The shortcomings of government’s information technology (IT) systems have once again been flagged in the management of the state’s COVID-19 expenditure.
Newly-minted auditor-general (AG) Tsakani Maluleke detailed the findings of the report on the financial management of government's COVID-19 relief initiatives, acknowledging the administration’s swift and “decisive” response to the pandemic.
However, Maluleke believes the country “could have achieved more if the funds and related initiatives had been managed better”.
The report, released yesterday, is the national audit office’s second real-time audit report of a series of reports compiled at the request of president Cyril Ramaphosa, following a flurry of allegations of abuse of COVID-19 relief monies.
While the initial report revealed the multibillion-rand COVID-19 relief package landed in a weak government control environment, the subsequent report points to significant faults in procurement and contract management processes of the relief package.
The focus of the second report includes an update on the expenditure of the relief funds and actions taken in response to the first report, covering these key areas: support to vulnerable households, wage protection, healthcare services, basic education interventions and tourism relief fund, to name a few.
Even though government’s COVID-19 relief package is valued at R500 billion, the audit work for this specific report focuses on R148 billion of the overall budget.
The AG reports that R95.84 billion (65%) of the R148 billion audited had been spent by 30 September. Furthermore, most initiatives were completed or close to completion, while some have been abandoned or redirected.
Overall, Maluleke’s office observed that the IT systems, processes and controls used in government were not agile enough to respond to the changes required.
“The lack of validation, integration and sharing of data across government platforms resulted in people, including government officials, receiving benefits and grants to which they were not entitled,” states the report.
“Some of the initiatives did not achieve the desired results and were even abandoned because of failed coordination, monitoring and relationships across the three spheres of government. Where implementing agents were involved, we found weaknesses in coordination and monitoring, which compromised delivery, transparency and accountability.”
Critical controls lacking
The Department of Labour’s Unemployment Insurance Fund (UIF) is using the first report as a critical tool to reflect on its overall control environment and identify areas for improvement, according to the AG.
The last report focused on payments of the Temporary Employer/Employee Relief Scheme (TERS) through the fund.
On key findings on the payment of TERS benefits, the AG states that “it is encouraging to note that, as at October 2020, the fund has recovered about R3.4 billion of funds that may have been disbursed incorrectly”.
“Progress has been made in addressing the previously identified system weaknesses, such as a lack of validations and incorrect calculation. However, since most of these enhancements were made during September, we still identified payments that will need to be investigated, although there are far fewer.”
According to Maluleke, because the UIF depends on the accuracy of the declarations and information submitted by the claimants – bargaining councils or employers – this exposes the fund to the risk of paying fraudulent claims.
This risk, says Maluleke, was increased by the TERS benefit coverage being expanded to include employees who were not registered with the fund before the COVID-19 pandemic.
To respond to this exposure, the fund designed post-validation processes to verify the claims paid out. However, the AG reports that, as at the date of her report, this process, which includes the verification of employer and employee employment information, had not yet started.
“Another risk reported was the possibility of the benefit being trapped at the level of employer or bargaining council and not reaching the intended employees. From May 2020, the fund also introduced direct payments to employees’ bank accounts, although the claim application would still need to be submitted by the employer.”
SASSA cleans house
With the previous report showing the South African Social Security Agency’s (SASSA’s) outdated, limited databases and inadequate verification controls resulted in non-qualifying persons receiving the R350 COVID-19 relief grant, the agency stopped the payment of grants to flagged people.
In addition, the AG notes SASSA is taking a conservative approach when evaluating applications for the grant. If a discrepancy is identified, the application is rejected, and only if the applicant queries the rejection and provides proof of eligibility will the grant be activated or re-instated.
Although SASSA embarked on a project to improve beneficiary validation, this has not yet borne fruit and the auditors continued to identify beneficiaries that are potentially also receiving income from other sources, says the AG.
“These sources include government pensions, social grants, UIF payments, national student financial aid scheme bursaries and benefits from other COVID-19 relief funds.
“By 31 August 2020, the AG had identified a total of 67 770 beneficiaries potentially receiving income from these sources, which represents 0.32% of the approved applications.
“The auditors also reported 1 513 beneficiaries who are directors of companies that have government contracts for investigation.”
According to SASSA, all the flagged beneficiaries are being investigated and planning is under way for an appropriate debt recovery process.
“In delivering the COVID-19 initiatives, we have observed that if officials, leaders, sectors, implementing agents and institutions do not do their part and actively partner to strengthen the delivery value chain, it undermines the effectiveness of the programme and leads to losses, abuse and costly investigations.
“The public sector requires longer term, more effective solutions to deal with the underlying causes of people, systems and processes not delivering optimally,”concludes Maluleke.
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