Bathabile Dlamini. Picture: SUNDAY TIMES
Bathabile Dlamini. Picture: SUNDAY TIMES

The agency responsible for paying social grants to 17-million people has been hit with another qualified audit opinion for irregular spending of nearly R2bn.

The government allocates a large part of social spending to social grants, with more than R150bn set aside annually. But the South African Social Security Agency (Sassa) has in recent times struggled to carry out its functions, due mainly to poor leadership and instability under former social development minister Bathabile Dlamini, who is now the minister in the presidency for women.

Last week, the Constitutional Court ordered Dlamini to pay out of her own pocket 20% of the legal costs of the Black Sash Trust and Freedom Under Law in relation to the 2017 Sassa debacle.

Sassa also received a qualified audit in the previous financial year, meaning the auditor-general had doubts about the veracity of certain financial data at the entity. In the 2017/2018 annual report tabled in parliament on Tuesday, auditor-general Kimi Makwetu said that not all irregular expenditure identified was disclosed, as required by the Public Finance Management Act (PFMA).

"This was because the entity did not have an adequate system for identifying all irregular expenditure. There were no satisfactory alternative procedures that I could perform to obtain reasonable assurance that all irregular expenditure had been properly recorded … consequently, I was unable to determine whether any adjustment was necessary to the balance of irregular expenditure stated at R1.712bn in the financial statements," said Makwetu.

Most of the irregular spending disclosed in the financial statements was caused by noncompliance with prescripts regulating procurement and contract management.

Goods and services with a transaction value of more than R500,000 were procured without inviting competitive bids, as required by the Treasury’s regulations. There were similar findings in the previous year.

Makwetu said Sassa had failed to take disciplinary action against some officials who had incurred or permitted irregular expenditure, as required by the PFMA.

Due to a pending court case, Sassa had also not been refunded the R316.4m it paid Cash Paymaster Services for the registration of grant beneficiaries.

"The entity is the defendant in various claims as well as an arbitration claim by the service provider of distribution of grants for deprivation of opportunity to earn full service fees for the periods prior to 2010."

In 2014, the court found that the contract Sassa had signed with social-grants distributor CPS two years earlier was illegal and invalid.