AG's new teeth bite, says Tsakani Maluleke

The auditor-general’s new powers are beginning to bite as government institutions are recover monies, reduce losses and hold transgressing officials to account. 

Auditor-general Tsakani Maluleke says that after years of her office warning state entities about increasing mismanagement, leakage of public funds and continuous increases in irregular expenditure without consequences, accounting officers are now beginning to act. 

Because of the new powers, institutions are recovering costs, avoiding losses, disciplining transgressors, reporting matters to law enforcement and cancelling supplier contracts where there is wrongdoing. 

The new powers as contained in the Public Audit Amendment Act came into effect in April 2019.  Under the act the auditor-general has been empowered to refer material irregularities — defined as any fraud, theft or breach — for investigation and the issuing of a certificate of debt to the officials involved. 

There are also personal consequences for accounting officers who fail to take appropriate action on matters flagged by the AG. 

Maluleke told parliament’s standing committee on the auditor-general on Friday that her office was starting to see the impact of the instruments given to it by the amended act as accounting officers were becoming more responsive. 

Since the new powers came into effect, 179 material irregularities (MIs) were identified in national and provincial government departments, leading to a loss of R12bn. But during the same period, a loss of a further R636m was prevented as accounting officers took appropriate remedial action after being issued with material irregularities by her office. 

Of the 179 MIs, 169 had a combined estimated value of R12bn. 

The AG could not quantify the financial loss in nine of them but said these related to matters that could “cause substantial harm to the public institutions” if not properly addressed. 

Maluleke told the Sunday Times, in the main these had to do with institutions that do not submit their financial statements for audit year on year.

She said this not only delays accountability and avoids transparency, noncompliance or breach of fiduciary duty could harm a public sector institution. 

“If a public sector institution is not transparent about how they are using public funds, if they are not opening themselves up for accountability processes to happen and how they performed the duties they were mandated to, that trust in the institution is likely to diminish. 

“But more fundamentally if you are not subjecting the activities of that institution to proper scrutiny, you tarnish its image, its capability and the trust that people can have in that institution.”

But, in the majority of instances, accounting officers have taken the appropriate action and through their actions, after receiving MIs, they have prevented financial losses to the value of R636m.

There are also investigations for fraud and criminal activity under way which were handed over to different public bodies in 15 instances. Five supplier contracts were stopped as a result of action taken by accounting officers and 36 officials were subjected to disciplinary action with some of them dismissed. 

“That’s encouraging because part of the reason the powers were put in place is to demonstrate the need for consequence management to happen and to propel accounting officers to execute on their given duty to put consequence management in place.” 

Maluleke acknowledged the recoveries as a result of the AG’s work and action by the accounting officers is a drop in the ocean, “a drop which is important because it tells us the things we call for are possible”.  

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