Government failures a ‘risk to AG credibility‘
• State entities threaten credibility of office, MPs told
Auditor-general (AG) Tsakani Maluleke has warned that her office could be in danger of losing its credibility due to the failure of other state institutions to maintain clean governance and deliver on their mandates. The AG’s office is integral to holding to account all government departments and institutions, as well as municipalities. Maluleke said citizens’ trust in institutions continues to diminish, “even in the office of the AG”.
Auditor-general (AG) Tsakani Maluleke has warned her office could be in danger of losing its credibility due to the failure of other state institutions to maintain clean governance and deliver on their mandates.
The office of the auditor-general is a key chapter 9 institution, integral to holding to account all government departments and institutions, as well as municipalities over their management of public funds and resources. Recent audits paint a bleak picture of the financial management of government entities with many of them struggling to achieve clean audits.
At least half of the 41 national departments were cumulatively responsible for a total of R1.52bn of fruitless and wasteful expenditure over the recent five-year period, contravening the Public Finance Management Act. Several state-owned enterprises (SOEs) are at risk of defaulting on their debts, which will put more pressure on the fiscus.
“While we try to get [audit] outcomes to improve the gap between what institutions should be delivering to the citizenry and what they actually are [delivering] is increasing. The impact is quite significant on the lives of people and on the stability of our democracy,” Maluleke told parliament’s standing committee on the auditor-general.
Maluleke, who led a delegation to discuss her office’s finances and strategic plan for the next three-year period, said due to the failure by state institutions to deliver, the trust that citizens have in institutions continues to diminish, “even in the office of the AG”.
“So while it may feel like we can keep saying that as the office of the AG we are distinct from others and we do our work and we are well regarded, that will be of little purpose if we didn’t stop to consider that we are also part of the organs of state. When mistrust starts to creep in, it also affects us. The mud gets thrown at all of us who have particular functions and responsibilities in our constitutional democracy,” she said.
Mismanagement and leadership instability continues to bedevil many government departments and parastatals, pushing some of them to the brink of collapse. This suggests the government has its work cut out in turning around the struggling and poorly managed departments and entities.
Improving their financial performance and governance has been central to President Cyril Ramaphosa’s drive to boost service delivery and SA’s faltering economy.
Maluleke said there was limited progress in audit outcomes, especially at local government level, the coalface of service delivery, and SOEs.
“This is of significant concern for the AG, government, parliament and citizens … there is very slow movement towards performance, integrity, transparency and accountability within state institutions, including departments. And so the question becomes, what do we do about that?”
Maluleke said emphasis should be on what institutions are doing well, and push them towards improving.
“The idea [is] that beyond worrying just about clean audits, let’s start considering to what extent institutions are doing good, to what extent they are delivering on their mandate, not in a tick box sort of way, but in qualitative aspects … the reality is if we can get the majority of auditees or public institutions operating closer to the right side, we can start closing this gap in the experience of citizens and be able to make sure we start using the resources we have ultimately to the benefit of citizens,” she said.
“We do use our powers of enforcement to shift them towards the right side … our strategic focus is to have a much more direct impact on improving the lived reality of ordinary South Africans. We know we cannot do it by ourselves; we will have to rely on the effective contribution by a broader network of stakeholders, some within government and others outside the state such as those that belong in the civil society or even in business.”
Meanwhile, while the auditor-general’s office is broadly in good financial health, it is owed just more than R1bn in audit fees, compared with nearly R1.1bn owed in the matching period last year. Local and district municipalities owed 52%, or R548m, while SOEs and public entities owed 23%, or R243m. Of the debt, R311m, or 29%, (R291m the previous year) was owed for 120 days or more, mainly by auditees in financial distress.
The office is mainly selffunding, financing its operations from audit fees. It had revenue of about R4.4bn in the year under review, representing a year-onyear increase of 29% from the previous year.