Auditor-general (AG) Tsakani Maluleke has reported a gradual upward trend in the national and provincial government audit outcomes.

She also called on the government to instil a culture of accountability in the public sector to improve service delivery to the citizenry.

Maluleke released the consolidated 2021/22 general report on national and provincial audit outcomes and also released the material irregularity report in national and provincial government to parliament on Wednesday.

She said these two spheres of government had been gradually improving their ability to report transparently on their finances over the term of the current administration.

Overall, 114 auditees now have a better audit outcome than in 2018/19, with 46 having a worse outcome — an overall net improvement in the outcomes of 68 auditees (17%).

Based on the completed audits of 160 departments, 47 departments had improved and 12 had regressed — a net improvement of 35 (22%).

Of the 238 public entities with completed audits, 67 had improved and 34 had regressed — a net improvement of 33 (14%).

“While we are cautiously optimistic about this trend, we have found that service delivery, good performance and financial discipline are not yet evident at those auditees with the greatest affect on the lives of South Africans and on government finances.

“These auditees are the key service delivery portfolios, consisting of health; basic education; public works and infrastructure; transport; water and sanitation; and housing, as well as state-owned enterprises,” she said.

Maluleke said the service delivery portfolios were responsible for more than 30% of the  expenditure budget, but consistently had the worst audit outcomes.

“These auditees account for 58% of the outstanding audits and 31% of the modified audit opinions (qualified, adverse and disclaimed).”

She said in 2021/22, accounting officers and authorities managed an estimated expenditure budget of R2.58 trillion.

However, the AG expressed concern that by September 15 this year — the cut-off date for audit outcomes to be included in the report — the office had not yet completed the audits of 26 auditees.

“Fifteen of these auditees (58%) — most of them state-owned enterprises — had not yet submitted their financial statements at this date.”

They include Denel and subsidiaries — which had not submitted its financial statements for two years due to financial and operational challenges — Mango Airlines (business rescue), the Compensation Fund, the Unemployment Insurance Fund and the Government Printing Works.

The irregular expenditure disclosed in 2021/22 was R51.22bn.

It was significantly less than the R136.67bn disclosed in the previous year, but the R77.49bn in irregular expenditure incurred by the National Student Financial Aid Scheme in that year was an anomaly.

Maluleke said she was encouraged by the progress made by her office in implementing the office’s expanded mandate, demonstrated through the increased attention given to the AG’s audit process and outcomes and the prevention or recovery of financial losses.

She said by August 31 this year, the office had notified accounting officers and authorities of 179 material irregularities (MIs) in the national and provincial spheres of government.

Most of the MIs identified were caused by non-compliance and suspected fraud likely to result in financial loss. The AG estimated the total financial loss of these MIs to be R12bn.

She said auditees were taking action to resolve these MIs by recovering losses, preventing further losses through strengthening internal controls, and effecting consequences for transgressions.

“Through the process, financial losses of R636m were prevented, R14m in financial loss was recovered and R509m in financial loss is in the process of being recovered.

“In addition, 39 MIs resulted in internal control improvements to prevent financial loss from recurring, 36 resulted in the officials responsible for the losses being identified and disciplined or undergoing disciplinary processes, 15 fraud and criminal investigations have been instituted and five supplier contracts have been stopped.”

TimesLIVE