When a R431 Million Error Slips Through: The SAA Wake-Up Call

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South African Airways (SAA) recently reported its audited results for the 2024 financial year after a long wait. The delay resulted from a crisis as the external auditors uncovered a R431 million allocation error that flipped that “profit” into a net loss of R354 million. The question is not how much income was shown, it is when it should have been recognised. Let that sink in: a material mistake, so big it changed the entire financial outcome.

What went wrong? The professionals involved were all qualified. But the internal controls and review processes? Clearly not doing enough. The error wasn’t discovered until the external audit which is far too late in the process. This wasn’t a simple spreadsheet blunder. It was a governance failure, and it exposed deeper cracks in how financial oversight is managed.

What happens when internal controls fail?

When controls are weak, it’s not just about wrong numbers. It’s about broken trust.

• Investors and boards start questioning the reliability of all past reports.

• Decision-makers may have made financial calls based on fiction.

• The public and media lose faith in leadership and transparency.

In a world where credibility is currency, one big error can undo years of reputation. And once confidence is lost, it’s hard to get it back.

Who takes the blame?

• Management of SAA

  They hold the ultimate responsibility for financial reporting. Management must ensure:

  • Systems are in place to accurately record transactions

  • Review processes are robust

  • Material misstatements are identified before the audit

  A sign-off from management isn't just a formality, it’s a commitment to accuracy.

• Internal Audit

  Internal audit is the second line of defence. Their job is to:

  • Test the effectiveness of internal controls

  • Identify breakdowns in processes

  • Raise red flags before external scrutiny kicks in.

  If internal audit isn’t empowered, or isn’t listened to, these risks go unchecked.

• Accountants Compiling Financial Statements

  The accountants doing the groundwork must:

  • Understand what’s material

  • Reconcile and review accurately

  • Speak up when something looks off.

  They’re not just recorders of data, they’re guardians of financial integrity.

The Bottom Line

A material error like this should never reach the auditors. Yes, external audit is important. But it should be the last line of defence, not the first to discover a major oversight. The impact of this is much bigger than we admit. It is also not something we can blame on one person. Weak internal controls break the foundation of trust as the financial statements as we do not have the answer for basic questions.

In addition, let us not forget that our national airline’s annual results show a loss, even after receiving billions in bailout (from our tax money).

The SAA case reminds us of a simple truth: Sound governance, clear accountability, and strong internal controls are non-negotiable.

Source Article: News24