Cape Town - Auditor-General Tsakani Maluleke has found that the SA National Roads Agency Ltd (Sanral) incurred a massive R175.3 million in irregular expenditure due to failure to comply with procurement regulations.
In her 2020–21 audit report, Maluleke said effective and appropriate steps were not taken to prevent irregular expenditure.
“Most of the irregular expenditure was caused by expenditure not approved by a duly delegated authority,” she said.
The audit report formed part of the entity’s annual report that was tabled in Parliament last week.
Maluleke said some contracts were extended or modified without the approval of a properly delegated official.
“Similar non-compliance was also reported in the prior year.”
In a recurring occurrence, the auditor-general revealed that she was unable to obtain sufficient appropriate audit evidence that disciplinary steps were taken against officials who had incurred fruitless and wasteful expenditure.
“This was because investigations into fruitless and wasteful expenditure were not performed.”
The state of affairs at the entity was blamed on the senior management for not addressing previously reported deficiencies relating to oversight of the financial reporting process.
“Although management compiled an action plan to address audit findings, the plan was ineffective in timeously addressing the reported control deficiencies due to a lack of adequate monitoring by management and governance structures.
“There was a slow response by senior management to address previously reported deficiencies relating to compliance and related internal controls,” the auditor-general said.
In its directors’ report, Sanral said irregular expenditure decreased by 48.8% from R342m to R175m.
It also said of the amount disclosed, R81.21m (46%) related to irregular contracts identified in the year under review.
“A loss control function to determine the causes of irregular expenditure and make recommendations is in place; its determinations are in progress.”
The report, however, claimed that there were no fraudulent and criminal acts found against employees, and no material losses were regarded as recoverable from employees or perpetrators.
Sanral said it was in the process of applying for condonation from the National Treasury for all the irregular expenditure where no loss was incurred and no criminal conduct was identified.
It said an application for condonation was also submitted for R10.887 billion in irregular expenditure identified in 2019 and prior financial years.
The National Treasury reviewed and condoned R9.957bn by August 2021.
Meanwhile, Maluleke said she found material impairments of R9.6bn were recognised as a result of expected credit losses.
But, Sanral explained this as relating mainly to e-toll debtors.
“This impairment relates to mainly old debt not recovered,” the entity said.
The agency said there was significant credit risk the entity would incur financial loss if customers failed to make payments when they were due.
“Even though the issuing of summonses was stopped, as announced to the public on 27 March 2019, and the final decision on the future of e-tolling has not been taken by the Cabinet,” it said.