Department of Defence receives qualified audit

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The Department of Defence (DoD) has been given a qualified audit opinion by Auditor-General Kimi Makwetu.

He said the reason for the qualified audit opinion related to intangible assets. The DoD published financial statements included misstatements as regards the “amount for intangible capital assets was not supported by sufficient appropriate evidence” and a misstatement in the previous year was restated “but the restatement could not be substantiated with appropriate audit evidence”.

The Auditor-General also pointed out the DoD incurred more than a billion Rand in irregular expenditure, 82% of the total irregular expenditure incurred by the portfolio of the DoD, Department of Military Veterans (DMV), Armscor, Castle Control Board, SA National Defence Force and the Special Defence Account.

DoD irregular expenditure was attributed to a salary increase for soldiers not being submitted to the Minister of Finance as required by legislation.

Makwetu also noted the auditors “could not secure a meeting with the minister (Nosiviwe Mapisa-Nqakula) during the past year. One meeting was held on August 1, 2014, after the audit report was signed. More frequent interactions could impact positively on the audit outcome and could lead to fewer changes to the financial statements”.

Makwetu and his team of auditors identified material non-compliance with legislation by the DoD (its internal audit committee was not fully operational), Armscor (it did not align its supply chain management policies with the Preferential Procurement Policy Framework Act) and both as well as the Special Defence Account “did not take reasonable steps to prevent irregular expenditure”.

The audit of the DMV was not finalised because its annual financial statements were not supported by appropriate audit evidence while the SANDF final audit could also not be finalised due to late submission of annual financial statements.



This article was altered on January 26, 2015, to amend an inaccuracy identified by SANDF Defence Corporate Communication.