Public Audit Act, 2004 (Act No. 25 of 2004)

Memorandum of Agreement (2020)

Annexure A

B. Criteria: Financial Performance Indicators

B.5. Capital underspending
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Description:

This indicator assesses—

•the effectiveness of auditee's capital spending; and
•also provides an indication of whether, for example, auditees are compromising their capital programmes to resolve cash flow challenges.

 

Calculation

The percentage of capital underspending is calculated on actual capital expenditure less the budgeted expenditure by dividing the budgeted capital expenditure as indicated in the auditee's capital expenditure statement.

 

Score

Rating

Score 3

Under-spending of more than 30% of capital budget

Score 2

Under-spending of between 10% and 30% of capital budget

Score 1

Under-spending of less than 10% of capital budget