Public Audit Act changes will give AG more teeth

Amendments to the Public Audit Act to give the auditor-general (AG) more teeth would be presented to parliament within days, Vincent Smith, chairperson of the standing committee on the auditor-general, said yesterday.

He was speaking at the release of the consolidated audit outcomes for municipalities for 2016-17 by auditor-general Kimi Makwetu.

Makwetu expressed frustration with the majority of municipalities which had not heeded the “constant and insistent advice and caution” of his office and as a result showed a deterioration in audit outcomes.

The number of municipalities with clean audits dropped from 48 in 2015-16 to 33.

A total of 112 received unqualified audit reports with findings, up from 108 in the previous year. Qualified audit outcomes increased from 60 to 66 and four municipalities got an adverse report with findings.

The number of disclaimers increased from 21 to 24 and the results of 18 municipalities were outstanding against none the previous year.

Irregular expenditure (unlawful) increased 75% from R16.2 billion to R28.3 billion. Of this, R15 billion related to irregular expenditure from previous periods only detected in 2016-17. The balance of R13.3 billion related to expenses paid in 2016-17.

Fruitless and wasteful expenditure (no value to the municipality) increased to R1.5 billion and unauthorised expenditure (not budgeted for) dropped by 9% to R12.6 billion.

Makwetu said he had pointed to a lack of leadership to address accountability, by ensuring consequences for those who flouted processes in 2011-12.

He also highlighted weaknesses in internal control, provided root causes for poor audit outcomes and made recommendations to rectify it.

“Five years later we are still faced with the same accountability and governance challenges we flagged throughout these years. There has been no significant positive change towards credible results; instead there is a reversal in audit outcomes,” he said.

Smith said the amendments to the Public Audit Act would be presented to parliament within days. He said parliament should adopt the amendments before the end of the current term at the end of June and it would be in force as soon as the president signed it.

The amendments would provide for powers for the AG to refer material irregularities to independent agencies like the police, the Hawks and the Public Protector.

On the basis of their findings, the AG would have the power to issue a “Certificate of Debt” to the municipality or entity obliging it to collect money lost due to irregularities. The municipality has to report annually on these collections.

Top contributors to irregular expenditure were the Nelson Mandela Bay Metro at R8.1 billion, the OR Tambo district at R3 billion and Tshwane was third with R1.8 billion irregular expenditure relating to its smart metering, wi-fi and fleet management contracts.

Makwetu said the irregular expenditure in metros increased significantly, mostly due to uncovering sins from the past.

The financial health of half of the eight metros was stable, but he was concerned about Johannesburg, Tshwane, Nelson Mandela Bay and Mangaung.

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