National Treasury failed to follow its own regulations – Standing Committee on Appropriations

6 March 2019

The Standing Committee on Appropriations (SCOA) today said that National Treasury (NT), as the custodian of the Public Finance Management Act (PFMA) and Supply Chain Management (SCM) regulations, failed to comply with its own regulations.

The committee is of the view that the forensic investigation report into the Integrated Financial Management System (IFMS) highlights the incompetence of officials in the NT. Committee Chairperson Ms Yvonne Phosa said, “Officials cannot be on a learning curve at the expense of the public purse and the Director-General (DG), Mr Dondo Mogajane, needs to be more assertive in his approach of consequence management.”

The committee cautioned the DG against covering up for officials implicated in the forensic report. The committee further questioned the pace at which remedial action was implemented against the implicated officials. Most importantly, some officials have resigned, but many of are still actively employed in the NT.

Ms Phosa said: “Section 38 of the PFMA requires that the Accounting Officer puts measures in place to prevent irregular, unauthorised, wasteful and fruitless expenditure. Failing which, Chapter 10 of the same Act provides for the implementation of section 81 and section 82 as a direct response for consequence management.” The NT should thus lead by example in implementing the provisions of the financial management prescripts, she said.

The committee was not happy with the pace at which the NT is progressing on the matter and instructed officials to craft an acceleration plan, which should not only address how it will deal with implicated service providers and officials, but also contain clear timelines of implementation. The NT was further advised to look at a recovery plan to recoup the money from service providers and officials. Moreover, while the Committee appreciated the work of the NT Internal Auditors, who identified these issues prior to the forensic investigation. However, the Committee emphasised the need for the internal audit unit to work together with the monitoring and evaluation unit in the NT. 

The forensic investigation report into the Integrated Financial Management System (IFMS) presented to the committee today found various conflicts of interest, tender irregularities and other failures in the process of appointing service providers. The committee said that the NT is a custodian of the South African government’s purse. As such, internal controls and financial management systems should be a good example for other departments, including provincial and local government. 

Issued by Felicia Lombard on behalf of Parliamentary Communication Services, 6 March 2019