- In an audit report of National Treasury's delayed financial statements, the Auditor General said it had incurred R249 million in irregular expenditure.
- The AG said the delay in implementing the Integrated Financial Management System caused R66 million in fruitless and wasteful expenditure.
- Finance Minister Tito Mboweni requested an extension of the deadline for submitting Treasury's annual report and financial statements.
Auditor General Tsakani Maluleke talked tough on financial management at National Treasury, saying that Finance Minister Tito Mboweni's department - which is widely considered the bastion of fiscal responsibility and sound financial management - had itself exhibited non-compliance.
The Office of the Auditor General conducts audit reports on government department and state-owned entities in the national, provincial and local spheres of government, assessing their financial statements against the standards of the Public Finance Management Act and, where relevant, the Municipal Finance Management Act.
Mboweni is perhaps the most vocal member of Cabinet where it comes to responsible spending and good governance, warning on multiple occasions that government had to come to grips with spending.
However, Mboweni wrote to Speaker of Parliament Thandi Modise requesting an extension to the January deadline for the submission of National Treasury's annual report and financial statements, which must include the Auditor General's audit report.
Treasury 'spent money outside guidelines'
Maluleke, the recently appointed Auditor General, following the end of Kimi Makwetu's term of office, wrote in her audit report of the National Treasury that the department spent money outside of the strictest guidelines of existing legislation for public finances.
"The department incurred irregular expenditure of R249 million. The majority of the irregular expenditure was caused by non- compliance with supply chain management and contract management processes," said Maluleke.
Maluleke said the department's fruitless and wasteful expenditure was for technical support and maintenance on the software licences of the commercial, off-the-shelf enterprise resource planning system to implement its Integrated Financial Management System (IFMS) for government.
"Fruitless and wasteful expenditure to the amount of R66 million was incurred, as the department made a payment for technical support and maintenance not utilised by the department. This is as a result of delays in the implementation of the IFMS programme," Maluleke said.
Steps not taken to avoid fruitless expenditure
She said effective steps were not taken to prevent the fruitless and wasteful expenditure and that the majority of the irregular expenditure was caused by non-compliance with the supply chain management and contract management processes.
National Treasury director general Dondo Mogajane acknowledged in the annual report that the National Treasury experienced challenges in the areas of supply chain management procedures, policies and systems during the 2019-20 financial year due to non-compliance.
"Measures to strengthen the supply chain management control environment include conducting a gap analysis by assessing the current practices, policies, procedures and relevant information as it pertains to the department's supply chain management environment, identifying areas of weakness and making improvement recommendations," said Mogajane.
Later this month, the spotlight will be on Mboweni as he tables the Budget speech for 2021. He is widely expected to repeat his message of the urgent need for tightening of spending in light of longstanding economic challenges and the ongoing Covid-19 pandemic.
Parliament's Standing Committee on Finance is due to meet with National Treasury and the office of the Auditor General on Wednesday to discuss the annual report, financial statements and the audit report.