AG urges defence department to address financial mismanagement

The auditor-general’s (AG) warning to the department of defence and military veteran to pull their socks up has forced the department to take steps to fix its historically poor financial management, which results in wasteful and fruitless expenditure.

The AG found the poor quality of annual financial statements submitted by the department was a glaring shortcoming in the department’s reporting, with 75% of its financial statements containing material errors. This represented an increase from 50% the previous year.

Despite operating from a low budget base, the department was found to have spent R442 million in fruitless and wasteful expenditure in the year. This included R271 million from cancelled and renewed contracts and R108.2 million from unoccupied buildings.

R442m in fruitless and wasteful expenditure

In a report to the department’s leadership, Deputy Minister of Defence and Military Veterans Bantu Holomisa suggested a series of solutions to get the department out of its financial quagmire.

Holomisa said thorough investigations into all instances of fruitless and wasteful expenditure would be followed by the enforcement of consequence management.

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“Proper investigations will be carried out, ensuring full accountability for negligence and noncompliance through rigorous consequence management measures,” Holomisa said.

The ministry is working on a plan of action to be implemented in the first quarter of the next financial year to rectify the situation, which was a consequence of the department’s deliberate budget cuts over the past 20 years, at least where the state prioritised social services over defence matters.

Defence ministry working on plan of action

The situation was worsened by the outbreak of Covid, when all government departments had to surrender part of their funds to be utilised for health services to tackle the pandemic.

As part of Holomisa’s plan, the department has undertaken to implement a system to track and report all irregular expenditures through an internal financial tracking system.

“Failing to improve these controls could be dire,” Holomisa said.

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