Business & Economy

Monday, 03 February 2020 22:31

AG to audit 89 departments and entities that make up 79% of SA’s budget as part of new powers

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Johannesburg, 3 February 2020 - SIXTEEN national and provincial government departments and entities audited by the office of the Auditor-General of SA under his new powers uncovered 28 cases of material irregularities and potential losses to taxpayers of R2.8-billion. But in the new financial year, says AG Kimi Makwetu, 89 out of 422 departments and state-owned entities - which account for a staggering 79% of South Africa’s budget - will be audited.

This follows the enactment of the Public Audit Amendment Bill in April last year which saw his powers extended and gives him the authority to lay criminal complaints with the relevant law enforcement authority. Makwetu made the announcement of the sweeping and wide-ranging forensic audits when opening the annual Public Sector Forum at Emperors Palace in Ekurhuleni this morning.

he annual event is hosted by the Institute of Internal Auditors SA (IIA SA) with over 300 - of its 8 000 members - from government departments and state-owned entities attending the two-day event. The theme for this year’s forum is “A Bird’s Eye View” and, as in recent years, issues to come under the microscope include corruption, state capture, promoting ethical behaviour, the impact of the fourth industrial revolution on the internal audit sector and ensuring corporate governance becomes a daily reality. Makwetu talked of “Strengthening Public Trust Through Accountability and Transparency” and said internal auditors were now at the forefront of safeguarding the public purse and ensuring good governance. He said optimism in SA’s socio-economic outlook may be low but “nobody said it would be easy”.

“Whatever we see around us or whatever we read in the weekend newspapers, it’s evident that strengthening the public trust and accountability is not easy. Many are almost giving up and that hope that they had 18 months ago is almost diminishing. “However, strengthening the trust of the public in governments ability to manage the public purse ... to benefit the citizens of South Africa ... this is what keeps us going or should keep us going in public office.” He said the 89 audits will be carried out across all nine provinces but focus on five key areas that account for the largest chunk of the public purse: infrastructure, education, health, state-owned entities and water and sanitation.

He said: “There is evidence of unacceptable levels of rising expenditure or fruitful and wasteful expenditure ... so what is the game plan, what should we do?” He said that, to this end, he had “spoken at length to various levels of leadership in the country” and had said to them that the plan should not be how to achieve a clean audit “but to use that money, including the assets you list in the balance sheet, for what they were destined for”. He said internal audit was thus a “first line of defence” and responsible for ensuring “preventative controls and mechanisms”.

“We said to government, and I want to repeat, that we need to elevate the importance of preventative controls.” For example, he said, procurement processes needed to be controlled to ensure no unnecessary spending.  Tender controls can also be tightened while conflicts of interest must be identified at the initial phase of any process. He urged internal auditors to flex their muscles more - especially when it came to external auditors. “They (external auditors) should become more reliant on the work of internal auditors ... it can sometimes be an uncomfortable conversation ... but one way to force it upon external auditors is to demonstrate that you have demonstrated all these instruments of preventative controls.” He said it was not necessarily the function of external audit “to paint a picture of a strong audit environment”, adding that strong preventative mechanisms would “make these new provisions redundant”.

“For example, in the cases of the Public Investment Corporation or the SA Revenue Service we learnt that the widest levels of preventative controls were overridden or not in place ... so an investment in preventative controls brings huge responsibility to internal audit.” On Tuesday, meanwhile, the forum will see, among others, economist Ndumiso Hadebe talk of “leading in the age of great disruption”, Dr. Christiaan Roos focusing on cyber security and Edeshri Moodley from the Department of Planning, Monitoring and Evaluation talking on performance information and the impact on internal audit.

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About IIA SA
The Institute of Internal Auditors South Africa (IIA SA) is part of an international network representing the interests of internal auditors worldwide. As a part of this international network, the IIA SA upholds and supports the fundamental tenets of the profession - the Code of Ethics and the International Standards for the Professional Practice of Internal Auditing. The IIA SA supports the profession by providing a wide range of services dedicated to the education and advancement of internal auditors and dynamically promoting and developing the profession in South Africa. The IIA SA’s objectives are to build the profession, its credibility and a thriving business environment in South Africa.

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