Cape Town - Standing Committee on Public Accounts (Scopa) chairperson Mkhuleko Hlengwa says the Compensation Fund audit outcomes is the worst that the committee has seen.
The chairperson alluded to Compensation Fund (CF) commissioner Vuyo Mafata and director-general Thobile Lamati not taking accountability for the failures in the institution.
On Wednesday the Compensation Fund appeared before Scopa to provide a progress update on the Clean Audit Action Plan currently being implemented at the institution that addresses the key focus areas that have contributed to disclaimed audit opinions as highlighted by the Auditor-General South Africa (AGSA) over a period of years.
Mafata briefed the committee on an action plan which has been in place for the past six months - as of June to December last year.
In May last year, the AG’s business executive Michelle Magerman revealed that internal controls at both the CF and Unemployment Insurance Fund entities are weak and concerning as there had been unauditable information for a period of 10 years, especially from the Compensation Fund.
She said financial statements had been submitted late and contained errors that could not be corrected, this often results in qualified opinions. Furthermore, Magerman indicated that the CF could not provide credible information and emphasised the need for intervention.
Other aspects that concerned the AG were revenue and receivables from non-exchange transactions, payable non-exchange transactions, absence of supporting documents for debtors, consolidation of investment in associates, investments in financial assets, irregular and fruitless and wasteful expenditure, and inadequate records in respect of contingencies relating to securities held, ceded and notices of motions and summonses.
While presenting to the committee, Mafata said there were 169 activities or actions over the six-month period which range from the above aspects which the AG raised.
Total action plans for revenue and receivables from non-exchange transactions were 42 actions. Mafata explained that this process included making sure that the completeness and accuracy of revenue through the return of earnings received from employers was accounted for.
Among others, Mafata said the figure for actions into irregular, fruitless and wasteful expenditure (IFWE) stood at 11. These included the appointment of a permanent structure for the Internal Control Unit, submissions by management on consequence management relating to IFWE incurred in areas of responsibility and redesigning the fruitless and wasteful expenditure reporting for accuracy and completeness, to name a few.
Hlengwa probed Mafata and Lamati on how long they have been serving within the CF. Lamati responded that he has been in the position for seven years while Mafata has been serving for five.
To this Hlengwa said the two have been in their positions for a sufficient period to implement improvement.
“This is the worst audit outcome that there is.
“Let’s not speak as though this is a new DG or a new commissioner.
“These audit outcomes are squarely on your table, at your doorstep, on your shoulders… whichever expression suffices.
“The main issue we have is that you (Compensation Fund) continues to be disclaimed and there is no improvement,” Hlengwa said. “The only time we are going to satisfy ourselves is when you come out of a disclaimer and that hasn’t happened,” he added.
Commenting on the briefing, ANC committee member Nokuzola Tolashe said she does not see any change or any indication that there have been plausible changes.
“Things are being done in six months, but the problem was there for the last year, in fact almost 11 years. We are not being taken seriously, chair, and if we keep doing this, taxpayers won’t be happy with us. I think our strategy must change as to what we as a committee are going to do,” she said.
Hlengwa concluded by saying this is an absolute collapse of systems at the Compensation Fund and “judging by the current attitudes there is no redemption in sight”.
He added Lamati should convey a message to Employment and Labour Thulas Nxesi that there is no progress within the institution. “We are not convinced that there is progress. You are disclaimed so we don’t trust anything you tell us because it has got no assurance,” he said.
“Our patience has run out with the Compensation Fund.”
Hlengwa has called on Nxesi to report back to the committee within 14 days on why the current commissioner and DG should be in their positions. Furthermore, he said Lamati and Mafata should also give their reasons on why they should continue holding their positions.
“We will make the necessary recommendations and put it to the House.
“Unless there is consequence management, it is an absolute shame to have an entity which maintains a defiance in the face of disclaimers over 10 years,” Hlengwa stressed.
Political Bureau