More provinces 'moving in the right direction': AG on latest audit outcomes

Auditor-general (AG) Tsakani Maluleke has reported a significant improvement for national and provincial governments' audit outcomes for the 2022/2023 financial year that ended in March.

“The number of clean audits has increased quite significantly, and I think that’s quite important,” she told parliament’s standing committee on the AG, where she led her team to present a consolidated report of the latest audit outcomes on Wednesday.

The trend of improvement has been developing over the last four years of the current government’s administration consistently, and even more rapidly in the past year, she said.

In 2022/2023, the net improvement was 37 auditees (9%) — the biggest movement over the four-year period, with provincial governments showing a net improvement of 44 (27%) and national government a net improvement of 34 (15%).

Maluleke said over that time there have been fewer audits with modified audit opinion — meaning fewer qualified, adverse findings and disclaimer audit opinions.

The AG audited 418 auditees — 161 national and provincial departments and 257 public entities — for the financial year under review (2022/2023).

“If you look at a Public Finance Management Act cycle that looks after an expenditure budget of R3.1-trillion together, it’s useful to see at least 35% of these auditees achieving a clean audit status.”

The 147 auditees (35%) that achieved clean audits managed 16% of the R3.1-trillion expenditure budget in national and provincial government. In addition, the 162 auditees (39%) that received unqualified audit opinions with findings managed 48% of the budget.

Maluleke said it was commendable that 110 of the auditees have been able to sustain clean audits over the past year, meaning they received repeat clean audits. At least 53 of them have had a clean audit for four years.

“That tells us there are institutions that have maintained quality systems of transparency and accountability that are able to put their financial statements together, are able to put a performance report that is credible and reliable, that have key systems and disciplines that ensure they operate within the rule of law.”

The improvements were visible right across the provinces and in the national sphere of government, she said.

“If you look at each of the provinces, you will see that over the last four years of this administration, every province has improved its audit outcomes.

“[There have been] significant improvements in the Eastern Cape, where it now has a high number of clean audits — 12 clean audits that have been attained over the course of this administration, and that is the outcome of consistent focus over this period, as well as a strong tone from the top of that leadership team that insisted there be attention to improve the audit outcomes.”

The AG wants to see the gains made sustained and translated into the bigger budgets, such as the department of education and health, which are still lagging behind.

In the Free State there were fewer modified opinions, with the province getting more unqualified audit opinions than have been seen in a long time.

Gauteng was another province with significant improvement, the AG said, and that was a result of sustained effort by the accounting officer over many years. “It’s one [of] those that remind us that clean audits don’t happen in a flash but it takes years of focusing on the right things,” she said.

KwaZulu-Natal has also demonstrated significant gains in terms of improvements on its audit outcomes and the number of clean audits attained. Again, Maluleke attributed this to a leadership team within the administration that over many years focused on driving the right tone and support.

The Western Cape retained the top number of clean audits at 18, but for the first time they are not an outlier compared to other provinces, which Maluleke said was encouraging, “because it tells us more provinces are moving in the right direction”.

In the national sphere, government departments have also been improving in the last four years, which the AG said has been sustained in the year under review.

While there was an improvement with audit outcomes, the late submission of financial statements continued to be a problem, the AG said.

Maluleke said the only blemish in her report was 31 outstanding audits. Among late submissions were Alexkor and the Passenger Rail Agency of SA.

“When there is lateness on a repeated basis, it starts to compromise transparency and accountability.”

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