SESSION : Budgeting

Local government

3 -7 October 2016

Objective of session
At the end of the session the
participants should be able to:
Understand the definition
Why is budgeting important
Compliance

Definition of Budget
What is a budget

Budget contd
A budget is a quantitative expression of
a plan of action prepared in advance of the
period to which of relates.
A budget expresses what is to be
undertaken next year and authorizes the
financial resources that are needed.

Budgeting

Why is budgeting important

( Group discussion 5 minutes )

Reasons for budgeting

Examples of fruitless and

wasteful
Interest on late payments
RSVP but no attendance

Treatment of fruitless and

wasteful
Step
1

Fruitless and wasteful expenditure discovered by

the Accounting Officer (AO) or the Auditor-General

Step
2

AO must immediately report expenditure in

writing in terms of the legislation

Step
3

AO must investigate the alleged fruitless and

wasteful expenditure to determine whether the
expenditure indeed meets the definition of
fruitless and wasteful expenditure
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Treatment of fruitless and

wasteful expenditure Cont
Step
4
Step
5
Step
6

AO must take appropriate disciplinary steps after reporting on the

matter in terms of the legislation

Once an investigation has been concluded and the results confirm

that the expenditure constitute fruitless and wasteful expenditure
and there is a person liable in law, the AO must recover such from
a person who is liable law

If the fruitless and wasteful expenditure is irrecoverable from the

person who is liable in law, the AO may write off the amount and
record such in the notes to the annual financial statements

Treatment of fruitless and

wasteful expenditure
Fruitless and wasteful expenditure is
recognized as expenditure in the
Statement of Financial Performance
according to the nature of the
payment, e.g. payment for travel and
subsistence and not as a separate line
item on the face of the Statement of
Financial Performance
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Treatment of fruitless and

wasteful expenditure
If an employee is held liable in terms
of the law, recovery must be made
and a debtor must be created in the
Statement of Financial Position.

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Audit considerations
What are some of the considerations you
need to take into account during the audit
of fruitless and wasteful?

Group discussion (5minutes )

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Extract of the procedures

Perform an inspection of records and documents to identify
fruitless and wasteful expenditure that occurred in the financial
year and trace it to the disclosure note to ensure all such
expenditure has been disclosed
Obtain detail of the incidents / schedule that made up the,
fruitless and wasteful expenditure for the current year and
through inspection ensure that Information on the schedule
agrees to the information and amounts disclosed in the
notes to the annual financial statements
Inspect the disclosure notes on the financial statements to determine
whether the following detail has been disclosed :
Particulars of any material losses, fruitless and wasteful
expenditures
Whether such expenditure / loss are recoverable
Any criminal or disciplinary steps taken as a result of such
expenditure / loss
The material losses recovered or written off

Group exercise

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Food for thought

CONTACT AFROSAI-E

www.afrosaie.org.za
afrosai-e@agsa.co.za
secretariat@afrosai-e
.org.za
AFROSAI-E
nikeziwek@agsa.co.z
a
@AFROSAIE
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THANK YOU

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