Presentation on theme: "Topic: Are Forensic Investigations"— Presentation transcript
Slide1
Topic: Are Forensic Investigations in Government Beneficial? Are there Consequences?
Adv Boyce MkhizeDirector: Forensic Audits21 June 2017
Imfo Risk and Audit Indaba
Cape TownSlide2
Contents
Trends Analysis - National DepartmentsTrends Analysis - MunicipalitiesConsequence Management Trends
Common Causes for Failure to Act
Benefits of Forensic Audits
Recommendations
© 2017 SekelaXabisoSlide3
National Departments Trends [Irregular Expenditure]© 2017 SekelaXabiso
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AGSA Report
2015-16Slide4
Investigations / Consequences© 2017 SekelaXabiso
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AGSA Report 2015-16Slide5
Consequence ManagementOver
80% of the auditees conducted the required investigations into unauthorised, irregular and fruitless and wasteful expenditure
.
There was a slight improvement from the previous year, but 24
of the 63 auditees that did not conduct investigations in 2014-15 also did not do the required investigations in 2015-16.
Recurring trend with those failing or neglecting to investigate and hold responsible officials accountable.
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Consequence ManagementAlthough investigations were done, insufficient steps were taken
to, in compliance with the PFMA:recover
,
write-off
,
approve
or condone unauthorised, irregular and fruitless and wasteful expenditure
for 2014-15
and
2015-16.
As
a result, the year-end balance of irregular expenditure that has accumulated over many years and has not been dealt with as required in terms of the PFMA, was R100,7 billion, while that of unauthorised expenditure was R5 399 million and fruitless and wasteful expenditure
R3
174 million.
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Municipalities Irregular Expenditure Trends© 2017 SekelaXabiso
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AGSA Report 2014-15Slide8
Consequences for Transgressions - Municipalities© 2017 SekelaXabiso
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AGSA Report 2014-15Slide9
Consequences for Transgressions - MunicipalitiesThe figure shows that at 45% of the municipalities (2013-14: 47%) the council failed to conduct the required investigations for all instances of unauthorised, irregular and fruitless and wasteful expenditure
.
Furthermore,
87 of the municipalities that failed to conduct investigations in 2013-14 attracted similar findings in 2014-15.
Recurring trend of failure to investigate and take action resulting in regression.
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Common Transgressions© 2017 SekelaXabiso
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AGSA Report 2014-15Slide11
Consequences for Transgressions - MunicipalitiesIn 2013-14,
AG reported SCM-related findings for investigation to 139 municipalities. As shown in figure 2, findings in all areas except payments to possible fictitious suppliers have increased.
Furthermore,
105 of the municipalities that had such findings in 2013-14 had similar findings in 2014-15. This means that investigations are not conducted or are not yet having the desired impact of discouraging fraud and improper
conduct.
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Common Causes : Failure to Act‘We all have our
smallanyana skeletons’;
Collusion to compromise procurement system for personal gain;
No moral high ground for superiors to hold junior staff accountable because Superiors direct juniors to act in conflict with the frameworks;
Junior employees have a sense of impunity because of perceived protection from superiors; and
Lack of adequate internal forensic capacity to pursue investigations and limited resources for external resources.
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Common Causes : Failure to ActDeliberate destruction of evidence – no supporting documents (perception that absence of documents is a lesser offence than straight evidence of irregular expenditure);
Inconsistencies in application of discipline (labour law considerations);Poor governance – lack of follow through on consequence management reporting;
Culture of impunity; and
Resignations without follow through principle.
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Benefits of Forensic AuditsHeighten sense of governance and accountability;
Instill confidence in the rate payers to continue paying rates and local taxes;
Ability to approach local and foreign investors through PPP for major infrastructure projects if books and governance are in order;
Preventative interventions such as proactive fraud management, ICT reviews, probity reviews and transaction advisory; and
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Benefits of Forensic Audits
Identification of weaknesses in internal controls and enhancement mechanisms.
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Recommendations
Absence of records must be equally punishable as evidence of irregular expenditure;Set a culture of accountability with a robust and obligatory reporting system – Municipal space to Provincial MEC; National Department to Cabinet Minister;
Obligatory consequence management reporting to Governance structures;
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Recommendations
Train Bid Committees on procurement framework;Follow through individuals who resign to avoid consequences – possibly review employment contracts in this regard to create obligation for clean governance beyond organization with follow-through consequences in case of resignation;
Revive importance of Risk Management structures; and
Take pride in clean governance.
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Thank You
