Fruitless, wasteful expenditure remains at eyewatering level
Auditor General Tsakani Maluleke says fruitless and wasteful expenditure amounting to R10 billion were incurred during the course of the previous administration.
Maluleke briefed Parliament on Tuesday on the audit outcomes of the national and provincial governments during the 2022/23 financial year.
Maluleke said the implementation of her office’s expanded powers, known as the material irregularity (MI process), prevented or recovered financial losses amounting to R3.39 billion.
“Since its implementation in 2019, the MI process has continued to contribute to improved accountability and oversight as well as the protection of public resources.
"Through this process, we have identified multiple cases of financial loss and harm to the public mainly due to procurement and contract management non-compliance and some due to suspected fraud.”
She said audit outcomes showed some improvements over the term of the administration.
By 2023-24, 139 auditees had improved their outcomes, and 50 had regressed – an overall net improvement of 24%.
At the same time, Maluleke warned of continued overspending by government departments and entities.
"When departments overspend their budgets, they disclose this as unauthorised expenditure, while public entities disclose their overspending as irregular expenditure.
"The combined overspending of departments and public entities totalled R38,83 billion over the administrative term.
“In 2023-24, departments incurred R7,19 billion in unauthorised expenditure – 57% more than in the previous year, while public entities incurred irregular expenditure due to overspending.”
Maluleke warned that the lack of accountability would have a negative impact on service delivery.
"When officials face the consequences for their actions, this helps auditees to both recover the losses caused by those officials and deter others from disregarding legislation and perpetuating a culture where officials are paid their salaries without fulfilling their responsibilities.
“The lack of consequences is most evident in the following areas: poor and slow response to investigating allegations of financial and supply chain management misconduct and fraud indicators.
In 2023-24, the total fruitless and wasteful expenditure for all auditees was R2,57 billion, an increase of 49% from the previous year.
Some of the high-impact auditees responsible for the expenditure is Transnet (R0,58 billion) for overpayments, interest and penalties, and cost of cancelled infrastructure projects
Gauteng Department of Human Settlements (R0,52 billion) for the cost of feasibility studies on cancelled housing projects, and the Free State Development Corporation (R0,27 billion) for overpayment for assets on the Special Economic Zone project that were valued lower than what was paid for their construction
The AG also identified three main shortcomings in national and provincial government that hold back progress, including inadequate intergovernmental planning, ineffective resource management and a culture of no accountability and consequences.
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