North West Exco suspends parastatal Board on financial irregularies
16 Aug 2012The Executive Council (Exco) of the North West Province has suspended North West Transport Investment (NTI) Board and its subsidiary companies, North West Star(Pty) Ltd (NWS) and Attredgeville Bus Services(Pty)Ltd (ABS) for financial irregularities, MEC for Public Works, Roads and Transport, Raymond Elisha announced on Thursday.
The decision to suspended the nine-member board and appoint an interim board including a shareholder`s representative that will be seconded to NTI for a period of six months on a full time basis pending investigation into the affairs of NTI and its subsidiaries was taken yesterday during Exco’s bi-weekly sitting.
The Exco resolution to appoint an audit firm that would conduct a forensic audit and report within the six months was announced by MEC Elisha on the sideline of the two-day Provincial Anti-Corruption Roundtable in Potchefstroom.
Exco’s decision to suspend the board and institute an investigation was based on the 2010/2011 qualified Auditor General`s report that pointed out that:
oThe entity could not provide sufficient appropriate audit evidence to support the ownership of investment property of R 21 570 000 (2010: R19 561 000), included in investment property of R 177 890 000 (2010: R 179 126 00) disclosed in note 22 to the separate annual financial statements. The entity`s records could not permit alternative audit procedures. Consequently the Auditor General could not determine the rights pertaining to this investment property.
oPayments amounting to R 110 208218 were made in contravention of section 51 of the PFMA. This amount was not disclosed in the financial statements leading to an understament of irregular expenditure by the same amount.
oThe entity did not correctly depreciate property, plant and equipment in terms of its accounting policy and also as required by the South African statements GAAP, IAS 16 (AC 123) property, plant and equipment.
oThe Auditor General could not obtain sufficient appropriate audit evidence to determine the accuracy of lease commitments relating to immovable property R 25 330 000 included in the lease commitments of R 132 909 000.
oThe accounting authority submitted annual financial statements for auditing that were not prepared in all material aspects in accordance with generally accepted accounting practise and supported by full and proper records as required by the PFMA.
oThe accounting authority did not take effective and appropriate steps to prevent irregular and fruitless and wasteful expenditure as per requirements of the PFMA.
oContrary to requirements of the PFMA no system for properly evaluating all major capital projects prior to a final decision on such projects was implemented and no appropriate procurement and provisioning system which is fair, equitable, transparent, competitive and cost effective existed for purchasing of busses.
oThe Auditor General also found that the accounting authority does not exercise oversight over reporting and compliance with laws and regulations and internal control, decisive actions are not taken to address risks relating to the achievement of complete and accurate financial and performance reporting.
Elisha has vowed that action will be taken upon receiving the report on the investigation.
He confirmed that the powers of the board will be vested with the accounting officer of his department as members of the board were served with suspension letters notifying them of their suspension and advising them to cooperative with the investigation which he is confident will be concluded within three months.
In terms of the letters of suspension, members of the board must not visit the company locations (nor those of its associated companies) or contact any employee of the company without written authorisation from the MEC for Public Works, Roads and Transport as the responsible Executive Authority.
NTI is a company registered in terms of the Companies Act of 1973 and wholly owned by the North West Provincial Government as holder of 100% of the total ordinary issued shares of the entity.
NTI, NWS and ABS are all Public Entities within the context of the Public Finance Management Act (PFMA) and are therefore subject to provisions of the PFMA.
The NTI board constitutes the accounting authority for NTI and its subsidiaries in the form of NWS and ABS in terms of section 49(2) (a) of the PFMA.
The suspensions are in line with Premier Modise’s administration’s commitment to clean governance aimed at ridding provincial government departments, municipalities and state owned enterprises of the scourge of corruption and maladministration targeted to achieve clean audits by 2014.
Lesiba Moses Kgwele
Tel: 018 388 3705
Cell: 083 629 1987
Fax: 086 620 4802
Issued by: North West Provincial Government
16 Aug 2012
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