AG eyes stricter penalties for offenders of supply chain regulations

Cape Town – State employees who don’t adhere to supply chain management procedures could be barred from working in the public service for a number of years.

This is one of the aspects the office of the Auditor-General (AG) is considering to give the entity more powers to hold government accountable for irregular, fruitless and wasteful expenditure.

Auditor General Kimi Makwetu was briefing Parliament on Friday on proposed amendments to the Public Audit Act to give his office more teeth to deal with transgressors of supply chain management procedures, among other things.

The possibility of barring transgressors for a number of years from the public service is practice in a number of overseas jurisdictions, but South Africa will have to make sure it is Constitutional.

Makwetu told MPs on Friday that there is a public perception that there are no real consequences for poor audit results and supply chain transgressions. “Our work is viewed as an area of no consequence – and that language has filtered through. People think about us as the institution whose work has no consequences. These proposed amendment should address issues associated with this institution,” he told MPs.

READ: There must be 'bite' at the end of an audit - AG 

A significant measure that the AG’s office is proposing to ensure consequences for undesirable audit outcomes was to “disallow” certain items of expenditure and issue surcharge certificates in the event that officials make improper payments, fail to collect, or lose money owed to the state without a satisfactory explanation.

Makwetu explained that “disallowance” would mean that the AG will reject particular expenditure incurred if it is contrary to the law, while the surcharge is basically a sum charged by the AG as a penalty for flouting supply chain management procedures.

During a previous engagement with the Cape Town Press Club, Makwetu also mentioned the possibility of a surcharge and explained it as follows: “Say for example someone is responsible for buying bottled water and National Treasury prescribed that the bottle must cost between R10 and R15. But if the buyer bypass the supply chain system and buys the bottle for R40, then he or she becomes responsible for the difference between the R40 and R15.”

It is proposed that the AG would be able to issue a certificate for each amount disallowed and surcharged and notify the head of the accounting authority (usually directors general) and executive authority (usually ministers).

The sum specified by the AG must be paid within 60 days after receipt of the certificate. The AG’s surcharge however should be allowed to be appealed to the High Court within 60 days of receipt of the certificate, Makwetu said.

READ: Municipalities lack accountability for finances - AG 

If the person who receives such a certificate is a government employee, the amount specified in the surcharge may be recovered from his or her salary, subject to written consent.

ANC MP Vincent Smith, who chairs the Portfolio Committee on the Auditor-General and who will be responsible for deliberations on the legislative amendments, said the proposed amendments from the AG’s office are informed by the frustrations Parliament, in particular the Standing Committee on Public Accounts (Scopa) has with lack of consequences.

“We’ve been lamenting that the AG would do an audit independently, come up with findings with intention of maximising efficiency of state resources to curb corruption and maladministration and submit that to Parliament.

“Parliament then calls the relevant department or entity to account for the findings, but after that there are no consequences. It’s almost as if there’s no end result and we’re doing it for the sake of doing it,” Smith said.

The Parliamentary committee will further discuss the AG’s proposed amendments in September. 

SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.

Read Fin24's top stories trending on Twitter:

Brent Crude
All Share
Top 40
Financial 15
Industrial 25
Resource 10
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
I'm not really directly affected
18% - 1575 votes
I am taking a hit, but should be able to recover in the next year
23% - 2068 votes
My finances have been devastated
34% - 3087 votes
It's still too early to know what the full effect will be
25% - 2240 votes