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 Approval Of 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. Summary Unauthorised Expenditure Schedule 1 + 2 of the Finance Bill
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 -
Financial and Administrative
36 204 97
4 370
1 591
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
28 456
48 581

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