Tech agency misses clean audit


The Technology Innovation Agency (TIA) received a qualified audit for its inaugural annual report.

There were some cases of wasteful and fruitless expenditure, including the under-utilisation of a building in the Western Cape for six months, and interest charged by the South African Revenue Services for a late payment of PAYE.

There were also gaps in procurement policies, but these have since been regularised, and were explained to National Treasury, ITWeb reports.

The Department of Science and Technology (DST) launched the TIA in November last year to help stimulate technological innovation to improve economic growth in SA.

It was formed from a merger of seven DST-funded organisations, namely Advanced Manufacturing Technology Strategy, BioPAD, Cape Biotech, Innovation Fund, LIFElab, PlantBio and Tshumisano.

Treasury assistance

The TIA became responsible for its own finances in March, and worked closely with treasury to comply with the Public Finance and Management Act.

It received an unqualified audit in respect of those financial statements. However, it had done something unusual, in that all the investments were depreciated to zero, according to CEO Simphiwe Duma.

This is now being regularised through a process with treasury and science and technology minister Naledi Pandor. There is a need to “normalise” the investments, since the seven entities incorporated into TIA had all been trusts that were being governed differently.

Duma attributed the qualified audit opinion to the combined portfolio of 126 entities that TIA inherited. Some of these entities had not had audited financial statements, and these could not be produced in time for the auditors.

Also, some of the loans had not been properly classified and some investments were dormant, while there was a problem with recording on others. The auditor-general was, therefore, not able to pronounce on the financials.

An action plan to address the gaps in procurement policies and wasteful expenditure was tabled in August 2011.

A team of trainee accountants, led by a senior accountant from treasury, will be seconded to the TIA to assist with the consolidation of all the investments.

Democratic Alliance shadow minister of science and technology Marian Shinn asked for further clarity on the figure of R63.9 million that was raised.

Duma, without giving any further details, said a note was made by the auditors that the matter relating to this figure was being dealt with. An investigation into the matter will be finalised by 4 November.

Innovation chasm

Duma said the TIA only looks at innovation that meets a need in the market and is sustainable, since it does not just fund all research.

He added that the TIA is also addressing problems relating to publishing and patenting. There are many products that lie dormant, since they are not yet commercialised. This is known as “an innovation chasm” or “the valley of death”, and TIA hoped to form a bridge across this so ideas from inventors could make the leap from being merely ideas, to becoming commercial industries or entities that could impact positively on society.

In order to implement its mandate, the agency uses appropriately structured financial and non-financial interventions, such as the 15 technology stations, 15 universities of technology and higher education institutions, and 14 technology platforms, according to the CEO.

He said these entities have high-end skills that small organisations that are developing technology may not be able to afford. A research service was made available, at a cost of R1 million a year, to assist these small entities, and the TIA also provided access to high-class equipment, which is often too costly for individuals, as part of the non-financial interventions.

Duma added that the TIA wants to build a culture of innovation. It has approached schools and offered science kits, sponsored competitions around innovation at universities, and is currently the lead sponsor of the solar car for universities.

The agency also entered into various external memoranda of understanding, with entities in France, Brazil, Spain, Germany and Zambia.

Duma said the TIA is driving the “slow pulse” sectors of agriculture, health and industrial biotechnology, as well as “fast pulse” sectors of industry, advanced manufacturing, energy, ICT, mining, and special projects.

Tech exports

The agency now has regional offices in four provinces and has established a number of local and international partnerships. It aims to have a regional office in every province by March 2012.

The main focus of TIA is to find good ideas that are sustainable and meet market needs, and to convert them from mere ideas to ongoing business propositions, in order to support innovation.

In light of this, the TIA is engaging with academic institutions, other government agencies and the corporate world to find out where such ideas already exist. It also wants to bridge the gap between local and international stakeholders.

In the 2010/11 financial year, the Investments Framework Policy was agreed to and will be gazetted soon.

The Youth Technology Innovation Fund was agreed to during the current financial year.

The agency assisted 1 594 small, medium and micro enterprises and facilitated 59 exports through the technology stations.