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City of Tshwane - Availability of the Annual Financial Statements for Year ended 30 June 2024.
THE CITY OF TSHWANE METROPOLITAN MUNICIPALITY
(A municipality as described in section 2 of the Local Government Municipal Systems Act, 2000, duly
established in terms of Notice No. 6770, promulgated in the Provincial Gazette Extraordinary of
1 October 2000 in terms of section 12(1) read with section 14(2) of the Local Government: Municipal
Structures Act, 1998, as amended)
(Issuer code: CTMM)
("City of Tshwane" or the "Issuer")
City of Tshwane availability of the Annual Financial Statements for the year ended
30 June 2024
Further to the announcement released on the availability of the Annual Financial Statements and Audit
Report on 23 January 2025, City of Tshwane advises noteholders that the Audit Report has not yet
been tabled at council. It will be tabled at the next council meeting on 30 January 2025.
The City of Tshwane's annual financial statements("AFS") for the year ended 30 June 2024 have been
audited by the Auditor-General South Africa ("AGSA"), who has issued a qualified audit opinion on the
AFS.
The details below are direct extracts of the Audit Report.
Basis for qualified opinion
Property, plant, and equipment
Assets included in note 13 to the consolidated and separate financial statements relating to
infrastructure assets as well as community assets were not valued in accordance with GRAP 17,
Property, plant and equipment. The service potential of the newly identified assets could not be
substantiated by an adequate technical assessment. Inappropriate unit rates were used to assign
values to assets identified. Previously capitalised assets were incorrectly componentised and revalued,
resulting in the value of the asset group recorded in the asset register being inflated. Due to the severity
of these issues and the extent of errors in the population, it was impracticable to determine the value of
the misstatements on infrastructure assets and community assets in the current and corresponding
figures. There was a resultant impact on impairment loss, depreciation, and the accumulated surplus.
Payables from exchange transactions
Trade payables were not correctly reconciled to supplier statements. In addition, some accruals were
not recorded in the accounting records. As a result, not all liabilities were recorded in the accounting
records and correctly valued in accordance with GRAP 1. Consequently, trade payables; and general
expenses, bulk purchases, contracted services, other materials and property, plant, and equipment
additions are collectively understated by R4 802 123 536. In addition, I was unable to obtain sufficient
appropriate audit evidence that the other creditors had been properly accounted for, due to the status
of the accounting records. I was unable to confirm the other creditors by alternative means.
Consequently, I was unable to determine whether any further adjustments were necessary to the other
creditors stated at R2 086 669 366 (2023: R1 661 541 005) and R2 081 857 420 (2023: R1 655 000
029) and as disclosed in note 21 to the consolidated and separate financial statements.
Other receivables from exchange transactions
I was unable to obtain sufficient appropriate audit evidence that sundry rentals and miscellaneous
receivables disclosed as part of other receivables from exchange had been properly accounted for, due
to the status of the accounting records. I was unable to confirm sundry rentals and miscellaneous
receivables by alternative means. Consequently, I was unable to determine whether any further
adjustments were necessary to the gross sundry rentals stated at R636 035 634 (2023: R502 489 424)
as well as miscellaneous receivables stated at R540 786 642 (2023: R301 775 596); as included in the
other receivables from the exchange transactions net balance stated at R1 116 282 451 (2023: R801
721 810) as disclosed in note 6 to the consolidated and separate financial statements.
Contingencies
I was unable to obtain sufficient appropriate audit evidence for contingencies for the current and
previous year, as the municipality did not maintain accurate and complete accounting records of the
registers used to determine contingencies. I could not confirm the amounts by alternative means.
Consequently, I was unable to determine whether any adjustment was necessary to contingencies
stated at R5 791 545 403 (2023: R5 810 016 424) as disclosed in note 62 to the consolidated and
separate financial statements.
Irregular expenditure
The municipality did not have an adequate system for identifying and disclosing all irregular expenditure
incurred, as required by section 125 (2) (d) of the MFMA. In addition, I was unable to obtain sufficient
appropriate audit evidence that irregular expenditure for the current year had been properly accounted
for, due to the status of the accounting records. I was unable to confirm the irregular expenditure by
alternative means. Consequently, I was unable to determine the full extent of the adjustment necessary
to the balance of irregular expenditure stated at R15 521 388 820 (2023: R13 143 540 000) and R15
443 033 030 (2023: R13 049 779 706) as disclosed in note 59 to the consolidated and separate financial
statements.
Segment reporting
The municipality did not prepare the segment reporting note in accordance with GRAP 18, Segment
reporting. This was due to the method of apportionment which is used to allocate actual amounts into
segments not being adequately supported. I was not able to determine the full extent of the errors in
the segment reporting note, as it was impracticable to do so. Consequently, I was unable to determine
whether any adjustments in the consolidated and separate financial statements were necessary.
Context for opinion
I conducted my audit in accordance with the International Standards on Auditing (ISAs). My
responsibilities under those standards are further described in the responsibilities of the auditor-general
for the audit of the consolidated and separate financial statements section of my report.
I am independent of the municipality in accordance with the International Ethics Standards Board for
Accountants' International code of ethics for professional accountants (including International
Independence Standards) (IESBA code) as well as other ethical requirements that are relevant to my
audit in South Africa. I have fulfilled my other ethical responsibilities in accordance with these
requirements and the IESBA code.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my
qualified opinion.
Key audit matters
Except for the matters described in the basis for the qualified opinion section or the material uncertainty
relating to the going concern section, I have determined that there are no key audit matters to
communicate in this auditor's report.
Material uncertainty relating to going concern
I draw attention to the matter below. My opinion is not modified in respect of this matter:
I draw attention to note 54 to the consolidated and separate financial statements, which indicates an
unfavourable liquidity position. As stated in note 54, these events or conditions, along with the other
matters as set forth in note 54, indicate that a material uncertainty exists that may cast significant doubt
on the municipality's ability to continue as a going concern.
Emphasis of matters
I draw attention to the matters below. My opinion is not modified in respect of these matters.
Material impairments – Consumer Debtors
As disclosed in note 5 of the consolidated and separate financial statements, the consumer debtors'
balance has been impaired. The allowance for impairment of consumer debtors amount to R21 046 826
796 (2023: R16 468 028 573) which represents 75.3%
(2023: 76.6%) of the total consumer debtors.
Material losses – Electricity
As disclosed in note 66 to the consolidated and separate financial statements, material electricity losses
of R2 529 946 110 (2023: R2 462 201 794) were incurred, which represents 19.09% (2023: 21.46%) of
total electricity purchased. Technical losses of R927 870 149 (2023: R803 185 911) were due to
electricity lost while being distributed from the source of generation through the transmission and
distribution network to the final consumer. Non-technical losses of R1 602 075 961 (2023: R1 659 015
883) were due to administrative and technical errors, negligence, theft of electricity, tampering with
meters and connections which form part of illegal consumptions, and faulty meters.
Material losses – Water
As disclosed in note 65 to the consolidated and separate financial statement, material water losses of
R1 331 066 990 (2023: R1 115 794 268) were incurred, which represents 34.4% (2023: 32%) of total
water purchased. Technical losses of R1 064 853 592 (2022-23: R892 635 414) were due to the
physical loss of water through the water distribution network. Non-technical losses of R266 213 398
(2023: R223 158 854) were due to inaccurate metering.
Other matters
I draw attention to the matter below. My opinion is not modified in respect of this matter.
Unaudited disclosure notes
In terms of section 125(2) (e) of the MFMA, the municipality is required to disclose particulars of non-
compliance with the MFMA in the consolidated and separate financial statements. These disclosure
requirements did not form part of the audit of the financial statements and, accordingly, I do not express
an opinion on them.
Responsibilities of the accounting officer for the consolidated and separate financial statements
The accounting officer is responsible for the preparation and fair presentation of the consolidated and
separate financial statements in accordance with the Standards of GRAP and the requirements of the
MFMA and Dora, and for such internal control as the accounting officer determines is necessary to
enable the preparation of the consolidated and separate financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated and separate financial statements, the accounting officer is responsible
for assessing the municipality's ability to continue as a going concern; disclosing, as applicable, matters
relating to going concern; and using the going concern basis of accounting unless the appropriate
governance structure either intends to liquidate the municipality or to cease operations or has no
realistic alternative but to do so.
Auditor-general's responsibilities for the audit of the consolidated and separate financial
statements
My objectives are to obtain reasonable assurance about whether the consolidated and separate
financial statements as a whole are free from material misstatement, whether due to fraud or error; and
to issue an auditor's report that includes my opinion. Reasonable assurance is a high level of assurance
but is not a guarantee that an audit conducted in accordance with the ISAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of these financial statements.
A further description of my responsibilities for the audit of the consolidated and separate financial
statements is included in the annexure to this auditor's report. This description, which is located at page
xx, forms part of my auditor's report.
Material irregularities
In accordance with the PAA and the Material Irregularity Regulations, I have a responsibility to report
on material irregularities identified during the audit and on the status of material irregularities as
previously reported in the auditor's report.
Material irregularities in progress
I identified material irregularities during the audit and notified the accounting officer of these, as required
by material irregularity regulation 3(2). By the date of this auditor's report, the responses of the
accounting officer were not yet due. These material irregularities will be included in next year's auditor's
report.
The AFS contain various restatements for the year ended 30 June 2024. Noteholders are referred to
note 73 (Prior period errors) on page 158 to page 165 of the consolidated Annual Financial Statements.
24 January 2025
Debt Sponsor
Absa Bank Limited (acting through its Corporate and Investment banking division)
Date: 24-01-2025 04:30:00
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