The City of Johannesburg has failed to provide quality financial statements. This is according to Auditor-General Tsakani Maluleke, who said out of the eight metros in SA, only the City of Cape Town received a clean audit. The metro also received a clean audit the previous year.
"[Joburg] is a big city, the biggest in the country and on the continent. There should be no difficulty in ensuring the necessary skills and capabilities to compile financial statements," Maluleke said.
Makuleke released the 2023/24 consolidated general report on local government audit outcomes in Parliament on Wednesday.
She said Mangaung in the Free State disclosed significant doubt in its financial statements about its ability to continue operating. The metro incurred R1,34bn in unauthorised expenditure and R122,52m in fruitless and wasteful expenditure.
Maluleke said R194m in grant funding went unspent and the National Treasury also withheld R297m in grant funding that had not been spent in 2022/23 due to slow project implementation.
The report also states that by June 30, 2024, Buffalo City, City of Ekurhuleni and eThekwini each had their credit rating downgraded by at least one of the rating agencies.
Maluleke said the biggest contributors to unauthorised expenditure was the City of Johannesburg by R2,76bn, City of Tshwane by R2,15bn and Nelson Mandela Bay by R1,44bn.
"These three metros also did not adequately budget for the impairment (writing down) of infrastructure assets and consumer debt (non-cash items) and, as a result, did not have funds to maintain and replace assets or to pay their creditors on time."
These three metros also did not adequately budget for the impairment (writing down) of infrastructure assets and consumer debt (non-cash items) and, as a result, did not have funds to maintain and replace assets or to pay their creditors on time
— Auditor-General Tsakani Maluleke
Buffalo City and Nelson Mandela Bay had a combined deficit of R489,86m as they spent more money than they had available.
Maluleke raised concerns about the quality of leadership in these metros, questioning whether municipal leaders, including not just municipal managers but also mayors and speakers, were equal to the task.
At Buffalo City, the report shows that revenue-collection rate declined due to factors such as high poverty and unemployment, poor billing practices, lack of debt-collection mechanisms and a culture of non-payment that was worsened by residents.
She said critical skills shortages in metros such as Buffalo City, which has had a vacancy for a district engineer responsible for electricity for 80 months.
A similar vacancy for a district engineer responsible for sanitation has not been filled for 24 months, said Maluleke.
"We have to ask the question on where things fall apart, why would a city like that struggle to get these critical technical skills that are there to drive service delivery and even look after assets," she asked.
"When you look at the complexity of a metro and you consider the complexity of their operations and you look at the scale of the budgets of the metros, one has to consider whether in the leadership of the metros, we have the type of people that are equal to the task, not just the municipal manager but the mayor and speaker."
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