Communications & digital technologies minister Solly Malatsi announced last week that lifestyle audits will be introduced for executives and board members across his department and state-owned entities (SOEs). This is the latest signal from the government of national unity (GNU) that it intends to build an ethical, capable state.The signal is clear. The mechanism remains unclear. Lifestyle audits can identify discrepancies between income and assets. They do not make the South African Post Office deliver mail, make the SABC balance its books or reduce the R453.6bn in contingent liabilities on the state’s balance sheet by March. Confusing the signal with the mechanism explains why the cycle repeats: announcement, audit, report and institutional inertia.Structural problemsThis experiment has already been conducted. After the state capture commission, lifestyle audits rolled out across departments and SOEs. Audits identified irregularities, yet HR processes stalled, consequence management remained rare and board changes were largely cosmetic.The Post Office, which has dismissed staff for fraud, theft and corruption over the past three years, still required R595m in the most recent budget vote. The SABC continues to report irregular expenditure and governance gaps despite improved audit outcomes.The problem is structural. Audits verify compliance with process, while bureaucracy optimises for adherence to process rather than outcomes. An audit confirms whether a tender followed the manual. This does not confirm whether the tender delivered fibre to 100 schools at the quoted cost. Without this link, audits become paperwork.Efficacy depends on the following: Clear, measurable mandates. The Post Office needs delivery targets: universal service at a defined cost per route with a defined reliability standard. The SABC requires targets for audience reach and cost per hour of content. Measurable targets allow assessment, and assessment gives meaning to accountability.Alignment between budget and delivery. The National Treasury’s medium-term expenditure framework technical guidelines for 2026, approved by the cabinet on July 23 2025, aim to address fragmented decision-making and poor alignment between policy and budget. This is substantive reform. Funding that fails to support the delivery model renders audits ineffective. The next medium-term budget policy statement will show whether this commitment is being implemented.Consequence management linked to delivery. Dismissals and prosecutions occur only when KPIs are missed and responsibility is clear. Enforceable performance contracts are needed, not aspirational ones. The test is whether audit findings lead to board changes and criminal referrals rather than administrative warnings.Audits are useful if applied correctly. They filter appointments, preventing compromised individuals from controlling procurement. They trigger forensic investigation when a mismatch between lifestyle and income prompts a review of contracts. They deter, provided that high-profile cases result in conviction or asset forfeiture. The deterrent vanishes without consequence.Why Treasury should read thisFor the Treasury the test is simple. If the medium-term budget links SOE funding to delivery milestones rather than institutional survival, lifestyle audits become a support tool. When it does not, they become another governance line item with no fiscal return.The R453.6bn in contingent liabilities will not shrink because an audit was done. This will shrink when accounting officers are held to contracts that pay for results. The February 2025 Public Finance Management Act (PFMA) amendment gives officers authority to move on public-private partnerships (PPPs) under R2bn without Approvals IIA and IIB. When departments do not use it, the Treasury is blamed for slow delivery anyway.The next medium-term budget is the first test of whether the GNU can convert policy into execution. Markets and analysts will watch the following indicators: linkage of funding to delivery milestones; board changes following audit findings; and use of the new PPP authority by departments.Governance reforms that fail to alter outcomes will include lifestyle audits if these indicators do not move. Credible reform becomes visible when they do. The GNU can announce as many audits as it wishes. Mandates need clarification, budgets need alignment to delivery, and consequences need enforcement before the machinery moves.• Maseko is an independent political economy researcher.