The department of defence received a qualified audit report from the auditor-general for the 2023/24 financial year during which it notched up R3.37bn in unauthorised expenditure, bringing the total for two years to R6.4bn.
The department has repeatedly complained over many years of its insufficient budget saying it does not get enough to maintain and modernise its equipment, among other things. It received an adjusted appropriation of R52.5bn for the year but spent R55.8bn resulting in the unauthorised expenditure.
The adjusted allocated for compensation of employees was R31.8bn but expenditure amounted to R35.3bn.
Defence analyst Helmoed Heitman said the SA National Defence Force (SANDF) did not have enough personnel and budget to do what the government wanted it to do which was why it had to keep calling up reservists, which added to the expense.
“The defence force has to have the people to do the job but they don’t get allocated the funds to do it and it ends up having unauthorised expenditure,” he said. “The army is too weak for it to do what the government wants it to do.”
The department’s annual report tabled in parliament said the unauthorised expenditure was due to the underfunding of its 68 278 employees and the liability relating to the implementation of the “exit mechanism strategy”.
It said the underfunding of employee salaries dated back to 2017/18. The ceiling for the compensation of employees did not support the current personnel numbers as well as the unfunded deployment of the SANDF personnel as part of the Southern Africa Development Community (Sadc) mission in the Democratic Republic of Congo.
Also, the utilisation of the Reserve Force exceeded the planned man-days due to the need to support military operations and provide protection services to military installations. The department planned to use about 2-million Reserve Force man-days during the year but used 3.3-million man-days.
“The occurrence of unauthorised expenditure is due to the underfunding of the compensation of employees of the actual feet on the ground. The department of defence has been using the operating and capital budget allocations to augment the compensation of employee shortfall, which resulted in irregular expenditure between FY2017/18 to FY2021/22, to the value of R10.13bn,” the report said.
“During FY2022/23, in order not to compromise the continued decline of department of defence facilities, a decision was taken not to use the dwindling operating and capital allocations to augment the compensation of employee shortfall. This decision resulted in overspending the appropriated votes across all programmes during FY2022/23 and FY2023/24.
“This funding shortfall dilemma had and will continue to have an impact on the department of defence’s ability to achieve its mandate according to the constitution.”
The report said the National Treasury had to date not condoned the irregularity.
The auditor-general’s report — included in the annual report — said one of the reasons for the department’s qualified audit was that the auditor was unable to obtain sufficient appropriate evidence of expenditure on sensitive projects and investments which fall under the defence special account.
This was, the report said, “due to the sensitivity of the environment and the circumstances under which the related transactions were incurred and recorded. I was unable to confirm goods and services and investments by alternative means.
“Consequently, I was unable to determine whether any adjustments were necessary to sensitive projects expenditure included in the expenditure of R14.18bn (2023: R14.21bn), and investments for special defence activities included in the investment amount of R179.16m (2023: R179.16m).”
The auditor-general said there was not sufficient appropriate audit evidence available for movable tangible capital assets as the department could not indicate where these assets were located. Also, controls were not established to ensure all movable tangible assets were recorded in the asset registers.
“Furthermore, the department could not provide sufficient appropriate audit evidence that management had properly accounted for some specialised military assets amounting to R4.04bn that are not accounted for in the normal asset management system, due to non-submission of registers in support of these assets. I was unable to confirm or verify these assets by alternative means.
“Consequently, I was unable to determine whether any adjustments were necessary to movable tangible capital assets stated at R67.09bn (2023: R66.76bn).”
Misstatements were identified in basic salaries, housing allowances and deprivation allowances and there were inadequate systems to detect, record and appropriately disclose irregular expenditure in the financial statements. Therefore the auditor-general was unable to determine the full extent of the understatement of irregular expenditure, stated at R338.5m. (FY23: R921m).
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