Auditor-General Report: No consequences for 98% of misuse of public money in
SA. "Joy and adrenaline." That's how Jan van Schalkwyk, corporate executive in the
Auditor-General's office, expressed his response to the news that the long-
awaited Public Audit Amendment Act had been signed into law by President Cyril
Ramaphosa three days before the country's audit outcomes were released on
Wednesday. For Van Schalkwyk, this piece of legislation could hold the key to
supplying something that South Africa's public entities are sorely lacking:
consequences for irregular spending. "We know what we need to do in South
Africa. We've probably got the money," Van Schalkwyk told an audience at UCT's
Graduate School of Business on Wednesday evening. "But damn, we're not good at
consequences." Van Schalkwyk estimates that over 98% of irregular expenditure
of public funds in South Africa is not followed up on in any meaningful way.
And there's a lot of it: "probably 160-billion" rand over the past few years, the
auditor says. Irregular expenditure does not refer to flat-out theft. "This is
money that was spent - you can find that there is a product or a service ,"
said van Schalkwyk. "It's money spent where there was no respect for law."
When it comes to both irregular expenditure and fruitless and wasteful
expenditure - the latter increasing 200% over the last year - the same
offenders keep popping up in government: the departments dealing with water,
health, and education. Associate Professor Derek Powell, of the Dullah Omar
Institute, suggested that provincial governments were under-scrutinised in
this regard. Powell pointed out that the bulk of funding for provincial
governments goes to remuneration in the fields of health and education. "It's
always the national minister out there on education and health, and yet it's
premiers who should be talking much more on that," Powell said. In terms of
the provinces, the Western Cape and Gauteng have again emerged as the good
news stories of the audits.Though the DA has already released a statement
congratulating itself on running the "cleanest government", in the form of the
Western Cape, Van Schalkwyk cautioned that direct comparisons between the two
top provinces are misleading because Gauteng and the Western Cape are
"structurally so different". But he said much could be learnt from both
provinces. " good internal controls, good reporting, good follow-up and the
results are there," Van Schalkwyk said. UCT researcher Dr Andrew Siddle
suggested another two reasons for the top performance of the Western Cape and
Gauteng. "Both have traditionally been far better resourced when it comes to
HR," Siddle said, which he highlighted as a critical element. In addition,
however, what the two provinces have in common is political competition. "The
fear of politicians being voted out is what keeps them on their toes, and this
is a more likely possibility in Gauteng and the Western Cape than in other
provinces," Siddle said. While irregular and fruitless expenditure tend to hog
the headlines, Van Schalkwyk also drew attention to the worrying trend of non-
compliance with the Auditor-General's office from public entities. This year,
there were 41 unfinished audits because the relevant entities failed to supply
their records in time. "Why would you not have your records ready by the end
of the year?" asked van Schalkwyk. "These are the guys that sit with huge
irregular expenditure, and have 'lost' documents." In addition, 5-billion rand of
transactions using public money could not be audited because there was
absolutely no documentation available. "People ask us why the Auditor-General
never picked up Nkandla," said Van Schalkwyk. "This is why - because the
documents weren't there." In addition to non-cooperation with the Auditor-
General's office, van Schalkwyk also expressed concern at recent reports of
state auditors being threatened - and in one case in October, shot. But even
despite these threats to security, the auditor said that the political climate
in which their work is carried out is currently "a hell of a lot better than
it was in the past". While the office is pinning its hopes on the Public Audit
Amendment Act bestowing greater authority on its findings, a few other
suggestions have been made to ensure that 2019's audit outcomes paint a more
positive picture. The Auditor-General has called on oversight bodies -
including Parliament's portfolio committees - to do their jobs better. When it
comes to state-owned entities, Van Schalkwyk pointed out that each SEO is
attached to a government department, which should sharpen its watchdog role.
"The mother departments can wake up," he said. From the perspective of Siddle,
it would also be helpful for South Africa's institutions of higher learning to
step up and devote more time to teaching students about public sector
financial management. "The general feeling within commerce departments is that
it's all about your private sector. SAICA is our god," Siddle said. During
question time, a member of the audience voiced frustration. "What is the point
of all this detailed audit," he asked, in a country hollowed out by State
Capture and endemic corruption? Van Schalkwyk responded that the 2018 audit
outcomes "point directly to what happened in State Capture". He said that
everything former Finance Minister Pravin Gordhan had told the Zondo
Commission in recent days could be correlated with the audit findings. "As
auditors, we knew things were going wrong," he said. "What stopped anything
happening was political will." DM
