City of Tshwane writes off R3bn

30/01/2014. 2014's first City of Tshwane Council meeting at their offices in Pretoria. Picture: Oupa Mokoena

30/01/2014. 2014's first City of Tshwane Council meeting at their offices in Pretoria. Picture: Oupa Mokoena

Published Jan 31, 2014

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Pretoria -

The City of Tshwane might have received an unqualified audit report from the auditor-general but closer inspection shows incidences of mismanagement, corruption and tender irregularities.

The auditor-general’s report for the 2012/13 financial year indicated the municipality had incurred material, water and electricity losses of more than R1 billion.

The figure is made up of a total of R404 550 339 for water and R622 720 993 for electricity, representing 22 percent and 11 percent of the total available for sale of the two basic services.

In addition, the city recorded that it has given up on collecting about R3.7bn owed to it by debtors.

The figure is up from the previous financial year and represents 53 percent of consumer debtors.

After the report was presented as “unqualified” by a representative of the office of the auditor-general, the ANC half of the council applauded.

The revenue loss for water includes non-technical and technical reasons.

Burst pipes, no metering and unauthorised consumption were identified as the causes of the loss of money.

Electricity distribution losses were caused by theft, tampering and faulty meters, according to the auditor-general.

On service delivery, the report said that of the total number of 40 targets planned for the financial year under review, nine or 23 percent were not completed due to the targets and indicators not developed during the planning stages.

“Expenditures were incurred in excess of the limits in the amounts provided for in the votes of the approved budget in contravention with the law,” the report stated.

“The total unforeseen and unavoidable expenditure incurred exceeded R15 million in contravention of Municipal Budget Reporting Regulations…

“Steps taken were not effective to fully prevent and detect unauthorised and irregular expenditure,” the report said.

In the report, the auditor-general said contracts and quotations were awarded by the municipality to bidders who did not submit a declaration as required by the law, and who were employees of the municipality or other State institutions.

There has also been non-disclosure of interest by employees of the municipality for contracts awarded to close family members.

The auditor-general also slammed the city leadership for not adequately performing oversight over financial reporting adjustments required on financial statements.

The report revealed the city was under investigation by the Special Investigating Unit and forensic unit section in more than 100 cases, including fraud, financial misconduct and tender irregularities.

DA councillor Lex Middelberg asked if inquiries had been made on the origin and cause for the extraordinary extent of unsatisfactory state of consumer debt collection, and the reason for the failure by the city's collections department to remedy the situation.

The DA queried several other issues in the report, including corruption and financial mismanagement, which the office of the auditor-general promised to look into.

When debate at the meeting switched to the Integrated Development Plan for the city, and seemingly annoyed by DA members continuously referring to the City of Cape Town’s clean audit, Ramokgopa said: “Our people don’t eat audit opinions.”

What is an unqualified audit?

An unqualified audit means no material misstatements were identified in the financial statement and no findings on audit of predetermined objectives and compliance with laws and regulations. The second type of unqualified audit means there are no misstatements identified, but there are findings on the audit of predetermined objectives and compliance with laws.

Pretoria News

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