The ultimate gravy train
PRASA: BELEAGUERED ORGANISATION’S 2019 FINANCIALS ARE SHAMEFUL
Fruitless and wasteful expenditure amounted to R383 million.
Incurred a deficit in revenue of R1.7 billion (2018: R1.4 billion surplus). However, without the government grant of R3.7 billion (2018: R4.7 billion), the deficit would have been R5.4 billion (2018: R3.3 billion deficit); Squandered billions; Could not provide appropriate documentation to enable the external contractors to write up the books; and
Could not provide appropriate audit evidence to enable the office of the auditor-general (AG) to do its job.
The AG issued a disclaimer of opinion on the 2019 annual financial statements. That means no reliance can be placed on the financial statements.
A disclaimer of opinion is worse than the qualified opinion issued on the 2018 annual report.
Recently, Transport Minister
Fikile Mbalula announced that he has dissolved the interim board, and has placed Prasa under administration.
The AG had 79 findings, including the following:
Irregular expenditure amounted to R27.3 billion (2018: R26.2 billion); 41 cases with criminal intent are currently under investigation by the Hawks. Management was not able to provide any report or indication of when these matters will be finalised.
Fruitless and wasteful expenditure amounted to R383 million (2018: R1 billion).
The AG could not verify the value of property, plant and equipment (PPE) of R42.6 billion.
There was insufficient appropriate audit evidence to show that management had properly accounted for the unspent conditional grants and capital subsidy and grants amortised in accordance with Generally Recognised Accounting Practice (Grap) requirements.
Prasa did not keep proper records, did not keep sufficient or appropriate audit evidence, did not follow required accounting conventions, and did not maintain complete governance records. The AG also raised material findings on the reliability of the reported performance information.
There were numerous material irregularities, including the locomotive saga (R2.5 billion has gone down the drain, and the locomotives are not fit for purpose), and the appointment of overhaul and upgrade contractors resulted in Prasa overpaying for the work.
Prasa has not provided evidence of any consequence management.
The AG will be following up on various investigations and the implementation of planned actions (disciplinary steps, financial recovery, and civil and criminal cases arising from the outcome of the investigation) during the next audit.
The unfair procurement process for the R3.5 billion contract purchase of locomotives.
The appointment of general overhaul and upgrade contractors since 2009, which has been handed over to the Special Investigating Unit.
The procurement process followed in the appointment of the signalling contractor.
The processes followed in appointing suppliers to provide bus services in the Western Cape, surveillance services (drones), security services, emergency repairs to signalling equipment, and the control of vegetation.