Johannesburg - The Gauteng Department of Health has failed to account for more than R12 billion of its budget - nearly half the R26bn budget allocated by provincial government.
This was revealed by Auditor-General (A-G) Terence Nombembe when he tabled his Public Finance Management Act (PFMA) audit outcomes for the department for the 2012/2013 financial year before the provincial standing committee on public accounts (Scopa) last week.
Reports for all Gauteng provincial departments and provincial entities were also tabled.
Scopa was locked in a three-day closed session of meetings to review all the reports and determine what action to take against departments found to have flouted National Treasury regulations.
The Health Department was again listed as one of the worst, despite appointing a consultant in April last year to deal with its recurring problems of failing properly to account for use of public funds.
The A-G found that then accounting officer in the department Ndoda Biyela failed to take effective steps to prevent:
* Irregular expenditure of more than R5.7bn; and
* Fruitless and wasteful expenditure of more than R408 million.
Detailing the fruitless and wasteful expenditure, the A-G said the department overspent more than R324m to acquire goods and services. The report does not specify what these were.
The R5.7bn in irregular expenditure is made up of numerous payments, including a single payment of R1.5bn, the details of which are not provided.
Other irregular expenditure identified was R270m on month-to-month security contracts without following proper supply-chain management regulations; R825m on unsolicited tender bids; R120m on infrastructure irregularities; and R160m on non-compliance to deviations from the regulations.
The department was also found to have wasted more than R125m on legal claims, R8m on purchasing expired medicine as well as paying collective interest of R8m on those two expenses.
Nombembe said the department was unable to meet its contractual obligations and failed to pay its service providers within 30 days, as required by the law.
He raised concern that the accounting officer did not ensure appropriate processes were developed and implemented to provide for the identification, collection, recording, reconciliation and safeguarding of information when it came to departmental revenue.
“The accounting officer did not take effective and appropriate steps to recover all debts due, prior to the debts being written off as required by sections of the PFMA. Bad debtors were written off that did not comply with the requirements of the write-off policy,” Nombembe found.
Due to the write-off, the department lost R198m for the 2012/2013 financial year. In 2011/2012, the figure was R127m.
One of his reasons for a qualified opinion, Nombembe said, was because he was unable to get sufficient appropriate audit evidence for departmental revenue amounting to R506 939 000 disclosed by the department. His inability to verify the figure was due to inadequate record-keeping and ineffective computerised information systems.
“I was unable to confirm the departmental revenue by alternative means. Consequently, I was unable to determine whether any adjustment to the financial statements was necessary.”
Nombembe also found it impossible to find sufficient evidence to support the department claims that it received revenue amounting to over R2bn from private patients and payments from neighbouring provinces.
This was due to material weaknesses in the management system and inadequate record-keeping.
Nombembe was unable to verify that the department had already paid more than R2bn in lawsuits against it because there were inadequate control systems in place for the identification and recognition of contingent liabilities.
He found
“employees were appointed without following a proper process to verify the claims made in the applications in contravention of public service
“.
Scopa has sent questions to the department about all issues raised by the A-G.
The department has until Friday to provide it with proper answers.
What R12bn can buy:
*Two years’ worth of treatments for the 1.9 million public sector patients on ARVs.
* A year of kidney dialysis treatments for 60 000 people.
* About 340 000 ICU beds.
* 3 000 Lodox full-body X-ray machines.
The Star