ENHANCING PUBLIC FUND ADMINISTRATION EXPLORING THE ROLE OF MINISTERS IN AUDIT PERFORMANCE

LESEDI SENAMELE MATLALA (Executive Director at Go-Getters Brand Consultancy)

Effective public finance administration is crucial for a country’s sustainable development and well-being. In South Africa, the government’s reputation has been tainted by reports of corruption and mismanagement, both locally and internationally. Examining the roles of ministers and their influence on audit performance is key to addressing these challenges.

This article explores the specific mechanisms through which the leadership of South African ministers impacts the financial performance of their departments, as revealed by audit findings.

By focusing on the South African context, this article aims to provide valuable insights into the leadership required to improve the responsible management of public resources.

Auditing in South Africa

It is necessary to evaluate the auditing system in South Africa in order to comprehend the impact of ministers on audit performance. The Auditor-General of South Africa (AGSA) and the Public Service Commission (PSC) perform critical responsibilities in examining government institutions' economic management practises. AGSA is a constitutionally autonomous entity responsible with auditing national and provincial governments, municipalities, and public entities.

They analyse public fund management by objectively evaluating financial statements, compliance with rules and regulations, and performance measures. AGSA conducts performance audits in addition to financial audits, with the goal of analysing the economy, efficiency, and effectiveness of government programmes and projects. AGSA finds areas for improvement and makes recommendations to improve the stewardship of public funds through these audits.

The PSC is another crucial oversight body in South Africa. It is responsible for monitoring and evaluating the ethical conduct and performance of the public service. The PSC promotes good governance, ethical behaviour and accountability within government departments. By monitoring adherence to ethical standards, the PSC plays a crucial role in ensuring that ministers and public servants uphold the principles of transparency and accountability in managing public funds.

The collaboration between AGSA and the PSC is crucial for maintaining integrity and accountability in the management of public funds. AGSA's financial and performance audits provide valuable insights into the financial practices of government entities, while the PSC's monitoring and evaluation efforts help identify ethical lapses and promote good governance.

Together, they contribute to a comprehensive assessment of the role of ministers in audit performance and provide a foundation for improving the stewardship of public funds in South Africa.

Role of Ministers in Audit Performance

The role of ministers in audit performance is multifaceted and can significantly influence the economic management practices of their respective departments. As key decisionmakers and leaders, ministers can shape policies, allocate resources and foster a culture of accountability. By understanding their role in audit performance, the public can gain valuable insights into how ministers impact the responsible management of public funds in South Africa.

Policy and Decision-Making: Ministers hold significant authority over policy formulation and decision-making within their departments. Their choices and strategic direction greatly influence financial performance. For instance, a minister responsible for infrastructure development may prioritise projects aligned with their political agenda rather than those with the highest economic feasibility. This misalignment can lead to wasteful expenditure and negatively impact audit outcomes.

To illustrate this, in the AGSA Annual Report 2016/17, it was revealed that the Department of Transport, under the leadership of the minister in office, allocated funds to high-profile infrastructure projects without conducting

proper feasibility studies or costbenefit analyses. As a result, several projects faced delays, cost overruns, and quality issues, leading to adverse audit findings and financial losses.

Resource Allocation and Budget Oversight: Ministers can allocate resources and oversee departmental budgets. Their decisions regarding the allocation of funds can significantly impact audit performance. For example, suppose a minister diverts resources from essential service delivery areas to projects with limited public benefit. In that case, it may result in audit findings highlighting inadequate resource allocation and inefficient use of public funds.

A case in point is the AGSA Annual Report 2018/19, which exposed irregularities in the Department of Education. In an attempt to appease certain interest groups, the minister diverted a massive portion of the department's budget to non-essential programmes, neglecting critical educational needs. This misallocation of resources contributed to bad educational outcomes and negative audit findings.

Leadership and Accountability: Ministers play a crucial role in fostering a culture of accountability within their departments. Their commitment to upholding ethical standards, transparency, and accountability sets the tone for the entire organisation. If ministers fail to prioritise these values, it can lead to a lack of financial discipline, irregularities and poor audit outcomes.

Conversely, ministers promoting accountability can drive positive change and improve audit performance.

An example can be found in the PSC Annual Report 2014/15, which highlighted the importance of ethical leadership in the fight against corruption. The report emphasised that ministers who demonstrate ethical behaviour and hold their staff accountable for financial misconduct significantly improve audit outcomes and strengthen public trust.

Furthermore, the AGSA Annual Report 2020/21 underscored the significance of leadership in addressing the root causes

of poor audit outcomes. It emphasised that ministers who lead by example and instil a culture of transparency and accountability throughout their departments are more likely to achieve positive audit results.

In Conclusion:

The influence that ministers wield through their policy and decision-making, resource allocation, and fostering a culture of accountability significantly impacts audit outcomes. Realworld examples from the AuditorGeneral of South Africa (AGSA) and Public Service Commission (PSC) reports demonstrate the tangible consequences of both practical and ineffective ministerial leadership.

To improve the stewardship of public funds, ministers must prioritise ethical practices, transparent economic management, and accountability. By setting policies aligned with the best interests of the general and sound economic principles, ministers can ensure the effective utilisation of resources.

By allocating funds strategically and responsibly, they can maximize the impact of public expenditure on essential services and programs.

By fostering a culture of accountability and transparency, ministers can instil confidence in managing public funds and restore public trust.

By understanding the critical role of ministers in audit performance, South Africa can develop strategies to enhance financial discipline, combat corruption and promote responsible economic management. This includes providing ministers with training and support in economic management practices, strengthening oversight mechanisms, and promoting a culture of transparency and accountability across all levels of government. South Africa can build a foundation for effective financial stewardship and good governance by holding ministers accountable for their actions and ensuring adherence to ethical standards.

The role of ministers in enhancing audit performance cannot be understated. By embracing their responsibilities and taking decisive actions, ministers have the power to transform the management of public funds in South Africa. Through their leadership, ethical practices, and commitment to accountability, ministers can pave the way for a future where public resources are efficiently utilised, corruption is minimized, and public trust is restored in the stewardship of public funds. 