March 30, 2006
By Lucky Sindane
THE City of Johannesburg recorded an accounting surplus of R1-billion in the 2004-05 financial year. This emerged from the auditor-general's report, released on Tuesday, 28 March.
Eight of the City's 16 companies received unqualified reports from the AG, Shauket Fakie. However, he issued a disclaimer on the City's 2004-05 financial statements, citing the incompleteness of revenue and weaknesses in the control environment of some of the City's companies.
Speaking at a media briefing on 29 March, the mayoral committee member for finance, Parks Tau, said that although the City was unhappy with the disclaimer, it was "not surprised because we have previously indicated that we do not as yet expect a clean audit report until we satisfy the requirements of the auditor-general".
"We are encouraged by the auditor-general's acknowledgement of our efforts as we strive towards a clean audit report," Tau said, pointing out that the AG had acknowledged that Joburg had made significant progress after an action plan was put in place to deal with its audit issues.
Fakie also said that Johannesburg had set an admirable standard in the interest of all the users of its financial statements, such as parliament, creditors and funders, ratings agencies, financial analysts and ratepayers.
Among other things, Tau ascribed the City's R1-billion surplus largely to:
- The excess R200-million on interest income resulting in an improved overall cash position;
- The disclosure of grants in terms of Generally Acceptable Municipal Accounting Practice (GAMAP), which led to more than R200-million being recorded as part of the surplus that would have been different under Generally Accepted Accounting Practice;
- The R110-million write back of credit balances; and
- The excess R149-million because of actuarial gain in employee benefits in accordance with the accounting statement, AC116.
Johannesburg Zoo, Johannesburg Roads Agency, Johannesburg Development Agency, Johannesburg Property Company, Johannesburg Tourism Company, Johannesburg Civic Theatre, City Parks and Roodepoort City Theatre all received unqualified reports from Fakie.
Metro Trading Company and Metro Bus received qualified reports. Six companies received disclaimers - Johannesburg Water, Johannesburg Social Housing Company, Pikitup, City Power, City Housing Company and Johannesburg Fresh Market.
During the 2005 financial year, more than 95 percent of the capital budget was spent, as seen in projects like the tarring of all the roads in Soweto, the renewal of sections of the electricity and water networks, and the Cosmo City and the Brickfields housing projects. Revenue increased by 16 percent, regional services levies grew by 14 percent, and the cash and call balance reached R1,65-billion, from R1,284-billion in the previous year.
"As noted by the auditor-general, there is a marked improvement in the quality of the fixed asset register both movable and immovable which, I am proud to say, is in compliance with GAMAP," Tau said.
The electronic matching of the council's billing system and the Valuation Roll shows that 91 percent of properties, or 527 000 properties, are matched.
A project is being undertaken to match properties in areas like Alexandra and parts of Soweto. These properties are below the assessment rates threshold and do not tie in with the Geographical Information Systems-Valuation computerised systems. They represent 9 percent of the total billing record.
"It was a huge task but thanks to perseverance shown by staff, assets were identified and reconciled to old accounting records and title deeds held by the municipality and the deeds office," Tau added.
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