The Treasury cannot criticise an audit regime built on its own regulations

Every year, the Auditor-General (AG) releases findings that make headlines: irregular and wasteful expenditure, qualified audits and disclaimers. And every year, the same question is asked: What prevents public officials from doing their jobs well?

On 1 April 2026, Ronette Engela, acting head of the Government Technical Advisory Centre within National Treasury, entered that debate with a sharp opinion piece in Business Day. Her argument: the Auditor-General of South Africa (AG) has built a rule-bound regime that disincentivises competent civil servants, conflates technical non-compliance with corruption, and prioritises process over meaningful evaluation.

Some of what she observes about administrative burden is real. But the argument has several serious problems that, taken together, undermine its credibility and redirect accountability away from the institution that most needs to account for itself. And the AG’s own 2024-25 consolidated general report on national and provincial audit outcomes – covering R2.21-trillion in expenditure across 417 auditees – provides the data that exposes those problems.

Let us look at the most fundamental problem. The Public Finance Management Act of 1999 gives the National Treasury sweeping authority to prescribe uniform norms and standards for financial management across the government, to enforce compliance with those norms and to monitor their implementation. The National Treasury wrote the procurement regulation. It issued the instructions governing performance information. It published the Framework for Managing Programme Performance Information in 2007.

The AG, whose independence is guaranteed by section 181 of the Constitution, audits against those standards. Section 188 of the Constitution requires the AG to audit and report on the accounts, financial statements and financial management of all national and provincial departments. It does not audit according to its own preferences. It audits in accordance with the law, regulations enacted by Parliament, and those prescribed by the National Treasury (and later the Department of Planning, Monitoring and Evaluation).

When Engela calls this “audit overreach”, she is referring to the National Treasury’s own instruments. It is, inadvertently, an institutional confession.

Auditor-General’s mandate

I therefore argue that an audit regime premised on its auditees’ preferences is not an audit regime at all. Legislation enables the AG, among other things, to identify material irregularities, recommend remedial action and issue certificates of debt. Those powers exist because Parliament, responding to public demand for accountability, strengthened the AG’s mandate to enforce consequences. This was the result of our robust democratic accountability processes. This was led by the same National Treasury now criticising this mandate.

Here is what Engela’s article does not mention: in 2019, it was formally resolved that the National Treasury should amend the Public Finance Management Act specifically to address the concerns about the application of the irregularity principle that departments and public entities had been raising for years. That recommendation was incorporated into the Programme of Action of the sixth administration. It stayed there, unimplemented, for the entirety of that term.

The concerns Engela is now airing in a national newspaper were known to the National Treasury. They were acknowledged as warranting legislative attention. And they were deliberately set aside. To critique the AG in 2026 without acknowledging that history is institutional amnesia.

There is still a more uncomfortable context. The Integrated Financial Management System (IFMS), managed under the auspices of the National Treasury, itself incurred close to one billion rand in irregular and wasteful expenditure, one of the largest single-project failures in recent national government history. During the years that the figure was accumulating, the National Treasury maintained that the irregularity framework was appropriate and viewed entities raising concerns about its application with institutional suspicion. The framework became uncomfortable precisely when it began to apply to the National Treasury itself.

Let us go directly to what the AG’s 2024-25 consolidated general report on national and provincial audit outcomes actually shows. This is the report covering the full breadth of national and provincial government, R2.21-trillion in expenditure, 417 auditees and the first year of the seventh administration. The picture it paints does not support the narrative of an audit regime generating paperwork problems for well-intentioned officials.

The AG herself addresses Engela’s central argument directly in the foreword to this report. She writes that the growing trend in the government to downplay the importance of disclosing and dealing with irregular expenditure as procedural or technical issues is in stark contrast to the principles of transparency and accountability. She is not writing about an abstract risk. She is describing a pattern already under way, the very pattern that Engela’s article, published the same month the general report was released, exemplifies.

The general report is equally explicit about irregular expenditure: dismissing irregular expenditure or changing the rules to reduce the amounts disclosed will not address the problem. It identifies the root cause as non-compliance with the constitutional and legislated requirements for fair, equitable, transparent, competitive and cost-effective public procurement. These are not the AG’s preferences. They are the requirements of section 217 of the Constitution, the provision that expressly places the National Treasury in charge of enforcing them.

Engela singles out attendance registers, IP addresses and physical signatures as examples of petty requirements that change year to year and waste time. This is the weakest part of her argument, and the general report’s data on consequence management explains precisely why. Consider the Expanded Public Works Programme. In one of the better-documented fraud cases from that programme, the initial signal was not a missing million-rand payment.

It could not verify attendance registers. Officials could not link identity numbers of alleged beneficiaries to actual disbursements. What began as a technical irregularity led investigators to a fraudulent payment scheme. The attendance register was not the point. It was the thread. This is the detection logic of compliance auditing that Engela’s argument misses. Irregularity findings are not accusations of corruption. They are the first layer of a detection architecture.

Poor consequence management

The general report documents that 30% of auditees with reported fraud allegations failed to investigate any of them. The link between poor consequence management and financial misconduct is quantified: 36% of auditees that failed to prevent irregular expenditure also had a history of delayed investigations. Remove the compliance requirement, and you remove the detection mechanism. The thread disappears, and the fraud becomes invisible.

I once served as the accounting officer of the National School of Government and received an adverse finding regarding the late verification of attendance registers in the 2024-25 financial year. I protested against the finding. The finding was ultimately accepted, not because it implied wrongdoing, but because it was understood that the system’s integrity depends on consistent and non-negotiable application.

When the same standard is applied selectively, it loses its value as a detection tool entirely. Once we argued about interest payments, with the National Treasury’s accountant-general saying we should not charge it, and the AG team saying we should levy interest on late payers. Knowing that paying interest contributes to irregular expenditure, I did not do it.

There is a legitimate grievance buried inside Engela’s article. Senior public servants in SA are, in many cases, spending more time complying with performance reporting frameworks than exercising strategic leadership. That is real, and it is damaging. The general report confirms it: of the 318 auditees required to prepare performance reports, 100 (31%) published reports that were not useful or reliable. Only 47% of performance reports would have been useful and reliable had auditees not made corrections in response to the audit.

But the source of that problem is not the Auditor-General. It is the National Treasury’s own performance information framework, combined with the methodology established by the Department of Planning, Monitoring and Evaluation through the introduction of the Annual Performance Plan.

Methodology

That methodology is the logical framework approach (the logframe), a tool developed decades ago for project-based development aid programmes. It works well when discrete inputs produce measurable outputs in stable environments. It works poorly when applied to complex government programmes whose success depends on intergovernmental coordination, shifting labour market conditions, social behaviour change and the cumulative decisions of thousands of individual actors over many years.

The logframe requires executive managers to reduce their strategic choices to a matrix of predetermined indicators and to demonstrate, year after year, that the right number of reports was submitted on the right template on the right date. The manager who was formerly expected to exercise judgement, respond to emergent crises and coordinate across institutional boundaries is now required principally to feed a compliance machine. The Presidency’s Policy Unit encountered these same officials as capable strategic leaders. The logframe encountered them as compliance risks.

The sharpest evidence of this paradox comes from the Presidency’s own Programme of Action, the co-business of government implementation and monitoring framework that coordinated delivery across the sixth administration. Through that framework, the Presidency’s Policy Unit engaged directly with the same executive managers on questions of strategic coherence, systemic barriers to implementation and cross-departmental coordination. Those officials demonstrated exactly the kind of strategic capability that Engela says the audit regime is suppressing. The difference was not the officials. It was the framework through which they were engaged.

The National Treasury and Department of Planning, Monitoring and Evaluation designed the logframe-based Annual Performance Plan regime – the AG audits against it. Blaming the auditor for the tyranny of the logframe imposed by the National Treasury and department is like blaming the examination invigilator for a poorly designed curriculum.

The most important figure missing from Engela’s article is the citizen. The argument is constructed almost entirely around the burden placed on managers and officials. The taxpayer, who is the ultimate principal in any public finance relationship, appears only as an abstraction.

Delivery on key government priorities

The general report is unambiguous: when auditees in national and provincial government fail to manage their performance, finances, infrastructure and resources properly, it directly affects delivery on key government priorities. High-impact auditees (responsible for approximately R2-trillion, or 91% of the national and provincial expenditure budget) account for more than half of outstanding audits and 64% of all modified audit opinions.

The sector data is sobering: 75% of state-owned enterprises and 69% of departments in basic education, health, human settlements, public works and transport carry unqualified opinions with findings. These are not administrative inconveniences. They are service delivery failures.

The general report places a further figure on the human cost: unsettled litigation claims against the government rose to R116.05-billion in 2024-25, with R58.28-billion in health alone, driven primarily by medical negligence. When financial management breaks down, the consequences are measured not in compliance hours but in untreated patients, delayed infrastructure and undelivered houses.

The public value framework, developed in the academic literature by Mark Moore and elaborated on by John Benington, requires that we evaluate public sector performance not by whether it is administratively convenient for officials, but by whether it creates trustworthy conditions for citizens. The AG’s constitutional mandate is precisely this: to strengthen democracy by enabling oversight, accountability and governance, thereby building public confidence.

None of this means the current system is optimal. There are three reforms worth making, none of which require weakening the audit regime, and all of which the general report itself recommends.

First, the National Treasury should fulfil the 2019 mandate to reform the Public Finance Management Act to clearly distinguish between technical non-compliance, which carries no financial loss, and substantive irregularity, which creates conditions for fraud. This distinction already exists conceptually in the material irregularity framework. It can be given clearer legislative expression without reducing the compliance standard on which detection depends.

Absence of a national electronic procurement system

Second, and most urgently, the National Treasury must take responsibility for SA’s absence of a national electronic procurement system. According to the general report, the audit team evaluated 72 ICT projects at 44 auditees, but reported findings were reported at 23 auditees (52%), affecting 41 projects with a combined value of R12.1-billion.

The State Information Technology Agency continued to reveal persistent procurement and delivery failures. An integrated, automated procurement system with real-time validation against Home Affairs and SA Revenue Service data would simultaneously reduce administrative burden on honest officials and make the kind of fraud documented above far harder to sustain. The Treasury has the statutory power under section 6 of the act to mandate and fund exactly this. It has not done so.

Third, the Department of Planning, Monitoring and Evaluation should commission an honest review of the logframe methodology and its fitness for governing complex adaptive programmes. The Programme of Action’s co-business framework demonstrated that a different approach is possible. It should be built upon, rather than abandoned.

SA’s accountability system has real design problems. The compliance architecture is burdensome in places. The performance measurement framework is poorly matched to the nature of government work. The infrastructure for detecting fraud is inadequate. These are genuine institutional failures. Watch the Madlanga Commission if you have doubts.

But they are failures of institutional design for which the National Treasury bears part of the responsibility, not the AG, who enforces the framework the Treasury (and Department of Planning, Monitoring and Evaluation) created. Directing public criticism at the AG without acknowledging the National Treasury’s own Integrated Financial Management System scandal, without mentioning the 2019 Public Finance Management Act amendment that was promised to the Treasury, and without proposing any reform that the National Treasury itself would need to lead does not advance accountability. It evades it.

The AG’s constitutional independence, guaranteed under section 181 of the Constitution, must be protected precisely because powerful institutions will always prefer auditors who are answerable to their preferences. The AG’s own general report puts it plainly: the weaknesses driving poor audit outcomes are not the result of unclear mandates, ill-defined legal responsibilities or insufficient funding. It is because role-players in the accountability ecosystem do not fulfil their designated roles or play their part effectively.

The National Treasury is one of the most powerful role players in that ecosystem. It is time it played its part. DM