MPs roast Treasury for being late with its annual report

Parliament’s finance watchdog, the standing committee on public accounts (Scopa), has flayed the National Treasury for failing to table its annual report on time amid disagreements with the auditor-general.

The Treasury, which is meant to lead by example, is charged with managing the national purse and overseeing sound financial management across the government. But it has not tabled its annual report for the financial year ending March 2022 due to disputes with the auditor-general over accounting procedures, which have in recent years highlighted constant fruitless and wasteful expenditure at the department.

Annual reports for government departments and entities have to be completed by the end of September as stipulated by the Public Finance Management Act.

Scopa chair Mkhuleko Hlengwa said the Treasury was held to a higher standard than other departments as far as compliance is concerned. He said that while the law allows departments to challenge auditor-general findings, more questions are likely to be raised when the Treasury is involved.

“It draws attention when you do not table [annual reports] simply because you [National Treasury] are on a higher pedestal. Non-tabling, while provided for, in our view is not a norm. It should arise in extraordinary circumstances, and we need them explained. They should be rational and reasonable,” Hlengwa said.

In his submission on Tuesday, Treasury acting director-general Ismail Momoniat said the department was committed to meeting Public Finance Management Act deadlines as they promoted transparency and accountability. However, he said, there may be delays in tabling annual reports for good reason, including that audit processes may take longer due to disputes between the auditor and auditee even if financial statements are submitted on time.

While some of the disagreements with the auditor-general have been resolved and the Treasury hopes to complete the annual report in the coming weeks, an issue that remains unresolved is the treatment of technical support and maintenance for the long-delayed and problematic integrated financial management system (IFMS). The project was responsible for R207m in irregular, fruitless and wasteful expenditure in the 2019/2020 financial year.

The project — which has cost more than R1bn since its inception in 2006 — is meant to incorporate human resources and financial management systems across national and provincial governments. The first phase had to be aborted after governance lapses resulted in the misspending of R1.2bn.

In 2020, President Cyril Ramaphosa issued a proclamation for the Special Investigating Unit to investigate the R4.3bn initiative, which has also been probed by parliament’s standing committee on finance.

Momoniat said the IFMS issue had dogged the department for years.

“The problem we face is that implementation of the IFMS, which is really an important project, has actually been seriously delayed and the whole dispute relates to a contractual agreement that government has entered into with [software provider] Oracle and every year when a payment is made for maintenance and support, the auditor-general has said it [the service] has not been used and therefore it is fruitless and wasteful expenditure,” he said.

“Even next year when our financials come up, if the current approach is maintained, it’s going to be fruitless. But there is no money that is being misappropriated. It’s in terms of a contractual agreement. We are trying to renegotiate with Oracle so that hopefully we meet the concerns of the auditor-general.”

ANC MP Sakhumzi Somyo said the delay in tabling the annual report must be rebuked because “Treasury is meant to be exemplary”.

DA MP Alf Lees said perhaps the previous director-general of the Treasury, Dondo Mogajane, should be taking the flak for the issues at the department.

‘Smokescreen’

EFF MP Veronica Mente suggested the department was trying to cover up wrongdoing. “It’s one thing to account, and another to smokescreen.”

Mente called the Treasury presentation condescending, also saying it “is written like you are writing a message to a friend, with so many acronyms. It is now lecturing us on the processes of auditing between the auditee and auditor ... we know there is a dispute ... All that we expect is not to be lectured on how the process of auditing works. We want to understand why the Treasury has not agreed to the findings of the auditor-general and why the dispute.”

In his response to concerns raised by MPs, Momoniat said he agrees that the Treasury should be held to a higher standard.

Finance minister Enoch Godongwana said the “Treasury cannot afford to lower the bar” and he intends to resolve the impasse with the auditor-general before the end of the year.

phakathib@businesslive.co.za