SA govt's irregular expenditure soars to R62bn, material losses at R2.8bn

2019-11-20 14:15
Auditor-General Kimi Makwetu releases the audit findings for 2018-2019. (Jan Gerber/News24)

Auditor-General Kimi Makwetu releases the audit findings for 2018-2019. (Jan Gerber/News24)

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The irregular expenditure of the South African government's national and provincial departments has increased to more than R60bn, while material financial losses amount to R2.8bn, the Auditor General revealed on Wednesday.

Irregular expenditure increased to R62.60bn from the R51bn reported the previous year – an increase of more than R10bn.

Auditor General Kimi Makwetu presented to the media the "disappointing" audit results of the national and provincial governments for 2018-2019 on Wednesday.

His report revealed that 28 material misstatements were identified at eight auditees, which resulted in a financial loss of R2.81bn.

The Passenger Rail Agency of South Africa (Prasa) contributed the biggest amount – R2.2bn – to material irregularities of the South African government in the last financial year.

"Of the known loss, R2.2bn is the money expected to be lost as a result of the irregularities in the purchase of locomotives by the Passenger Rail Agency of South Africa," read Makwetu's statement.

The most material irregularities were identified at the Free State's Department of Human Settlements, with 10, closely followed by Prasa, with nine.

Material irregularities stem from non-compliance with legislation, but has a broader scope than irregular expenditure and can be applied to fraud, theft and a breach of fiduciary duty, meaning that an official did not comply with legislation. Material irregularities also differ from irregular expenditure in that the non-compliance results in a material financial loss.

On irregular expenditure, Makwetu noted that the figure could be higher than the reported R62bn.

"It is worth noting that the amount could be even higher as 34% of the auditees were qualified because the amount disclosed was incomplete and/or disclosed that they had incurred irregular expenditure but that the full amount was unknown," read Makwetu's statement.

"We could not audit R2.33bn worth of contracts due to missing or incomplete information," he said.

Irregular expenditure is expenditure where there was non-compliance with legislation in the process leading up to the payment. It does not necessarily mean that money was stolen or lost.

However, Makwetu was encouraged that unauthorised expenditure decreased by 23% from the previous year. But he remained concerned that the number of departments that incurred this type of expenditure increased for the past three years.

Fruitless and wasteful expenditure also increased.

"Government cannot afford to lose money because of poor decision-making, neglect of inefficiencies; however, we continue to see a rise in fruitless and wasteful expenditure," Makwetu said.

Fruitless and wasteful expenditure increased by 7% from the previous year, mostly due to the National Department of Energy losing R110m for additional storage costs of solar heater panels manufactured and stored by suppliers beyond the agreed storage period, and the Free State's Department of Health losing R101m for remedial work on infrastructure projects.

Read more on:    economy  |  government spending

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