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The Transnet pipeline case study

Warren Maroun (Associate Professor at the University of the Witwatersrand, Johannesburg, South Africa)
Robert Garnett (Associate Professor at the University of the Witwatersrand, Johannesburg, South Africa)

Emerald Emerging Markets Case Studies

ISSN: 2045-0621

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", Emerald Emerging Markets Case Studies, Vol. 4 No. 7. https://doi.org/10.1108/EEMCS-01-2014-0009

Publisher

:

Emerald Group Publishing Limited

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