The Department of Defence has come under scathing criticism from Auditor-General Tsakani Maluleke, who unveiled significant flaws in its financial management for the 2023/24 fiscal year.
The department has overshot its budget by a staggering R3.3 billion, leading to unauthorised expenditure.
In her report tabled in Parliament on Monday, Maluleke attributed the department’s qualified audit opinion to extensive internal control deficiencies.
She pointed the finger at the leadership’s failure to exercise adequate oversight over financial and performance reporting, as well as compliance with laws and regulations.
“Consequence management was not implemented to foster a culture of compliance with policies and legislation, and to deter further irregularities.
“The lack of consequence management due to limitations on the accounting officer’s powers to discipline military officials also caused significant delays in addressing material irregularities,” she said.
Maluleke found that the department did not fully record irregular expenditure as required by the Public Finance Management Act (PFMA) due to inadequate systems.
She was unable to determine the full extent of irregular expenditure, recorded at R338.5 million for 2023-24, down from R921m the previous year.
“The majority of the irregular expenditure disclosed in the financial statements was caused by non-compliance with procurement legislation.”
The financial statements revealed R51m in fruitless and wasteful expenditure, alongside the R3.374bn in unauthorised expenditure.
Acting Secretary for Defence Thobekile Gamede said the unauthorised expenditure incurred was due to the underfunding of the compensation of employees allocation and the departmental liability expenditure relating to the implementation of the exit mechanism strategy.
“The continuous underfunding of the compensation of employees, coupled with the increased tasking or deployments to the SANDF (SA National Defence Force), as instructed, resulted in the increased utilisation of reserve forces, which in turn contributed to the increased degree of unauthorised expenditure incurred by the Department of Defence for financial year 2023/24,” Gamede said.
She also said among the challenges experienced in the year under review was the inadequate numbers of trained personnel in some procurement entities.
“This is being addressed through the training intervention,” Gamede said.
In her report, Maluleke indicated uncertainty over sensitive project expenditures totalling R14.18bn and investments in special defence activities amounting to R179.16m.
The A-G also identified misstatements in basic salaries, housing allowances and deprivation allowances of the employees.
“I was unable to determine the full extent of the overstatement of compensation of employees stated at R35.30bn in note 4 and the related receivables balance stated at R1.13bn in note 11, as it was impractical to do so,” she said.
EFF MP Carl Niehaus expressed dismay at the findings, saying the situation at the SANDF was an ongoing emergency.
“The trends that were already disturbing in SANDF seem to be even worse and we are faced with an emergency that the SANDF is collapsing. It does not come as a surprise as we face a serious problem with SANDF,” Niehaus said.
Niehaus said while part of the SANDF collapse was due to lack of resources, the wrong application and use of the limited resources was a glaring issue.
“We don’t seem to have a defence that is adequately taking care of military hardware in order to defend our country,” Niehaus said.
DA MP Chris Hattingh said the latest report of the A-G was a very serious reminder of the state of the SANDF.
“There is no improvement in any facet in the financial management,” Hattingh said.
He also said the report highlighted a worrying concern about repeat findings in various areas such as the lack of consequence management.
“A lot of the things that are happening in the defence force as you can see in the A-G report are a serious indication that confirms that the defence force has collapsed.”
Cape Times