AUDITOR-GENERAL Terence Nombembe has denied that he misled Parliament when he omitted to report on irregular and fruitless expenditure incurred by the Department of Science and Technology.

On Tuesday, Sowetan reported that Nombembe failed to report to Parliament financial and tender irregularities that had resulted in fruitless expenditure of R1.3-million for the year ending March 2011.

The A-G has described the Sowetan's report as "baseless and untrue".

Below we publish issues raised by the A-G in his rebuttal and our responses thereto.

• A-G: "Where we (auditor-general) detect any issues of concern, we address them with the management of the respective organisations (departments) in the management report.

In cases where management is able to provide clarity to the satisfaction of the audit team, disclosed in the financial statements and where the matters were adequately addressed by management, the issues will be considered when finalising the audit report."

Sowetan reported that the management of Science and Technology had acknowledged the irregularities. Strangely, the department disclosures on pages 140 and 141 of its annual report note irregularities of R1.3-million.

Without providing details, the notes merely states that irregularities of R641147 were incurred as a result of "payment exceeding bid requirements".

• A-G: "As management reports deal with issues regarded as 'audit work in progress', we keep these reports confidential and will never report on the content thereof to Parliament, as such a practice would constitute gross breach of international accepted auditing standards."

According to the management report Sowetan quoted, the irregularities were to be reported under the audit report's section "emphasis of matter". The details are hidden, contrary to the findings stated in the management report. The disclosure notes also records R725000 incurred in the contravention of the Public Service Act.

Contrary to the recommendations of the management report, these details have been concealed.

• A-G: "Based on our assessment of the responses we received from management after releasing the interim management report (quoted in Sowetan), we concluded with proper guidance from international standards on auditing that the matters had been satisfactorily responded to and would therefore only require disclosure in the financial statements."

Sowetan is in possession of the final management report for the year ending March 31 2011, listing irregularities we reported about.

• A-G: "This was decided to ensure that the department reports directly on this matter in order to enhance the appreciation of the public on the remaining qualitative matters that need to be addressed."

It is unclear how failure to report details about irregularities would enhance appreciation by the public.

• A-G: "These matters (irregularities and fruitless expenditure), we concluded, were not indicative of a pervasive material breakdown in controls at the department and therefore had not been included in the audit report."

Sowetan did not say there was material breakdown in controls in the Department of Science and Technology. The irregularities, according to the management report, were to be reported in the A-G's audit report under the section "emphasis of matter".

• A-G: "We believe that the final audit report of the department is accurate, financial statements are fairly presented, and that the public has not been misled as all information required is contained in our audit report and in various areas of disclosure in the financial statements."

It is unclear how exceeding bid requirement in the procurement of services and non-compliance with the Public Service Act in the case of secondment of employees from Square Kilometre Array's office to the department would justify the following comment by the A-G in his audit report to Parliament:

"There are no findings concerning material non-compliance with laws and regulations applicable to the department."

• A-G "The fact that they (the department) reported them (irregularities) voluntarily made it unnecessary for us to comment otherwise."

The disclosure notes lack details about the nature and extent of the irregularities. The comments suggest that the A-G is acknowledging the irregularities, but then proceeds to give the department a clean bill of health.