How on earth did billions of Rand allocated in Regional Bulk Infrastructure Grants allocated through the Department of Water Affairs go missing? The department has earned itself a qualified annual audit report due its inadequate management of funds.

South Africa’s Auditor General, Thembekile Kimi Makwetu, has stated that certain regional bulk infrastructure grant (RBIG) project commitments have been misstated in his report on the financial statements of the department for the period April 1, 2013 to March 31 this year.

“The department did not have adequate systems in place to maintain records of RBIG commitments where the procurement of goods and services have been approved and/or contracted, but where no delivery has taken place at year end,” states the report.

Makwetu says that in addition, he was unable to obtain sufficient, appropriate audit evidence for the corresponding amounts disclosed as RBIG commitments in the financial statements. “And I could not confirm the disclosure by alternative means.”

“I was unable to determine whether any further adjustments to prior year RBIG commitments, stated at R5,9 billion in the financial statements, were necessary”.

“There were no satisfactory audit procedures that I could perform to obtain reasonable assurance that all outstanding invoices for RBIG have been included in the accruals,” continues the report.

As a consequence, he was unable to determine whether any further adjustments to accruals, stated at R1bn in the financial statements, were necessary.

In a separate report within the annual report, the Department of Water Affairs’ own audit committee says it “notes with concern” the AG’s qualified opinion.

It concedes the department “did not have adequate systems in place” to maintain certain records.

“While the department has presented action plans to address the issues raised… the issues were not fully cleared and were repeated as a basis for qualification,” states the department.

The department had an allocated budget of R10.4bn for the 2013/14 financial year, of which it spent 98,8%.