Cape Town – Auditor-General Kimi Makwetu says there has been a decrease in the value of fruitless and wasteful expenditure since the 2013/14 financial year.
The Auditor-General said this when releasing the overall report on audits done on national and provincial governments, as well as their entities, on Wednesday.
However, he said that fruitless and wasteful expenditure that was made in vain could have been avoided had reasonable care been taken.
He said there has been a reduction in the value of the fruitless expenditure – from R2.4 billion in 2012/13 and R1.2 billion in 2013/14 to the R936 million in 2014/15.
He said for the current and previous years, 197 auditees incurred fruitless and wasteful expenditure and 151 auditees incurred such expenditure for the past three years.
Of the R836 million in fruitless expenditure incurred in the year under review, R32 million (3%) was incurred to prevent further fruitless and irregular expenditure or losses, the Auditor-General said.
He said this was in relation to the cost of cancelling irregular contracts or contracts of non-performers.
“The root causes of these audit outcomes overall as we look at what has been achieved are largely to do with, for those that have improved, leadership having taken ownership [of recommendations].
“We have picked up testimonies from a number of our teams, who said that where in the past there were weaknesses of financial management discipline… [there was improvement] when the leadership of that institution took a very keen interest of the financial matters that are associated with the delivery of services,” he said.
Makwetu said it was worth noting that 80% of this expenditure was identified by the auditees, “which shows an improvement in the detection and reporting thereof”.
Unauthorised expenditure drops
The Auditor-General said there has been a notable decrease in unauthorised expenditure since 2013/14.
According to his report, unauthorised expenditure dropped from R2.6 billion in 2013/ 14 to R1.6 billion in 2014/15.
Briefing journalists, he said the overall decrease was largely due to a significant decrease in KwaZulu-Natal, which decreased its unauthorised spend by 79%, and Limpopo (69%), while national auditees decreased theirs by 55%.
Makwetu said 99% of the unauthorised expenditure was identified by the departments themselves, with auditors identifying the remaining 1%.
“Of the R1.6 billion in unauthorised expenditure incurred in 2014/15, most (99%) was as a result of overspending of the approved budget,” he said.
Improvements in supply chain management
The Auditor-General said, meanwhile, that he noted improvements in supply chain management.
He said, however, that the number of auditees with findings remain high.
Only 43% of auditees, compared to 39% in 2013/14, had no findings in this area, the Auditor-General said.
He said the key driver of these findings continues to be auditees that do not follow competitive or fair procurement processes, as observed at 31% of auditees that had material findings on supply chain management.
“This contributed largely to the irregular expenditure of R25.7 billion for this year.
“This expenditure does not necessarily mean that money was wasted or fraud committed in all instances.
“We will recall that no specific detailed investigations are conducted in an audit to establish the real substance and reasons for the deviations from prescribed controls.
“It is for this reason that we report these instances as required by the Public Finance Management Act (PFMA) so that those charged with governance can authorise the required investigations to determine whether they concur or otherwise with management actions associated with these transactions.” - SAnews.gov.za
