Eskom denied exemption on annual reporting of wasteful expenditure
Finance minister Enoch Godongwana has decided not to grant Eskom a partial exemption from disclosing irregular, fruitless and wasteful expenditure and material losses from criminal conduct in its annual financial statements.
In March, Godongwana had granted Eskom a partial exemption from section 55(2)(b)(i) of the Public Finance Management Act (PFMA) and Treasury regulation 28.2.1 for three years.
“In total, 56 comments were received, with 23 in formal correspondence and 33 received through e-mails,” the Treasury said on Wednesday.
The comments covered a spectrum of accounting and reporting, auditing, governance, legal principles, and public interest issues which were duly considered, it said.
“The Treasury also engaged audit firms, professional auditing and accounting bodies, a ratings agency, and other relevant authorities to discuss the challenges and seemingly onerous compliance reporting requirements applicable to state-owned entities (SOEs) such as Eskom.”
It said though irregular expenditure did not automatically equate to fraud and corruption, many comments submitted viewed irregular expenditure as an indicator of how SOEs were managing their finances.
“The Treasury remains of the view that SOEs are facing legitimate technical challenges regarding compliance reporting, and the need to differentiate between corrupt and suspicious transactions and expenditure made in good faith but not necessarily complying with the plethora of financial and non-financial laws and rules.”
It said the comments from professional bodies and experts provided the basis for further engagement on the accounting and compliance reporting challenges, and to help develop a better framework for compliance reporting in SOEs.
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