Audit reports read like an SOS from SOEs, Parliament hears

Parliament's Portfolio Committee on Public Enterprises this week got a glimpse of far-reaching administrative challenges facing state-owned enterprises, including incomplete financial statements, irregular spend and lack of action plans.

Irregular expenditure among the entities under the Department of Public Enterprises went from R31.4bn in the 2017/18 financial year to R86.2bn in the 2018/19 financial year.

Despite the entities under its care getting less than favourable audit outcomes, however, the Department of Public Enterprises itself got a clean audit from the Auditor General in the 2018/19 financial year.

Last week, Parliament heard from Public Enterprises Minister Pravin Gordhan that South African Airways would again be missing the deadline to submit its annual report.

Meanwhile debt-ridden Eskom has been plundered for years, with private companies receiving lucrative contracts from the power entity while supplying substandard coal, among other things.

Arms company Denel entered into transactions with businesses that were ultimately deemed unlawful.

Auditor General official Yolisa Ndikandika told the committee that while the Department of Public Enterprises retained a clean audit, the entities under the department were at varying stages of their journey to optimal financial health.

Eskom not doing enough, Denel stagnant

"Eskom received a qualification similar to the prior year due to limitations in confirming the completeness of irregular, fruitless and wasteful expenditure. Some of the prior year findings were not adequately addressed," said Ndikandika.

Ndikandika said Transnet received a qualification again due to incomplete information on irregular expenditure contained in the entity’s financial statements.

"Safcol was also qualified on irregular expenditure due to not having adequate systems in place to identify and report on irregular [spend].

"Denel remains stagnant with a disclaimer due to lack of adequate implementation of action places to correct last year’s qualification," Ndikandika said.

The office of the Auditor General noted an "overall stagnation" in audit outcomes for entities under the Public Enterprises portfolio, with challenges for many entities in sustaining financial viability or remaining a going concern without government support.

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