The auditor-general has proclaimed a staggering leap in clean audits for national and provincial government departments, praising them for showing signs of improved financial and performance management.
Tsakani Maluleke said on Tuesday that government departments with accurate, complete and transparent financial records, or unqualified opinion in accounting parlance, jumped by more than 50% from the 93 recorded in 2018/19 to 142 in 2023/24.
Yet, the public sector continues to grapple with bureaucratic inefficiency, lack of skilled personnel and human capital, as well as systemic looting, which have all contributed to the levels of service delivery falling over the years.
Maluleke’s 2023/24 general report, presented to parliament’s standing committee on public accounts, highlighted progress and persistent challenges.
While clean audits have risen over the past five years, high-impact auditees — responsible for 77% of the 2023/24 expenditure budget — continue to show poor performance against their planned targets, and have not institutionalised strict financial and compliance disciplines.
These entities, crucial for delivery of critical services in education, employment, energy, health and other services continued to have the worst audit outcomes and improved slower than other auditees, she said.
Irregular expenditure remained high over the past five years, totalling R406.8bn, primarily due to noncompliance with procurement and contract management legislation.
Fruitless and wasteful expenditure incurred this term totalled R10.3bn, with high-impact auditees being responsible for 84% of this amount.
Some of the biggest contributors to the increase in fruitless and wasteful expenditure included Transnet, the Gauteng department of human settlements and the Free State Development Corporation.
Top of the list
The DA-run Western Cape was top of the list of auditees that sustained clean audit statuses for six or more years, with 15 departments and provincial entities on the list, followed by the Eastern Cape, Gauteng and KwaZulu-Natal with four each, the Northern Cape with two and one each for Mpumalanga and North West.
Maluleke said she could not audit awards to the value of R1.7bn because of “missing or incomplete information, which results in weakened transparency and accountability”.
The North West education department contributed the most, with R0.69bn due to documentation for eight quotations and eight contracts relating to various services including school construction, printing services and technology kits for learners “not submitted for auditing due to poor record management”.
It was followed by the Compensation Fund, with R0.52bn due to nonsubmission of bid documentation relating to various services including travel management, forensic investigations, mobile communication and other professional services.
The fund, which pays compensation for injuries suffered at work and is funded by a levy paid by employers, was responsible for the administration of R11.1bn in 2023/24.
It has received disclaimed audit opinions for 12 consecutive years and accumulated R73.8m in irregular expenditure and R279m in fruitless and wasteful expenditure over the administrative term.
Next was the Limpopo health department with R0.11bn due to nonsubmission of documents for IT-related goods and services. The KwaZulu-Natal health department accounted for R0.09bn due to poor document management relating to two quotations and six contracts relating to various catering services, flood damage recovery services and water treatment services. KwaZulu-Natal’s education department accounted for R0.7bn due to an inadequate record management system.
Improved transparency
Overall, Maluleke said the improved audit outcomes showed that national and provincial governments were working towards improved transparency and accountability through credible financial statements and performance reports.
“The quality of financial statements and performance reports that were published and used for oversight purposes improved over the administrative term, but the versions we received for auditing from most auditees in 2023/24 were still materially flawed,” she said.
“Institutional capacity is not yet in place to enable credible and transparent in-year and year-end reporting. The continued high level of noncompliance means that most auditees have not institutionalised controls to ensure compliance with key legislation.
“This is indicative of a culture where leadership places little emphasis on the importance of compliance and there is a lack of management disciplines,” she said.
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