The entities that could not be audited

Most audit outcomes tell you something about the numbers. A disclaimer tells you something about the records. It means the Auditor-General could not obtain sufficient appropriate evidence to form an opinion at all, so no view is expressed on whether the financial statements are right or wrong.

It is the most serious outcome on the scale, and it is rare. Six entities in the directory hold one in the most recent reported year.

The six disclaimers

• Compensation Fund, the largest by a wide margin at roughly R140bn in assets
• South African Airways
• National Health Laboratory Service
• Denel
• South African Post Office
• Taletso TVET College

The Compensation Fund is the one that ought to draw attention. It compensates workers injured or made ill at work, is funded by employer assessments, and carries the largest balance sheet of any entity on this list. Its claims administration and financial reporting have drawn sustained adverse findings over several cycles.

Three others sit in institutions already under public financial strain. South African Airways emerged from business rescue with a much reduced operation. The Post Office entered business rescue in 2023. Denel suffered a financial and operational collapse that at points left it unable to pay salaries.

Two adverse opinions

An adverse opinion is a step less severe in one narrow sense: the auditor did obtain enough evidence, and concluded the statements are materially misstated. Two entities hold one:

• Road Accident Fund
• Supported Employment Enterprises

The Road Accident Fund is the significant one. It is funded by a dedicated levy on every litre of fuel sold, and it carries a very large actuarial liability for claims incurred but not yet settled. How that liability is measured has been the substance of its disagreement with the Auditor-General.

What this is not

A disclaimer is a statement about records and evidence. It is not in itself a finding of fraud, and it does not mean money is missing. It means nobody can say from the financial statements whether it is or not, which is the reason the outcome is treated as serious.

It also says nothing about whether an entity delivers its mandate. The National Health Laboratory Service runs the laboratory network the entire public health system depends on, and did so through the pandemic. Both things are true at once.