The article in The Star of Monday, 16 September titled “Gauteng Health can’t account for more than R12 bn” has exposed a serious gap in the understanding of financial accounting terminology that the auditor general uses in dealing with the finances of public institutions.
The article misinterpreted concepts used by auditors such as unauthorised expenditure, irregular expenditure as well as fruitless and wasteful expenditure to mean that public funds could not be accounted for. This interpretation is incorrect and creates a wrong perception that nearly half of its budget was squandered, misused or disappeared.
In reality, an amount of R15.2 billion was paid to over 63 000 employees. R2 billion was transferred to municipalities for the provision of emergency medical services (EMS), primary health care (PHC), and HIV and AIDS services. The department acquired assets to the value of R1 billion rand which was fully accounted for in the Assets Register of the department for medical equipment and hospital and clinic infrastructure.
The following key services were also paid for by the department for which full records are available:
Laboratory services : R1.2 billion
Medical supplies and medicines : R3.7 billion
Municipal services : R 500 million
Blood and blood products : R189 million
Transfer to non-profits Institutions (NGOs) : R818 million
Other goods and services : R2.4 billion
Another fatal error in the article is that expenditure balances spanning several previous years, before the appointment of Ndoda Biyela as the acting accounting officer, were added up to create an impression that funds were not properly managed in a period of one year. A call to the auditor-general’s office would have assisted to clarify matters and avoid these mistakes.
The fact of the matter is that in simple terms, unauthorised expenditure means over-expenditure on the main budget or a programme within the budget; irregular expenditure means expenditure was incurred without following all the correct policies and procedures; and fruitless or wasteful expenditure means expenditure was incurred that could have been avoided.
Contrary to the impression created by the article, the truth of the matter is that the department has in the 2012/2013 financial year put in place controls which have improved the overall management of the department. This resulted in an improved audit outcome in the financial year, from a disclaimer in 2008/2009 to a qualified audit opinion. The number of areas that the auditor general was concerned about have reduced from 11 to 4 in 2012/2013.
The department acknowledges that there are important areas of improvement and the department is working diligently to address these issues. Unauthorised expenditure has reduced from R1.7 billion in 2009/2010 to R1.1 billion in 2010/2011, R1.0 billion in 2011/12 and to R324 million in 2012/2013.
Over-expenditure in emergency medical services, provincial hospital services and central hospital services was responsible for this amount. While these programmes recorded an over-expenditure the department as a whole did not overspend its budget for the first time in a decade.
Irregular expenditure has come down from R2.2 billion in 2010/2011 to R1.1 billion in the past financial year while fruitless and wasteful expenditure has been reduced from R 217 million in 2010/2011 to R145.9 million in the past financial year.
Key interventions have been implemented and continue to be implemented to further improve controls and bring about financial stability and discipline in the department. These include alignment of demand plans to budget availability, improving payments to avoid interest and penalties and ensuring availability of medication and equipments in hospitals.
To strengthen accountability the department has taken disciplinary action against a number of staff members for non-compliance to policies and procedures.
The fact is that the department can account for its finances. That is the reason the auditor-general was able to point out areas of weakness and give the department a qualified opinion with emphasis of matter on these areas. If that was not so, the auditor general would have given an adverse audit opinion or disclaimer.
