Myth busted: ‘No one person can be blamed for Tshwane’s adverse audit opinion’

The City of Tshwane on 2 February published the financial statements for the year ended 30 June 2022 on the JSE’s news service, thereby ignoring the advice to add information about glaring mistakes.

The financial statements got it an adverse opinion from Auditor-General (AG) Tsakani Maluleke, indicating that they are not a true reflection of the financial affairs of the city.

Read: City of Tshwane no longer a going concern – AG [Jan 2023]

Robert Cameron-Ellis, chair of the independent audit and performance committee (APC) that advises politician and administrators, recommended during the council meeting a few days earlier that the statements would be more useful for lenders and other stakeholders if accompanied by the correct information.

The advice was however not heeded.

The AG’s office officially presented its report to council during its meeting on 26 January, on which occasion Cameron-Ellis also had his say.

Leak

The report had already leaked on 4 January and DA mayor Randall Williams confirmed its authenticity in statements to the media.

This is not the first time the City of Tshwane has ignored the advice of forensic auditor Cameron-Ellis and his committee.

Cameron-Ellis told councillors that it was common knowledge among officials that the statements were inadequate and that a day before its submission the APC advised them to “take a month and correct the damn things, because there were many things in the AG’s report that could have been corrected”.

He described the statements that were served before the committee as “rubbish”.

Against this advice, the statements were submitted – which resulted in the adverse audit opinion.

Not the first warning

Cameron-Ellis made it clear that no one person, but rather officials who couldn’t care less and political leaders who serve in council and fail to read the reports, who should take accountability for the poor audit outcome.

He said the APC had been warning successive administrations for at least five years that the city’s internal controls are completely inadequate, but to no avail.

He told the political leaders that it is their responsibility to hold officials to account and that many small things can make a difference, such as insisting on punctuality.

Contrary view

The statements by Cameron-Ellis fly in the face of the position taken by Williams who blamed the city’s former CFO Umar Banda for what was described as the mess with the financial reporting.

Banda controversially left the city on 31 December when his contract lapsed, despite an authorisation by the council on 24 November for a three-month extension of his contract until the end of March.

Only days after the council authorisation, and after newly appointed city manager Johann Mettler learnt of the adverse audit opinion, Banda was suspended for allegedly misleading the administrative and political leaders to think that the statements were compliant with all requirements, which was clearly not the case.

A day later the suspension was withdrawn, and Banda was purportedly fired without any due process being followed.

After the AG’s report was leaked, Williams said in a statement: “Criminal charges [will] be laid against the ex-CFO. The poor quality of the financial statements is a flagrant violation of the Municipal Finance Management Act. Further reports on financial misconduct will be brought before council.”

ead: Tshwane CFO challenges dismissal

Under threat of litigation the parties agreed that Banda’s service would come to an end at the end of December. Banda indicated that he was consulting his lawyers about Williams’s allegations against him.

No ‘political consequences’ after all

The multiparty coalition that governs the city initially insisted on “political consequences” for the debacle, but following several meetings has seemingly bought into Williams’s narrative while continuing with investigations to inform any further steps.

In response to a question from Republican Conference representative councillor Lex Middelberg, Cameron-Ellis told the council that Banda’s absence makes no difference to the control environment in the administration – “except that there is now no competent person in that role”.

He said there was no sabotage of the process to ensure a poor audit outcome; the problems are systemic and should be addressed as such.

Cameron-Ellis disclosed that the APC wasn’t the only one to have doubts about the statements before they were submitted.

The internal audit office also had a quick look and pointed out various issues, but these were not corrected before submission to the AG.

He said in Tshwane: “Nobody cares. Nobody takes responsibility and nobody is held to account. If somebody does something wrong, they blame someone else.”

Finance team ‘exhausted’

According to Cameron-Ellis the city’s financial division no longer has the resources it needs, and the staff it has were exhausted after correcting the mistakes found in the previous year’s audit. They never practised how to submit a set of statements for the whole year and didn’t know how much they did not know.

He said the APC warned successive administrations about the risks, but nobody took note. He accused the officials of having a laissez-faire attitude and said it is difficult to manage people who couldn’t care less, but that is the responsibility of council.

Members of council should set an example in this regard, he said.

Cameron-Ellis criticised councillors for failing to read the quarterly reports from the AG’s office. “It is no wonder there are so many issues. If nobody at the top looks at [the reports] and asks questions, nobody at the bottom is going to make sure [things are] correct.”

He said the monthly financial reports served before council by the administration are not a true reflection of the city’s finances. “Our income statement does not show all the expenses for the month and does not balance with the income for the month.”

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He urged councillors to insist on accurate information that will be useful for all stakeholders and advised the city, when publishing the AG’s report, to add corrections so that lenders and other stakeholders have a true reflection of the state of the city’s finances.