Unauthorised Expenditure

1
Unauthorised Expenditure

• Presentation by
• National Treasury to PCOF
• March 2007

2
Outline of Discussion

• Definition of unauthorised expenditure
• Principle for dealing with unauthorised
  expenditure
• Criteria for approval/non approval of
  unauthorised expenditure
• Finance Bill
• 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.

5
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 spent 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 occurrence 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 permitting the expenditure

6
Criteria For Non ApprovalOf Unauthorised
Expenditure

• No disciplinary steps were taken against
  officials responsible for permitting 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

7
SummaryUnauthorised ExpenditureSchedule 1 2
of the Finance Bill
R 000
Clusters Preceding Years 1998/ 1999 1999/ 2000 2000/ 2001 2001/ 2002 2002/ 2003 2003/ 2004 Total
Central Government Administration 792 71 747 32 001 27 082 5 898 2 569 - 140 089
Financial and Administrative 36 204 97 - - 121 937 4 370 1 591 164 199
Social Services 1 362 439 822 10 - - - 2 633
Justice Services 2 899 586 50 227 1 364 - 41 642 - 96 718
Economic Services 6 940 16 526 33 655 - 12 345 - - 69 466
TOTAL 48 197 89 395 116 705 28 456 140 180 48 581 1 591 473 105
8
Finance Bill

• SCOPA Recommendation
• R313,6 million (schedule 1 of Finance Bill)
  unauthorised due to deviations from tender
  procedures in terms of Exchequer Act (These funds
  were previously surrendered and will have no
  additional expenditure implications)
• R159,5 million (schedule 2 of Finance Bill) due
  to overspending in terms of PFMA (This will
  become an additional charge against the NRF)
• Finance Bill (section 77 Bill) to give effect to
  SCOPA recommendation
• Funds will be withdrawn as a direct charge
  against the National Revenue Fund

9
Conclusion

• Annual process will be formalised by the Budget
  Office to monitor and evaluate the unauthorised
  expenditure for the annual SCOPA meetings
• The next finance act will deal with few cases
  still outstanding from 1998/99 2003/04 and new
  cases emanating from 2004/05, 2005/06
• Unauthorised expenditure for 2006/07 will only be
  considered after the financial statements have
  been audited