Irregular expenditure among the State Owned Enterprises (SOE) under the Department of Public Enterprises rocketed from R31.4bn in the 2017/18 financial year to R86.2bn in the 2018/19 financial year, Parliament’s Portfolio Committee on Public Enterprises has heard.
The Department itself got a clean audit from the Auditor General in the 2018/19 financial year, despite the entities under its care getting less than favourable audit outcomes.
Last week, Public Enterprises Minister Pravin Gordhan told Parliament that South African Airways (SAA) and SA Express would again be missing the deadline to submit their annual reports.
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Auditor General official Yolisa Ndikandika told the Committee that while the Public Enterprises Department retained a clean audit – for the third consecutive year – the entities under the Department were at varying stages of their journey to “optimal financial health.”
The Committee wanted to know from Public Enterprises if the the entities it governs are capable of attaining clean audits and submitting timeous financial reports.
Deputy Public Enterprises Minister, Phumulo Masualle, assured the Committee that his department is confident that SOE’s will mirror the audit outcomes achieved by the department, but that it’ll take time.
“The department has started ensuring that there are right people in the SOEs, ensuring that there are right boards, there is capacity in place and ensuring proper leadership in place,” he said.
“Eskom received a qualification similar to the prior year due to limitations in confirming the completeness of irregular, fruitless and wasteful expenditure.” said Ndikandika.
She said Transnet received a qualification again due to incomplete information on irregular expenditure contained in the entity’s financial statements, while 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 viable concern without government support.