House Chairperson, comrades and hon members, the reports that we are presenting are in two forms. The first two are about unauthorised expenditure, and the other two are about the hearings that we have had.
Regarding the Department of Defence and Military Veterans, there are four items that constituted the unauthorised expenditure that the department incurred in previous financial years. The first one is on the military museum where an amount of about R15,1 million was incurred. Since the Defence Act of 2002 was enacted, which provides that the military museum be the function of the department, the committee recommends that this R15 million should be approved by Parliament as a direct charge against the National Revenue Fund.
There is also an amount of R40,2 million which is an overspend owing to the peace-support operations that the department had to undertake. As a committee, we feel that Parliament should approve this, and also as a direct charge against the national revenue fund. The remaining two, which are the hiring of photocopiers in the amount of R5,4 million and the repair of furniture in the amount of R17 000, the committee recommends approval, but that it should be funded from savings from the department.
The second one is the Department of Correctional Services, which has total unauthorised expenditure of R483,8 million which was incurred in the 2008- 09 financial year. This was because the department had to implement the Public Service Co-ordinating Bargaining Council resolution which was that employees should be compensated for overtime in monetary terms, and thus the department incurred an overexpenditure of R1,2 billion for overtime. After the additional money that they got from National Treasury, they were left with unauthorised expenditure of R483 million. The committee recommends that this amount should be approved, but that the department should use savings to fund this unauthorised expenditure. Fortunately, we already have a letter from National Treasury and the department indicating that they will be able to make savings in this financial year that should cater for this unauthorised expenditure.
The second category is that of hearings of the Department of Social Development and the SA Social Security Agency, Sassa. We had a hearing with the department and the entity on 14 June 2011. We must indicate, however, that in so far as the department is concerned, the department had an unqualified audit, but because of the accountability relationship between the department and Sassa, it was decided that the audit opinion of Sassa had a direct bearing on the audit opinion of the department. So, all the findings that we are talking about of the department, in large measure actually arose out of the findings on the entity itself. We recommend that co-operate governance, and particularly the accountability relationship between the department and Sassa, needs to be addressed urgently.
In the meantime, the department needs to ensure that its in-year monitoring of Sassa's management of funds is beefed up so that it does not have a hands-off approach, and, yet at the end of the financial year, the outcomes of the audit opinion of Sassa impact directly on the department. On the agency itself regarding the issue around supporting documents for social grant beneficiaries, the expenditure of more than R10,5 billion could not be verified because we do not have all the documentation in place.
The agency moved to a new accounting system, the accrual-based accounting system, without training its staff and that is why it received a disclaimer from the Auditor-General. Beneficiaries were paid without all the supporting documents, and there were numerous numerical errors in the financial report of the agency.
We recommend, amongst other things, that controls over the safeguarding of source documentation are put in place, because if the Auditor-General cannot find the source documents, it becomes difficult to confirm whether, indeed, people who were receiving child grants deserved them.
If you go to their offices - in terms of how the processes are conceptualised - they are perfect, but the implementation is where the problem lies. And this is more a management and monitoring control challenge. The internal controls, as far as finance are concerned, need to be developed and implemented effectively, and there is the need for training of Sassa staff on the accrual-based accounting system.
These are the reports that we are presenting, and I want to thank my colleagues in the committee with whom we have worked so hard and collegially in dealing with all matters that are brought before us. I also want to thank our researchers and the committee secretaries who ensure that the committee sustains the reputation that it has for seeking accountability in respect of public funds. Thank you.
There was no debate.
Thank you, hon member. Hon members' requests for declarations of vote have been received. I will now allow three minutes for a member of every party wishing to make a declaration.
Declarations of vote:
Chairperson, two of these reports deal with unauthorised expenditure in the Department of Correctional Services in respect of the 2008-09 financial year. A total of R483 million was classified as unauthorised by the Auditor-General. This related mainly to overexpenditure owing to the implementation of overtime payment to officials. Scopa felt strongly that this unauthorised expenditure should not be condoned, but that the shortfall should be funded through savings in the department's own budget.
In the Department of Defence and Military Veterans, some R60 million has been classified as unauthorised expenditure. Also, R40 million was overspent in the 2003-04 financial year on military peace-support operations owing to the deployment of the SANDF in peace-support initiatives in Africa, for which provision could not be made in the financial year as the deployment took place after the adjustment estimates process. Scopa fully understands the technical reason for this unauthorised expenditure and hence recommends that the amount be approved as a direct charge against the National Revenue Fund.
The Department of Social Development received a qualified audit for its 2009-10 financial statements. The Auditor-General found, inter alia, grant expenditure of more than R10 billion could not be verified as a result of limitations that were placed by the SA Social Security Agency, which acts as an agent for the department. In addition, large numbers of Sassa files were incomplete. Sassa's records also did not permit the application of alternative audit procedures regarding social assistance grant expenditure. What essentially happened was that Sassa caused the department to receive a qualification.
The Auditor-General rightly pointed to this dual accountability relationship, and Scopa agrees that these muddled lines of responsibility should be cleared. Sassa itself received the worst possible audit opinion, namely a disclaimer. The Auditor-General could not satisfy itself as to the existence, completeness, valuation and allocation to the value of R178 million of payables stated at R879 million, owing to limitations placed on the scope of its work, as sufficient and appropriate evidence was not made available for audit purposes.
The Auditor-General also pointed to numerous instances in which the agency's records were unavailable, incomplete or unreliable - clearly, a bad state of affairs. Scopa recently visited numerous Sassa paypoints and regional centres throughout the country and followed that up with discussions with Sassa's management and the Department of Social Development. We were encouraged by the commitment and resolve shown by Sassa's management under the leadership of its new head, Ms Virginia Petersen, to turn things around, and we trust they will succeed.
However, critical to any future success is the elimination of the uncertainty about the dual accountability relationship between Sassa and the department. The DA supports the full reports. Thank you, sir.
Thank you, hon member. Hon members, please lower your voices during your conversations. Your voices are too loud.
Chairperson, hon Comrade Roy Ainslie will have to wait another three minutes for his moment of glory.
I rise to support all the reports, on behalf of Scopa, that have been presented by our very competent chairperson. However, I would just like to make a point - and I'm glad the Deputy Minister of Public Service and Administration is here - that one of the reports that we considered was from the Department of Correctional Services, in which we found that they had spent a huge amount of R1,2 billion on overtime in 2008 and 2009.
Whilst we understand that sometimes negotiating salary increments and other terms and conditions of employment takes a long time, the inordinate delay in sorting out the five-day working week and the seven-day working week, which led to overtime, caused this department to have to find R483 million from its own budget.
And, although we had representatives - the chairperson of the Correctional Services committee and the Director-General of Correctional Services - make an impassioned plea that we condone this, we felt as a committee that the department needed to plan carefully in future so that they did not take Scopa for granted in that we would automatically approve a direct charge against the National Revenue Fund.
Our appeal is that even the Department for the Public Service and Administration, in conducting negotiations for increases, should do so, possibly, on a three-year cycle so that there is certainty within the budgets about how much would be set aside for increments.
The other issue that we dealt with concerned the Department of Defence and Military Veterans. Here, again, they felt that we would automatically approve an amount of R5,4 million as a direct charge. One of the problems that they had here was that they did not comply with the Treasury Regulations in acquiring certain photocopying machines. We felt that this was something that they should have done. Therefore, the money had to be funded from the budget of the department.
Lastly, I request members of the executive, those that are here and even those that are not here, that when Scopa concludes its report - whatever report we place before this House for approval - that the executive authority of that particular department submit a progress report on all the recommendations made by Scopa within 60 days after the adoption of the report by the House.
I would take it that these reports would be adopted by the House today, and within 60 days members of the executive would have to report on remedial action taken on the recommendations made. We trust that the Office of the Speaker has satisfactory tracking systems to ensure that within the 60 days those reports come back to the Office of the Speaker.
We, in Scopa, are also beginning to put a tracking system in place to ensure that we get the responses. Otherwise, it would be absolutely useless for us to come here, make recommendations for the House to adopt the report, and then have the executive do nothing about it. Thank you very much, Chairperson. We support the reports. [Applause.]
Chairperson, hon members, the provision of social grants, as administered by the SA Social Security Agency, is the government's most effective programme to address income poverty in the country. The Medium- Term Budget Policy Statement, tabled in the National Assembly by the Minister of Finance earlier this month, reports that about 15,2 million South Africans rely on social welfare grants. This represents about 20% of the budget.
This income assistance to the poor, the aged, the young and the disabled, who, otherwise, would not be able to meet the basic daily needs of survival, is probably the most extensive social safety net in the developing world and shows our commitment as a country to the principle of ubuntu. Of course, it goes without saying that as the economy grows and employment rises, dependence on social welfare must be reduced. Until then, the monthly pensions, the childcare grants, etc, are essential for daily survival.
Empirical research conducted by the University of the Western Cape and by the economic policy research unit confirms a number of socioeconomic benefits of the grant system, including that they are an effective redistribution mechanism in a country with the highest income inequality in the world. I also confirm that cash transfers in the form of pensions and grants in South Africa, support consumption and improve the welfare of the recipients and their broader households.
Given the importance of these grants, therefore, and the huge slice of the budget that they consume, it is absolutely essential that they are administered in a way that prevents abuse and administered under strict financial control. The social security system needs to become efficient in providing better services. In this regard, Sassa has experienced challenges in the past, some of which have been indicated by previous speakers. One of these challenges is the fact that the Auditor-General gave Sassa a disclaimer, not only in this financial year, but also in previous financial years. This is an indication of serious financial mismanagement in Sassa.
There are, however, signs that the new management team, headed by the recently appointed chief executive officer and under the leadership of the Minister and the Deputy Minister of the Department of Social Development, are turning the situation around. A clean audit opinion will require, as a minimum, focus on the following basic elements contained in the Scopa resolutions, which have been tabled. Chairperson, the ANC supports the resolution and the other three resolutions. Thank you. [Time expired.] [Applause.]
Chairperson, I move:
That the Reports be adopted.
Motion agreed to (Declarations of vote made on behalf of the Democratic Alliance, Inkatha Freedom Party and African National Congress).
Eleventh Report of Standing Committee on Public Accounts on Unauthorised Expenditure of Department of Correctional Services in relation to 2008-09 financial year accordingly adopted.
Ninth Report of Standing Committee on Public Accounts on Unauthorised Expenditure of Department of Defence and Military Veterans, dated 24 August 2011 accordingly adopted.
Twelfth Report of Standing Committee on Public Accounts on Annual Report and Financial Statement of Department of Social Development, and Report of Auditor-General on Financial Statement of the Department of Social Development for 2009-10 financial year, dated 24 August 2011 accordingly adopted.
Thirteenth Report of Standing Committee on Public Accounts on Annual Report and Financial Statement of South African Social Security Agency, and Report of Auditor-General on Financial Statement of South African Social Security Agency for 2009-10 financial year, dated 24 August 2011 accordingly adopted.