Parliament: We demand answers on ballooning irregular spend | Fin24
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Parliament: We demand answers on ballooning irregular spend

Oct 10 2018 20:27
Lameez Omarjee, Fin24

Cabinet minsters and heads of government departments who have failed in their duties must be held responsible for the poor audit outcomes, which have regressed from the previous year.

This is according to a statement from the Standing Committees on Public Accounts and Appropriations, which held a joint sitting on Wednesday. The Auditor General (AG) of South Africa Kimi Makwetu briefed the committees on the audit outcomes of government departments and state entities for 2017/18.

A total of 434 government departments and state-owned enterprises were audited. Only 25% received clean audits compared to last year when 34% received clean audits.

The committees raised concerns over the rising irregular expenditure which was around R50bn. The committees highlighted that the increase in irregular expenditure shows that some departments are not adhering to the Public Finance Management Act.

"Cabinet ministers and director-generals who are failing to do their duties as stipulated in the Public Finance Management Act (PFMA) should be held responsible for the appalling audit outcomes of their departments and entities," the statement read.

The AG also noted that some state entities such as SAA, SA Express and Denel had not yet submitted their financial statements for auditing, which could mean that the amount of irregular expenditure is even greater. The audits of the departments of health, social development and energy are also still outstanding.

Irregular expenditure is spend incurred through non-compliance with supply chain management legislation. The AG report indicated that 56% of auditees did not follow competitive and fair procurement processes which resulted in irregular expenditure.

The report also indicated that fruitless and wasteful expenditure incurred by government departments – spend which could have been avoided – increased more than 200% from R757m to R2.5bn. Unauthorised expenditure – which is spend that was not budgeted for – increased from R1.5bn to R2.1bn.

The AG said that there had been a lack of improvement in audit outcomes due to management, political leadership and oversight bodies such as Parliament's committees not responding with urgency to improve internal controls.

"This slow response from management was evident at 89% of auditees, while there was not even any response at some auditees," the AG's report read.

Further there is a lack of consequence management for officials who neglect their duties and contravene legislation. Instability and prolonged vacancies in key positions have also caused a competency gap which affects the improvement of audit outcomes, the report read. 

The committees called on various agencies and officials - including MPs, the office of the chief procurement officer and the public service administration - to do their duties, to improve audit outcomes.

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