National Treasury tries to calm the waters over the latest Eskom furore.
National Treasury has provided its reasoning for granting embattled power utility Eskom a partial exemption to sections of the Public Finance Management Act .
“A major risk of having non-material, non-corrupt transactions reported in the annual financial statements include a higher likelihood of qualified audit opinion – which other listed companies do not face – that triggers loan covenants,” it said. Irregular expenditure is not necessarily corrupt or suspicious expenditure – it’s spending which was not incurred in the manner prescribed by legislation; in other words, somewhere in the process that led to the expenditure, the auditee did not comply with the applicable legislation.
Treasury stressed that Eskom is not exempted from ensuring that it takes effective and appropriate steps to prevent irregular, fruitless and wasteful expenditure.
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