Section 83(1)(b) of the PFMA states that if the accounting authority (Board) makes or permits fruitless and wasteful expenditure they may be charged with financial misconduct. It is therefore the responsibility of the accounting authority to ensure that sound controls are put in place to detect and prevent such expenditure from being incurred. The accounting authority is also required to ensure that disciplinary steps are taken against persons who have permitted or incurred fruitless and wasteful expenditure and that such is disclosed in the annual report and annual financial statement of the entity. The process for dealing with a charge of financial misconduct is outlined in the Treasury Regulations.
In this case, the accounting authority must make the determination whether expenditure incurred was fruitless and wasteful. The accountability arrangements applicable to State Owned Entities envisage that if accounting authority (the board) fails to act, then the shareholder Ministry is required to step in. It is only after all of these avenues have been explored that the matter can be investigated by the Auditor-General at the request of relevant authorities or as part of their audit.