Sunday, April 28, 2013

■ SOUTH AFRICA: Forensic audit reveals $20million loss for SA Express in FY 2010/2011.

SA ExpressFollowing a long, painstaking forensic audit, South African Express (SA Express) (XZ) has finally released its 2010/2011 Financial Year results posting a USD20.6million (ZAR187million) loss.

SA ExpressThe results have been greeted with shock given the airline's USD8.9million (ZAR81million) profit the year before.

The forensic audit had been warranted after various accounting irregularities were discovered. One of the major issues with the accounts involved an error in the treatment of an amount for USD3.5million (ZAR32million) for VAT that the company would not have been able to claim from the South African Revenue Service (SARS). The Independent Regulatory Board for Auditors (IRBA), the body that oversees auditing professionals, has previously received two separate reports from SA Express's external auditor, Nkonki Incorporated; the first report was issued by Nkonki to IRBA was in November 2011 and the second was on May 16 2012.

According to BusinessDay, "the loss will no doubt be compounded in 2011/12, when airlines globally suffered from rising fuel costs, and will no doubt give further rationale to an amalgamation of SA Express with South African Airways (SAA), which is apparently being considered by the Department of Public Enterprises."
A USD660million (ZAR5billion) bailout from the South African government to South African Airways and its subsidiaries last was hinged on the presentation of a viable long term turnaround strategy for the group, which could involve the integration of its subsidiaries SA Express, Mango and SAA into a single holding company, though this is still unconfirmed.