Johannesburg - Five years after the government announced a major intervention to clean up its books – Operation Clean Audit 2014 – the overall picture is unchanged, if not slightly worse.
In 2009, the year that then-minister of co-operative governance and traditional affairs Sicelo Shiceka announced the plan with some fanfare, 25 percent of national and provincial departments and entities achieved a “clean audit” (unqualified, with no material findings) – the same as they achieved this year, instead of the target of 100 percent.
But 53 percent had managed unqualified audits with findings in 2009, compared with only 51 percent this year.
That means 25 percent were operating in the “red zone” in the past financial year – having received a disclaimer or having failed to submit their records in time – compared with 22 percent in 2009.
Shiceka’s plan was aimed at the local and provincial governments, so the comparison is not exact, but the auditor-general’s report on municipalities released earlier this year showed local government audit results had been even harder to shift in the right direction.
Perhaps even more worrying than the number languishing outside the “clean audit space”, as Auditor-General Kimi Makwetu put it when he released his office’s general report on national and provincial audit outcomes this week, is the types of departments involved.
While the number of clean audits increased this year from that last year, Makwetu said closer analysis showed many of these were in departments that had relatively small budgets and whose main function was oversight or policy.
Of the big-spending departments tasked with the delivery of services – such as education, health and public works – half submitted financial statements that were qualified or received disclaimers, meaning they hadn’t complied with all the legislation relating to how they spent their funds, or the books were in such bad shape that the auditor-general was unable to establish to his satisfaction how the money had been spent.
“These sectors receive a substantial portion of the budget and are responsible for implementing key programmes to improve the health and welfare of citizens,” Makwetu said in his report.
This may account for the huge hike in irregular expenditure, from R27.4 billion last year to R62.7bn this year – much of it stemming from previously undetected amounts in the Public Works Department.
While audit results may seem fairly remote from the daily lives of citizens, they have a direct bearing on the likelihood or otherwise of the government being able to deliver what it planned to.
Makwetu gave the hypothetical example of a local government environmental department that had budgeted for the purchase of a truck for waste removal, but instead bought a Mercedes-Benz SLK sports car.
The department might obtain an unqualified audit, as the entry in its books could be corrected to reflect the purchase of the Mercedes, but the auditor-general would make findings in two areas: non-compliance with supply chain management legislation (the department would have been unlikely to have met the requirement of following a competitive bidding process) and performance reporting, because it would not have met its target for refuse collection. Those two, seemingly technical details in an audit report, would be reflected in garbage piling up outside people’s homes.
Makwetu highlighted as two key contributors, among others, to poor audit results, the prevalence of officials in accounting roles who lacked the relevant qualifications and experience and the absence of consequences for officials who flouted the rules. His predecessor, Terence Nombembe, made similar remarks in 2009. In his overview, he said in 2012: “A common reaction to the audit outcomes is the question posed by many about the need for officials to be accountable, and for there to be consequences for poor performance, misappropriation of state resources and fraud.
“It is my assessment that the full power of the law has yet to be activated, leading to commentators asking ‘What can be done?’ or saying ‘There are no consequences’.”
Independent Media