Sanral hits back at Outa’s ‘creative accounting’ claims

The South African National Roads Agency Limited (Sanral) has denied the Organisation Undoing Tax Abuse’s claims regarding its financial practices.

Outa alleged that Sanral had engaged in “creative accounting” by revising its e-toll revenue figures and debt assessments.

Sanral has labelled the accusations as “mischievous and misleading”, adding that its financial statements were accurate and complied with the Generally Recognised Accounting Practices (GRAP) framework.

In a statement, Outa CEO Wayne Duvenage criticised Sanral for shifting from the International Financial Reporting Standards (IFRS) system to the GRAP framework, arguing that the change allowed the agency to inflate its Gauteng e-toll revenue figures.

Outa said Sanral had revised its e-toll revenue for the 2022/23 financial year, from R589 million to R6.5 billion, and for 2021/22, from R569m to R5.3bn.

Duvenage said the revised figures were unrealistic as Sanral could not have collected more than R550m in toll payments for those periods.

Outa criticised Sanral’s definition of revenue for tolls, as “revenue recognised when the customer passes through the toll”.

“By reflecting Gauteng e-toll revenues in this manner, Sanral has, in effect, depicted that it was expecting to make more revenue from the 186km GFIP (Gauteng Freeway Improvement Project) network than it achieved from the combined collection of over 1 600km of their entire Sanral-managed toll roads,” said Duvenage.

Outa raised concerns about Sanral’s debt reporting, highlighting that the e-toll debt at the end of 2023/24 had ballooned to R28.9bn, with almost all of it listed as “impaired”.

The figure, Outa said, represented a dramatic increase from previous reports, where toll debtors for 2022/23 were listed at R9.8bn, a “creative accounting” tactic.

Sanral spokesperson Vusi Mona said Outa’s claims were misleading.

“Sanral’s financial statements were diligently prepared in line with the best accounting practices,” Mona said, emphasising that the Auditor-General of South Africa had signed off on Sanral’s 2023/24 financials with an unqualified audit report.

Mona said the switch from the IFRS to the GRAP was mandated by the Accounting Standards Board (ASB) and the National Treasury.

“In 2018, the ASB issued Directive 12, which directed state-owned entities to report on GRAP if they were largely grant-funded. Sanral had permission to continue reporting on IFRS until 2023, but this was withdrawn, and we transitioned to GRAP reporting from 1 April 2023,” Mona said.

Addressing the e-toll revenue restatement, Mona said: “(The) GRAP requires Sanral to recognise all e-toll fees billed, resulting in higher e-toll revenue being reported for 2023/24.

“However, the revenue was also impaired due to collectability issues, which means that while the gross revenue is recognised, the impaired debt is reflected in expenses, leaving a small net amount of collectable revenue,” he said.

Another area of concern Outa raised was Sanral’s unspent government grants. It said Sanral had failed to use R42bn in non-toll road grants.

In response, Mona said the unspent funds were allocated to longterm projects.

“Sanral’s operational and capital expenditure projects span multiple years. The non-toll segment has project commitments amounting to approximately R67.94bn by the end of the 2023/24 fiscal year.

“This includes R14.24bn for the 2024/25 financial year and R53.7bn projected for 2025/26 and beyond.

This implies that the R42bn is not sitting unused but is allocated to paying for contracts and suppliers related to road maintenance and construction projects,” said Mona.

The Mercury