File photo by Waldo Swiegers/Getty Images.
Power utility Eskom still has the same internal control deficiencies which have resulted in negative audit outcomes for the past five years, the office of the auditor general told parliament’s standing committee on public accounts (Scopa) on Tuesday.
The embattled state-owned enterprise also continued to submit financial statements that “contained material misstatements in multiple account balances and disclosures”, said Madidimalo Singo, the business unit leader at the Auditor General of South Africa, as she and colleagues took the committee through the entity’s financial statements for 2023-24.
Singo said Eskom’s management had not taken sufficient steps to detect, record and address irregularities, particularly in supply-chain management.
“The reports of current and previous auditors over the same period have consistently highlighted material breakdowns in controls over compliance with applicable laws and regulations that have hindered the entity’s ability to prevent material non-compliance findings, resulting in qualified audit opinions,” she said.
While load-shedding has significantly decreased — Eskom fell two months short of a full year without the cuts in January — the entity was, by mid-December, owed just under R110 billion by errant municipalities. Chief executive Dan Marokane told parliament in December that the amount could reach over R120 billion by the end of March.
The company’s gross debt is over R400 billion, far outstripping its gross revenue. Between 2017 and 2024, it received qualified audit opinions.
Singo said Eskom still failed to take action against officials who violated supply-chain management rules, allowing irregular expenditure and non-compliance to persist.
Investigations into misconduct were slow, she said, and when consequence management was undertaken, it was largely ineffective, creating a culture where disregard for regulations went unchecked.
Despite repeated commitments from Eskom leadership to address these issues, little progress had been made due to weak accountability, poor oversight and inadequate monitoring.
The absence of proper compliance checks meant that irregularities only came to light during external audits.
The auditor general had urged Eskom’s management to take a more proactive approach by identifying the root causes of audit failures and strengthening controls across the organisation, Singo said.
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In January, the National Energy Regulator of South Africa approved electricity hikes of 12.7% for 2025-26, 5.36% for 2026-27 and 6.19% for 2027-28. Eskom had asked for 36.15% for 2025-26, 11.81% for 2026-2027 and 9.1% for 2027-28.
On Tuesday, Economic Freedom Fighters Scopa member Veronica Mente asked what effect the increases would have on the entity, after having declared “their systems are a mess, their leadership is a mess”.
Singo said the auditor general’s office was “particularly worried” about how Eskom managed expenditure. “If they don’t deal with irregular, fruitless and wasteful expenditure, the cost of electricity will continue to rise.”
The responsibility for effective quality control and compliance lay at the feet of Eskom’s board, she said. As for consequence management, she reiterated that it “takes quite a long time for investigations to be concluded”.
“We have told the board and management they have to fast track investigations into non-compliance, and when it comes to the audit action plan, if there isn’t satisfactory implementation, there must be consequence management.”
Mente also asked about the possibility of real-time audits, to which Singo responded that the auditor general provided continuous feedback to Eskom’s audit committee, management and board on the audit outcomes and recommendations for improvement.
She said the AG could explore doing a half-year review of Eskom’s financial statements and issuing a limited assurance engagement report, which would provide more real-time assurance.
The auditor general also conducted quarterly “status of records reviews” to assess areas of concern highlighted in the audits. This was another way to provide more real-time feedback.
Singo said the key to addressing the recurring problems was strengthening internal controls and accountability mechanisms at Eskom.
Specific deficiencies in internal control included weak controls that failed to detect, assess and prevent non-compliant procurement and lack of oversight and proper recording led to unaccounted losses.
Theft and fraud were also not detected or properly recorded, Singo said, worsening Eskom’s financial position.