Government departments wasted more than R4-billion in irregular and fruitless payments in 2009-2010, the auditor general has found.
The General Reports on National Audit Outcomes, gives an overview of the audit outcomes for national departments and public entities during the financial year.
Of the 35 government departments monitored, unauthorised, irregular and fruitless and wasteful expenditure amounted to more than R4-billion, the report says.
In a bid to combat financial irregularities and to improve reporting in the broader state and government, the auditor general’s office will undertake quarterly reviews of national and provincial departments and public entities.
Terence Nombembe, the auditor general, said at the report’s release that parliamentary oversight of the government could be upgraded if MPs improved their attendance of and participation in portfolio committee meetings. “Greater participation by all members of these committees is essential,” he said.
More training, increased research capacity and better coordination with ministers were also needed to improve Parliament’s oversight capacity, Nombembe said. “A lot of work needs to happen. We believe the ability to scrutinise annual reports in their totality needs to improve.”
But he said there had been some early indications of improvement, particularly in the growing number of committees that were choosing to stage hearings with departments and entities when annual reports that concerned them were tabled in Parliament.
A ‘sterling job’
Last year was the first in which Nombembe’s office participated in briefing committees. “In the past we engaged mainly with the public accounts committee [Scopa], so we’ve extended our availability to portfolio committees,” said Nombembe. Where there was greater engagement with committees MPs were able to do a “sterling job”.
Nombembe said that, although the report showed an encouraging trend in the way the government accounted for taxpayers’ money, there were issues of concern. The ability to achieve clean audits was compromised by non-compliance with regulations and inadequate reporting on service delivery information.
Most failures of compliance related to procurement and supply chain management, resulting in irregular and wasteful and fruitless expenditure.
In the departments audited unauthorised expenditure amounted to R362,4-million, irregular expenditure amounted to R3,9-billion and fruitless or wasteful expenditure amounted to R143,6-million.
Seven departments incurred material losses and impairment of assets totalling R109,7-million, according to the report. The most significant of these was in the department of rural development and land reform, where fraud resulted in losses of R53,3-Âmillion.
The report found that misspent funds were frequently the result of weak supply chain management. More than half of all irregular spending was caused by a failure to comply with supply chain management laws.
Violations included government employees or their family and friends having an interest in suppliers to the state or state entities, deviation from bidding processes without approval or justification and the award of contracts to suppliers who did not always score best in the bidding process.
A key driver behind Nombembe’s concerns is the lack of human capacity in departments, which affects their financial management and ability to deliver services. Continuing vacancies in key managerial and financial management posts were a case in point. Others were employees acting in posts beyond the 12-month limit and the failure to conduct proper verification of new employees.
Nombembe called on national and provincial ministers to do a better job of monitoring how their departments were working to address the root causes of poor audit findings. It was a matter of leadership, he said — taking “personal ownership of the issues” was important.
To ensure that empty promises were not made there had to be a commitment to more regular reviews.