In previous general reports, we reiterated the need for provincial leadership to be deliberate in its efforts to build skills and capacity within financial and performance reporting directorates and to hold all relevant roleplayers accountable for implementing corrective action in response to weak control environments, transgressions and poor performance. Over the three-year period, there were some gains and traction, as evident in improvements in the audit outcomes of four departments and two entities. However, a sustainable control environment to improve service delivery will require extra effort by all roleplayers in the accountability ecosystem.

Overview

The audit outcomes for 2021-22 reflect one clean audit and eight unqualified opinions with findings, as well as six qualified, one adverse and two disclaimed opinions. The sustainability of the improvements over the past three years is yet to be seen, however, as accounting officers had not yet instilled a culture of producing quality financial statements, officials did not attend to recurring findings, and key roleplayers did not diligently and regularly monitor post-audit action plans. Senior managers and officials also did not attend to basic control activities such as proper record keeping, processing and reconciling controls as well as performing timely reviews because there were no consequences for them not doing so. Executive leadership should be concerned that the provincial treasury remains the only department with a sustained clean audit outcome over the three years of the current administration.

To address the above concerns, accounting officers should capacitate finance units with skilled individuals who will carefully and consistently implement day-to-day financial and compliance disciplines. Accounting officers should also strive for maximum benefit from governance structures by insisting on the timely submission of quarterly reports for review by internal audit units and audit committees. To enhance accountability, executive authorities should hold accounting officers answerable for not adhering to their basic responsibilities as contained in the Public Finance Management Act.

The annual performance plans of the key service delivery departments were aligned to the approved Medium-Term Strategic Framework, except for the provincial education department, which had not included all output indicators. Nine auditees were able to report accurately on their performance information with no findings, an improvement from only five in 2018-19. However, reporting accurately does not necessarily mean that services were delivered. For example, the provincial public works and roads department reported accurately on its performance, but did not achieve most of its planned targets. The roads within the province and some government buildings under its management are in a poor state. Despite this, the department underspent its budget on transport infrastructure by R466 million, mostly relating to road construction and maintenance, due to a lack of proper planning in the procurement process to ensure that a panel of prequalified contractors with the required Construction Industry Development Board grading was available.

Conversely, at the provincial health department, we could not audit a number of indicators relating to HIV/Aids and tuberculosis surveillance and treatment due to differences between the reported achievement and the patient information in primary healthcare facility registers. This lack of credible performance data made it difficult to measure how the department delivered on its mandate and the overall primary healthcare in the province. The accounting officer should hold facility and sub-district managers accountable for the lack of corrective action for such poor-quality performance reporting.

As part of our work, we audited the management of infrastructure projects at various departments and found that poor project management continued to be a significant contributor to delayed projects. The provincial human settlements department had still not completed the Geluksoord housing project in Lekwa-Teemane or the Matlosana extension 5 project, both of which were supposed to have been completed in 2019. The department also underspent its budget for housing development by R271,3 million, most of which related to the human settlements development grant, because it did not have adequate capacity in its project management unit to monitor and timeously inspect projects. This meant that people continued to live in poor conditions while waiting for proper housing.

We found similar project management shortcomings at the provincial health department. For example, the Excelsius Nursing College project had been delayed by 46 months, during which time the department spent more than R50 million on renting office and teaching space as an alternative arrangement. Likewise, the provincial education department had not completed Loretlweng Primary School and Tlotlang Thuto Secondary School four years after their planned completion dates. Learners thus had to attend neighbouring schools, which became overcrowded and did not provide a conducive learning environment.

Ordinarily, the provincial public works and roads department should manage these infrastructure projects, but due to its failure to execute its mandate in the past, user departments started taking over their own projects. Unfortunately, user departments did not have the required project management capabilities, such as determining the skilled workforce required on each project. Provincial leadership should capacitate the responsible department to deliver on its mandate or, alternatively, formally decentralise the responsibility to user departments and equip them with the necessary project management skills.

The financial health of the province remains a concern, more so at public entities, as evident from the North West Transport Investment group being placed under business rescue and the Golden Leopard Resorts group of subsidiaries being dependent on government bailouts and loans to run its daily operations and settle its financial obligations. The poor performance of these entities hampers the delivery of bus services to communities and the recovery of the tourism-driven economy. Provincial leadership should reassess whether these entities are still an effective instrument to address economic development and job creation in the province.

At departmental level, the provincial health department also showed indicators of financial sustainability concerns. The department overspent its budget by R389 million despite having received additional funding during the year to deal with its growing accrual balance, which increased to R1,3 billion despite the additional funds. Even though it overspent on employee costs, the department did not have enough personnel to address the health needs of the people in the province, specifically at primary healthcare and district hospitals. For example, at Sunrise Park Clinic, professional nurses were overworked as each nurse had to provide clinical services to over 35 patients a day, which is not sustainable. The department, taking into account the current budget constraints, needs to reorganise its organisational structure to ensure that all facilities are sufficiently staffed with the right balance of medical and administrative staff.

The province’s annual irregular expenditure decreased slightly over the three-year period, but remained high with R3,75 billion being incurred in 2021-22. This was mainly due to non-compliance, specifically a lack of transparency or competitiveness in procurement processes, such as the extension of expired contracts or deviations not being properly approved. While not all irregular expenditure results in financial losses, it heightens the risk of corruption and process weaknesses. This makes it even more important for departments to investigate irregular expenditure. Yet, departments lacked the capacity to do so and the initiative of the premier’s office to assist with investigations and disciplinary processes did not yield positive results due to a lack of sufficient and skilled resources.

Since our mandate was expanded in 2018-19, we have issued 29 material irregularities to accounting officers. Through these material irregularities, we have managed to influence accountability and enforce corrective action. At the provincial health department, for instance, this included the prevention of a possible loss of R65,6 million; disciplinary action against responsible officials; recovery of R9,4 million from a contractor; and recovery of further losses totalling R15 million being initiated. However, some accounting officers are reactive and only start corrective action once we have notified them of a material irregularity. Executive authorities need to insist on progress updates to ensure that accounting officers are diligently and effectively implementing the committed actions.

Coordinating departments and oversight structures should aim to monitor, support and strengthen governance within the province. The legislature reviewed departments’ strategic plans and raised recommendations, but departments’ lack of implementation of resolutions hindered the impact of legislature committees. The speaker should support committee chairpersons by getting members of the executive council to buy into, and agree to fully implement, these resolutions. The provincial treasury actively supported departments in line with its legislated mandate. The treasury’s initiatives can be enhanced by customising them to address entity-specific root causes with a focus on financial difficulties. Although the premier’s office identified non-performing departments (despite no agreements being in place between the premier and some of the members of the executive council), no corrective action was enforced. The premier should thus enhance the process aimed at holding responsible executives accountable for implementing corrective action.

Coordinating departments and oversight structures should focus on key service delivery departments to ensure that their initiatives, projects and spending are aligned to their allocated budgets and that any deviations are addressed immediately to ensure a positive impact on service delivery.

It is now more than four years since the national intervention in terms of
section 100(1)(a) and (b) of the Constitution at 10 departments. Since then, the premier’s office; provincial health, social development, and agriculture and rural development departments; Mmabana Arts, Culture and Sports Foundation; and North West Development Corporation have all improved their audit outcomes, with the provincial education department regressing over the period. Provincial leadership should assess and build on the gains driving these improvements.

Call to action

We urge provincial leadership to focus on improving financial and performance reporting disciplines to enable the preparation and submission of credible financial statements and annual performance reports. As coordinating departments and oversight structures form the cornerstone for better outcomes and improved service delivery, we continue our call for all key roleplayers to support and intensify the role of the coordinating departments and oversight structures to improve the lived experiences of people in the province. A culture of responsiveness, consequence management, good governance and accountability should be a shared vision for all, including executive authorities, the legislature and the coordinating departments.