Eskom’s multi-billion-rand financial misstatement
Eskom’s financial statements received a qualified audit opinion related to R16.3 billion that Eskom reported as “savings from turnaround strategies”.
Eskom’s financial statements were independently audited by Deloitte and Touche for the 2025 financial year.
Eskom’s financial statements received a qualified audit opinion from Deloitte and Touche, which means they contain material misstatements.
In the case of Eskom, the misstatements were related to R16.3 billion that Eskom reported as “savings from turnaround strategies”.
Deloitte and Touche stated that R2.9 billion, which was reported as savings from ten specific initiatives, was overstated.
It said that this figure was overstated based on the supporting audit evidence that reflected the actual result.
Eskom also overstated R3.4 billion of savings, which was related to seven other initiatives due to management applying inappropriate estimates and judgments.
Eskom further reported R1.4 billion of savings related to “contract negotiations, once-off purchase orders and standard rate contracts”.
Deloitte and Touche stated that it could not find sufficient audit evidence that the R1.4 billion savings occurred.
Deloitte concluded that Eskom overstated its “savings from turnaround initiatives” by R6.3 billion. It could also not find evidence of a further R1.4 billion in savings.
This means that Eskom potentially overstated its turnaround savings by R7.7 billion, which is unbecoming of a top company.
Due to these significant and material misstatements, Eskom did not receive a clean audit, and its financials received an independent qualified audit opinion.
Eskom addressing the qualified audit opinion
Eskom said it received a qualified external audit opinion for its 2025 financial statements due to incomplete or inaccurately maintained records.
“These records did not comply with legislative requirements relating to irregular expenditure and losses due to criminal conduct,” it said.
“Issues raised in the prior year’s audit qualification were not adequately addressed and continued into 2025. Several internal control deficiencies were also highlighted.”
In December 2024, Eskom has launched a three-year audit recovery programme to achieve the standards required for an unqualified audit opinion.
The programme is governed by the Audit Recovery Oversight Committee, chaired by the Group Chief Executive (GCE).
Its primary objective is to restore the integrity of Eskom’s internal control systems, resolve recurring audit findings, and enhance audit preparedness.
The programme also aims to support unqualified audit outcomes and ensure the timely publication of Eskom’s annual financial statements.
Key focus areas include strengthening governance frameworks, fostering a culture of accountability, and improving documentation and recordkeeping.
The power utility is also enhancing compliance with internal controls across critical business processes.
Eskom is also investing in digital systems and tools, while building specialist capacity across finance, assurance, and other oversight functions.
“Despite being launched with only three months remaining in FY2025, the programme has already shown tangible results,” Eskom said.
“Approximately 90% of external audit findings raised since FY2021 have been addressed, pending audit verification.”
To further strengthen its ability to proactively address integrity risks, Eskom established the Group Investigations and Security Unit.
This unit works in close coordination with the Ethics Office and Internal Audit to ensure a unified and robust response to incidents of crime, fraud, and corruption.
Eskom has strengthened its financial capacity by onboarding additional finance professionals in key areas of the business.
“With foundational elements now in place, management is optimistic about achieving an unqualified audit opinion,” it said.
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