Auditor-General Makwetu not impressed with ‘lack of consequences’

2016-11-17 05:50

Auditor-General Kimi Makwetu has decried the lack of consequences for senior officials responsible for unauthorised, fruitless, wasteful and irregular expenditure of state funds.

Makwetu said in the absence of consequences, the misuse of funds will continue unabated.

He was briefing journalists yesterday on the audit outcomes for the financial year which ended on March 31 this year. Makwetu revealed that irregular expenditure had skyrocketed to R46.36 billion during the period under review.

This was an 80% increase when compared to audit results announced last year. Makwetu said the main reason for the increase in irregular expenditure was the continued non-compliance with supply chain management legislation.

The AG said six auditees were responsible for just over 50% of the irregular expenditure in 2015/16 and this included the Passenger Rail Agency of South Africa (Prasa) which was responsible for a whopping R13.9bn.

Fruitless and wasteful expenditure in 2015/16 was at R1.37bn, with unauthorised expenditure at R925 million – a decrease of over 50% when compared to three years ago.

Overall, Makwetu announced an improvement in the number of clean audits achieved, from 122 in 2013/14 to 152 in the year under review. The figure represents 484 government departments and entities that were audited with a total budget of R1.2 trillion.

Makwetu revealed that there was an improvement in compliance with key legislation as the number of auditees with no material findings on compliance had increased from 27% to 33% since 2013-14. “However, the non-compliance rate is too high and needs significant attention.”

Makwetu however had an issue with the lack of consequences. “We also looked at the root causes of these audit outcomes … and largely among many things that cause these audit outcomes to remain stuck or to continue to come out poor is largely the leadership issue that we have highlighted often times,” he said.

Makwetu said management responsiveness to the messages, as well as the implementation of recommendations, was slow and “becoming a no response in a number of areas”.

“I think in the absence of consequences ... we have debated this and said that action will not come fast enough as long as consequences are not in place,” he said.

Makwetu said in the cases where investigations into allegations of irregular and other types of expenditure have been conducted, the investigations took too long and there was no proper coordination to the end to make sure that if there was any identified area of expenditure that fell foul of the rules of the public finance management act, stern action could be taken.

Makwetu said the vacancies and instability in key positions – especially in state-owned enterprises and in areas of supply chain management where the level of instability is high – mean certain projects that have been put in place to implement corrective measures over time, suddenly do not have an owner as those people do not stick around.

Makwetu said from a supply chain management point of view, officials are allowed to procure goods and services within certain defined rules and limits, but once they use their own discretion and decide not to call for submission of tenders for potential suppliers, “that’s where you’ve applied discretion in terms of breaking the rules” and if there is no accountability, chances are that such behaviour would continue in what would have become a corrupted environment”.

Makwetu added: “If you look at all these audit outcomes, there is a prevalence of conditions that indicate that if we do not address the issue of uncontrolled discretion in applying policy and there is lack of accountability, the chances are that the derailment of the programmes that are meant to be achieved with these funds will continue to escalate.”

ANC MP Vincent Smith, who chairs the institution’s committee that oversees the AG, said Parliament was concerned about the slow responses of accounting officers to recommendations of the institution and the unacceptably high levels of vacancies – especially in financial positions in state entities and departments.

Smith said there was a need to investigate the powers of the AG and see if they could not be strengthened like those of other Chapter Nine institutions.

“Currently, the Auditor-General just makes recommendations and as he himself is lamenting, year after year those same areas are highlighted.

“May be we should look at it in light of other Chapter Nine institutions whose recommendations are a bit stronger so that it doesn’t just become a recommendation that is dependent on the accounting officer or executive authority in terms of whether they want to implement them,” said Smith.

He said unless there were real consequences for some of the financial difficulties, the problems would continue.

Andisiwe Makinana
Parliamentary journalist
City Press
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May 19 2019