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Consultants cost govt R12.1bn - AG

Cape Town - The report on national and provincial audit outcomes shows that consultants cost the country R12.1bn last year, said auditor general Kimi Makwetu on Wednesday.

He said a quarter of national and provincial departments and entities received a clean audit opinion last year.

"The audit outcomes... show an improvement, with 119 (25%) of the 469 auditees attaining clean audit outcomes, compared to 22% in the previous year," he told reporters in Cape Town, tabling his PFMA 2013/14 report on national and provincial audit outcomes.

The report covers the audit outcomes of all national and provincial departments and entities for the 2013/14 financial year.

It includes 165 departments and 304 public entities, with a total budgeted expenditure of R1.035 trillion.

According to the document, a further 51% of departments and entities received an "unqualified with findings" audit outcome, while 16% were qualified with findings, 4% received an adverse or disclaimer audit, while a further 4% did not submit on time.

The report warns that while reporting on performance is improving, South Africa's main service delivery sectors are lagging behind.

"In the education, health, and public works sector, only six departments reported their performance in a useful and reliable manner."

Further, while the outcomes in most provinces improved, entities and departments audited in Limpopo and North West had the poorest results.

Makwetu singled out Gauteng and the Western Cape for special mention, saying they had "led the charge and performed admirably".

According to the report, 18 (78%) of 23 auditees in the Western Cape achieved clean audit outcomes. In Gauteng, 19 (54%) of 35 auditees received clean audits.

The report finds there was an increase in unauthorised and irregular spending by departments.

"Irregular expenditure of R62.7bn was incurred by 309 auditees. In total, R29.1bn... was incurred in previous years, but identified and disclosed for the first time this year.

"Unauthorised expenditure of approximately R2.6bn - [compared to] R2.3bn in 2012/13 - was incurred by 30 departments. Little progress has been made in decreasing the extent thereof in the past three years."

Other key findings include that non-compliance with key legislation remains at a high level.

"The number of auditees with [adverse] material compliance findings decreased only slightly, from 76 percent to 72 percent."

The report highlights results within the education, health, and public works sectors, with "only one department out of 30 in these sectors having no material findings on compliance".

On the use of consultants, the report finds these services cost the country R12.1bn last year.

It also highlights the "root causes" of departments and entities not receiving a clean audit. These include:

- The slow response of accounting officers and senior managers in addressing weaknesses in internal controls;

- Instability or vacancies in key positions, particularly at the level of accounting officers and chief financial officers; and,

- Inadequate consequences for transgressions and poor performance "that is apparent from the findings we report on".

The report finds there was a 16% vacancy rate in accounting officers positions, with higher vacancies at provincial departments.

"Instability at this level (on average, fewer than three years in office) affects the ability of auditees to build and maintain a robust control environment for financial and performance management, and weakens the accountability chain."

Responding to questions, Makwetu noted that although the report showed 25% of departments and entities achieved clean audits, this represented only 15% of spending.

"If you drill down and look at the quality of the expenditure, you will find that only 15% of the total estimates of national expenditure has gone and achieved the clean audit."

"And when you analyse that further, you start seeing that some of the big departments, such as education, health, public works, and human settlement... are outside of these clean audits."

These were the departments "that have largely failed the audit test", he said.

The report calls for a strengthening of certain basic controls and disciplines, including "effective leadership based on a culture of honesty, ethical practices and good governance".

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