The dire financial state of the Road Accident Fund (RAF) has been thrust into the spotlight once again after the entity received an adverse audit outcome for the third financial year in a row.
South Africa’s Standing Committee on Public Accounts (SCOPA) has expressed concern about the adverse outcome for the 2023/2024 financial year and has asked the RAF to furnish it with detailed information pertaining to its finances and outstanding settlements.
The RAF is reportedly carrying an accumulated deficit of nearly R24 billion and is currently at loggerheads with the Auditor General over its accounting methods.
SCOPA said it was highly concerned about the financial sustainability of the RAF under its current funding model.
“RAF relies mainly on the fuel levy as its main source of revenue stream, which is evidently insufficient. The Deputy Minister of Transport, Mr. Mkhuleko Hlengwa informed SCOPA that the ministry is conducting a review of the funding model and the related pieces of legislation to enable RAF to be sustainable,” Scopa said in a statement.
The RAF attributes its latest deficit to the fact that its fuel levy, which currently stands at R2.18 per litre, has not been increased by the Treasury for the past three years.
Dispute over accounting methods
The RAF’s adverse audit outcome is due to it using the International Public Sector Accounting Standards 24 method rather than the Generally Recognised Accounting Practice (GRAP) that is prescribed for South African government entities by National Treasury.
So far the matter has been taken to both the High Court and the Supreme Court of Appeal (SCA), both of which have agreed with the AG. However the RAF said it has approached the Judge President of the SCA to reconsider its verdict.
IOL