AG’s advice pays dividends
Creecy wants more clean audits
One of the main reasons the Gauteng provincial government was able to score a good audit outcome for four consecutive years was due to the province reacting positively to advice from the office of the auditor-general of SA.
The government, which was the only province in the previous financial year to achieve unqualified financial statements for the year, implemented the AG’s recommendations and institutionalised internal controls over financial management, performance reporting and compliance with legislation.
“The premier, speaker and members of the executive council, continued to lead by example and insisted on a culture of transparency and accountability.
“Coordinating departments and external oversight structures complemented this culture, as they sustained their oversight responsibilities within the province,” reads the AG’s report.
The report also commended the quality of the financial statements the provincial government departments and entities submitted for auditing, which improved from the previous year, as only 26% as opposed to 35% in the previous financial year, were required to make corrections to their submitted financial statements due to material misstatements identified during the audit.
“As we had also recommended in the previous year, accounting officers should hold chief financial officers accountable for the implementation of basic financial disciplines,” it says.
However, despite the improvement in the number of provincial departments and agencies that complied with key legislation, 10 of the 11 did not achieve clean audit outcomes in the current year.
“This remains the main obstacle preventing the province from improving its audit outcomes, as the administrative leadership and senior management were slow to implement their commitments to address compliance findings.”
It noted that “irregular expenditure disclosed in 2017-18 remained high at R6.4bn, of which R4.9bn (77%) related to noncompliance with supply chain management [SCM] requirements and R1.2bn (19%) related to human settlements that transferred funds from the human settlements development grant to implementing agents without the National Treasury’s approval”.
“Of the R4.9bn in SCM-related irregular expenditure, R2.1bn was due to the extension of the bus subsidy legacy contracts, while R2bn was due to multi-year noncompliant contracts awarded in previous years at health and education.”
The report highlighted that the SCM-related irregular expenditure does not represent wastage or fraud, but this needs to be confirmed through timeous investigations by the relevant accounting officer or authority to minimise and/or recover possible losses, as had been recommended in the previous year.
Gauteng finance MEC Barbara Creecy was concerned about the high level of irregular expenditure which prevented a number of departments from moving to clean audit status, and said the tender system last year prevented R1.5bn in irregular expenditure.
The Organisation Undoing Tax Abuse’s executive director Makhosi Khoza said the province should improve the oversight role it plays on municipalities.
“When it comes to housing projects, the provincial human settlements is supposed to oversee the implementation of projects at local government level where a lot of waste is happening.
“The premier should ensure that MECs are performing the oversight functions,” she said.
Creecy said government will re-establish good governance and root out state capture and corruption.
She added that the government would also promote sustained and inclusive growth to create jobs, reduce inequality and transform our economy.