4 2011/12 AUDIT OUTCOME 4.1 The DCS received a qualified audit opinion. The 2011/12 audit outcome revealed that serious challenges in relation to the DCS' expenditure management, procurement and contracts, human resource management, internal control, governance, financial and performance management, and leadership remain. These concerns echo many alluded to by the Committee in previous reports. 4.2 In terms of the DCS' predetermined objectives, the AGSA found that information provided by the DCS was neither useful nor reliable, and that there was a significant level of non-compliance with laws and regulations. The AGSA observed no significant change since 2010/11. 4.3 While the DCS reported no unauthorized expenditure in the 2011/12 financial year, its irregular, and fruitless and wasteful expenditure had increased to R214 million, and R71 million respectively. 4.4 The DCS' performance in terms of its contract management and adherence to procurement policies, remains extremely poor. According to the AGSA it continues to make itself guilty of uncompetitive and unfair procurement processes, fails to observe even the most basic procurement principles, and remains unvigilant with regard to doing business with prohibited suppliers, or those in its employ. 4.5 The AGSA found that sick leave abuse, and irregular overtime payments persisted, with little evidence that the accounting officer had attempted to prevent such abuse. It was also found that there were no established policies and procedures that would enable and support the execution of internal control objectives, processes and responsibilities. 4.6 A whole range of weaknesses in the DCS' information technology controls were found. These included the absence of an IT and Project Governance Framework, and disaster recovery plan. 4.7 The Auditor General had identified a range of challenges which pointed too ineffective management. The late implementation of projects and the consequent underspending, were the direct result of poor management. In addition those charged with governance had not adequately reviewed the annual financial statement before auditing commenced, and statements were not prepared in accordance with the prescribed financial reporting framework, or supported by full and proper records. 4.8 Upon interrogation of the DCS' Annual Report and Audit outcome, the DCS senior management appeared reluctant to acknowledge their part in the department's continued poor performance. This reluctance draws into question their commitment and/or ability to implement the necessary strategies to ensure better performance. The Committee is pleased that the Minister of Correctional Services undertook to drive the process of reporting to the AGSA on a quarterly basis with regard to the deficiencies identified.