Deteriorating financial health of SOEs increase burden: Auditor-General

Maluleke was briefing the media on the audit outcomes for national and provincial government on Wednesday.

Auditor-General (AG) Tsakani Maluleke says “weak controls and disciplines over financial and performance management as well as compliance” have caused a regression in the audit outcomes of state-owned enterprises (SOEs) over the past financial year.

Maluleke was briefing the media on the audit outcomes for national and provincial government on Wednesday.

“Our report sets out the deteriorating financial health of SOEs, which has increased the financial burden on government, through bailouts and guarantees. These concerns spill over into the ability of SOEs to fulfil their mandates and directly impact on the economy and ultimately, the lived experiences of South African citizens,” she said.

Maluleke said the audits of at least seven SOEs are still outstanding as there is uncertainty in the entities’ ability to continue operations.

She added that there is also a growing trend of late or non-submission of financial statements – tainting the ability to hold SOEs accountable and to implement consequence management.

“Therefore, it is important to for the executive and oversight to pay particular attention to addressing the deficiencies at SOEs and ensure that appropriate interventions are urgently implemented to enable them to effectively fulfil their mandates. Given the urgent challenges of economic hardship, jobs and inequality in our society, this cannot be overstated.”

Provincial audit outcomes and improvements

The AG revealed that the audit outcomes for six provinces have improved from the previous year.

Two provinces – Limpopo and Mpumalanga – have regressed in their outcomes with the audit status of the Free State remaining unchanged.

The AG's office recognised the improvements from last year and urged leadership structures in the provinces to continue to implement tighter financial controls.

“Our report acknowledges the gradual improvement in most of the provinces and we urge the provincial leadership and the legislatures to focus on implementing sustainable solutions at the provincial departments and their public entities. [This is] so that we can continue to improve audit outcomes, continue to improve the integrity and strength of public institutions, and even get to a point where we can demonstrably improve service delivery," she said.

Maluleke emphasised that although an increase in clean audits is welcome, more needs to be done to ensure sustained improvements.

“The improvements that we’ve seen in audit outcomes and year-on-year increases in clean audits are a feather in the cap of this administration. Some auditees are close to achieving a clean audit status and just need to get over the very last hurdles.

“With this acknowledgement in mind, we believe that the point that the [AG’s] office has been making that the desirability and the ability of institutions to attain this clean audit outcome is valid.

(With Inputs from South African Government Press Release)