SAA wasted R210 million in five years

South African Airways lost R207.3 million over five years to fruitless and wasteful expenditure as it struggles to turn its fortunes around. 

The Auditor-General (AG) revealed this in a report presented to Parliament’s Portfolio Committee on Public Enterprises.

The Auditor-General told the committee that it had completed audits for the four financial years until the 2022/2023 financial year. 

SAA received audit disclaimers for all four years due to material misstatements in the company’s financial reports. 

The Auditor-General cited poor record-keeping and inadequate governance as reasons for the material misstatements. 

South Africa’s Public Finance Management Act (PFMA) requires the public entity to include particulars of fruitless and wasteful expenditure in the notes to the financial statements. 

However, the group did not include all fruitless and wasteful expenditure incurred due to inadequate controls to maintain complete records of fruitless and wasteful expenditure, the report said. 

Consequently, the AG could not determine whether any further adjustments were necessary to the fruitless and wasteful expenditure included in the table below.

The story is even worse when it comes to irregular expenditure at the state-run airline. 

The AG said SAA continues to fail to comply with procurement and contract law, as irregular expenditure over the four audited years rose from R22 billion to R44.5 billion. 

This is not even the complete picture, as “The group did not include all irregular expenditure incurred in the notes to the financial statements due to inadequate controls to maintain complete records of irregular expenditure”.

“In addition, we could not obtain sufficient appropriate audit evidence to confirm irregular expenditure incurred.” This was again due to poor record-keeping at SAA. 

“Failure to implement consequence management encourages a culture where the disregard for legislation, policies, and procedures thrives,” the report said.