December 10, 2003
By Jonews Reporter
THE Auditor-General, Shauket Fakie, has noted considerable improvement in the City of Johannesburg's financial statements for the financial year ended June 2003.
According to a statement issued by the City, Fakie also complimented council on the timely submission of its financial statements and the improvement in the areas of bank, payroll and debtors reconciliations.
The Auditor-General has issued a disclaimer on the financial statements, which was expected by the City, and could not verify the completeness of revenue in relation to assessment rates. The City has various initiatives underway to reconcile differences between the valuation roll and the property register.
The disclaimer was on the completeness of revenue and included both City Power and Johannesburg Water. Johannesburg Roads Agency, Johannesburg Property Company, Johannesburg Development Agency, Johannesburg Civic Theatre and Metropolitan Trading Company received clean audit reports.
However, the Johannesburg Metropolitan Bus Services, Fresh Produce Market, Pikitup, City Parks and Johannesburg Zoo all received qualified audit reports.
Finance Strategy and Economic Development mayoral committee member, Councillor Parks Tau expressed optimism on the future of the City's finances. "Joburg is on track towards a clean financial report. The submission of financial statements in accordance with prescribed legislation bears testimony to this."
Councillor Mike Moriarty, leader of the opposition Democratic Alliance, said: "The City, and the officials in particular, must be commended on the visible improvement in the provision of the financial statements." He, however, also indicated that certain areas still needed to be improved.
The City had made considerable progress in:
- The confirmation of inter-company balances.
- Reducing previously unallocated receipts from R448-million to R105-million.
- The management of fixed assets, especially new acquisitions on an electronic system.
- The finalisation of Financial Procedures and Controls.
The Auditor-General was now comfortable with the estimates of unfunded liabilities and this issue had become an emphasis of matter on the report.
Roland Hunter, executive director of finance at the City of Johannesburg, said the financial statements were submitted within three months and were to be considered by the council this month. This was six months after year-end, compared with nine months last year and 16 months in 2001.
Revenue collection remained at 87 percent of the amount billed to residents and businesses each month for the year-end June 2003. The core administration had ended the financial year with an operating surplus of R46.4-million and a positive cash balance of R155.9-million. Capital expenditure was R1.3-billion and the City had spent 90 percent of its budget - a considerable improvement over previous years.
Hunter said the City's capital investment requirements were over R8-billion for five years, which was "too large for traditional bank loans". The council was therefore seeking to issue Municipal Bonds sometime in the future, which would "greatly reduce the cost of funding".
The proceeds of the bond issue would be invested mainly in revenue-generating capital projects, which should result in "an expanded revenue base for the City".
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