Department of Infrastructure Development Annual Report 2021-2022

ANNUAL REPORT 2021 | 2022

19. I did not identify any material findings on the usefulness and reliability of the reported performance

information for this programme: - Programme 2 – public works.

Other matters 20.

I draw attention to the matters below.

Achievement of planned targets 21.

Refer to the annual performance report on pages 40 to 56 for information on the achievement of planned targets for the year and management’s explanations provided for the under/over achievement of targets. Adjustment of material misstatements 22. I identified material misstatements in the annual performance report submitted for auditing. These material misstatements were on the reported performance information of Programme 2 – Public Works. As management subsequently corrected the misstatements, I did not raise any material findings on the usefulness and reliability of the reported performance information.

Report on the audit of compliance with legislation

Introduction and scope 23.

In accordance with the PAA and the general notice issued in terms thereof, I have a responsibility to report material findings on the department’s compliance with specific matters in key legislation. I performed procedures to identify findings but not to gather evidence to express assurance. 24. The material findings on compliance with specific matters in key legislation are as follows: Expenditure management 25. Payments were not made within 30 days or an agreed period after receipt of an invoice, as required by TR 8.2.3. 26. Effective steps were not taken to prevent irregular expenditure amounting to R339 600 000, as disclosed in note 21 to the annual financial statements, as required by section 38(1)(c)(ii) of the PFMA and treasury regulation 9.1.1. The majority of the irregular expenditure was caused by supply chain management (SCM) processes not being followed, amounting to R125 343 000. 27. Effective steps were not taken to prevent fruitless and wasteful expenditure amounting to R21 536 000, as disclosed in note 22 to the annual financial statements, as required by section 38(1) (c) (ii) of the PFMA and treasury regulation 9.1.1. The majority of the fruitless and wasteful expenditure was caused by interest expense that was paid by the department which amounted to R21 500 000. 28. Department resources were not used economically, as required by section 38(1)(b) of the PFMA. The department incurred capital expenditure in the refurbishment on a private hospital in which a lease agreement was not yet renewed after it expired. Procurement and contract management 29. Some goods and services of a transaction value above R500 000 (up to 31 July 2021) and above R1 000 000 (from 1 August 2021) were procured without inviting competitive bids and deviations were approved by the accounting officer despite it being practical to invite competitive bids, as required by treasury regulation 16A6.1 and paragraph 3.4.1 of National Treasury Practice Note 8 of 2007-08 (up to 31 July 2022) and paragraph 3.3.1 of National Treasury SCM Instruction Note 2 of 2021-22 (from 1 August 2021) and treasury regulation 16A6.4. Similar non-compliance was also reported in the prior year.

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DEPARTMENT OF INFRASTRUCTURE DEVELOPMENT