Makwetu raises red flag on financial state of govt depts, SOEs

The Auditor General also reported a steep 80% increase in the amount of irregular expenditure racked up by government.

Auditor-general Kimi Makwetu. Picture: National CoGTA

CAPE TOWN – Auditor General Kimi Makwetu has raised the red flag over the deteriorating financial state of an increasing number of government departments and state entities.

The embattled South African Post Office and the crisis-ridden South African Broadcasting Corporation have both again received qualified audits.

Armaments Corporation of South Africa was the only state entity of the 10 audited to receive a clean audit.

Makwetu’s consolidated report on national and provincial audit outcomes released at Parliament on Wednesday shows the number of auditees in good financial health to have slipped during the past financial year.

The Auditor General also reported a steep 80% increase in the amount of irregular expenditure racked up by government, totalling more than R46 billion during 2015-16 – up from R27.5 billion the previous year (2014-15).

Auditor General Kimi Makwetu says the financial health of 76% of government departments and 39% of public entities audited is “either concerning or needs intervention”.

These are among 484 auditees who end the year in the red or dip into next year’s budget to fund cash shortfalls – and who can’t pay creditors within 30 days.

“There’s a concerning trend which is growing over time, where the financial risk is starting to become a major challenge for the departments and entities.”

Five percent of departments and 10% of public entities were in such poor shape at financial year-end there was material uncertainty about their ability to keep operating.

“So it’s a flag to say that, before we know it, it may be good to start applying risk management discipline around the area of financial health so that whatever is spent is what has been allocated.”

Visit EWN's special municipal spending portal - created in partnership with the Auditor-General - to see how your taxes are being spent at local government level.

(Edited by Masechaba Sefularo)