Tshwane misses deadline to submit financial statements

Following an adverse opinion by Auditor General (AG) Tsakani Maluleke last year, that cost former mayor Randall Williams his job, the cash-strapped City of Tshwane has missed the 31 August deadline for submission of its financial statements for FY 2022/23 to the AG’s office.

In doing so, it is following the advice of the city’s audit and performance committee to rather take more time to finalise “other outstanding matters on the financials”. A year ago, the same advice was ignored, with a disastrous outcome for SA’s capital city, as it shocked the market with its poor audit outcomes.

Read: Here’s how much City of Tshwane’s striking workers get paid

In a statement issued on Sunday 3 September, the metro said its city manager Johann Mettler decided to follow the advice “to adequately address some of the findings made by the AG in the 2021/22 financial year.”

Mettler said the management and executive together decided to take a cautious approach “this time around, to ensure that we quality assure the financials in order to avoid a recurrence of last year’s AG findings. There are a few areas where we discovered that there were some glaring gaps which needed to be plugged”.

“We are doing things differently this year. We don’t want a repeat of mistakes made last year. We’re meticulous and paying attention to every detail,” he added.

Mettler vowed to present “credible and sound financial statements to the AG.”

When the AG’s adverse opinion came to light early this year, Williams placed all the blame on former CFO Umar Banda, whose contract was terminated in December, less than a month before his contract extension was due to expire anyway.

Read:
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Williams resigned in February, a month after the AG’s adverse opinion became public knowledge. It is believed to have been a major factor in his resignation.

The city has been without a permanent CFO since, but according to current mayor Cilliers Brink, an appointment is imminent.

Robert Cameron-Ellis, chair of the independent audit and performance committee (APC) that advises politicians and administrators, told councillors at a meeting in January 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.

Systemic problems 

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, should take accountability for the poor audit outcome. The problems are systemic, he said.

He noted that 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 also disclosed that the internal audit offices also pointed to some gaps in the statements.

It is not clear whether the systemic problems have since been addressed adequately. The city has been struggling financially and is in arrears on its Eskom and Rand Water accounts.

To add insult to injury, it has a R4.7 billion Vat liability that costs it more than R100 million per month and was only discovered last year, according to Brink. That includes interest and penalties. More than R2 billion of this has already been paid and it featured in Maluleke’s findings on fruitless and wasteful expenditure.

Unfunded budget

The multi-party coalition led by Brink has succeeded in passing its budget for the current financial year, despite it being unfunded and despite having a very small majority in council.

Brink has explained that it came with a funding plan agreed upon with National Treasury.

The budget makes no provision for a salary increase for officials, despite a local government collective agreement for an increase of 4.5%.

The city has applied to the bargaining council for exemption, pleading poverty. According to Brink the increase would cost the city an additional R600 million it doesn’t have.

South African Municipal Workers Union members who insist on the increase have embarked on an unprotected strike since late July and service delivery in the city has been severely disrupted.

The bargaining council’s ruling is only expected at the end of September.

In the meantime, Moneyweb has learnt that the ANC-led provincial government is looking carefully at the deteriorating situation in Tshwane and may consider placing it under administration if it continues and once the bargaining council process has been exhausted.

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