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Pretoria - Labour Minister Membathisi Mdladlana has ordered a forensic audit into an Auditor-General finding that unknown net debit entries totalling R10m in the Unemployment Insurance Fund's 2003/04 annual report were incorrectly accounted for as bank charges.
The probe would also look at a finding that debit entries totalling R4.1m were incorrectly accounted for as contributions received, the minister told reporters in Pretoria on Tuesday evening.
Mdladlana said he was not satisfied with the explanation given to him by UIF and departmental officials, and has instructed acting Director-General Vanguard Mkosana to get a forensic audit underway. The director-general is the fund's accounting officer.
"If the results are serious, heads will have to be chopped. If a finger is pointed, we must ask the Scorpions (special investigating unit) to sting."
Mdladlana expressed displeasure about the bad reflection cast on the UIF and his department by findings of anomalies in Auditor-General Shauket Fakie's report.
"One is dealing with human beings. We don't want anyone to be seen chowing state money." Corrections had to be made to ensure future Auditor-General reports did not find similar problems with the UIF's financial statements.
"The UIF was in the red and we fought a big battle. Now we are doing well, we cannot have these little matters."
Fakie said he was unable to express an opinion on the fund's financial statements - the most serious criticism an auditor-general can make.
He found problems with processes involving the collection of contributions, interest and penalties, the reconciliation of bank accounts, a "fundamental breakdown" in internal control systems and procedures, inadequate accounting processes, and general weaknesses in information technology used.
An explanation for shortcomings
Various sections of the Public Finance Management Act, Treasury regulations, the Unemployment Insurance Act and the Unemployment Insurance Contributions Act had not been complied with, Fakie said in his report.
But Mdladlana said there was an explanation for at least one of the shortcomings listed. Fakie found that benefits erroneously paid to people who had become re-employed, amounting to R44.7m, were written off as uncollectable without the authorisation of the director-general - as required by law.
The minister said authorisation had been lawfully delegated by the director-general, but this was not communicated to the Auditor-General.
Mdladlana has instructed that this be done immediately. The money has also not been written off, but was merely not reflected in the balance sheet.
UIF commissioner Shakes Mkhonto told the same media briefing the UIF could be deemed as being on a sound financial footing. It was able to meet its obligations every month, and no longer had a bank overdraft.
In 2002 the fund had a deficit of R605m. It now had reserves of about R7.4bn.
Mkhonto conceded there were financial management and organisational shortages, but said these were being addressed - starting with the recent appointment of a new financial management team.