THE Portfolio Committee on Tourism applauded the Department of Tourism for obtaining an unqualified audit report yesterday during a briefing from the Office of the Auditor-General (AG) on the department’s 2022/23 audit outcomes.
The overall audit outcome for the tourism portfolio remained unchanged, with both the department and South African Tourism (SAT) receiving unqualified opinions with findings on the compliance with key legislation. The AG indicated that the department had a material finding on procurement and contract management, while SAT had material findings on its annual financial statements and expenditure management.
The Committee noted a significant improvement in the Department of Tourism’s audit outcomes, with the department having cleared all findings from the previous year and submitting annual financial statement that are free from material misstatements. The committee attributed this to the development of a departmental audit action plan and the appointed a Chief Financial Officer in the department, as per its recommendations last year.
The committee also praised the department for spending 98.9 per cent of its allocated budget and achieving 96 per cent of its set targets, a spending that was commensurate with performance. The committee advised the department to strengthen its procurement processes, as it has a material finding relating to awarding contracts to service providers before their tax compliance has been confirmed.
The committee acknowledged that this finding relating to procurement was incurred by the Development Bank of Southern Africa, which is the implementing agent of the department’s infrastructure projects.
Meanwhile, Committee Chairperson Tandi Mahambehlala raised serious concerns about findings at SAT, which has not improved from the AG’s report to the committee the previous year and has in fact regressed.
SAT did not implement any of the AG’s or the committee’s recommendations to improve performance from previous years.
This led to a number of audit findings including, among other things, financial misstatements; failure to prevent irregular expenditure, which increased from R 6.8 million in the prior year to R9.9 million; making prepayments of R17.6 million for the Summer Campaign, even though the contract did not make provision for prepayments; and governance collapse, as SAT still has vacancies in critical executive positions, including the positions of CEO, CFO, chief convention bureau officer, chief marketing officer, head of internal audit and company secretary.
The committee was also critical of SAT’s continued poor service delivery performance, achieving 54 per cent of the set targets but overspending on its budget by R105 million. Making matters worse, SAT had a surplus in the previous year and asked the National Treasury to keep that profit yet overspent on its budget. SAT also continued to incur fruitless and wasteful expenditure of R1.23 million and is ending the year in deficit, with net cash outflows from SAT’s operating activities at R183 million.
Mahambehlala said that this poor audit outcome vindicated the committee’s continued robust oversight over governance and operations at SAT.
The findings justify what the committee has observed in the recent past, leading to the decision to appropriate budget with conditions in the 2023/24 financial year.
The committee is adamant in its opinion that the collapse of governance and operations at SAT continues to render it dysfunctional. As such, the committee calls for the Minister of Tourism to expedite the process of appointing a Board of South African Tourism to restore stability in governance and operations at SAT.
Mahambehlala also told the department that the committee will continue to enforce the implementation of the AG’s recommendations, as these enhance Parliament’s work and assist the committee to enforce accountability in the department and its entities.
