A view of the City of Tshwane, from Freedom Park. Picture: SUNDAY TIMES
A view of the City of Tshwane, from Freedom Park. Picture: SUNDAY TIMES

The auditor-general has warned the City of Tshwane that it could face a qualified audit if the R317m paid to engineering consultants GladAfrica in the 2017-2018 financial year is not disclosed as irregular expenditure.

The contract in question has been at the heart of the tension between city manager Moeketsi Mosola and DA mayor Solly Msimanga, who has his eye on the Gauteng premiership for the DA after the 2019 election. A good governance record is paramount to his campaign.

Msimanga, who initially defended Mosola after he was appointed by the coalition-led council in 2017, has over the last few months lobbied hard to have Mosola suspended, given among other reasons the  effect on service delivery.

Msimanga asked that Mosola be suspended pending the outcome of an investigation into alleged procurement irregularities relating to the GladAfrica contract, but the council did not approve the suspension and he is still working while the investigation continues. The second attempt was deferred last week to January after the ANC and EFF voted to only deal then with new misconduct allegations levelled by Msimanga.

It is understood that Mosola initially refused to disclose the amount paid to GladAfrica in the notes as irregular expenditure. A representative of the auditor-general apparently conveyed the possible repercussions of the decision to the member of the mayoral committee on finance, Mare-Lise Fourie, in an informal meeting in which it was bluntly stated that Tshwane could receive a qualified audit if it is not disclosed.

Favourable audit opinions are generally used by local government to boast about their performance, while a qualified opinion or worse can be used to raise the political alarm about the state of governance.

Business Day was told that Mosola finally gave an undertaking in a meeting on Friday that the amount will be disclosed as irregular. By the time of publishing, it could not be confirmed whether the financial statements that were expected to be concluded on Friday did disclose it as such.

Approached for comment, Fourie said the auditor-general found that the procurement process for the appointment of GladAfrica Project Managers was irregular and that it will have to be disclosed in the notes if the city is to avoid having its unqualified opinion amended to a qualified opinion. In this instance, irregular expenditure was defined as expenditure incurred in contravention of the requirements of the Municipal Finance Management Act and the municipal supply-chain management regulations.

She said in terms of the act the city manager is the accounting officer of the municipality and is responsible for its financial administration, which includes the preparation of the annual financial statements. 

“A finding of the auditor-general is final. The city manager would commit an act of financial misconduct if he deliberately or negligently contravened the provisions of the Municipal Finance Management Act by refusing to disclose the irregular expenditure incurred on the contract in the annual financial statements,” Fourie said.