The Compensation Fund has finally submitted one set of its annual financial statements to Auditor-General Tsakani Maluleke for audit purposes after it missed the deadline for last year.
Now, it is waiting for the auditing of its 2021-22 financial statements to be completed before submitting another set for the 2022-23 financial year.
This emerged when the Employment and Labour Department briefed the portfolio committee on employment and labour on the non-submission of annual financial statements for two years in a row by the Compensation Fund.
Organs of state are required in terms of the Public Finance Management Act to submit financial statements within two months after the end of the financial year to the auditor-general for auditing, and the National Treasury to prepare consolidated financial statements.
The audit reports are scheduled to be submitted within five months of the end of a financial year to Parliament with the institution’s annual report and financial statements.
Last year, Employment and Labour Minister Thulas Nxesi wrote to Parliament saying both the Unemployment Insurance Fund and the Compensation Fund were unable meet the legislated deadlines.
Nxesi had asked that the Compensation Fund’s submission be delayed until November 30, 2022, citing the work that had to be undertaken to correct all prior financial years’ errors that had contributed to the negative audit outcomes of the fund.
On Wednesday, the Compensation Fund’s acting commissioner Farzan Fakir said they had for a long period obtained a disclaimer of audit opinion.
“In order to achieve fair representation as per section 40(3) of the Public Finance Management Act, the Compensation Fund requested to delay submission of the 2021-22 annual financial statements and focus on records extraction,” Fakir said.
She also said the Compensation Fund submitted the annual financial statements for 2021-22 on May 31.
Fakir added that in line with the principle of fair presentation and careful consideration of the 2021-22 external audit on annual financial statements’ closing balances, a request was made to submit the 2022-23 financials on August 30.
“The financial statements’ action plan has been compiled and it is being implemented for the 2022-23 annual financial statements compilation,” she said.
In terms of the fund’s action plan, the supporting reconciliation and schedules were due for finalisation on June 23, followed by draft annual financial statements by June 30.
Fakir told the MPs that the audit action plan was based significantly on the matters arising from the disclaimer audit opinion.
“The plan’s approach is to develop the root cause of the weakness in controls that gave rise to the audit finding, as opposed to administratively correcting the auditing findings,” she said.
She told the MPs that the fund had requested that it not submit its annual report for 2021-22, but instead submit it during the 2023-24 together with the 2022-23 financial statement to resolve prior year audit errors.
“The main reason behind the request to table the 2021-22 financial year on September 30, 2023, was to implement action plans in order to achieve improved audit items.”
Fakir said the pre-audited annual report for 2022-23 would be submitted to the AG by October 30 and thereafter to the National Treasury by November 30.
“The printed annual report inclusive of financial information for 2022-23 will be sent to Parliament for tabling by December 31, 2023,” she said.
Employment and Labour Department head Thobile Lamati said a number of steps were taken to bring normalcy to the fund, and audit firm PriceWaterhouseCoopers had looked at the organograms of the Compensation Fund and the UIF.
“We are in a position to implement the recommendations they have made. They developed a high level organisational structure for the UIF and the Compensation Fund,” he said.
“We will get a report from them and after that follow internal administrative processed and start the process of reconfiguring,” Lamati said.
Cape Times
