Treasury kills plan to exempt Eskom from reporting irregular spending

The Minister of Finance has determined that Eskom will not be granted a partial exemption from section 55 of the Public Finance Management Act requiring it to disclose irregular, fruitless and wasteful expenditure and material losses from criminal conduct in its annual financial statements.after industry stakeholders, political parties and economic experts heavily criticised the plan.

In total, fifty-six comments were received, with twenty-three comments received in formal correspondence and thirty-three comments received through emails, covering a broad spectrum of accounting and reporting, auditing, governance, legal principles, and public interest issues have been duly considered.

“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. “The extensive PFMA reporting requirements makes it more onerous for a State-Owned Entity compared to a listed company to have its financial statements qualified, even when there is no financial mismanagement or corruption,” it said.

Despite not moving ahead with the exemptions, Treasury said that it still wants to review and restructure the reporting of irregular, wasteful and fruitless expenditure.

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