Management Accounting for Consequence Management in South African State-Owned Enterprises: Redesigning Accountability Architectures

Dickson Mdhlalose

EconStor Preprints from ZBW - Leibniz Information Centre for Economics

Abstract: South Africa's state-owned enterprises (SOEs), entities that collectively hold assets exceeding R1.3 trillion and are instrumental in delivering infrastructure, energy, transport, and social services, have been the epicentre of sustained and systemic financial mismanagement. Annual Auditor-General reports consistently reveal billions of rands in irregular, fruitless, and wasteful expenditure attributable to identifiable individuals, yet consequence management the formal process of holding transgressors financially and professionally accountable remains conspicuously absent from most SOE governance architectures. This paper argues that the core failure is not merely one of political will or prosecutorial capacity, but of the design of management accounting systems: South African SOEs lack the internal control frameworks, performance metrics, and management control architectures needed to create a traceable, evidence-based accountability chain from financial transgression to individual culpability. Drawing on an integrative review of 60 peer-reviewed, legislative, and practitioner sources published between 2020 and 2026, the paper examines public sector financial management reforms under the Public Finance Management Act (PFMA); the theoretical contribution of management control systems (MCS) to corruption curbing and waste reduction; performance management and accountability frameworks for public entities; and international case studies of successful SOE turnaround. The paper proposes a redesigned Management Accountability Architecture (MAA) for South African SOEs, comprising five integrated components: a consequence-linked performance management system, a real-time irregular expenditure-tracking module, individual accountability mapping, an MCS governance layer, and an independent consequence-enforcement mechanism. Recommendations are directed at National Treasury, SOE boards, accounting officers, and the Auditor-General.

Keywords: State-owned enterprises (SOEs); Irregular expenditure; PFMA (Public Finance Management Act); Irregular expenditure; Management accounting (search for similar items in EconPapers)
JEL-codes: H11 H83 M41 M42 M48 (search for similar items in EconPapers)
Date: 2026
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