Billions of rands of public funds are floating around in government departments with no one knowing what the money is being spent on or whether it is being spent at all.
This has been the outcome of another round of financial reports prepared by Auditor General Terence Nombembe, which form part of the annual reports that departments are obliged to submit to Parliament. These reports will be discussed by the relevant portfolio committees that will question ministers and directors general on various issues relating to financial mismanagement and lack of internal financial controls.
Once again many government departments received qualified audits from Nombembe, which means they have not been able to comply fully with the financial requirements of the Public Finance Management Act (PFMA), which is being introduced in phases. The auditor general’s opinion serves as a report card on the financial management by ministers and directors general. A qualified audit points to a lack of checks and balances. It is so bad that the auditor general is not able to do a proper audit of the department.
Some departments have become regulars on the qualified audit list. Some of the most stubborn offenders are the departments of health, correctional services and water affairs and forestry, which have never received a thumbs-up.
The introduction of the PFMA created more hurdles for the departments to clear before getting a clean bill of health from Nombembe. As a result, some departments, one of them arts and culture, received a qualified audit for the first time this year.
Nombembe says the main problem is the management of assets, which include furniture, computer hardware and vehicles, as well as extensions to existing government buildings.
The asset registers that should accompany claims for expenditures on assets are often not updated and, in some cases, the registers do not exist.
This leaves these assets open to abuse and corruption, because they cannot be traced and monitored.
Other problems include the fact that departments increasingly spend their current budgets but are not able to spend their capital budgets within the allocated time.
Capital budgets are used to acquire fixed assets, while current budgets cover the running costs of the department.
Assets totalling R2,2-billion in the department of water affairs and forestry do not have the adequate documentation and asset register to support the amount in the financial statements.
This department received an adverse opinion, which is the worst opinion the auditor general can give. It means the financial statements were both misleading and incomplete.
Other departments are suffering from problems relating to a lack of proper records of beneficiaries of medical aids. While contributions are being paid, a department does not know who it is paying, as in the case with correctional services. This department also has R10,2-million in staff debt and there are no attempts to recover the money, while some staff members leave the department without being asked to pay off their debt.
These problems have also been linked to the severe staff shortages.