The status of financial affairs of Roads Agency Limpopo, as evidenced in their accounting books, continues to improve, resulting in an unqualified audit opinion in the latest audit by its Auditor-General South Africa.
The Board of Directors and the Executive Management of RAL sees the findings of the state audit institution as a vindication of RAL’s relentless efforts to put its financial management and accounting on a sound footing since assuming their respective roles.
The latest audit opinion is an improvement from the qualified opinion RAL got in the preceding financial year (2015/16) and the adverse opinion in 2014/15. Even though there is still a room for improvement, the agency is clearly out of the doldrums and the era when its audit findings alternated between an adverse opinion and a disclaimer—with the disclaimer being the worst opinion the auditor can express about the state of a public institution’s finance books—is firmly in the past.
RAL CEO, Maselaganye Matji, says the journey towards the goal of a clean audit outcome, which is already within RAL’s view of the horizon, has been anything but plain sailing.
“Turning around any organisation requires an insurmountable amount of resilience, commitment, focus and patience. Implementing strategies to turn around RAL from an adverse audit opinion in the 2014/15 financial year to an unqualified audit opinion in 2016/17, which is a period of two years, has been a fascinating, yet challenging task,” he recalls.
Mr Matji attributes the improvements to the Board’s commitment to its oversight role, stability in the agency’s executive management, and the way the two structures have been unwavering in rolling out the company’s Turnaround Strategy.
Through the Turnaround Strategy adopted by the Board at the inception of its tenure in 2014, the Agency has managed to achive the following:
- putting in place internal control measures to root out a culture of non-compliance with prescribed Supply Chain Management procedures which led to the incurrence of fruitless and wasteful expenditure and irregular expenditure
- strengthening its executive management by employing highly qualified and experienced experts
- strengthening the internal supply chain management unit in order to ensure to ensure adherence to Treasury SCM prescripts
The culture of compliance these interventions have ingrained is clearly irreversible, and the Agency is firmly on course to eliminate a few outstanding issues that are a cause for concern in the path to achieving an unqualified audit opinion without significant findings (which is often referred to as a “clean audit” in popular parlance) next year.
The auditors expressed the view that they would like to see RAL doing more to prevent irregular expenditure in line with the requirements of the Public Finance Management Act, and to maintain a proper record of its road infrastructure assets.
“The entity developed a plan to address internal and external audit findings, but the appropriate level of management did not monitor adherence to the plan in a timely manner,” says the Auditor-General. “Non-compliance with legislation could have been prevented had compliance been properly reviewed and monitored. Effective performance procedures had not been adequately developed and implemented because of the slow response to previous year audit findings.”
Moves are already afoot to address the issues flagged by the audit institution to ensure more rigorous compliance going forward. The leadership of RAL has vowed to spare neither strength nor energy in ensuring that the Agency’s bold plans to attain a clean audit, as illustrated by its yearly progressive audit improvements, is realized.
Mr Matji explains some of the initiatives underway to ensure RAL achieves a clean audit:
“We have also strengthened our internal fraud detection processes. We have declared war against fruitless and wasteful expenditure, and irregular spending behaviour. We have also exercised fiscal prudence by outlawing all forms of unbudgeted spending.
“The strict budget control culture we have introduced is paying dividends. As part of the Agency’s fiscal prudence initiative, we have effectively dragged the agency into austerity mode. We also complied with every aspect of the Treasury’s procurement directives. We insisted that contractors should only be contracted if there is proof that their services are rendered on a value-for-money basis. We have successfully cleansed our supplier database of all contractors who have a history of short-changing the agency,” he says.