The Auditor-General of South Africa’s (AGSA’s) office has identified seven material irregularities, impacting four of the communication department’s entities, for the financial year ended 31 March 2023.
The department and its entities are still to officially table their annual reports for the 2024 financial year.
The entities in question are the State IT Agency (SITA), South African Post Office (SAPO), SABC and Postbank, according to AGSA, which last week delivered an induction briefing to Parliament’scommunications portfolio for the seventh administration.
AGSA defines material irregularity as any non-compliance with, or contravention of, legislation, fraud, theft, or a breach of a fiduciary duty identified during an audit performed under the Public Audit Act that resulted in, or is likely to result in, a material financial loss, the misuse or loss of a material public resource, or substantial harm to a public sector institution or the general public.
Joyce Maki Dangeni, senior auditor at AGSA, explained the main objective is to encourage the strengthening of the public sector institutions, to better serve the public.
In the case of SITA, SABC and Postbank, Dangeni revealed the office identified two material irregularities for each of the entities, while SAPO had one.
In relation to SAPO, the material irregularity is connected to weaknesses in internal controls in terms of social grant payments, she said. “This has resulted in significant financial losses that have been lost within the grant payment system, amounting to nearly R90 million.”
The issue of the Postbank irregularities relates to South African Social Security Agency (SASSA) cards that were stolen and used for fraudulent purposes, with estimated financial losses of R30 million.
Furthermore, SASSA cards were written off due to the exposed issuer master key, she stated. “An incident that took place in 2018 saw the key feature within the SASSA cards being exposed, leading to fraud vulnerabilities.”
Turning to SITA, Dangeni noted payments made for access to licences that are not utilised. “SITA procured licences but nobody is utilising them. The second one [irregularity] is the payment made for an event that did not take place.”
The SABC’s material irregularities were linked to fruitless expenditure and improper procurement processes, with a security contract and rent paid for unoccupied space at the centre of those issues.
“From these material irregularities, the key thing is to instil a culture of accountability, improve the protection of resources, enhance public sector performance and encourage ethical culture, so that we are able to better serve the people of South Africa.”
Speaking to the actions taken by auditors in regards to the material irregularities, Dangeni revealed they were able to prevent R4 million of further financial losses from taking place and recovered R500 000.
“We’ve also been able to encourage investigations to take place, based on five of the material irregularities that were identified. There’s also a contract that was stopped entirely.
“Three internal control processes have been improved…and the recommendation that we had issued and implemented by management will be able to prevent future reoccurrences of these material irregularities.”
Dangeni noted that appropriate consequence management action needs to be initiated timeously and implemented appropriately, to address the material irregularities at SITA and SABC, for example.
“The committee can assist AGSA’s office by requesting continuous progress on the material irregularities presented during this meeting, and finding out from the accounting officer/authority what they are implementing to ensure these are resolved.”
With AGSA presenting insights for the financial year ended 31 March 2023, Thabelo Musisinyani, business unit leader at AGSA, told committee members the information time-lag is mainly because the department and its entities are still to officially table their annual reports for 2024.
“It’s important that the internal audit function is strengthened and supports the accounting officer to deal with some of these things earlier on in the process before the situation is out of hand.”
Musisinyani added that oversight functions also have a role to play, including the portfolio committee and other institutions responsible for certain laws and regulation, to ensure a move in the right direction.
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