Why South Africa Needs AuditPro Core
The Auditor-General's 2024/25 PFMA report reveals that 64% of state entities failed to achieve a clean audit. Only 12% of total government expenditure is managed by entities with clean outcomes.
417
Entities Audited
Departments, SOEs, Public Entities
151
Clean Audits
Only 36% of entities
R42.58bn
Irregular Expenditure
Down from R49.53bn prior year
R866bn
SOE Combined Liabilities
Transnet + Eskom alone
2024/25 Audit Outcomes
Of 417 PFMA auditees assessed by the Auditor-General
Unqualified opinion with no findings on compliance or performance reporting
Financials are fair, but problems with compliance and/or performance information
Financials contain material misstatements in specific areas
Records so poor no opinion possible - accounts cannot be relied on
Accounts materially misleading, or audit not yet complete
151
Clean Audits (36%)
Controls 12% of expenditure budget
266
Did Not Achieve Clean (64%)
Controls 88% of expenditure budget
State-Owned Enterprise Outcomes
Of 19 audited SOEs, only 2 received clean audits. 8 flagged going-concern uncertainty.
8
Going-concern risk
R453bn
Government guarantees
7
6+ years at risk
Why Entities Fail Their Audits
Recurring root causes identified by the Auditor-General
Procurement & Compliance Failures
Evergreen contracts, month-to-month extensions, and uncompetitive tendering that shuts out new and historically disadvantaged suppliers. This is the root cause of irregular expenditure.
Irregular, Fruitless & Wasteful Expenditure
R42.58 billion in irregular expenditure for 2024/25 (down from R49.53bn). A further R32.04 billion sits under review because 33% of auditees were still investigating their own spending.
Poor-Quality Financial Statements
Submitted financial statements are not of good quality, indicating weak internal management practices, controls and review processes.
Weak Performance Reporting
72% of auditees in the 'unqualified with findings' category submitted performance reports with significant errors, indicating weak planning, monitoring and evaluation disciplines.
Late or Non-Submission of Financials
SOEs have a history of not submitting financial statements for audit or submitting them late, delaying the audit process and parliamentary oversight.
Governance & Oversight Weaknesses
Weaknesses in governance, oversight, accountability, institutional capability and intergovernmental processes - not unclear mandates or insufficient funding - are the underlying drivers.
Grants Lost to Non-Compliance & Underspending
Billions in conditional grant funding at risk due to procurement failures, capacity gaps, and non-compliance
R19bn+
Unspent Municipal Grants
At risk of forfeiture (Q3 2024/25)
50%
Municipal Spend Rate
R19.5bn of R38.9bn transferred
R1.8bn
Gauteng Returned to NT
Health & education funds unspent
R42.58bn
Irregular Expenditure
Much on grant-funded procurement
Worst-Performing Grants (Q2 2024/25)
Expenditure as percentage of allocation — all below 40%
Of R52.1 billion approved for municipal conditional grants in 2024/25, municipalities received R38.9 billion but spent only R19.5 billion (50%). Indirect grants of R7.1 billion showed zero reported expenditure. Section 21 of DORA states unspent funds revert to the National Revenue Fund unless rollover is approved.
How Grant Funds Are “Lost”
Returned to National Revenue Fund
Surrendered permanently unless rollover is approved by National Treasury.
Reallocated to Better Performers
Redirected to higher-performing provinces or municipalities during adjustment budget.
Withheld or Stopped by Treasury
Transfers stopped as consequence of persistent non-compliance with conditions.
Rolled Over (Delayed)
Not technically lost, but delivery delayed by a year or more. Compounds backlogs.
Why Grants Are Lost — Root Causes
SCM & Procurement Failures
Late business plans, disrupted procurement processes, leading to reduced allocations as uncommitted funds are reallocated to better-performing municipalities.
Capacity & Planning Weaknesses
Provinces and municipalities cannot mobilise tenders, contractors or implementing agents fast enough to spend within the financial year.
Non-Compliance with Reporting
Delays in submission of quarterly non-financial reports and non-reporting of projects lead to provinces' allocations being reduced.
NT Withholding Funds
Treasury withholds transfers under DORA for slow implementation. E.g. Masilonyana had R19m withheld due to R174m underspent conditional grants.
Abandoned / Delayed Projects
Projects running years over schedule. E.g. EC road project set for 25 months has been in progress for 9 years (3,546 days). Sub-standard work accepted and paid.
Entity-Level Non-Compliance
Recipient entities not fully compliant with provincial departments, failing to provide documentation required for transfers to proceed.
Case Study: 25-month road project running 9 years
The Eastern Cape Department of Transport had a road project set to be completed in 25 months but it has now been in progress for 3,546 calendar days (over 9 years). The department accepted and paid for sub-standard work from contractors, incurring significant financial losses due to poor project management.
One year into the seventh administration, there has been only minimal progress, and the entities responsible for the vast majority of state spending are still unable to demonstrate sound financial management, reliable performance reporting, or lawful procurement.
Auditor-General Tsakani Maluleke
PFMA General Report, 26 March 2026
AuditPro Core addresses every root cause
From automated SCM compliance monitoring and real-time IFW tracking, to conditional grant expenditure oversight, GRAP-aligned financial reporting and performance information verification — built specifically for South African public sector audit.