Government overspent or wasted R49 billion since 2019, says Auditor General

Government departments and entities have squandered almost R10 billion a year for the last five years.  

Since 2019, unauthorised expenditures by departments totalled R35.2 billion, with irregular, fruitless and wasteful expenditures tipping the scales at R13.9 billion.

Additionally, 292 separate incidents of material irregularities were identified, reaching an accumulated R14 billion. 

Late and delayed audits

Auditor-General of South Africa (Agsa) Tsakani Maluleke confirmed the figures in a presentation on the national and provincial audit outcomes in Parliament on Tuesday.

Maluleke began by saying that too many entities were escaping oversight by not submitting their financial statements on time or at all.

Audits on 38 departments and entities were still outstanding as of September, with 10 not having been submitted at all by the time of the presentation.

Entities whose financial losses were not included in the presentation due to not having submitted statements include the South African Post Office (Sapo), South African Airways (SAA) and the National Student Aide Financial Scheme (Nsfas) — SAA and Nsfas having not done so for two consecutive years.

An excerpt from the Agsa’s presentation to Parliament: Picture: Agsa

Audit results improved

The entity least forthcoming with its financial statements has been the Unemployment Insurance Fund (UIF) which has not submitted its statements on time for five years. 

“If you think about the significance of the amount of money that flows through the fund and the significance of the role they out to play in our socio-economic framework, it is crucial that oversight be seized with this matter,” Maluleke said.

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Despite the high amounts of waste and non-compliance, 90% of departments had unqualified financial statements, as did 77% of public entities.

Agsa commended the 142 auditees that achieved clean audits in the last financial year. Collectively, those entities manage R2.2 trillion of the nation’s expenditure.

Maluleke added that a culture of zero consequences would continue to slow progress at a national and provincial level.

“Although audit outcomes have improved, there are far too many instances where one can see that financial management practices are not yet sound” stated the AG.

Limited powers of Agsa

The Public Audit Amendment Act of 2018 granted Agsa greater powers but Maluleke stated those were limited to entity’s ledgers.

“The powers do not provide for us to put anyone in jail. The powers also do not provide for us to discipline anybody,” Maluleke said.

“The powers are a complimentary mechanism for us to follow up on how our audit reports and recommendations are being dealt with,” she explained.

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Material irregularities (MI) are easier to act on as they are observable cases of wrongdoing relating to misuse of public funds

“An MI is different from a normal audit finding in that we can see a direct link between, let’s call it the breach, and impact,” Maluleke said.

Material irregularities

Of the 292 MIs identified, 10 were for misuse of a public resource, 19 for substantial harm to a public institution and seven for substantial harm to the general public.

The remaining 256 were for payment for goods not received, irregular procurement and revenue not billed or recovered.

Once making these findings, the AG notifies the relevant accounting officer who is then obliged to act on the findings.

“We then allow them to implement their plan of action. It is important that we do that because we do not step into their shoes, we do not take over the role of the accounting officer because they are the appointed steward over that institution.”

An excerpt from the Agsa’s presentation to Parliament: Picture: Agsa

Recourse

Should action not be taken, stronger recommendations are made before escalating the matter to portfolio committees and then eventually to law enforcement.

Maluleke acknowledged that R3 billion had been recovered through remedial actions but that it was nowhere near enough.

“There is a big jump between R14 billion and R3 billion and the gap that sits between those two numbers is the behaviour of the accounting officers who must ensure they prevent these problems and act on them much quicker,” Maluleke concluded.

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