AG report: ‘Government too slow’ in turning around ailing SOEs

The Auditor General’s office said has government has been lacking in turning around ailing state-owned enterprises (SOEs).

The AG was briefing Parliaments Portfolio Committee Public Enterprises on Wednesday on the annual audited statement of SOEs.

The report was based on the outcomes of the SAA, SA Express, Denel, Eskom, Transnet, Alexkor and the SA Forestry Company Limited.

AG report findings

Little improvement of SOEs

Auditor-general SA, and deputy business unit leader Fhumulani Rabonda said there was little improvement in the audit outcomes.

“There is an urgent need to finalise the majority of the SOE reforms that have been under government, and that includes the finalisation of the SOE funding criteria.”

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Rabonda said the control and maintenance of SOEs are lacking.

“Government indicated that the future of state-owned companies is under consideration by the Presidential State-Owned Enterprises Council (PSEC) and the continued existence will be informed by the value they create and whether they can be run as sustainable entities without a bailout from the fiscus.”

This is a summary of the portfolio's audit outcomes, there are a number of audits that are outstanding #AGReport pic.twitter.com/eGb1beTKrT

— Auditor-General SA (@AuditorGen_SA) October 12, 2022

“However, there is slow progress in the implementation of key reforms. This creates policy uncertainty in the SOE environment with them struggling to deliver on their mandates,” he said.

Eskom

While Eskom implemented load shedding once again, Rabonda was critical of the ailing parastatal.

“The audit of Eskom is delayed as a result of various issues including, late submission of information and adjustments of misstatements identified during the audit by the appointed auditors Deloitte.”

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Transnet and Safcol

Rabonda said Transnet had only managed to achieve 39% of its targets, while Safcol achieved 86% and identified material irregularities at both entities.

“The processes of dealing with these material irregularities is ongoing with Safcol. Disciplinary processes are ongoing at Transnet, but the process is taking long to finalise because of the complexities of dealing with employee and employer relations with employees lodging appeals against the cases reported against them.”

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Denel

Rabonda said Denel has for the past two years not submitted financial statements due to financial and operational challenges.

“The entity has committed to submit 2020-21 AFS by 30 November 2022”.

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SAA and SA Express

“South African Express Airways has not submitted financial statements for three financial years, The entity has been liquidated.

The audit of SAA and subsidiaries have been outstanding since 2018-19 due to business rescue proceedings,” he said.

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SOEs lack of oversight

The auditor-general said there is a lack of oversight in the SOEs.

“We found that leadership did not adequately exercise oversight responsibility over financial, performance reporting and compliance with applicable laws and regulations,” Rabonda added.

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