By Antoinette Slabbert.
The City of Tshwane has once again, this time for the 2023/24 financial year, received a qualified audit report from Auditor-General (AG) Tsakane Maluleke, who lamented the stagnation.
Tshwane has been working to improve its audit outcomes since an adverse opinion for the previous financial year sent shockwaves through the council early in 2023. It was a major factor that led to the departure of then mayor Randall Williams who was succeeded by his DA-colleague Cilliers Brink.
Brink was ousted in September when ActionSA’s Dr Nasiphi Moya – who leads a coalition with the ANC and EFF – succeeded him.
The city managed to improve its audit outcome to a qualified audit the next year during Brink’s term, but has not been able to progress to an unqualified audit.
“Though some of the qualification areas have been resolved, the overall stagnation in outcomes is a testament to the audit action plan implemented by management not being effective,” the AG said in a document Moneyweb has seen.
“Additionally, significant weaknesses in internal controls remain prevalent as evidenced by the material misstatement still identified in the financial statement line items.”
The report is only expected to be officially released at a council meeting, probably later this month.
Debt to creditors
Robert Cameron-Ellis, chair of the city’s independent audit and performance committee who has seen the AG’s report, confirmed the findings.
He points out the AG’s finding that the city’s debt to creditors may be understated by R3.6 billion.
“It is an ongoing problem. Throughout the city people don’t put all invoices into the system and the AG is getting better at catching them out.”
If that is correct, the current surplus in the city’s books will in reality be a deficit.
Service delivery …
The AG’s reservations about the city’s reporting goes beyond the financial statements.
About the performance reports, she says: “The quality of performance reports produced by the municipality remains a concern as we continue to note material findings on the usefulness and reliability of reported performance information and mitigation measures undertaken to address under-achievement of planned targets.”
Among the performance targets not achieved is the installation of new sewerage pipelines. The target was 550 metres, but not a single metre of pipeline was installed.
Only 15% of the reported pothole complaints were resolved within “standard municipal response time” against a target of 60%. It is not clear what the standard municipal response time is.
She does however note some progress in terms of compliance.
“Material non-compliance has been reported over the past three financial years but in some instances, though still materially non-compliant, the list of instances is reducing.”
She explains that: “Compliance monitoring controls were not effectively implemented while policies and standard operating procedures to ensure compliance laws and regulations were not adhered to, resulting in material non-compliance findings.”
Audit results per outcome area
Source: Auditor-General
The city incurred R2.3 billion in irregular expenditure (in contravention of the law) in 2023/24, up from R1.9 billion in the previous financial year.
Fruitless and wasteful (no value for money) expenditure was largely unchanged at R347 million.
Unauthorised expenditure (not budgeted for) increased from R423 million to R2.1 billion.
“None of the prior year’s balances was dealt with,” the AG notes, while adding that processes to that effect were underway at the time of submission of the annual financial statements.
Cash collections stagnant
Cameron-Ellis says it is concerning that despite all the efforts to improve the collection of consumer debt, cash collections have not improved compared to the previous financial year. “The cash deficit is not being resolved.”
He believes this can be ascribed to corruption in the revenue management section of the municipality.
“We go and disconnect [customers for non-payment] and within three days they are reconnected [by corrupt officials].”
He says in the past this was only picked up a year later when the city once again went to disconnect services.
“Nobody followed up. We do that now. We go back every three days until we are convinced that they have paid.”
He says the DA politicians must get credit for picking up this gap. “It wasn’t officials who picked it up.”
AG wants to see a ‘culture change’
The AG calls for a culture change within Tshwane to improve financial controls and audit outcomes. She notes that “we are noticing an incremental shift”, but makes it clear that there is still a lot of work to be done.
Cameron-Ellis says there is a formal process underway to change the organisational culture in Tshwane, but it will take time.
“It takes discipline, discipline, discipline, the changing of systems, and people must be held accountable. It will take another five years.”
He says the senior management is on the right path and values accountability, but it will take a long time.
“As I said last year, there must be structural changes, which means the city must reduce staff,” he adds.
That, he says, cannot be done by natural attrition only.
“You must make sure you retain the right people and get rid of the dead wood.”
DA not happy
The DA expressed its disappointment in the failure of the city to obtain an unqualified audit “despite serious and diligent work being done towards this objective”.
The party says the culture change the AG calls for “will only be achieved if tough action is taken against officials responsible for the misspending of taxpayers’ money”.
It also points to “worrying practices by the current government that suggest they may not be committed to this culture”.
According to the DA this includes:
- An unprovoked attack on the city manager by the EFF;
- Failing to schedule or convene any meetings for the oversight committee responsible for investigating misspending of public funds; and
- Failing to schedule or convene the executive audit tracking committee put in place by Brink to track consequence management of audit outcomes.
Metro still plotted as ‘Doing harm’
Councillor Lex Middelberg of the Republican Congress of Tshwane and a member of the financial oversight committee, has accused the DA of trying to “minimise the deteriorating outcomes as work in progress”.
“Throughout the year the coalition government were putting out messaging that the finances were improving under the leadership of Brink and his MMC for Finance, Councillor [Jacqui] Uys.
“The AG’s findings put paid to that narrative,” he says.
“In fact, she [Maluleke] revealingly says in her presentation that: Based on the 2023/24 audit outcomes, the municipality continues to be plotted as ‘Doing harm’. “The municipality has not moved on the continuum compared to the prior year.”