South African citizens still don’t get their money’s worth, even though …

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According to Auditor General Tsakani Maluleke, only 19% of national and provincial government spending, which stands at Rand 1.9 trillion, was fully audited in fiscal year 2020/21.

Only one of the 15 public entities (SOE) managed by the Auditor General and only two of the main service delivery departments such as human settlements, education and health are part of this own audit group of 115 departments and entities. .

While the Development Bank of South Africa and the Western Cape Department of Health and Public Works have carried out clean audits, on the other end of the worst audit result, a warning, again is the South African Nuclear Energy Corporation (Necsa).

Like Necsa, the SABC “revealed uncertainty in its financial statements as to its ability to continue operations,” according to the 2020/21 audit report of the Consolidated Public Financial Management Law (PFMA) published by the Auditor General Tsakani Maluleke on Wednesday after informing the Cabinet, then the Standing Committee of Parliament on the Auditor General and the public expenditure watchdog, the Standing Committee on Public Accounts (Scopa).

Maluleke was decidedly optimistic in his briefing to MPs. This is a “good result”, as own audits represent 27% of the 425 ministries, public enterprises and public entities audited. Another 187 auditees, or 44% of the total, had received unqualified audits with conclusions.

“This administration has resulted in an increase in clean audits over time. My team told me that there were 31 other audits that we could have moved to the clean audit area without a little thing or two.

But further uncertainties regarding the continued operations of state-owned enterprises are expected as more audits are finalized. Of the 34 late submissions, seven are from state-owned companies, including SAA (since 2018), SA Express, Denel, Alexkor, Trans-Caledon Tunnel Authority, Independent Development Trust, Passenger Rail Agency of South Africa (Prasa), as well as the SA Post Office and the Land Bank, both of which have received bailouts in the past year.

“The situation of SOEs remains volatile, especially their financial health, as many key financial indicators continued to deteriorate during the year under review.

“Some SOEs have continued to request – and receive – government funding, which has resulted in the misappropriation of funds intended for the provision of primary services,” according to the PFMA 2020/21 consolidated audit report.

Auditor General Tsakani Maluleke told MPs that lawsuits against ministries have further reduced already scarce resources. (Photo: Kopano Tlape / GCIS)

And this so-called diversion of resources is a key element – if money is spent on bailouts, resources are not available for service delivery and so are key service delivery departments, especially those of key institutions. human, education and health care, do not maintain internal controls to effectively spend their allocations, again, service delivery is compromised.

Or, as the Auditor General said, citizens are denied essential services due to poor financial and performance management in key service delivery departments.

Even though Maluleke’s emphasis on “incremental improvement” as the theme of this report is to “accelerate improvements in accountability”, continued disregard for regulations and legislation by more than two-thirds of national and provincial departments and public entities emerged.

In total, 69% of national and provincial government departments and public entities failed to comply with regulations and legislation – from procurement and other rules to the PFMA.

The fact that the government must break its own laws and regulations responds to the repeated call for internal controls, strong political and administrative leadership, and the consequences of transgressions.

Unsuccessful and unnecessary spending, or spending in vain, amounted to Rand 1.72 billion, and unauthorized spending, or spending beyond the available budget, also remained high at 3.21 billion Rand.

Provincial health departments are the most affected by unauthorized spending, due to the 1.76 billion rand paid for medical negligence claims, or 75% of all claims against the state, for a total of 124 , 15 billion rand.

Meanwhile, the SA Police Department faces legal claims of R 7.71 billion for wrongful arrests and unlawful shootings and assaults during arrest or questioning.

Maluleke told MPs the legal claims were further reducing already scarce resources. Yet much of such litigation could be avoided through appropriate internal controls and suitably motivated and agreed upon performance standards.

“If you have a ministry of health that cannot demonstrate that it can give you credible performance information, what that tells us is that its ability to plan performance, to monitor and supervise performance, is not there.

“If you have the HIV / AIDS program and you are unable to confirm that it is being implemented the way Parliament has been informed that it is … and how the beneficiaries need to see it, then you won’t be able to keep up … okay, no matter over time, achieve your goals and aspirations.

But the impact of the government’s failure to adhere to its own laws, prescriptions and regulations is also reflected in irregular spending which has increased dramatically to R166.85 billion – and it continues, as this aspect of 2020/21 is not quite finished – compared to R109.8 billion in irregular spending in the previous fiscal year.

While irregular spending does not necessarily mean corruption, it is money that has been spent without complying with laws and regulations, including procurement rules and value for money requirements such as calls for tenders. In some ways, this relates to the audit finding that 69% of national and provincial departments, state-owned enterprises, and public entities are non-compliant.

The 2020/21 consolidated audit was the third year in which the GA made findings of material irregularities in accordance with the authority provided by the Law on Amendments to the Law on Public Audit, which authorizes action disciplinary and personal expense orders against accountants.

Of the 237 material irregularities, only 17 have been resolved, MPs heard, leaving 220 open, covering everything from breaches of government contracts, payments for substandard goods, fraud and obtaining repeated waivers .

Prasa has been the subject of nine findings of material irregularities against it since July 2019. [material irregularities] have not been resolved or adequately addressed due to the multiple changes at the board level since then ”, states the 2020/21 consolidated audit report.

The Defense Ministry has five findings of significant irregularities against it, without any appropriate action out of three by mid-October 2021, according to the report.

The material irregularity regarding the asset inventory management contract with an instruction in November 2021 to determine losses, recover them and institute disciplinary action against civilian officials, with the SANDF boss doing the same with command officials military is now a corrective measure.

government audit of public enterprises
Even as Auditor General Tsakani Maluleke emphasized “gradual improvement”, the continued disregard for regulations and legislation by more than two-thirds of national and provincial departments and public entities has emerged. (Photo: Kopano Tlape / GCIS)

If this is not done, Defense Secretary Ambassador Sonto Kudjoe faces a certificate of debt, makes it a personal expense order.

On Wednesday, Maluleke appeared to want to downplay such public audit powers, claiming that the Auditor General “does not take over the responsibilities of the accountant,” nor those of the executive authority – in fact ministers and CEMs – or the oversight role of Parliament. and provincial legislatures to promote accountability so that it does not get certificates of debt.

These comments seem curious, but may be triggered by actions taken by government and public entities to transfer financial management and audit compliance only to the Auditor General, given these additional statutory public oversight powers.

But such a swing would run counter to the ethics of a capable state and public accountability – and against the GA’s long-standing pressure for consistent internal controls, credible performance plans, consequences for transgressions and committed political leadership.

Or, as Maluleke put it: “What we see as success is when we have better accountability… better protection of resources so that we have controls and discipline and a working culture. ‘in a prudent manner when we manage with public resources’. DM

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