Government finances continued a summer of discontent as parliament heard that the 2005/2006 accounts of the department of defence had been slammed by a qualified audit opinion for the fifth straight year. In the past few weeks, auditor-general Shauket Fakie has also hit correctional services and home affairs with qualified audit opinions, each also for the fifth straight year.
In the private sector, were these departments to be listed companies, the investor outcry would deafen the continent. However, on the contrary, government is increasingly ignoring the provisions of the Public Finance Management Act, which includes draconian provisions to address the abuse of public sector monies. By now, the rot appears to have simply gone too deep.
Of 17 national departments and entities (which total 34) to have tabled 2005/2006 annual reports so far, only one set of accounts, from public enterprises, has been deemed “clean” or entirely in order by the auditor-general. Seven sets of accounts have been tainted with qualified or disclaimer opinions, and nine have been branded with “emphasis of matter” findings relating to various aspects of financial practice and management.
For the man and woman and the street - the taxpayer - some of the disclosures are beyond mind-boggling. The auditor-general found, for instance, in the case of the defence accounts, that the overriding majority of the more than R567m in travel and subsistence claims could simply not be validated against original supporting documents. In 2005, the defence department ranked among the top five most expensive government Christmas parties, with an outlay of R172 444.
The accounts of parliament itself have just been qualified for the third consecutive year. In other random samplings, at home affairs, “government garage expenditure” of over R61m could simply not be verified. The auditor-general also found that the health department paid out R1.3bn in grants before receiving the necessary business plans stating how the money would be spent.
The health department ended up having to shell out R110m more than the amounts required in the individual business plans once they were at last received. In 2005, the health department ranked among the top five most expensive government Christmas parties, with an outlay of R91 728.
Fakie has had a hectic year, all right, and will be retiring in due course, but to the private sector. Earlier in 2006 Fakie tabled a performance audit identifying financial and administrative inefficiencies found in the management of monies in trust (MMIT) by the department of justice. The audit found that maintenance and inheritance monies intended for the poor, particularly women and children, was not being effectively managed by the department.
This was evident from the lack of defining regulations to regulate the trust, which annually receives almost R2bn from maintenance, inheritance and fine monies. The astonishing findings of the audit pointed overwhelmingly toward comprehensive incompetence, complete ignorance and a total lack of urgency in addressing the needs of the poor. Menzi Simelane, director general and accounting officer of justice, failed three times to respond to requests to address the findings of the auditor-general’s report.
The auditor-general also published an eye-popping report on declarations by ministers, deputy ministers and government employees. This found that 14 government ministers and the majority of both 1678 MECs (members of various legislatures) and designated employees, as well as the majority of 50 223 non-designated employees, held undisclosed directorships or memberships in companies.
Another auditor-general report, on the audit of the approval and allocation of housing subsidies by provincial housing departments, found thousands of instances of irregular approval of housing subsidies amounting to R323m a period of more than a decade.
All told, billions of rands have gone walkabouts. Management failures, along with skills shortages, appear to lie at the heart of an increasingly dysfunctional government. In the past few days, interesting details arose from the department of agriculture’s Agricultural Debt Account (ADA), which toed the line by being branded with a qualified audit report for 2005/2006. While the accounts are another story for the meantime, the auditor-general cited “a lack of necessary expertise, proper accounting and data management systems”.
The human resources section of the agriculture department’s annual report indicated a 25.6% overall vacancy rate, with some 869 posts still waiting to be filled at the end of the latest financial year. There was a 36% vacancy rate in permanent administrative posts; 37.2% of finance and economics professionals still needed to be hired; 25.9% of finance positions were not filled, while 15.8% of financial clerks and credit controllers had not yet been hired. The department, like all others, is battling to find skilled replacements to match the race-driven employment equity quotas set by the government.
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