Auditor-general reports R20bn in 'irregular expenditure'

Auditor-General Kimi Makwetu. Image: Parliament.

Makwetu told the Standing Committee on Public Accounts (Scopa) that more than R2bn was incurred as wasteful expenditure‚ while more than R20bn was irregular expenditure. There was also R2.2bn in unauthorised expenditure.

Fruitless and wasteful expenditure is money that was spent in vain‚ while irregular expenditure is money spent without abiding by the appropriate legislation. Unauthorised expenditure is money spent not in accordance with an approved budget.

Five government departments accounted for almost all the wasteful expenditure‚ with the Department of Justice leading the way followed by the Department of Rural Development and Land Reform, Statistics SA‚ the Department of Public Works and the Department of Arts and Culture.

Problems

Makwetu told the committee that the main reasons for irregular expenditure related to procurement or supply-chain management. About 17 departments failed to get three written quotations as is required by law. Goods and services were also procured from companies that did not have tax clearance from the South African Revenue Service. There were also cases where the lowest quotation was not selected without any justification.

The five worst-performing departments in irregular expenditure were co-operative governance and traditional affairs‚ public works‚ correctional services‚ transport and defence.

MPs were relieved to hear that there had been an improvement in audits‚ with about 58% avoiding qualifications. But Makwetu said that the quality of the audit reports was sorely lacking‚ with many material misstatements. Without corrections made by auditors‚ the number of qualifications would have rocketed to 85%.

Little progess

Makwetu said it remained a problem in the public service that there were no consequences for failing to do the job properly.

African National Congress MP Roy Ainslie said the improvement in audits was welcome‚ but stressed that there was not sufficient emphasis on the lack of consequences for those wasting public money. This view was shared by committee chairman Themba Godi who said that there should be consequences for those who approved irregular spending.

Makwetu said that there was slow progress in improving the key controls that would improve audits. He said that in more than 50% of the departments there was a lack of good leadership and financial and performance management.

Across the 40 departments and entities audited only six had improved their audit results‚ 30 remained unchanged while four had regressed.

In 93% of national departments there were material findings of failure to comply with legislation and there had been no improvement over the 2011/12 financial year.