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AG Report: SOEs Failing, Irregular Expenditure R45.6-billion

The AG found that SOEs continue to regress, and that irregular expenditure has gone up to R45.6-billion - that's 55 percent more than last year.

01/11/2017 12:49 SAST | Updated 01/11/2017 12:49 SAST
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A report by the Auditor-General of South Africa (AG) has revealed that the country's state-owned enterprises (SOEs) continue to regress, while irregular expenditure increased by 55 percent to R45.6-billion in the past financial year.

In his announcement of the national and provincial audit results on Wednesday, AG Kimi Makwetu said the audit outcomes of SOEs continued to regress -- most often as a result of inadequate controls, monitoring and oversight.

"The accountability for government spending at SOEs is an area receiving attention in the public, as government funds and guarantees are being used to sustain some of the SOEs," he said in a statement.

"The level of oversight by the departments to which the SOEs report differed, and there was no single approach in this regard. 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."

Makwetu's office also found that irregular expenditure has increased by 55 percent since the previous financial year, to R45.6-billion. Makwetu said this amount could be even higher, as it does not include the irregular expenditure of the auditees in which the audits are still ongoing (including Prasa, at which irregular expenditure last year was almost R14-billion).

Furthermore, 25 percent of the auditees disclosed that they had incurred irregular expenditure but that the full amount was not known, while 28 auditees were qualified because the amount they had disclosed was incomplete.

Provincial audits found that Western Cape and Gauteng continued to produce the best results, due to "leadership emphasising a culture of accountability".

In contrast, audit outcomes in Mpumalanga, Northern Cape and KwaZulu-Natal have been "erratic" over the past four years. Makwetu says this is caused by a lack of urgency in leadership's response to the root causes of the audit outcomes in these provinces.

In North-West and Free State, Makwetu singled out a "lack of accountability and commitment towards clean administration" as factors that influenced the poor showing of these provinces.