Johannesburg - Auditor-General Kimi Makwetu has taken issue with Zulu King Goodwill Zwelithini's Ingonyama Trust Board (ITB) for failing to provide supporting documents to account for land to the value of R1.08 billion.
“I was unable to obtain sufficient appropriate evidence that management has properly accounted for land to the value of R1.08bn due to supporting documentation not submitted,” Makwetu said in his audit report for 2017-2018.
The damning report formed part of the annual report tabled in Parliament in Friday.
The ITB, which obtained an adverse opinion for 2017-2018, has Zwelithini as its sole trustee.
Rural Development and Land Reform Minister Maite Nkoana-Mashabane has noted that the trust's performance was unsatisfactory.
“I am hopeful that the ITB will perform at an optimal level in the next financial year,” Nkoana-Mashabane said in the annual report's foreword.
However, Makwetu took issue with the board's leadership for not establishing effective oversight and monitoring over financial and performance reporting processes and compliance with legislation.
“Management did not ensure that accurate and complete expenditure records and reports were prepared in accordance with the requirements of the applicable financial reporting framework.
“The system established by the accounting authority was inadequate to monitor compliance with National Treasury framework for the managing of programme performance information,” he said.
The A-G also said the trust did not properly account for property, plant and equipment.
“This was due to survey diagrams not submitted and inadequate controls in place to correctly value the properties
"Consequently, I was not able to determine the full extent of the property, plant and equipment of R28.21bn to the consolidated and separate financial statements as it was impractical to do so,” Makwetu said.
The trust has instituted an investigation into possible misappropriation of the assets, with six officials charged with financial misconduct and a disciplinary case under way.
Makwetu also said the trust incorrectly recognised royalties from a mining operator as its revenue, and the royalty revenue was not paid to the National Revenue Fund as required by the Mineral and Petroleum Resources Royalty Act.
“Effective and appropriate steps were not taken to collect all revenue due,” he said.
Makwetu added that he was unable to obtain sufficient audit evidence that provision for bad debts was properly accounted for due to failure to provide for all outstanding debtors.
Acting chief executive Thembeka Ndlovu said they had devised a plan to address the issues raised by Makwetu.
“The board took a decision to appoint a firm of attorneys to advise the board and provide legal opinion on royalties. We have had a series of engagements with National Treasury and the Auditor-General on this matter and it is receiving a well-deserved attention,” Ndlovu said.
She also said the focus in 2018-2019 was to develop a plan that would ensure royalties were used in the best interest of its beneficiaries.
“The board is aware of money owed to the trust by commercial lessees in this harsh economic climate. The ITB is therefore exploring the use of stricter methods in reducing the level of debt,” Ndlovu added.
She noted that the trust had appointed a team of valuers to conduct valuation exercise.
Ndlovu said the board was reviewing the lease terms and exploring other ways to generate revenue.
“We are trying to strengthen our debt collection procedures as we have R72m owed to the trust.”