The Auditor-General (AG) has lifted the lid on the North West Department of Public Works and Roads’ poor management of taxpayers’ money and flagged its flagrant disregard for the law, accountability and policies. 

According to the AG’s 2022/2023 financial year report, the department incurred irregular, wasteful, and fruitless expenditure of R689 million, and underspent the budget by R204 million due to inadequate planning and project management. It failed to properly record unauthorized expenditures, accruals and payables, and immovable tangible capital assets. 

In addition, unauthorized expenditure was not recorded in accordance with National Treasury rules, thus understating expenditure for contractors and capital assets by R72 million while overstating consulting fees by R38 million. Capital work in progress and immovable, tangible capital assets were understated by R1,4 billion. 

“As disclosed in note 30 to the financial statements, irregular expenditure and fruitless and wasteful expenditure of R689 359 000 and R537 000, respectively, were incurred in the current year. As disclosed in the appropriation statement, the department has materially underspent the budget on programme 3: Transport Infrastructure with R204 988 00 due to inadequate planning and project management,” said the AG’s report. 

“Unauthorized expenditure was not recorded in accordance with paragraph 7.6 of National Treasury Instruction Note No 4 of 2022-23 – PFMA Compliance and Reporting Framework. The department incorrectly calculated unauthorized expenditure in the current year relating to the spending of the PRMG grant, resulting in the current year unauthorized as disclosed in note 30 to the financial statements being understated by R72 244 106.”

Accruals and payables for goods and services received but not yet paid for were understated by R39,305,563. Capital work in progress and immovable, tangible capital assets were understated by R1,474,072,851. The provincial department of public works and roads does not have adequate systems in place to ensure that goods and services are correctly classified, said the AG. 

The AG’s report adds to the department’s growing woes under MEC Saliva Molapisi and head of department Moss Kgantsi. African Times previously reported on tender irregularities, fraud and corruption which implicated senior departmental officials, including Kgantsi and Chief Financial Officer Peter Modika.

This includes Ndhuna Civils’ R134 million Khunotswana road tender, Khosi Vuyo Logistics’ R79 million Nelson Mandela Drive tender, and MM Industries’ R44 million Mmakaunyane road tender. The Special Investigating Unit SIU), the Hawks, and the North West Legislature are investigating the department. 

The AG further refused to audit the supplementary information submitted by the department, saying it did not form part of the financial statements as it was presented as additional information. The AG put the blame squarely on Kgantsi’s door, suggesting he either failed his responsibility as an accounting officer or sought to “liquidate” the department. 

“The accounting officer is responsible for the preparation and fair presentation of the financial statements in accordance with the MCS prescribed by National Treasury and the requirements of the PFMA and the Dora, and for such internal control as the accounting officer determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error,” read part of the AG’s report. 

“In preparing the financial statements, the accounting officer is responsible for assessing the department’s ability to continue as a going concern; disclosing, as applicable, matters relating to going concern, and using the going concern basis of accounting unless the appropriate governance structure either intends to liquidate the department or cease operations or has no realistic alternative but to do so.”

The department has received a qualified audit opinion.