In his report on the audit of the Treasury’s financial statements for 2017/18, Makwetu observed that contracts were awarded to suppliers whose tax matters had not been declared by the SA Revenue Service.
”Some of the contracts were awarded to bidders that did not score the highest points in the evaluation process, as required by the Preferential Procurement Policy Framework Act and the Preferential Procurement Regulations,” reads the report.
According to Makwetu, Treasury, which received an unqualified audit opinion, incurred irregular expenditure of R768.9m as it did not follow proper tender processes and did not properly approve its expenditure.
The AG found that bidders who failed to submit mandatory documents were evaluated for preferential points, and that this non-compliance related mainly to transversal term contracts facilitated by the department. Transversal term contracts are centrally facilitated and arranged by the National Treasury for goods or services required by one or more than one government department or state institution.
Makwetu also identified significant internal control deficiencies; lack of adherence with supply chain management regulations; procuring goods and services without inviting competitive bids; as well as approval of deviations when it was practical to invite competitive bids, among other findings.
"Lack of a formal business case, proper project management and inadequate budget monitoring for the IFMS (Integrated Financial Management System) programme may result in failure to deliver the overall quality solution on time and within the funds allocated,” he found.
Makwetu warned that vacancies in key positions in the IFMS programme may also cause the delays in delivering required solutions timeously.
Last year, it was estimated that the second phase of the IFMS would cost the R4.3bn originally budgeted, including the R1.2bn spent on the abandoned first phase, and was expected to be fully implemented by June 2021.
The payment of R67m, which was declared fruitless and wasteful expenditure, for services not received was a result of deficiencies in technical support and maintenance of the IFMS.
The government hopes the IFMS will replace legacy information technology systems in order to improve procurement, human resources, financial and catalogue management, as well as the payroll integrated data exchange.
In March, the Treasury undertook to act speedily and decisively if any graft or wrongdoing was identified by a forensic process, following findings by its internal audit unit that consultants working on the IFMS were to monitor themselves, among other findings.
Chairperson of the National Assembly’s standing committee on public accounts Themba Godi said yesterday that they expected the Treasury to present the findings of the forensic investigation it commissioned into the IFMS in the next few weeks.
A previous forensic probe into the IFMS was terminated, and in February a new service provider was appointed to continue the investigation.
Godi warned that if the Treasury stumbled, this was problematic, as the institution was expected to provide a supervisory role in public finances.
He said Makwetu’s audit report fitted the picture of the general decline in financial management in government departments and other state institutions.
"It is the first signal that the National Treasury is not the oasis of all the right things that have always been associated with it,” Godi explained.
He said the Treasury was not well staffed and had been rocked by both political and administrative instability, with several senior officials leaving.
The Treasury did not respond to questions this week.