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​Financially sound Joburg on the right track – Fowler

With two consecutive unqualified audits, the City of Johannesburg’s financial performance “continues to exceed our expectations and provide a solid base for investment in transforming our society and changing the face of Johannesburg”.

This was said by City Manager Trevor Fowler during the presentation of the 2013-2014 Annual Report before the Municipal Public Accounts Committee (MPAC) on Friday.

While acknowledging the challenges Johannesburg was facing, Fowler said he was confident the City was on the right track.

Fowler said as of June 30 2014, the total revenue collected stood at R39-billion while the total expenditure was R34.5-billion. The City had collected 93.7% of the revenue billed.

Four of the city’s entities – Johannesburg Social Housing Company, Johannesburg Fresh Produce Market, Johannesburg Theatre and Johannesburg Roads Agency – had all received clean audits.

He said there had also been a noticeable decrease in poverty levels in the city, home to 4.6-million people. Unemployment at 24.5% and youth joblessness at 31.5% were a cause for concern, he said.

The City was also winning the battle against HIV-Aids and efforts to combat crime were paying off. This had resulted in increased tourist visits. CCTV cameras had resulted in reduction of crime.

“Access to services remains above 90% and the quality of drinking water remains of the highest possible standard at 99.8% of the approved standard,” he said.

He said through various projects such as the Corridors of Freedom, Jozi@Work and Go Jozi, the future of the City looked bright.  “We are committing to a promising future,” Fowler said.

He said 2012-2013 was the first year of the implementation of the R100-billion infrastructure investment programme, of which the creation of the Corridors of Freedom, is part. Mixed housing developments had taken off in a big way and the smart city initiative would bring more internet connectivity to the City. Green economy efforts were paying off as seen by the installation of almost 20 000 solar geysers in a number of areas.

Sol Cowan, chairman of the MPAC, said though the audit report was a cause for concern, progress had been made in stabilising the City’s financial health. He said corruption was now being vigorously tackled, with almost 20 cases being investigated during the financial year under review. Once all the loopholes were closed, that problem would go away.

Cowan said accounting officers should pay more attention to tenders below R200 000 and stick to the requirements. Debt collection needed to be strengthened, he said.

In his presentation to the committee, City of Johannesburg Audit Manager Floyd Rikhotso said the City lost more than R15-billion through non-metering of electricity and unauthorised consumption. It also lost more than R815-million through water wastage and theft.

He said despite this grim picture, the good news overall was that the City’s finances were healthier as shown by an unqualified audit issued for this financial year. He said the biggest challenge in auditing the various Municipal Owned entities (MoEs) was that his office did not receive adequate information as requested. Some of the information was incorrect.

“For the municipality to achieve a clean audit, it requires an unqualified opinion with no material findings on predetermined objectives and no material non-compliance with key laws and regulations,” he said.

He said irregular expenditure remained a huge challenge. This financial year it amounted to more than R215-million mainly due to non-compliance with the supply chain management guidelines. At least R386,9-million was lost in uncollected fines, he said. The city spent R341,5-million in civil claims against the municipality and its entities.

Because of lack of skills and manpower, the city might not be able to recover R15,5-billion as a result.

“Expenditure was incurred in excess of the limits of the amounts provided for in the votes of the approved budget, in contravention of Section 15 of the Municipality Financial Management Act. The total unforeseen and unavoidable expenditure incurred exceeded R15-million in contravention of the Municipal Budget and Reporting Regulation 72,” Rikhotso said.

He said the city was battling to get paid within 30 days.

“Contracts and quotations were awarded to bidders who did not submit a declaration on whether they were employed by the state or connected to any person employed by the state as required by law.

Goods and services valued below R200 000 were procured without quotations as required by the law,” Rikhotso said.