Kimi Makwetu. Picture: SUNDAY TIMES
Kimi Makwetu. Picture: SUNDAY TIMES

Auditor-general Kimi Makwetu has decried the lack of consequences for senior government officials and managers at state-owned entities (SOEs) responsible for millions of rand in unauthorised, fruitless, wasteful and irregular spending.

Makwetu stunned MPs on Wednesday when he revealed that government departments and various SOEs were responsible for irregular spending of at least R50bn, up from about R45bn the previous year.

He was presenting a briefing a joint meeting of parliament’s standing committee on public accounts  and the standing committee on appropriations on the 2017-2018 audit of national and provincial departments and their entities.

This comes as government scrambles to reprioritise about R50bn of its existing budget to reignite economic growth and create jobs.

The worst offenders in irregular spending include the KwaZulu-Natal transport department (more than R5bn); the water trading entity (R4bn); Gauteng roads and transport (R2bn) and the department of water and sanitation (about R2bn).

Makwetu cautioned that poor financial management in government departments was a major threat to service delivery.

He said fruitless and wasteful spending rose from about R1bn in 2016-2017 to the current R2.5bn. Unauthorised spending was up about 38% to slightly more than R2bn.

Makwetu said these amounts could increase as the audits of SOEs such as SAA and Denel were yet to be finalised.

In general, audit outcomes of public entities regressed from the previous year and over four years. While 82 public entities received clean audits in the previous financial year, in 2017-2018 only 59 entities had clean audit outcomes.

Only 25% of national and provincial departments had unqualified audits in 2017-2018.

Makwetu also said there was a growing trend by accounting officers to contest audit findings.

“Some auditees place pressure on audit teams to change conclusions … to avoid negative audit outcome or disclosure (of) irregular expenditure without sufficient grounds,” he said.

Makwetu emphasised that accounting officers who contravened the Public Finance Management Act should be held responsible for the poor audit outcomes of their departments and entities.

Earlier in 2018, the National Assembly unanimously passed the Public Audit Amendment Bill, which seeks to give the office of the auditor-general more teeth. President Cyril Ramaphosa is yet to sign it into law.

The law will give the auditor-general the power to refer adverse findings in its reports to investigative bodies, as well as recover from accounting officers funds lost due to failure to adhere to the act.

“While we await the Public Audit Amendment Bill to be signed into law, we continue to see a lack of consequence (for) management … Our vision is not to discourage creativity and innovation or to enforce punishment, but to encourage accountability and good governance in the public sector,” said Makwetu.