Mitigating irregular expenditure and enhancing corrective measures at the Department of Water and Sanitation

Abstract

Background: In the fourth-year period (2018–2019 to 2021–2022) of the Public Finance Management Act (PFMA) audit, the Auditor-General South Africa (AGSA) reported that the Department of Water and Sanitation (DWS) had incurred approximately R1.7 billion in irregular expenditure; patterns of such expenditure were identified. The AGSA indicated this as a clear non-compliance with the Supply Chain Management (SCM) legislation. Aim: This article evaluated the legislative frameworks to inhibit irregular expenditure and proposed a framework for its management. Setting: The study was conducted in the DWS in South Africa. Methods: The researchers referred to available documentation and adopted a qualitative research approach. Structured interviews were conducted with 10 out of 26 possible participants from the organisational structure of National Treasury, DWS SCM, Financial Management, Internal Audit, Risk Management, and Internal Controls with more than 10 years’ experience in SCM processes, PFMA (1999), Treasury Regulations (2005), Preferential Procurement Policy Framework Act (2000), Public Service Commission (1997), and the manifestation of public decision-making. Results: The ineffectiveness of implemented measures and a lack of consequence to hold officials responsible for transgressions were the primary causes of irregular expenditure. Conclusion: Based on these findings, recommendations aimed to strengthen the procurement process. This includes development and implementation of a standard operating procedure (SOP) manual, and implementing consequences for transgressions. A framework will help manage irregular expenditure and to identify corrective measures. Although the research was limited to the DWS, the results and recommendations are transferable to other departments with comparable challenges. Contribution: The study could help the DWS and other government departments or spheres with similar challenges in managing and reducing irregular expenditure.

Keywords

• irregular expenditure
• public finance management act (pfma)
• auditor–general south africa (agsa)
• supply chain management (scm)
• legislative frameworks