The Ekurhuleni Metro's municipal public accounts committee is expected to deliberate on Auditor-General Tsakani Maluleke's latest audit of its finances.
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Auditor-General Tsakani Maluleke has expressed a qualified audit opinion on the Ekurhuleni Metro due to the state its finances, in her latest report for the 2024/25 financial year.
A qualified audit opinion is described as when the financial statements contain material misstatements in specific amounts or there is insufficient evidence for Maluleke’s office to conclude that specific amounts included in the financial statements are not materially misstated.
According to the report, a material loss relating to traffic fines has been impaired.
“The allowance for impairment of traffic fines debtors amounts to [about] R2.74 billion, which represents 82% of total traffic fines. This was due to non-payment of long-outstanding traffic fines,” reads the report, which is dated March 23 and was tabled during the ordinary council meeting held on March 26.
It also shows that material electricity loss of just less than R3.1bn, which stood at R2.75bn in 2024, was incurred and this represents 15.5% of the total electricity purchased and was 16% in 2024.
A technical loss of R858.4 million was due to electricity lost while being distributed from the source of generation through the transmission and distribution network to the final consumer.
The loss was R736.3m in the previous financial year while non-technical loss of R2.2bn was due to administrative and technical errors, negligence, theft of electricity, tampering with metres and connections, which form part of illegal consumption and faulty metres.
Maluleke found that reasonable steps were not taken to prevent irregular expenditure amounting to nearly R43m and in contravention of the Municipal Finance Management Act.
The majority of the disclosed irregular expenditure was caused by the contravention of supply chain management and the preferential procurement regulations, according to the report.
Maluleke was also critical of retired former city manager Dr. Imogen Mashazi, saying she did not exercise adequate oversight responsibility over financial reporting and compliance with legislation, as well as the related internal controls.
“Effective and appropriate measures were not implemented in a timely manner to prevent and detect material errors in the submitted annual financial statements, as well as to prevent and detect non- compliance with legislation,” the report revealed.
Maluleke said Mashazi developed an action plan to address the prior years' significant findings but adherence to the plan was not adequately monitored on a timely basis by the appropriate level of management, resulting in numerous material findings relating to compliance with laws and regulations.
In addition, Mashazi did not adequately design and implement information technology controls to prevent, detect and prevent unauthorised access to the financial reporting system, resulting in data manipulation.
“Senior management did not always ensure that adequate controls were designed, implemented and monitored to ensure proper financial reporting and compliance with laws and regulations, resulting in material non-compliance with laws and regulations,” declared the report.
Ekurhuleni's municipal public accounts committee (MPAC) is scheduled to hold public hearings with the municipality’s departments affected by the Auditor-General’s findings in the 2024/25 financial year report on Friday at the council chambers in Germiston.
According to the Municipal Structures Act, MPAC serves as an oversight committee over the executive obligations of council and its duties include reviewing the Auditor-General's report and responses with a view to ensuring satisfactory responses and corrective action, where necessary.