License Card Tender Declared Irregular by AGSA

The Auditor-General of South Africa (AGSA) has flagged the R898 million Driving Licence Card Machine tender as irregular, highlighting key financial mismanagement risks that accountants should take note of. The tender exceeded the R486 million budget, and procurement regulations were not followed, raising serious concerns about governance and financial oversight.

Key Accounting & Compliance Lessons

• Strict adherence to procurement laws is essential

  The AGSA found violations of Supply Chain Management (SCM) regulations, including the Public Finance Management Act (PFMA), Treasury Regulations, and DLCA policies. Accountants must ensure bid evaluations and approvals follow legal requirements to avoid irregular expenditures.

• Accurate budgeting is critical

  The DLCA relied on outdated pre-Covid pricing and submitted an incomplete budget to Cabinet, leading to incorrect cost approvals. Financial professionals must conduct thorough market analyses and update cost projections to prevent budget shortfalls.

• Fair and transparent evaluation is key

  Inconsistent bid scoring and the evaluation of a different machine than the one proposed by IDEMIA created a lack of transparency. Accountants should verify that procurement assessments align with contract requirements to maintain audit integrity.

• Risk of financial misconduct

  Under Section 81 of the PFMA, willful or negligent financial mismanagement is considered misconduct. This case serves as a warning for financial officers to maintain compliance and avoid personal liability for irregular expenditure.

Next Steps

Minister Barbara Creecy has instructed the Department of Transport (DoT) to seek a High Court ruling on how to handle the irregular tender. Interim measures will be introduced to keep the current system running while the legal process unfolds.

The Bottom Line for Accountants

This case highlights why financial professionals must enforce compliance, ensure accurate budgeting, and verify procurement processes. Strong internal controls and risk management are crucial to avoiding wasteful expenditure and ensuring transparency in public finance.

Read more on this in the media statement.