By: Portia Kobue
Every year the Minister of Finance shares his plans for government spending with the nation. During his budget speech the Minister allocates funding to different departments, to enable them to carry out their programmes aimed at improving the lives of South Africans. The Minister also uses his budget speech to account to the nation on how their taxes were used.
Although government spends millions of rand on service delivery including poverty alleviation, seventeen million people are still dependent on the state, while millions of rands in the past year have either remained unspent by various departments, or were lost to fraud, corruption and irregular expenditure.
The budget has received both positive and negative reviews, with COSATU and other NGO’s criticizing Gigaba for a budget that is not pro-poor. Other experts and observers have described it as balanced and enough to prevent further negative ratings by global credit rating agencies.
But the budgeting process does not end when the Minister steps off the podium after briefing parliament and the nation. In addition to global investors and credit rating agencies, South Africa’s Auditor General keeps an eye on the government’s financial performance and reports on how tax payers’ money is spent. The AG has over the years reported on serious lack of accountability by some departments, and this was no different in his 2017 report.
Last year the number of clean audits at national level increased to 30%. Gauteng was able to sustain positive results and financial accountability from year to year.
By August 3126 audits were not complete. This figure increased by 13 from the previous year. The audits were not complete because financial statements and other information were not submitted. Some units within The South African Airways group accounted for some of 9 these outstanding audits.
The auditor general’s report also raised concern over “an emerging trend of departments failing to manage finances properly”.
The audit reports of State Owned Enterprises continue to regress, mostly as a result of inadequate controls, as well as lack of monitoring and oversight.
The level of oversight by departments responsible for SOE’s varied and there was no single approach in this regard. There was inconsistent political leadership, with some entities being closely monitored while decision making and policy direction were inadequate in other SOE’s.
Public entities showed a slight improvement over the last four years. 22% of these entities improved their audit outcomes while 14% have regressed.
In order to illustrate the importance of accountability for government spending and the effect of poor financial management and lack of performance on the delivery of government programmes the AG’s report includes findings on the management and delivery of five key programmes included in the estimates of national expenditure(ENE) for 2016-2017.
These programmes have a combined budget of 58, 5 billion Rand.
Water Infrastructure Development, Expanded Public works Programme, School Infrastructure, Food Security and Agrarian Reform and Housing Development Financing.
According to the Auditor General’s report these programmes did not achieve the targets set out in the ENE, or did not report whether or not the targets were met although the allocated budget had been spent. The most common causes of poor audit reports was inadequate monitoring and poor accounting for assets and liabilities.
Irregular expenditure increased by 55% to 45, 6 billion Rand in 2016. This amount does not include the irregular expenditure of audits which were ongoing at the time. This means the irregular expenditure could be higher.
A further 25% of entities that were audited incurred irregular expenditure although the full amount is not known. 28 other entities did not disclose complete figures for irregular expenditure. As a result they received qualified audit reports.
The AG says if all these incomplete reports on irregular expenditure were submitted the total amount of irregular expenditure could rise to as high as 65 billion Rand.
The report has also revealed that the number of government employees doing business with their employer has not decreased. Employees and their families continue to get contracts from the government and fail to declare. This is despite the auditor general raising this concern every year.
He warns that various departments are failing to pay attention to this misconduct by government employees. The AG is calling on government to give attention to his report and ensure that there is accountability in government spending.
Following his election president Cyril Ramaphosa has used his first SONA and other platforms to stress that his administration will act on fraud, corruption and maladministration in government especially at SOE’s.