R5.3 billion of the departments total expenditure of R22.

6 billion in the 2010/11 year unverifiable

E. Cape Department of Education Expenditure for the year ending March 2011
R million Compensation of employees 2,620 18,859 Unverified %

14%

Goods and services 860 Unverified expenditure R5,3 billion (23%)

1,769

49%

Verified expenditure R17,3 billion (77%)

Transfers and subsidies 1,440

1,536

94%

Expenditure for capital assets

396

360

91%

Payments for financial assets 0 Total expenditure

Source: Eastern Cape Provincial Department of Education, Annual Report 2010/11, Report of the Auditor General, page 153 - 165

19

0%
Unverified expenditure

Section Compensation of employees

Auditor Generals Comment not all employees selected for testing could be physically verified and the possibility of fictitious employees and the associated fruitless and wasteful expenditure could not be refuted. The department could not provide sufficient appropriate audit evidence supporting capped leave commitments to the value of R2,95 billion (2010: R2,86 billion) I could not determine the correctness of the available leave days due to incomplete personnel records and non-submission of personnel files. The department could not provide documentation to support payments amounting to R859.72 million included in goods and services expenditure of R1.77 billion It could not be determined whether these transactions were at arms length or if they should be disclosed as related-party transactions not at arms length there were no satisfactory alternative audit procedures that I could perform to obtain reasonable assurance as to the completeness and accuracy of related-party transactions Consequently the accuracy and occurrence of transfer payments made to schools included in non-profit institutions transfers amounting to R1.44 billioncould not be determined. Sufficient appropriate audit evidence could not be obtained to confirm capital expenditurefor buildings and other fixed structures, amounting to R360.43 million Payments amounting to R3.42 billion relating to compensation of employees, goods and services, expenditure for capital assets and conditional grantsare irregular Payments amounting to R75.46 millionrelate to expenditure incurred which could have been avoided as due care was not taken by officials when authorizing paymentshowever it is not included in the fruitless and wasteful expenditure of R37.60 million disclosed

Questionable expenditure R2.62 billion

Employee benefits

R2.79 billion

Goods and services

R859.72 million

Related party transactions

R135.67 million

Transfers and subsidies Expenditure for capital assets Irregular expenditure Fruitless and wasteful expenditure

R1.44 billion

R360.43 million

R3.42 billion

R113.06 million

Source: Eastern Cape Provincial Department of Education, Annual Report 2010/11, Report of the Auditor General, page 153 - 165

Additional comments from Auditor General

Awards were made to suppliers:
Who did not declare their employment by the state or their connection with a person employed by the state or their relationship with persons involved in the evaluation and/ or adjudication of the bids That are listed on the National Treasurys database as persons prohibited from doing business with the public sector

Contracts were extended or modified to the extent that competitive bidding processes where circumvented Instances were identified where senior managers did not disclose their business interest in a supplier to the department and a state institution to the executive authority

Supply Chain Management (SCM) officials and other SCM role players who had a private or business interest in contracts awarded by the department participated in the process relating to that contract
SCM officials and other SCM role players whose close family members/ partners/ associates had a private or business interests in contracts awarded by the department participated in the process relating to that contract The accounting officer did not, immediately upon the discovery of all irregular and fruitless and wasteful expenditure report it to the relevant treasury 57 food handlers (under the National school nutrition programme) did not have valid contracts with the department, payments of less than the minimum of R600 were made to food handlers and payments were not always authorized by a designated official

Source: Eastern Cape Provincial Department of Education, Annual Report 2010/11, Report of the Auditor General, page 153 - 165

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