Irregular expenditure skyrockets
AG warns of fraud, corruption
Auditor-general Kimi Makwetu has warned that the almost R17-billion in irregular expenditure incurred by municipalities could be higher, as only a third of the country’s 234 councils fully disclosed it.
Makwetu said only 88 municipalities fully disclosed irregular expenditure while another 63 did not completely disclose it.
The R17-billion irregular expenditure in 2015/16 is the highest since the auditor-general started tracking it.
The year-end balance of irregular expenditure that had accumulated over many years and had not been dealt with through recovery, condonation or writeoff was R41.7-billion.
Irregular expenditure is an indicator of noncompliance with processes and needs to be investigated to determine whether it was an unintended error, negligence or done with intention. Makwetu said irregular expenditure does not necessarily represent wastage or mean that fraud has been committed. “This needs to be confirmed through investigations by councils, but losses could already have arisen or may still arise if follow-up investigations are not undertaken.”
Yesterday, the AG released his 2015/16 local government audit outcomes report.
Makwetu warned that municipalities with poor consequence management practices were often prone to corruption or fraud as a result of municipal officials not being held accountable.
The number of municipalities incurring irregular expenditure increased to 236 from 217.
Municipalities in the Eastern Cape, North West, KwaZulu-Natal and Mpumalanga were the main contributors to the significant increase in irregular expenditure. The East- ern Cape incurred over R5.6billion, an increase of 60%.
Irregular expenditure in the North West more than doubled to more than R2.5-billion, while in KZN it increased by 50% to nearly R2.4-billion.
In Mpumalanga, irregular expenditure increased by 162% to almost R2.3-billion.
Makwetu warned that “as long as the political leadership and municipal officials do not make accountability for transgressions a priority, irregular expenditure, unauthorised expenditure and fruitless and wasteful expenditure as well as fraud and misconduct will continue to be widespread in local government”.