Auditing of government institutions in South Africa is required by law

20 March 2013

The auditing of government institutions in South Africa is required by law. Every action, decision and expenditure by public officials is reviewed by government accountants and auditors to ensure that it adheres to the rules and procedures. All actions must be lawful, reasonable and procedurally fair.

The auditor-general's office is required by law to audit and report on how government uses taxpayers' money. The office goes beyond the auditing of financial statements. According to the South African Institute of Chartered Accountants (SAICA), it evaluates performance against predetermined objectives as well compliance with rules and regulations.

The auditor-general provides Parliament and other legislative bodies in the three spheres of government with independent assessment reports through a structured process. Their oversight ensures that government delivery is consistent with Parliament's intentions.

Last Tuesday the auditor-general's office as part of its constitutional mandate, released a report on performance audits of national and provincial departments and public entities based on the Public Finance Management Act (PFMA).

The report by Auditor General Mr Terrence Nombembe revealed "stagnation" and slow progress towards clean audits. Nombembe said the overall audit outcomes for national and provincial government regressed in terms of clean audits. He was, however, satisfied with the continued improvement in the usefulness and reliability of the annual performance reports. He stated: "Three hundred and three (60 per cent) of auditees do not have any material findings on the usefulness and reliability of their annual performance reports – improving from 266 (54 per cent) in the previous year."

He highlighted issues that need strengthening to speed up progress towards clean audits. These included supply chain management, human resources and financial reporting. The audit outcomes by the AG are in line with the Management Performance Assessment Tool (MPAT) early warning system findings. The Department for Performance Monitoring and Evaluation last year conducted an assessment of 103 departments through the MPAT. According to the department, MPAT is used to determine the performance of departments by measuring various aspects of good management practice.

The MPAT report provides departments with an early warning system of the weaknesses they have in their management and systems that ultimately lead to poor audits.

The AG was encouraged by the government's interventions to ensure compliance with accepted accounting principles and using public resources in accordance with legislation. This was the result of a commitment in the government to achieving clean audits. The auditor-general, National Treasury, the Public Service Commission, the Departments of Public Service and Administration, and Co-operative Governance and Traditional Affairs are working with the Presidency to ensure that uniform standards on measuring and monitoring performance are developed.

The Department of Co-operative Governance and Traditional Affairs, in partnership with other role-players, has established the Municipal Public Accounts Committees in provinces to promote good governance, transparency and accountability on the use of state resources.

Nearly 87 percent of these committees have been established.

We are also prioritising training and have ramped up our search for suitably qualified personnel such as chief financial officers. The National Treasury has given the assurance that a chief procurement officer would be appointed soon to combat corruption and align supply chain management and procurement processes. More is being done to capacitate officials to better understand their roles and ensure they have the minimum competencies required to achieve clean audits next year.

Planning Minister, Trevor Manuel, said the government would, through the National Development Plan, put in place measures to re-skill and reorient public servants on the basics of key legislation such as the Public Service Act and the PFMA. The PFMA promotes the objective of good financial management to maximise service delivery through effective and efficient use of the limited resources.

That every decision relating to expenditure by public officials is reviewed shows that the government is committed to addressing short-comings highlighted by the auditor-general. Government interventions are aimed at reinforcing trust in public institutions.

Phumla Williams is Acting CEO of the Government Communications and Information System (GCIS)