- Parliament's Portfolio Committee on Tourism has presented a draft report in which it expresses concern about certain audit findings at the Department of Tourism and SA Tourism.
- The regression in audit findings has serious consequences for the effective and efficient utilisation of allocated budget, according to the Committee.
- In its view, SAT performed "dismally" during the 2020/21 financial year and received a qualified audit opinion with material findings - the first in 17 years.
Parliament's Portfolio Committee on Tourism is concerned about a continued regression in material findings by the Auditor General relating to the performance of the Department of Tourism and its destination marketing arm South African Tourism (SAT) during the 2020/21 financial year.
The committee presented a draft 2021 Tourism Portfolio Budget Review and Recommendation Report on Tuesday.
"The regression in audit findings has serious consequences for the effective and efficient utilisation of allocated budget as there are more cases of irregular, fruitless and wasteful expenditure," states the draft report.
According to the committee, SAT performed "dismally" during the 2020/21 financial year and received a qualified audit opinion with material findings - the first in 17 years.
Some of the issues raised by the Auditor-General regarding SAT include inadequate internal controls to maintain records of marketing expenditure paid for by third parties; material misstatements in financial statements not adequately corrected; and tender irregularities.
The committee is concerned that SAT has not done enough to avoid a continuation of this type of "regressive behaviour" and it has undertaken to work closely with the Auditor General to track the implementation of an action plans to address the findings.
Delays in the procurement of service providers for projects was one of the main challenges of the department. This in turn resulted in delays with the commencement of tourism projects.
The Committee is also concerned about certain underlying expenditure patterns at the department as highlighted by the Auditor General.
"The flouting of internal controls and ongoing irregular expenditure ... speak to a lack of progress in efficiently managing tax payer funds," states the draft report.
"The emerging trend is that the department always spends almost 100% of its allocated budget whilst failing to achieve some targets set over the past five financial years. The high expenditure by the department is not commensurate to the performance against the predetermined objectives."
Furthermore, the majority of the irregular expenditure disclosed in the financial statements was caused by non-compliance with supply chain management procedures and irregular awarding of tenders. The total irregular expenditure identified amounted to R21.29 million. The bulk of this (R20.06 million) was incurred by the SAT.
The Auditor General found that SAT incurred irregular expenditure due to not following competitive bidding processes. Furthermore, the financial statements SAT submitted for auditing were not supported by full and proper records, as required by the Public Finance Management Act (PFMA).
"Management disregarded [SAT's] internal policies, laws and regulations for appointing suppliers without following a procurement and contract management process," states the draft report. SAT also used third parties to make payments on its behalf for expenditure it had incurred. The committee is concerned that the irregular expenditure is a recurrence from the 2019/20 financial year whereby SA Tourism extended or modified contracts without the approval of the National Treasury.
The committee wants the department to investigate and follow up on instances of irregular, fruitless and wasteful expenditure from the 2019/20 and 2020/21 financial years and ensure "consequence management" depending on the outcome. The committee is not satisfied with the lack of action taken against those who have been found to have committed wrong activities. The committee is also not satisfied with the lack of and slow pace of prosecutions in matters that are before the courts.
Minister of Tourism Lindiwe Sisulu, who was appointed in this position after the end of the financial periods under review, has informed the committee that she is aware of the Auditor General's findings. She has undertaken that she will meet with the SAT board and the Auditor General and will then revert to the committee regarding consequence management or recovery of lost money.
SAT said in a statement that its board takes the audit opinion in a very serious light and has begun the process of consequence management. The board has also tasked management to put in place systems to improve the internal control environment.