Auditor-General Kimi Makwetu. Picture: Dumisani Sibeko/African News Agency (ANA) Archives
Auditor-General Kimi Makwetu. Picture: Dumisani Sibeko/African News Agency (ANA) Archives

Prasa ’biggest contributor of fruitless and wasteful expenditure’ in transport portfolio

By Mayibongwe Maqhina Time of article published Nov 11, 2020

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Cape Town - The Passenger Rail Agency of South Africa (Prasa) has again obtained the worst audit opinion for 2019/20 for the second year in a row due to material misstatements in its financial statements.

The entity also emerged as the biggest contributor to fruitless and wasteful expenditure to the tune of R48.3m within the transport portfolio.

This emerged when the office of outgoing Auditor-General Kimi Makwetu briefed the committee on the audit outcome of the entities falling under the Transport Department.

Business executive Polani Sokombela said Prasa had been beset by various challenges that ranged from governance, lack of compliance with legislation and failing infrastructure.

"The entity's service offering to rail commuters is diminishing at alarming levels which is evident by the passengers being at its lowest level since 2012/13 financial year," he said.

Sokombela also said the drop in Metrorail passenger numbers affected their ability to generate revenue.

"A concrete action needs to be taken at Prasa," he said.

The metrorail passenger numbers have dropped from 448 million in 2015/16 to 132 million in the financial year under review. The fare revenue has dropped from R1.9 billion to R630m during the same period.

Sokombela also said Prasa was behind schedule in terms of its new rolling stock due to a number of supply chain management deficiencies, and that the lack of infrastructure development impacted on deployment of new trains.

“It is important that these are attended to as a matter of urgency. Capital spend in relation to the capital subsidies received remain significantly low," he said.

Sokombela said the financial viability and sustainability of Prasa remained a concern and there were multiple significant issues, including ineffective internal controls.

"These deficiencies require urgent attention in order to improve the stagnant audit outcomes. The board must focus its attention on bringing stability by ensuring that key positions are filled."

He also said record-keeping issues remained unaddressed with incomplete annual financial statements as at July 31.

"Deficiencies previously noted over asset management have remained unaddressed in respect of the lack of credible asset register, inadequate records to support disclosed projects and inadequate records relating to network assets."

AGSA's Mary-Ann Whitford said Prasa was the largest contributor to fruitless and wasteful expenditure amounting to R48.3m identified in the current year related to interest and penalties (R34.4m) and incorrect rates used for overtime (R12.4m).

She also said Prasa was among the biggest contributors to irregular expenditure to the tune of R1.235 billion, followed by Sanral with R342m and ACSA at R560m.

Sokombela said the amount incurred by Prasa made it the highest contributor in the country.

"That is not a nice picture to see. The Department of Transport as a shareholder is supposed to exercise oversight," he said, adding that the entity reached 17.5% of its targets.

Corporate executive Solly Segooa said Prasa, along with South African National Roads Agency (Sanral) and Airport Company of South Africa (Acsa), have been identified for probing of material irregularities in its finances.

"The audit teams are still busy assessing if there are any potential material irregularities for the current financial year," Segooa said.

Committee chairperson Mosebenzi Zwane said they could not afford to have an unchanged situation at Prasa.

"We can't have a situation where we are counted as this portfolio committee amongst the structures who failed to redirect Prasa to a required direction.

"With positive energy we should be able to do that and focus on Prasa. It is our view that it is correct, not forgetting other entities." he said.

"We will heed that call and see next time if we can't have better results. With focus and capacity the portfolio committee possesses, we must be able to have impact in changing the status quo and behaviour in this entity,” Zwane said.

Political Bureau

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