Governance ecosystems and statutory disclosure compliance: Financial misconduct reporting in South African state-owned entities under the PFMA
Samukelisiwe Hlatshwayo · Riyad Moosa ORCID ↗
International Journal of Business Ecosystem & Strategy · 2026 · Vol. 8 / Issue 3 · 436-444
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Observed 21 Oct 2026, 00:14 UTC
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Abstract
The study investigates governance challenges in South Africa’s state-owned entities (SOEs) by assessing disclosures provided in SOEs’ annual reports and financial statements regarding fraud, unauthorised expenditure, irregular expenditure, and fruitless and wasteful expenditure between 2022 and 2024, in line with section 55 of the Public Finance Management Act (PFMA) No. 1 of 1999. Adopting an interpretivist research philosophy, the study utilizes qualitative methods through a content analysis of the annual reports and financial statements of the five sampled SOEs. The analysis revealed that, although the selected SOEs demonstrated partial compliance with Section 55 of the PFMA, significant governance and reporting shortcomings persist. While most SOEs maintained records and produced financial statements, none provided evidence of submitting these reports within the required timeframes, and one entity had not produced its 2024 reports by the cut-off date of 10 October 2025. The financial statements frequently lacked a fair and accurate reflection of each SOE’s financial position and performance. Disclosures related to financial misconduct were particularly weak and inconsistent, with irregular, fruitless, and wasteful expenditure reported more often than cases of fraud or unauthorised expenditure, which were largely omitted. These disclosure shortcomings suggest that compliance among SOEs remains superficial and procedural rather than substantive, undermining accountability, transparency and the overall integrity of financial reporting.
Keywords: {'name': 'State-owned entities'}, {'name': 'PFMA'}, {'name': 'Section 55'}, {'name': 'Disclosures'}, {'name': 'Financial Misconduct'}
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Samukelisiwe Hlatshwayo
University of Johannesburg
Riyad Moosa
University of Johannesburg
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