Auditor-General Tsakani Maluleke has made damning findings against the South African Post Office (SAPO) when it obtained yet another disclaimer of audit opinion for the sixth year during the 2024/25 financial year.
This happened as the group recorded a net loss after tax of R117 million, and its revenue declined from R1.6 billion to R1.2 billion in its annual report.
Maluleke was unable to express an opinion on the financial statements.
“I was unable to obtain sufficient appropriate evidence to provide a basis for an audit opinion on these consolidated and separate financial statements,” she said.
Maluleke blamed the sad state of finances on the accounting authority for not exercising adequate oversight regarding compliance and related internal controls.
“Management did not implement processes to ensure that compliance with legislation was adequately reviewed and monitored,” she said.
In her audit report tabled in Parliament this week, the A-G found that SAPO was a going concern, amid its current liabilities exceeding current assets.
“The public entity was therefore entirely commercially insolvent because it was unable to pay its debts when they became due, even though its assets exceeded its liabilities.”
According to Maluleke, SAPO did not account for post-employment benefit plans in accordance with the requirements.
“I was unable to determine whether any further adjustments were necessary to the pension fund value included in the net present obligations stated at R477 658 000.”
The valuation of the state-owned company’s heritage assets was not performed.
“I was unable to confirm the fair value of heritage assets by alternative means. Consequently, I was unable to determine whether any adjustment was necessary to heritage assets stated at R46,247,000,” said the A-G.
Maluleke also noted that SAPO, which was placed under business rescue in July 2023, had its business rescue plan adopted in December 2023.
“The plan has not yet been concluded as of the date of this audit report, as the funding required to conclude the plan has not yet been confirmed.”
The A-G also found material misstatements in the annual performance report submitted for auditing.
“These material misstatements were in the reported performance information for customer satisfaction and the regulated service quality standards objective. Management did not correct the misstatement and I reported material findings in this regard.”
Maluleke also found SAPO R74m in irregular expenditure after flouting procurement processes and R4.3m in fruitless and wasteful expenditure due to creditors not being paid.
The entity did not implement consequence management processes for transgressions of applicable policies, laws, and regulations.
There was also no evidence of disciplinary action taken against officials who caused fruitless and wasteful expenditure.
“This was because investigations into fruitless and wasteful expenditure were not performed,” she said, adding that allegations of theft exceeding R100,000 were not reported to the police.
Business rescue practitioners Anoosh Rooplal and Juanito Damons said the disclaimer of audit opinion was due to the going concern challenges.
Rooplal and Damons painted a rosy picture of SAPO, saying the year under review marked a turning point for the entity as it made significant strides under business rescue to stabilise its operations and lay the groundwork for long-term sustainability.
They said the bank has settled R1 billion with creditors and earmarked a further R509m for statutory obligations, while a R7.4 billion debt write-back boosted SAPO’s balance sheet, resulting in its positive R721m net asset value since 2012.
The business rescue practitioners claimed that strict governance and control measures were implemented by way of consequence management.
“Through the business rescue proceedings, SA Post Office has conducted over 926 separate disciplinary hearings, which resulted in the dismissal of approximately 442 employees due to misconduct.”
Rooplal and Damons maintained that the financial statements were prepared in accordance with International Financial Reporting Standards, the Public Finance Management Act, and the Companies Act.
“The accounting policies have been applied consistently compared to the prior year.”
