RAF should account for finances, despite litigating against disclaimer audit finding

Cape Town - The Road Accident Fund (RAF) should be asked to account for its finances to Parliament -- despite its application to review and set aside the disclaimer audit finding Auditor-General Tsakani Maluleke made against the entity.

This is according to the legal opinion the Parliamentary standing committee on public accounts (Scopa) received from parliamentary legal services on Tuesday.

The RAF wants the court to review and set aside the audit report, after its bid to interdict its publication was unsuccessful.

Transport Minister Fikile Mbalula previously wrote to Parliament explaining that he could not table the report because of the dispute between the RAF and the Auditor-General of South Africa (Agsa).

But Maluleke said there was nothing in law preventing her from publishing the audit report, if it was not tabled by the executive authority.

In her audit report, Maluleke said she was unable to obtain sufficient appropriate audit evidence for liability claims totalling R27.8 billion, and expenditure claims amounting to R37.1bn, as disclosed in the fund’s financial statements.

She also said the RAF had amended the accounting policy to recognise claims liabilities and claims expenditure.

Parliamentary legal advisor Fatima Ebrahim said it was beyond the scope of their legal opinion whether Agsa was correct in its assertion that incorrect accounting policy was utilised by the RAF.

Ebrahim also said the Agsa issued the audit report, and the only remedy the RAF had was for a competent court to set it aside.

“That report is of full legal effect and binding,” she said.

However, Ebrahim noted that the audit report had been issued more than five months ago, but that it was not tabled as part of the package inclusive of the annual report.

She said there was huge public interest and a right for the public to know what was happening in the financial affairs of RAF.

“The constitutional functioning of Parliament can’t be trumped by internal rules and processes of Parliament. Rules have to be subjected to the Constitution.”

She warned that persons and institutions could simply turn to the courts to frustrate the oversight process, and effectively disable Parliament every single time they were required to account.

“That is, of course, an untenable situation and Parliament would never be able to function. Oversight of finances should not be stifled by litigation,” she said, adding that litigation could take years to resolve.

Ebrahim sketched out the importance of oversight as an instrument for accountability and informing budgetary allocations and legislative reforms.

“That audit report, as presented by Agsa, is of legal force and effect and must be considered in terms of National Assembly Rule 245.1, and the minister and the RAF should attend any engagement with Scopa to scrutinise the audit report,” said Ebrahim.

“The RAF is at liberty to respond to findings and provide clarity around the liabilities and other financial matters. They can explain why they used the accounting standards and why they think it is correct and defend their position.”

She said if the annual report could not be finalised pending the judicial review, the RAF needed to explain and Mbalula be directed to provide a provisional report.

Ebrahim also said the National Treasury should be approached to advise on the issuing of a provisional annual report when audit financial statements were in dispute.

She said there was no reason if the RAF review application was successful, why Parliament would hold further meetings to discuss the matter.

“To simply sit back and wait for litigation processes (to be completed) can’t be done. There is no doubt that Scopa is legally required to at least look at the audited financial statement.”

DA MP Benedicta van Minnen said Scopa needed to have a hearing with the RAF.

ANC MP Sakhumzi Somyo said Mbalula should be apprised about the legal opinion and be invited to a hearing.

Scopa chairperson Mkhuleko Hlengwa agreed that the RAF should appear before Scopa.

“We will consider all variables of this matter and then be in a position to structure a hearing with the RAF and the Department of Transport, because what we are saddled with is that the A-G submitted the audit outcome to Parliament notwithstanding realities of litigation,” he said.

Hlengwa said litigation could be open-ended and the RAF should be kept on a short leash.

“The RAF has been a headache for quite a while now. This litigation turns it into a migraine,” Hlengwa said.

Cape Times