The report also reveals the regulator was insured for just over R200 million for fixed assets, but the net book value of fixed assets disclosed in the financial statements was R14.74 million.
Deferred government grants of R16.73 million were accounted for as revenue, which the auditor-general says “is not in compliance with treasury regulations”, since R10.17 million of the funds that were earmarked for capital expenditure was instead used for operating expenses.
Xhead = No CFO
The auditor-general also criticised the regulator`s procurement and tender processes: “It was not possible to determine whether goods and services were procured in a fair, transparent, competitive and cost-effective manner.”Irregularities in procurement, it adds, are in violation of the Public Finance Management Act (section 76-4-C) and the Treasury Regulation 16-A.
Africa Boso, spokesman at the auditor-general`s office, says he cannot comment specifically on the ICASA report, but generally, the process followed when public entities are accused of gross financial mismanagement is:
“We would send recommendations to parliament, which will then decide whether to take further steps.”
ICASA`s CFO Bridget Mohlala resigned on 14 November 2005, and was replaced by Lauren Fullerton as acting CFO on a five-month contract. However, Fullerton`s term only began on 27 March this year – more than four months after Mohlala`s resignation. ICASA says a recruitment process to fill this vacancy is in progress.
In one cancelled contract alone, says the auditor-general, ICASA wasted R1.2 million. It was for a R4 million contract with an unnamed supplier where no proper audit trail supported the decision.
“The service level agreement was not entered into with the service provider. Subsequently the contract was cancelled due to poor service delivery after a total cost of R1.2 million was incurred,” it states.
The report attributes the “weak control environment” to a range of factors, including upheavals in the CEO and CFO positions, no senior managers of IT or human resources, a high use of consultants, lack of accountancy staff training, and ad hoc internal audits.
Despite this, ICASA chairman Paris Mashile was bullish in his review of the year`s highlights. “Despite the setback of losing senior managers in the past year, the authority has not just managed to keep afloat, but went on to deliver convincingly on its mandate to licence and regulate the communications sector.”
ICASA was unable to respond to questions before publication this morning.
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