South African Tourism (SAT) has come under fire from the parliamentary portfolio committee on tourism over internal control deficiencies, a 16.8% vacancy rate, a surplus of R229-million for the 2023/4 financial year and a qualified audit opinion from the Auditor-General of SA (AGSA).
The agency, which is the marketing arm of the Department of Tourism, was flagged by the Auditor-General for lack of proper record-keeping, reconciliation of control accounts and irregular expenditure of R24.2-million, which resulted from failure to follow procurement processes such as inviting competitive bids.
Portfolio committee chairperson Lungi Mnganga-Gcabashe asked SAT to outline the causes of the regressed audit outcome and the measures that will be put in place to address the finding. She also asked SAT to develop an audit action plan with clear time frames detailing how the audit outcomes will be addressed and stability maintained.
“Progress on this should be reported to the committee every quarter,” she said.
SAT’s 2023/24 annual report submitted to the committee this week revealed that the “net cash flows from operating activities were not correctly
prepared and disclosed as required by standards of GRAP (Generally Recognised Accounting Practice)”.
In its presentation to the committee, SAT management stated there was “insufficient appropriate audit evidence for trade payables and accrued liabilities included in payables from exchange transaction due to a lack of proper record keeping and reconciliation of control accounts”.
According to the report, “Management did not implement adequate internal controls to ensure the preparation of accurate financial statements as numerous material misstatements were identified that resulted in the modification of the auditor’s opinion,” the SAT said in its report.
SAT also noted there was a departure from GRAP through the use of purchase orders instead of actual invoices. SAT regressed from the 2022/23 financial year with a qualified audit outcome for the 2023/24 financial year.
Minister of Tourism Patricia de Lille, under whose watch SAT falls, noted the challenges faced by the agency in her speech on the 100 days of the government of national unity a week ago.
Unlike SAT, De Lille’s department received a clean audit for the financial year 2023/24.
“SA Tourism received a qualified audit. The entity has faced serious governance difficulties but we are working on the
remedial actions as recommended by the Auditor-General to get SA Tourism to an unqualified audit,” she said.
De Lille also said: “For the first six months of this financial year, close to R900 000 of the R1.44-million budget for board fees was accrued by the SAT board for 54 meetings. I have launched an independent investigation into the matter.”
She said on September 27, she gazetted the appointment of “six new board members who bring with them a wealth of experience in the tourism sector”.
“I wish the new chairperson and board members well and continue to impress on them the importance of their fiduciary duties to ensure proper oversight of SA Tourism without undue interference.”
Last year, said De Lille, international tourism spend contributed R95-billion to the economy, while domestic tourism generated an impressive R12- billion in spending. “This underscores that domestic tourism is the bedrock of our sector.
Employment in the sector is projected to grow to 1.7-million jobs in 2024, she said.
SAT told the committee that recruitment processes for critical posts such as the chief financial officer, head of audit, chief operating officer and chief conventions bureau officer are underway. SAT management also assured the committee that measures will be implemented to better manage its budget.
Hopefully indeed employment in the sector will grow and the tourism graduates will be given opportunity to learn more and grow in this careers. It’s been almost 3 years unemployed to unfairly work experience this companies in the sector require for any specific job role. I mean I was part of the first group at University of Johannesburg to study for the introduced BA of Tourism Development and Management course and we never got an opportunity for an internship to gain work experience and suitable skills. I try so hard every single day to approach for employment to the businesses operating in the sector but no luck. I sometimes feel I have taken a wrong turn of career while I have so much passion for the sector. It’s time they hire fresh creative and innovative young minds.