29 March 2006 Press release ACCOUNTING SURPLUS The City of Joburg has recorded an accounting surplus of R1-billion according to its 2005/06 financial statements audited by Auditor-General Shokat Fakie. This is largely due to amongst other things: Excess R200m on interest income resulting in an improved overall cash position The disclosure of grants in terms of Generally Acceptable Municipal Accounting Practice (GAMAP) led to over R200m being recorded as part of the surplus that would have been different under Generally Accepted Accounting Practice (GAAP) R110m write back of credit balances Excess R149m due to actuarial gain in employee benefits in accordance to AC116. The Auditor-General has once again issued a disclaimer on the City's financial statements. The disclaimer is based on the incompleteness of revenue as well as weaknesses in the control environment of some of the City's companies. He did however commend the City on significant progress made as a result of an action plan put in place to address these audit issues. He also said that Joburg had set an admirable standard in the interest of all the users of its financial statements, (parliament, creditors and funders, rating agencies, financial analysts and ratepayers). Member of the Mayoral Committee for Finance and Economic Development Councillor Parks Tau says, "We are encouraged by the Auditor-General's acknowledgement of our efforts as we strive towards a clean audit report." "Of the City's 16 companies, eight received unqualified reports, JHB Zoo, JHB Roads Agency, JHB Development Agency, JHB Property Company, JHB Tourism Company, JHB Civic Theatre, City Parks and Roodepoort City Theatre". Continuing he says, " Two received qualified reports, Metro Trading Company and Metro Bus and six received disclaimers, JHB Water, JHB Social Housing Company, Pikitup, City Power, City Housing Company and JHB Fresh Produce Market". Some of the key features as at financial year-end 2005 are: Over 95% of capital budget spent as evidenced by the tarring of all roads in Soweto, renewal of sections of the electricity and water networks, Cosmo City and Brickfields housing projects Increased revenue by 16% Regional Services levies grew by 14% A cash and call balance of R1, 655bn compared to R1, 284bn last year. "As noted by the Auditor-General, there is a marked improvement in the quality of the fixed asset register both moveable and immoveable which I am proud to say is compliant to GAMAP", says Tau. The electronic matching of the Council's billing system and the Valuation Roll shows that 91% (527 000) properties are matched. A separate project is underway regarding the matching of properties in for example Alexandra, parts of Soweto laid out in terms of previous legislation (now repealed). These properties are below the assessment rates threshold and do not tie in with the GIS/Valuation computerised systems and represent 9% of the total billing record. He adds, "It was a huge task but thanks to perseverance shown by staff, assets were identified, reconciled to old accounting records and title deeds held by the Municipality and the Deeds Office". The City of Joburg was a pilot site for the implementation of GAMAP for the 2004 financial year and subsequently implemented Generally Recognised Accounting Practice (GRAP). In concluding Tau says, "We are unhappy with the disclaimer though 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". Ends For further enquiries call: Virgil James 082 467 9415