With new losses of R2.8bn to SA, Auditor-General seeks a game plan

The Auditor-General has urged internal auditors to “flex their muscle” and become the bulwark of the public purse by ensuring preventative controls to prevent the looting of public funds.

This comes on the backdrop of Auditor-General Kimi Makwetu revealing material irregularities with potential loses to the public purse amounting to a staggering R2.8 billion in 28 new cases.

The Auditor-General told least 300 delegates attending the Institute of Internal Auditors SA’s (IIASA) two-day Public Sector Forum in Kempton Park, Ekurhuleni, which ended yesterday, that internal audit was a first line of defence and responsible for ensuring preventative controls and mechanisms.

Makwetu talked on “Strengthening Public Trust Through Accountability and Transparency”, saying internal auditors were now at the forefront of safeguarding the public purse and ensuring good governance.

He said procurement processes needed to be controlled to ensure no unnecessary spending and that tender controls must also be tightened while conflicts of interest must be identified at the initial phase of any process.

“We said to government, and I want to repeat, that we need to elevate the importance of preventative controls … it is evident that strengthening the public trust and accountability is not easy. Many are almost giving up and that hope that they had 18 months (state capture pinnacle) ago is almost diminishing,” he said.

The Auditor-General said there was evidence of unacceptable levels of rising fruitful and wasteful expenditure, asking what the game plan was and what should be done.

Makwetu said he had told various levels of leadership in the country that the plan should not be how to achieve a clean audit “but to use that money, including the assets you list in the balance sheet, for what they were destined for”.

He said therefore it was critical to elevate the importance of preventative controls, saying for instance procurement processes needed to be controlled to ensure no unnecessary spending, with tightened tender controls and conflicts of interest identified at the initial phase of any process.

“They (external auditors) should become more reliant on the work of internal auditors … it can sometimes be an uncomfortable conversation … but one way to force it upon external auditors is to demonstrate that you have demonstrated all these instruments of preventative controls,” Makwetu told delegates.

He said it was not necessarily the function of external audit to paint a picture of a strong audit environment, saying strong preventative mechanisms would make these new provisions redundant.

“For example, in the cases of the Public Investment Corporation or the SA Revenue Service we learnt that the widest levels of preventative controls were overridden or not in place … so an investment in preventative controls brings huge responsibility to internal audit,” Makwetu said.

According to Makwetu, 89 out of 422 departments and state-owned entities – which account for a staggering 79% of South Africa’s budget – will be audited this year.

He said the audits will be carried out across all nine provinces but that the focus will be on five key areas that account for the largest chunk of the public purse: infrastructure, education, health, state-owned entities and water and sanitation.

siphom@citizen.co.za

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