For the first time in a long time, Auditor-General Tsakani Maluleke has tabled a positive audit outcome general report in Parliament.
Maluleke on Wednesday said the overall outcomes reflect “incremental improvement” in the national and provincial government audits, with an increase in the number of clean audits.
A clean audit outcome occurs when submitted financial statements are in compliance with legislation and are free from material misstatements.
Maluleke said there were 115 auditees – 48 departments and 67 public entities – that obtained a clean audit outcome, compared to 109 in the previous year.
Together, these auditees are responsible for 19% of the R1,9 trillion expenditure budget managed by the national and provincial governments.
Maluleke said at least 31 auditees were close to obtaining a clean audit and require sustained effort to reach this goal.
She said her office was encouraged that 61 auditees have managed to retain their clean audit status since the first year of the current administration.
“The improvements in audit outcomes are a clear indication that some auditees are listening to our messages, heeding our call, and implementing the necessary interventions to realise improvements,” said Maluleke.
“While we are yet to see the progressive and sustainable improvements required to realise an overall change in outcomes, we note and acknowledge the efforts of the many accounting officers and authorities that seek to instill a culture of good governance, accountability, and discipline in the system.”
Maluleke said while a clean audit was not always an indicator of good service delivery, “auditees that have the controls and systems in place to plan, measure, monitor and account for their finances and performance, and to comply with the rules, often have a solid foundation for service delivery that will benefit the citizens of South Africa”.
“Therefore, all these efforts are a step in the right direction and must be sustained to ultimately realise overall improvement in the performance of public institutions”.
Departments and entities are required to submit their financial statements for audit by 31 May each year, and AGSA conducts its audits over a two-month period following this submission.
The audit reports are then included in the departments’ and entities’ annual reports and presented to Parliament and provincial legislatures as part of the accountability process.
The AGSA sometimes encounters delays in the completion of audits for various reasons.
In the year under review, there are 34 audits that have not been finalised due to: outstanding financial statements (17), financial statements being submitted late (4), and delays in the audit process (13). The details are further elaborated in the report.
Auditees that fail to present financial statements and performance reports for auditing, as required by legislation, effectively undermine the overall efforts made by many role-players to improve transparency and accountability.
However, the report also records low levels of accountability among accounting officers and accounting authorities.
The report indicates that fruitless and wasteful expenditure remains high, with 224 auditees losing a combined R1,72 billion to fruitless and wasteful expenditure in the current year.
Key service delivery departments and SOEs were, once again, the main contributors, wasting a combined R0,90 billion (52%).
Maluleke warned that the state cannot afford further leakages, and urgent action was required from accounting officers, the executive and oversight entities.
In this regard, the auditor-general said she continues to call for higher levels of accountability, which are necessary if the public sector is to implement the changes required to ensure that public finances are spent efficiently in the delivery of services that benefit citizens.