Pretoria - The Auditor-General has declared the South African National Road Agency (SANRAL) financial statements for the year that ended in March as fairly presented in all material respects.
But certain non-compliance issues had been highlighted, SANRAL said in a statement.
“SANRAL has identified additional processes to clarify any technical issues with compliance matters. Essentially, existing processes need to be formally recorded to prove compliance to the satisfaction of the Auditor-General,” Inge Mulder, SANRAL’s CFO, said.
The issues in question refer principally to R3.3 billion in irregular expenditure, which, the Auditor-General found, had deviated from the supply chain management legislated processes in the Preferential Procurement Policy Framework Act (PPPFA) and Treasury Regulations.
The Auditor-General found that R2.4 billion, included in the total sum of R3.3 billion, had been awarded using a benchmarking instrument to determine the “most realistic lowest acceptable price”.
His report states that although the intention was within the PPPFA objectives, it was not compliant with the letter of the law. The non-compliance is related to certain aspects of the PPPFA and how SANRAL does the procurement of a management contractor in support of the development of SMMEs.
Mulder said that the model had been developed as part of SANRAL’s strategy to develop small contractors, in line with the government’s aims and objectives.
“The model is aimed at appointing a management contractor that sublets 80% of routine maintenance work (of which more than 90% are black companies) to SMMEs. The work goes out on tender in smaller work packages, which SMMEs are more capable of undertaking and can be sustained.”
She acknowledged that the deviation from the PPPFA had not been approved by the Minister of Finance, although an application for exemption had been submitted for the Minister’s consideration.
She emphasised that “the AG has not found the form of procurement used to be corrupt in any way whatsoever. A proper examination of the system will show that it also discourages collusive practices”. Mulder also pointed out that this system of procurement has been used by SANRAL for the past 11 years and only this year has the AG found fault with it.
She noted that the figures contained in SANRAL’s financial statements would not have differed from those reported, had the non-compliance factor been absent.
“This is implicit in the Auditor-General’s favourable report, which, in addition, pointed out that the delay in the implementation of the high profile Gauteng Freeway Improvement Project had not impacted negatively on SANRAL’s going concern status.” – SAnews.gov.za
