Auditor-general qualifies NHBRC audit

The National Home Builders Registration Council (NHBRC) incurred R201.3 million in irregular, fruitless and wasteful expenditure in the year to March and has received a qualified audit from Auditor-General Terence Nombembe for this period. Part of the expenditure related to R1.3m paid to Vanessa Somiah, the Special Investigating Unit (SIU) lead investigator employed by then NHBRC chief executive Sipho Mashinini at allegedly double her SIU pay when she was probing allegations of corruption at the NHBRC. However, the auditor-general’s report said the NHBRC did not have adequate systems for identifying and recognising all irregular expenditure and there were no satisfactory alternative procedures the auditor-general could perform to obtain reasonable assurance that all irregular expenditure had been properly recorded.

“Consequently, I was unable to obtain sufficient appropriate audit evidence to satisfy myself as to the completeness of irregular expenditure relating to the current year stated at R201 304 808… [in] the financial statements,” Nombembe said. He added that material misstatements of revenue and disclosure items identified by the auditors in the submitted financial statements were subsequently corrected but “the potential undisclosed irregular expenditure” resulted in the financial statements receiving a qualified audit opinion. Mashinini was dismissed with immediate effect as the NHBRC’s chief executive on May 29 this year after being found guilty by an independent disciplinary committee in March on charges of financial misconduct and bringing the NHBRC into disrepute.

NHBRC acting chief exe-cutive Jeffrey Mahachi confirmed last week that Somiah’s contract was termi- nated by the council, also on May 29. However, Mahachi said the termination of Somiah’s contract was subject to a Labour Court case that had been instituted by her and the case was “now sub judice”. Mahachi said Mashinini had made appointments without following formal tender processes and authorised payments for services beyond his authority. He added that Mashinini had also approved a payment of R600 608.78 to a service provider, which was in excess of the original quoted amount of R250 000. Mashinini was also found guilty of misconduct related to comments in a newspaper article attacking Human Settlements Minister Tokyo Sexwale, Mahachi added.

NHBRC spokesman Conrad Mors confirmed that no criminal charges had been laid against either Mashinini or Somiah and therefore no attempt had been made to recover the money lost through Mashinini’s conduct. He stressed Mashinini would not be charged because he had been found guilty of misconduct and not fraudulent activities. The auditor-general’s report into the financial statements of the NHBRC said investigations into allegations of financial misconduct against officials were not instituted within 30 days of their discovery as required by Treasury regulations. Nombembe found non-compliance with the Housing Consumers Protection Measures Act because surplus funds of R133 564 122 were not invested at the Corporation of Public Deposits and it had not obtained approval from the finance minister or the Treasury not to do so.

In regard to procurement and project management, Nombembe found that goods and services with a transaction value below R500 000 were procured without obtaining the required price quotations as required by Treasury regulations; goods and services of a transaction value above R500 000 were procured without inviting competitive bids as required by Treasury regulations; and the preference point system was not applied in the procurement of goods and services above R30 000 as required by the Preferential Procurement Policy Finance Act.