SA Express reports net loss of R590m

Auditor General Kimi Makwetu slapped state-owned airline SA Express with a disclaimer audit opinion in the airline's annual report and financial statements for the financial year ended March 2019.

In auditing terms, a disclaimer audit opinion occurs when an auditee is unable to provide evidence of its financial state as reflected in the financial statements. After a number of delays preventing it from doing so, SA Express submitted its annual report in Parliament earlier this week.

SA Express reported a net loss of R590m in the financial year ended in March 2019 and a net current liability position of R374m. The net cash from operating activities deteriorated to negative R461m from R101m reported in 2018.

In the audit report on SA Express' financial statements, Makwetu said there was not sufficient evidence in the contents of the financial statements to conclude that the airline could continue as a going concern.

"The entity re-negotiated liabilities amounting to R260m which were due before year end, to March 31, 2026. This situation indicates that material uncertainties exist that may cast significant doubt on the entity's ability to continue as a going concern," Makwetu wrote.

Makwetu said SA Express did not correctly disclose financial liabilities that were due within 12 months after year-end.

He pointed out that SA Express did not include all irregular expenditure in its financial statements, and he could not determine the full extent of irregular expenditure stated at R834m. Irregular expenditure is up from R677m reported in March 2018.

Makwetu also took a dim view of the state of consequence management at SA Express, saying effective steps were not taken to prevent irregular expenditure and that internal control deficiencies existed at the entity.

The annual report for the financial year ended March 2019 was also accompanied by a separate audit report for the financial year ended at March 2017, in which another disclaimer audit opinion was given.

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