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City of Tshwane - Availability of the Audit Report for the year ended 30 June 2025
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 "City")
AVAILABILITY OF THE AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2025
Following to the announcement released by the City of Tshwane on the 4th of December 2025 on the
availability of the audit report, noteholders are further advised of the availability of the City of Tshwane's
auditor-general report on the audit of the consolidated and separate financial statements.
Noteholders are advised that the City of Tshwane's audit report of the consolidated and separate
financial statements for the financial year end 30 June 2025 is available for downloading on the city's
website at: https://www.tshwane.gov.za/wp-content/uploads/2025/12/COT-Final-Consolidated-Audit-
report-2024-25.pdf
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 or before 30 January 2026.
The details below are direct extracts of the Audit Report.
Report of the auditor-general to the Gauteng Provincial Legislature and
the council on the City of Tshwane Metropolitan Municipality
Report on the audit of the consolidated and separate financial statements
Qualified opinion
1. I have audited the consolidated and separate financial statements of the City of Tshwane
Metropolitan Municipality and its entities (the group) set out on pages xx to xx, which comprise
the consolidated and separate statement of financial position as at 30 June 2025, consolidated
and separate statement of financial performance, consolidated and separate statement of
changes in net assets and consolidated and separate cash flow statement and consolidated
and separate statement of comparison of budget and actual amounts for the year then ended,
as well as notes to the consolidated and separate financial statements, including a summary of
significant accounting policies.
2. In my opinion, except for the effects and possible effects of the matters described in the basis
for qualified opinion section of this auditor's report, the consolidated and separate financial
statements present fairly, in all material respects, the consolidated and separate financial
position of the group as at 30 June 2025, and its consolidated and separate financial
performance and consolidated and separate cash flows for the year then ended in accordance
with the Standards of Generally Recognised Accounting Practice (Standards of GRAP) and the
requirements of the Municipal Finance Management Act 56 of 2003 (MFMA) and the Division
of Revenue Act 24 of 2024 (Dora).
Basis for qualified opinion
Property, plant and equipment
3. Assets included in note 11 to the consolidated and separate financial statements relating to
infrastructure assets and community assets were not valued in accordance with GRAP 17,
Property, plant and equipment. Inappropriate methodologies and unit rates were used to assign
values to assets identified. Previously capitalised assets were incorrectly componentised and
revalued, resulting in the value of the assets recorded in the asset register being inflated in the
current and comparative financial periods. 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. There was a resultant impact on impairment loss,
depreciation and the accumulated surplus.
Contingencies
4. Contingences were not accounted for in terms of GRAP 19, Provisions, contingent liabilities
and contingent assets. Contingencies were not completely accounted for in the municipality's
records, consequently, the corresponding figures for contingencies disclosed in note 63 to the
consolidated and separate financial statements were understated by R4 322 251 120.Context
for opinion
Context for opinion
5. 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.
6. I am independent of the group 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.
7. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis
for my qualified opinion.
8. In terms of the IRBA Rule on Enhanced Auditor Reporting for the Audit of Financial Statements
of Public Interest Entities, published in Government Gazette No. 49309 dated 15 September
2023 (EAR Rule), I report:
Final materiality
9. The scope of our audit was influenced by my application of materiality. An audit is designed to
obtain reasonable assurance whether the financial statements are free from material
misstatement. Misstatements may arise due to fraud or error, and they 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 the consolidated and separate financial statements.
10. My determination of materiality is a matter of professional judgement and is affected by my
perception and understanding of the financial information needs of intended users, which are
the quantitative and qualitative factors that determine the level at which relevant decisions
taken by users would be affected by a misstatement. These factors helped to determine the
scope of the audit and the nature, timing and extent of our audit procedures and to evaluate the
effect of misstatements, both individually and in aggregate on the consolidated and separate
financial statements as a whole.
11. Based on my professional judgement, I determined final materiality for the consolidated and
separate financial statements as follows:
Materiality considerations Consolidated financial Separate financial statements
statements
Final materiality amount R503,3 million R483,7 million
Basis for determining 1% of total expenditure 1% of total expenditure
materiality
Materiality considerations Consolidated financial Separate financial statements
statements
Rationale for benchmark Total expenditure is an Total expenditure is an
applied appropriate quantitative appropriate quantitative
indicator of materiality as the indicator of materiality as the
primary focus of the users of primary focus of the users of
the financial statements is on the financial statements is on
the use of funds to deliver the use of funds to deliver
services. services.
Group audit scope
12. I tailored the scope of the audit in order to perform sufficient work to enable us to provide an
opinion on the consolidated financial statements as a whole, considering the structure of the
group and the accounting processes and controls. I performed a full audit of the group's
consolidated and separate financial statements.
Key audit matters
13. Key audit matters are those matters that, in professional judgement, were of most significance
in my audit of the consolidated and separate financial statements for the current period. These
matters were addressed in the context of my audit of the consolidated and separate financial
statements as a whole and, in forming my opinion, I do not provide a separate opinion on these
matters.
14. 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.
Emphasis of matters
15. I draw attention to the matters below. My opinion is not modified in respect of these matters.
16. As disclosed in note 71 to the consolidated and separate financial statements, the
corresponding figures for 30 June 2024 were restated as a result of an error in the financial
statements of the group at, and for the year ended, 30 June 2025.
17. I draw attention to note 55 in the consolidate and separate financial statements, which deals
with the possible effects of the future implications of existing adverse indicators on the group's
prospects, performance and cash flows. Management have also described how they plan to
deal with these events and circumstances.
18. As disclosed in note 4 to the consolidated and separate financial statements, material
impairment of R20 891 172 098 (2024: R20 981 140 195) was incurred as a result of
doubtful debts on consumer receivables.
19. As disclosed in note 5 to the consolidated and separate financial statements, material
impairment related to other receivables from exchange and non-exchange transactions of
R1 468 554 383 (2024: R1 301 196 498) and R664 923 422 (2024: R536 288 804),
respectively, were incurred as a result of doubtful debts on other receivables from exchange
and non-exchange transactions.
20. As disclosed in note 46 to the consolidated and separate financial statement, material water
losses of R1 699 765 016 (2024: R1 331 066 990) were incurred, which represent 39,1%
(2024: 34.4%) of total water purchased. Technical losses of R1 359 812 013 (2024:
R1 064 853 592) were due to the physical loss of water through the water distribution network.
Non-technical losses of R339 953 003 (2024: R266 213 398) were due to inaccurate metering,
water leaks, pipe bursts and water theft.
21. As disclosed in note 47 to the consolidated and separate financial statements, material
electricity losses of R1 873 312 711 (2024: R1 632 223 297) were incurred, which represent
21% (2024: 19%) of total electricity purchased. Technical losses of R610 437 852 (2024:
R598 625 902) 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 262 874 859 (2024: R1 033 597 395) 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.
22. I draw attention to note 69 in the consolidated and separate financial statements, which deals
with subsequent events and specifically the possible effects of the court ruling declaring the city
cleaning levy applicable to households and businesses that make use of private refuse
collection services unlawful on the municipality. I further draw attention to the disclosure on the
city's unsuccessful exemption application hearing with Independent Municipal and Allied Trade
Union and South African Municipal Workers' Union regarding the 2021 salary and wage
collective agreement.
Other matters
23. I draw attention to the matter below. My opinion is not modified in respect of this matter.
24. 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 consolidated and separate
financial statements and, accordingly, I do not express an opinion on them.
Responsibilities of the accounting officer for the consolidated and separate financial statements
25. The accounting officer is responsible for the preparation and fair presentation of the
consolidated and separate financial statements in accordance with the Standards 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.
26. 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.
Responsibilities of the auditor-general for the audit of the consolidated and separate financial statements
27. 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 consolidated and separate financial statements.
28. 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 on page xx, forms part of my auditor's report.
Report on the audit of the annual performance report
29. In accordance with the Public Audit Act 25 of 2004 (PAA) and the general notice issued in
terms thereof, I must audit and report on the usefulness and reliability of the reported
performance against predetermined objectives for the selected strategic priorities presented in
the annual performance report. The accounting officer is responsible for the preparation of the
annual performance report.
30. I selected the following strategic priorities presented in the annual performance report for the
year ended 30 June 2025 for auditing. I selected strategic priorities that measure the
municipality's performance on its primary mandated functions and that are of significant
national, community or public interest.
Strategic priority Page Purpose
numbers
Prioritisation of the electrical XX Provide key service delivery linked to
grid and water infrastructure the local government mandate to
provide water and sanitation as well
as electricity services and related
infrastructure
Maintenance and expansion of XX Provide key service delivery linked to
road infrastructure and public the local government mandate to
transportation provide roads and transport services
and related infrastructure
Strategic priority Page Purpose
numbers
A caring city that supports the XX Provide key service delivery linked to
vulnerable and provides social the local government mandate to
relief provide housing and related
infrastructure services
31. I evaluated the reported performance information for the selected development priorities
against the criteria developed from the performance management and reporting framework, as
defined in the general notice. When an annual performance report is prepared using these
criteria, it provides useful and reliable information and insights to users on the municipality's
planning and delivery on its mandate and objectives.
32. In performing the audit, my procedures focused on the material indicators relating to water,
sanitation, human settlements and related infrastructure, as well as electricity and energy,
roads and transport services.
33. I performed procedures to test whether:
• the indicators used for planning and reporting on performance can be linked directly to the
municipality's mandate and the achievement of its planned objectives
• all the indicators relevant for measuring the municipality's performance against its primary
mandated and prioritised functions and planned objectives are included
• the indicators are well defined to ensure that they are easy to understand and can be
applied consistently, as well as verifiable so that I can confirm the methods and processes
to be used for measuring achievements
• the targets can be linked directly to the achievement of the indicators and are specific,
time bound and measurable to ensure that it is easy to understand what should be
delivered and by when, the required level of performance as well as how performance will
be evaluated
• the indicators and targets reported on in the annual performance report are the same as
those committed to in the approved initial or revised planning documents
• the reported performance information is presented in the annual performance report in the
prescribed manner and is comparable and understandable
• there is adequate supporting evidence for the achievements reported and for the
measures taken to improve performance.
34. I performed the procedures for the purpose of reporting material findings only; and not to
express an assurance opinion or conclusion.
35. The material findings on the reported performance information for the selected strategic
priorities are as follows:
Prioritisation of the electrical grid and water infrastructure
Various indicators
36. I could not determine if the reported achievements of the following indicators and targets were
correct, as adequate supporting evidence to clarify the methods and processes for measuring
achievements on these indicators and their targets were not provided. Consequently, the
municipality would have found it difficult to determine the correct achievements to be reported
against the planned targets. Consequently, the reported achievements might be more or less
than reported and were not reliable for determining if the targets had been achieved.
Furthermore, underachievements were reported against the related planned targets, together
with the reasons for this. However, adequate supporting evidence was not provided for
auditing. Consequently, I could not confirm the reliability of the reported reasons.
Name of indicator Planned target Reported achievement
Percentage of water treatment
capacity unused 45% 37,22%
Percentage of wastewater -10% -22,1%
treatment capacity unused 7 7,6
Infrastructure leakage index
Percentage of industries with trade effluent inspected for compliance
37. An achievement of 86,8% was reported against a target of 92%. However, some supporting
evidence was not provided for auditing; or, where it was, I identified material differences
between the actual and reported achievements. Consequently, the achievement might be more
or less than reported and was not reliable for determining if the target had been achieved.
Missing indicator
38. The indicator of percentage of planned maintenance performed was omitted from the approved
planning documents. The indicator was agreed nationally as a standard for metropolitans to
measure performance on key service delivery outputs. Consequently, the achievement of this
objective was not planned or accounted for, which resulted in some of the service delivery
issues not being prioritised and this impacting negatively on service delivery to the citizens.
The omission of the standardised indicator also undermines transparency and accountability on
the progress towards achievement of the objectives by all metropolitan municipalities.
39. The municipality indicated that the reason for exclusion is systems' limitations. The municipality
is unable to draw the required data to account on the performance relating to the phenomenon
measured by this indicator in a way that satisfies all the data and evidence requirements in line
with the National Treasury's MFMA Circular 88. In the absence of the enabling system, the
municipality is removing this key performance indicator from the Service Delivery Budget
Implementation Plan, while exploring ways that will ultimately promote the credibility and
integrity of the required accounting information/data.
Maintenance and expansion of road infrastructure and public transportation
40. The indicator of percentage of surfaced municipal road lanes that have been resurfaced and
resealed was omitted from the approved planning documents. The indicator was agreed
nationally as a standard for metropolitans to measure performance on key service delivery
outputs. Consequently, the achievement of this objective was not planned or accounted for,
which resulted in some of the service delivery issues not being prioritised and this impacting
negatively on service delivery to the citizens. The omission of the standardised indicator also
undermines transparency and accountability on the progress towards achievement of the
objectives by all metropolitan municipalities.
41. The municipality indicated that the reason for exclusion is that the MFMA Circular 88 prescripts
require a clearly defined denominator in the length of all municipal unsurfaced road lanes,
which the municipality does not have. The numerator listing – kilometres of roads graded –
does not have street names and the region under which they fall to be uniquely identifiable.
The inability to have unique identifiers in areas of grading interventions is making it impossible
to account properly and reliably for work done and calculate the results accurately.
A caring city that supports the vulnerable and provides social relief
Various indicators
42. Based on the audit evidence, the actual achievements for two indicators did not agree with
what was reported. I could not determine the actual achievements, but I estimated them to be
materially less. Consequently, the targets were not achieved, the underachievements on the
targets were more than reported and the achievements against the targets were lower than
reported. Furthermore, underachievements were reported against the related planned targets,
together with the reasons for this. However, adequate supporting evidence was not provided
for auditing. Consequently, I could not confirm the reliability of the reported reasons.
Name of indicator Planned target Reported achievement
Number of serviced sites – water 2 834 2 297
Number of serviced sites – sewer 2 834 1 498
Missing indicator
43. The indicator of number of title deeds registered to beneficiaries was omitted from the
approved planning documents. The indicator was agreed nationally as a standard for
metropolitans to measure performance on key service delivery outputs. Consequently, the
achievement of this objective was not planned or accounted for, which resulted in some of the
service delivery issues not being prioritised and this impacting negatively on service delivery to
the citizens. The omission of the standardised indicator also undermines transparency and
accountability on the progress towards achievement of the objectives by all metropolitan
municipalities.
44. The municipality indicated that the reason for exclusion is that the registration process of title
deeds is done by service providers appointed by the Gauteng Department of Human
Settlements against the background that the Title Restoration Grant goes directly from national
to the provinces and not to the municipalities. Therefore, the city is entirely dependent on the
submissions of evidence on registrations from the Gauteng province for the low-cost houses
transferred to beneficiaries monthly.
Other matters
45. I draw attention to the matters below.
Achievement of planned targets
46. The annual performance report includes information on reported achievements against planned
targets and provides measures taken to improve performance. This information should be
considered in the context of the material findings on the reported performance information.
47. The tables that follow provide information on the achievement of planned targets and list the
key service delivery indicators that were not achieved as reported in the annual performance
report. The measures taken to improve performance are included in the annual performance
report on pages xx to xx.
Prioritisation of electric grid and water infrastructure
Targets achieved: 20%
Key service delivery indicator not Planned target Reported achievement
achieved
Number of new sewer connections meeting
950 0
minimum standards
Length of water pipelines
13 000 m 9 893,75 m
replaced/upgraded
Length of new sewer pipelines installed 2 815 m 2 402,35 m
Percentage of water treatment
45% 37,22%
capacity unused
Percentage of wastewater
-10% (22,1%)
treatment capacity unused
Percentage of industries with
trade effluent inspected for 92% 86,8%
compliance
Infrastructure leakage index 7 7,6
Number of dwellings provided with 1 905 499
connections to the mains electricity supply
by the municipality
A caring city that supports the vulnerable and provides social relief
Targets achieved: 50%
Key service delivery indicator not Planned target Reported achievement
achieved
Number of serviced sites – water 2 834 2 297
Number of serviced sites – sewer 2 834 1 498
Material misstatements
48. I identified preventable material misstatements in the annual performance report submitted for
auditing. These material misstatements were in the reported performance information for the
selected strategic priorities, prioritisation of the electrical grid, maintenance and expansion of
road infrastructure and public transportation and water infrastructure and a caring city that
supports the vulnerable and provides relief. Management did not correct all the misstatements,
and I reported material findings in this regard.
Report on compliance with legislation
49. In accordance with the PAA and the general notice issued in terms thereof, I must audit and
report on compliance with applicable legislation relating to financial matters, financial
management, and other related matters. The accounting officer is responsible for the
municipality's compliance with legislation.
50. I performed procedures to test compliance with selected requirements in key legislation in
accordance with the findings engagement methodology of the Auditor-General of South Africa
(AGSA). This engagement is not an assurance engagement. Accordingly, I do not express an
assurance opinion or conclusion.
51. Through an established AGSA process, I selected requirements in key legislation for
compliance testing that are relevant to the financial and performance management of the
municipality, clear to allow consistent measurement and evaluation, while also sufficiently
detailed and readily available to report in an understandable manner. The selected legislative
requirements are included in the annexure to this auditor's report.
52. The material findings on compliance with the selected legislative requirements, presented per
compliance theme, are as follows:
Annual financial statements, performance reports and annual reports
53. The financial statements submitted for auditing were not prepared, in all material respects, in
accordance with the requirements of section 122(1) of the MFMA. Material misstatements of
non-current assets and current assets, and disclosure items identified by the auditors in the
submitted financial statements were subsequently corrected and the supporting records were
provided, but the uncorrected material misstatements resulted in the financial statements
receiving a qualified audit opinion.
Asset management
54. An effective system of internal control for assets (including an asset register) was not in place,
as required by section 63(2) (c) of the MFMA.
Expenditure management
55. Money owed by the municipality was not always paid within 30 days as required by section
65(2) (e) of the MFMA.
56. Reasonable steps were not taken to prevent unauthorised expenditure amounting to
R1 298 037 923, as disclosed in note 58 to the annual financial statements, in contravention of
section 62(1)(d) of the MFMA. The majority of the disclosed unauthorised expenditure was
caused by overspending on non-cash items.
57. Reasonable steps were not taken to prevent fruitless and wasteful expenditure amounting to
R613 981 605, as disclosed in note 59 to the annual financial statements, in contravention of
section 62(1)(d) of the MFMA. The majority of the disclosed fruitless and wasteful expenditure
was caused by the incurrence of interest on late payments.
58. Reasonable steps were not taken to prevent irregular expenditure amounting to
R3 240 777 589 as disclosed in note 60 to the annual financial statements, as required by
section 62(1)(d) of the MFMA. The majority of the irregular expenditure was caused by non-
compliance with section 112 (1) of the MFMA.
Procurement and contract management
59. Contracts were awarded to bidders based on points given for legislative requirements that were
not stipulated or differed from those stipulated in the original invitation for bidding, in
contravention of supply chain management (SCM) regulations 21(b) and 28(1)(a) (i) and the
Preferential Procurement Regulations.
60. Some of the contracts were awarded to providers whose tax matters had not been declared by
the South African Revenue Service to be in order, in contravention of SCM regulation 43.
61. The performance of some of the contractors or providers was not monitored on a monthly
basis, as required by section 116(2) (b) of the MFMA. Similar non-compliance was also
reported in the prior year.
62. The contract performance and monitoring measures were not in place to ensure effective
contract management, as required by section 116(2)(c)(ii) of the MFMA.
Consequence management
63. Some of the irregular expenditure incurred by the municipality was not investigated to
determine if any person is liable for the expenditure, as required by section 32(2)(b) of the
MFMA.
64. Some of the fruitless and wasteful expenditure incurred by the municipality was not
investigated to determine if any person is liable for the expenditure, as required by section
32(2)(b) of the MFMA.
65. Unauthorised expenditure incurred by the municipality was not investigated to determine if any
person is liable for the expenditure, as required by section 32(2)(b) of the MFMA.
66. Some of the losses resulting from irregular expenditure were not recovered from the liable
person, as required by section 32(2) of the MFMA.
67. Losses resulting from fruitless and wasteful expenditure were not recovered from the liable
person, as required by section 32(2)(b) of the MFMA.
Strategic planning and performance management
68. The performance management system and related controls were inadequate, as weaknesses
in internal controls were identified in the process of performance monitoring, measurement,
review and reporting, as required by municipal planning and performance management
regulation 7(1).
Governance and oversight
69. I was unable to obtain sufficient appropriate audit evidence that the Internal Audit unit advised
the accounting officer and/or reported to the audit committee on the implementation of the
internal audit plan on matters relating to risk management, as required by section 165(2)(b)(iv)
of the MFMA.
Other information in the annual report
70. The accounting officer is responsible for the other information included in the annual report.
The other information referred to does not include the consolidated and separate financial
statements, the auditor's report and those selected strategic priorities presented in the annual
performance report that have been specifically reported in this auditor's report.
71. My opinion on the consolidated and separate financial statements, the report on the audit of the
annual performance report, and the report on compliance with legislation do not cover the other
information included in the annual report and I do not express an audit opinion or any form of
assurance conclusion on it.
72. My responsibility is to read this other information and, in doing so, consider whether it is
materially inconsistent with the consolidated and separate financial statements and the
selected strategic priorities presented in the annual performance report or my knowledge
obtained in the audit, or otherwise appears to be materially misstated.
73. I did not receive the other information prior to the date of this auditor's report. When I do
receive and read this information, if I conclude that there is a material misstatement therein, I
am required to communicate the matter to those charged with governance and request that the
other information be corrected. If the other information is not corrected, I may have to retract
this auditor's report and re-issue an amended report as appropriate. However, if it is corrected
this will not be necessary.
Internal control deficiencies
74. I considered internal control relevant to my audit of the consolidated and separate financial
statements, annual performance report and compliance with applicable legislation; however,
my objective was not to express any form of assurance on it.
75. The matters reported below are limited to the significant internal control deficiencies that
resulted in the basis for the qualified opinion, the material findings on the annual performance
report and the material findings on compliance with legislation included in this report.
76. The accounting officer did not exercise adequate oversight responsibility over financial
reporting and compliance with legislation, as well as the related internal controls. Effective and
appropriate measures were not implemented timeously to prevent and detect material errors in
the submitted annual financial statements and annual performance report, as well as to prevent
and detect non-compliance with legislation.
77. The accounting officer developed an action plan to address the prior years' significant findings,
but adherence to the plan was not adequately monitored timeously by the appropriate level of
management, resulting in numerous material findings relating to the consolidated and separate
financial statements, performance report and compliance with laws and regulations.
78. Senior management did not adequately ensure that the consolidated and separate financial
statements and performance report prepared were accurate and complete and agreed to
supporting schedules, as numerous misstatements were identified on the consolidated and
separate financial statements and performance report submitted for audit. Daily and monthly
control activities that support accurate and reliable reporting, such as reconciliations, were
generally lacking.
79. Senior management did not always ensure that adequate controls were designed,
implemented, and monitored to ensure compliance with laws and regulations, resulting in
material non-compliance with laws and regulations. In addition, there was inadequate
implementation of consequence management for poor performance and transgressions.
Material irregularities
Material irregularities identified during the audit
80. The material irregularities identified are as follows:
Upgrade of roads and stormwater systems in Mabopane and Winterveldt areas not completed
81. The municipality appointed a service provider on 22 December 2020 for the upgrading of roads
and stormwater systems in the Mabopane and Winterveldt areas for an amount of R41 494 193
(VAT inclusive). The construction commenced on 13 April 2021 for a duration of 12 months,
with a planned completion date of 4 May 2022.
82. On 5 September 2023, the accounting officer approved the bid adjudication committee
recommendation to terminate the contract; however, a formal termination letter was only issued
to the service provider on 8 November 2024.
83. Resources of the municipality were not utilised economically, as required by section 62(1)(a) of
the MFMA. The municipality did not ensure that the upgrade of roads and stormwater in the
Mabopane and Winterveldt areas is completed. Failure to finalise the upgrading results in
money spent on infrastructure that cannot be used. In addition, the incomplete infrastructure is
likely to deteriorate due to elements of weather.
84. The infrastructure is currently exposed to extreme weather conditions and is likely to
deteriorate, which will likely result in a material financial loss for the department, if the project is
not completed timeously.
85. The accounting officer was notified of the material irregularity on 12 December 2024.
86. The accounting officer has taken the following actions to address the material irregularity:
• The municipality appointed a service provider as the new consultant on 8 March 2024 to
review the detailed design for Mabopane Block UX1. The consultant completed the design
review on 31 May 2025.
• A real-time financial tracking system to monitor capital expenditure against performance to
prevent possible mismanagement was implemented.
• The municipality will embark on an investigation and review process to identify gaps and
improve future contract management.
• The municipality adopted structured project management methodologies aligned with best
practices, such as the capital demand dashboard (CAPS dashboard project tracking
system).
• There will be capacitation of the project managers through continuous training.
• A project management committee is being established to conduct periodic evaluations of
project progress.
• The tender for the appointment of the replacement contractor to complete the project was
advertised on 15 August 2025, followed by a briefing session held on 26 August 2025. The
tender closed on 19 September 2025, with the appointment of the contractor scheduled for
end of December 2025.
87. I will follow up on the implementation of the planned actions during my next audit.
Customers not billed for services rendered
88. The Computer Assisted Audit Techniques (CAATS) indicated that some customers were billed
for property rates but were not billed for the related service charges, which included the
following:
o Properties billed for property rates but not billed for refuse removal (solid waste.
o Properties billed for property rates but not billed for electricity
o Properties billed for property rates but not billed for water
o Properties billed for property rates but not billed for sanitation and sewerage.
89. The municipality did not take reasonable steps to ensure that revenue due is calculated
monthly, as required by section 64(2)(b) of the MFMA for the period between 1 July 2023 to 30
June 2024.
90. The non-compliance is likely to result in a material financial loss, if not recovered.
91. The accounting officer was notified of the material irregularity on 12 December 2024.
92. The accounting officer has taken the following actions to address the material irregularity:
• The installation of waste removal services on the SAP system was completed in May 2025.
• There is ongoing implementation of geo-billing web analysis as part of daily activities to
ensure completeness of billing.
• From January 2025, the revenue team started running simulations of the CAATS and
allocating to the electricity, waste, water and sanitation departments for comprehensive
comments and implementation of corrective measures monthly.
• Site inspections are currently being conducted on identified properties to assess water and
sewer connections.
• Standard operating procedures were developed and implemented and standing meetings
between the billing department and revenue-generating departments were established.
93. I will follow up on the implementation of the planned actions during my next audit.
Status of previously reported material irregularities
Pollution of water resources not prevented at Rooiwal Wastewater Treatment Works
94. The municipality did not take reasonable measures at the Rooiwal Wastewater Treatment
Works (WWTW) to prevent pollution or degradation of the environment and water resources
from occurring, continuing or recurring, as required by section 28(1) of the National
Environmental Management Act 107 of 1998.
95. The Rooiwal WWTW has not been functional since 2010 due to neglected maintenance that
has resulted in the discharge of inadequately treated effluent into the Apies River and
Leeuwkop Dam over several years. The Apies River feeds the Leeuwkop Dam, which is the
extraction point of the Temba Water Treatment Plant.
96. This has resulted in the continued and long ongoing discharge of inadequately treated effluent,
exceeding the discharge limits, into main water resources such as the Apies River and
Leeuwkop Dam, as well as groundwater pollution of the surrounding environment. It also has a
devastating effect on the water, its eco-systems and the people who use the water. These
contaminated water resources provide water for consumption and recreational services for the
surrounding communities, as well as water to neighbouring farmers for consumption by
livestock and irrigation of crops (boreholes and irrigation ponds).
97. The accounting officer was notified of the material irregularity on 15 December 2021.
98. The accounting officer included the planning of Rooiwal Phase 2 in the integrated
developmental plan of the municipality. The accounting officer had initiated section 33 of the
MFMA process, which was expected to be finalised by February 2023. Subsequently, the
accounting officer put section 33 of the MFMA process on hold as the municipality adopted a
new approach to address issues at the Rooiwal WWTW.
99. The process to complete the Rooiwal Phase 1 project will require a new consulting engineering
firm to be appointed. The scope of work for the appointment of the consulting engineering firm
to render professional services has been compiled. The preparation of the specification was
expected to be finalised by March 2023; however, the accounting officer has considered an
alternative approach for the execution of Rooiwal Phase 1, and this will be the appointment of
an Implementing agent to oversee the execution of the project.
100. The accounting officer has taken the following actions to address the material irregularity:
• Continuous repairs and maintenance of the machinery and equipment at the Rooiwal
WWTW were ensured.
• Service providers were appointed in August 2021 for the provision of water tanker services
to Hammanskraal residents affected by the water quality issues.
• A contractor for the phase 1 upgrade and refurbishment at the Rooiwal WWTW was
appointed. However, the contractor's contract was terminated in July 2022 due to poor
performance.
• An early business case that was submitted to Infrastructure South Africa (ISA) in April
2023 was approved in June 2024.
• A total of R450 million has been allocated for the Rooiwal WWTW Phase 1 project on the
2023-24 Medium-Term Revenue and Expenditure Framework, with R150 million split from
2023-24 to 2025-26 financial years. The allocated budget will be utilised for the completion
of the Rooiwal WWTW phase 1 upgrade, and the execution of new upgrades identified to
improve the quality of the effluent discharged.
• A preliminary technical meeting between the municipality and the Development Bank of
Southern Africa (DBSA) took place in June 2023 to discuss the scope of works and the
possible signing of the memorandum of understanding for the execution of the project.
• A mayoral committee meeting took place in July 2023 to consider the appointment of the
DBSA as the implementing agent. The DBSA was appointed as an implementing agent in
September 2023 and a service level agreement between the DBSA and the
municipality was finalised in October 2023.
• General building and mechanical engineering turnkey contractors appointed in February
2024 were granted access to the site in March and April 2024, respectively.
o Phase 1A has two contracts, one for mechanical engineering and another for general
building works. The mechanical engineering contract achieved its completion on 23
March 2025, with the general building achieving sectional completion on 6 March 2025.
o A phase 1B contract was awarded to the contractor on 24 January 2025, with site
handover happening on the 19 March 2025. The planned scope of phase 1B includes
refurbishment of the north inlet works; construction of two primary sedimentation tanks
and sludge pipeline from north top east works; and mechanical and electrical components
of the north works. Phase 1B is expected to be completed on 17 October 2026.
• A consulting engineering company appointed as part of a panel in October 2023 prepared
an intermediate business case, which was submitted to the ISA. The intermediate
business case was approved by the ISA's investment review committee. The city ceded
the project to ISA for procurement purposes to develop the Intermediate Business Case.
ISA appointed a service provider as the consultant to compile the required business cases
to obtain funding. The project preparation for funding request for phases 2 and 3 still in
progress. Once funding has been secured, it is envisaged that the project will be
implemented over a 72-month period.
• In addition to the business cases, a preliminary submission was submitted to the National
Treasury (Budget Facility for Infrastructure) in May 2024 to apply for funding for the Phase
2 project. The director-general of the Department Water and Sanitation also signed a letter
in June 2024 in support of the preliminary submission to National Treasury.
• The city has implemented the Magalies Water solution as an interim measure to supply the
people of Hammanskraal with clean and safe drinking water. The Department of Water
and sanitation, the city and Magalies Water are in partnership to deliver clean water to the
residents of Hammanskraal. The partnership is agreed on for a three-year term, with an
automatic annual extension until it is terminated.
101. I will follow up on the implementation of these actions during my next audit.
Inadequate controls designed to monitor the work of a consultant
102. Reasonable steps were not taken to ensure that the municipality implements and maintains an
effective system of expenditure control, including procedures for the payment of funds, as there
were no controls to verify the work done by the consultant before processing payments in the
2021-22 financial year, in contravention of section 65(2)(a) of the MFMA.
103. The non-compliance is likely to result in a material financial loss, if not recovered.
104. The accounting officer was notified of the material irregularity on 19 April 2023.
105. The accounting officer has taken the following action to address the material irregularity:
• A panel of service providers was appointed in June 2023.
• The value for money audit was completed in April 2024; however, the investigation
conducted did not address the material irregularity, and I notified the accounting officer of
the outcome of the assessment in May 2024.
• The accounting officer addressed deficiencies in the value for money audit in September
2024.
• The value for money audit concluded that the service provider did not perform work valued
at R26 079 866 for which R12 317 640,72 relating to the monies owed to the service
provider has been withheld by the accounting officer. On 20 May 2025, the accounting
officer filed with the registrar of the high court a summons to recover the remaining R13
762 224,81 from the service provider.
• No official was found responsible for payments made for work not done by the service
provider, as payments were made due to ineffective controls designed by the accounting
officer.
• The accounting officer communicated to the city's officials to include clear roles and
responsibilities in service level agreements entered into with potential service providers.
106. The actions taken by the accounting officer are deemed appropriate and have addressed the
material irregularity. The material irregularity is resolved.
Other reports
107. In addition to the investigations relating to material irregularities, I draw attention to the following
engagements conducted by various parties. These reports did not form part of my opinion on
the consolidated and separate financial statements or my findings on the reported performance
information or compliance with legislation.
108. The municipality is conducting several investigations based on allegations of procurement
irregularities and financial misconduct. Some of these investigations had been finalised while
others were still in progress at the date of this auditor's report.
Johannesburg
31 December 2025
Annexure to the auditor's report
The annexure includes the following:
• The auditor-general's responsibility for the audit
• The selected legislative requirements for compliance testing
Auditor-general's responsibility for the audit
Professional judgement and professional scepticism
As part of an audit in accordance with the ISAs, I exercise professional judgement and maintain
professional scepticism throughout my audit of the consolidated and separate financial statements
and the procedures performed on reported performance information for selected strategic priorities
and on the municipality's compliance with selected requirements in key legislation.
Consolidated and separate financial statements
In addition to my responsibility for the audit of the consolidated and separate financial statements
as described in this auditor's report, I also:
• identify and assess the risks of material misstatement of the consolidated and separate
financial statements, whether due to fraud or error; design and perform audit procedures
responsive to those risks; and obtain audit evidence that is sufficient and appropriate to
provide a basis for my opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations or the override of internal control
• obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the municipality's internal control
• evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made
• conclude on the appropriateness of the use of the going concern basis of accounting in the
preparation of the consolidated and separate financial statements. I also conclude, based
on the audit evidence obtained, whether a material uncertainty exists relating to events or
conditions that may cast significant doubt on the ability of the municipality and its entities
to continue as a going concern. If I conclude that a material uncertainty exists, I am
required to draw attention in my auditor's report to the related disclosures in the
consolidated and separate financial statements about the material uncertainty or, if such
disclosures are inadequate, to modify my opinion on the consolidated and separate
financial statements. My conclusions are based on the information available to me at the
date of this auditor's report. However, future events or conditions may cause the
municipality to cease operating as a going concern
• evaluate the overall presentation, structure and content of the consolidated and separate
financial statements, including the disclosures, and determine whether the consolidated
and separate financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
Communication with those charged with governance
I communicate with the accounting officer regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal
control that I identify during my audit.
I also provide the accounting officer with a statement that I have complied with relevant ethical
requirements regarding independence and communicate with them all relationships and other
matters that may reasonably be thought to bear on my independence and, where applicable,
actions taken to eliminate threats or safeguards applied.
From the matters communicated to those charged with governance, I determine those matters that
were of most significance in the audit of the consolidated and separate financial statements for the
current period and are therefore key audit matters. I describe these matters in this auditor's report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, I determine that a matter should not be communicated in this auditor's report
because the adverse consequences of doing so would reasonably be expected to outweigh the
public interest of such communication.
Compliance with legislation – selected legislative requirements
The selected legislative requirements are as follows:
# Selected legislation and regulations Consolidated firm level requirements
1 Municipal Finance Management Act 56 Sections 1, 11(1), 13(2), 14(1), 14(2)(a), 14(2)(b), 15,
of 2003 (MFMA) 24(2)(c)(iv), 28(1), 29(1), 29(2)(b), 32(2), 32(2)(a),
32(2)(a)(i), 32(2)(a)(ii), 32(2)(b), 32(6)(a), 32(7),
33(1)(c)(ii), 53(1)(c)(ii), 53(1)(c)(iii)(bb), 54(1)(c), 62(1)(d),
63(1)(a), 63(2)(a), 63(2)(c), 64(2)(b), 64(2)(c), 64(2)(e),
64(2)(f), 64(2)(g), 65(2)(a), 65(2)(b), 65(2)(e), 72(1)(a)(ii),
112(1)(j), 116(2)(b), 116(2)(c)(ii), 117, 122(1), 122(2),
126(1)(a), 126(1)(b), 127(2), 127(5)(a)(i), 127(5)(a)(ii),
129(1), 129(3), 133(1)(a), 133(1)(c)(i), 133(1)(c)(ii),
165(1), 165(2)a, 165(2)(b)(ii), 165(2)(b)(iv), 165(2)(b)(v),
165(2)(b)(vii), 166(2)(b), 166(2)(a)(iv), 166(5), 170,
171(4)(a), 171(4)(b)
2 MFMA: Municipal Budget and Reporting Regulations 71(1)(a), 71(1)(a)(b), 71(2)(a), 71(2)(b),
Regulations, 2009 71(2)(d), 72(a), 72(b), 72(c)
3 MFMA: Municipal Investment Regulations 3(1)(a), 3(3), 6, 7, 12(2), 12(3)
Regulations, 2005
4 MFMA: Municipal Regulations on Regulations 5(4), 6(8)(a), 6(8)(b), 10(1)
financial Misconduct Procedures and
Criminal Proceedings, 2014
5 MFMA: Municipal Supply Chain Regulations 5, 12(1)(c), 12(3), 13(b), 13(c), 16(a),
Management Regulations, 2017 17(1)(a), 17(1)(b), 17(1)(c), 19(a), 21(b), 22(1)(b)(i),
22(2), 27(2)(a), 27(2)(e), 28(1)(a)(i), 29(1)(a), 29(1)(b),
29(5)(a)(ii), 29(5)(b)(i), 32, 36(1), 36(1)(a), 38(1)(c),
38(1)(d)(ii), 38(1)(e), 38(1)(g)(i), 38(1)(g)(ii), 38(1)(g)(iii),
43, 44, 46(2)(e), 46(2)(f)
6 Construction Industry Development Section 18(1)
Board Act 38 of 2000
7 Construction Industry Development Regulations 17, 25(7A)
Board Regulations, 2004
8 Division of Revenue Act 24 of 2024 Sections 11(6)(b), 12(5), 16(1); 16(3)
9 Municipal Property Rates Act 6 of 2004 Section 3(1)
10 Municipal Systems Act 32 of 2000 Sections 25(1), 26(a), 26(c), 26(h), 26(i), 29(1)(b)(ii),
(MSA) 34(a), 34(b), 38(a), 41(1)(a), 41(1)(b), 41(1)(c)(ii), 42,
43(2), 45(a), 54A(1)(a), 56(1)(a), 57(2)(a), 57(4B),
57(6)(a), 57A, 66(1)(a), 66(1)(b), 67(1)(d), 74(1), 96(b)
Parent municipality with ME:
Sections 93B(a), 93B(b)
Parent municipality with shared control of ME:
Section 93C(a)(iv), 93C(a)(v)
# Selected legislation and regulations Consolidated firm level requirements
11 MSA: Disciplinary Regulations for Senior Regulations 5(2), 5(3), 5(6), 8(4)
Managers, 2011
12 MSA: Municipal Planning and Regulations 2(1)(e), 2(3)(a), 3(3), 3(4)(b), 7(1), 8, 9(1)(a),
Performance Management Regulations, 10(a), 12(1), 14(1)(b)(iii), 14(1)(c)(ii), 14(4)(a)(i),
2001 14(4)(a)(iii), 15(1)(a)(i), 15(1)(a)(ii)
13 MSA: Municipal Performance Regulations 2(3)(a), 4(4)(b), 8(1), 8(2), 8(3), 26(5),
Regulations for Municipal Managers and 27(4)(a)(i)
Managers Directly Accountable to
Municipal Managers, 2006
14 MSA: Regulations on Appointment and Regulations 17(2), 36(1)(a)
Conditions of Employment of Senior
Managers, 2014
15 MSA: Municipal Staff Regulations Regulations 7(1), 19, 31, 35(1)
16 MSA: Municipal Systems Regulations, Regulation 43
2001
17 National Environmental Management: Section 20(b)
Waste Act 59 of 2008
18 National Water Act 36 of 1998 Section 22(1)(b)
19 Prevention and Combating of Corrupt Section 34(1)
Activities Act 12 of 2004
20 Preferential Procurement Policy Sections 2(1)(a), 2(1)(f)
Framework Act 5 of 2000
21 Preferential Procurement Regulations, Regulations 4(1), 4(2), 5(1), 5(3), 5(6), 5(7), 6(1), 6(2),
2017 6(3), 6(6), 6(8), 7(1), 7(2), 7(3), 7(6), 7(8), 8(2), 8(5), 9(1),
10(1), 10(2), 11(1), 11(2)
22 Preferential Procurement Regulations, Regulations 4(1), 4(2), 4(3), 4(4), 5(1), 5(2), 5(3), 5(4)
2022
A further announcement will be released once the Annual Report and Audit Report are tabled at council.
For further information, please reach out to the City of Tshwane Metropolitan Municipality:
David Masimini: Acting Divisional Head (Treasury Office)
Email: DavidMasi@TSHWANE.GOV.ZA
Tel: 012 358 6045
Or
Gareth Mnisi: Chief Financial Officer
Email: cfo@tshwane.gov.za
Tel: 012 358 8801
Tshwane
17 December 2025
Debt Sponsor
Absa Bank Limited (acting through its Corporate and Investment Bank division)
Date: 17-12-2025 05:35:00
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