Amendments to Public Audit Act turn AG from 'chihuahua to pitbull'

Cape Town – "Watershed" amendments to the Public Audit Act will empower the Auditor-General (AG) to recover monies lost through financial mismanagement and corruption, and to refer fraud and irregularities to relevant agencies for investigation, the National Assembly has heard.

The Public Audit Amendment Bill was raised before the National Assembly for consideration on Tuesday. There were no objections and it will go to the National Council of Provinces (NCOP) next for concurrence.

Chair of the Standing Committee on the Auditor General, Vincent Smith, reiterated the importance of the bill, which he raised last week when the AG released audit outcomes for local government.

• READ: AG given more teeth to refer audits for law enforcement

"Every cent of taxpayer money must be put to best use – for the benefit of citizens – not for a corrupted few in the public and private sector," Smith said.

Fruitless and wasteful expenditure and irregular expenditure had increased astronomically, he stressed. The previous week, the AG revealed that irregular expenditure by local government ballooned 75% to R28.4bn and fruitless and wasteful expenditure increased 71% to R1.5bn.

"Year after year, the AG reports astronomical amounts of irregular, fruitless and wasteful expenditure.

"The reasons are procurement without competitive bidding, non-compliance with procurement procedures or non-compliance with legislation related to contract management," he said. "These are basics which cannot be difficult for officials to comply with."

Smith highlighted the AG’s frustration. As far back as 2013 the AG's "constant and insistent" advice had not been heeded by those charged with governance and oversight. Smith said there was legislation in place such as the Public Finance Management Act (PFMA) and the Municipal Finance Management Act (MFMA), but the situation with "prudent financial management" still left much to be desired.

Powers

The AG will now be able to make recommendations with remedial action that is binding - much like the case with the Public Protector - to recover losses incurred.

"We believe continued mismanagement of taxpayer money can be stopped and will be stopped when harsh consequence management is meted out," said Smith.

The AG itself can facilitate or initiate forensic or other investigations that must be conducted by relevant agencies such as the Hawks, the police, the Special Investigating Unit and the Public Protector, among others. These agencies will then be required to update Parliament and the AG on the progress of investigations.

The AG will also be able to hold officers to account for irregular expenditure. These may be the director generals of departments, as well as the management of boards, who are the primary custodians of public money.

The AG can issue a debt certificate to accounting officers which are not compliant with the PFMA or the MFMA. The relevant director general, board or municipal manager will be personally liable to repay funds to the state for poor financial management.

The AG will also report to the National Assembly Speaker on the instances of debt certificates issued, so that relevant portfolio committees can demand accountability on the progress of repayment.

All individuals or entities issued a certificate of debt will have the opportunity to make representations as to why the debt certificate must be withdrawn, and can seek a review from the courts.

Last week Smith stressed that a review of a certificate does not mean the AG is stepping down on its decision to issue a certificate. "The final arbiter is the courts. The review does not mean the AG will be bullied to change his position," he said.

Chihuahua to pitbull

The bill will aid in transforming the AG from a chihuahua into a pitbull, COPE MP Deidre Carter said during the debate.

The bill was also supported by other political parties. Narend Singh, IFP MP, called it a "significant move" with "watershed amendments". Singh said SA had good legislation and consequence management but that this was not implemented - the biggest fault of government.

Nazier Paulsen, EFF MP, said the bill was long overdue, as the AG has issued warnings to government departments and municipalities for years with no accountability being implemented. He added that the Public Audit Amendment Bill was only the beginning, and that those stealing taxpayer money should be held to account. "We should not have thieves that steal our money and also public representatives that protect them," said Paulsen. He called for the AG to have more capacity to conduct audits for government.

FF plus MP Wouter Wessels concurred that the bill was a step in the right direction and called for "political will" to implement and adhere to legislation.

DA MP Alan Mcloughlin claimed the bill would not have been necessary if the ANC-led government had taken action against those serving their self-interest. 

ANC MP Zephroma Dlamini-Dubazana responded, saying there were institutions to carry out action against those implicated and that investigations should be allowed to run their course.

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