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Unauthorised Expenditure

Unauthorised Expenditure. Presentation by: National Treasury to PCOF March 2007. Outline of Discussion. Definition of unauthorised expenditure Principle for dealing with unauthorised expenditure Criteria for approval/non approval of unauthorised expenditure Finance Bill Conclusion.

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Unauthorised Expenditure

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  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

  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

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