The City of Tshwane has come under fire from the Auditor-General (AG) for overstating its employee-related costs by more than R415 million, which includes close to R2m paid towards salaries of staff who had resigned from the municipality.
This was disclosed in the City’s qualified audit report issued by the AG for 2022/2023 financial year.
The City was also found wanting for paying its staff for overtime work they did not perform.
The AG report said: “Overtime payments stated at R618 335 286 and R615 944 148 were overstated by R413 652 014 due to employees being paid for more hours than worked.”
The City’s disclosed salary payments of R7 694 969 897 and R7 627 684 729, respectively, were overstated by more than R1.9m due to employees being paid after their services had ended.
The report, dated March 12, was made public this week together with the City audited annual financial statements.
This was after criticism by the Republic Conference of Tshwane councillor Lex Middelberg that Mayor Cilliers Brink was withholding the AG report from the public in order to monopolise the debate on it.
Brink hailed the report for showing an improvement in comparison to the previous adverse opinion issues for the 2021/2022 financial year.
This was despite the fact that the latest AG report was replete with examples showing Tshwane’s financial reporting did not adhere to SA standards of generally recognised accounting practice.
For example, the municipality came under fire for infrastructure and community assets that were not correctly valued in accordance with the generally recognised accounting practice.
The municipality’s fruitless and wasteful expenditure was understated by R1.4 billion. This was because the City did not have an adequate system for identifying and disclosing all wasteful and fruitless expenditure incurred.
The City reported an irregular expenditure of R13bn but the AG observed that he was unable to confirm if the expenditure was properly accounted for, owing to Tshwane’s lack of an adequate system for identifying and disclosing all irregular expenditures.
The AG found that some of the goods and services were valued beyond R200 000 and were procured without inviting bids, as required by supply chain management regulations.
Neither irregular or fruitless expenditure incurred by the City were investigated to determine who was liable for this.
The City incurred material electricity losses of R2.4 bn, which represents 21.46% of total electricity purchased.
On the other hand, the City incurred material water losses of R1.1bn, which represents 32% of the total water purchased.
Technical water losses of R892m was due to the physical loss of water through the water distribution network while the technical losses of R232m were due to meter inaccuracies, meter estimations, non-metering of water and unauthorised consumption.
Brink said the release of the City’s audited financial statements and AG report were to enable public scrutiny and demonstrate good fiscal governance.
“With the City having received an improved audit report from the AG last week, standard practice would be for this report to form part of the broader annual report, which comes to council and then goes out for public participation. However, due to the delays that will arise in compiling the annual report, the mayoral committee has taken a decision to release the AG’s report along with the audited financial statements to the public,” he said.
He said the core reason for releasing the reports was to ensure that the City met its obligations to the Johannesburg Stock Exchange (JSE) where it currently has bonds listed and traded.
Brink said: “The release of these crucial documents will enable the JSE to inform investors and allow them the opportunity to scrutinise the City’s financial performance.”
Pretoria News