R25.7bn in irregular government spending flagged

There has been irregular expenditure of R25.7bn across the country’s national and provincial departments and public entities for the 2014-15 year, Auditor General Kimi Makwetu said on Wednesday.

If there is a silver lining to his office’s general report on national and provincial audit outcomes, it’s that irregular expenditure decreased by 27% over the previous year’s figure of R35.28bn.

The report covers a total of 468 auditees, which include 167 national and provincial departments and 301 public entities with a total budget of R1.1trn for the year under review.

Some of the biggest culprits were the Gauteng transport department with R1.9bn, the Gauteng human settlements department with R1.9bn, the Mpumalanga health department also with R1.9bn, the SA National Roads Agency Limited (Sanral) with R1.6bn, and the Gauteng education department with R1.7bn.

Makwetu said one of the findings was that auditees do not follow competitive or fair procurement processes.

He said 31% of auditees had material findings on supply chain management.

“This contributed largely to the irregular expenditure of R25.7bn for this year. This expenditure does not necessarily mean that money was wasted or fraud committed in all instances,” Makwetu said.

“We normally highlight those areas in which deficiencies were observed, and we are required to report on them in order to bring them to the attention of the leadership of the institutions.

“R25.7bn could be at risk if the necessary investigations are not undertaken.”

The report found that there was a decrease in fruitless and wasteful expenditure since 2013-14’s figure of R1.2bn, down to R936m.

For the current and previous years, 197 auditees incurred fruitless and wasteful expenditure, of which 151 incurred expenditure for the past three years.

Of the R936m in fruitless and wasteful expenditure for 2014-15, R32m was actually incurred by preventing further fruitless and wasteful expenditure, or losses.

This normally related to the cost of cancelling irregular contracts, or the contracts of non-performers.

Some of the main contributors to wasteful expenditure was Gauteng’s transport department with R251m, the Gauteng health department with R160m and the Eastern Cape health department with R74m.

Unauthorised expenditure, which is where the expenditure by auditees was not incurred in accordance with an improved budget, decreased from R2.6bn in 2013-14 to R1.6bn in 2014-15.

The main contributors to this figure include the Free State education department with R589m, the national department of transport with R393m and the North West health department with R263m.

Ahmed Areff, News24