Committee welcomes prevention of R3.47 billion in financial losses

The Standing Committee on the Auditor-General (AG) has welcomed the recovery and prevention of the R3.47 billion in financial losses by the Office of the Auditor General (AGSA) through the Material Irregularities (MIs) process.

This as the committee received a briefing from the Auditor-General of South Africa (AGSA) on its integrated annual report for the 2023/24 financial year.

“The AG has recovered R1.55 billion in financial losses; R1.14 billion in financial losses in the process of recovery and has prevented the financial loss of R0.78 billion for government departments, municipalities and entities.

“These successes show the importance of the execution of the new powers of the AG obtained through the amended Public Audit Act. In the year under review, the AG identified 626 MIs on non-compliance and suspected fraud,” the Chairperson of the Standing Committee on the Auditor-General Wouter Wynand Wessels said on Friday.

This resulted in 500 MIs on material financial loss, 51 MIs on substantial harm to the general public, 66 MIs on substantial harm to public sector institutions and 9 MIs on misuse on material public resource.

An MI is any non-compliance with legislation, fraud, theft or breach of fiduciary duty that could result in a material financial loss, misuse of public funds or substantial harm to a public sector institution or the public.

The amended Public Audit Act introduced the concept of MIs and expanded the powers of the AG to refer the MIs to relevant bodies for investigation if the accounting officer or authority does not take appropriate action to address them.

“The committee welcomes the AGSA’s culture shift strategy. This entails plotting auditees not only according to mere compliance, but also focusing on service delivery performance.  This shows that 23% of government departments and entities and 45% of municipalities are currently doing harm, while 40% of departments and entities and 43% of municipalities are not doing the basics.

“The committee commends the AG for receiving a clean audit opinion for the year under review. A functional office of the AG is important as it results in a positive shift towards accountability and public sector performance,” Wessels said.