Ir­reg­u­lar state spend­ing just gets worse

Kimi Mak­wetu de­cries lack of ac­tion as he re­veals amount that is sim­i­lar to that sought to spark growth

Business Day - - FRONT PAGE - Bekezela Phakathi Par­lia­men­tary Writer phakathib@busi­nesslive.co.za

Au­di­tor-gen­eral Kimi Mak­wetu has de­cried the “lack of con­se­quence” for se­nior govern­ment of­fi­cials and man­agers at state-owned en­ti­ties (SOEs) re­spon­si­ble for mil­lions of rand in unau­tho­rised, fruit­less, waste­ful and ir­reg­u­lar spend­ing. Mak­wetu stunned MPs on Wed­nes­day when he re­vealed that govern­ment de­part­ments and var­i­ous SOEs were re­spon­si­ble for ir­reg­u­lar spend­ing of at least R50bn, up from about R45bn the pre­vi­ous year.

Au­di­tor-gen­eral Kimi Mak­wetu has de­cried the "lack of con­se­quence" for se­nior govern­ment of­fi­cials and man­agers at sta­te­owned en­ti­ties (SOEs) re­spon­si­ble for mil­lions of rand in unau­tho­rised, fruit­less, waste­ful and ir­reg­u­lar spend­ing.

Mak­wetu stunned MPs on Wed­nes­day when he re­vealed that govern­ment de­part­ments and var­i­ous SOEs were re­spon­si­ble for ir­reg­u­lar spend­ing of at least R50bn, up from about R45bn the pre­vi­ous year.

He was brief­ing a joint meet­ing of par­lia­ment’s stand­ing com­mit­tee on pub­lic ac­counts and the stand­ing com­mit­tee on ap­pro­pri­a­tions on the 2017/2018 au­dit of na­tional and pro­vin­cial de­part­ments and their en­ti­ties.

This comes as the govern­ment scram­bles to repri­ori­tise about R50bn of its bud­get to reignite eco­nomic growth.

The worst of­fend­ers in ir­reg­u­lar spend­ing in­clude the KwaZulu-Natal de­part­ment of trans­port (more than R5bn); the wa­ter trad­ing en­tity (R4bn); Gaut­eng roads and trans­port (R2bn) and the de­part­ment of wa­ter and san­i­ta­tion (R2bn).

Mak­wetu cau­tioned that poor fi­nan­cial man­age­ment in govern­ment de­part­ments was a ma­jor threat to ser­vice de­liv­ery.

Fruit­less and waste­ful spend­ing rose from about R1bn in 2016/2017 to R2.5bn. Unau­tho­rised spend­ing was up about 38% to slightly more than R2bn.

Mak­wetu said these amounts could in­crease as the au­dits of SOEs such as SAA and Denel were yet to be fi­nalised.

In gen­eral, au­dit out­comes of pub­lic en­ti­ties re­gressed from the pre­vi­ous year and over four years. While 82 pub­lic en­ti­ties got clean au­dits pre­vi­ously, in 2017/2018 only 59 en­ti­ties did.

Only 25% of na­tional and pro­vin­cial de­part­ments had un­qual­i­fied au­dits in 2017/2018.

Mak­wetu said there was a grow­ing trend by ac­count­ing of­fi­cers to con­test au­dit find­ings. “Some au­di­tees place pres­sure on au­dit teams to change con­clu­sions to avoid neg­a­tive au­dit out­come or dis­clo­sure [of] ir­reg­u­lar ex­pen­di­ture with­out suf­fi­cient grounds,” he said.

Mak­wetu em­pha­sised that ac­count­ing of­fi­cers who con­tra­vene the Pub­lic Fi­nance Man­age­ment Act should be held re­spon­si­ble for the poor au­dits.

Ear­lier in 2018, the Na­tional Assem­bly passed the Pub­lic Au­dit Amend­ment Bill, which seeks to give the au­di­tor-gen­eral more teeth. Pres­i­dent Cyril Ramaphosa has yet to sign it into law. The law will give the au­di­tor-gen­eral the power to re­fer ad­verse find­ings in its re­ports to in­ves­tiga­tive bod­ies, as well as re­cover funds lost due to fail­ure to ad­here to the act from ac­count­ing of­fi­cers.

“While we await the bill to be signed into law, we con­tinue to see a lack of con­se­quence [for] man­age­ment Our vi­sion is not to dis­cour­age cre­ativ­ity and in­no­va­tion or to en­force pu­n­ish­ment, but to en­cour­age ac­count­abil­ity and good gov­er­nance in the pub­lic sec­tor,” he said.

/Pux­ley Mak­gatho

Growth sec­tor: Au­di­tor-gen­eral Kimi Mak­wetu told a a joint meet­ing of par­lia­ment’s stand­ing com­mit­tees on pub­lic ac­counts and on ap­pro­pri­a­tions that ir­reg­u­lar spend­ing had grown from R45bn to R50bn in the last fi­nan­cial year.

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