health is wealth
SOEs ran up R68 billion in irregular expenditure
By Praise the Lord 4h agoShare this article:ShareTweetShareShareShareEmailShareAuditor-General Tsakani Maluleke has found state-owned entities (SOEs) ran up R68 billion in

By Praise the Lord Time of article published 4h ago

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Auditor-General Tsakani Maluleke has found state-owned entities (SOEs) ran up R68 billion in irregular expenditure in the 2019/20 financial year.

The amount could increase as audits of eight SOEs were under way when the national and provincial outcome report was compiled and three others – South African Airways, South African Express Airways and Denel subsidiary LMT Products – were not audited because they were either under business rescue or provisional liquidation.

In her report, Maluleke said the irregular expenditure increased from R57bn recorded in 2018/19, while wasteful and fruitless expenditure shot up from the R1.4bn recorded the previous year.

The top three contributors in irregular expenditure were Transnet (R56.3bn), Eskom (R11.2bn) and Airports Company South Africa (R0.6bn).

Eskom (R2.3bn), Transnet (R0.1bn) and the South African Broadcasting Corporation (R0.03bn) topped the fruitless and wasteful expenditure category.

Maluleke said 21 public entities (10%) disclosed uncertainty about whether they would be able to continue as a going concern.

She also said five SOEs disclosed uncertainty about whether they would be able to continue as a going concern.

These included Petroleum Oil and Gas Corporation, the SABC and three Denel subsidiaries – Densecure, Denel Aerostructures and Denel Vehicle Systems.

“Based on the financial statements of the SOEs where the audits are outstanding, such disclosures were also made by the Independent Development Trust, Denel, the Land and Agricultural Development Bank of South Africa, Pelchem, and the South African Nuclear Energy Corporation.”

She also said a similar disclosure had been made in Eskom’s financial statements.

Maluleke said six SOEs that recorded a deficit at year-end were Petroleum Oil and Gas Corporation (R5 579 million), SABC (R511m), Central Energy Fund (R334m), Komatiland Forests (R115m), Land Bank Life Insurance (R44m) and Land Bank Insurance (R39m).

“According to the financial statements of Eskom, it had a deficit of R20.5bn at year-end.”

The auditor-general said the inability to pay creditors on time was another indicator of pressure on the finances of these SOEs, which in turn had a negative impact on their suppliers.

“The increase in the debt collection period and in irrecoverable debts also affected the ability of SOEs to pay their creditors on time.”

Maluleke said they assessed the financial health status of almost 70% of these public entities as good.

“Those where intervention is required are responsible for almost a third of the budget, inclusive of the 17 (8%) whose financial statements were not reliable enough for financial analysis.”

These included seven technical and vocational education and training colleges, the Passenger Rail Agency of South Africa, and four provincial public entities in North West.

She said the deficit of R64.95bn was incurred by 55 public entities whose expenditure exceeded their revenue,

“Of the total deficit, 92% related to the Road Accident Fund.”

Political Bureau

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