Auditor-General Tsakani Maluleke said she was unable to obtain sufficient appropriate audit evidence to substantiate the amount recognised as unlisted financial instruments, interest in joint ventures and investments in associates. Picture: Thobile Mathonsi/Independent Newspapers
The Unemployment Insurance Fund (UIF) has miraculously escaped a disclaimer when it landed a qualified audit opinion for the 2021/22 financial year.
The finances of the fund are such that Auditor-General Tsakani Maluleke was unable to obtain sufficient audit evidence that benefit payments for the Covid-19 Temporary Employer-Employee Relief Scheme (TERS) for the year under review and the previous years were properly accounted for due to the status of the accounting records.
“I could not confirm the amount of benefit payments for the Covid-19 TERS by alternative means as the public entity’s records did not permit the application of alternative audit procedures.
“Consequently, I was unable to determine whether any adjustments were necessary to Covid-19 TERS benefit payments stated at R3 808 456 000 (2021: R57 442 060 000) in note 20 to the financial statements,” Maluleke said.
She also said she was unable to obtain sufficient appropriate audit evidence for unemployment benefit payments as the public entity did not implement effective systems of internal control to maintain proper accounting records.
“I could not confirm the amount of unemployment benefit payments by alternative means as the public entity’s records did not permit the application of alternative audit procedures.
“Consequently, I was unable to determine whether any adjustments were necessary to unemployment benefit payments stated at R15 270 134 000 in note 20 to the financial statements,” the A-G said.
Maluleke also said she was unable to obtain sufficient appropriate audit evidence to substantiate the amount recognised as unlisted financial instruments, interest in joint ventures and investments in associates.
This extended to income from equity accounted investments and interests and that adjustments were necessary to the impairment of investments amounting to hundreds of millions of rands.
She also found that the UIF did not correctly account for prepayments in compliance with presentation of financial statements.
Maluleke said the UIF did not have adequate systems to maintain records of commitments and ensure that the amount of commitments was correctly calculated.
The entity’s failure led to commitments being understated by R132 893 660.
Maluleke was also unable to obtain sufficient appropriate audit evidence for amounts disclosed as contingencies as the public entity did not implement effective systems of internal control to maintain proper accounting records.
“I could not confirm the amounts for contingencies by alternative means as the public entity’s records did not permit the application of alternative audit procedures,” she said.
The A-G blamed the state of finances at the UIF on not implementing proper record keeping to ensure that complete, relevant and accurate information was accessible and available in a timely manner to support financial and performance reporting.
Although the UIF developed an audit action plan to address internal control deficiencies, she said, the plan was not adequately monitored to ensure that corrective measures were effectively implemented.
“As a result, there were recurring and significant new findings with similar root causes as those previously reported.”
The UIF also did not implement adequate controls relating to daily and monthly processing and reconciliation of transactions, she said.
“The controls that management put in place to ensure regular, accurate and complete financial reports did not always prevent and/or detect material misstatements in the financial statements and annual performance report.
“The public entity did not adequately review and monitor compliance with applicable laws and regulations, which resulted in non-compliance with legislation being identified during the audit.”
Maluleke also found that there was insufficient appropriate audit evidence that disciplinary steps were taken against some of the officials who permitted irregular expenditure amounting to R86 870 457 in prior years.
“Disciplinary hearings were not held for confirmed cases of financial misconduct committed by members of the accounting authority,” she noted.
Cape Times
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