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Incremental improvement in government audit outcomes!

Auditor-General Tsakani Maluleke has called on government departments and public entities to implement and exercise more controls in the use of public funds in order to achieve cleaner audit outcomes.

This as clean audits in the public sector increased from 109 in 2019/20 to 115 this financial year.

Maluleke said the increase in clean audits demonstrates that messages of good governance coming from the Auditor-General’s (AG) office are taking hold.

“The improvements…are a clear indication that some auditees are listening to our messages, heeding our call and implementing the necessary interventions to realise improvements.

“Whilst we are yet to see the progressive and sustainable improvements required to realise overall change in outcomes, we note and acknowledge the efforts of the many accounting officers and authorities that seek to instil a culture of good governance, accountability and discipline in the system,” Maluleke said at a media briefing on Wednesday.

According to the AG, some 31 departments and state entities are “actually close to achieving clean audit outcomes”.

“With some extra effort…they will be able to enter that desired space of clean audit outcomes. With this effort, they will be able to contribute to this impressive trend of improvement by this sixth administration,” she said.

Financial health of government departments

Despite the improved audit outcomes, Maluleke warned that some public institutions and departments “continue to show slow progress in the journey towards good governance”.

“This is particularly concerning. Those that are still lagging behind this improvement trend [are] state owned entities and the key service delivery departments, specifically those of health, education, housing or human settlements and public works. [Those] have the largest impact on the lives of citizens and government’s financial health,” Maluleke said.

According to the AG, unauthorised expenditure in the public sector amounted to R3.21 billion in the past financial year – driven in the main by overspending.

“[In] such challenging circumstances; good financial management should be reinforced to ensure that the limited funds available are spent wisely and within budget.

“We caution that the growing trend of departments using next year’s budget to pay the current year’s expenses and claims adversely affected their ability to pay creditors on time, and continues to have a negative impact on service delivery.”

According to Maluleke, legal claims against departments further decreased available budgets within departments with provincial Health Departments in particular paying out at least R1.76 billion in medico-legal claims.

“The key service delivery departments of health, education and public works have the poorest financial health of all, which affects their ability to deliver services to citizens. In total, these departments incurred 90% of all unauthorised expenditure and their deficits amounted to R15.65 billion. Five provincial health departments had deficits totalling R6.2 billion,” Maluleke said.

Fruitless and wasteful expenditure was measured at R1.72 billion with irregular expenditure increasing to at least R166 billion.

“At a time when there are limited funds available, the state cannot afford further leakages, and urgent action is required from accounting officers, the executive and oversight. Such expenditure, especially as it relates to procurement, is an indication that auditees do not follow supply chain laws and regulations when making procurement decisions,” Maluleke said.