Auditor General speaks on Limpopo audits

The Auditor General (AG) of South Africa, Kimi Makwetu, told Polokwane Observer during a personal interview that even though the province’s audit outcomes have improved, there is no reason for complacency as there are still a lot to do in the province.
He said only 10% of auditees were found with no issues on compliance with key financial legislative issues and only 19% had no findings on supply chain management. He also mentioned the Department of Education, which, with R994 million of irregular expenditure, was one of the main contributors towards irregular expenditure in the country.
A major concern is the increased risk in the financial health of the province. Ten departments (77%) underspent on their capital budgets in the year under review, which has a direct impact on achieving planned service delivery objectives.
Although 94% of grants received by the departments were spent, only 26% of the planned targets relating to the grant were achieved. “The leadership should address these concerns by implementing rigorous cash flow and project management mechanisms to ensure that critical projects and services are prioritised. A concerted effort is required from both the political and administrative leadership to sustain and further improve the audit outcomes without relying on the audit to identify shortcomings and errors,” the AG’s report stated.
“The three coordinating departments in the province, namely the Provincial Treasury, Provincial Legislature and the Office of the Premier play a very critical role in the drive towards clean administration and must work together to strengthen financial management practices in the province,” according to the AG’s report. Africa Boso, Spokesperson for the AG added: “The public accounts committee and portfolio committees should collaborate more effectively in their oversight work as this will ensure that root causes of audit outcomes are addressed by management and that decisive action is taken against those who perform poorly and fail to comply with legislation.”
The lack of skills at more than half of departments and entities is still a cause for concern, but steps are taken to try and address training. The poor quality of financial statements and performance reports submitted for auditing continues to be a challenge for almost all the auditees. The AG is concerned about the 56% of auditees who had findings on the usefulness and reliability of the information contained in their performance reports, as there is a risk that decisions taken by leadership and oversight structures are based on information that is unreliable. He also pinpointed that 94% of the irregular expenditure in the province was incurred by three of the leading service delivery departments and this requires leadership to investigate further to determine the underlying causes of transgressions and enable appropriate steps to be taken to prevent recurrences and hold accountable those that may be systematically avoiding controls.
Boso is optimistic that steps taken by the Provincial Treasury to assist the Department of Education may yield positive results in the 2015-16 financial year. Boso further said the AG noted that departments were not implementing the recommendation of the internal audit unit, thus failing to address serious internal control deficiencies.
“We identified lack of consequences for poor performance and transgressions as a root cause of poor audit outcomes at 65% of auditees (departments and public entities) in the province.
The leadership should set the tone by sound performance management processes, evaluation and monitoring and consistently demonstrating that poor performance has consequences.
The province needs to attract and retain skilled staff, he said. “This can be achieved by implementing an effective performance management system where good performers are rewarded and there are consequences for poor performers”

Story: NELIE ERASMUS
>>nelie.observer@gmail.com