No exemption on irregular expenditure reporting for Eskom - Godongwana
Finance Minister Enoch Godongwana has resolved not to grant Eskom a partial exemption from disclosing irregular, fruitless and wasteful expenditures and material losses from criminal conduct in its annual financial statements.
In April, Godongwana granted Eskom an exemption from disclosing its expenses in its financial statements for three years, saying the expenses will only be reported in its annual report.
He later backtracked on his decision after the announcement received backlash from the public, including political parties and civil society movements.
Godongwana said a final decision will be made after receiving public comments on the matter.
In a statement released on Wednesday, Godongwana said his department received 56 comments on the proposed exemption.
He said that Eskom needs to do more to reduce fraud and corruption before the exemption can be considered.
"As Eskom attempts to recover from the devastating impact of state capture, and take steps against past and current corruption, it needs to ensure that its anti-corruption strategy is credible and has the support of key stakeholders like investors, lenders, suppliers, customers, and the public," says Godongwana.
He adds that the department also engaged with audit firms, professional auditing and accounting bodies, a rating agency, and other relevant authorities to discuss the challenges at Eskom.
"Although irregular expenditure does not automatically equate to fraud and corruption, many comments submitted view irregular expenditure as an indicator of how SOEs are managing their finances.
“Accounting and auditing experts noted that SOEs are currently subject to more onerous accounting and reporting standards than commercial companies, as they are required to comply with both the PFMA and the Companies Act, as well as the International Financial Reporting Standards (IFRS) and JSE Debt Listing Requirements," he notes.
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