Auditor-General Tsakani Maluleke has published the national and provincial government audits for 2019/2020, providing an overview of government spending and points of concern over the annual period.
In her first PFMA since taking office, Maluleke said that there were some ‘signs of improvement’ seen in a number of areas. However, she strongly urged government leaders to ensure ‘progressive and sustainable improvements’ in their outcomes.
“(Our office) cannot yet see the progressive and sustainable improvements required to prevent accountability failures and deal with them appropriately and consistently across national and provincial government,” she said.
“As the national audit office, our role is to assist the accounting officers and authorities in achieving positive audit outcomes, which will strengthen accountability and improve service delivery to the citizens we serve. That has been our objective for many years and we will remain steadfast in that mission.
“However, where there are failures and unwillingness to act, we will have to employ the instruments we have been given in our enhanced mandate to enforce accountability.”
Maluleke said her office will pay extra attention throughout the year to identify material irregularities and ensure that the accounting officers and authorities implement and see through their commitments on the report.
“We will, where we feel there is no progress, invoke the instruments in the law, to ensure that there is appropriate and timely accountability.”
One particular point of concern is the country’s state-owned enterprises, and Maluleke expressed concern that a number of these entities are in serious financial difficulty and did not submit financial statements for auditing.
She pointed to South African Airways and LMT Products, a subsidiary of Denel, which are both under business rescue. She noted that SA Express is also under provisional liquidation.
“In addition, many state-owned entities disclosed uncertainty in their financial statements whether they will be able to continue as a going concern,” said Maluleke.
- The Petroleum Oil and Gas Corporation;
- South African Broadcasting Corporation;
- Denel and three subsidiaries (Densure, Denel Aerostructures and Denel Vehicle Systems);
- Independent Development Trust;
- Land and Agricultural Bank of South Africa;
- South African Nuclear Energy Corporation;
A similar disclosure was made in the financial statements of Eskom, which is one a number of the state-owned entities that the auditor-general does not audit.
The AG’s report shows that government had already issued guarantees of R445 billion to 11 state-owned entities – of which R350 billion was to Eskom – and these entities had used the guarantees to obtain R374 billion in loans.
Maluleke said that there are also key public entities that are similarly 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 disclosed uncertainty about whether they will be able to continue as a going concern. They include:
- The Road Accident Fund;
- South African National Roads Agency (Sanral);
- Property Management Trading Entity and a number of provincial public entities.
“Even though most public entities would be able to continue their operations through obtaining funding (loans, grants and overdrafts), delaying creditor payments, cutting costs and reprioritising projects,these negative indicators raise concerns about their financial viability,” the report states.
She called on accounting officers and executive leadership to pay serious attention in this area.