The South African Social Security Agency (Sassa) is forking out an additional R15-million this year to plug its financial management skills gap, it emerged in Parliament this week.
A critical lack of skills was a major contributor to financial mismanagement at the agency and the reason it submitted financial statements riddled with errors to Parliament.
This was revealed as the agency — which is responsible for administering grants to millions of South Africans each month — was grilled before Parliament’s standing committee on public accounts (Scopa) on Tuesday.
This additional expense to taxpayers comes on the back of a host of other problems facing Sassa, including corruption and beneficiary fraud, a R500-million deficit and a R2.4-billion annual bill to pay private contractors to make grant payments.
Former acting CEO Coceko Pakade, seconded from the department of social development, told the committee that the changeover from a modified cash basis of accounting to an accrual accounting system, as required by Treasury, had revealed the skills deficit in the agency.
But chairperson of the committee Themba Godi was less than impressed with this explanation.
He pointed out that Sassa had received a three-year exemption granted by the Treasury to allow it to implement the new accounting procedures.
“The cost of not preparing for this conversion is costing us R15-million,” said Godi.
Pakade said that the very people who were implementing the new accounting practices did not properly understand them, and that this would require both the retraining of current staff and the recruitment of additional staff, over and above the cost of bringing in consultants.
The lack of expertise also contributed to a host of errors in Sassa’s financial statements.
Due to these errors, the numbers provided for property, plant and equipment went from R339-million to R408-million; intangible assets were restated from R33-million to R100-million; while inventories went from R24-million to 147-million.
African National Congress MP Roy Ainslie questioned whether, given the number of errors, the financial statements were worth the paper they were written on.
Last year the Auditor General, Terence Nombembe, was so unconvinced of the information he was provided with he said he could not provide a basis for an audit opinion. Included in the reasons for his audit disclaimer was insufficient evidence to explain payments of R35-million.
The agency had also been battling an operating deficit of more R1-billion. But Pakade did note that since last year this has been reduced to just under R500-million.
A lack of staff as well as infrastructure has meant that Sassa spends R2.4-billion on private contractors to make grant payments. However, Sassa’s newly appointed CEO, Virginia Petersen, indicated that this was being reviewed and that new tenders would be going out in September this year.
Sassa’s former CEO, Fezile Makiwane, was dismissed amid allegations of fraud and corruption.
A barrage of corruption cases, in cooperation with the Special Investigations Unit, has also been investigated.
By March 2010 15 238 cases of corruption and false beneficiary claims had been taken to court, with 14 325 cases finalised, and 13 145 people convicted.
A further 34 300 people have signed acknowledgments of debt to Sassa valued at R191.3-million.
Vacancy rates inside the organisation also remain high, according to Petersen, at 59% — or 7 500 of its 18 400 posts filled.