/ 2 October 2018

AG slaps Nedlac with qualified audit

Auditor general Kimi Makwetu. David Harrison
Auditor general Kimi Makwetu. David Harrison

Auditor General Kimi Makwetu has slapped the National Economic Development and Labour Council (Nedlac) with a qualified audit opinion in its annual report for the 2017/18 financial year.

Nedlac incurred irregular expenditure to the tune of over R1-million and did not initially disclose this in line with the Public Finance Management Act, Makwetu said.

”The entity did not include irregular expenditure amounting to R391 809 in the amount disclosed as irregular expenditure as required by the PFMA.

”The entity made payments in contravention of supply chain management requirements, which resulted in irregular expenditure,” said Makwetu.

Moreover, he added in his audit report, the full extent of the expenditure could not be quantified as an investigation to establish this had not been conducted. As a result, he could not determine whether it was necessary to make any adjustments to the stated amount of R1 093 631.

Makwetu said ”effective and appropriate steps” had not been taken to prevent irregular expenditure.

He also said leadership did not develop adequate procedures to ensure that financial statements were free of financial misstatements.

Makwetu further highlighted a material impairment of R1 851 232, which was disclosed by Nedlac in the financial statements as a result of doubtful debt.

He said the annual financial statements of Nedlac were not prepared in accordance with prescribed financial reporting framework in the PFMA.

Nedlac’s role as a mediator on labour matters between government, unions and business is set to remain highly visible as the country prepares to implement its first national minimum wage.

The policy is expected to improve wages for a large number of the estimated 6 million workers in South Africa who earn less than R20 per hour.

Despite the qualified audit, Makwetu said he found insufficient evidence for consequence management for the irregular expenditure and supply chain management guidelines.

Nedlac executive director Madoda Vilakazi said despite capacity constraints, the council managed to meet 89% of its targets set out for the 2017-18 financial year. — Fin 24