Leaked audit report points to Post Office chaos

A LEAKED report by the audit committee of the embattled Post Office provides an account of chronic mismanagement and weak internal controls.

A LEAKED report by the audit committee of the embattled Post Office provides an account of chronic mismanagement and weak internal controls.

It reveals that losses from fraud jumped 400% to R10-million - and the audit committee was not satisfied "that fraud and corruption had been reduced to an acceptable level".

The report, dated September 15, is included in a leaked draft of the annual report, seen by Business Times but not yet presented to parliament.

The Post Office's operations also appear to have ground to a near halt. An unprotected strike is now in its 11th week, and undelivered post and magazines continue to pile up at depots.

Companies that collect payments through the Post Office implored customers on Friday "not to pay your accounts via the SA Post Office".

On Friday, officials of auditor-general Kimi Makwetu's office told parliament's postal services committee that an independent audit on the Post Office had not been concluded - which prevented its annual report being finalised.

The internal audit committee, headed by Sathie Gounden, said issues previously reported had not been addressed despite assurances from management on tightening internal controls.

"The committee is especially concerned with the high rate of nonadherence to established policies and procedures and the lack of subsequent punitive measures against the responsible officials," it said.

Gounden's committee said responsibility, accountability, work ethic and "nonadherence of such, should be addressed through a fair and rigorous application of the performance management system".

The committee identifiedIT upgrades, internal audit, control environment and risk-management framework as areas to be improved.

Gounden, when approached for comment, referred inquiries to Post Office chairman Hlamalani Manzini, who deferred to spokesman Lungile Lose.

The implosion at the Post Office comes despite the fact that the board held 22 meetings from April last year to this March and directors were paid R4.6-million in fees.

Last month, the Companies and Intellectual Properties Commission said the Post Office could be declared delinquent or placed on probation after failing to address noncompliance with the Companies Act, Business Day reported.

The issues related to irregular spending, which indicated a lack of oversight by the board and a failure by the board to perform its fiduciary duties.

The Post Office appeared before parliament to explain a R2.1-billion "irregular expenditure" in its 2012-13 financial year, but the leaked report for the most recent year showed this had not been addressed.

The report showed that further "irregular expenditure" of R71-million was incurred during the 2013-14 year - of which R30.9-million was related to contracts previously disclosed as irregular but now in the process of being "regularised".

This week, the Post Office said on its Facebook page that negotiations with unions to end the strike were continuing.

Meanwhile, the Democratic Postal and Communication Union's spokesman, Tutu Serame, said on Friday that "there are no negotiations that we know of taking place ... we have not accepted anything because we are waiting for the Post Office to call a meeting for submissions for our response".

Representatives of the Communication Workers Union were not available to comment.