SOE irregular spend: Here are the three worst offenders

Cape Town - Auditor-general Kimi Makwetu says Airports Company South Africa (ACSA), the South African Post Office (SAPO) and the SABC were the top contributors to irregular expenditure by state-owned enterprises (SOEs).

Makwetu reported before the Standing Committee on Public Accounts (Scopa), the Standing Committee on Appropriations and the Standing Committee on the Auditor-General on Tuesday on the 2016/17 audit outcomes.

Out of the 19 SOEs audited, SAPO, the South African Forestry Company and Komatiland Forests received qualified audits, while the SABC and the Courier Freight Group received adverse findings.

When it came to irregular expenditure, the top contributors were ACSA, SAPO and the SABC, at R1.17bn, R719m and R687m respectively.

Fourteen SOEs had a combined irregular expenditure of R2.88bn in the period.

The most common problems with irregular spend at SOEs were:

  • not receiving three quotations during bidding (42%);
  • the preference point system not being applied (37%);
  • tax affairs not being in order (26%);
  • inadequate contract performance measures (26%); and
  • competitive bidding not invited (21%).

Six SOEs did not have CEOs at year-end. The average vacancy rate was 17% for senior management.

All 19 either had a new finding or repeat finding in their audit.

Eleven incurred a deficit during the period, including Armscor and the South African Nuclear Energy Corporation. Fifteen have creditors payment periods of more than 30 days.

SAA failed to submit documents

The auditor-general had not received all financial statements and documents from SAA, SAA Technical, SA Express, Air Chefs, Mango Airlines and the Independent Development Trust.

Makwetu therefore could not make a finding on SAA's financial health and ability to continue operating.

Scopa chairperson Themba Godi said he was concerned by the decline of government departments and SOEs.

Godi noted the fact that SAA had not submitted financial statements meant the auditor-general could not report on whether the airline could continue operations or not.

"The committee has also learnt that Prasa (Passenger Rail Agency of South Africa) has not submitted any approved financial statements to the AG (auditor-general) for the 2016/17 financial year.

"These outcomes demonstrate that the lack of penalties for late submission or no submission poses a huge challenge for oversight bodies seeking redress in the management of finances in the public sector."

Makwetu ended by saying corruption flourished in an environment dominated by monopoly and discretion and in which there was no accountability.

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