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The Portfolio Committee on Public Enterprises received a briefing today from the Auditor General of South Africa (AG) on the audit outcomes of the Department of Public Enterprises (DPE) and its entities for the 2020/21 financial year. The committee was also briefed by the DPE on its annual report and financial statements for the 2020/21 financial year.
 
The AG told the committee that the portfolio has remained stagnant when compared to the previous year. The DPE and the South African Forestry Company Limited (SAFCOL) auditees received unqualified audit opinions with findings on compliance with legislation. The committee heard that Eskom and Transnet audit opinion remain qualified.
 
The AG reported that the South African Airways was in business rescue until 30 April 2021 and the South African Express is currently in provisional liquidation, both audits remain outstanding. The committee heard that Denel did not submit financial statements as it is currently experiencing financial difficulties, loss of key resources and is addressing significant financial statement issues raised in 2019-20 audit. Regarding Alexkor, the AG said the entity’s audit is still in progress and is set to finish during November.

The AG highlighted that the prevalent instances of noncompliance are in the areas of expenditure management; supply chain management; revenue management; consequence management; and material misstatements identified in the financial statements submitted for auditing.

In most instances, findings raised are reoccurring, indicating weaknesses in the implementation of audit action plans and an effective culture of accountability.

The AG said leadership should put measures in place to ensure that there are adequate reviews on the annual financial statements, annual performance reports and monitoring of compliance with laws and regulations.
 
On irregular expenditure, the AG said the major contributors to the irregular expenditure are Transnet with R14 billion and Eskom with R11.6 billion. Procurement and contract management irregularities remain the cause of irregular spending at these entities, said the AG. Also, the AG said consequence management remains a challenge at Eskom and Transnet, while the department and SAFCOL did not have material noncompliance findings on consequence management.
 
The committee expressed its concern over the non-submission of annual financial statements of the department and its entities. The committee was of the view that a solution needs to be found to immediately address the matter. The committee has agreed to write to the Office of the Speaker of the National Assembly to report what has been reported to it by the Office of the AG.
 

Issued by the Parliamentary Communication Services on behalf of the Chairperson of the Portfolio Committee on Public Enterprises Khaya Magaxa