Irregular expenditure by govt up 80%, AG reveals

AUDITOR-General Kimi Makwetu yesterday said continued failure to adhere to supply chain management guidelines among government departments and their entities saw irregular expenditure increase nearly 80% to R46.36-billion in the 2015-16 financial year.

Makwetu was briefing the media in parliament on his general report of national and provincial government departments as well as their entities.

Only 9% of those audited nationally registered an improvement in the past three years, only 30% received a clean audit, while 15% were disclaimed‚ adverse or outstanding.

He mentioned improvements among provinces in the report, which assesses 484 auditees‚ including 196 national and provincial departments and 315 public entities, with a budget of R1.2trillion.

Makwetu said in some cases those who received an unfavourable audit opinion did not have proper accounting systems in place to account adequately for their finances.

“Some departments lack the needed disciplines needed to bring in proper finance controls and accurate disciplines of accounting.

“There are a growing number of entities that have not come forward with their financial statements and are outstanding‚” said Makwetu.

He said 27 audits were not completed in time for the auditorgeneral’s consolidated report. The reason for non-submission or late submission of financial statements and information was that the departments or entities in question had disagreed with the auditor-general on their preliminary financial standing.

Fruitless and wasteful expenditure grew by 14% in the threeyear period, adding up to R1.37billion. Six auditees‚ including Prasa‚ made up more than 70% of the fruitless and wasteful expenditure.

Unauthorised expenditure decreased, but just over 50% in the three-year period, to R925-million.

Makwetu warned that while irregular expenditure did not necessarily mean money was lost (but was not spent according to procurement guidelines), it could create potential issues.

“The litany of these things creates doubt as to whether you procured these goods and services efficiently and cost-effectively. It could lead to a conflict of interest where people who work for government and want to do business with the state would want to take advantage‚” he said.

Chairman of the standing committee on the auditor-general, Vincent Smith, said the audit outcomes were a point of frustration for his committee and that parliament’s relevant committee had committed themselves to investigating lacklustre audit outcomes from various departments and entities.

“It is an increasingly difficult environment of auditing that the AG finds his office in. Parliament has a constitutional mandate to defend chapter nine institutions.”

He said the standing committee on public accounts requested that government’s anti-corruption task team be present at committee hearings of departments and entities when expenditure was discussed.

Parliament’s relevant committees are assisting the office of the auditor-general to research possible amendments to legislation that will give it more teeth to allow enforcement of recommendations‚ he said. — TMG Digital/ BusinessLIVE