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Cape Town – The South African National Roads Agency (Sanral) must improve its internal audit processes as its growing impairments will put it at risk of further downgrades and it may require bailouts from the state, the Organisation Undoing Tax Abuse (OUTA) warned on Friday.
The civil rights body was responding to concerns raised over the agency’s financials by the standing committee on public accounts (Scopa) earlier this week.
Sanral has incurred high levels of irregular, fruitless and wasteful expenditure resulting from non-compliance with supply chain management processes, Fin24 reported previously. Scopa also raised the issue that Sanral did not comply with the Public Finance Management Act.
Sanral’s accumulated irregular expenditure amounted to R10bn, and fruitless and wasteful expenditure was over R15m.
“Irregular expenditure is intolerable, regardless of the excuses,” said Rudie Heyneke, OUTA’s portfolio manager for transport.
“Variations from supplier standards should not become the norm and Sanral’s internal audit processes need to be robust to overcome these issues.”
OUTA said it appreciates the fact that Sanral aims to promote transformation by including more small, micro and medium enterprises (SMMEs) in its contracts. However, it is Sanral's responsibility to ensure that these businesses are competent to provide services and it called on the roads agency to do proper vetting in this regard.
"Contracting SMMEs to conduct routine road maintenance projects does not give Sanral licence to deviate from the Public Finance Management Act," said Outa.
Without a thorough audit process Sanral - and ultimately the public - will have to pay, OUTA pointed out.
Impairments to grow
OUTA further expects e-toll fees to drop, and unpaid e-toll fees to increase Sanral’s impairments by another R2bn. This is in addition to the R3.6bn in impairments reflected in its 2017 financial statements, said OUTA.
“This will place Sanral at risk of further downgrades and more bailouts from National Treasury," OUTA warned.
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