The auditor-general of South Africa has expressed serious concerns about internal control deficiencies at Air Traffic and Navigation Services (ATNS), a state-owned entity responsible for securing the country's airspace. The AG's report highlights that revenue records at ATNS are not accompanied by an audit trail, compromising the integrity, completeness, and accuracy of the underlying revenue data. This has led to a disclaimer opinion on the company's financial statements.
In the year to end-March, ATNS recorded 303,034 billable movements, an increase from 287,760 the previous year. Regulated revenue also saw an 18.9% increase to R1.8bn, primarily due to growth in domestic market movements. Despite this, the AG's office identified significant deficiencies in the design and operating effectiveness of information technology general controls. These deficiencies left auditors unable to rely on system-generated reports and automated controls used in processing and recording revenue transactions.
The AG's report specifically mentions unexplained deletions of revenue-related records, which raises serious concerns about the company's internal controls. The AG stated that they were unable to confirm the accuracy and completeness of revenue data by other means. As a result, they could not determine whether any adjustments to revenue, stated at R2bn in the financial statements, were necessary. The difference between R1.8bn and R2bn can be attributed to 87.7% of ATNS's business being regulated, while 12.3% is not.
The unexplained deletions of revenue-related records indicate that such records can be removed from the system without sufficient preventive or detective controls. This increases the risk that valid aircraft movements and related billable transactions may be omitted, altered, or inappropriately excluded from the billing process and financial records. The AG's report emphasizes that they could not obtain sufficient and appropriate evidence that revenue from contracts with customers for the current year has been properly accounted for.
ATNS is responsible for providing safe, expeditious, and efficient air traffic management, communication, surveillance, and navigation infrastructure in South Africa. The entity manages 6-10% of the world's airspace, spanning South Africa and large portions of the southern Indian and Atlantic oceans. In response to the AG's concerns, ATNS spokesperson Khulu Phasiwe stated that the company acknowledges the seriousness of the findings and accepts responsibility for ensuring appropriate oversight of the organisation's control environment.
Phasiwe added that ATNS is addressing the underlying deficiencies and has established clear corrective actions, timelines, and performance targets. The company plans to modernise its systems to minimise manual interventions, which is a long-term initiative. The board is monitoring the implementation of the audit improvement plan through its governance structures. Phasiwe also noted that, with the exception of the revenue-related matters, the financial statements fairly reflect ATNS's financial position and performance for the period under review.
The AG's disclaimer opinion and concerns over internal control deficiencies at ATNS highlight the need for the company to improve its accounting and record-keeping practices. Key points include:
Key points
- The auditor-general's report reveals significant deficiencies in ATNS's internal controls.
- Unexplained deletions of revenue-related records raise concerns about the accuracy and completeness of revenue data.
- ATNS has established corrective actions and timelines to address the AG's concerns and modernise its systems.
