RAPULA MOATSHE
The historical issues emanating from the incorporation of the Metsweding District Municipality, the Kungwini and Nokeng Tsa Taemane local municipalities into the City of Tshwane in 2011 are the biggest contributing factor to the City’s qualified report for the 2023/24 financial year.
MMC for Finance Eugene Modise said the City is grappling with valuation disagreements with the Auditor-General (AG) related to property, plant and equipment, specifically concerning assets inherited during the amalgamation process that formed the city. The AG raised concerns about the valuation of the assets.
Modise said issues regarding the valuation of the assets emanated during the 2021/22 financial year when the City received its first-ever adverse audit opinion.
At the time, the AG was unable to determine the impact on the disclosed net carrying amount of property, plant and equipment, stated at R52.8 billion “as it was impracticable to do so”.
Modise said: “The biggest contributing factor is in relation to property, plant and equipment wherein there is a valuation disagreement with the AG in reference to assets inherited during the amalgamation and formation of the current City of Tshwane.”
The move to merge the municipalities was part of a broader effort by the Municipal Demarcation Board's decision to restructure municipal boundaries, with the board's decision taking effect after the 2011 municipal elections.
Following the merger, Tshwane faced significant financial strain and was forced to write off a massive R520.6 million debt inherited from the dissolved municipalities, as it was deemed impossible to recover.
Despite the recent AG report painting a bleak picture of the City’s financial management, Modise believed the current administration has what it takes to turn around the metro’s fortunes.
For example, he cited the formation of a circular 113 audit steering committee led by the Chief Financial Officer and comprising all group heads, to closely monitor the implementation of audit action plans twice a week.
He said there was also a municipal continuous audit management committee, chaired by the city manager and comprising all cluster heads, group heads and members of provincial government and the National Treasury.
“The purpose of this committee aimed at unblocking major stumbling blocks which might require the intervention of the municipal manager,” he said.
He said the executive audit tracking committee was in place to monitor the process and progress made towards implementing the audit action plan, is chaired by the executive mayor, and comprises all members of the mayoral committee.
Lastly, he said, the City has an audit and performance committee chaired by an independent set of industry specialists, aiming to provide additional specialised advice in the mitigation process in addition to monitoring progress.
Modise said: “We are committed to ensuring that accountability and transparency are at the forefront of our day to day business. We are working hand in hand with the administrative team to ensure that we achieve our desired outcomes. Myself and the executive mayor have assigned the audit opinion key performance indicators to all senior managers and we are robustly monitoring the achievement thereof.”
He added that there were still a number of internal control issues they are working on strengthening.
“We are planning on addressing each finding from a root cause perspective. This will assist in ensuring that the finding does not recur in the future,” he said.
The 2023/24 report showed an alarming surge in the metro's unauthorised expenditure, which ballooned to a staggering R2.1 billion, up from R423 million in the previous period.
Tshwane's irregular expenditure skyrocketed to R2.3 billion in the 2023/24 financial year, a big jump from the previous year's R1.9 billion.