Auditor-general Tsakani Maluleke has warned that weak political oversight is fuelling a culture of complacency across government, saying politicians must take responsibility for poor audit outcomes.
“It tells you about posture and tone,” she said. “The people who set the posture and the tone of an institution are the political leadership. They are the ones who will hire a competent, professional accounting officer or not; they are the ones that will hold that accounting officer accountable or not, that will support them or not, and that will interfere or not. They set that tone.”
Should political leadership not lead the charge in ensuring clean audits, the auditor-general believes it allows room for non-performance.
“What we’ve seen is that where you have the type of political leadership that is diligent in ensuring that they hire professional, capable and disciplined accounting officers, you must give them space to do their work.
“Hold them accountable, but allow them to stay in their roles long enough to know how to run the place because government operations have a level of complexity that requires institutional memory. So, you need time in the institution.”
Maluleke argued that political leaders who don’t display intentionality on the capability of the staff they hire will end up with entities and departments that falter.
It’s not a technical issue; it’s about chaos. Where chaos is, service delivery certainly isn’t, and leakage certainly is
— Tsakani Maluleke, auditor-general
“Where political leaders don’t prioritise this, you end up with accounting officers who don’t do what’s required from a poor performance point of view and don’t hold staff accountable.
“They allow internal controls to be ignored, they don’t respond to audit findings, they simply don’t perform in accordance with their given duties, and they allow others to interfere with their responsibilities.
“Much of it is about the tone and support given by the executive leadership.”
The AG criticised provincial and national departments and entities that do not meet the audit standards they should as a critical issue, warning they will act against them.
“Accounting officers that are complacent in a disclaimer territory are a reflection of complacency even at the level of the political leadership, whether as the executive or as oversight, because they should be holding them accountable. A disclaimer really shouldn’t happen.
“We’ve used our powers to issue material irregularities where there were no submissions, because that is a violation of the law. Where there were no disclaimers, they should submit financials for us to audit.”
Maluleke, whose office this week published the latest national and provincial audit outcomes, said their interventions, such as issuing these material irregularities, do work.
“The reason we did that is because, sure, you’re not going to be able to chase someone for a specific amount of money they must bring into the system, but you can get them to comply with their duties in a way that helps us all achieve that noble constitutional objective of accountability and transparency.
“The very basic thing you must do is at least submit financial statements.
“We’ve also issued material irregularities where there were disclaimers and repeat disclaimers. In the Municipal Financial Management Act (local government), we’ve been able to reduce these from 29 to fewer than 10 because we’ve helped everyone in the system understand how undesirable and problematic a disclaimer is.
“It’s not a technical issue; it’s about chaos. Where chaos is, service delivery certainly isn’t, and leakage certainly is.”
A disclaimer — the worst audit outcome — means auditors could not form an opinion because the institution’s financial records were incomplete, unreliable or missing.
Our issue has always been to say that irregular expenditure in and of itself is not the problem; the problem is when it is not acted upon
— Maluleke
Maluleke accused those who falter of creating man-made situations. She conceded, however, that there are instances where circumstances beyond their view prevail.
“If you look at areas where there is non-submission, where there are disclaimers, in many ways that is man-made.
“Sure, from time to time you might have a cyberattack, so you can’t get your financial records, as happened at the National Health Laboratory Services or the South African Bureau of Standards. But where someone has been in a disclaimer zone for years and years, like the Compensation Fund has been disclaimed for more than a decade, that’s a decision.”
Maluleke said unauthorised, irregular, fruitless and wasteful expenditure is not the core issue but a signal that something has gone wrong. She urged action to be taken against those found to be in trouble with the law.
“The accounting officer must go and check what went wrong and deal with it transparently. Part of dealing with it might include an investigation to check what happened, the training of staff, discipline, and holding the contractor accountable.
“Maybe the contractor deceived you when they declared their conflict at the time of their appointment; the next thing you know, you’ve appointed a contractor or a supplier that is owned by a public servant, which is against the rules because that is fraud, so you must hold them accountable and cancel the contract. It merely tells you that something has gone wrong and that somebody must act.
“Our issue has always been to say that irregular expenditure in and of itself is not the problem; the problem is when it is not acted upon.
“We know it is not being acted upon when the number keeps growing because we check every year and it shows us that it is not being attended to.
“We check whether consequence management has happened: did they train, discipline, finalise the investigation, or report to law enforcement?
“If they have done that, fine. If not, it tells you that there is a tolerance of that wrongdoing, so impunity sets in, controls continue to be weakened, and that’s a recipe for a great deal of vulnerability, criminality and loss.”
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