Auditor-general Tsakani Maluleke has rapped on the knuckles the management of the Road Traffic Infringement Agency for not implementing internal controls to comply with policies and legislation.
This emerged in the agency’s annual report for 2022–23 financial year that was recently tabled in Parliament.
The agency has obtained a qualified audit opinion.
“I was unable to obtain sufficient appropriate audit evidence that the Administrative Adjudication of Road Traffic Offences (Aarto) liabilities – unallocated receipts for the current and previous year had been properly accounted for due to the status of the accounting records.
“I was unable to confirm the Aarto liabilities – unallocated receipts by alternative means. Consequently, I was unable to determine whether any adjustments were necessary to Aarto liabilities – unallocated receipts stated in note 6 to the financial statements at R82 718 225 (2022: R81 093 476),” Maluleke said.
She also said not all outstanding amounts meeting the definition of a liability were recognised in accordance with Standard of Generally Recognised Accounting Practice.
Maluleke found that the management did not adequately design and implement internal controls to ensure Aarto liabilities were supported by reliable information including listings and schedules.
“Management did not adequately design and implement internal controls for preparation, review and approval of annual financial statements to prevent, detect and timely correct material misstatements.
“Management did not ensure effective record management system to support consequence management to deter non-compliances with laws, regulation and internal policies,” she said.
Maluleke added that she was unable to obtain sufficient appropriate audit evidence for the restatement of the corresponding figure for Aarto liabilities.
“As described in note 27 to the financial statements, the restatement was made to rectify a prior year misstatement, but the restatement could not be substantiated by supporting audit evidence.
“I was unable to confirm the restatement by alternative means. Consequently, I was unable to determine whether any adjustment was necessary to the Aarto liabilities corresponding figure stated at R89 417 809 in the financial statements.”
The auditor-general also found that irregular expenditure of R5 796 262 was incurred because proper procurement process was not followed.
“Effective steps were not taken to prevent fruitless and wasteful expenditure. The majority of the fruitless and wasteful expenditure was caused by penalties incurred.”
She also could not obtain sufficient audit evidence that disciplinary steps were taken against officials who had incurred irregular expenditure.
“This was due to proper and complete records that were not maintained as evidence to support the investigations into irregular expenditure.”
Maluleke noted that the financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework and supported by full and proper records as required by the Public Finance Management Act (PFMA).
Road Traffic Infringement Agency registrar Matsemela Moloi said the 2022-23 financial year has presented a sense of stability for the agency as they diligently address the operational challenges that have plagued the entity in the past.
“It is worth noting that these challenges have persisted as evidenced by the unchanged audit outcomes, which continue to be qualified due to lingering legacy issues.
“The qualified audit opinion was regrettably impacted by certain historical matters pertaining to Aarto,” Moloi said.
He said the implementation of consequence management against the officials accountable for incurring irregular expenditure as mandated by the PFMA has not reached its conclusion subsequent to the investigations.
“This is due to the ongoing appeal process at the Commission for Conciliation, Mediation and Arbitration,” he said.
Moloi also said the agency has diligently worked towards reviewing all organisational policies and standard operating procedures to enhance compliance.
“As a result, we have witnessed a notable decrease in reported instances of irregular expenditure, fruitless and wasteful expenditure.”
He added that the agency has established a social ethics committee to proactively address non-compliance and effectively address the audit findings from the 2021-22 financial year.