AG finds City of Tshwane finances irregular in adverse audit opinion

The City of Tshwane has been flagged for serious irregularities and failing to submit the correct financial statements to the auditor-general (AG) for the July 2021 to June 2022 financial year.

In a leaked 28-page report, the AG found a string of irregularities, overpayments of councillors and officials benefiting from supply chain processes.

Among the findings was irregular expenditure of R10.5bn. This was the amount which could not be properly accounted for.

Tshwane failed to have an adequate system to identify and disclose all irregular expenditure incurred, the report says.

Fruitless and wasteful expenditure was also understated by R1bn as the municipality failed to record such expenses.

The municipality reportedly failed to disclose the reasons for deviating from supply chain management regulations. This resulted in financial statements being overstated by R488m, the report says.

“The recorded reasons to dispense with the official procurement processes were not in accordance with municipal supply chain management regulations.”

Tshwane was also found to incorrectly account for accrued leave pay due to incorrect calculations of employee leave balances and daily rates, which was overstated by R858m.

Similarly, salaries and wages were found to be controlled on an inadequate system. The AG could not get the necessary audit evidence for salaries. “Consequently, I was unable to determine by alternative means whether any further adjustments were necessary to salaries and wages stated at R7.4bn.”

Executive mayor Randall Williams confirmed the adverse opinion. He said they would investigate the culprits listed in the report.

“If the facts are correct, appropriate action will be taken to recover the money and bring the culprits to justice,” he said, adding that findings of financial misconduct and misrepresentation would be treated seriously.

“There are other interventions and response actions to these findings and irregularities which have commenced in December and we will present details on these at a media briefing later in January once the final report is received,” Williams said.

The report is expected to be presented at the first council meeting of the year on January 26. This includes a report into the conduct of former Tshwane CFO Umar Banda, whose contract ended on December 31. This is in relation to the compilation of the financial statements and auditing processes.

Williams said the adverse opinion is a “great disappointment. But the City of Tshwane executive and management welcome the work of the auditor-general to bring this to the fore. We will continue to respect the independence of the auditor-general and work with them to bring change to the city.”

Tshwane is appointing a new CFO.

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