AG results show entire public service needs to go back to school – Sisulu

2013-03-12 15:49

The financial administration of more than R900 billion in taxpayers’ money in most government departments and public entities “regressed” in the 2011/12 financial year, Auditor-General Terence Nombembe has said.

Announcing the audit outcomes of all national and provincial government departments and entities in Pretoria today, Nombembe called for a new culture of “professionalism” within government, while Public Service Minister Lindiwe Sisulu said the results showed that the entire public service may need to “go back to school”.

The audit outcomes showed that more than R60 billion in irregular expenditure was unaccounted for in the 2011/12 financial year, up from R46 billion in 2010/11 and R21 billion in 2009/10.

Nombembe said the R60 billion figure included R12 billion that was not detected by departments and entities when they filed their financial statements, owing to incompetence in financial administration.

Nombembe painted a picture of stagnant results, with 50 auditees failing to maintain the clean audit reports they received the previous year. This meant that the number of entities that received a clean audit fell from 93 in 2010/11 to 53 in 2011/12.

Only two national departments, environmental affairs and public enterprises, and the public service commission, received clean audits.

Of the 536 audited entities only 117 received clean audit opinions.

“The majority of entities are still experiencing challenges, with 297 receiving financially unqualified audit opinions with findings, compared with 279 in the previous year. Seventy-four received qualified opinions, while an adverse opinion or disclaimer was expressed on 17 audits. Thirty-one of the audits are still outstanding, mainly due to the non-submission of financial statements by the relevant entities,” said Nombembe.

Auditees that regressed from clean audit opinions to qualified audits included the Mpumalanga Legislature, while the Gauteng and KwaZulu-Natal premier’s offices and the provincial legislatures of the Eastern Cape, Gauteng and KwaZulu-Natal retained financially unqualified opinions on financial statements but regressed owing to material findings on predetermined objectives or compliance.

Nombembe said the main reason entities and departments were not improving their financial administration was because “leadership did not set the right tone in leading change in their respective portfolios”.

He was pleased that government had expressed concerted efforts to address the malaise in the administration of government’s finances.

“It is evident from this year’s results that audit outcomes only improved in areas where the leadership adopted a hands-on approach to addressing shortcomings in their respective portfolios. Leadership in these portfolios personally took on the oversight role of their control environments and this led to a remarkable improvement in outcomes,” said Nombembe.

The report also showed government’s failure to comply with supply-chain management laws and take control of the tender environment, which was susceptible to irregular practices, said Nombembe.

He highlighted the need to bolster human resources capacity in all areas of government as the key structure that will assist in appointing the right people and filling vacant posts in the public service.

Sisulu promised to clamp down on managers that did not comply with Treasury regulations and announced that government was changing legislation to make directors-general more accountable for human resources in their departments.

“We are amending the law that says a director-general is only responsible for the finances of the department to also include human resources so that they are responsible for human resources. So there will be consequences for them should there be irregularities,” said Sisulu.

Government was also working on filling vacant posts to ensure that every department was adequately staffed to fulfil Treasury requirements on financial controls, said Sisulu.

She said government was busy with the establishment of a school of governance where public servants would be trained in their various fields.

Nombembe said the monitoring of expenditure and financial controls was on the wane as treasuries, offices of the premier, the department of public service and administration and other monitoring institutions were not adequately guiding, supporting, coordinating and monitoring financial administration in all departments.

“At the moment, my assessment is that not all these roleplayers are playing their part in providing the level of assurance required to create the momentum to improve audit results and provide comfort to citizens that the public administration machinery is able to operate and monitor itself daily without waiting for external guidance or supervision,” said Nombembe.

Of the 671 auditees (162 departments including Parliament and provincial legislatures, and 509 entities), only 40 had not submitted annual financial statements by the May 31 2012 deadline.

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