Auditor-General Kimi Makwetu has called on all government leaders to play a crucial role in ensuring that government departments and entities improve their audit outcomes.

He has raised concerns over irregular expenditure, non-compliance with legislation, auditees with financial risk indicators and financial misstatements – where auditors have to help auditees correct their annual performance reports to achieve better outcomes.

Releasing the audit results for national and provincial departments, including their entities, in Cape Town on Wednesday, Makwetu said while audit outcomes had improved, a lot still needed to be done to ensure that all departments achieve better outcomes.

“We again emphasise that particular attention should be given to the assurance provided by senior management, as the accounting officers and executive authorities are relying on senior management to implement financial and performance management controls.

“Accounting officers must also improve the level of assurance they are providing,” he said.

The Auditor-General said senior managers and executive authorities should take a leadership role in ensuring that measures to improve audit outcomes are implemented and embraced by all departments for better results to be achieved.

Measures to improve outcomes include:

• Responding to the Auditor-General’s recommendations through action plans in order to improve key controls and address these risk areas – the quality of submitted annual performance reports, supply chain management, financial health, human resource management and information technology controls;
• Focusing more on getting the basics right, including filling vacant posts with competent officials, implementing basic internal controls and insisting on regular and credible reports on the state of their finances and performance in accordance with their performance plans; and
• Enforcing compliance with legislation by implementing processes and procedures that will make it part of the daily disciplines and monitor to determine whether auditees have complied.

The Auditor-General also said that those in leadership positions should hold people accountable for poor performance and transgressions as this will go a long way in demonstrating that non-performance is unacceptable in order to encourage a responsible, accountable and transparent administration.

He also called on all departments to encourage and support robust and proactive audit committees and internal audit functions to ensure that their recommendations and reports are responded to.

AG highlights several audit concerns

The Auditor-General said there were several audit observations that needed the attention of those in leadership.

He said while 80% of the financial statements that were audited received an unqualified audit opinion, 37% of those achieved the outcome after auditors helped them identify several misstatements.

The Auditor-General also said 72% of all auditees failed to comply with key legislation. He said that should departments address issues like misstatements in submitted financial statements, non-compliance with supply chain management, recurring unauthorised, irregular, fruitless and wasteful expenditure, the results would be better.

He said the number of auditees bearing negative financial risk indicators had increased, and that attention should be given to entities where “significant uncertainty exists about their ability to operate in the foreseeable future”.

“I am encouraged by the responses and commitments of the executive and oversight to continuously work on solutions with the auditees, key role players and my office to drive financial and performance management in national and provincial government in order to build the public’s confidence in government.

“My office remains firmly committed to making a positive contribution towards this journey and we will continue to make ourselves available to provide proactive insights and recommendations,” he said.