Tshwane’s finances are on a knife-edge

THE City of Tshwane remains in a precarious financial position despite its qualified audit opinion obtained from the Auditor-General (AG) for the 2022/23 financial year.

This was according to an independent forensic accountant Robert Cameron-Ellis, who is also the chairperson of the City's audit and performance committee.

He was reacting to the audit report officially presented in a special council sitting at Tshwane House on Thursday by Xolani Zicwele from the AG's office.

Cameron-Ellis said: “The liquidity of the City is on a knife-edge. We need to make cuts in expenditure. We need to improve our revenue collection.”

He said the City was gradually getting an understanding of what went wrong with its revenue collection system, which was important for its survival.

The AG report lamented that the City incurred material electricity losses amounting to R2.4 billion, which represents 21.46% of total electricity purchased.

The AG also pointed out that the City incurred material water losses of R1.1bn, which represents 32% of the total water purchased.

Cameron-Ellis said it was important for the City to reduce the non-technical electricity losses and water losses.

“This is closely linked to systems related to revenue. Illegal connections, how do we deal with them? How do we stop corrupt officials reconnecting with impunity? It has been a problem for many years and we are now starting to get a grip on it,”he said.

Raising concerns about consequence management, the AG highlighted that the City never investigated both irregular and fruitless expenditures to determine if there was someone liable for them.

In addition the AG said allegations of financial misconduct laid against officials were not investigated.

According to the AG report, the City's fruitless and wasteful expenditure was understated by R1.4bn.

While the City reported irregular expenditure of R13bn, the AG was unable to confirm if the expenditure was properly accounted for.

Cameron-Ellis said the audit and performance committee was worried about the consequence management, saying the practice is going to take a long time for the City to entrench.

ANC chief whip in council, Aaron Maluleka, said the City should not underplay the gravity of not spending grants from national and provincial governments.

He said failure to spend those grants in a way punishes the people expecting to receive services such as water and proper roads from the municipality.

Republican Conference of Tshwane councillor Lex Middleberg asked the AG representative if he had audited the status of the City's debtors' book with a view to establish if the payability of amounts claimed for services was realistically recoverable.

The City previously said its debtor's book was sitting at R23.3bn and intended to recoup the amount through an aggressive revenue collection called #TshwaneYaTima, which includes disconnecting electricity from defaulting customers.

ANC councillor France Boshielo said: “It is very clear that there is no difference between the present audit and even the current one. The outcome of the audit can be described as shameful.”

Last year, the AG issued the City an adverse audit opinion for the 2022 financial year.

Mayor Cilliers Brink described the 2022 audit report as a dramatic turning point for the City, saying the adverse findings were used to fix what was broken in the metro.

He said the City's executive appointed the executive tracking committee to monitor the progress of the administration and to implement the audit action plan to address challenges related to its cashflow previously raised by the AG.

Regarding the qualified report, he said: “It is simply an indication of improvement and a lot of work still needs to be done.”