SA economy bleeds billions

2015-11-26 12:00
Angry commuters protest the implementation of taxi cards at the entrance to France.

Angry commuters protest the implementation of taxi cards at the entrance to France. (Ian Carbutt, The Witness)

Multimedia   ·   User Galleries   ·   News in Pictures Send us your pictures  ·  Send us your stories

Pietermaritzburg - Poor oversight in procurement has seen the country rack up a monumental R25 billion in irregular expenditure, while a lack of any consequence makes the national fiscus vulnerable, says the auditor-general’s office.

Auditor-General (AG) Kimi Makwetu also reprimanded the country’s leadership, saying that while there had been “marginal improvement”, the government could have recorded a “higher margin of improved results” had “leadership stepped up the pace in addressing internal control deficiencies identified in the previous audit”.

Irregular state spending jumped from R27,4 billion in the 2012/2013 financial year, to R62,7 billion for 2013/2014.

The AG found that although the 2014/15 figure was lower than for the previous period, it was still too high.

One of the more bizarre findings was the R32 million included in the total of R936 million deemed “fruitless and wasteful expenditure”, which was ironically spent to “prevent further fruitless and wasteful expenditure”.

The 2014/15 PFMA consolidated general report on national and provincial audit outcomes covered 468 state-funded entities, including 167 national and provincial departments, with a total budget of R1,1 trillion (a million millon) and was released yesterday.

“Stepping up the pace is about consistently narrowing the space for possible errors or abuse in handling public resources through leadership-driven efforts,” said Makwetu.

The key indicators scrutinised were financial statements, performance indicators and legislative compliance.

The provinces with the most clean audits were the Western Cape (83%), followed by Gauteng (54%), Free State (32%) and KwaZulu-Natal (22%).

The AG said the education, health and public works sectors still had the worst outcomes.

His report said basic and higher education had a combined budget of R257 billion, health R146 billion) and public works R32 billion.

“There should be a focus on these departments to ensure a meaningful movement towards accurate, accountable and transparent financial and performance reporting. This should be underpinned by sound internal controls and good human resource management, including enhancing personal accountability and consequence management,” said Makwetu.

He said the key driver was that many “do not follow competitive or fair procurement processes” in their supply chain management, which contributed largely to the irregular expenditure of R25,7 billion.

Makwetu clarified that while this did not immediately mean the money was wasted or that fraud was committed, it could nevertheless threaten the public purse.

“The absence of follow-up and real consequences … creates more vulnerability for the control weaknesses to be taken advantage of, resulting in possible significant losses to the fiscus.”

He said the root cause of poor audit outcomes was that 73% of entities were slow in improving key controls and addressing risk areas.

“Instability or vacancies in key positions remained the second highest root cause of findings [while] consequences for poor performance and transgressions … were inadequate.

“The status of human resource management remains poor in most provinces.”

His report emphasised the role of leadership towards strengthening the controls.

“We are still convinced that with more firm, resolute action and ongoing support from leadership, these audit deficiencies could easily be addressed,” said the auditor-general.

• jonathan.erasmus@witness.co.za

FOR KwaZulu-Natal, there were several bright spots, with the province’s leadership being called “responsive, disciplined and hands-on”.

But worryingly, the KZN Legislature, the heart of government in the province, was the only legislative house in the country that obtained a qualified opinion.

Meanwhile, irregular expenditure was down by 60% to R1,7 billion, largely as result of the Education Department reducing its irregular expenditure from R2,6 billion to R448 million.

The Health Department was responsible for 90% of the province’s unauthorised expenditure of R143 million, although overall the figure was down significantly from R685 million the previous year.

“Our analysis indicated that the political and administrative leadership has the will and zest to improve the provincial landscape by promoting accountability and good governance, and by holding officials in positions of stewardship to account.

“With this being said, the province is destined to realise better audit outcomes in the year ahead,” said the AG’s office.

The province’s total budgeted expenditure was R97 billion, of which R52 billion went to employee costs.

However, the Education, Health and Transport departments, which manage 82% of the provincial budget between them, all had negative findings against them.

Read more on:    pietermaritzburg  |  economy

Join the conversation!

24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions.

Inside News24

 
PARTNER CONTENT
INFOGRAPHIC: New thinking required for retirement

Everything we believe about retirement is fast becoming outdated.

PARTNER CONTENT
WATCH: How education can change a life

A university education gives students the chance to create a better future for themselves, their families and to opportunity achieve their dreams.

/News

Book flights

Compare, Book, Fly

Traffic Alerts
There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.




Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.