Debate on Public Audit Excess Fee Bill by Cde Ndabakayise Gcwabaza in the National Assembly

19 March 2019

Hon.Speaker/House Chairperson

The Office of the Auditor-General of South Africa is mandated by the Constitution of the Republic to audit National and Provincial Departments and also municipalities for every financial year.

Ten percent of the Auditor-General’s clients fall under the financially distressed municipalities and small auditees such as museums, trusts and boards

Section 23(6) of the Public Audit Act provides that, if the National Treasury is of the view that the auditee is financially distressed then the excess audit fees must be paid from the National Treasury’s budget vote, in an instance where the audit fee exceeds one percent of the current and capital expenditure of the auditee.

It has been reported that, from the 2014/15 Financial year to the current one, the excess audit fees to be drawn from the National Treasury’s vote have been a lot higher than the amount appropriated to these financially distressed municipalities and small state institutions and thus there have been shortfalls over the past five financial years.

It has also been observed that the total amount of excess audit fees has been unpredictable and thus made it difficult to provide accurate funding for the purpose of meeting the payable audit fees to the office of the AG on behalf of the distressed municipalities and other small institutions.

The ANC proposes that:

  1. the excess audit fees be payable to the Office of the Auditor General annually and thus avoid the accumulation over a long period.
  2. municipalities which have a potentially large revenue base be capacitated urgently to collect revenue from the consumers of municipal services, so that they are able to pay their audit fees
  3. where municipalities have a poor revenue base, sufficient funds be made available every financial year possibly in the form of a specific grant.
  4. similar funds be appreciated to the small institutions for the same

The delays in the payment of excess audit fees threatens the financial stability of the office of the Auditor-General. In addition, it makes difficult for the office of the AGSA to carry out its Constitutional mandate, and the fact that it has to depend on payment of the excess audit fee from the National Revenue Fund, may bring into question AGSA’s independence.

The ANC will continue to protect the constitutional mandate and the independence of the office of the Auditor General

The ANC, therefore, supports the Public Audit Excess Fee Bill and recommends that the House passes the Bill.

We wish to remind our people that they have a date with the ANC on 8 May. On that date Vote ANC!