Auditors hit Eskom hard over records
Answers regarding R11bn ‘unsatisfactory’
AUDITORS have criticised Eskom for its lack of proper record-keeping on R11 billion in irregular expenditure incurred when its finances for 2020-21 were audited.
The auditors found that non-availability of records hampered verification of the spending processes.
“This record-keeping is an issue to be addressed properly before one can say how we prevent and start addressing issues around irregular expenditure,” auditor Siyakhula Vilakazi said when the office of Auditor-General Tsakani Maluleke, through audit firm Sizwe Ntsaluba-Grant Thornton, briefed the standing committee on public accounts on the audit of Eskom’s finances.
Vilakazi said they have been qualifying Eskom on irregular expenditure since 2016-17 as there was no evidence it complied with the Public Finance Management Act (PFMA).
“When we ask for explanations from Eskom as to why those are not disclosed as irregular expenditure, most of the time there are no satisfactory answers,” he said.
Vilakazi maintained there was often no documentation to show why irregular expenditure went undisclosed.
“This is something that has been happening since 2016-17 up until now.”
Vilakazi said Eskom often claimed that the irregular expenditure auditors picked up was linked to legacy contracts from years ago, but the audit revealed some irregular expenditure were related to recent contracts. MPs also heard that Eskom management did not do enough to address the matter as they felt it could live with qualification on PFMA non-compliance.
The report tabled to the Scopa showed that Eskom incurred R11 billion irregular expenditure broken down as follows: s2 BN IN USE OF SOLE SOURCE s2 BN INCORRECT CLASSIFICATION AS AN EMERGENCY
s2 BN TENDER PROCESSES NOT adhered to and insufficient delegation OF AUTHORITY
s2 BN IN FLOUTING 0REFERENTIAL 0ROCUREMENT !CT AND
s2 BN IN BREACH OF MORE THAN one commercial requirement.
Vilakazi told MPs that the audit had made other findings in addition to non-compliance with PFMA.
They included material misstatements in the submitted financial statements, expenditure management, procurement and contract management, consequence management and revenue generation.
About financial misstatement, Vilakazi said the main areas were around inventory.
“When financial statements were submitted to us at the end of May, they were working to ensure disclosure and figures were accurate. That took very long to get us to a correct figure.”
On revenue management, Eskom referred to recovering debts from municipalities and big corporations.
“When you look at households’ accounts, you find there is no evidence of warning letters or notification sent to customers to please pay up.
“Where customers are disconnected, when we ask for evidence to find s/he was disconnected, in many instances we did not find that.”
Meanwhile Eskom has threatened to serve legal notices to municipalities failing to load shed. It said it had reported several metros and key industrial sites to the National Energy Regulator of South Africa (Nersa).
Eskom distribution executive Monde Bala and chief executive Andre de Ruyter gave an update on the state of load shedding yesterday. The utility was ready to lift load shedding by 5am on Saturday as it had managed to recover several megawatts from several of its plants.
Bala declined to name municipalities which did not comply, saying that was contained in agreements these “defaulting parties’ had entered into with Eskom. He, however, indicated that Eskom had already drafted the letters to them and Nersa, informing them about possible remedial actions.