SAA and Mango Audit Reports Are A ‘Horror Show’

South African Airways (SAA) and Mango airlines have received qualified opinions according to their audit reports, which were due in September last year, tabled in Parliament today.

According to Alf Lees, DA Shadow Deputy Minister of Finance, the adverse findings by the Auditor General partly explain why there has been a such a reluctance by SAA to release its financial statements for 2016/17.

These are yet to be made public after former Finance Minister Malusi Gigaba requested an extension, after SAA missed the deadline.

Lees said the DA will write to Finance Minister Nhlanhla Nene asking him to release SAA’s financials as a matter of urgency.

“It is odd that the Auditor General has chosen to table the audit reports in Parliament, which is a complete departure from standard practice where audit reports are released as part of annual reports,” said Lees.

According to the Auditor General’s report SAA incurred a net loss of over R5-billion – R5.57-billion to be exact, and its liabilities exceeded assets by R17.8 billion.

Auditor General Kimi Makwetu said: “Six consecutive years of operating losses have further eroded the capital base and this continues to impact on the entity’s ability to operate in a highly demanding and competitive environment.”

The audit reports expose a “horrific picture of poor governance and alleged instances of looting” said Lees, listing the following as examples:

• assets not being recorded in financial statements, while the existence of some assets recorded could not be verified.
• SAA’s Technical unit’s inventory could not be verified and there is a lack of controls in place to manage the inventory.
• glaring accounting irregularities on maintenance costs and using incorrect exchange rates were recorded.
• the SAA group has not established controls to maintain complete records of irregular expenditure and wasteful expenditure

Lees said: “Minister Nene will need more than a good reputation to clean the mess at SAA. It is a horror show which requires a complete change to the culture and business model of the airline if its fortunes are to be revived…”