit evidence to satisfy myself as to the completeness of licensing revenue amounting to R26 643 000.
“I was also unable to satisfy myself with the completeness, valuation, existence and cut-off of the related receivable.”
He said penalties were not always charged on late renewals because there was no dedicated unit to update the liquor board’s accounting records.
“The compliance unit did not always ensure that liquor licence traders with lapsed licences complied with section 98 of the Gauteng Liquor Act and renewed. Furthermore, there was no inspection done to ensure that liquor licence holders with lapsed licences stopped trading.”
He added that, occasionally, licences were issued to outlets whose primary business was not liquor, and these were in contravention of section 31 of the act.
Nombembe said this was due to poor oversight by the liquor board approving licences.
He also found that some of the entity’s financial statements submitted to his office were not in line with basic audit requirements.
“The accounting officer did not review the financial statements and the supporting schedules prior to their submission for audit and thus… material misstatements were identified and corrected.
“The actual processes and procedures implemented for the recognition of revenue were not in accordance with the documented policies and procedures.”
The auditor-general has put the blame on the department’s head, Khulu Radebe, who was placed on suspension in February.
Premier Nomvula Mokonyane has not furnished her reason for his suspension, but Nombembe’s report has implicated Radebe in0s a number of transgressions in the department.
He said the accounting officer did not take adequate steps to prevent irregular expenditure as required by the Public Finance Management Act (PFMA).
The root cause was that management did not adequately review and monitor compliance with laws and regulations.
“Contractual obligations and money owed by the department were not always settled within 30 days, or an agreed period as required by the PFMA.
“The processes in place to track invoices from receipt date to payment date is inadequate as the process addresses sundry payments only.”
The department is expected to give the standing committee on public accounts a detailed response on Nombembe’s findings on Friday.