Fewer than one in 10 annual reports filed, a week before deadline — governance wobble?

26 Sep 2022

Parliament, five departments, three constitutional bodies and a small bouquet of public institutions such as the prosecution services, Tax Ombud, Transnet and the Commission for Conciliation, Mediation and Arbitration had filed their 2021/22 annual reports by Friday.

Only 21 out of 286 government and state entities required to file their annual reports had actually done so a week before the 30 September deadline. It’s an indictment on governance — and making available key accountability and oversight tools. Not even in the two-year Covid lockdown disruptions did that checklist seem quite so red this close to the filing deadline.

Fellow early annual report filers stayed on track: the National Prosecuting Authority tabled on 17 June; Parliament on 31 August and the South African Reserve Bank (Sarb) whose 2021/22 annual report has been posted on its website since 27 June.

Government departments that had filed annual reports by 23 September — a week before the final deadline — are Defence, Employment and Labour, Public Enterprises, Public Service and Administration and Small Business Development.

Of the eight constitutionally established institutions to support democracy, the Auditor-General filed the annual report on 22 September, the Public Protector on 1 September and the Financial and Fiscal Commission submitted its documents on 31 August.

State entities that have already tabled their annual reports earlier in September include the National Economic Development and Labour Council, the Development Bank of Southern Africa, the Independent Regulatory Board for Auditors and the Military Ombud.

Why is any of this important?

Annual reports, including audited financial statements, are part of parliamentary oversight and the holding of government to account. That’s because these documents state how a department or public institution spent the rands and cents it got the previous financial year, and how it fared on its performance targets.

Annual reports in terms of the Public Finance Management Act must be tabled in Parliament within six months of the financial year-end on 31 March. That last-minute-dot-com date is 30 September.

In 2020, then finance minister Tito Mboweni extended that timeframe to 16 November over the lockdown disruption. By 2021 it was back to the 30 September filing deadline.

That only 21 annual reports had arrived in Parliament by 23 September, according to documents seen by Daily Maverick, does not necessarily mean the rest will not come this week.

But having an avalanche of annual reports at the last minute means ratcheted-up pressure on the Budget oversight cycle — and opens the door to potential fluffs as the clock ticks.

MPs use these annual reports to interrogate departmental and institutional spending and performance for what’s called the Budget review and recommendation reports (BRRRs), a crucial oversight step in the Budget cycle.

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Before the Medium-Term Budget Policy Statement is finalised, the BRRRs go to the National Assembly for adoption — and then these Parliament-approved review and recommendation reports go to the finance minister and other relevant ministers, for action.

At the tabling of the next year’s Budget, Annexure A of the Budget Review is the finance minister’s response to the BRRRs.

Ministers unable to get their annual report to Parliament in time must write to the national legislature to explain why. These letters are published in the Announcements, Tablings and Committee Reports — Parliament’s record of work.

It’s understood that ministers will have until noon on Friday, 30 September to either table the annual reports or the letters on why the documents are not there.

It can be a bit awkward.

By May 2022, SAA — which falls under Public Enterprises — had still not caught up with its annual reports and financial statements beyond 2017/18 documents.

Read more in Daily Maverick: “SAA financials MIA as 51% share sale details remain out of reach – Scopa”

And while then Correctional Services boss Arthur Fraser spoke of leaving with an unqualified audit in a statement issued on 20 September 2021, by 28 September Justice and Correctional Services Minister Ronald Lamola wrote to tell Parliament to hold on — that the annual report would be late as a series of other steps needed to unfold first.

“The department will ensure that the annual report is tabled in Parliament within four weeks of receiving the final audit report from the AGSA [Auditor-General of South Africa],” said Lamola’s letter at the time.

Read more in Daily Maverick: “The curious, the late and the good in the 2021 annual report season”

But 2022 looks unprecedentedly bleak in terms of numbers of annual reports tabled in good time, not with a 30 September deadline breathing down everyone’s neck.

Nothing in law or regulation stops a department from filing its annual report by, say May or June, thereby giving several weeks for proofreading and printing.

If government departments and public entities table annual reports right on the 30 September deadline — or late, or not at all, for whatever reason — that undermines parliamentary oversight.

Malicious compliance

When everything is left to the last minute, it could be what’s called malicious compliance — the attitude that we have to do it, so let’s do it basically, but not doing anything more than ticking the boxes, and if 30 September is the deadline, then that’s when it’ll be done by.

Or leaving everything to the last minute also could be a reflection of disorganisation within an administration, perhaps because of political distractions like an ANC December national elective conference, and/or bureaucratic distractions like a revolving door of directors-general or other senior officials.

Or it could be a bit of both, particularly as little has changed in the annual report calendar. And that’s an indictment on the state of governance. DM

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Malicious compliance