Simply enforcing financial operating disciplines will go a long way towards reducing the high number of qualified audit reports received last year by government departments, says Auditor General (AG) Terence Nombembe.
Briefing MPs on Friday in Cape Town on national and provincial audit outcomes for 2006/07, he highlighted measures adopted by other countries that were successfully applying accrual accounting to their government finances.
In the countries studied, the average number of ”auditees” was between 40 and 50, of which ”less than three ever receive qualified audit reports”, he said.
Locally — according to figures tabled by the AG — a total of 11 out of 34 national government departments received a qualified audit report for the past financial year, as did half of the 108 provincial departments analysed.
Nombembe told parliamentarians it was essential that within departments, before accounts were handed over to auditors for inspection, someone checked they were accurate.
”That’s the area of financial discipline that we need to introduce in this country. Before the accounts are sent for auditing, someone must check those accounts are correct.”
A big contributor to the high number of qualified audits was information not being submitted in time ”because of the lack of availability of key officials during the audit process”.
Departments had to make it their business to have such key officials on hand for the audit process.
”That would go a long way to avoiding a qualification,” Nombembe said.
There were sometimes situations where information presented was not clear, but there was no senior official available to clear up the matter.
”The availability of officials during the audit is actually a very critical discipline.”
He stressed the need for effective leadership within departments, particularly among its financial managers, noting this was crucial for ”effective monitoring of the performance of the department”.
Further, it was necessary departments had people with the skills necessary to prepare financial statements in the manner required by Treasury, Nombembe said.
At a media briefing earlier on Friday, he told journalists the biggest problem for both national and provincial departments that received qualified reports lay in accounting for capital assets.
So-called ”material misstatement” — which could be corrected on the advice of the auditors — and non-compliance with legislation were also major issues at both levels of government.
More than half of national departments, and 75% of provincial, had made material misstatements.
Nombembe said that while the audit results were not a ”train smash”, there was a need for more support from and involvement by provincial treasuries, audit committees and legislators.
Legislators and members of the executive had to be empowered to monitor effectively and ask the right questions so that these issues were resolved before audits actually got under way.
”If you can do this right, the bulk of the issues will be dealt with,” he said. — Sapa