CITY OF TSHWANE METROPOLITAN MUNICIPALITY - City of Tshwane - Media Statement

City of Tshwane - Media Statement

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")

Media Statement: City of Tshwane has begun implementing key remedial steps to address
Auditor-General's 2023/24 report findings

Noteholders are advised that the City of Tshwane's Executive Mayor has issued a media statement on
the key remedial steps to address Auditor-General's 2023/24 report findings. The media statement is
also available on the issuers website.

Media Statement

"The Auditor-General of South Africa (AGSA) has released its audit findings for the City of Tshwane for
the 2023/24 financial year. This report, which shows an overall stagnation in audit outcomes, highlights
several key challenges that require urgent attention.

The City received a qualified audit opinion for a second year, with the City recording R2,3 billion in
irregular expenditure, and wasteful expenditure of R347 million. In addition, the audit findings indicated
issues related to property, plant and equipment (PPE) management, payables and receivables, and
compliance with the Supply Chain Management Regulations.

These findings underscore the need for stronger financial controls, better interdepartmental
coordination and adherence to governance principles. While the findings are a stark reminder of the
financial and operational issues that persist, they also provide a clear mandate for our administration to
take decisive action in addressing these shortcomings.

The Executive Mayor wishes to assure the residents of Tshwane that the City takes these findings
seriously and is fully committed to implementing a comprehensive remedial action plan to address them.
Since taking office in October 2024, the City's administration has been steadfast in its determination to
restore financial accountability and governance excellence in the City of Tshwane.

This year, the City is introducing a range of new interventions as part of a consolidated Audit Outcome
Remedial Action Plan designed to effectively tackle the challenges pointed out by the Auditor-General.

Central to this Action Plan is a collaborative approach between the City and the AGSA. The City has
explicitly requested the AGSA to perform an official audit procedure on the work conducted by the City
to address the qualification areas. This aims to ensure that the matters raised by the AGSA have been
adequately addressed, and that the Auditor-General has comfort over the City's opening balances prior
to the commencement of the audit of the 2024/25 annual financial statements.

As part of this process, the City has proposed to make supporting information available to the AGSA
on staggered basis, with the first batch to be submitted by 31 March and the second batch by 30 April.
The AGSA will be requested to avail a team on these dates to perform the necessary opening balance
audit procedures.

These measures aim to address the root causes of the audit findings and to set a clear path towards
sustainable improvement. The City will be appropriating additional funds during the adjustment budget
process towards the execution of this activity.

Other key actions in the Audit Outcome Remedial Action Plan include the following:

•    Property, plant and equipment management: We are conducting a full review and physical
     verification of the City's assets in order to ensure the accuracy of our asset register and compliance
     with accounting standards.

•    Improved payables and receivables processes: Efforts are underway to streamline invoice
     tracking, reconcile outstanding payables and strengthen collection strategies in order to reduce
     impairments.

•    Compliance with the Supply Chain Management Regulations: Enhanced training and quarterly
     compliance audits will help to ensure that supply chain management processes adhere to the
     regulations and prevent irregular expenditure.

•    Development of standard operating procedures (SOPs): SOPs will standardise key financial
     and operational processes in order to reduce inconsistencies and improve efficiency.

•    Enhanced oversight and accountability: We have strengthened the oversight mechanisms
     through regular Audit Steering Committee meetings, which are chaired by the Chief Financial
     Officer, and Executive Audit Tracking Committee meetings, which are chaired by myself, in order
     to ensure progress and accountability.

These interventions, along with an unwavering focus on improving interdepartmental collaboration and
governance, reflect the City's administration's commitment to comprehensively addressing the audit
findings.

While the challenges the City faces are significant, the City approaches this process with cautious
optimism. Implementing these measures provides the City with an opportunity to lay the groundwork for
improved financial controls, operational efficiency and governance standards. Our ultimate goal is to
place the City on a sustainable path towards achieving an unqualified audit opinion.

We call on all stakeholders – residents, businesses and our staff – to support these efforts as we work
together to build a City of Tshwane that exemplifies accountability, transparency and service
excellence."

For further information, please reach out to the City of Tshwane Metropolitan Municipality:
Chris Thipe: Divisional Head (Treasury Office)
Email: Christ@tshwane.gov.za
Tel: 012 358 6068

Or

Gareth Mnisi: Chief Financial Officer
Email: cfo@tshwane.gov.za
Tel: 012 358 8801

24 January 2025

Debt Sponsor
Absa Bank Limited (acting through its Corporate and Investment banking division)

Date: 24-01-2025 08:44:00
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