Audit outcome shows higher grades
SA’s main delivery sectors are lagging behind, warns PFMA report
A QUARTER of national and provincial departments and entities received a clean audit opinion last year, Auditor-General Kimi Makwetu announced yesterday.
“The audit outcomes… show an improvement, with 119 (25 percent) of the 469 auditees attaining clean audit outcomes, compared to 22 percent in the previous year,” he said, tabling his PFMA 2013/14 report on national and provincial audit outcomes.
The report covers the audit outcomes of all national and provincial departments and entities for the 2013/14 financial year. It includes 165 departments and 304 public entities, with a total budgeted expenditure of R1.035 trillion.
A further 51 percent of departments and entities received an “unqualified with findings” audit outcome, while 16 percent were qualified with findings, 4 percent received an adverse or disclaimer audit, while a further 4 percent did not submit on time.
The report warns that while reporting on performance is improving, the main service delivery sectors are lagging behind. “In the education, health and public works sector, only six departments reported their performance in a useful and reliable manner.”
Further, while the outcomes in most provinces improved, entities and departments audited in Limpopo and North West had the poorest results.
Makwetu singled out Gauteng and the Western Cape for special mention, saying they had “led the charge and performed admirably”.
According to the report, 18 (78 percent) of 23 auditees in the Western Cape achieved clean au- dits. In Gauteng, 19 (54 percent) of 35 auditees received clean audits.
The report finds there was an increase in unauthorised and irregular spending by departments. “Irregular expenditure of R62.7bn was incurred by 309 auditees. In total, R29.1bn… was incurred in previous years, but identified and disclosed for the first time this year.
“Unauthorised expenditure of approximately R2.6bn – (compared with) R2.3bn in 2012/13 was incurred by 30 departments. Little progress has been made in decreasing the extent thereof in the past three years.”
Other key findings include that non-compliance with key legislation remains at a high level.
“The number of auditees with (adverse) material compliance findings decreased only slightly, from 76 percent to 72 percent.”
The report highlights results within the Education, Health and Public Works sectors, with “only one department out of 30 in these sectors having no material findings on compliance”.
On the use of consultants, the report finds these services cost the country R12.1bn last year.
It also highlights the “root causes” of departments and entities not receiving a clean audit. These include:
The slow response of accounting officers and senior managers in addressing weaknesses in internal controls.
Instability or vacancies in key positions, particularly at the level of accounting officers and chief financial officers.
Inadequate consequences for transgressions and poor performance “that is apparent from the findings we report on”.
The report finds there was a 16 percent vacancy rate in accounting officers positions, with higher vacancies at the provincial level.
Makwetu said although 25 percent of departments and entities achieved clean audits, this represented only 15 percent of spending.
Auditor-General Kimi Makwetu