The Tshwane municipality on Tuesday poured scorn on the African National Congress’ (ANC's) celebration of the latest unqualified Auditor-General’s opinion on the capital city, saying the financial situation was nothing to write home about.

“The annual [Auditor-General] report served in council at the end of January issues an unqualified opinion. But what an unqualified opinion by the Auditor-General simply means the statements that were presented to the Auditor-General represent fairly the financial position of the municipality. In other words the accounting entries were done correctly – the debits and the credits,” Tshwane MMC for Finance Mare-Lise Fourie told reporters.

“What is interesting is that the ANC in council [the previous administration of Tshwane] cheered when the unqualified audit report was presented to them, but not understanding the financial implications of what those financial statements represent. In the audit opinion, there are four issues highlighted by the Auditor-General as being of concern. So it is an unqualified audit opinion with emphasis of matter.”

She said the Auditor-General expressed concern over the significant uncertainties in terms of legal matters that the city is currently entangled in.

“As far as debtors are concerned, the debtor book at the end of the financial year stood at a whopping R8.6-billion. Of that R8.6-billion, the Auditor-General estimated that approximately 68 percent of that debt is irrecoverable. We are now looking at plans, going forward, to clean up the debtor book,” said Fourie.

“The last item that was listed as emphasis of matter was the extremely high distribution loss in electricity. That distribution loss stood at almost 20 percent. There is technical and the non-technical loss which [the latter] touches on illegal connections, meters that were tampered with, and electricity consumption that doesn’t go through meters. The cost of those losses total about R1.3-billion. We lost R1.3-billion of electricity that was purchased for distribution.”

She said the operating account of the Tshwane municipality showed a significant deficit of R2.1-billion in the previous year’s Auditor-General report.

“Now that’s a massive amount of money. Revenue that was collected, that was over spent. Of particular concern is the unauthorised expenditure that has been reported in the financial statements [of the Auditor-General]. The unauthorised expenditure totalled more than R2-billion,” she said.

“An unauthorised expenditure is simply expenditure that was not budgeted for. In other words, the municipality compiled a budget, approved the budget and they overspent that budget by R2-billion. Now that's a serious, serious concern. It means either the budget was completely unfunded and it didn’t make sense, or they simply didn’t care – they just spent money which they didn’t have.”

She said the new Democratic Alliance (DA) government, led by Mayor Solly Msimanga, has introduced a turnaround strategy where the availability of funds is limited for departments to a quarterly basis in a bid to curtail the scourge of unauthorised expenditure.

Fourie said Tshwane was also being haunted by an irregular expenditure bill of almost R2-billion – with around R400-million accumulated in the previous financial year.

“The irregular expenditure is expenditure in contravention of legislation. The primary cause of this financial year’s irregular expenditure is in the supply chain management process … we have supply chain management processes that are bypassed and those are legal processes prescribed in legislation. So it is instances where the legal processes were bypassed, deviations were approved, due process and proper bidding processes were not followed, and that creates serious concern,” said Fourie.

She emphasised that the new administration was pulling the city towards the attainment of a clean audit opinion from the Auditor-General.

At a press briefing last week, previous Tshwane Mayor and ANC Greater Tshwane regional chairperson Kgosientso Ramokgopa welcomed the “the Auditor-General’s sixth unqualified audit opinion … that audit report relates to the administration of the African National Congress from July 2015 to June 2016”.

“The audit confirmed that indeed you can place reliance on the financial assertions in financial statements of the city and in fact, they did not find any irregularities. This is significant because it goes against the face and the claim of what the DA and Economic Freedom Fighters led administration has been saying,” said Ramokgopa.

“The DA ascended to power against the backdrop of a message that they are going to bust corruption. The narrative peddled in the public domain was that corruption is rife and they were going to expose it. We are close to six months into the life of their administration but they are not in a position to do that.”