Auditor-General, Tsakani Maluleke.
The Auditor-General of South Africa recovered financial losses of R14 million while R509 million was in the process of being recovered, auditor general Tsakani Maluleke said on Wednesday afternoon.
The announcement was during the release of the auditor general’s annual consolidated general report on national and provincial audit outcomes for the 2021-22 financial year.
Maluleke said that national and provincial government audit outcomes showed a gradual upward trend since 2018-19, with the Eastern Cape having the most clean audits in its history.
That province recorded a “continuous increase” in the number of clean audits over the past year. The Eastern Cape achieved 11 clean audits — 52% of its total audits — which the AG described as “the highest number of clean audits in the history of the province”.
Maluleke acknowledged the provincial government’s progress in improving its audit outcomes but added that “decisive action is still required by leadership to meaningfully improve service delivery”.
Irregular expenditure in the province decreased from R3 billion in the previous year to R1.35 billion in 2021-22.
The decrease, according to the report, is “largely because of the provincial transport department’s prior period adjustment of R2.1 billion in the previous year due to noncompliance in procuring bus services”.
Overall audit outcomes
A total of 128 auditees of 424, received clean audit status. Maluleke said 69 of these auditees have maintained their clean audit status for multiple years.
A clean audit means a department or public entity shows transparent, honest and credible financial statements and performance reports.
An improvement of 17% better audits was achieved since the previous administration’s term in 2018-19. Overall, 114 auditees received a better audit outcome, with 47 having worse outcomes.
Maluleke noted that key service delivery portfolios — basic education, health, human settlements, public works, transport, and water and sanitation — and state-owned enterprises are responsible for more than 30% of the expenditure budget, “but consistently have the worst audit outcomes”.
“These auditees account for 58% of the outstanding audits and 31% of the modified audit opinions (qualified, adverse and disclaimed).”
Irregularities
The auditor general has identified 179 material irregularities that can result in an estimated financial loss of R12 billion.
Maluleke said accounting officers and authorities have been notified of the irregularities — caused by noncompliance and suspected fraud — to prevent the total loss of R12 billion.
She said there had been a shift at departments and public entities “from a slow response to our findings and recommendations over the years to an improved responsiveness”.
Through the auditor general’s early notification of irregularities, financial losses of R636 million were prevented from taking place, R14 million in financial loss was recovered and R509 million in financial loss was in the process of being recovered.
Irregular expenditure for 2021-22 amounted to R51.22 billion.
But Maluleke said the amount could be higher, as 25% of auditees did not report all irregular expenditure. She pointed out that 55% of the entities could not confirm if the disclosed irregular expenditure was accurate.
“The AGSA could also not audit contracts worth R2.53 billion because of missing or incomplete information.”
Upward trend
Although Maluleke welcomed the overall upward trend in better audit outcomes, she remained discreet.
“While we are cautiously optimistic about this trend, we have found that service delivery, good performance and financial discipline are not yet evident at those auditees with the greatest impact on the lives of South Africans and on government finances.”
She noted that poor overall performance led to poor service delivery, which had a direct effect on the public.
She urged government to instil a culture of accountability in the public sector to improve service delivery to citizens.