The Transnet pipeline case study
Publication date: 26 November 2014
Abstract
Subject area
Financial reporting.
Study level/applicability
Postgraduate (honours and masters in financial reporting).
Case overview
Transnet is the utility company responsible for, inter alia, the operation, construction and management of South Africa's fuel pipeline infrastructure. The company is wholly owned by the South African Government and prepares its financial statements in compliance with International Financial Reporting Standards (IFRS). One of Transnet's capital projects involves the construction of an upgraded multi-fuel pipeline. The expected costs of construction ballooned from ZAR12.6 billion (approximately USD120 million) to ZAR24 billion (approximately USD240 million) over a five-year period. This has raised questions about the prudential management of the company's capital projects and the basis on which the government subsidises Transnet's capital costs. The significant increase in project costs also begs the question: how should the cost of the self-constructed pipeline be accounted for in Transnet's annual financial statements?
Expected learning outcomes
Describe and explain the qualitative characteristics of useful information in terms of the Conceptual Framework (2010) and summarise the framework's key principles. Evaluate these principles, drawing connections between them and the relevant academic theory (as per the prescribed readings), with specific reference to the accounting for self-constructed plant and equipment.
Supplementary materials
Teaching Notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.
Subject code
CSS 1: Accounting and Finance
Keywords
Acknowledgements
The authors would like to thank Lelys Maddock for her invaluable editorial services and critical review of the case study and teaching notes.
Citation
Maroun, W. and Garnett, R. (2014), "The Transnet pipeline case study", , Vol. 4 No. 7. https://doi.org/10.1108/EEMCS-01-2014-0009
Publisher
:Emerald Group Publishing Limited
Copyright © 2014, Emerald Group Publishing Limited