The Auditor-General of South Africa (AGSA), Tsakani Maluleke said on Wednesday that the country has had an overall improvement in terms of the national and provincial audit outcomes.

“Over the administration’s term, we have seen some encouraging signs of improvement in the ability of national and provincial government to transparently report on their finances and performance, and to comply with key legislation,” Maluleke said.

“However, those auditees with the greatest impact on the lives of South Africans and on government finances, which we refer to as ‘high-impact auditees’, are lagging behind on financial and performance management disciplines. This is placing further pressure on government finances.”

UNAUTHORISED EXPENDITURE REMAINS HIGH

Unfortunately Maluleke noted that unauthorised expenditure at departments remained high, totalling a massive R28.22 billion over four years.

The AG said in the 2022-23 financial year, such spending amounted to R4.59 billion.

It should be noted that collectively, accounting officers and authorities managed an expenditure budget of about R3.10 trillion in 2022-23.

“The irregular expenditure disclosed in 2022-23 totalled R63.37 billion, with high-impact auditees being responsible for R53.77 billion (85%) of this amount,” Maluleke said.

“These amounts might be incomplete, as auditees no longer have to include irregular expenditure incurred in prior years or the closing balance of irregular expenditure in their financial statements.”

She explained to Parliament that when government departments spend more than their budgets, they disclose this information as unauthorised expenditure.

“If this type of expenditure is condoned, it means that the department needs to either find more money or absorb the overspent amount, which reduces the available budget for the following years,” Maluleke said.

She said that in 2022-23, irregular expenditure happened, thanks to the overspending of about 900 million.

CLEAN AUDITS

The AG said that the number of clean audits has increased quite significantly.

“I think that’s quite important. If you're looking at a PFMA cycle that looks after an expenditure budget of R3.1 trillion together," she said.

“A clean audit is not always an indicator of good service delivery. However, a clean audit positions an auditee to transparently communicate to citizens on whether and when their needs will be met through accurate records, which also enables informed decisions by the different role-players in the accountability ecosystem,” Maluleke said.

“We have seen that auditees with institutionalised controls and systems to plan, measure, monitor and account for their finances and performance, and to stay within the rules, often also have a solid foundation for service delivery to the people of South Africa.”

The AG said that 147 auditees that achieved clean audits in the 2022-23 financial year and these bodies managed 16% of the R3.10 trillion expenditure budget in national and provincial government.

She also noted that 162 auditees received unqualified audit opinions.

Around 53 auditees also managed to retain their clean audit status over the administrative term, Maluleke said.

“It is commendable that these auditees that make up 74% of the auditee population are able to publish credible financial statements, which is a positive development that must be encouraged. This augurs well for accountability,” the AG said.

It should be noted that 37 auditees were very close to obtaining a clean audit, according to the AG.

The AG had audited a total of 418 auditees.

ISSUES

Maluleke said that despite the overall encouraging signs, late submission of financial statements are still a huge problem, as it impacts the transparency and accountability of the audits and those involved.

Maluleke said 31 auditees had outstanding audits and they received disclaimed opinions.

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