SAA does not anticipate a clean audit soon

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It will take a number of years for SAA to have a clean audit, parliament heard on Wednesday. 

The national carrier, which went into business rescue in December 2019 and exited in April 2021, has not had a clean audit for several years, and is still being audited for the financial years 2018-19, 2019-20, 2020-21 and 2021-22.

SAA’s low-cost subsidiary, Mango Airlines, was also placed under business rescue in July 2019 and has not taken to the air since.

“Producing SAA group financial statements for four financial years [and] having them audited simultaneously starting from August 2022 to complete in March/April 2023 was a mammoth task,” SAA said in a presentation to parliament’s portfolio committee on public enterprises on Wednesday.

“Some of the years relate to the difficult years when SAA was confronted with many challenges. The business rescue processes at both SAA and Mango further complicated the audit.”

The last finalised audit for the airlines was in February 2022, for the 2017-18 financial year. SAA obtained a qualified audit opinion, while Mango Airlines obtained a disclaimer.

A qualified audit opinion means the financial statements contain material misstatements in specific amounts, or there is insufficient evidence to conclude that specific amounts included in the financial statements are not materially misstated, according to the Auditor General of South Africa. 

A disclaimer means the entity under audit provided insufficient evidence in the form of documentation on which to base an audit opinion. 

On Wednesday, SAA told the public enterprises committee that a final draft external audit report was expected at the end of May and would be deliberated at various governance levels in June.

Last week the Competition Commission recommended that the Competition Tribunal approve a 51% disposal of SAA shares to the Takatso consortium.

The next step, should the tribunal give its nod, would be a process to get permission from the relevant aviation regulators to transfer ownership and management of the national carrier. 

SAA told parliament that it would also need to set up new governance structures for effective management and decision-making, which may involve forming a new board of directors and executive leadership.  

Public Enterprises Minister Pravin Gordhan appointed an interim board in April, with former tourism minister Derek Hanekom as chairperson.

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