Parliament, Friday, 3 November 2023 – The Standing Committee on Auditor-General has called the Material Irregularities (MI) process undertaken by the Auditor-General of South Africa a good instrument that will improve the culture of accountability and financial stability at public entities.
The committee was today briefed by the Auditor-General, Ms Tsakani Maluleke, on the MI process in local government for the 2021/22 financial year. The report covered 170 municipalities and found 268 MIs while the MIs of 257 municipalities must still be scrutinised.
The committee commends the Office of the AG for gradually using this instrument on more auditees. When the AG started using this instrument in the 2018/2019 financial year, the MI process only addressed nine auditees; it has now addressed 170 auditees. The 268 MIs of non-compliance and suspected fraud is a huge concern to the committee, as they have resulted in an estimated R5.9 billion material financial loss.
Measures can be taken for some of this amount to be recovered. For example, R182.75 million has been recovered by auditees, R18.85 million in financial losses have been prevented and R310.16 million of financial loss is in the process of being recovered by auditees. However, a complete culture shift is needed in local government to curb financial mismanagement and improve accountability.
The committee welcomes the exposure the MI process is giving to the lack of internal controls and the consequences of this lack in municipalities. Local government should use the MI process as a guiding tool to establish the necessary controls for financial stability. The committee hopes that those who are authorised to account for public funds in local government will act speedily to resolve the material irregularities identified by the AG.
The committee also welcomed the AG’s 2022/23 integrated annual report and resolved to engage with National Treasury on the nature of the work done by the Office of the AG in saving money for the fiscus and how that work can be compensated.
ISSUED BY THE PARLIAMENTARY COMMUNICATION SERVICES ON BEHALF OF THE CHAIRPERSON OF THE STANDING COMMITTEE ON THE AUDITOR-GENERAL, MR SAKHUMZI SOMYO.
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