Irregular Government Spending Up 40% to R46bn‚ Auditor General Reveals

Makwetu said the controls that should be put in place in the procurement process were derived from the constitutional requirements of supply chain management as set out in section 217 of the Constitution. 

Irregular expenditure has increased by almost 40% since 2013/14 to R46‚36-billion‚ Auditor-General Kimi Makwetu's report on national and provincial department's audit outcomes released on Wednesday has revealed.

The AG's report singled out continued non-compliance with supply chain management legislation as the main reason for the increase in irregular expenditure.
Irregular expenditure refers to spending on procurement of goods and services without following prescribed processes.

Makwetu said the controls that should be put in place in the procurement process were derived from the constitutional requirements of supply chain management as set out in section 217 of the Constitution.

He explained that when his office audits procurement‚ it tests the application of existing procurement processes as approved by the entity.

"We identify such expenditure and report separately on it with a view to alerting those charged with governance to further investigate and determine the appropriate steps required to address the identified deviations‚" Makwetu said.

He said the total amount of irregular expenditure does not represent total losses "We have specifically examined the validity of these transactions through further audit tests where we ascertained that 89% of R42‚3-billion of irregular expenditure arising from procurement‚ was in respect of goods and services received.”

He said due to a lack of transparency and competitiveness‚ it remained to be seen whether prices were not inflated in the procurement process‚ hence the need for leadership to investigate the identified items.

Makwetu said six auditees were responsible for just over 50% of the irregular expenditure in 2015/16.

These include the Passenger Rail Agency of SA (Prasa)‚ KwaZulu-Natal and Mpumalanga health departments‚ the road and transport and human settlements departments in Gauteng and the department of water and sanitation.

Fruitless and wasteful expenditure in 2015/16 was 14% higher than in 2013/14 at R1‚37-billion. Six auditees were responsible for just more than 70% of this expenditure. Again‚ Prasa and the department of water and sanitation are included in the list‚ joined by three departments in the education sector and the Compensation Fund.

It is not all doom and gloom‚ however. The report indicated a decrease of just over 50% in unauthorised expenditure since 2013/14 to R925-million as a result of interventions at national and provincial levels.

Makwetu said the main reason for the unauthorised expenditure remained overspending of the budget. The AG also reported a slight improvement in the audit results of national and provincial governments over the past three years.

He reported that in the three-year period under review (2013/14 to 2015/16)‚ 24% of the auditess improved their audit results; 14% regressed‚ while the results of the majority (62%) remained unchanged.

Date published: 
Wednesday, 16 November, 2016
Issued by: 
TMG Digital/The Times

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