Unauthorised, Fruitless & wasteful, Irregular Expenditure Presenter: Lindy Bodewig Chief Director, National Treasury.

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Presentation transcript:

Unauthorised, Fruitless & wasteful, Irregular Expenditure Presenter: Lindy Bodewig Chief Director, National Treasury

2 Unauthorised expenditure: defined Unauthorised Expenditure is a)the overspending of a vote or a main division within a vote; or b)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.

2 Unauthorised expenditure: defined

2 Unauthorised expenditure: accounting policy When confirmed unauthorised expenditure is recognised as an asset in the statement of financial position until such time as the expenditure is either approved by the relevant authority, recovered from the responsible person or written off as irrecoverable in the statement of financial performance. Expenditure is never adjusted through the creation of the unauthorised expenditure asset Department could show a deficit on the statement of financial performance (overspending)

2 Unauthorised expenditure: accounting policy Unauthorised expenditure approved with funding is derecognised in the statement of financial position when the unauthorised expenditure is approved and the related funds are received. Where the amount is approved without funding it is derecognised as expenditure in the statement of financial performance on the date of approval Recommendation when the UA is approved without finding should specify period of time over which the amount is derecognised Departments must disclose reasons why not written off at year-end What if the approval is not obtained?

2 Unauthorised expenditure: procedures

2 Unauthorised expenditure: procedures cont

2

2 Fruitless & wasteful expenditure: defined Fruitless and wasteful expenditure means expenditure which was made in vain and would have been avoided had reasonable care been exercised.

2 Fruitless & wasteful expenditure: accounting policy Fruitless and wasteful expenditure is recognised as expenditure in the statement of financial performance according to the nature of the payment and not as a separate line item on the face of the statement. If the expenditure is recoverable it is treated as an asset until it is recovered from the responsible person or written off as irrecoverable in the statement of financial performance. Movement in balance obtained from the note to the AFS Expenditure for the year is not reduced when the F&W is discovered

2 Fruitless & wasteful expenditure: procedures

2

2 Irregular expenditure: defined Irregular expenditure comprises expenditure, other than unauthorised expenditure, incurred in contravention of or that is not in accordance with a requirement of any applicable legislation, including: the Public Finance Management Act 1 of 1999 (as amended by Act 29 of 1999); the State tender Board Act, 1968 (Act No. 86 of 1968, or any regulation made in terms of that Act; or any provincial legislation providing for the procurement procedures in that provincial government.

2 Irregular expenditure: accounting policy Irregular expenditure is recognised as expenditure in the statement of financial performance. If the expenditure is not condoned by the relevant authority it is treated as an asset until it is recovered or written off as irrecoverable. Movement in balance obtained from the note to the AFS Expenditure for the year is not reduced when the IE is discovered Unauthorised expenditure takes precedence over irregular expenditure

2 Irregular expenditure: procedures

2