The Portfolio Committee on Human Settlements, Water and Sanitation has instructed the Department of Human Settlements to strengthen its oversight on the Housing Development Agency (HDA) to ensure stability and recovery.
For its part, the committee said it will pay extra attention to the implementation of the agency’s audit action plan to improve the declining performance of the agency.
This follows a committee briefing from the agency on its 2019/20 annual report, where the committee noted various areas of concern that require urgent action.
The committee expressed concern on the state of affairs at the HAD and warned that it will eventually impact negatively on the agency’s ability to deliver on its mandate.
The committee received a briefing from the agency on its 2019/20 annual report and noted various areas of concern that require urgent action.
Committee chairperson Machwene Semenya said to overcome the underlying contributors to the decline at the agency, the committee will focus its oversight on, will include, procurement and contract management, expenditure management and ensuring stability at leadership level.
“Firstly, the committee is concerned by the information that the annual performance and strategic plans of the agency were not approved by the Executive Authority. This is concerning in the context that these set the strategic direction the agency has to take, and without a guiding framework, the agency is destined to fail.
“Secondly, the committee is concerned by non-compliance with legislation especially with the supply chain management at the entity. Also concerning was the information that there was a lack of the implementation of consequence management at the agency,” Semenya said.
Semenya said that the committee has instructed Human Settlements to ensure that the strategic framework is put in place to ensure direction.
While welcoming the dismissal of two senior officials as consequence management, the committee has also called for further consequences against every official found in the wrong.
Weaknesses in Supply Chain Management processes
The committee also raised concerns on weaknesses in Supply Chain Management processes, saying it finds it unacceptable that procurement happened without a call for at least a minimum number of prescribed written price quotations from prospective suppliers.
“The deviation was also approved even though the reasons are not justified, some of the contracts were awarded to suppliers whose tax matters had not been declared by the South African Revenue Services to be in order, and some of the contracts were extended or modified without the approval of a properly delegated official.
“The committee expressed its concern over this in the context that non-compliance of this nature was reported last year, according to the committee this shows an evolution of the culture of non-compliance with no intention to reverse it,” Semenya said.
Increase in fruitless and wasteful expenditure
Regarding fruitless and wasteful expenditure, the committee said it is concerned by the enormous increase in fruitless and wasteful expenditure from R2 million in 2018/19 financial year to R17 million in 2019/20.
“The concerns are worsened by the fact that the expenditure was caused by payments made for work that cannot be shown to have been done or no record indicating its approval to be done. The committee has called on the department to institute recovery processes to recuperate wasted state money,” Semenya said.
While the committee noted that the deficiencies in the internal audit capacity within the entity, Semenya said that the committee has recommended that the department’s own internal audit Monetary unit sampling (MUS), in the interim, fill the gap to implement this key function, as it is critical to curing the defects within the agency.
“The committee has also called for the department to ensure stability at senior management level at the agency, as this guarantees strategic direction and guidance to the entity. At the centre of the committee’s aim is to ensure that the entity meets its constitutional mandate,” Semenya said.