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Unauthorised Expenditure

Unauthorised Expenditure. Presentation by: National Treasury, SA. 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

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Unauthorised Expenditure

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  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 WorksUnauthorised 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 DevelopmentUnauthorised 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 IndustryUnauthorised 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

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