The National Treasury and the Department of Public Service and Administration appeared before the Standing Committee on Public Accounts (SCOPA) to present a report on the full implementation of the much-awaited Integrated Financial Management System (IFMS). The system aims to improve the efficiency and the synchronisation of government’s human resources, expenditure of public funds, supply chain management and procurement systems. Inefficiencies in these areas have been blamed for widespread fraud and corruption in government.
The IFMS was recommended because government’s current financial management system is antiquated and costly, according to the National Treasury’s Acting Director, Mr Ismail Momoniat, and unable to raise red flags when needed. The Auditor General’s qualified audit of the IFMS brought matters to a head, along with the committee’s resolution in November 2022 that all stakeholders should today present a report on the IFMS’ progress to date.
Giving context to the committee resolution, SCOPA Chairperson Mr Mkhuleko Hlengwa recounted that the IFMS has become an ongoing problem and the poor management of public funds has broader implications for service delivery.
The Acting Minister of the Department of Public Service, Mr Thulas Nxesi, responded that the stagnation of IFMS has delayed the transformation of government’s human resource management and could have prevented the defrauding of the Unemployment Insurance and Compensation funds.
Questioned about the IFMS’s qualified audit, Mr Momoniat, replied by saying that in National Treasury’s view, expenditure on the IFMS constitutes a contractual commitment and is thus not wasteful and fruitless expenditure. “The R68 million payment is not made in vain, as failure to do so would result in legal and financial implications for the department. This payment is made annually to ensure automatic access to updated versions of Oracle licences, software and security patches. If these fees are not paid, discounts will be lost and penalties and back payments will be incurred.” Treasury is thus seeking a legal review on the matter.
In reply to a question about the system’s lack of functionality, Mr Momoniat noted a reluctance to spend public funds for fear of an adverse finding from the Auditor General. However, the Chairperson retorted: “When this system was approved by Cabinet in 2005, I was writing my matric and we were told it would render government financial management agile and will push the frontiers of poverty.” In his view, the system has not been implemented due to a lack of political will. He further added: “The AG finding is a secondary issue. The non-implementation of this system is deliberate. That’s the nub of this matter.”
Mr Hlengwa was adamant that the responsible stakeholders must come back to the committee and report to it on how the project with be fully implemented, “because it’s not the first time we hear about reasons for its non-implementation.”
The committee had set a November 2022 deadline for IFMS stakeholder departments and entities to come up with financial scoping and project plan management for IFMS, but they failed to meet the committee’s deadline. Mr Nxesi conceded the point, saying, “What we have presented to the committee is certainly not sufficient. We will go back and come again with a detailed report.” To which, Mr Hlengwa replied: “It seems as if this project is run on an ad hoc basis, not as a critical tool for the efficient management of public funds. If no progress is registered in future, we should as a committee escalate this matter to the Deputy President, the leader of government business.”
As a result of AG’s report on the IFMS, a proclamation was made that the Special Investigative Unit (SIU) should investigate its shortcomings and the R1.1billion spent on it. The Chief National Investigations Officer of the SIU, Mr Leonard Lekgetho, confirmed that an investigation has been undertaken. It is at an advanced stage and will be concluded by May. Mr Hlengwa then suggested that the committee should not compromise its integrity by presenting its preliminary findings and will table findings when this process is concluded.
Abel Mputing
7 March 2023
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