The Auditor-General (AG) of South Africa, Tsajani Maluleke, says there has been a “gradual upward trend” in the national and provincial government audit outcomes this year; however, there are still major shortfalls in service delivery.
“While we are cautiously optimistic about this trend, we have found that service delivery, good performance and financial discipline are not yet evident at those auditees with the greatest impact on the lives of South Africans and on government finances,” said Maluleke.
The auditor-general said that service delivery improvement across the country could be improved by governments delivering on their prescribed mandates and a culture of accountability being instilled in the relevant institutions.
The AG noted that key service delivery portfolios such as basic education, health, public works and transport alongside the state-owned entities are responsible for more than 30% of the expenditure budget – but have the worst audit outcomes every year.
Despite the poor performance of certain portfolios, provinces at large are showing positive developments.
According to the latest Auditor General Provincial Report for 2021-2022, there has been a gradual upward trend over the term, with 47 auditees having improved and only 11 regressing.
Maluleke said that provincial governments are responsible for roughly R711 billion (28%) of the total national budget and play a significant role in implementing the government’s service delivery priorities.
She made specific notice of the fact that KwaZulu-Natal (KZN) and the Eastern Cape are showing significant improvement.
The province reported a net improvement compared to years before. The AG said that nine auditees improved to clean audits.
“Effective oversight, good governance and diligence by all roleplayers in the accountability ecosystem, combined with stability in key management positions, were instrumental in this improvement,” said the AG.
Governance in the Eastern Cape is starting to show a trend towards positive outcomes, with a record number of clean audits.
Four auditees improved to clean audit opinions, and there were no regressions, reported the AG.
“As a result, the current term of administration has seen a continuous increase in the number of clean audits.” There are 11 clean audits (52%) – the highest number of clean audits in the history of the province
The Western Cape has set a high standard of provincial financial management with consistent positive performance over a long period of years.
According to the AG, over the 2021-2022 period, the Western Cape once again showed a positive reflection.
In 2021-22, the consistent positive pattern of previous years continued. Maluleke noted that “this positive reflection highlighted the tone set by the accounting officers and authorities, instilling a culture of doing the right thing, being accountable, and improving controls as key elements in achieving and sustaining clean audit outcomes”.
The province scored 17 clean audits, with 15 maintaining this status for three years.
The economic hub of South Africa has stagnated in its audit outcomes due to slow response and a lack of effective monitoring and accountability.
“We find it encouraging that 65% of the financial statements submitted for auditing were free from material misstatements, compared to 48% in 2018-2019,” said the AG.
Over the last three years, the number of auditees that received clean audits increased from none in 2018-2019 to three in 2021-2022.
The AG found that most auditees in the province could not reach the desired clean audit status and stagnated on financially unqualified opinions with findings (27%) or qualified opinions (40%).
Overall audit outcomes regressed over the analysed period despite a three-year-long run of positive results.
This was mainly due to the provincial transport and community safety department’s inability to sustain a clean audit.
Audit outcomes continue to fluctuate, says Maluleke, while remaining stagnant overall over the current administration term.
“Auditees continue to produce poor-quality financial statements, with only six auditees (38%) submitting credible financial statements for auditing,” she added.
“Auditees also continue to rely on the audit process to identify and correct misstatements, with five auditees (31%) receiving unqualified audit opinions only because we allowed them to correct misstatements we identified in their submitted financial statements.
The number of auditees receiving clean audits improved from two in 2018-2019 to four in 2021-2022 as the provincial education, economic development and tourism transport, safety and liaison departments improved from qualified to unqualified audit outcomes.
“While most key service delivery departments (education; roads and public works; and cooperative governance, human settlements and traditional affairs) remained unqualified with findings in the area of compliance, the state of the provincial health department remains a key concern,” she added.
The audit outcomes for the 2021-2022 period reflect only one clean audit and eight unqualified opinions with findings, as well as six qualified, said Maluleke.
Despite some improvement, its sustainability has been questioned, with service delivery requiring more attention.