The value of irregular expenditure in South African state-owned enterprises (SOEs) increased significantly in 2016-17, the country’s auditor general has said.
In his national and provincial government audit report, Kimi Makwetu, the auditor general, said supply chain management at SOEs was weakening because officials were unfamiliar with the procurement policies and processes, or sometimes circumventing them altogether.
“The level of oversight by the departments to which the SOEs report differed, and there was no single approach in this regard,” said Makwetu.
“The political leadership was also inconsistent. At some SOEs there was a high level of involvement, while at others the required decision making and policy direction were not adequate.”
More generally, the auditor general’s report found a “slow but noticeable” improvement in national and provincial government audits over the last four years, with the number of clean audits increasing to 30% of the total.
However, poor compliance with laws and regulations – especially in supply chain management – as well as inappropriate monitoring of project deliverables and an inability to manage finances, hindered progress.
Irregular expenditure had increased by 55% on the previous year, to R45.6bn, the report said. This does not necessarily mean the money was wasted or that fraud had occurred. However, the report said the track record for dealing with irregular expenditure when it occurred was still poor.
The report also said little had been done to address concerns previously raised by the auditor general about contracts being awarded to employees or their families without the required declarations of interest being made.
The auditor general’s report also looked at the progress of a number of key programmes, which together had a combined budget of R58.5bn. These included water and school infrastructure, the expanded public works programme, food security and housing development. It found these projects either did not achieve their targets or failed to report whether targets had been achieved, despite budgets having been spent.
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