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"The bulk of the qualifications raised by the AG concern the city's revenue management system and the consistency of the records used for the billing of customers," city manager Trevor Fowler told reporters on Thursday.

"A number of technical glitches were experienced with the introduction of the new billing system which impacted on customer service," he said.

The qualified report also covered City Power and Johannesburg Water. The period under review related to the previous administration, between July 2010 and June 2011.

Fowler said issues raised by the AG were being addressed to return to a clean audit status.

Electricity cut-offs between October and December were for accounts in arrears of more than 90 days. There were 22,000 cut-offs during those three months.

According to Johannesburg's annual report, revenue collection for the 2010/2011 financial year was R19 billion, slightly above its target.

However, the collection ratio of 88% was below the annual target of 92%.

Fowler said the city was confident of improving its liquidity, and maintaining its collection ratio and the level of its loans.

It was taking steps to strengthen internal controls, enhance revenue management and improve the consistency of data and records.

"The current administration... has to deal with the dynamics of a rapidly changing urban environment where increasing demands are being placed on infrastructure, resources, services and the quality of management and administration," he said.

"The annual report covers a period during which the global economic downturn reached its lowest point with a resultant negative impact on budgets and revenue."

Like other public sector institutions across the world, the city suffered the consequences of the recession.

Fowler said the "revenue roadmap" announced in November would help improve customer service.

Among the interventions already in place were a more "customer-centric" approach to billing and revenue issues, a turnaround plan for the revenue system with deadlines, and an oversight system for senior management.

"The AG's report spells out the areas where we need further improvement," said Fowler.

"I am confident that with the support of residents, ratepayers and other stakeholders, we will soon receive unqualified audit reports."

The Democratic Alliance described the audit report as a confirmation of the deteriorating state of South Africa's biggest economic hub.

"The report also bears testimony to the poor political leadership the city is currently under," spokesman Mmusi Maimane said.