Post Office's late financials a concern - AG

2016-11-17 17:24 - Lameez Omarjee
Post a comment 0

RELATED ARTICLES

Johannesburg – The South African Post Office (Sapo) was one of two public entities which received a qualified audit opinion by the Auditor General South Africa (Agsa). The other entity was the South African Broadcasting Corporation (SABC).

A qualified opinion means that the information obtained by the auditor general (AG) was limited in scope. This means that not all of the information was disclosed in the financial statements, which impacts the AG’s ability to draw a conclusive opinion on the state of financial management by auditees. 

According to the audit report for 2015/16, which was released on Wednesday, the loss-making public entity submitted financial statements late.

“Sapo submitted the financial statements for the 2015/16 financial year after the legislated 31 May 2016 due to a lack of skills and number of resignations within the finance unit after year-end,” the report stated.

According to the AG, Sapo required “more time” to make adjustments to the financial statements regarding taxation, pension and provident fund information and heritage asset verification which was still incomplete. Sapo also still had to make provision for the possible divisionalisation of the Courier Freight Group and clearing accounts in Postbank, stated the report.

The AG audits 10 of the 21 public entities in the country. Among its concerns is the delay in audits, as well as the going concern of these entities.

Sapo’s audit was finalised on 19 September 2016.

The report found that irregular expenditure by the entity came to R127.10m. This is down 65% from the previous year’s level at R363.21m. Similarly fruitless and wasteful expenditure reduced significantly by 87% from R53.86m in 2014/15 to R7.05m.

For the past two years Sapo had been making losses. Fin24 previously reported that Sapo made a R1.1bn loss for the year ended March 31, 2016. Sapo recorded a R1.4bn loss for the previous financial year. As a result 221 post offices were closed.

READ: Post Office closes 221 outlets amid R1.1bn loss

A return in profitability is not expected before 2018, according to CEO Mark barnes’ statement in the annual report. Barnes was appointed in January.

In the Medium Term Budget Policy Statement (mini-budget) Treasury recognised the role of the new board and the appointment of a CEO.

ALSO READ: Treasury's SOE liabilities headache

So far the company had raised funding to repay creditors, implement a turnaround plan and reached a settlement with labour to mitigate the possibility of strike action. Treasury has set aside R4.4bn as guarantee exposure for Sapo. 

Read Fin24's top stories trending on Twitter: