MPs concerned non-payment of audit fees will impact work of Auditor-General
The AG is owed over R1 billion by government departments and entities with fears that this will continue to increase.
The Standing Committee on the Auditor-General. Picture: x.com/Auditor-General South Africa
CAPE TOWN - Members of Parliament (MPs) say they’re concerned that the continued non-payment of audit fees to the Auditor-General (AG) will jeapordise its independence.
The AG is owed over R1 billion by government departments and entities with fears that this will continue to increase.
But the office of the Auditor-General said the current funding model, which is charging auditees a fee, is still the most appropriate despite government's failure to pay the entity.
National Treasury and the AG on Friday briefed the Standing Committee on the Auditor-General about interventions to collect outstanding audit fees owed to the institution.
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National Treasury says the AG's current funding model is the most appropriate because it ensures the institution's independence, as opposed to receiving an appropriation or budget from the state.
National Treasury accountant General Shabeer Khan said financial constraints also make the current model the best option, despite non-payment.
"A funding model that relies purely on appropriations to get resources to execute its mandate may not be appropriate in the current fiscal environment in South Africa," said Khan.
But Chairperson of the Standing Committee on the AG, Wouter Wessels said their main concern is the non-payment in the current model.
"Yes the current model is ideal for independence, but independence will also be compromised if Auditor-General can’t function because of financial constraints," said Wessels.
The AG said one option to ensure payment could be attaching bank accounts or treasury pays them before funds are appropriated to departments.
Meanwhile, the AG said it's considering taking serious action against government entities that fail to pay, like attaching their bank accounts.
However, many departments and municipalities are in financial distress and can’t afford to pay the AG for its audit services.
Deputy AG Vonani Chauke said unlike private audit firms, they can't stop auditing an entity just because they’re in financial distress and can't pay.
But he said entities that receive billions in bailouts but still don't prioritise paying the AG, leave the entity little choice.
"When they get bailouts they will priortise creditors and Auditor-General will not be part of that list. We are not seen as strong enough creditors. Even for those ones we might take severe action going forward such as maybe attaching their bank account," said Chauke.
Chauke said they will be engaging with the National Treasury to find a solution to deal with auditees who are in financial distress and the ones who can afford to pay but choose not to.