‘Clean audits’ or dirty secrets? Auditor-General reveals shocking setbacks

It takes the pulse of the state’s finances, no matter how fluttering it might be: it’s the auditor-general’s annual report to parliament, an event looked forward to only by political masochists.

When one ploughs through the original AG reports of the past five years – the period the latest report uses for comparative purposes – one realises that it’s all about keeping a game face, whatever the setbacks. There are always “encouraging signs”, “significant effort” and “steps in the right direction”.

However, these nuggets of hope are too often stalled or reversed a year later. As AG Tsakani Maluleke notes this year, there is the ever-present “culture of zero consequences”.

The supposedly good news is that 90% of departments had clean audits, as did 77% of public entities. But the clean departmental audits are 50% higher only when compared to 2018-19, the last year of the Jacob Zuma administration.

When compared to last year, there actually has been a drop from 146 clean audits to 142.

In any case, it’s the big numbers that matter most, those of what the AG calls the “high-impact” auditees (HIAs) – the key service delivery departments of health, labour, public works, policing, water, energy, environment, education and finance, as well as the major stateowned enterprises.

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They account for the bulk (77% or R1.6 trillion) of public expenditure. Over the past five years, noncompliance with regulations, mainly by these HIAs, resulted in irregular expenditure of R407 billion.

One can avoid the AG’s beady eye by simply not submitting financial accounts. In 2022-23 there were nine HIAs with outstanding audits. In the past financial year, there were 29. T

here is nothing the AG can do about this. Although successive AGs have called for punitive powers, the ANC has never acceded.

HIAs that did not submit accounts include the National Student Aid Financial Scheme (Nsfas) (a repeat offender and until June this year, under Blade Nzimande) and the Unemployment Insurance Fund (under Thulas Nxesi for five years and now under Nomakhosazana Meth), that haven’t filed financial statements on time for five years.

The Nsfas was last year allocated about R49 billion to support tertiary students from low-income families. The UIF manages a surplus of more than R70 billion.

Nzimande, who has held the higher education portfolio since 2009, has for years been the subject of allegations of corruption. Leaked whistle-blower recordings released by the Organisation Undoing Tax Abuse suggest he and other officials were involved in schemes to benefit from Nsfas contracts.

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Nzimande has denied wrongdoing. In June, with the announcement of the first GNU cabinet, Nzimande lost control of the Nsfas money bags when he was made minister of science, technology and innovation.

Nxesi was given the Labour and Employment portfolio in 2019. With the collapse of the ANC vote, he failed to be re-elected to parliament.

During his tenure, the UIF entered into a R5 billion deal with Thuja Capital, purportedly to create over 25 000 jobs and fund businesses. The high court later declared the contract invalid after allegations surfaced that officials and Nxesi solicited bribes worth R500 million for the deal.

In her report this week, Maluleke again bemoaned the “no consequence culture” that prevails. The lack of consequences is most evident, she writes, in the “poor and slow response” to allegations of misconduct and fraud.

Maluleke is referring, of course, to the public servants who are impeding service delivery. Her words could, as accurately, be directed against the ministers and the president who should bear ultimate responsibility, but shirk it.