Auditor General Tsakani Maluleke has released the National and Provincial Government Audits for 2019/2020, providing an overview of government spending and areas of concern during the annual period.
In his first PFMA since taking office, Maluleke said there were “signs of improvement” seen in a number of areas. However, she urged government leaders to ensure “gradual and lasting improvements” in their performance.
“(Our office) cannot yet see the incremental and lasting improvements needed to prevent accountability failures and address them appropriately and consistently across national and provincial government,” she said.
“As a national audit office, our role is to help accountants and authorities achieve positive audit results, which will strengthen accountability and improve service delivery to the citizens we serve. This has been our goal for many years and we will remain true to this mission.
“However, where there are failures and reluctance to act, we will need to use the instruments given to us as part of our strengthened mandate to uphold accountability.”
Maluleke said his office will pay close attention throughout the year to identify material irregularities and ensure that accountants and authorities implement and meet their commitments regarding the report.
“We go, where we feel there is no progress, to invoke the instruments of the law, to ensure that there is appropriate and timely accountability.”
Failed companies
The country’s state-owned enterprises are of particular concern, and Maluleke expressed concern that a number of these entities are in serious financial difficulty and have not submitted financial statements for verification.
She pointed to South African Airways and LMT Products, a subsidiary of Denel, both of which are being rescued. She noted that SA Express is also in provisional liquidation.
“In addition, many public entities have disclosed in their financial statements uncertainty as to whether they will be able to continue to operate,” said Maluleke.
These include:
- The Oil and Gas Company;
- South African Broadcasting Corporation;
- Denel and three subsidiaries (Densure, Denel Aerostructures and Denel Vehicle Systems);
- Independent Trust for Development;
- South African Land and Agricultural Bank;
- South African Nuclear Energy Society;
Similar information was made in the financial statements of Eskom, which is one of the public entities that the Auditor General does not audit.
The GA report shows that the government had already issued guarantees of 445 billion rand to 11 public entities – including R350 billion in Eskom – and these entities had used the guarantees to obtain R374 billion in loans.
Maluleke said there are also key public entities that are also under financial pressure.
A total deficit of R64.95 billion was incurred by the 29% of public entities whose expenditure exceeded their revenue – 92% of the total deficit related to the Road Accident Fund.
There were 21 public entities that expressed uncertainty about their ability to continue to operate. They include:
- The Road Accident Fund;
- South African National Roads Agency (Sanral);
- Commercial property management entity and a number of provincial public entities.
“Even though most public entities could continue their operations by securing financing (loans, grants and overdrafts), delaying payments to creditors, reducing costs and resetting project priorities, these negative indicators raise concerns about to their financial viability, ”the report states.
She called on accountants and executives to pay special attention to this area.
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