Department of Defence Annual Report 2008-2009

| Department of Defence | Vote 19 |
REPORT OF THE AUDITOR-GENERAL TO PARLIAMENT
ON THE FINANCIAL STATEMENTS AND PERFORMANCE
INFORMATION OF VOTE NO.19: DEPARTMENT OF
DEFENCE for the year ended 31 March 2009 (continued)
the prior year. As the department did not maintain proper asset registers as prescribed by National
Treasury, supported by the relevant documentation to determine the values, I could not quantify
the effect of the non-disclosure. Consequently I was unable to perform alternative audit procedures
to verify existence, rights and obligations, completeness, and valuation with regard to tangible and
intangible assets.
Lease commitments: R615 906 000 (2007-08: R804 596 000)
8. The operating leases disclosed were overstated by R8 447 429 (2007-08: R171 128 153) as the department
did not have any obligation for the operating leases disclosed.
| Financial Performance |
Supporting documents could not be provided for operating leases of approximately R175 973 592
(2007-08: R229 884 422) which is included in the amount disclosed in note 26 to the nancial statements.
Consequently I was unable to perform alternative audit procedures to verify the valuation and the
department’s obligation in respect of these operating leases disclosed in note 26. Furthermore nance
leases were understated by an estimated amount of R10 732 054 as the department failed to disclosed
all its nance leases.
Irregular expenditure: R118 473 000
9. Irregular expenditure disclosed in note 28 to the nancial statements is understated by R102 700 271.
The department could also not provide documents to support the R77 042 781 of the irregular
expenditure disclosed in note 28 to the nancial statements. I was unable to perform alternative audit
procedures.
Furthermore the department did not correctly account for irregular expenditure of R61 722 673, that
was condoned by National Treasury as per Practice Note 5 of 2006-07, in note 28 to the nancial
statements.
Goods and services: consultant expenditure: R2 904 788 000
10. Included in Note 4.3 to the annual nancial statements is an amount of R193 105 851 paid to consultants
for services rendered. I was unable to verify the accuracy of this amount, due to a lack of a proper
control system and supporting documentation. I was unable to perform any alternative audit procedures
to verify the accuracy of these payments.
Departmental revenue: other sales: R165 244 000 (2007-08: R165 137 000)
11. Included in other sales is an amount of R93 087 955 pertaining to boarding and lodging. There was no
system of control over this revenue to ensure accuracy, as prescribed in Public Service Co- ordinating
Bargaining Council Resolution 3 of 2002, and resulted in an overstatement of departmental revenue
of R67 034 331 (2007-08: approximately R49 395 867) and an understatement of payables as disclosed
in notes 2.1 and 18 to the nancial statements respectively.
Annual Report FY 2008 - 2009 238