Scopa chairperson Mkhuleko Hlengwa said according to the 2020/21 annual report, RAF was technically insolvent due to significant operational challenges.
The Road Accident Fund (RAF) will come under scrutiny when the Standing Committee on Public Accounts (Scopa) conducts an oversight visit at its offices on Wednesday.
This follows a previous visit in June to investigate a dispute between the RAF and Auditor-General Tsakani Maluleke over the entity’s disclaimer audit opinion for the 2021/22 financial year.
In her audit report, Maluleke said she was unable to obtain sufficient appropriate audit evidence for claims liabilities totalling R27.8 billion and claims expenditure amounting to R37.1bn as disclosed in the financial statements.
She also said RAF had amended the accounting policy to recognise claims liabilities and claims expenditure.
RAF amended its accounting policy regarding International Public Sector Accounting Standard 42 to recognise claim liability and expenditure as social benefits.
This was in place of the generally recognised accounting practice, which applies to the RAF as a Public Finance Management Act Schedule 3A entity.
But, RAF took the report on review after Maluleke issued a disclaimer of audit opinion in December 2021 following a dispute on the entity’s decision to change its accounting policy.
The dispute did not stop Maluleke from publishing the report saying there was nothing barring her if the executive authority, former minister Fikile Mbalula, did not do so.
Scopa chairperson Mkhuleko Hlengwa said according to the 2020/21 annual report, RAF was technically insolvent due to significant operational challenges.
“Key among these challenges is an operating model that relies heavily on litigation, resulting in a substantial portion of the revenue being allocated to administrative costs rather than claimants.
“These administrative costs include legal, medical and actuarial expenses,” he said.
Hlengwa also said RAF appeared before Scopa in April for a hearing on its 2020/21 annual report and financial statements.
“Based on unsatisfactory observations made during the previous oversight visit and matters reported by Auditor-General, the committee decided to conduct a follow-up visit to determine the RAF leadership’s accountability, inadequate storage space and filing systems, unconducive working environment for employees, poor administration and improper handling of claims, and high legal costs and default judgments,” he said.
Cape Times
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