Military doesn’t know where its money or ordnance is
The department of defence is hampered by financial mismanagement amid aggressive budget cuts, raising questions about SA’s ability to defend itself against external military aggression.
In the department’s annual report tabled in parliament at the weekend, auditor-general Tsakani Maluleke raised concerns about its record-keeping and issued it with a qualified audit opinion, meaning its accounts cannot be relied on.
The department, responsible for overseeing the SA National Defence Force (SANDF), has over the years been hit with a string of negative audit reports ranging from qualified to disclaimer‚ the worst possible audit outcome.
The SANDF is tasked with defending SA against external military aggression and plays a role in peacekeeping missions in Africa.
It often plays a leading role in providing humanitarian relief and rebuilding efforts after natural disasters.
But it recently warned that poor and unsafe infrastructure and accommodation at some of its bases amid aggressive budget cuts had affected staff morale, which could make it difficult for commanders to mobilise troops in an emergency.
The department was allocated R48.7bn in the 2021/2022 financial year, an almost 0% year-on-year decrease from the previous reporting period.
Its budget allocations have been declining in real terms over the last decade, a situation not helped by rising military personnel costs and poor financial controls.
In her report, Maluleke said she was unable to obtain sufficient appropriate audit evidence on sensitive project expenditure and related investments.
“Consequently, I was unable to determine whether any adjustments were necessary to sensitive projects expenditure included in the expenditure of R12.83bn (R14.26bn in the previous year) ... and investments for special defence activities included in the investment amount of R179m (R182m in the previous year),” Maluleke said.
Furthermore, the department did not fully record irregular expenditure in the notes to the financial statements as required by the Public Finance Management Act.
“Consequently, I was unable to determine the full extent of the understatement of irregular expenditure, stated at R15.18bn (up from R11.26bn the previous year) ... as it was impracticable to do so,” Maluleke said.
Effective and appropriate steps were not taken to prevent irregular expenditure, as required by the Act and Treasury regulation.
Most of the irregular expenditure disclosed in the financial statements was due to the compensation of employee budget being exceeded without approval of the finance minister, Maluleke said.
Disciplinary steps were not taken against some of the officials who had permitted irregular expenditure, as required by the Act, and goods and services were procured without obtaining at least three written price quotations in accordance with Treasury regulations.
Similar transgressions were reported in the previous year.
Some contracts were awarded to bidders who did not submit a declaration on whether they were employed by the state or connected to any person employed by the state, which was prescribed to comply with Treasury rules.
Maluleke was also unable to obtain sufficient audit evidence for movable tangible capital assets.
“Consequently, I was unable to determine whether any adjustments were necessary to movable tangible capital assets stated at R64.72bn.”
Maluleke noted that in the prior year, the department did not establish adequate internal controls to monitor leave processing.
As a result, not all leave transactions were captured.
“I was unable to confirm these employee benefits by alternative means.
“Consequently, I was unable to determine whether any adjustments were necessary to the corresponding figure of employee benefits, stated at R3.56bn.”
In her foreword, defence minister Thandi Modise said she was concerned about the state of financial and resource management in her department.
“We need to demonstrate to our key stakeholders, the auditor-general SA, the department of public service and administration and the National Treasury that we are very serious about the way we go about our business,” she said.
The department, responsible for overseeing the SA National Defence Force (SANDF), has over the years been hit with a string of negative audit reports — ranging from qualified to disclaimer‚ the worst possible audit outcome.