Auditor-general reveals how much of your money the government is wasting
A new report by the auditor-general, Kimi Makwetu, finds that irregular expenditure at national and provincial government departments has surged nearly 40% since 2013-14, to R46.36 billion in 2015-16.
Makwetu cited the continued non-compliance with supply chain management legislation as the main reason for the increase. Irregular expenditure represents expenditure incurred towards procurement of goods and services without following prescribed processes.
The AG’s latest report covers a total of 484 auditees, which include 169 national and provincial departments and 315 public entities with a total budget of R1.2 trillion for the year under review.
Public entities fared the best with continuous improvement year on year, increasing their total from 82 to 108 while 44 departments received clean audits in 2015-16.
The AG noted that six auditees were responsible for just over 50% of the irregular expenditure in 2015-16.
They include the Passenger Rail Agency of South Africa (Prasa); the KwaZulu-Natal and Mpumalanga health departments; as well as the Department of Water and Sanitation and Gauteng’s Road and Transport and Human Settlements departments.
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The AG said that fruitless and wasteful expenditure in 2015-16 was 14% higher than in 2013-14 at R1.37 billion, and was again incurred by an increasing number of auditees.
Six auditees were responsible for just more than 70% of this expenditure – again the Passenger Rail Agency of South Africa and the Department of Water and Sanitation are included in this list, joined by three departments in the education sector and the Compensation Fund.
The AG rated the financial health of 76% of departments and 39% of public entities as either concerning or requiring intervention – yet another regression over the three years. Departments regressed from 53% in 2014-15.
“The signs of poor financial management are apparent in the increasing occurrence of deficits, departments funding cash shortfalls from the following year’s budget, poor revenue management and the inability to pay creditors within the required 30 days,” the AG said.
In total, 5% of departments and 10% of public entities were in a particularly poor financial position by the end of 2015 -16, with material uncertainty regarding their ability to continue operating in the foreseeable future.
Makwetu cited the following as the root causes of the aforementioned weaknesses in financial and performance management and the poor audit outcomes:
- Management (accounting officers or authorities, chief executive officers and senior managers) did not respond with the required urgency to his office’s
consistent messages about addressing risks and improving internal controls.
- Vacancies and instability in the key positions of accounting officers, chief executive officers, chief financial officers and heads of supply chain management units affect the financial and performance management of auditees and can directly affect audit outcomes.
- Insufficient steps were taken to recover, write-off, approve or condone unauthorised, irregular,and fruitless and wasteful expenditure of the year under review and the previous year, as required by the PFMA.
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