DURBAN - Over the past three years, the material irregularity (MI) rule, which mandates corrective action in compromised institutions, has aided attempts to sanction auditees who have failed to address the Auditor-General’s findings and recommendations.
The MI rule, which was unanimously enacted into law by Parliament in April, 2019 requires the Auditor-General to encourage remedial action in cases where a material irregularity, such as a breach of fiduciary duty, was discovered during an audit conducted under the Public Audit Act and resulted in material financial loss, the misuse of public resources or caused substantial harm to a public sector institution.
Speaking at a media briefing on Thursday, Auditor-General Tsakani Maluleke said the office was pursuing over 230 major institutions for failing to comply with the new Material Irregularity Rule.
The Department of Defence and SA Post Office are among those in hot water for compliance failure.
“We have raised 237 material irregularity rules, which are currently in various stages of processing in line with the Auditing Profession Act, and the regulations relating to Material Irregularity Rule process. We referred five unresolved material irregularity rules to the relevant public bodies for investigation.
“These involve the Northern Cape department of health; the Department of Defence; the SA Post Office; Matjhabeng Local Municipality in the Free State; and the Free State Development Corporation.
“We are generally encouraged by the responsiveness of the accounting officers when we notify them of the material irregularity rules. This is the type of accountability that must be institutionalised – where accounting officers and authorities decisively and consistently act on audit findings, and other weaknesses beyond those flagged as MIs,” said Maluleke.
While the Auditor-General did not note any MIs reported in KwaZulu-Natal, the province recorded one Public Finance Management Act (PFMA) regression.
“In KwaZulu-Natal, our latest PFMA report revealed that the overall audit outcomes of the province reflected a net improvement, with five auditees progressing to clean audits, while one regressed. The leadership remained committed and acted on our call to support governance processes and controls.
“However, discipline is required to further strengthen accountability and consequence management. The leadership must enforce a culture of accountability to realise further improvement in these audit outcomes,” Maluleke said.
She stressed that auditing plays an integral role in ensuring a foundation for accountable governance and handling of the public purse.
“A clean audit indicates that the first parts of the criteria for transparency and accountability have been met, including whether an auditee is able to show what it has done with the funds it received; what its current resources are; and what it is capable of doing with its funds in the future.
“A clean audit is merely one component of the journey towards building an institution that is strong and that can deliver predictable outcomes. Audit outcomes provide an indication of the general governance environment within which a department or public entity functions, but they are not an assurance of service delivery,” Maluleke pointed out.
Daily News