Province’s austerity drive pays off

2011-12-07 00:00

A DAY after the national cabinet intervened to save two provinces from economic collapse, it emerged that KwaZulu-Natal is bucking the trend of financial mismanagement in the public sector and is on its way to financial excellence.

Auditor-General Terrence Nombembe told the KZN Legislature yesterday that the provincial government received five clean (unqualified) audits, the most for any province for the 2010/11 financial year.

The latest audit outcomes are in stark contrast to the financial years from 2005 to the 2009, when KZN did not have a single clean audit, and an improvement on the 2009/10 financial year, when it only garnered four clean audits.

KwaZulu-Natal also stands out for not having a single adverse opinion or disclaimer in the latest audit, while it received only three qualified audits compared to eight in the 2005/06 financial year.

KZN is also riding high, with its finances firmly in the black, brought about by strict austerity measures, while Limpopo, Gauteng and Free State are in serious financial trouble, with the National Treasury forced to step in.

Nombembe said KZN’s unauthorised expenditure has decreased from a whopping R2,6 billion in the 2009/10 financial year to R267 million.

The 21 cost-cutting measures that helped the province get back on track included doing away with Christmas parties, catering, buying furniture and allowing government officials to fly first class.

Yesterday Nombembe told MPLs that clean audits were received by the Provincial Treasury, Arts and Culture, the Office of the Premier, the legislature and Transport.

The three departments that received qualified audits were Education, Health and Public Works.

Eight other departments received unqualified audits “with matters”. They are Economic Development; Human Settlements, Agriculture, Environmental Affairs and Rural Development; Community Safety and Liaison; Royal Household; Co-operative Governance and Traditional Affairs; Social Development; and Sport and Recreation.

Nombembe said the province is on its way to achieving financial reporting excellence. “We are beginning to see progress in the right direction,” he said.

However, he said, the province must pay more attention to service delivery, reporting and compliance to sustain the positive audit and to accelerate good governance.

He said compliance with legislation, especially procurement, still haunts South Africa.

Non-compliance with procurement has resulted in irregular expenditure of R1,4 billion.

“Although the expenditures were not necessarily wasteful, government processes were not followed in spending the money,” he said.

Other findings by the A-G relating to procurement were that a large number of state officials and their close family members were awarded contracts to do business with departments they work for and/or within the provincial government.

Nombembe urged the legislature and government departments to look into strengthening their audit committees and internal auditing functions to ensure that financial controls are watertight.

Most MPs were pleased with the news, which prompted Premier Zweli Mkhize to urge opposition party members also to bask in the province’s achievement.

“It’s a team effort … We have committed ourselves to clean governance and fighting fraud and corruption … We have done it ourselves without any assistance and we avoided [being placed under administration], unlike some provinces.”

KZN Finance MEC Ina Cronjé was equally pleased and said the provincial government is “feeling good about the A-G’s presentation”.

On Monday the national cabinet announced it had been forced to urgently review the financial management in Limpopo, Free State and Gauteng. The national government had to dip into reserves amounting to billions of rands, placing eight provincial departments in Limpopo and Free State under administration.

Interventions were also needed in Gauteng, particularly in the health department.

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