On the face of it, this year’s general report on national and provincial audit outcomes makes encouraging reading.
Overall, there has been a steady, if gradual, improvement over the past few years in the number of clean audits.
For the 2014/15 financial year, 131 of the 468 auditees achieved a financially unqualified opinion with no findings (or clean audit), compared with 118 last year and 100 the year before.
The amount of irregular expenditure, for which the relevant processes and legislation was not complied with, stood at R25.68bn, compared with R35.28bn the year before.
Fruitless and wasteful expenditure (R936m compared with R1.24bn) and unauthorised expenditure (R1.64bn compared with R2.64bn) also declined.
Step by step, it would appear, the state is building the capacity and will to improve its accounting systems and the transparency of its procurement processes.
But the bird’s-eye view masks serious weaknesses that remain, causing Auditor-General Kimi Makwetu to admit to a level of frustration.
For one, consequence management for instances of irregular, fruitless and wasteful and unauthorised expenditure remained poor.
While management at 56 out of 76 auditees where the auditor-general reported findings for investigation in 2013/14 complied, such findings continued to increase, Makwetu said in the report, released this week.
“Furthermore, 58 auditees that had such findings in 2013/14 had similar findings in 2014/15.”
Poor consequence management has been a refrain of the auditor-general’s office since the tenure of Makwetu’s predecessor, yet little has changed.
A bigger problem masked by the overall improvement in audit findings is that it has taken place mostly in departments handling smaller budgets and not responsible for delivery of priority services.
The really big departments like education, health and public works, accounting for the bulk of government spending, have shown no improvement.
The result is that a total of R891bn of the R1.1 trillion Budget for 2014/15 was spent by departments and auditees receiving unqualified audits with material findings, qualified audits with findings or disclaimers.
That doesn’t mean it was spent fraudulently, but it does mean standards of internal controls were weak enough for fraud and corruption to be possible.
Makwetu said his office wanted to establish a “line of sight” between good financial practice and the experience of citizens in services received from the state, to show the relationship between bookkeeping, on the one hand, and tangible results, on the other.
Already the report contains a sector-specific study on health, education, public works and human settlements which begins to illustrate the effect.
In health, for example, which receives the second-largest share of the Budget (R145.2bn in 2014/15), poorly designed and implemented health information systems meant to track demand and delivery of medicines resulted in shortages.
These systems were outdated, sometimes still relying on manual controls. Where automated the systems couldn’t talk to one another.
While an eHealth strategy had been approved for the 2012/16 period, the leadership had been “slow to address fundamental challenges affecting the sector such as network infrastructure, well-functioning accounting systems and connectivity”, Makwetu complained.
There were similar problems in education, with weak information systems leading to shortages of textbooks or materials being supplied in the wrong languages or for the wrong subjects.
Poor monitoring and co-ordination of the learner transport scheme resulted in the use of unroadworthy buses, the use of contractors without valid operating licences or insurance and buses driven by operators without public driver permits.
Again, the work of the auditor showed that lack of consequences for poor performance and transgressions resulted in repeat findings and action plans not being implemented.
Makwetu’s annual presentation of these reports is usually accompanied by headlines about billions spent in potentially wasteful fashion, but the next time a bus full of school children crashes it might be worth returning to the previous year’s annual report for the provincial department of education concerned, to see if its learner transport programme was flagged as an area of concern.
There couldn’t be a clearer “line of sight” than that between the tedious job of the auditor and the consequences in the real world.
Sunday Independent