Audit outcomes of some SOEs paint a bleak picture

The Office of the Auditor-General has painted a bleak picture about the financial situation of some of the State-Owned Entities. The audit outcomes of some of these entities are showing regress rather than improving.

The Office of the Auditor-General briefed Standing Committee on Public Accounts on the audit outcomes of among others the Development Bank of South Africa, Denel, Prasa, Transnet, Eskom and the SABC.

The audits indicate an increase in irregular expenditure.

Transnet has incurred about R56.2 billion in irregular expenditure, Eskom R33 billion, Prasa R28.6 billion while Denel’s figure is R3.1 billion.

“At Prasa there is poor discipline especially when it comes to finance management. The discipline of the financial mismanagement at Prasa is very poor, has been that for years – non-compliance. One of the entities ranked high in irregular expenditure. Current financial year is at R28.6 billion,” said Business Executive in the AG’s office Polani Sokombela.

Other challenges Prasa has been dealing with:

Meanwhile, the SABC is said to be gradually addressing its challenges through the implementation of financial management discipline.

Auditor Mxolisi Mthimkhulu, however, says the public broadcaster continues to incur financial losses and if they are not addressed, it will require additional funding again.

“Despite the bailout received, the losses are still continuing and there’s still a forecast that will continue for the next three years which is also still concerning, So, there’s a risk that even the funds of the R3 billion bailout that were received, if the losses continue without effective implementation of the turnaround plan, that R3 billion will be depleted and the entity will require additional funding.”

SABC 2019/2020 financial report:

The committee has expressed concern about these developments.

“We are in dire straits. Quite clearly, if you look at the state of the unhealthiness of these SOEs and just the myriad of issues which confront them and I dare say that the worst of times and if obviously, our work is cut out, we are going to meet with the Department of Public Enterprises about the state of the unhealthiness of these,” said Committee Chairperson, Mkhuleko Hlengwa.