Publications
Partners
Johannesburg – Introducing control measures for supply chain management (SCM) such as an e-tender portal for tenders, could help reduce irregular and fruitless and wasteful expenditure.
This is according to Yugen Pillay, partner and regional lead of the public sector at Grant Thornton. Pillay provided analysis on the audit results by the Auditor General South Africa (Agsa) which were released this past week.
The results revealed that irregular expenditure had increased by 80% over the past year and by 40% over the past three years, to R46bn. According to the report, the main reason for the increase is non-compliance with supply chain management rules.
READ: Irregular govt spend balloons to over R46bn
“We should bear in mind that a handful of entities were responsible for nearly half of the past year’s irregular spending… if the necessary controls are applied in these departments, this number could drop drastically, even over the short term,” he said in a statement.
Pillay said reducing the level of irregular expenditure by half means that R23bn could be used better in addressing other funding needs.
“It is evident that there has been a significant lack of financial controls especially in the last financial year,” he said.
Public entities should start adhering to SCM regulations. “These institutions are custodians of public funds and there is a reason why there is strict regulation when dealing with this money. It requires absolute compliance with the relevant rules,” he said.
Further, the large number of vacancies in key management positions also contributed to irregular expenditure. “This translates to a lack of leadership in entities and it has a serious knock-on effect for the operations of an entity,” he added.
He said it is important for management personnel to be held accountable for being in charge of public funds and that this responsibility extends to all personnel involved in SCM.
Further, “targeted training and development” in SCM is lacking in most entities. Even though policies exist for SCM, the application of this policy is limited, which results in irregular spend.
“The fact that the number of clean audits increased to 152 in this financial year shows that more and more public entities are taking good financial management seriously,” said Pillay.
Read Fin24's top stories trending on Twitter: Fin24’s top stories
