CAPE TOWN - The department of water and sanitation has has hit out at reports that irregular expenditure had rocketed to over R6 billion, saying such figures were premature as the auditing process had not yet been completed.
The office of South Africa’s Auditor-General (AG) on Wednesday told parliament that irregular expenditure at the department of water and sanitation had risen to R6.4 billion.
The AG’s office said that the irregular expenditure at the department was significantly high around 2014/15 and 2016/17 financial years, and was now R2.4 billion higher than the R4 billion that was initially disclosed.
Andries Sekgetho of the AG's office told MPs that the R2.4 billion had not been disclosed by the department.
However, in a statement, the DWS said that it would like to put it on record that the financials that would have indicated such an escalation or even a decline were still in the process of finalisation, with the end date of May 31, 2018.
"These financials as would be finalised by the DWS acting chief financial officer would then be audited accordingly by the auditor-general’s office, which audit must be finalised by July 31, 2018. That process, together with the requisite engagement with the AG’s office, will indicate what the ultimate figure would be," said the department.
"The DWS is of the opinion that all matters relating to the final outcomes of this process be articulated once the process is completed and all engagements finalised. The DWS takes the work and articulation of the AG’s office seriously and the cooperation between the DWS and the AG’s office is regarded as paramount to ensure the DWS is properly accountable to South Africans on matters involving the fiscus."
Earlier, Sekgetho told MPs that the new figure for irregular expenditure had been reported to the department when the AG's office was doing its audit and the department said that it (R2.4 billion) was not going to be disclosed. "So the overall, the amount of irregular expenditure is R6.4 billion and not the R4 billion that was disclosed," he said.
Sekgetho was briefing the portfolio committee on water and sanitation on the financial position and contested audit outcomes for the department.
Presenting to the committee, he stated that financial management at the department had regressed due to qualification areas of last year not being addressed and the fact that there were no effective plans in place. Oversight and monitoring also regressed due to instability in leadership and lack of oversight over implementing agents.
In terms of the revenue decline in the previous financial year with regards to the overdraft, Sekgotho said that one of the matters that contributed was a lot of expenditure that was taking place which had no budget.
"Amongst others was the war on leaks programme. In the current financial year, an amount of R542 million has already been spent and this was not included in the budget, so therefore, before you start implementing your normal projects and processes that you have budget for, you are already on the back foot with half a billion rands of expenditure and this will result in you depicting or disclosing a deficit at the end of the financial year because you are expensing and there is no revenue or the money did not come in in terms of the budget," he said.
The department incurred a net loss of R89 million, overdraft of R194 million and unauthorised expenditure of R406 million during the year ended March 31, 2017, and, as of that date, the department's current liabilities exceeded its total assets by R454 million.
"It is an indication that a material uncertainty exists that may cast significant doubt on the department's ability to continue as a going concern, thus its ability to undertake its objectives where the vote has been depleted."
In addition, there has been a decline in the operational activity of the unit due to construction work being awarded to implementing agents and or awarded to external service providers. Sekgetho further said that, on certain projects, due to budget constraints, projects had to be halted, which resulted in fruitless and wasteful expenditure.