An undisclosed amount of sugar is unaccounted for in a stock reconciliation performed by the South African Sugar Association (SASA).
While SASA confirmed that an investigation was underway as part of the annual audit process, it could neither confirm the quantity or the value of the missing sugar, nor pinpoint how losses occurred. However, a source outside of the industry body said the losses were substantial.
Trix Trikam, SASA executive director, said the industry was working on identifying the reasons for an “unreconciled variance between physical sugar and book stock” held by the South African sugar industry. “The millers and growers are well aware of this and the industry is working together to resolve it,” said Trikam.
Trikam said a specific forensic audit into the losses is not underway but given the complexity of the sugar industry, reconciliations naturally resulted in a number of reports. The unreconciled variance has led to a delay in the release of SASA’s annual financial statements, as the financials can’t be signed off until the matter is resolved.
“We are in the process of reconciliation and any resulting effects would only be determined once finalised,” said Trikam.
There are a variety of explanations as to how a discrepancy between physical and book stock can occur. These range from sugar that may have been exported and incorrectly recorded, to accounting errors or an accumulation over a number of years of incorrect book entry calculations. Performing the reconciliation is a massive task as figures from multiple mills and warehouses must be pulled together to ensure there is a balance between what is produced and sold.
If a stock loss has occurred from warehouses or terminals, as speculation seems to suggest, it is unlikely to affect farmers as they are paid for sucrose produced by the mill and don’t lay claim to sugar lying in warehouses. However, it influences the total income of the industry and could have serious repercussions on the stock prices of any sugar company implicated. – Robyn Joubert
