FRUITLESS AND WASTEFUL EXPENDITURE

Transcription

1 FRUITLESS AND WASTEFUL EXPENDITURE BRIEFING TO SCOPA Presenter: Lindy Bodewig Chief Director: Technical Support Services 19 August 2014

2 Discovery of unwanted expenditures Accounting officer to record details of the unwanted expenditures in the register; Conduct an investigation to : Confirm if the expenditure meets the definition thereof; If Yes, identify and confirm if there is an official liable in law; If No, the amount must be retained in the register for completeness purposes; If expenditure is proven to be irregular expenditure, the AO must immediately report in writing to the National Treasury. If expenditure is proven to be fruitless & wasteful expenditure, the AO must report to the council and the chair person. 2

3 Fruitless & wasteful expenditure: defined Fruitless and wasteful expenditure means expenditure which was made in vain and would have been avoided had reasonable care been exercised. 3

4 Fruitless & wasteful expenditure: Examples Scenario 1: Department JJ purchased springbok t-shirts for its employees Scenario 2: Department X used a consultant to compile its asset register at a cost of R130 million, at year-end the auditors found that the asset register was largely incomplete Scenario 3: Department Y was charged interest on overdue accounts Scenario 4: Department Q did not take advantage of a discount offered by one of its suppliers Scenario 5: Employee RX did not show at a training session that was booked in advance at a cost of R10,000 Scenario 6: An international trip was planned for December, if the ticket was booked early it would have cost R50k but it was booked a week before the trip at a cost of R70k 4

5 Fruitless & wasteful expenditure: Examples (cont.) Scenario 7: DG was booked on a flight to Cape Town but was instructed by the Minister to go to EC instead Scenario 8: Department Y printed 2,000 copies of its annual report 5

6 Irregular expenditure: defined Irregular expenditure comprises expenditure, other than unauthorised expenditure, incurred in contravention of or that is not in accordance with a requirement of any applicable legislation, including: the Public Finance Management Act 1 of 1999 (as amended by Act 29 of 1999); the State tender Board Act, 1968 (Act No. 86 of 1968, or any regulation made in terms of that Act; or any provincial legislation providing for the procurement procedures in that provincial government. 6

7 Irregular expenditure: Examples Scenario 1: Suppliers to whom awards were made did not declare that they are in the service of the department Scenario 2: Awards were made to suppliers who are listed on the National Treasury s database as persons prohibited from doing business with the public sector Scenario 3: The accounting officer knowingly awarded a contract to a recommended bidder who is known to have committed a corrupt or fraudulent act in competing for a particular contract Scenario 4: The accounting officer failed to report the alleged criminal conduct (from scenario 3) to the SAPS Scenario 5: Chief director entered into a contract with a supplier for R500,000 (exceeded delegation) Scenario 6: Process followed by SITA for the procurement of IT equipment on behalf of Department T was flawed 7

8 Irregular expenditure: Examples (cont.) Scenario 7: Department X did not advertise a tender in the government tender bulletin but used other media Scenario 8: Three quotes were not obtained for work awarded to supplier GG amounting to R250,000 Scenario 9: Deviations were approved for the invitations of 3 written price quotations from accredited prospective suppliers even though it was possible to comply with the requirement Scenario 10: Bid specifications were drafted on a biased manner which did not allow all potential suppliers to offer their goods and services Scenario 11: Payments were made to suppliers in excess of the approved contract or quoted amount Scenario 12: Overtime was paid to employees even though the department does not have an overtime policy 8

9 Irregular expenditure: Examples (cont.) Scenario 13: Supplier CX did not submit a valid tax clearance certificate with bid documentation, and the contract was awarded to CX Scenario 14: Department K did not apply the provisions of the PPPF Act for procurement between R30,000 and R500,000 Scenario 15: Process followed by SITA for the procurement of IT equipment on behalf of Department T was flawed Scenario 16: Department X used its public entity to procure consulting services on its behalf Scenario 17: Department P paid its supplier within 120 days 9

10 Condonation of Irregular Expenditure If If 10

11 THANK YOU 11