Eskom's Treasury exemptions – Understanding both sides of the coin from an auditing perspective
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GUEST Tshepo Mofokeng - Board Chair of The Institute of Internal Auditors South Africa
Eskom chairperson Mpho Makwana's quest to achieve an unqualified audit in the first year of the new board's tenure is what lies behind the unusual exemption from parts of the Public Finance Management Act (PFMA) granted by Finance Minister Enoch Godongwana last week. The exemption from parts of the PFMA that require that irregular, wasteful and fruitless expenditure, no matter the reason, be disclosed in notes to the annual financial statements has raised suspicion across the political spectrum that Eskom is seeking to cover up corruption. A similar exemption was provided to Transnet last year, but went unnoticed. Over the past 24 hours, bits of information have leaked out in dribs and drabs, creating further confusion. On Monday evening, the Treasury eventually provided an explanatory note and released the letters between Makwana and Godongwana over the past three weeks. In its explanation, the Treasury said that irregular expenditure or losses due to corruption will still have to be disclosed in Eskom's annual financial statements. But Eskom will not be obliged to disclose all irregular expenditure in the financials. It will still have to disclose the particulars of all irregular expenditure, losses, recoveries, and so on in the annual report.
Eskom chairperson Mpho Makwana's quest to achieve an unqualified audit in the first year of the new board's tenure is what lies behind the unusual exemption from parts of the Public Finance Management Act (PFMA) granted by Finance Minister Enoch Godongwana last week. The exemption from parts of the PFMA that require that irregular, wasteful and fruitless expenditure, no matter the reason, be disclosed in notes to the annual financial statements has raised suspicion across the political spectrum that Eskom is seeking to cover up corruption. A similar exemption was provided to Transnet last year, but went unnoticed. Over the past 24 hours, bits of information have leaked out in dribs and drabs, creating further confusion. On Monday evening, the Treasury eventually provided an explanatory note and released the letters between Makwana and Godongwana over the past three weeks. In its explanation, the Treasury said that irregular expenditure or losses due to corruption will still have to be disclosed in Eskom's annual financial statements. But Eskom will not be obliged to disclose all irregular expenditure in the financials. It will still have to disclose the particulars of all irregular expenditure, losses, recoveries, and so on in the annual report.
