State entity spending still in disarray

INL SA

Terence Nombembe. Picture: Phill Magakoe

Pretoria - National and provincial entities have failed to significantly improve their audit performances, increasing the amount of taxpayers’ money spent in irregular, wasteful and fruitless expenditure.

The recommendations of the auditor-general in previous financial years proved to have gone largely ignored, with only 117 audited entities receiving clean audits for the 2011/2012 financial year, out of a total of 536.

This is revealed in the audit outcomes released by Auditor-General Terence Nombembe on Tuesday, who has called for greater oversight and leadership of the financial activities of entities.

According to the report, 297 audited entities received unqualified audit opinions, up from 279 in the previous financial year. A total of 74 entities received qualified opinions, 17 received adverse opinions or disclaimers, and 31 entities failed to submit financial statements.

Nombembe’s report painted a picture of entities which were failing to adhere to the prescriptions of the Public Finance Management Act (PFMA) and lacking in proper internal controls.

This has also seen an increase in the amounts incurred by entities through irregular, wasteful and fruitless expenditure.

Flanked by Public Service and Administration Minister Lindiwe Sisulu and Performance Monitoring and Evaluation Minister Collins Chabane, Nombembe called for higher levels of professionalism in the public service to ensure more departments received clean audits and were fully accountable for the use of taxpayers’ money.

The amount of irregular expenditure incurred by the audited entities increased from R22 billion in 2010/2011 to more than R28bn in 2011/2012, with provincial departments accounting for 73 percent of this.

Supply chain management processes, through which tenders are awarded, remained one of the most worrying areas, with many entities flouting the PFMA rules. “If things are not done according to the law, that is irregular expenditure and it’s busy growing. Most of it happens on account of simple things like not getting more than one quote during procurement. We need more professionalism in the public service,” said Nombembe.

The report also revealed a R1.7bn amount of wasteful and fruitless expenditure by the audited entities, 55 percent of which was incurred by provincial departments.

The report cites insufficient oversight and monitoring as part of the root causes for such expenditures, while internal auditors and the audit committees were also singled out for not adequately focusing on their duty to audit and report on compliance. The results showed a negative trend for both national and provincial departments, with 50 entities failing to maintain the clean reports they had received in the previous financial year.

Sisulu said there was a real intention from the political leadership to ensure better audit outcomes, though admitting that much needed to be done in terms of oversight in various portfolios.

“We do meet from time to time with the auditor-general to reflect on what needs to be done. He does meet us as the cabinet. He meets various MECs as well, and this will show in the improvement of the audit outcomes,” said Sisulu.

mogomotsi.magome@inl.co.za

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