Massive wasteful expenditure, few clean audits, says AG report

FILE PICTURE: Auditor-General Kimi Makwetu. Picture: Christine Vermooten

FILE PICTURE: Auditor-General Kimi Makwetu. Picture: Christine Vermooten

The AG says fruitless and wasteful spending had an increase of 200% compared to the 2016/17 financial year.

Auditor General Kimi Makwetu on Wednesday released his report looking into how state-owned enterprises are doing, and it doesn’t contain much good news.

His report, which also looks into the financials of provincial and national departments, shows a “massive regression” in audit outcomes this financial year, Makwetu said.

Irregular expenditure in government sits at around R51 billion, including R28.4 billion from Eskom and Transnet alone.

The Road Accident Fund is also a huge source of wasteful expenditure. The report found that 75% of the R35.1 billion deficit incurred by public entities with expenditure exceeding their revenue was from the fund.

“Unauthorised expenditure increased by 38% from the previous year to R2.1 billion, 86% of which was a result of overspending,” according to the report.

“Fruitless and wasteful expenditure increased by over 200% from the previous year to R2.5 billion. Irregular expenditure continued to remain high at R51 billion. This total includes the irregular expenditure of those auditees where the AGSA had completed the audits after the cut-off date of this report (R5.4 billion).”

Alarmingly, this figure of R51 billion reportedly does not even include SOEs, according to Makwetu.

Clean audits, meanwhile, have decreased to 23%, a sharp drop from 30% the previous year.

“There were serious weaknesses in the financial management of national and provincial government that had not been addressed over the past four years,” the report finds.

The Western Cape, governed by the DA, has been reported to have produced 83% clean audits.

Second to that was Gauteng, with 52%.

Other disturbing findings:

  • There is a risk of increased litigation and claims against government departments
  • A third of the departments have claims against them in excess of 1o% of next year’s budget
  • These claims will be funded from money intended for service delivery, as the departments don’t budget for the claims
  • A R35.1 billion deficit was found in the 41% of public entities whose expenditure exceeded their revenue
  • The amount of non-compliance by those audited in 2018 increased from 54% to 72%

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