Gauteng Social Development: Qualified Audit Reveals Irregular Expenditure

• The Gauteng Department of Social Development received a qualified audit opinion with findings for the 2025/26 financial year, a decline from previous years.
• The Auditor-General identified significant irregular expenditure, material misstatements in financial statements, and widespread non-compliance with the Public Finance Management Act.
• Issues included a lack of systems to monitor progress and ensure proper use of R1.9-billion paid to non-profit organizations.
• Procurement irregularities, such as goods and services over R1-million acquired without competitive bids, occurred despite a 'no deviation' policy.
• No evidence was found of disciplinary action taken against officials responsible for incurring irregular expenditure, as investigations were not conducted.

This absence of accountability mechanisms exacerbates the problem of non-compliance and undermines efforts to ensure responsible financial management within the department.

The Gauteng Department of Social Development (GDSD), responsible for delivering crucial social welfare services and managing protection programs across the province, recently received a qualified audit opinion with findings from the Auditor-General (AG) for the 2025/26 financial year. This marks a decline in the department's financial oversight, as it had previously secured an unqualified audit opinion with findings for the two preceding financial years, 2023/24 and 2024/25. The department operated with a substantial budget of R5.6-billion for the year, a significant portion of which, R1.9-billion, was allocated to non-profit organizations (NPOs) tasked with providing essential social services to the most vulnerable residents of Gauteng.

This Gauteng Social Development qualified audit highlights persistent issues with financial controls and expenditure. A forensic audit conducted in 2023 had already identified a critical gap in the department's capacity to effectively monitor and evaluate the performance of these non-profit organizations. The latest AG report further substantiated these concerns, revealing an absence of systems designed to track progress against departmental targets and a lack of verifiable evidence that payments made to organizations were utilized for their intended purposes.

The Auditor-General's review of the 2025/26 financial year uncovered several critical deficiencies, including material misstatements within the department's financial statements. A significant concern was the flagging of Gauteng DSD irregular expenditure and widespread non-compliance with the Public Finance Management Act (PFMA), alongside various supply chain management issues. The PFMA mandates that all government departments meticulously disclose any irregular expenditure in their financial reports. However, the AG found that the GDSD had spent funds in direct violation of supply chain management regulations and failed to include all such instances in its financial reporting.

Despite the Gauteng Department of Social Development stating in its annual report that it had adopted a "no deviation" policy by the end of the 2024/25 financial year, the Auditor-General's findings contradicted this assertion. The audit revealed instances where goods and services exceeding R1-million were procured without competitive bids, directly contravening the department's stated policy. Specific examples of non-compliant spending, resulting from retrospective approvals and supply chain contraventions, included expenditures on tent hire, mobile toilets, chair rentals, kitchen services, conference attendance, and direct disbursements to a subcontractor for school uniforms. These PFMA contraventions Gauteng underscore a systemic failure in adhering to established procurement protocols.

The AG also highlighted a significant lapse in accountability, noting a lack of evidence that disciplinary steps were taken against officials responsible for incurring irregular expenditure. This was attributed to the fact that "investigations into irregular expenditure were not performed." This absence of accountability mechanisms exacerbates the problem of non-compliance and undermines efforts to ensure responsible financial management within the department. The AG qualified audit opinion Gauteng therefore points to deep-seated issues beyond mere administrative errors.

The findings from the Auditor-General raise serious questions about the Gauteng Department of Social Development's ability to effectively manage public funds and ensure accountability, particularly given its mandate to serve vulnerable populations. The inability to verify performance against targets, such as the 86% for social welfare and 73% for children and families, due to a lack of supporting evidence, casts doubt on the department's reported achievements, including its claim of achieving "at least 83%" of its planned targets across all programs. While some targets were reduced due to funding cuts (e.g., food relief from 400,000 to 332,000 beneficiaries, and poverty reduction from 465,000 to 393,000 beneficiaries), the department did exceed these revised figures.

However, the broader implications of these Gauteng Department Social Development audit findings extend to public trust and the efficient delivery of essential services. The persistent issues with irregular expenditure, the lack of monitoring systems for NPO funds, and the failure to hold officials accountable for financial misconduct signal a need for urgent and comprehensive reforms. This situation underscores the critical importance of robust financial controls and transparent governance in public sector entities, especially those entrusted with significant budgets for social welfare.

This development signals increased scrutiny on financial management and procurement within the Gauteng Department of Social Development. Lawyers advising public sector entities or NGOs receiving government funding should review their clients' compliance with the Public Finance Management Act and supply chain regulations to mitigate risks of irregular expenditure and potential disciplinary actions against officials.

Source: Insights from recent audit reporting.