Sanral, RAF may grind to a halt - AG report | Fin24
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Sanral, RAF may grind to a halt - AG report

Oct 10 2018 16:23
Lameez Omarjee, Fin24

The Auditor General has expressed "significant doubt" that the operations at the SA National Roads Agency (Sanral) and the Road Accident Fund (RAF) can continue in future.

Representatives from the Auditor General of South Africa on Wednesday briefed the portfolio committee on transport on the audit outcomes of the department and its entities – which include the Passenger Rail Agency of South Africa (Prasa) and Airports Company South Africa (ACSA).

In its comments on the financial health of entities, the AG raised concerns over Sanral and the RAF’s liquidity challenges.

Earlier this month, Fin24 reported that Sanral had a funding gap of R6bn and had resorted to issuing summonses to drivers who had not yet paid their e-toll fees. The e-tolls are meant to fund the Gauteng Freeway Improvement Project (GFIP).

As for the RAF, Treasury in August told the Standing Committee on Appropriations that the fund was receiving more claims which could not be covered by the income of the current road accident fund levy.

The AG’s report also provided details on the expenditure incurred by the entities and the department.

Unauthorised expenditure – expenditure that had not been budgeted for – amounted to R786m, almost double the R393m reported in 2016/17.

Fruitless and wasteful expenditure – which is spend that could have been avoided – reduced significantly from R579m, reported in 2016/17, to R40m.

Reported irregular expenditure – spend not in compliance with supply chain management – grew marginally, from R2.6bn to R2.8bn.

The AG noted that the audit of the Air Traffic Navigation Services had not yet been completed, and its irregular expenditure amount was not included in the report.

Lack of accountability

Similar to issues identified by the AG for other state entities, there has been a lack of accountability when it comes to improving internal controls and consequence management for transgressors. The instability and vacancies in key positions have caused a "competency gap" and affected the improvement of audit outcomes.

Earlier this year, Transport Minister Blade Nzimande appointed a new board at Prasa, and in August Cabinet approved new boards at Acsa and Sanral.

The AG recommended the appointment of boards and other governance structures with appropriate skills and experience to exercise governance and oversight of entities, as well as the management of vacancies to ensure stability of leadership.

Progress and action plans must be put in place to improve audit outcomes and consequence management should be implemented. The AG also called for monitoring to ensure there is progress in these actions.

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