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In this video, we summarize what the regulations states regarding the identification as well as the treatment of Unauthorized, Irregular, Fruitless & Wasteful Expenditure.
Municipal Finance Management Act, (MFMA) and the Public Finance Management Act (PFMA) requires that each public official, who is responsible for financial management within the public sector must take all reasonable steps to ensure that any irregular expenditure, fruitless, and wasteful expenditure as well as other losses are prevented.
All government purchases, and all government spending, must comply with policies and legislation, and are correctly approved.
If this is not done, the official responsible for any Unauthorised, Irregular And Fruitless & Wasteful Expenditure may be held responsible and accountable.
It is therefore important that any Unauthorised, Irregular And Fruitless & Wasteful Expenditure should be investigated.
This will ensure that consequences such as disciplinary action and criminal sanction may be explored.
Any government official who becomes aware of or suspects the occurrence of Unauthorised, irregular or fruitless and wasteful expenditure should immediately report in writing, the particulars of such expenditure which are within his or her knowledge, to the Accounting Officer or his or her delegate.
The Accounting Officer or his/her delegate should record the details of the expenditure in the relevant internal register. Where applicable, the Accounting Officer or the Executive Authority must also assign someone to investigate the matter without delay to determine the validity of such alleged expenditure, and whether such expenditure can be recovered from the liable official or political office bearer, and who must be held accountable.
After investigation, the Accounting Officer must then report such expenditure to the Executive Authority (such as the Executive Mayor, the Council and the MEC for Local Government in the province in the case of the municipality. In case of the Provincial Government, such expenditure must be reported to the MEC.
In case of the National departments, the Accounting Officer is required to report to the Minister. While in case of state owned entities, alleged irregular, fruitless and wasteful, or unauthorised expenditure, must be reported to the board of directors. As indicated, the reporting must indicate details of the expenditure; as well as any steps that have been taken to recover the expenditure; and to prevent any re-occurrence.
Where an irregular expenditure has been declared as irrecoverable, such expenditure may be written-off by the appropriate Executive Authority. Where the investigation reveals that the political office-bearer or official responsible for the irregular expenditure did not act in good faith, then the Executive Authority or the Accounting Officer must consider instituting disciplinary action or criminal charges against such person.In some instances, the accounting officer may ratify any minor breaches of the procurement processes, provided that, the power and delegation to ratify is provided for, in the policies of the organisation.
The law also allows for the National Treasury to condone non-compliance of an irregular expenditure.
The Irregular, fruitless and wasteful, or unauthorised expenditure, must then be reported to the Auditor-General in the disclosed in the financial statements of the government department. Such expenditure must also disclosed in the financial statements of the government department.
The Accounting Officer must record and report any deviations in terms of regulations. And then disclose these deviations in the annual financial statements as well as any reasons for such deviations.
The Annual Financial Statements must also disclose particulars of any criminal sanctions or disciplinary steps undertaken as a result of such unauthorised, irregular or fruitless & wasteful expenditures.
0:00 Introduction
0:51 Responsibility of Public Officials
1:48 Definition of Unauthorized Expenditure
2:11 Definition of Irregular Expenditure
2:24 Definition of Fruitless an Wasteful Expenditure
2:35 Treatment of Unauthorized, Irregular, Fruitless & Wasteful Expenditure.
3:16 Process For Handling Unauthorized, Irregular, Fruitless & Wasteful Expenditure.
7:09 Summary of Handling Unauthorized, Irregular, Fruitless & Wasteful Expenditure.
Disclaimer:
This publication and the information included in it are not intended to serve as a substitute for consultation with a professional. Specific issues, concerns and conditions always require the advice of an appropriate professional advisor. The use of the contained information is at the user's own discretion.
