The Eastern Cape provincial administration was unable to account for R30,2-billion out of R34,1-billion (88,5%) it spent during 2005/06, the Public Service Accountability Monitor (PSAM) said on Thursday.
The Eastern Cape auditor general issued five provincial departments with disclaimers for the 2005/06 financial year. These include the four major service-delivery departments, health, education, social development and housing, which together received 86% of the total Eastern Cape budget for 2005/06.
The province’s department of economic affairs was also issued with an audit disclaimer.
This is of particular concern, the PSAM said, because it means that the cumulative figure disclaimed has almost doubled from the previous financial year (2004/05) when the auditor general disclaimed a total of R16,8-billion, or 54%, of expenditure. In that year, the departments of housing, health and education were issued with disclaimers.
An audit disclaimer is issued when the auditor general is unable to confirm that the funds were used for their claimed purpose. This is often due to the fact that departments cannot provide sufficient supporting documentation to justify the department’s expenditure.
Such a disclaimer is usually an indication of extremely poor financial management and a serious lack of financial and internal control measures within a department.
For example, the auditor general noted in his 2005/06 reports on the departments of health, housing and education that their financial statements did not comply with the relevant National Treasury regulations. There was also an absence of sufficient “monitoring and independent checks” on the part of management.
The disclaimed amount for 2005/06 represents the worst performance on the part of the Eastern Cape administration in five years. In 2000/01, eight out of 13 departments received disclaimers. This represented 95,8% of the spent budget.
While matters improved subsequent to 2000/01, financial management appears to again be on the wane.
Provincial finance minister Billy Nel acknowledged in his budget speech earlier this year that financial management in the Eastern Cape administration was weak and undertook that the Treasury would design and implement a comprehensive “financial management improvement programme”.
Premier Nosimo Balindlela also undertook in her 2006 state of the province address to ensure that the fiscal environment in the province was strengthened.
The PSAM, which is based in Grahamstown, on Thursday called on the premier and her finance minister to report back to the public urgently on these undertakings. It believes that emphasis should be placed on strict adherence by departments to the regulatory framework governing public finances in order to ensure that all available resources are utilised towards effective service delivery.