Provincial Treasury Performance: AGSA briefing

Video In a virtual meeting, the Select Committee on Finance was briefed by the North West Provincial Treasury on their quarterly reports, while the Auditor-General of South Africa (AGSA) made presentations on the performance of the Free State, Northern Cape and the Western Cape provincial treasuries. This is part of a series of meetings the Committee was having overseeing the performance of provincial treasuries. The North West Provincial Treasury reported that in the 2023/24 financial year, 11 departments had received unqualified audit opinions. The public entities' audit outcomes had remained unchanged from the previous years. The North West Transport Investment Group had not submitted financial statements for the last four years, so the provincial Treasury would assist with the completion of its financial statements. Only one public entity had a substantive board, while two had an interim board. There was one substantive chief executive officer, while the others were in an acting position. None of the public entities had a chief financial officer, which affected the regressed audit outcomes for the 2023/24 financial year. Departments such as community safety and agriculture had consistently underspent, while cooperative governance had periodically exceeded their budget. Inefficient budget execution could result in inconsistent spending, which suggests systematic capacity constraints. Measures had been put in place to enhance spending and generate own revenue. Budget reductions had negatively impacted service delivery targets. Members raised concerns about the recurring underspending in the North West province, entities having no boards, financial statements not being submitted, beneficiaries not receiving houses and hospitals being dysfunctional. They were concerned that the report was not showing the realities on the ground. The Committee asked about the plans for a functional airport, the state of road maintenance, disclaimer audit opinions, medical claims, and the underspending on service delivery, and recommended an oversight visit to the province. The AGSA reported that there had been an overall improvement in the Free State over the administrative term. Most of the auditees had remained stagnant, which illustrated a lack of prioritisation of the performance information and compliance. Fleet management, community safety and roads and transport had regressed. Some areas of concern included consequence management, the quality of financial statements and revenue management. Weaknesses in performance planning and reporting were identified. The AGSA found that the indicators were not well-defined, verifiable, specific, or measurable. Some of the reported achievements were not valid, accurate or complete, resulting in a delay in service delivery to communities. Human settlements had not achieved all their targets due to an inadequate performance management system and a delay in appointing contractors. Health had also not achieved all its targets due to a lack of consequence management, misaligned targets, and critical vacancies. Education had not achieved all its targets due to poor project management and inadequate inventory management system. There had been 24 material irregularities on non-compliance resulting in a financial loss of R426.1 million. In the Northern Cape, the AGSA had found that the indicators were not well-defined or verifiable. No reasons were provided for variations in over-and underachievements. Relevant indicators were excluded, and some reported targets were not valid, accurate or complete. Weaknesses in the infrastructure for service delivery were identified. There was poor planning, lack of coordination between role players, delays in projects, cost increases and poor quality of work. As a result, schools were overcrowded, road conditions were poor and sufficient health care services were not provided. There were 21 material irregularities. The Western Cape had received 18 clean audits and two unqualified audit opinions, with findings. The AGSA had identified weaknesses. Education did not include key medium-term strategic framework performance indicators for programmes in its annual performance plans. This resulted in a material finding on the completeness of indicators in the annual performance plans. Some targets for the housing units were not achieved due to poor project management and poor quality of work. Some of the weaknesses in infrastructure were due to inadequate planning and the lack of accountability for non-performing contractors. There was one material irregularity that was resolved. The Committee stressed the importance of consequence management. Concerns were raised about the overcrowded classes in the Northern Cape and the underperformance of human settlements, the Premier in the Free State not performing, and the material irregularities in the Free State and Northern Cape. Members wanted to know how the AGSA determined if a project was complete or not. They recommended that the Select Committee on Cooperative Governance and Traditional Affairs do further investigations into the repeat findings, regressions, and non-improvement. They also suggested that some matters should also be referred to law enforcement agencies.