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Sat Oct 25 17:21:32 SAST 2014

Financial shambles makes mockery of world-class claims

The Times Editorial | 22 February, 2013 00:53

The Times Editorial: Auditor-general Terence Nombembe warned earlier this month that financial controls in government departments and municipalities were deteriorating and that more than half of them were unable to provide ''credible and quality information'' in their financial reports.

This, Nombembe said, undermined the capacity of the government to carry out its obligations.

Shockingly, only 18% of municipalities achieved clean audits, and only 22% adhered to regulations governing supply-chain management.

Irregular expenditure has continued to soar, creating an environment, according to accountant-general Freeman Nomvalo, in which tender-rigging can become commonplace.

Johannesburg, South Africa's financial hub, is not immune to this malaise.

The city, which has received a qualified audit for three years in succession, is buckling under financial strain because of mismanagement, poor financial controls - and fraud.

A scathing auditor-general's report, presented to the metro's finance committee this week, reveals that the city has failed to meet 89% of its service-delivery targets and has accumulated about R1.2-billion in debt that is effectively not recoverable because of its long-running billing crisis.

To add insult to injury, the city is overcharging ratepayers by more than a quarter-of-a-billion rands and a key subsidiary service provider, Pikitup, is in the red to the tune of more than R300-million.

If the mandarins of our most powerful city cannot get its finances in order serious questions have to be asked about the likelihood of the government's entire development project succeeding.

Hard-hitting interventions need to be made urgently if Johannesburg is going to have any hope of turning around its fortunes. Repeated bailouts by the Treasury will merely postpone the crippling of what is optimistically billed as "a world-class African city''.

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