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AG: Irregular, fruitless and wasteful expenditure is unlawful

28 May 2018 11:39 AM

Auditor General Kimi Makwetu explains the details of the data revealed in the annual audit of billions lost in municipalities.

Understanding the basics of what the Auditor General does is rooted in our Constitution. This supreme law of our land empowers the AG to audit or examine the accounting records of any state institution that is publically funded.

This exercise is carried out annually.

The main aim is to show the public how the money given to state officials is spent.

Auditor General Kimi Makwetu talks to Eusebius McKaiser about how this all works.

How was the money handled? Did it go to the places it was intended to?

Kimi Makwetu, South African Auditor General

Are the figured in the institutions' books reliable, asks Makwetu?

The auditing process needs to be completed within five months after the end of an institutions' financial year.

The recently released reports are a consolidation of the initial reports done in November last year, he explains.

We don't go out there to look for wrongdoing, but unfortunately, as we look for other things we end up stumbling into wrongdoing.

Kimi Makwetu, South African Auditor General

The reports have seen many municipalities getting a bad rap, so is there any good news Eusebius asks?

He talks about the importance of those employees at the first line of defence, like the teller at a state hospital who receives the money, always makes sure the books are balanced daily. Also, those who are tasked with money going out of institutions, usually for goods received, are also responsible for managing expenditures.

Then, he says, the municipal managers and teams must implement policies correctly and develop mechanisms to prevent problems with finances occurring.

Th municipalities that consistently get good outcomes are those who ensure there is no misalignment between those key roles.

Kimi Makwetu, South African Auditor General

Those whose books are in good order and who are diligent are usually successful in receiving unqualified audits, he adds.

But the bad news...

Irregular expenditure in municipalities amounted to over R28 billion (a 75% increase) and fruitless and wasteful expenditure amounted to R1.5 billion (an increase of 71%), staggering figures.

The AG explains what 'irregular' expenditure means as compared to 'regular' - any activities which circumvent the existing rules around awarding contracts for tender.

Fruitless and wasteful expenditure, for example, is when contractual payments are not made timeously and then penalties and interest occur.

It is when you don't pay attention to those basic processes and procedures, that that arises...and in institutions when you know no one is bothering to check up on what they do, some people tend to continue with what they do even if it is wrong.

Kimi Makwetu, South African Auditor General

Hence the call for leadership oversight to be strengthened and reverse this tenedency, he says.

Makwetu agrees that irregular expenditure and fruitless and wasteful expenditure are at the very least unlawful.

Take a listen to the AG explaining the state of our municipalities:

28 May 2018 11:39 AM