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Steps are already in place to deal with the issues raised in the auditor-general’s latest report for Johannesburg, says the City manager.
THE City has started “remedial work” to ensure that all deficiencies pointed out by the auditor-general (AG) in his audit report for 2009/10 are addressed immediately to ensure they do not recur.

Disappointed: City manager Mavela DlaminiDisappointed: City manager Mavela DlaminiThis is according to City manager Mavela Dlamini, who said the City was “deeply disappointed” by the negative finding by the auditor-general, who presented a consolidated general report on the local government audit outcomes on 29 June.
The City received a qualified opinion on its financials on the basis of two key issues:

The method of accrual of revenue that was raised at the end of the financial year in respect of rates and trading services had not been done in a satisfactory manner; and
The resultant statement of the consumer debtors was, in the view of the auditor-general, therefore uncertain because of the accounting treatment of the accruals.
These issues resulted directly from the conversion of the City’s revenue management systems across that financial year, in which 87 percent of revenue was finalised in the old system and the balance was handled in the new system.

The system-interface between the two did not work as expected with regard to the migration process, which caused some billing inaccuracies.

“We are deeply disappointed by this negative finding that is effectively a regression for the previous three years where our financials were unqualified in all respects. We have started the remedial work to ensure that all deficiencies pointed out by the AG are addressed immediately to ensure there is no recurrence of these shortcomings,” said Dlamini.

He will present the full report to the council on 30 June, where the political oversight process will begin.

In the main, the auditor-general found that the City’s financials were in a good state, from which he could make his opinion.

Joburg’s total assets grew by more than R3-billion over the previous year. Although its liabilities were reduced substantially following the successful recovery of the Municipal Bond to the value of R1-billion, and after all commercial paper was redeemed, the City was left with a positive bank balance of more than R2,6-billion.

Total revenue for the year grew from R20-billion to R25-billion on account of bulk tariff purchases, inflationary adjustment and revenue management and others.

Before the latest report from the auditor-general, the City had received unqualified audit reports for three successive years, starting in 2006, despite the negative effects of the global economic crisis on its revenues and expenditures.

Joburg is the only city in the country that has combined the accounts of its core administration with those of its agencies and municipal-owned entities. The implication of this is that it has to meet higher accounting standards that cover the entire range of its activities.

Its past unqualified audit reports came out of Operation Clean Audit Report, with dedicated resources to identify high-risk areas such as revenue and procurement, as well as an independent Group Auditing Committee, consisting of private sector professionals.

All the issues raised in the AG’s latest report were receiving priority attention by the City’s senior management, Dlamini said. These issues were mainly concerned with billing matters and the accuracy of customer information in the new consolidated billing system.

The City would be putting in place numerous interventions to address the outstanding billing issues, including:

Management turnaround and interventions to sort out the billing, revenue and customer management challenges;
Effective stabilisation of the billing system and input parameters such as meter readings and so on;
Turnaround of the City’s call centre to ensure that staff attending to queries do so courteously, professionally and effectively;
A greater commitment to resolve queries from the public more effectively – out of the 65 000 queries recorded in February, 59 000 have been resolved, and in the past six months, there has been a significant reduction in the number of queries relating to invoice accuracy; and
Improving revenue collections levels.
Dlamini said the billing system and call centre environment would become more responsive to the needs of residents. The City would also work together with communities and stakeholders to find solutions to unresolved issues.

“We are very disappointed by this outcome and thus take the qualifications raised by the auditor-general very seriously – and we will work hard to ensure they are resolved for the ensuing audit[s] process.”

Overall, only seven municipalities out of 237 in South Africa got clean audit reports. There were 51 municipalities whose audit reports had not been finalised by 31 January.

Of the 237 municipalities audited, 60 received adverse findings, while 50 received qualified audit reports and 120 got financially unqualified reports.

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