Issued by: Truth and Reconciliation Commission
The Auditor-General today issued a statement on the 1996-97 accounts of the Truth and Reconciliation Commission in which he indicates that he has issued a qualified audit report for the period ending March 31, 1997.
The qualifications relate to possible unauthorised expenditure as a result of incorrect salary structures having been tabled in Parliament, and to non-compliance with State Tender Board and State Expenditure regulations. We are informed that the Department of Justice is preparing to table the correct salary structures. In the case of tender regulations, the State Tender Board believes that institutions such as ours are not subject to the regulations and we are awaiting a resolution of the matter.
The Auditor-General has reported no misappropriation of funds and no actual unauthorised expenditure. However, he has expressed concern at what he finds are inadequate internal checking and control measures. The period in respect of which he has reported began one month after my appointment as Chief Executive Officer. As a result, at the beginning of the period the Commission had not adopted formal fiscal policies, procedures and controls. These began to be introduced during the year under review and we are committed to improving and strengthening the efficiency of these procedures on a continuous basis.
We have been particularly concerned at the use by some Commissioners and Committee members of Commission credit cards for private expenditure. However, all those involved have now relinquished their cards and the money has been repaid in all but one case, where we have still to recover a little over R2,000.
The following are our comments on the specifics of the Auditor-General's report.
1. Approval of Salary Structures
The Auditor-General notes that salary increases granted to staff members with effect from July 1, 1996 were not authorised by Parliament. He says in his report that if Parliament's approval is not obtained for the increases, the expenditure should be dealt with as unauthorised spending.
The Commission submitted details of salary structures, including the increases, to the Ministry of Justice in August 1996. However, when the structures went to Parliament for ex post facto authorisation in June 1997, figures from March 1996 were tabled. We pointed this out to the Department of Justice on August 12, 1997.
We noted to the Auditor-General in February this year that we had done everything in our power to resolve the matter. We understood the matter had already been referred by the department to Parliament for approval. We are now informed by the Department of Justice that they are preparing to table the correct salary structures.
2. Non-compliance with State Expenditure or State Tender Board regulations
The Auditor General reports that the Commission has not complied with these regulations.
The Commission was initially informed by officials of the Department of Justice that as a Commission independent of the Government we might not be subject to these regulations. In addition to this, the pressure of beginning Commission operations quickly did not permit us to go through the normal route of tendering, which could take up to six months before assets were actually acquired. In the start-up phase of the Commission, we adopted a practice of calling for a range of quotations, or piggy-backing our requirements on existing Government contracts.
A legal opinion procured by the Department of Justice, which we received only in August 1996 (dring the audit period and after most purchases had been made) indicated that we were subject to State Tender Board regulations and their fiscal policies and controls. We entered into discussions with the Government officials involved, and in September 1997 were told that the State Tender Board had adopted a policy that parastatal institutions in our situation were not subject to their procedures. The matter was referred to the Auditor-General in November 1997, who proposed that we approach the Department of State Expenditure via the Department of Justice. The latter department advised that in the circumstances we should ask for ex post facto approval for expenditure. This we have done.
3. Fixed asset registers
The Auditor-General reports that these did not in all respects contain sufficient information to verify the physical existence of assets.
The Commission contracted a firm of private auditors to help compile comprehensive asset registers. It was subsequently found that certain serial numbers were not specified. These have been corrected in an audit by Commission staff.
4. Personnel spending
The Auditor-General reports deficiencies in regard to the administration of the payroll and related human resources activities.
The Auditor-General's previous audit report, which drew attention to these deficiencies, was finalised only in January 1997, during the year under review in the latest report. Payroll control mechanisms were accordingly implemented with effect only from April 1997 and continuous attention is being given to ensuring that they are adequate. The effectiveness of these controls will be evaluated during subsequent audits.
5. Private purchases on Diner's Club cards
The Auditor-General reported that private purchases were made on Diner's Club cards and that although the amounts involved were not material, the TRC should put a policy into place to regulate the practice and enter formal agreements regarding repayment of amounts.
When the cards were issued, Commissioners and Committee members were told they were to be used only for bona fide Commission matters, and for urgent spending relating to the Commission's work. A procedure was established by which the Finance Director drew to the attention of the Deputy-Chairperson any apparent instances of private spending. This was done with a view to him requesting a formal explanation of the spending and, if necessary, a refund.
In the fiscal year covered by the Auditor-General's report, two Commissioners used their cards for private expenses on five occasions, the amounts involved ranging from R95 to R5,386. The amounts were refunded. (In fiscal periods since the year under review, another Commissioner and two Committee members used their credit cards for private spending ranging from amounts of R42.99c to R5,767. In addition, one Committee member used his card for emergency medical expenses. All amounts have been repaid, except in the case of one Committee member, who still owes just over R2,000.)
All the card-holders involved have relinquished their cards.
6. Control deficiencies
The Auditor-General reported control deficiencies with regard to the procurement of goods, services and assets.
Recommendations from the Auditor-General in relation to the segregation of duties in one section of the Finance Department have been implemented.
7. Photocopied or faxed invoices
The A-G reported that several payments in respect of which VAT refunds were or will be requested were made on photocopied or faxed invoices.
The practice of using photocopied or faxes invoices has been stopped. The Commission has requested and is receiving original invoices from such suppliers so that it will comply with the VAT legislation.
The A-G reported that the Commission had not in certain instances had accounts for donors audited in time.
The Commission is in constant communication with donors and has requested from them an indication of who they would prefer to audit the use of their funds. A number of reports are at the preparation stage.
9. Accounts receivable and payable; income and income receivable
The Auditor-General reported that formal documented systems in respect of accruals for accounts receivable and accounts payable did not exist; further that all relevant income and income receivable figures could not be confirmed.
The necessary systems will be documented and updated in the Commission's Fiscal Policy Systems Controls and Procedures. The A-G's recommendations with regard to income and income receivable transactions will be implemented.