Auditor-general urges SAA to work on governance structures

The board and management of SAA, which posted irregular expenditure of R44bn, should improve the ailing airline’s governance and internal capacity to turn it around, the auditor-general said. 

Briefing the standing committee on public accounts (Scopa) in parliament on Tuesday about SAA’s audit outcomes for the 2018/19, 2019/20, 2020/21 and 2021/22 financial years, a team from the auditor-general’s office recommended that executive leadership positions be filled with skilled and experienced personnel.

Officials responsible for financial statements and supply chain management must be properly trained and the departments capacitated with qualified and experienced staff. 

The government’s cadre deployment strategy has long been accused of engineering the downfall of many state-owned entities.

SAA is among state-owned enterprises that were hollowed out during the state capture years under former president Jacob Zuma.

The airline received R48.3bn in government bailouts from 2017/18 to 2022/23. It was slapped with disclaimed audit opinions by the auditor-general from 2018/19 to 2021/22. 

It was placed in business rescue on December 5 2019, mainly because of operational instabilities, pressure on the fiscus, lack of funding and withdrawal of services by key service providers, among others. It exited the rescue process on April 30 2021.

In 2018 to 2022 irregular expenditure increased from R22bn to R44.5bn, while fruitless and wasteful expenditure increased from R24.8m to R207.3m over the four-year period. 

The auditor-general said the 2022/23 audit has been completed but not yet signed “as we are still busy with internal SAA governance processes to adopt the final financials and the audit reports”. The audits were expected to be signed by end-September. 

The auditor-general recommended that key policies and procedures that drive financial and record-keeping functions must be reviewed and updated or designed and implemented where they did not exist. “The board and management must ensure that strict consequence management practices are ingrained in the culture of SAA. Officials who transgress or permit non-compliance must be held accountable for their actions.”

The executive was advised to mandate and support the SAA board to establish appropriate governance structures to stabilise operations and to grow the entity in the best interests of the shareholder. 

It must, among other things, drive accountability with the board to improve performance and achieve planned targets in the shareholders compact, and hold the board accountable for submission of outstanding financial statements for auditing. 

mkentanel@businesslive.co.za