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NEWS
Henley offers scholarships to investigative journalists
Henley offers scholarships to investigative journalists

5 trends that can keep the South African MBA relevant
5 trends that can keep the South African MBA relevant

We need to realign government, business and civil society
We need to realign government, business and civil society

Life as a full-time MBA student
Life as a full-time MBA student

Brexit delay provides breathing space for SA
Brexit delay provides breathing space for SA

MSA joins the ADvTECH family
MSA joins the ADvTECH family

SA plunges to 117 out of 149 in gender wage equality
SA plunges to 117 out of 149 in gender wage equality

UCT’s Executive MBA recognised for its distinctive approach
UCT’s Executive MBA recognised for its distinctive approach

GIBS Executive MBA programme debuts in top 50
GIBS Executive MBA programme debuts in top 50

Can Africa fill the glass?
Can Africa fill the glass?

YALI AFRICA launch at Unisa
YALI AFRICA launch at Unisa

The fake resurrection of South Africa
The fake resurrection of South Africa

Don't panic: The digital revolution isn’t that unusual
Don't panic: The digital revolution isn’t that unusual

Why Agile works
Why Agile works

How firms can avoid the mediocrity trap
How firms can avoid the mediocrity trap

How a 100000-strong company is relearning how to innovate
How a 100000-strong company is relearning how to innovate

The changing shape of the MBA
The changing shape of the MBA

Adding climate change to curriculum is a top priority
Adding climate change to curriculum is a top priority

The MBA should turn you into a business disruptor
The MBA should turn you into a business disruptor

Innovation in SA organisations driven by C-level support
Innovation in SA organisations driven by C-level support

UNISA SBL a torch-bearer of training for military veterans
UNISA SBL a torch-bearer of training for military veterans

Scaling up the MBA for relevance in the 4IR
Scaling up the MBA for relevance in the 4IR

Moody's: SA not out of the woods yet
Moody's: SA not out of the woods yet

GIBS manufacturing-focused MBA kicks off in Durban
GIBS manufacturing-focused MBA kicks off in Durban

Henley’s Makhoalibe selected for sought-after programme
Henley’s Makhoalibe selected for sought-after programme

Personal potential, a source of power
Personal potential, a source of power

Reach your business leadership potential with a MBA from WBS
Reach your business leadership potential with a MBA from WBS

MPC: SA needs a period of stable interest rates
MPC: SA needs a period of stable interest rates

SA’s energy problems just the tip of the iceberg
SA’s energy problems just the tip of the iceberg

What's really driving disruption?
What's really driving disruption?

Why has there been such a failure of leadership?
Why has there been such a failure of leadership?

Steinhoff: Exactly where does responsibility stop and start?
Steinhoff: Exactly where does responsibility stop and start?

The cure for the loneliness of command
The cure for the loneliness of command

How to survive in the age of digital transformation
How to survive in the age of digital transformation

New MBA timetable starts in 2016
New MBA timetable starts in 2016

EVENTS
Henley MBA & PGDIP Preview Day
Henley MBA & PGDIP Preview Day
29 May 2019,
Pretoria

UCT GSB MBA Information Sessions
UCT GSB MBA Information Sessions
15 October 2019,
Johannesburg



04 DECEMBER 2018
New law will give the Auditor-General the "right to act"

The Public Audit Amendment Bill will change the DNA of the office of the Auditor General (AG) and will go a long way in curbing poor financial management in government departments and state owned entities (SOEs), the AG’s office has said.

Last month President Cyril Ramaphosa signed the eagerly anticipated bill into law giving the AG more powers. This at a time when government departments and parastatals continue to record dismal audit outcomes with the state losing billions of rand yearly to irregular, fruitless and wasteful expenditure. Poor financial management in government departments and SOEs is seen as a threat to service delivery and the broader economy.

Speaking at a panel discussion on the audit outcomes of government departments and SOEs hosted by the University of Cape Town Graduate School of Business (UCT GSB) recently, Jan van Schalkwyk, a corporate executive at the AG’s office said the new law will augment the AG’s mandate in three key ways, giving it new powers to:

  1. Refer material irregularities to relevant public bodies (such as the Special Investigating Unit and the Public Protector) for further investigation;
  2. Take binding remedial action for failure to implement AGSA’s recommendations; and
  3. Issue certificates of debt for failure to implement AGSA’s recommendations if financial loss was involved.

It is anticipated that the new law will be in force by the time the next audit cycle is completed in 2019, he said.

“It [the new law] will change the DNA of our organisation,” said van Schalkwyk. “We are not changing audits or becoming investigators… We are not trying to infringe on the roles of accounting officers, but rather reserving the right to act should they fail to do their jobs. If we never use this piece of legislation that would be wonderful, but we believe that we should have the option of insisting on accountability, should others fail to be appropriately accountable in their work.”

Auditor General Kimi Makwetu released the general report of the audit results of national and provincial departments and their entities for the 2017-18 financial year and cautioned that for a country whose economy is in technical recession, “government cannot afford to lose money because of poor decision-making, neglect or inefficiencies” such as in the failure to follow up on audit recommendations or the high fruitless and wasteful expenditure, which is effectively money lost.”

The 2017-18 report shows that the audit outcomes have regressed significantly. At national level, the number of clean audits decreased to just 23% of the total audited population compared to 30% in the previous financial year.

Fruitless and wasteful expenditure increased over 200% from the previous year to R2,5bn. Irregular expenditure was a staggering R51bn, an amount which excludes the SOEs that are not audited by the AG, whose total irregular expenditure totalled R28,4bn-notwithstanding that such expenditure does not always necessarily imply that there was corruption involved.

“It is worrisome that we have a 200% increase in fruitless and wasteful expenditure,” said van Schalkwyk. The AG could not audit procurement worth around R6,4bn due to missing or incomplete information, he added.

Andrew Siddle, an adjunct associate professor at the UCT College of Accounting and a research associate at the UCT GSB, said the adoption of the Public Audit Amendment Bill was a tacit admission by authorities that those charged with oversight had dismally failed in their duties.

“Why are we in such a parlous state? We need to have effective accountability mechanisms which are properly implemented. We have brilliant systems but we seem to be unable to implement. We also need political will,” said Siddle.

He added that universities should also play a much more prominent role in addressing the dire financial management of government departments and SOEs.

“At universities it’s all about the private sector. Universities should change their approach, and also focus on [training students] to improve financial management in the public sector,” said Siddle, who lectures postgraduate students on public sector structures and functions, policy, and legislation, and public sector financial management.

Derek Powell, an associate professor in law and head of the Applied Constitutional Studies Laboratory at the Dullah Omar Institute at the University of the Western Cape, said that at provincial level there should be much stronger emphasis on improving the quality of management and administration, especially the financial health of the education and health departments as they have the biggest budgets allocated through division of revenue. He showed how modelling very large datasets on audit outcomes and performance could uncover useful patterns that could be used in oversight and early warning. “Disclaimers, the worst possible audit outcome, should be seen as an early warning that a department is in serious trouble,” said Powell.

Studies, he said, showed that at local government level when a municipality is slapped with a disclaimer twice in a five-year period, it becomes difficult to get out of the negative cycle for at least 10 years.

Concluding the discussion, UCT GSB Associate Professor Mlenga Jere, who convened the event said that the Public Audit Amendment Bill is a step in the right direction and deserves to be supported. “But, the scope of the challenges ahead mean a multi-pronged approach will be necessary,” he said.

Source:

University of Cape Town Graduate School of Business, Executive Education
Executive Education at the UCT Graduate School of Business is dedicated to growing the leadership backbone in organisations and individuals and inspiring a new generation of leaders to engage with the challenges of the African continent in a hyper-connected and globalised world. Visit our website.

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