The National Treasury, which is charged with managing the national purse and overseeing sound financial management across the government, is itself one of the worst offenders when it comes to fruitless and wasteful expenditure.
Most of the wasteful expenditure incurred by the Treasury over the past five years was due to payment of software licences that were not used.
On Friday, officials from the auditor-general’s office briefed parliament’s appropriations committee on fruitless and wasteful expenditure incurred by government departments over a five-year period. They highlighted that half of the 41 national departments were cumulatively responsible for a total of R1.52bn of such expenditure. The top offenders were the department of defence (R460m); the Treasury (R339m); and basic education (R106.85m).
Fruitless and wasteful expenditure means there is no benefit derived from the spending and it could have been avoided had reasonable care been taken. Such expenditure contravenes the Public Finance Management Act, which regulates financial management in government and aims to ensure that all revenue, expenditure, assets and liabilities are managed efficiently and effectively.
In the Treasury’s annual report tabled in October last year, auditor-general Tsakani Maluleke issued an unqualified audit opinion on the department’s financial statements, but with an emphasis of matters including the irregular expenditure of R66m and fruitless and wasteful expenditure of R67m, which was incurred as the Treasury made payments for which no services were received. This was for technical support and maintenance for the long-delayed and problematic integrated financial management system (IFMS). The project was responsible for R207m in irregular, fruitless and wasteful expenditure in the 2019/2020 financial year.
The IFMS project — which has cost more than R1bn since its inception in 2006 — is meant to incorporate human resources and financial management systems across national and provincial governments and replace outdated computer systems. The first phase of the project had to be aborted after governance lapses resulted in misspending of R1.2bn.
In 2020, President Cyril Ramaphosa issued a proclamation for the Special Investigating Unit to investigate the R4.3bn initiative, which has also been probed by parliament’s standing committee on finance. A senior Treasury official previously stated that the department has nothing to hide and no cent has been stolen.
Lost funds
The auditor-general’s office told MPs on Friday that tighter measures need to be implemented to curb wasteful expenditure across the board. Those responsible should be held accountable and lost funds should be recovered, the auditor-general’s submission highlighted.
Sfiso Buthelezi, the chair of the appropriations committee, expressed concern that fruitless and wasteful expenditure continues unabated and that the Treasury, which is meant to lead by example, is a culprit. He called for harsher penalties for those implicated, pointing out that many of them were just suspended on full pay, without much action taken thereafter.
DA MP Ashor Sarupen said the various ministers and CFOs must be held accountable for the wasteful expenditure.
“It seems clear from the auditor-general’s presentation that the country currently lacks any ministers that [have] the skill and political will to turn their departments around. Instead, there is a culture of waste with little care or thought on how the staggering financial losses impact the growing millions of vulnerable South Africans,” Sarupen said.
With Linda Ensor
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