Cape Town - Auditor-General Kimi Makwetu on Wednesday painted a grim picture of the financial situation in provincial and national departments, warning they continue to struggle to rein in spiralling irregular expenditure, which has increased from R45.6 billion in the 2016/2017 financial year to R51bn.
Makwetu charged that his new powers in the Public Audit Act would allow him to refer cases and to clamp down on corruption in the state.
The watershed law will allow Makwetu, for the first time, to refer irregularities and fraud to relevant agencies to investigate, and also to recover money lost through financial mismanagement and graft.
So dire is the financial situation in state institutions that the R51bn in irregular expenditure in national and provincial departments excluded Eskom and Transnet, with their irregular expenditure of R19.6bn and R8.1bn respectively.
Makwetu said that if he added other state-owned entities (SOEs), such as SAA and Denel, the figure of irregular expenditure would be even higher.
The auditor-general said if the situation did not improve, the country would sink further into trouble.
Makwetu said the R51bn irregular expenditure was a serious concern as it showed there was a lack of internal controls and financial management in departments.
“If there is no compliance with supply-chain management, this is where things like irregular expenditure remain high. The more the internal controls are ignored, the more you have financial risk,” he said.
But the Public Audit Act would empower him to go after the officials responsible for the irregular expenditure.
“The Public Audit Act was signed into law on Sunday. This gives us the power to make significant impact,” he said.
“It is timely because it comes at the time when we are now given powers to effect consequences.
“We are now in a position to say irregular expenditure sitting in that book was followed up and we took action,” he added.
He expressed concern about the poor state of the provincial health departments in the Free State, Eastern Cape and Northern Cape, warning they would collapse because they were now running on a deficit.
Parliament’s standing committee on the auditor-general welcomed the announcement that President Cyril Ramaphosa had enabled the Public Audit Amendment Bill, which will give more teeth to the auditor-general in reining in malfeasance.
“The committee has, for a while now, advocated for strengthened consequence management in the public service. It is high time officials are held liable for irregularities they commit. With this new law we are hopeful that accounting officers and officials will be held accountable for the wrongs they do,” said committee chairperson Nthabiseng Khunou (ANC).
The committee said good governance and accountability were strong pillars in ensuring effective service delivery.
The DA also welcomed the bill’s signing, which it said was an important piece of legislation which had been collecting dust on the president’s desk. DA member of the committee Alan McLoughlin said the law would give the auditor-general more power to hold officials accountable, as opposed to merely pointing out irregularities and indiscretions.
“This is a necessary step, especially considering that the ANC has shown it is incapable of holding offenders accountable, and we urge that this legislation is implemented urgently,” said McLoughlin.
In October, the DA concluded that irregular, fruitless and wasteful expenditure totalled a staggering R75.6bn on a study of the 2017/18 annual reports of government departments and selected entities.