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In 1999 the South African Parliament passed the Public Finance Management Act No.1 of 1999 (PFMA) whose main role is to ensure effective and better public finance management practice. Despite the body being in existence, there have been persistent irregular expenditure reports every year.
Reports have emerged that irregular expenditure by government departments and state-owned entities have continued to increase rapidly, it has increased ZAR 50.1 Bn in 2018 to ZAR 61.3 Bn this year.
Auditor-General Kimi Makwetu revealed this while briefing parliament’s standing committee on public accounts about the audit outcomes of all government departments and SOEs for the 2018/2019 financial year.
Irregular expenditure is an expenditure that was not incurred in the manner directed by law in that, the auditee failed to comply with the legally required procedure of application, leading to the expenditure.
“Because we’re examining the compliance with internal controls, this is a fertile place for resources to be diverted. It’s a multitude of things that have not been complied with, that trigger this expenditure but are also happening in an unsupervised and uncontrolled environment,” the auditor general said.
The national department of water and sanitation, health and transport sectors of KwaZulu-Natal and Gauteng took up the bulk (ZAR 61 Bn)of the irregular expenditure.
The two provinces: KwaZulu Natal (ZAR 12.42 Bn), Gauteng province (ZAR 7.13 Bn) and national departments (ZAR 11.25 Bn) took up the lion share (72 percent) of the irregular expenditure.
“The levels of irregular expenditure, sometimes, are a reflection of non-compliance with the discipline of the supply chain as well as payments that are made without following processes in terms of acquisition of goods and services,” Makwetu said.
He noted that the figures released are not the full results as irregular expenditure of some of SOEs like Eskom and Transnet were not included.
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