Cape Town – Departments and public entities have made a slight but notable improvement in audit outcomes over the last three years, the outgoing Auditor General Terence Nombembe said on Wednesday.
Releasing the 2012/13 consolidated general report on national and provincial audit outcomes in Parliament, Nombembe noted that there had been a slight improvement in the 2012/13 audit outcomes of national and provincial departments as well as public entities over 2011/12 and 2010/11.
In all, 81 public entities and 24 departments – 22% of the 450 departments and public entities for which audits were finalised by August 31 – recorded clean audit opinions for 2012/13, up from 17% in 2011/12 and 20% in 2010/11.
Clean audits are received when the financial statements are unqualified and no audit findings are reported in respect of either the annual performance report or non-compliance with legislation.
The percentage of entities and departments with disclaimers declined from five percent in 2011/12 and six percent in 2010/11 to four percent in 2012/13.
The audit results also revealed that in 2012/13, a total of 96 entities improved over the previous financial year, including 57 that gained clean audits, while 61 regressed – three quarters of them public entities.
Among the provincial departments and entities, six of the nine provinces improved their audit findings, while the North West showed little progress and Limpopo and Gauteng regressed.
Nombembe stressed that Gauteng’s regression could be considered as a slight glitch, as a number of departments in the province had improved, despite the performance of entities in general having declined.
He ascribed the improvement in the overall audit outcomes to commitment from ministers and directors-general, adding that it was commendable that internal controls – those of financial and performance management, governance and leadership – had improved slightly.
Although he admitted that current legislation had possibly been too weak to deal with underperforming public servants, he welcomed government’s drive to vamp up the public service – with the announcement by the Minister of Finance Pravin Gordhan in his Medium Term Budget Policy Statement of cost control measures for members of the executive.
He added that the launch of a government school for public servants last month, the amendment of the Public Service Act to ban civil servants from doing business with the government, and the Department of Performance Monitoring and Evaluation’s management performance evaluation tool would also help to improve the efficiency of the public sector.
While the Auditor General’s office is working with the government’s governance cluster to improve procedures and standards by documenting these to ensure consistency, the oversight model in Parliament as well as in provincial legislatures would also help boost audit outcomes, he said.
Despite the improvements, Nombembe said government entities and departments needed to find the right formula to which internal controls were respected by public officials.
It was critical that supply chain systems, service-delivery reporting, HR, IT systems integration and financial management remained stable – particularly as these areas had not improved in recent years, he said.
Fruitless and wasteful expenditure increased by 43% over 2011/12 to just over R2.1 billion, while that of irregular expenditure stood at R26.4 billion.
Nombembe pointed out that the most concerning audit outcomes lay with the areas of education, health and public works going on the size of these portfolios – with five provincial departments (three of these in Limpopo) in these areas notching up disclaimers for 2012/13.
Added to this, 50% of departments in these three portfolios had received qualified findings, compared to just 17% of departments in other portfolios.
The Minister of Public Service and Administration, Lindiwe Sisulu, said political authority and accountability was essential to achieving clean audits.
She said no public servant had been found guilty in terms of the Public Finance Management Act (PFMA), but added that she hoped that the amendments to the Public Service Act would make it easier to prosecute public servants that fall foul of the PFMA.
She said during her time as Minister of Defence, Nombembe’s office had visited her and offered to assist her then department to acquire a clean audit – which the department under Sisulu was able to do on the third try.
Delegating more accounting functions to military chiefs and heads of bases had also helped the department to achieve a clean audit.
Recently, an audit team headed by the Deputy Auditor General, Kimi Makwetu, assisted her department through a whole-day workshop in ensuring that the Public Service Bill addressed the current challenges identified by the AG.
The Deputy Minister of Finance, Nhlanhla Nene, said the slight progress was encouraging but added that putting in place sound internal controls and strengthening the arms of government would help ensure more improvements are made.
He said he had found the interaction with the Auditor General’s office very useful and called on other departments to make use of the office as well. – SAnews.gov.za
