Human Settlements, Water and Sanitation Minister Lindiwe Sisulu
PHOTO: Palesa Dlamini/City Press
- The AG has told Parliament that the national Department of Human Settlements (NDHS) and its entities have not received a clean audit in the last five years.
- The AG also recommended stronger oversight at some entities to ensure audits outcomes improve.
- Vacancies at senior level has also been highlighted as a challenge.
Over the last five years, not a single entity in the national Department of Human Settlements has managed to obtain a clean audit.
On Friday, the Auditor-General (AG) briefed Parliament on the 2019/20 audit outcomes of the department and its entities.
The entities include the National Home Builders Registration Council (NHBRC), the Estate Agency Affairs Board (EAAB), National Housing Finance Corporation (NHFC), and the Community Schemes Ombud Service.
Londoloza Songwevu, audit manager at the AG, said in his presentation the department needs stronger leadership.
Leadership is required to set the right tone and provide the necessary oversight support in ensuring that the audit outcomes of the portfolio as a whole improve. The NHBRC and NHFC material misstatements in the financial statements were corrected by management, resulting in an unqualified with findings audit opinion. This can be attributed to inadequate and lack timely review processes, as well as the ineffective use of the internal audit function.
The CSOS and EAAB both received a qualified opinion because of inadequate controls and processes around revenue management.
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“Both entities have no permanent chief financial officer appointed. The NDHS submitted financial statements with no errors, and did not material [sic] contravene laws and regulations that govern financial matters. However, the systems and processes to ensure performance information reported is useful and reliable require improvement,” he said.
At the EAAB, Songwevu said, revenue was materially understated.
“[As] penalties for late renewals of fidelity fund certificates by estate agents were not always raised. The qualification in 2018/19 on commitments has been resolved. [At] CSOS, similar to prior years, revenue is materially understated as not all levies from community schemes were identified and collected. Though still qualified, some improvement were noted towards addressing the finding,” he said.
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Irregular expenditure has also decreased dramatically.
In the 2018/19 financial year, R48 million was recorded as irregular expenditure. That amount has, however, decreased to R14 million in the 2019/20 year.
“The majority was caused by contravention of supply chain management legislation through deviations and irregularities in the procurement process at the NHBRC, CSOS and the EAAB, as well as NHFC’s continued use of contracts after expiry dates,” he said.
Fruitless and wasteful expenditure, albeit low for both financial years, also decreased from R2 million in 2018/19 to R1 million in 2019/20.
“The majority of the disclosed fruitless and wasteful expenditure for the current year was caused by interest and penalties charged on late payment to creditors at NHFC,” Songwevu said.
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