On Tuesday, I released the 2023-24 consolidated general report on the audit outcomes for national and provincial departments, their entities and legislatures. The report reflects on the audit results over the term of the previous (sixth) administration and shows an improvement in the ability of national and provincial governments to transparently report on their finances and performance.
Among other positive developments are that more auditees improved their audit outcomes over the period than regressed. However, detracting from the improved performance of the sixth administration are the outcomes of the “high-impact” auditees that have the biggest impact on the lives of South Africans and on government finances.
These auditees contribute to the delivery of critical services in education; skills development and employment; energy; environmental sustainability; financial sustainability; health services; human settlements; infrastructure development; roads and transport; safety and security; and water and sanitation. They also include state-owned enterprises and other key public entities.
These auditees do not yet demonstrate quality service delivery, good performance, and strict financial and compliance disciplines. Improved service delivery and the responsible use of the limited funds available will only be possible when we have capable, co-operative, accountable and responsive institutions that inculcate a culture of accountability, transparency, integrity and improved service delivery for all.
As the national audit office, we were encouraged by President Cyril Ramaphosa’s address at the opening of parliament in July, in which he announced that the government had resolved to dedicate the next five years to service delivery focused on three strategic priorities: promoting inclusive growth and job creation; reducing poverty and dealing with the high cost of living; and building a capable, ethical and developmental state.
For the seventh administration to successfully deliver on these priorities, institutions across all government spheres must systematically and purposefully plan and work together, and be performance-driven. National and provincial governments are instrumental in implementing the service delivery priorities and initiatives. The country depends on departments and public entities to provide and maintain essential infrastructure, and to deliver on programmes that enable economic opportunities and growth.
The impact of national and provincial governments not adequately protecting their systems is evident from the recent, well-publicised incidents of successful cyberattacks.
Departments and public entities depend on service providers and contractors to deliver on their projects. Continued noncompliance with procurement legislation leads to unfair and uncompetitive processes, which often result in financial losses and contractors not delivering.
Through the material irregularity process, we have identified multiple cases of financial loss and harm to the public due to procurement and contract management noncompliance, and suspected fraud. The main reasons for the continuing financial losses and waste, especially at high-impact auditees, were poor payment practices, uncompetitive and uneconomical procurement practices, limited value and benefit for money spent, and weaknesses in project management. Fruitless and wasteful expenditure over the sixth administration’s term totalled R10.34bn.
The impact of national and provincial governments not adequately protecting their systems is evident from the recent, well-publicised incidents of successful cyberattacks
Government budgets for service delivery activities are reduced by claims made against departments and overspending by auditees. The overspending over the five years was R38.83bn. By the end of 2023-24, the estimated settlement value of claims against departments was R105.57bn. The medical claims against the health sector stand at R64.27bn — a decrease of 19% from R76.37bn last year.
The no-consequence culture in government will continue to slow down progress towards improved service delivery and financial performance. When officials face consequences for their actions, it helps auditees to recover the losses and also deter others from perpetuating a culture where officials are paid salaries without fulfilling their responsibilities.
In our report, we advocate for these risks to be managed and for weaknesses in governance, control and accountability to be attended to. We call on the government to address the shortcomings and their root causes we’ve reported on over the last five years. We specifically highlight the following three root causes for urgent attention:
- Inadequate intergovernmental planning co-ordination and support;
- Ineffective resource management; and
- A culture of no accountability and consequences.
To address these root causes, we recommend prioritisation and oversight focus by executive authorities, parliamentarians and members of provincial legislatures on five key matters:
- Intergovernmental and institutional planning for delivery on the medium-term development plan (MTDP);
- Institutional capacity and effective governance for transparent reporting and accountability;
- Infrastructure, systems and professionalisation as key enablers;
- Managing the risks to service delivery created by the poor quality of spending and financial mismanagement, weaknesses in procurement and contract management, cybersecurity vulnerabilities, and a culture of no consequences; and
- Optimising the material irregularity process as an oversight tool.
As the country’s audit office, we remain committed to partnering with and supporting the public sector through our audits, the use of our expanded powers as granted by the Public Audit Act amendments, and the many initiatives we’ve implemented to help and guide all role players.
• Maluleke is South Africa's auditor-general
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