Irregular spending rockets to R45.6bn
Irregular expenditure among national and provincial departments, as well as their entities, has increased 55% since the previous financial year to R45.6bn, says Auditor-General Kimi Makwetu.
But this amount could be higher as it does not include the irregular expenditure of entities and departments, the audit outcomes of which are still outstanding, such as the Passenger Rail Agency of SA, which recorded irregular expenditure of almost R14bn in the previous year.
“If you have an instrument in supply chain management, the minute you have a series of deviations to that rule … you would have to review the sustainability of that rule in the first place. You may need to relook at the prescripts.
“Many people have different reasons to overlooking prescripts,” Makwetu said.
He told reporters that his office was willing to hear meritbased disagreements from accounting officers of state entities, but that most who disputed his findings had failed to give credible counterarguments and
merely wanted a more favourable audit outcome. “There are technical contestations, but the trend we see is because [of] the technical nature, the interpretation is pushed in a way that does not promote transparent reporting.
“To contest an audit opinion is one thing, but to insist on a different audit outcome without bringing the evidence to bear on why it should be the case, just because you want a better audit, is something we would like to discourage,” he said.
Partner and regional head analyst for public sector at Grant Thornton Yugen Pillay said the audit findings showed a lack of accountability in the public sector and accounting officers were not willing to comply with supply chain management regulations and controls.
“What is clear from the [auditor-general’s] report is that auditees are struggling to manage their finances, with a staggering 61 auditees who either have going-concern issues or who require some sort of intervention. A further 119 auditees have been flagged by the auditor-general as being ‘of concern’ in terms of their financial health,” Pillay said. Because of outstanding audits, the overall figure for irregular expenditure could be higher, perhaps R65bn.
Irregular expenditure among SA’s state-owned enterprises has nearly tripled in the past four years, with the number of entities getting qualified audit opinions with findings growing faster than that of clean audits.
The weaker financial performance across the national and provincial spheres of government comes as internal auditors reported increased intrusions on their independence.
The fifth annual corporate governance index compiled by the Institute of Internal Auditors SA found that only 44% of participating chief audit executives in national government believed their units enjoyed a “sufficient degree of independence” and were able to operate without undue influence or interference. In 2016, 75% of audit executives held this belief.
Institute CEO Claudelle von Eck said the findings were startling and worrying, raising questions about whether internal audit units within the public sector enjoyed any measure of independence.
Only 46% of audit executives at state-owned enterprises said their work was done independently, compared with 74% in 2016. At provincial level, only 56% of audit executives reported being able to do their work independently (80% in 2016).