The Parliamentary Standing Committee on the Auditor-General (SCoAG) has noted interventions by the National Treasury to recover audit fee debt owed to the Auditor-General of South Africa (AGSA), but is imploring Treasury to explore interventions to ensure that municipalities budget properly for the fees.

Accountant-General Shabeer Khan on Friday briefed the committee on the reasons for the debt and on the interventions underway for debt repayment and to encourage financial accountability in State institutions.

As of July 31, the total outstanding debt to the AGSA was R1.83-billion, up from R1.35-billion in March.

Of the current R1.83-billion outstanding debt to the AGSA, municipalities owe R437-million and State-owned entities (SOEs) owe R644-million.

The committee welcomed Treasury’s interventions in using Section 216 (2) of the Constitution to withhold funds from municipalities that breach the Municipal Finance Management Act.

In December 2024, after Treasury issued warning letters, R460-million was collected from municipalities. 

In March and July, Treasury withheld portions of the Local Government Equitable Share from municipalities failing to pay.

“Funds were only released in instalments once proof of payment to the AGSA and other creditors was provided. This has forced several municipalities to enter into payment arrangements with the AGSA, though some still refuse to comply,” said SCoAG chairperson Wouter Wessels.

He called for implementation of avenues other than withholding such municipalities' equitable share, arguing that it was detrimental to service delivery.  

Khan also pointed out long-standing SOE debtors include Denel, which owes R82-million; the South African Post Office which owes R63-million; South African Express, which owes R21-million; Pelchem, which owes R11-million; Autopax, which owes R6-million; and Mango Airlines, which owes R2-million.

She expressed concerns that some of these SOEs are under business rescue or liquidation.

Meanwhile, the committee said it was pleased with the collaborative monitoring from Treasury and the AGSA to track defaults, enforce payment conditions, and recommend write-offs where entities are in liquidation.