Unauthorised Expenditure

1
Unauthorised Expenditure

• Presentation by
• National Treasury, SA

2
Outline of Discussion

• Definition of unauthorised expenditure
• Principle for dealing with unauthorised
  expenditure
• Procedure for the treatment of unauthorised
  expenditure
• Criteria for approval of unauthorised expenditure
• Criteria for non approval of unauthorised
  expenditure
• Additional funding / against funds allocated for
  future years
• Cluster discussion
• Conclusion

3
Definition of unauthorised expenditure

• Pre 2000/01 in terms of the Exchequer Act 1996
• Overspending of a vote or a main division within
  a vote
• Expenditure that was not made in accordance with
  the purpose of a vote or, in the case of a main
  division, not in accordance with the purpose of
  the main division

4
Principle for dealing with unauthorised
expenditure

• Unauthorised expenditure must be authorised by
  the relevant legislature (before it can become a
  charge against a Revenue Fund) either by
  providing additional funds or as a charge against
  funds allocated for the subsequent financial
  years.
• Unauthorised expenditure should be treated as a
  current asset in the statement of financial
  position until such expenditure is approved by
  the relevant authority, recovered or written off
  as irrecoverable

5
PROCEDURE FOR THE TREATMENT OF UNAUTHORISED
EXPENDITURE
Unauthorised expenditure discovered by the
accounting officer
Accounting officer must immediately report in
writing in terms of sec 38(1)(g) to National
Treasury and in terms of Treasury Regulation (TR)
9.1.2 in the monthly report as required in terms
of sec (40)(4)(b)
Accounting officer must in terms of sec 38(1)(h)
take effective and appropriate disciplinary steps
(in determining steps, TR 9.1.3 must be taken
into account)
Unauthorised expenditure must be reported in the
annual report (as a note to the financial
statements) in terms of TR 9.1.5

• Division Budget Office in consultation with the
  Division Public Finance submit a report to
  Parliament (SCOPA) on unauthorised expenditure as
  reported in departmental annual reports and
  advise on
• approval/non-approval
• additional funds/charge against funds allocated
  for future financial years
• (sec 34)

6
PROCEDURE FOR THE TREATMENT OF UNAUTHORISED
EXPENDITURE

• Division Budget Office in consultation with the
  Division Public Finance submit a report to
  Parliament (SCOPA) on unauthorised expenditure as
  reported in departmental annual reports and
  advise on
• approval/non-approval
• additional funds/charge against funds allocated
  for future financial years
• (sec 34)

either
or
Parliament does not approve unauthorised
expenditure in terms of sec 34

• SCOPA recommends to Parliament to approve
  unauthorised expenditure in terms of sec 34(1)
  (2)
• Additional funds
• Charge against future years

Unauthorised expenditure must be recovered from
the person responsible in terms of TR 12.7
Prepare legislation for tabling in Parliament
(normally by way of a Finance Bill)
If the amount is irrecoverable, the accounting
officer can write the debt off in terms of TR
11.4. Amounts written off must be disclosed in
the annual financial statements.
7
Criteria For Approval Of Unauthorised Expenditure

• Effective and appropriate disciplinary steps
  against officials who made or permitted an
  unauthorised expenditure
• Funds in excess of appropriation were spend in
  accordance with the programme descriptions of the
  department on essential services which could not
  be avoided (value for money)
• Remedial steps taken by the accounting officer to
  prevent further occurance of unauthorised
  expenditure
• Funds not spent in accordance with the purpose of
  a main division or a vote but related to the
  objectives of the department (technical
  transgression)
• No fraudulent / corrupt activities present in
  making or permiting the expenditure

8
Criteria For Non ApprovalOf Unauthorised
Expenditure

• No disciplinary steps were taken against
  officials responsible for or permitted an
  unauthorised expenditure
• Funds spent in excess of the vote on
  non-essential services (wasteful)
• Funds not spent in accordance with the purpose of
  a main division or a vote and which are unrelated
  to the objectives of the department
• Unauthorised expenditure where fraudulent /
  corrupt activities were present

9
Additional funding / Against funds allocated for
future years

• Availability of funds within the total
  expenditure framework
• Ability of department to fund approved
  unauthorised expenditure within future years
  allocations
• Unauthorised expenditure not approved must be
  recovered or written off as irricoverble against
  future years allocations

10
National DepartmentsUnauthorised Expenditure
R 000
11
National DepartmentsUnauthorised Expenditure
R 000
12
Central Government AdministrationUnauthorised
Expenditure
R 000
13
Public Works Unauthorised Expenditure

• Overspending
• Provision of land and accommodation for amounts
  exceeding budget (R144.1m)
• Theft and losses
• Replacement value (R111.7m)
• Savings (R28.7m)

14
Central Government AdministrationUnauthorised
Expenditure
R 000
15
Financial and Administrative ServiceUnauthorised
Expenditure
R 000
16
Financial and Administrative ServiceUnauthorised
Expenditure
R 000
17
Social ServicesUnauthorised Expenditure
R 000
18
Social ServicesUnauthorised Expenditure
R 000
19
Justice and Protection ServicesUnauthorised
Expenditure
R 000
20
Justice and Protection ServicesUnauthorised
Expenditure
R 000
21
Justice and Constitutional Development
Unauthorised Expenditure

• Overspending
• Amounts of R63.0m and R46.1m occurred in
  Administration Program and Administration of
  Courts
• Although the state did not suffer losses, better
  budget control could have prevented overspending
• Budget shortage addressed in 2003/04 budget

22
Economic and Infrastructure Dev.Unauthorised
Expenditure
R 000
23
Economic and Infrastructure Dev.Unauthorised
Expenditure
R 000
24
Trade and Industry Unauthorised Expenditure

• Tender procedures (R0.376m) - not recommend
• Overspending
• National Pavilions1999/2000 (R0.6m) - not
  recommend
• EMIA Exhibition (R11.5m) - recommend
• GEIS-Intershore (R14.2m) - recommend

25
Conclusion

• Amounts recommended by SCOPA will be captured in
  a Finance Act
• Practice note will be issued to provide specific
  rules and procedures relating to unauthorised
  expenditure, to be applied by an entity in
  preparing and presenting financial statements.
• Annual process will be formalised by the
  Directorate Expenditure, Budget Office to
  monitor and evaluate the unauthorised expenditure
  for the annual SCOPA meetings