The Portfolio Committee on Public Enterprises was briefed by the Auditor-General (AG) on the audit outcomes of the Department of Public Enterprises (DPE) and state-owned enterprises for the 2017/18 financial year.
Also, the committee received a briefing from the Department of Public Enterprises on its annual report and financial statements for the 2017/18 financial year.
Briefing the committee, the AG said four audits are not part of the report as they were not finalised during the time of tabling of the report. Denel, Safcol, South African Express (SAX) and South African Airways (SAA) did not submit their annual reports and financial statements. The report presented by the AG included the DPE, Eskom, Transnet and Alexkor.
The failure by SAX, Safcol, Denel and South African Airways to submit their financial statements for audit to the AG shows a stark reality of the challenges in state-owned enterprises, the committee said it is shocking and concerning that financial statements have not been submitted.
The committee was of the view that the AG needs to be empowered and given more powers in order to do more when recommendations are not followed through by department and entities. The committee said the AG cannot rely on other people to take action on recommendations that the AG has made. The committee said it is unacceptable that year in, and year out, departments and entities contravene legislation without any consequences. The new Act will allow and enable the AG’s office to have more muscle and be able to effect change on its audit opinions.
The committee said the Public Audit Amendment Bill is before the President for consideration. The Bill will assist the AG to give it greater powers to act against those responsible for wasting public funds.
The Chairperson for the committee, Ms Lungi Mnganga-Gcabashe, questioned where external private auditors were when state-owned entities have high irregular expenditures.
The AG reported an increase of approximately R4.9 billion to R27 billion, which is attributed to irregular expenditure which is incurred through non-compliance with the supply chain management. The committee said this is not a pretty picture and is disastrous.
Responding to questions, Sizwe Ntsaluba Gobodo (SNG), the private auditor, said it does raise issues and presents findings and recommendations during its investigations to entities. SNG said it is incumbent on the entities to act on findings and recommendations.
The DPE received a clean audit. However, the committee said the governance outcomes of the department should filter down to the entities which are struggling. The committee welcomed and lauded the department for getting a clean audit.
The committee cautioned the department for setting and creating targets that it is unable to achieve.
Issued by The Parliamentary Communication Services on behalf of the Chairperson of The Portfolio Committee on Public Enterprises, Ms Lungi Mnganga-Gcabashe