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SARS dispute with Auditor-General raises concerns

Oct 27 2017 18:53
Angelique Serrao

Johannesburg – Members of the Parliament's Portfolio Committee on Finance have expressed concern with a potential lack of oversight of the SA Revenue Service (SARS) due to the late filing of its financial report. 

Last week it was revealed in Parliament that SARS had not yet tabled its financial report because of a dispute with the Auditor-General. 

SARS Commissioner Tom Moyane had written to the chairperson of Parliament's oversight committee on finance, Yunus Carrim, to say that SARS had reached an "impasse" concerning the correct interpretation of a section of the SARS Act. 

The section refers to the minister of finance approving the terms and conditions of employment for managers at SARS. 

SARS indicated it would be able to present its annual report to Parliament at the end of November. 

Auditor-General Kimi Makwetu, meanwhile, had told Parliament that SARS was threatening to take his office to court over a dispute in its audit finding. 

Moyane given ultimatum

"We have not signed off on the accounts of SARS because we have a dispute on a particular matter and they have chosen that they will take it to court," EWN reported Makwetu as saying. 

The Daily Maverick's investigative unit, Scorpio, reported that the Auditor-General had given Moyane an ultimatum to declare controversial bonus payments to his executive committee as irregular expenditure, or SARS would recieve a qualified audit opinion. 

The report said the dispute related directly to R3m in bonus payments made to his executive, and that Moyane had opted to settle with the Auditor-General.

The Auditor-General's office would not answer News24's questions on the issue. Spokesperson Africa Boso said that all national and provincial audits, including that of SARS, would be released on Wednesday. 

In response to a request for comment SARS spokesperson Sandile Memela said:"SARS does not wish to engage on the issues raised by the Office of the Auditor-General and related matters through the media at this stage.

"Please note SARS is engaged in talks with the AG’s legal representative as part of the effort to resolve the matter. SARS is committed to the process that is underway and wishes not  to provide further details at this stage."

Tax shortfall 

On Thursday members of Parliament asked Finance Minister Malusi Gigaba to look into the administration of SARS after the mini budget revealed that the country faces a revenue collection shortfall of R50.8bn.

READ:  Look into SARS, MPs tell Gigaba amid glaring tax shortfall

DA MP Ockert Terblanche wanted to know from Gigaba if the under-collection of tax could be ascribed to a "wholesale underperformance" by Moyane.

Carrim said the committee was concerned that SARS had not produced an annual report yet. "It's very bad. We read somewhere that SARS is taking the Auditor-General to court. We have the right to know," he said. 

Gigaba on Thursday had acknowledged there were challenges with the SARS annual report.

"SARS failed to resolve the matter (the difference of opinion) with the AG and they had to seek a resolution through a court process," he said.  

Auditor-General 'increasingly challenged'

Last year the Standing Committee on Public Accounts, or SCOPA, warned government departments and state entities that South Africa was not a "mafia state" after the Auditor-General said he was being increasingly challenged.

Makwetu warned a year ago that there was a growing trend of departments and provinces threatening him with legal action on his findings.

He said there was resistance because his office was digging in places where officials did not want it to. 

SARS insiders told News24 that, as far as they knew, SARS had never challenged the Auditor-General before, and they said this was a clear indication that something was not right.

"A dispute being raised with the Auditor-General over whether the finance minister should sign off over executive bonuses or not has never happened before," an insider with knowledge of the matter said. "This could set a huge precedent. It talks to the heart of governance in the country." 

The person did not want their name used as they had not been authorised to speak to the media. 

DA deputy spokesperson on finance Alf Lees, meanwhile, said the financial report should have been presented to Parliament towards the end of September. 

"It's very late, so everyone is feeling uptight about it," he said.  

SARS hiding behind 'taxpayer confidentiality'

Lees said the portfolio committee had not been given a full explanation about what the dispute was about. He said that if the issue did relate to bonuses for executives this would show there was some attempt at enriching managers at SARS.

"This sadly seems to me to be the product of the appointment of an unsuitable commissioner for SARS," said Lees. 

He said he believed the model of oversight of SARS needed to change, as the institution was hiding behind taxpayer confidentiality so as not to answer questions about its management. 

Lees also mentioned the Tax Ombudsman's report into slow taxpayer refunds at the institution.

READ: Tax ombud slates SARS, says it must drop 'skop and donner' attitude

He said both the report, and the fact that the financial report had not been released yet, had a negative impact on business and the economy.  

"They seem to be hiding behind the screen of taxpayer confidentiality and all these things are being screened from oversight. We need a new way to look into what SARS is doing. Treasury should be overseeing SARS, but they too appear to be blocked," Lees said.  

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sars  |  auditor general  |  tax  |  sa economy
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