Current administration gradually improving audit outcomes, says AG

In the third year of the current administration, Auditor-General, Tsakani Maluleke, says her office continues to see a gradual upward trend in the audit outcomes of national and provincial government.

However, she said, key service delivery portfolios and state-owned enterprises continue to receive poor audit outcomes.

Maluleke’s observation is contained in her executive summary in the Consolidated General Report on National and Provincial Audit Outcomes of the 2021/22 financial year. She released the report on Wednesday.

In the report, Maluleke said: “Through our expanded mandate, we have enriched our insights and strengthened our ability to influence and enforce accountability and consequence management. There has been a shift at departments and public entities from a slow response to our findings and recommendations over the years to attention now being paid to material irregularities.

“Auditees are taking action to resolve these by recovering losses, preventing further losses and harm through strengthening internal controls, and effecting consequences for transgressions.”

However, greater impact will be achieved if accounting officers and authorities resolve the material irregularities quicker,” she said.

“We continue to advocate for investment in good preventative controls, as preventing material irregularities is more effective than having to deal with the consequences thereof.

“Poor overall performance leads to poor service delivery – to the detriment of the people of South Africa. Much of this can be attributed to poor planning, insufficient intergovernmental coordination, execution without oversight, and lack of accountability for effective reporting and the achievement of planned service delivery.”

Over the past few years, the AGSA had highlighted the internal control deficiencies that led to government not deriving value from its spending because of inefficient and ineffective infrastructure delivery.

She said infrastructure continues to deteriorate because it is not properly maintained and protected against vandalism.

“This slows down service delivery and results in funds being wasted, which places further pressure on the fiscus. Auditees have not heeded our call to address these deficiencies, and infrastructure projects continue to face the same delivery challenges.

“We have also seen little improvement in the area of financial management, despite consistently reporting the same deficiencies. Non-compliance with legislation remains high, resulting in unfair and uncompetitive procurement processes and payments for goods and services not received. These are also the areas where the risk of fraud is highest, hence it is necessary for a culture of compliance and respect for the law to be re-enforced.”

In the report, the AGSA identified 179 material irregularities in the national and provincial spheres of government.

Over the three-year term of the current administration, auditees have disclosed fruitless and wasteful expenditure totalling R5.83 billion.

She said since 2019, the AGSA had also identified non-compliance and fraud resulting in an estimated R12 billion in financial loss through our material irregularity process.

The main reasons that money is being lost include:

• Poor payment practices to suppliers of goods and services;

• Unfair or uncompetitive procurement practices when procuring goods and services;

• No or limited benefits received for money spent and properties owned;

• Infrastructure not maintained and secured;

• Uneconomical practices for leasing properties; and

• Inadequate needs analysis and project management.