AG given more teeth to refer audits for law enforcement

Cape Town – The Standing Committee on the Auditor General has approved amendments to the Public Audit Act, giving the Auditor General of South Africa more power to effect consequence management.

This is according to chairperson of the committee, Vincent Smith, who was speaking at the AG’s briefing on the audit outcomes for municipalities in Parliament on Wednesday.

"Just yesterday, the committee approved amendments to the Auditor General Act," said Smith.

The amendments will give the AG power to refer matters that must be investigated further to relevant agencies, including the Hawks, the Public Protector and the South African Police Service, based on prima facie evidence picked up in audits, Smith explained.

The AG will also have power to issue a certificate of debt against an accounting authority, who could be a director general of a department. The accounting authority would have to pay back the irregular spend they could not prevent or give reasons why they could not pay. "These are powers [the AG] never had. It will have an impact on real and immediate consequence management," Smith remarked.

• READ: Irregular spend by SA municipalities up 75% to R28.4bn as audit outcomes regress

The amendments also make provisions for the AG and Treasury to be able to ensure that audit fees are paid by municipalities, so that the AG can continue doing its business, as it does not get allocations from government to do so.

"The AG does not get a cut from the revenue fund. His existence relies on audit fees only. We can’t have the AG not able to perform because counsel is not paying," he said.

Smith said the Bill was expected to be presented to the house by Thursday, and hopefully would be tabled before Parliament’s recess. Thereafter it would go to the President to be signed, and the AG would have powers to act.

Debt certificate

Makwetu explained the process of issuing a debt certificate. Currently, once audit opinions are signed off, those charged with oversight are persuaded to consider the AG’s recommendations to improve audit outcomes for the following year. Sometimes auditees follow the recommendations, sometimes they start and stop, or sometimes they just don’t. Makwetu described it as a "mixed bag".

However, given additional powers to refer transactions to agencies for investigations, the AG will be able to track down who may be responsible for irregular spend. If an agency can track where and by whom the monies were lost, then the AG can issue a debt certificate to recover the funds from whoever was responsible.

This mechanism provides for "sufficient transparency". "An audit does not point a finger to an individual, it points a finger at a breakdown of control. The next step, in light of the breakdown of controls here, is to find those behind the breakdowns. The certificate is about trying to get to that."

• READ: Auditor-General soon to get greater powers to fight wasteful spend

There is an opportunity to have a debt certificate reviewed, Makwetu said. Based on a collection of their own evidence, the parties can come forward to challenge the certificate.

However, Smith added, the review does not mean that the AG is "stepping down".

Musical chairs

"The final arbiter is the courts. The review does not mean the AG will be bullied to change his position," said Smith. The review just allows the implicated party to give their point and if they and the AG still do not "see eye to eye", the final arbiter is the courts, he emphasised.

The certificate will be issued to the person who was responsible.

"As long as you are not dead, they must find you. The reason we doing that is because history has taught us – as soon as a DG or anyone else who is under investigation – they resign and pop up somewhere else. The excuse is they no longer work in a department.

"We say now as long as you are still breathing, you must be held accountable. The musical chairs happening for the past 24 years must come to an end."

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