Public sector’s wasteful expenditure hits R28-billion

Terence_Nombembe.jpgThe annual audit of South Africa’s provincial and national government bodies revealed that R28.4-billion was lost to irregular spending – R6.25-billion more than the previous year, said the Auditor-General’s report.

In the report, auditor general Terence Nombembe blamed weak internal controls, poor political leadership (from the accounting officer and/or executive authority) and a disregard for procurement rules for the haemorrhage.

Unauthorised, irregular and fruitless and wasteful expenditure remained at the same high level as in the previous financial year – 66% of those audited incurred one or more types of unauthorised, irregular and fruitless and wasteful expenditure.

The audit found that contracts to the value of R438-million were awarded to suppliers in which employees had an interest, in some cases the employees included supply chain management officials and senior managers.

Additionally, contracts to the value of R141-million were awarded to suppliers in which close family members of employees had an interest.

However, the most common findings relate to competitive bidding and quotation processes not followed to select suppliers and the non-submission by suppliers of their tax certificates and declarations of independence. The preference point system was also not always applied in the procurement process, said the report.

Findings on unfair and uncompetitive bidding were raised at 50% of auditees – an increase from 42% in the previous year.

Furthermore, the audit highlighted certain limitations exacerbating the extent of identified irregularities and supply chain management weaknesses.

Contracts and quotations to the value of R4.8-million selected for audit could not be audited owing to the required information or documentation not being made available to the auditors.

A sum of R9.7-billion of the irregular expenditure was incurred in prior years and only identified and reported in the current year.

Nombembe called for the government to be monitored collaboratively, rather than wait for his yearly report. He said senior management, accounting officers and executive authorities should self-monitor to detect and prevent non-compliance of laws in government’s internal processes.

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