‘Financial irregularities’ behind suspension of FFC head

forensic investigation is the possible misappropriation of assets related to a data warehouse project. The amount of fruitless and wasteful expenditure involved was R1.9m in the 2019/2020 financial year and arose because the value created was less than the amount paid.

Tseng said the commission is concluding its investigations into the matter and corrective action will be taken in terms of the FFC’s disciplinary code against any staff member who is found to have transgressed policies and procedures.

The closing balance for fruitless and wasteful expenditure in 2020/2021 was R2.9m and for irregular expenditure, R12.8m. These are relatively high amounts for an organisation that had total revenue of R64.3m in that year, R63.8m of which came in the form of a government grant.

The irregular expenditure relates to the awarding of contracts; noncompetitive bidding or the lack of proof thereof; nondeclaration of interest; and failure to choose the supplier with the highest preference points or the supplier with the lowest price.

The auditor-general noted that the FFC had not taken effective steps to prevent irregular, fruitless and wasteful expenditure and that inadequate disciplinary steps were taken against the officials who had incurred or permitted irregular expenditure.

The audit and risk committee also noted that the FFC had not adopted aggressive anticorruption measures and highlighted internal control weaknesses.

Tseng said the irregular expenditure identified and disclosed in the annual report was a direct result of improved financial management practices stemming from an audit improvement plan. The FFC is in the process of appointing an investigator into the irregular expenditure. He also noted that management had strengthened the control environment to mitigate the risk of fraud and corruption, especially relating to procurement.

Asked whether the findings by the auditor-general and the FFC’s audit and risk committee suggested that there had been an overall deterioration in the financial management, Tseng said that the FFC was working hard to improve its financial management after “an extended period of disruption and not finding continuity in its executive management

“With permanent appointments having been made, stability has borne fruit.”