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AG: State spent R21.1bn irregularly

Oct 19 2011 18:33 Sapa

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Cape Town - Government departments and entities last year racked up irregular spending of R21.1bn Deputy Auditor General Kimi Makwetu said on Wednesday.

National departments were responsible for R2.286bn of that total, Makwetu told Parliament's Standing Committee on Public Accounts (Scopa).

Most of the irregular spending was not identified by the departments themselves but by the AG's office.

Provincial departments were guilty of a collective R16.2bn in irregular spending, while public entities contributed R2.5bn and legislatures R53m.

Makwetu said irregular expenditure often went hand in hand with flawed procurement, which in turn was often a case of state officials or close family securing tenders.

"If procurement and contract management is not complied with the chances are that expenditure is also not going to be complied with. It is very interesting to see the correlation between the two."

He said it was lamentable that those government departments that spent the lion share of state resources - education, health and public works - had failed to clean up their accounting act.

"There are no clean audits in that area where the bulk of expenditures are being incurred," Makwetu said.

"Since 70% of resources are going in this direction maybe the effort also needs to be directed at these areas where there are more and more problems from an accounting point of view.

"I think we must take a view that says where will the best benefit come from and I think it is if a limited amount of effort is given to those areas that have huge expenditures but problematic issues.

"It is not necessarily meant to say focus exclusively on these," he added.

Qualified audits

Health received a qualified audit for 2010/11 while basic education earned a financially unqualified audit with other findings and public works earned a disclaimer - one of the worst audit reports possible.

Auditor General Terence Nombembe said last week he could not find evidence to convince him of the correctness of public works' asset register.

On top of that, the department had irregular expenditure of R16.5m and failed to account for losses of R54m on a vehicle lease deal.

Makwetu highlighted procurement as a problem even for departments that had their books in order otherwise.

"They are doing their accounting properly but failing the test in terms of complying with the system of sourcing goods and services."

"In terms of non-compliance, 92 percent of national departments are in the red, meaning that they have not complied with whatever applicable laws and regulations they needed to comply with," Makwetu said.

Most "would easily migrate to the green" if they made an effort on compliance, notably with supply chain management rules.

Makwetu said Cabinet ministers were briefed on the AG's findings last week.

Other members of the AG's executive team said most departments had good guidelines but lacked dedicated staff who consistently checked on compliance.

They pointed to severe shortcomings in managing asset registers and singled out the land reform and defence departments for criticism in this regard.

Defence "has come a long way" but unfortunately left much of the task of sorting out its asset register woes to consultants who did not acquit themselves properly, Barry Wheeler said.

This put paid to Minister Lindiwe Sisulu's promise that a long spell of qualified audits would end summarily on her watch.

"They still have quite a lot of work to do to get their asset register up and running," Wheeler said.

Correctional services relied too heavily on consultants, who outnumbered the department's own accounting staff by ten to one, he said.

Scopa chairman Themba Godi said the auditor general's findings were disappointing because they reflected the same problems in state departments year after year.

"It is one step forward, two steps back. We would want to move forward all the time."
corruption  |  tenders  |  state spending
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