The State Information Technology Agency (SITA) is currently saddled with cases of irregular expenditure totaling about R2 billion.
This was revealed by the institution’s acting managing director Gopal Reddy, during a briefing with the Standing Committee on Public Accounts (Scopa) regarding the agency’s 2023-24 audit outcomes on Wednesday.
Auditor-General Tsakani Maluleke’s recent report found that SITA did not take effective and appropriate steps to prevent irregular expenditure required by the Public Finance Management Act.
“The majority of the irregular expenditure relates to expenditure incurred on ongoing multi-year contracts incurred in prior years. Prepayments were made before goods or services were received and the terms of contract did not specify that payments in advance are required in contravention of treasury regulation,” Maluleke said.
She also stated in her report that she was unable to obtain sufficient appropriate audit evidence that disciplinary steps were taken against officials who had incurred irregular expenditure because investigations into irregular expenditure were not performed.
CFO Molatlhegi Kgauwe said SITA has an independent loss control committee to deal with cases of irregular expenditure.
“In the past there were delays in finalisation of irregular, wasteful and fruitless expenditure (cases), but we have improved,” Kgauwe said.
Reddy told Scopa said some cases of irregular expenditure have been submitted for condonation to the National Treasury, while others were under investigation.
A presentation by SITA to the meting with Scopa showed that irregular expenditure cases valued at R319m were under investigation, R159m were in disciplinary process, R492m were to be considered for condonation, R21m were submitted to the National Treasury for condonation and R1 billion sent to National Treasury for reconsideration.
Responding to a question about the nature of the irregular expenditure, former board member and audit committee chairperson Nolitha Pietersen said out of the R2bn irregular expenditure, R1,4bn was due to lack of proper contract management.
“SITA has been guilty over the years of not managing contracts to a point where we reacted when a contract was about to end, the service (was) still needed and contracts get extended,” Pietersen said.
She also said R151m of irregular expenditure was due to overspending on contract and issues of documentation management.
“Some of it is due to local content requirement not being applied. Deviation was another contribution. We would deviate not in line with National Treasury regulation,” Pietersen said, adding that there were cases of “man-made emergencies” that were not necessarily emergencies as per the procurement definition.
Earlier, Reddy told Scopa that there were two cases of immaterial irregularities that were flagged by Maluleke in the 2023-24 financial year.
One of the material irregularities related to software licences that were not used by client departments.
“We purchased 99,000 licences in 2018 to cover SITA and create capability to clients. The clients did not take up the service, resulting in software licences of R23m not being utilised.”
Reddy said the A-G issued a finding about fruitless and wasteful expenditure in 2021 and has since referred the matter to the Special Investigating Unit for investigation.
Another material irregularity concerned a contract entered into in April 2019 for building SMME capability and transferring skills, including a conference that could not be rolled out due to Covid-19 in 2020.
