AG: Consultant splurge must be reined in

Jan 27 2013 17:15
City Press

Of the eight audited departments, the department of defence spent the highest amount: R10.4bn in the past three years.

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Johannesburg - Government can turn the corner on splurging billions of taxpayers' money by curbing expenditure on consultants, which amounted to R102bn in three years.

The auditor general has implored government to immediately implement stricter financial controls to curb over-expenditure on consultants.

This was revealed by deputy auditor general Kimi Makwetu in Pretoria last week.

The auditor general report, which is based on an audit of the performance of eight of the 44 national departments, has identified areas which, Makwetu said, needed urgent control and attention when engaging the services of consultants.

Makwetu said the use of consultants was also open to abuse as government departments could not provide documentary proof of the decision taken to enter into 63 consulting contracts worth R1.9bn.

Only 124 contracts, amounting to R24.6bn, were audited.

Despite the guidelines and regulations issued by National Treasury and the department of public service and administration, many weaknesses in the overall management and use of consultants by government persist, said Makwetu.

Findings on how the state contracts the private sector to run the state are illustrated in the City Press graphic below.

One of the most bizarre examples of the irregular use of consultants was where government departments spent millions of rands to employ recruitment agencies to fill vacant posts despite having their own human resources units.

Of the eight audited departments, the department of defence spent the highest amount: R10.4bn in the past three years.

The expenditure for the other departments is:
  • Departments of police and water affairs: more than R4bn each
  • Correctional services: R2bn
  • Transport: R1.8bn
  • Rural development and land reform: R1bn
  • Environmental affairs: R550m
  • Health: R416m
According to the report, national government departments spent R33.5bn on consultants between 2009 and 2011, compared with R68.5bn by provincial departments during the same period.

Government agencies, entities – including sector education and training authorities – and municipalities were not audited for their use of consultants, which means that the total expenditure on consultants is in fact higher than the R102bn.

The report identified the growing skills crisis and a lack of internal financial controls as some of the reasons government was not getting value for money, particularly the lack of skills transfer to public servants from consultants.

“The inadequate planning, high turnover of employees in key positions, inadequate financial and performance management, and ineffective governance arrangements adversely affected the economical, effective and efficient use of consultants,” said Makwetu, adding that government could turn the corner on the overexpenditure on consultants by implementing the right controls and systems.

“The recurrence of findings that were highlighted in our previous performance audits on consultants and continuously in our annual audits is a cause for concern, particularly in light of the R102bn spent on consultants,” said Makwetu.

He said interventions recommended by the auditor general to government had not yielded results.

- City Press

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