Africa-Press – South-Africa. The South African government loses around R86 billion a year due to material irregularities in its financial statements, with provincial governments losing around R2.1 billion and local governments losing R3.9 billion.
The International Monetary Fund (IMF) revealed this in its Fiscal Transparency Evaluation Report for South Africa.
At the request of the National Treasury of South Africa, a team from the IMF’s Fiscal Affairs Department (FAD) undertook a Fiscal Transparency Evaluation (FTE) from July 11 to 25, 2023.
The IMF had extensive meetings with senior staff of the National Treasury, including deputy director generals Edgar Sishi and Duncan Pieterse,
Its report said that despite the serious governance issues relating to state capture and widespread corruption, the National Treasury has consistently been transparent in its reporting and maintains rigorous oversight of public finances.
However, the government has failed to address the consistent material irregularities in their financial reporting.
The IMF team analysed audit reports from the Auditor-General to understand the size of the losses due to material irregularities and the major drivers of these irregularities.
A material irregularity occurs when a person does not comply with or contravenes legislation, engages in fraud or theft, or violates their entrusted duty.
This action can result in a significant financial loss, the misuse or loss of a significant public resource or substantial harm to a public sector institution or the general public.
In its integrated annual reports, the auditor-general outlines the number of material irregularities per sphere of government and the estimated financial loss from them.
For the national government, 60 material irregularities were identified in the latest report, with an estimated loss of R86 billion.
For provincial governments, 82 irregularities were identified with a combined value of R2.1 billion, while at the local government level, 185 were pointed out with a value of R3.9 billion.
These irregularities range from procurement, resource management, and revenue management to fraud and compliance issues.
Material irregularities are a major cause behind repeated qualified (unclean) audits throughout government entities.
While unqualified (clean) audit reports improved slightly over time, they only represent 24% of the opinions of all audit reports.
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