Durban — A standing committee on public accounts (Scopa) hearing with the KwaZulu-Natal Department of Education (DoE) has exposed a fiscal mess which has the potential to ruin the province financially.
The leader of the DA in the KZN legislature and spokesperson, Francois Rodgers, made the remark after the public accounts standing committee meeting on Tuesday at the KZN legislature.
The Scopa report on real-time findings on supply chain management for the floods mobile classrooms stated that the pre-qualification criteria were not in line with the regulations.
It also found that there was inconsistency in the application of the pre-qualification criteria, and the allocation of work to the suppliers was not fair, equitable and transparent.
The finding on infrastructure found all 16 mobile units sampled from the list had not been completed at the date of site visits, and the handing over had not taken place. It was also found a mobile kitchen was only installed at Mthusi Primary School a day before the site visit.
Findings on infrastructure were the mobile units were not securely resting on jacks, while in other instances the placements of the jacks were skew or partially outside the concrete slab.
There were also instances where the slab dimensions were less than the specification requirements as smaller slabs were used. The report stated it was evident that there was poor workmanship.
Contract
The report stated that with regard to procurement and contract management audit, there was insufficient evidence to confirm that the Department of Trade and Industry was notified of the successful bidder and contract value.
That a possible cover-splitting was identified in the procurement process, and also a possible splitting of orders to avoid a competitive bidding process.
The contract was awarded to service providers who did not meet the functionality requirements.
The amount paid exceeded 15% of the contract value without the treasury’s approval, and procurement of mandatory IT goods and services was not done through the State Information Technology Agency.
The pre-qualification criteria were not in line with the regulations, the contract was not awarded to the service provider that scored the highest points, and the amount paid exceeded the original quoted amount.
There was also an incorrect elimination of service providers during the evaluation process.
The challenges of cash flow and cash blocking implemented on education are being addressed to the National Treasury through provincial treasury.
Bank overdraft
The department’s bank overdraft has increased by R128.30 million (15%) to R965.28m at year-end. This was due to budget reductions, the negative impact of the Covid-19 pandemic and the resultant spending on personnel protective equipment, which continues to place further pressure on the department’ s finances.
The DoE stated that the growth of the bank overdraft is due to the unauthorised expenditure of the last three years not being finalised and amounting to R961 301m and the debts incurred due to late terminations.
Staff debts
The department had a staff debt balance of R493.24m (2021: R476.23m), made up of current and former staff members.
Furthermore, a provision for debt impairment of R355.31m (72%) (2021: R329.27m) was made against the staff debt balance in respect of doubtful debts. This provision was mainly due to past employee debts that had been outstanding for three or more years.
The department has appointed debt collectors to recover these financial losses.
In April the additional debts were at R20.3m and as at March 31, it had decreased to R13.2m.
It was also discovered that the early childhood development was overspent by R34.641m.
Other findings were that disciplinary hearings were not held for confirmed cases of financial misconduct committed by some of the officials, as required by treasury regulation.
The material irregularities identified were salary payments to persons no longer employed by the department that resulted in a material financial loss of R142.49m by March 31, 2021.
Rodgers said the overdraft was a result of inadequate oversight and monitoring on compliance, and poor budgeting, planning and co-ordination within the department.
“This is a major threat to the province’s economic sustainability.
“This, while the KwaZulu-Natal provincial treasury does not have the fiscal resources for the department’s bailout.
“With the budget cuts from the National Treasury, KZN DoE may well have borrowed money to keep the province afloat.
“What we are emphatically saying is that this is a situation that must be avoided at all costs,” he said.
Rodgers called on KZN’s Finance Portfolio Committee to convene a followup meeting with both the DoE and treasury and said it must be dealt with as a matter of urgency.
“Failure to rein in such spending will have severe consequences, not only for the government, but ultimately the citizens of our province.
“As the DA, we remain committed to our role as KZN’s only opposition and to ensuring that the ANC government delivers on its mandate to the people,” Rodgers said.
Daily News