AG reports “gradual upward trend” in public sector audit results

Auditor-General (AG) Tsakani Maluleke has called on the government to introduce greater accountability within the public sector by introducing disciplinary action in cases of deficiencies in areas of citizenship service delivery.

Despite this message, Maluleke confirmed that looking at the findings in the most recent Public Finance Management Report – PFMR 2021-22 – there has been a “gradual upward trend” in national and regional government audit results.

Maluleke said government sectors have gradually improved their ability to report transparently on their finances during the current government’s tenure, but there are still shortcomings in financial and performance management.

Overall, it was found that 114 audited entities achieved a better audit result than in 2018-19, with 46 having a worse result – a net improvement in the results of 68 audited entities (17%).

Image: Auditor General’s PFM Report 2021-22

The higher performing audited companies

There were 128 audited entities – composed of 56 departments and 72 public bodies – with a proper audit status.

But this, she said, accounts for just 6% of the R2.58 trillion spending budget managed by the national and regional government.

However, Maluleke said there were 30 audited entities that came very close to receiving a sound audit and only had to address one finding about the quality of their financial statements or performance reports, calling this encouraging.

Audited worst performing companies

Key service delivery portfolios, namely basic education, health, human settlements, public works, transport, and water and sanitation, and the state-owned enterprises are said to consistently have the worst audit scores.

“These audited entities account for 58% of outstanding audits and 31% of modified audit opinions (qualified, negative and denied),” she explained.

Wasteful spending

During the current government’s three-year tenure, the audited bodies have disclosed fruitless and wasteful spending totaling R5.83 billion.

Since 2019, Maluleke’s office has also identified breaches and fraud that have resulted in an estimated financial loss of R12 billion through the material irregularities procedure.

During the press conference, Maluleke explained that this was due to bad payment practices towards suppliers for goods and services; unfair or anti-competitive procurement practices when purchasing goods and services; no or limited benefits for money and property spent; Infrastructure not maintained and secured; uneconomic practices in real estate leasing; and inadequate needs analysis and project management.

The problem with state-owned companies

Maluleke revealed the audit also informed her that most state-owned companies still face ongoing challenges. She said there were at least three of them who might not be able to continue working.

These were the Independent Development Trust, Land Bank and SABC.

Two state-owned companies, namely the South African Post Office and the South African Nuclear Energy Corporation, received amended audit reports because they did not have sufficient evidence that they would be able to continue operations.

Maluleke said South African Post, South African Nuclear Energy Corporation and South African Broadcasting Corporation need their respective accounting authorities to step in with shareholder support. She said her ongoing challenges in running the business coupled with back-to-back losses indicate her turnaround plans are either not effective or not being fully implemented.

*additional reporting by Devina Haripersad

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