The fund's financial position cast doubt on its ability to operate, auditor general Terence Nombembe said in a two-page assessment in the report.
"The Road Accident Fund incurred a net loss of R16.487-million during the year ended March 31 2012 and, as of that date, the entity's total liabilities exceed its total assets by R46.395-million," he said.
The AG cited a lack of internal controls to curb the wasting of taxpayer money.
"Management have not implemented adequate processes to prevent and detect fruitless and wasteful expenditure."
An additional concern raised was that 47% of the RAF's targets were not achieved.
CEO Eugene Watson, who was appointed in July, also raised concerns about the financial situation in his overview of the annual report.
"The fund recorded a deficit of R16.5-billion in the financial year under review compared to a net deficit of R1.5-billion in the previous year," said Watson.
He said the deficit was directly linked to the growth in provision for outstanding claims.
Outstanding RAF claims of R340-billion had jumped to R54-billion.
Watson said long-term funding models were being considered as contributions, via the fuel levy, were not meeting claim costs.
"In the short and medium term, government will need to consider interim legislative changes to ensure that inefficiencies in the current compensation system are minimised and contained."
The report highlights the negative effect on tens of thousands of claimants, some with serious injuries and who were unable to work.
They would continue to wait several years for their claims to be settled, according to the report. – Sapa