Bloemfontein: The Free State Treasury Department has responded to the Auditor General’s Audit outcomes for the financial year 2016/2017.
The accumulated irregular expenditure for the Free State provincial departments as at 31/03/2017 was R9,2 billion. The breakdown of this figure is as follows:
(a) R6 billion or 65% relates to 2014/15 and prior financial years
(b) R1.5 billion or 16,5% relates to 2015/16 financial year
©R1,7 billion or 18,5 % relates to the 2016/17 financial year
To ensure that the Province reduce its cumulative Irregular Expenditure that dates as far back as 2007, The Free State Provincial Treasury initiated the process of investigating irregular expenditure incurred in previous years. The initiative started with the following Departments, Education, Health and Human Settlements. The process involved the verification of 20 000 payment documents for the period 2010/11 -2015/16 financial years for the Department of Health as well as the investigations of 7474 irregular expenditure cases for the three departments. The exercise followed is quite intense and requires time and effort to clear old Irregular expenditure.
The investigations were completed and the results are:
(a) 3324 cases of irregular expenditure to the value of R539 million were identified in the department of Health and included in the accumulated balance at 31/03/2017
(b) 1217 cases to the value of R480 million included in the balance of R9.2 were found not be irregular expenditure.
© For 6257 cases to the value of R2,8 billion no losses were incurred and the relevant departments are in process to execute relevant requirements to ensure that the accumulative balance can be decrease during 2017/18 financial year
(d) A potential loss of R5 million is identified that need further investigation to determine liability and recoverability.
To enhance the existing internal controls the root causes for the transgressions were determined during the investigations and remedial controls developed to prevent future irregular expenditure. The three Departments will issue these control measures as instructions during November 2017.
The Intervention of the Provincial Treasury is assisting a great deal. The Department of Education’s unauthorized expenditure is not as a result of Financial Misconduct but it’s mainly as a result of the budget cuts since 2009 that left the Province with a negative impact in excess of R 2,5 billion. The unauthorised expenditure relates to Compensation of employees which was not fully budgeted for. Every time the Province experiences budget cuts, such cuts mostly affects Education and Health negatively.
“If we are to look at the Audit Outcomes trends of the Free State Provincial Departments, it is evident that the Province improvement was steady, the picture however changed during the 2015/16 Financial year and we are confident that the 2017/18 Audits will improve drastically.” said the Free State Treasury Department.