Auditor-General: departments not taking management of public funds seriously – Outa
The AG report shows an alarming lack of financial control in high-impact government departments, despite improvements in number of unqualified audits.
Wayne Duvenage, CEO of Outa Picture: Michel Bega
The Auditor-General’s report on audit outcomes for national and provincial government for 2022/2023 shows that departments do not take the management of public funds seriously.
Civil organisation Outa says in a statement that while it notes a 13% improvement in the number of unqualified audits of departments from the last year of the previous administration (in financial year 2018/2019) when compared to 2022/2023, there are still far too many departments (26%) that fail to achieve unqualified audits.
“Even more concerning is that 31 departments missed the deadline of 30 September for providing their financial statements to the Auditor-General. We are very concerned about the growing number of departments and state-owned entities (SOEs) that fail to have financial statements ready for audit purposes on time, which has increased from 4 to 31 over the past four years.
“This in itself sends a clear message that these departments do not take the management of public funds seriously. What is more worrying is that once again, we will not see the required accountability and consequence management by the accounting authorities of these organisations, that will merely continue to remain comfortably employed by the state,” Wayne Duvenage, CEO of Outa, says.
“We commend the Auditor-General and her team for the diligence applied to the audit process and the ongoing improvements to this function. We note that this year, the Auditor-General’s report identifies the high impact departments to give the public a sense of where attention may require acute focus on departments that manage state funds in areas more critical to service delivery, such as water, energy, healthcare, employment, infrastructure and so on.”
Bleak situation of high-impact departments
Duvenage says this paints a picture of a bleak situation because in these high-impact departments the percentage of unqualified audits drop from an overall 74% to 65%.
“This means that 35% of our high impact areas of government have qualified audits and 8% of them failed to submit financials on time.”
Only 52% of SOEs achieved unqualified audits, while 43% had audits which were qualified with findings, adverse with findings, disclaimed with findings or failed to provide their financial statements.
“This is a serious concern for Outa and we reiterate once again, as we have for years, that government should rid itself of state companies that are not core to the service provision essential to the public.
“The state has no need to own diamond mines, airlines and armament manufacturing businesses. All of them perform poorly and they are a drain on the fiscus or do not even have financials to audit,” Duvenage says.
“The Auditor-General spelled out the myriad reasons for poor service delivery from her audit outcomes and the issues of excessive overpayment for infrastructure and services by the state, along with accepting poor quality workmanship or even zero services delivered but paid for at times, clearly indicates that there is a combination of gross ineptitude or maladministration and corruption that continues to thrive within many state departments.
Delayed Infrastructure projects show poor planning, Outa says
“The number of infrastructure development projects that are delayed (68%) and have cost-overruns (51%) is a significant problem for the country, signalling poor planning, lack of oversight and monitoring and outright poor leadership. The lack of maintenance is also a significant concern and this is playing out in higher expenditure resulting in reactive and emergency maintenance spending to fix broken infrastructure, which generally costs a lot more than preventative maintenance.”
Duvenage says while the Auditor-General indicates that the department of higher education’s efforts to address the need for more student accommodation has been a good story as three of these projects came in on time and within budget, Outa is investigating concerning developments within the department’s future student accommodation plan.
Government was also found to be wanting in infrastructural development plans for the country’s water needs and Duvenage says the gap between where departments believe they are performing and what the actual situation is leaves much to be desired.
Material irregularities caused losses of R14.34 billion. “We are appalled at these losses that could and should have been averted if sound financial hygiene and good management practices were in place,” he says.
“Our government is failing its people and while there are a few signs of improvement, these come off a base of extremely low performance and degradation of service delivery for the past two decades. We need a much faster recovery from this dire situation and to see more consequences for the mismanagement of state funds, something which appears to be a foreign concept to this government.”