Several state entities fail to submit their financial statements

The Passenger Rail Agency of SA (Prasa), the South African National Roads Agency Limited (Sanral) and South African Airways (SAA) all failed to submit their 2016-17 financial statements to the auditor-general.

So far, the Airports Company SA (R1.16bn), the South African Post Office (R719m) and the SABC (R687m) have recorded the highest levels of irregular expenditure, while the picture remained incomplete on the overall figure because the other entities’ annual financial statements had not been submitted to the auditor-general.

Auditor-General Kimi Makwetu was in Parliament on Tuesday to talk about his office’s state entity and government department audit outcomes.

Makwetu told a joint meeting of the standing committee on public accounts, the standing committee on the auditorgeneral and the standing committee on appropriations that Prasa, Sanral and SAA were just some of the entities and departments that had failed to submit their financial statements.

Prasa was one of the worstperforming state-owned entities in 2015-16 as it recorded high levels of irregular expenditure. The rail agency has also been rocked by leadership instability and the unresolved issue of its procurement of locomotives.

Sanral has been beset by the unresolved issue of electronic tolling noncompliance, which has affected its ability to raise money through bond issues.

SAA is grappling with a debt problem and implementation of its turnaround plans.

Makwetu also raised the alarm about the financial health of various entities given the lack of information about how they were being run.

The “SAA group, excluding Mango airlines, have not submitted financial statements yet, as management could not conclude … whether the company will be able to continue operations in future. Eleven SOEs [state-owned entities] (58%) incurred a deficit during 2016-17. These include Armscor and Necsa [South African Nuclear Energy Corporation],” he said.

Finance Minister Malusi Gigaba has written to National Assembly Speaker Baleka Mbete asking that SAA be granted permission to submit its annual report at the end of November, citing “financial challenges”, as well as “concerns raised by external auditors on the viability of the airline”.

The chairman of the standing committee on the auditorgeneral, Vincent Smith, said he was disappointed but not surprised at the lack of consideration given by departments to compliance because no sanction existed for undermining the office of the auditor-general.

“It’s a matter that we must discuss. There is also no penalty for late submission,” said Smith.