AGSA Reports R42 Billion Down the Drain — Again

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You've just finished a 14-hour day helping your clients stay compliant. You filed on time, you kept the records clean, you followed the rules. Meanwhile, the national and provincial government just spent another R42.58 billion incorrectly, and almost nobody is being held accountable for it.

That's the short version of the Auditor-General's 2024-25 General Report, released on 26 March 2026. And it should make every accountant in practice furious. The AG identified critical failures, and together, they tell a story of a system that knows what it's doing wrong and keeps doing it anyway. We look at the top 5 findings from the AG’s report below.

Finding 1: Minimal progress on audit outcomes

AG Tsakani Maluleke reported that only 151 of 417 government (36,2%) departments and entities achieved clean audits. Sounds reasonable until you realise those 151 "clean" entities look after just 12% of the total expenditure budget. The remaining 266, including most major departments and state-owned enterprises control 88% of the public purse, and continue to fail basic financial management tests.

Forty-five auditees actually got worse compared to the prior year. Not the same. Worse. Those 45 regressions, including 22 high-impact auditees, collectively oversaw R523 billion in spending. As CIBA's practical guide on audit evidence and financial statement quality makes clear, credible financial reporting isn't a once-a-year event, it's a discipline that runs throughout the year. Government has yet to learn that lesson.

Finding 2: Irregular expenditure — normalised and barely shrinking

The reported irregular expenditure (those that were spent in contravention of the laws and regulations) for 2024-25 came in at R42.58 billion, down from R49.53 billion the previous year, which sounds like progress. It isn't. A further R32.04 billion sits under review and wasn't included in that figure, because 33% of auditees were still investigating their own spending. The true number is almost certainly far higher.

The root cause is procurement failure, evergreen contracts, month-to-month extensions, and uncompetitive tendering that shuts out new and historically disadvantaged suppliers. More damaging is the cultural rot underneath: government is increasingly treating irregular expenditure as a technicality rather than a governance failure. The AG was direct, changing the disclosure rules to make the number look smaller doesn't fix the problem. It just makes it invisible.

Finding 3: Widespread non-compliance with legislation

224 auditees, 58% of the total had material findings on compliance with key legislation. This isn't a new problem. It's the same problem, repeated year after year, with minimal consequences. The AG described it plainly: an entrenched culture of impunity, where officials are neither incentivised to comply nor deterred from transgressing.

Without strong internal controls and ethical leadership, non-compliance becomes the default. And when non-compliance is the default, financial losses and service delivery failures are inevitable.

Finding 4: SOEs pose a critical risk to the fiscus

If the irregular expenditure figures don't alarm you, the SOE numbers should. Eight state-owned enterprises flagged going concern uncertainty, meaning they may not be able to keep operating. Seven of them have been in this position for at least six consecutive years. Transnet and Eskom alone carry combined liabilities approaching R866 billion. Government guarantees backstopping SOEs stand at R453 billion, with R414 billion already exposed.

These uncertainties stem from persistent operating losses, liquidity constraints, high fixed costs, and reliance on government support that isn't always formally committed when financial statements are prepared. This isn't a balance sheet problem. It's a governance crisis that every taxpayer and every accountant advising private sector clients is ultimately financing.

Finding 5: Consequence management — where accountability goes to die

This is the thread that ties everything together. The number of auditees failing to comply with legislation on consequence management grew from 119 (37%) to 140 (43%). 30% of the 57 auditees with reported fraud allegations investigated none of them. None.

The AG was unequivocal: when officials face no consequences, non-compliance continues, losses mount, and the cycle repeats. It's not a funding problem or a capacity problem in isolation, it's a leadership problem. Roles exist, structures exist, legislation is clear. The people in those roles simply aren't fulfilling them.

What this means for business accountants

The AG's report doesn't just reflect on government, it reflects the broader accountability environment your clients navigate every day. Public sector failures create real ripple effects: 44 auditees paid suppliers an average of 73 days late, starving small businesses of cash flow. Infrastructure projects that never complete. A fiscus stretched so thin that future service delivery is already compromised before it begins.

Your job, keeping clients compliant, well-governed, and financially credible, has never mattered more. You are, in practice, doing what government cannot seem to do for itself. Use this report as a client conversation starter. Walk your SME clients through what irregular expenditure means, what consequence management looks like when it works, and why clean financial records are a competitive advantage, not just a regulatory burden.

Government's failure is your value proposition.