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Business In The News South Africa

Spending on new finance management system frozen – DG Mogajane

PARLIAMENT, August 29 – Director General of Finance Dondo Mogajane on Tuesday, said he halted all payments in relation to the Internal Finance Management System earlier this month in response to dozens of adverse internal audit findings on the process.
Mogajane also told Parliament’s watchdog Standing Committee on Public Accounts (Scopa) that he had ordered the project management office to be restructured after learning that it had a staff complement of only five people, one of whom worked part time.
It was “very worrying” that a critical project was so understaffed, he said.
MPs were questioning top treasury officials about the department’s failure to put the IMFS into operation after 15 years and R1.2 billion spent.
The project aims to integrate all human resource and financial management systems across government. The first model, IMFS1, was abandoned after National Treasury was advised not to use bespoke software as planned but to opt for off-the-shelf commercial models.
The department was called before Parliament’s appropriations committee in June after an internal audit report conducted in 2015/16 was leaked to ANN7. It reflected very poor financial and operating controls for the project, with 49 of the 54 findings carrying a “catastrophic” risk rating and the rest a very high risk.
At that meeting Mogajane conceded that the findings risked bringing National Treasury into disrepute.
On Tuesday, African National Congress (ANC) MP Mnyami Booi led the charge, saying the treasury could not “be the institution that spends such an amount of money without accountability”.
He added: “The reality of what happened is that South Africans lost R1.2 billion.”
Mogojane countered that he had only been in his position for three months and has to contend with other crises, including the economy entering a recession.
He said it should be said in National Treasury’s defence that it alerted Cabinet in 2013 that there were challenges with the project and responded to complaints from MPs about seeking help from the World Bank, by saying it had expertise at such systems, and had offered advice free of charge.
Mogojane also rejected suggestions that there was no political will to complete and implement the system.
“We had packaged in a way that we thought we would  be able to deliver but we were not. We went to Cabinet at the time [when] it was clear that the project was taking much longer than anticipated at the time, it was more  than 10 years.
“The day to day implementation is a technical issue, I would not want to say there was no political will.”
The chairman of  Scopa, Themba Godi, said regardless of the problems, the net result was that R1.2 billion was spent only to start from scratch.
Mogajane said the issue was of great concern, including to Finance Minister Malusi Gigaba who had demanded answers from him, but the reverse side was that it showed that National Treasury’s internal audit system was robust.
“I am happy that internally we have internal audit process that is functioning that will point us in the right direction… [But] we are taking too long to get to the issues and I take that responsibility and I accept it.”
Mogajane said on his instruction all payments towards the IMFS stopped on August 7. He has met with the project management office four times and planned to restructure it entirely, he added.


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