COVER Second special report on the financial management of government’s Covid-19 initiatives 1 INSIDE FRONT 2 Second special report on the financial management of government’s Covid-19 initiatives CONTENTS ACRONYMS AND ABBREVIATIONS .......................................................................................................... 2 MESSAGE FROM THE AUDITOR-GENERAL ........................................................................................... 4 EXECUTIVE SUMMARY ................................................................................................................................ 5 INTRODUCTION TO THE REPORT AND SUMMARY OF FINDINGS ...................................................... 7 TABLE ON FUNDING AND EXPENDITURE .............................................................................................. 19 SUPPORT TO VULNERABLE HOUSEHOLDS ........................................................................................ 23 WAGE PROTECTION ................................................................................................................................... 39 FARMERS’ RELIEF ...................................................................................................................................... 57 SPORT, ARTS AND CULTURE SOCIAL RELIEF FUND ......................................................................... 69 TOURISM RELIEF FUND ............................................................................................................................ 79 HEALTHCARE SERVICES .......................................................................................................................... 85 DEFENCE FRONTLINE SERVICES ......................................................................................................... 123 BASIC EDUCATION INTERVENTIONS .................................................................................................... 137 QUARANTINE SITES ...................................................................................................................................191 EXPANDED PUBLIC WORKS PROGRAMME ........................................................................................ 201 EMERGENCY SUPPLY OF WATER TO TARGETED COMMUNITIES ................................................. 209 OTHER INITIATIVES INCLUDED IN PREVIOUS REPORT ................................................................... 221 Second special report on the financial management of government’s Covid-19 initiatives 1 ACRONYMS AND ABBREVIATIONS Asidi Accelerated School Infrastructure Delivery Initiative BAC bid adjudication committee B-BBEE broad-based black economic empowerment BEC bid evaluation committee CAATs computer-assisted audit techniques Casp comprehensive agricultural support programme CCTV closed-circuit television CDC Centers for Disease Control and Prevention CIDB Construction Industry Development Board CIPC Companies and Intellectual Property Commission Combud computerised budget CSD central supplier database csv comma-separated values DBE national Department of Basic Education DBSA Development Bank of Southern Africa DCS Department of Correctional Services DPW Department of Public Works DPWI Department of Public Works and Infrastructure DSAC Department of Sport, Arts and Culture DTIC Department of Trade, Industry and Competition EPWP expanded public works programme Fedhasa Federated Hospitality Association of South Africa FFP filtering face piece GBV gender-based violence GIS Geographic Information System GPS global positioning system GRC governance, risk and compliance IDC Industrial Development Corporation IDT Independent Development Trust MCS Modified Cash Standard MinMec committee of the minister and the members of the executive council MoA memorandum of agreement NCC National Command Centre NCC-CMC National Command Centre – Change Management Centre 2 Second special report on the financial management of government’s covid-19 initiatives NDoH / DoH (national) Department of Health NEIMS National Education Infrastructure Management System NGO non-governmental organisation NHBRC National Home Builders Registration Council NHLS National Health Laboratory Service NICD National Institute for Communicable Diseases NPO non-profit organisation NSFAS national student financial aid scheme PAYE pay as you earn Persal Personnel and Salary System PMTE Property Management Trading Entity PPE personal protective equipment PSU project support unit RFQ request for quotation Safe Sanitation Appropriate for Education Sahpra South African Health Products Regulatory Authority Samhs South African Military Health Service SANDF South African National Defence Force Sars South African Revenue Service Sassa South African Social Security Agency SBD standard bidding document SCM supply chain management Sefa Small Enterprise Finance Agency SLA service-level agreement SMMEs small, medium and micro enterprises Socpen Social Pension System SOP standard operating procedure SRD social relief of distress SRD grant special covid-19 social relief of distress grant of R350 Ters temporary employee/employer relief scheme TRU temporary residential unit UAT user acceptance testing UIF Unemployment Insurance Fund VAT value-added tax WHO World Health Organization Second special report on the financial management of government’s covid-19 initiatives 3 MESSAGE FROM THE AUDITOR-GENERAL ‘Even in the midst of a crisis, transparency and accountability for government spending to the benefit of citizens cannot take a backseat.’ These were the words of the late auditor-general, Kimi Makwetu, when he presented the first special report on the financial management of government’s covid-19 initiatives in September 2020. And while the response to our first special report was positive and the actions taken in response to our findings and observations were commendable, more could have been achieved if the funds and related initiatives had been better managed. The follow-up information and insights presented in this report are intended to empower oversight structures and enable executive leaders to focus on implementing and strengthening controls that support his call for transparency and accountability. We dedicate this report to the late auditor-general, Kimi Makwetu. Were it not for his untimely passing on 11 November, this second special report on the financial management of NEXT government’s covid-19 initiatives would have been the last audit report released under his tenure, before he left the auditor-general’s office on 30 November 2020 at the end of his seven-year term. As such, it contains the final governance > messages he wanted to share with the country. MENU ≡ In releasing this report today, we have become Auditor-General Makwetu’s mouthpiece – conveying the final wisdom and patriotic counsel he left for our country. Tsakani Maluleke Auditor-General 4 Second special report on the financial management of government’s covid-19 initiatives EXECUTIVE SUMMARY The multibillion-rand relief package for the covid-19 response enabled the provision of additional hospital beds, medical equipment, medicines and quarantine sites, as well as community screening, testing and awareness programmes. It also paid for personal protective equipment for health facilities, schools and frontline workers, and for the emergency supply of water to communities and schools. Millions of vulnerable households were supported through grants, and unemployed people and businesses that struggled to continue during the lockdown period received funding to keep them afloat. It is commendable that such outcomes were achieved in a period of uncertainty when quick decisions had to be made based on the best available information and when officials were working under difficult circumstances. The intention behind the covid-19 audit is to report any audit findings and observations on the payments, procurement and delivery of the relief package to the accounting officer or authority to enable them to respond to shortcomings immediately. These lessons learned will empower them to tighten controls to prevent a recurrence in future transactions. The response to our first special report was very positive and it is commendable that most accounting officers and executive authorities took action to address our audit observations and findings, implement the recommendations and, in some cases, even took disciplinary steps. The impact of these actions will not be fully apparent in this report, as most of the transactions we are reporting on took place before they were implemented. We recognise that some of the fixes will take time to address the underlying root causes of what we reported on. As reported in the first special report, the relief package was introduced into an already compromised control environment. We have been reporting for many years on poor control environments where the basics of financial NEXT management and record keeping are not in place. We have highlighted the impact of instability in leadership, a lack of > consequences for transgressions and the non-compliance with legislation, and opportunities for abuse in, the supply chain management processes. We have reported on projects and programmes that have failed because of poor planning, MENU execution without oversight and a lack of coordination across government, fuelled by poor intergovernmental relations. In this report, we, once again highlight the significant deficiencies in the procurement and contract management ≡ processes, and