DOC's financial status regresses

The Department of Communications' (DOC's) financial management went from bad to worse during the year to March 2010, a recently-released auditor-general (AG) report has revealed.

The AG's “General Report on the National Audit Outcomes” covers the period when Siphiwe Nyanda was communications minister, before being axed last November and replaced by Roy Padayachie. It details several areas in which the department was found to have insufficient controls and systems.

The DOC moved from having “financially unqualified with findings” status, for the 2009 financial year, to a “qualified” report last year, because of irregular expenditure of R8.3 million, which was incurred because supply-chain regulations were not followed.

According to the AG's report, the DOC was one of four departments that “regressed” in the status of its financial compliance, out of 35 government departments included in the national review.

Padayachie last year said he would tackle the mammoth task of salvaging the “dysfunctional” department. The communications ministry went from bad to worse under Nyanda, but the new minister vowed to restructure the department and, 11 days into his tenure, detailed a priority plan for fixing the DOC.

However, the latest AG report shows the department is lacking in several areas. There are key vacancies to be filled, supply-chain management holes that must be plugged, and a need to focus on IT systems covering security management, governance, user-access control and service continuity.

Irregular expenditure relating to contraventions of supply-chain management were identified, but the AG could not “verify the completeness of irregular expenditure disclosed”, says the report.

In addition, fruitless and wasteful expenditure worth R54 000 was incurred because of interest payable to Telkom, as bills were paid late; trips that were cancelled; and a duplicated payment.

In the general report, the AG states the department deviated from the procurement process by not always inviting three quotations. The DOC had also deviated from competitive-bidding procedures “without approval”, notes the report.

The department did not use government's preferential point system, and awarded contracts to suppliers that did not score the highest points. The AG also found that contracts were extended or renewed without approval, and there were inadequate performance measures in place to monitor contracts.

Supply-chain management controls were also found wanting. Although the controls are in line with legislation and staff members are trained, there is no mechanism that allows employees in the division to report breaches of controls.

Among the findings of the AG's report was the department is not managing its vacancies. The AG found that there was a lack of improvement in the overall vacancy rate, and a lack of improvement in the senior management vacancy rate.

In addition, the AG's report found that senior managers' performance agreements had not been signed by the end of July last year.

The department also did not comply with time frames for filling posts in senior management and financial positions, and reasons for non-compliance were not recorded. Government regulations require that posts should be advertised within six months of becoming vacant, and should be filled within a year.

Nyanda explained in his forward that vacancies in the department were caused by “financial constraints, which led to the difficulty in filling of all vacant positions”.

However, according to the financial statements, R8.8 million of the department's budget for staff compensation was not spent in the year to March, which amounts to 6.38% of its total staff budget.

At the end of March, the department had a vacancy rate of 28.9% and needed to fill more than a hundred posts. Padayachie said in November that his first priority would be to appoint a new director-general after Mamodupi Mohlala was fired by Nyanda, and fill senior management posts, within three months.

In his forward to the department's annual report for the year to March 2010, Nyanda states the department has “for the first time received a dubious qualified report from the office of the auditor-general”.

He says “most if not all the misgivings” the AG unearthed relate back to previous years leading up to the 2008/9 financial year. However, Nyanda promised that tighter controls, compliance issues and training would be put in place to improve operational and financial management in the 2011 financial year.

Corrective measures would include a stronger internal audit team, and officials involved in irregular transactions would be disciplined, wrote Nyanda. Supply-chain management would also be improved, the former minister stated.

The DOC was not this morning immediately able to respond, but indicated it would do so as soon as possible.