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Drivers of irregular expenditure and role of the ‘internal control unit’ within the Department of Social Development in the Western Cape Province
Author(s)
Mamve, Thandisile
Date Issued
2022
Type
Thesis
Publisher
Cape Peninsula University of Technology
Abstract
Every year in South Africa, the office of the Auditor General (AG) reveals shocking numbers of irregular expenditures committed by government departments, State owned enterprises (SOEs) and municipalities. This is despite the controls that are in place to prevent the occurrence of irregularities within the financial management processes. Government departments and entities established internal control unit (an internal Auditing Unit) which attempts to identify weaknesses in the controls and advise possible solutions. The continuous increasing numbers of irregular expenditures year in and year out leaves many with questions about the impact and the role of the internal control unit within the departments. This study examined the drivers of irregular expenditures and the role of internal control units within the Department of Social Development in the Western Cape with an intention to provide a suitable approach to strengthening the role of the internal control unit. The issue of irregular expenditures in the public sector today is topical; government departments and government entities are implementing consequence management policy in a bid to control and minimise irregularities. However, if such policy is to yield any positive results, we first need to identify the drivers of irregularities and subsequently evaluate the role of the institutions and internal control units that were established to evaluate controls and identify possible risk to better advise senior managers on best controls. Previous researchers focused primarily on irregular expenditures and the impact on service delivery, but less has been said about the drivers of irregular expenditures and the role of internal control units.
This study followed a qualitative research approach to understand the drivers of irregular expenditures and the role of internal control units by giving participants an opportunity to share their day-to-day experiences. Interview guide was used as data collection instrument using semi-structured interviews through Microsoft Teams medium. Participants of the study were selected based on working experiences and availability. For data analysis the researcher used thematic analysis together with Atlas.Ti data analysis software. The study established that there is a relationship between working under pressure and chances of making errors. The study also revealed a lack of training and workshops on policies and issues of irregular expenditures. It is also confirmed that the departments have controls in place to minimise possibilities of irregular expenditures but some of the controls are not effective because they are not properly designed nor properly implemented. It is recommended that the department review the effectiveness of its controls and provide courses that will enable officials to perform their duties to the best of their ability. Data collected suggest that the policy unit need to provide training and workshops on new policy development to ensure that staff members are always up to date with new developments. The research indicates a communication gap on how the information is being disseminated and how the internal control unit gives feedback on findings. The study findings support literature on the contribution made by centralisation of a procurement process in reducing the number of irregular expenditure in the department. Lastly, the findings suggest that each department has its unique challenges that must be further investigated to add to the development of new knowledge.
This study followed a qualitative research approach to understand the drivers of irregular expenditures and the role of internal control units by giving participants an opportunity to share their day-to-day experiences. Interview guide was used as data collection instrument using semi-structured interviews through Microsoft Teams medium. Participants of the study were selected based on working experiences and availability. For data analysis the researcher used thematic analysis together with Atlas.Ti data analysis software. The study established that there is a relationship between working under pressure and chances of making errors. The study also revealed a lack of training and workshops on policies and issues of irregular expenditures. It is also confirmed that the departments have controls in place to minimise possibilities of irregular expenditures but some of the controls are not effective because they are not properly designed nor properly implemented. It is recommended that the department review the effectiveness of its controls and provide courses that will enable officials to perform their duties to the best of their ability. Data collected suggest that the policy unit need to provide training and workshops on new policy development to ensure that staff members are always up to date with new developments. The research indicates a communication gap on how the information is being disseminated and how the internal control unit gives feedback on findings. The study findings support literature on the contribution made by centralisation of a procurement process in reducing the number of irregular expenditure in the department. Lastly, the findings suggest that each department has its unique challenges that must be further investigated to add to the development of new knowledge.
Additional information
Thesis (Master of Internal Auditing)--Cape Peninsula University of Technology, 2022
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