Govt audit outcomes improve slightly


14 November 2013

South African government departments and public entities have made a slight but notable improvement in audit outcomes over the last three years, outgoing Auditor-General Terence Nombembe said in Cape Town 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 31 August – 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 North West province showed little progress and Limpopo and Gauteng regressed.


Fruitless and wasteful expenditure


Overall, fruitless and wasteful expenditure increased by 43% over 2011/12 to just over R2.1-billion, while irregular expenditure stood at R26.4-billion.

Nombembe said the most concerning audit outcomes were in the areas of education, health and public works, with five provincial departments in these areas (three in Limpopo) notching up disclaimers for 2012/13. In addition, 50% of departments in these three portfolios had received qualified findings, compared to just 17% of departments in other portfolios.

While conceding that legislation had possibly been too weak to deal with underperforming public servants, Nombembe welcomed the announcement in Finance Minister Pravin Gordhan’s medium term budget of cost-control measures for members of the executive.

He added that last month’s launch of a government school for public servants, 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 launch of a management performance evaluation tool to help improve the efficiency of the public sector.

While the Auditor-General’s office was working with the government to improve procedures and standards, the oversight model in Parliament as well as in provincial legislatures would also help boost audit outcomes.

Despite the improvements, Nombembe said that government entities and departments needed to find the right formula for ensuring that 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.

Public Service and Administration Minster Lindiwe Sisulu, also speaking at Wednesday’s briefing, 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 fell foul of the law.