Taxpayers didn't get value for R25bn
Johannesburg - Auditor General Terence Nombembe has unearthed R25bn in unauthorised, irregular, fruitless and wasteful expenditure in national and provincial government departments in the 2010/2011 financial year.
Nombembe, who expressed concern about the financial controls in public sector spending, said this was an increase of R2.3bn compared with the previous financial year - because of his office's increased "scrutiny" of taxpayers’ money.
The exact figure of R25.445bn includes the spending of government entities such as Eskom and the SA National Roads Agency Limited.
Addressing reporters in Pretoria this morning Nombembe said he felt the most discomfort about the area of financial reporting, where government officials failed to record the correct amounts spent.
He said financial information was often corrected by his own officials during the auditing process at the end of the financial year.
While national and provincial departments, including entities, reported R13.7bn in unauthorised, irregular, fruitless and wasteful spending in their annual reports, the AG found a further R11.7bn through the final auditing processes.
Nombembe said financial managers should be trained to be able to report on finances correctly before all spheres of government could reach the target of clean audits by 2014.
"It (correct financial reporting) is the single and sole factor that will make clean audits in SA a reality. The role of the ministers, premiers, MECs, portfolio committees and Scopa [the standing committee on public accounts] is important,” said Nombembe.
One of the "biggest weaknesses" in government as a whole was the effectiveness of information technology systems and controls, said Nombembe.
The AG report shows that at provincial government level irregular expenditure - incurred in contravention of national laws - was the biggest culprit at R16.8bn, followed by unauthorised expenditure (overspending on certain projects) at R2.9bn while fruitless and wasteful expenditure (spending in vain, which could have been avoided) stood at R850m.
At national government level irregular expenditure was R4.5bn, fruitless and wasteful expenditure R593m and unauthorised expenditure was R802m.
Nombembe expressed concern that most government departments did not understand the requirements for meeting service delivery objectives and that departments were apparently deliberately not reporting their finances accordingly.
"Financial reporting is the biggest area of concern where there is [a] supply chain. This is where we still find a number of omissions by departments in adhering to departmental norms.
"Once again it’s an area, to a large extent, that does need to be given attention because there’s constant deviation. It doesn’t mean money has been lost, just that due processes are not embarked upon by government departments," said Nombembe.
He was also concerned with the high vacancy rate and called on government to employ skilled people who have an understanding of the basic accounting principles.
But Nombembe was pleased that senior government officials including the executive had committed themselves to improving the state of financial reporting and controls in the public sector.
He warned that unless the executive rise to the occasion and monitor financial controls in their respective departments Operation Clean Audit, set for 2014, would not be a reality.