Johannesburg Mayor Dada Morero. The Auditor-General said the City of Joburg’s core has regressed to a qualified opinion, with persistent control and reporting weaknesses escalating into material misstatements and audit qualifications.
Image: Itumeleng English / Independent Newspapers
The Auditor-General has raised serious concerns about governance failures, weak compliance controls, deteriorating infrastructure and poor information technology management at the City of Johannesburg, warning that urgent intervention is needed to prevent further decline in service delivery and financial management.
Presenting the 2024/25 audit outcomes before Parliament's Standing Committee on Public Accounts (Scopa) on Tuesday, AG business unit leader Fhumulani Rabonda said the majority of the city's municipal entities remain trapped in a cycle of poor governance and inadequate accountability.
The city has entities such as Joburg Water, City Power, Pikitup, City Parks and Zoo, Metropolitan Trading Company, Joburg Market, Joburg Roads Agency, Metrobus, Johannesburg Development Agency, Joburg Property Company and the Joburg Social Housing Company.
Rabonda said only a handful of entities had achieved positive audit outcomes, with the City of Joburg's main municipality receiving a qualified audit opinion, while Joburg Market and Joburg Theatre achieved clean audits.
"The City of Joburg’s core has regressed to a qualified opinion, with persistent control and reporting weaknesses escalating into material misstatements and audit qualifications. Underlying deficiencies in leadership, internal controls, and review processes remain unresolved, undermining sustained improvement and highlighting the need for decisive corrective action and stronger accountability," Rabonda said.
"The overall control environment is concerning. Instability at the city manager position, vacant chief audit executive position and vacancies in key management positions in the finance, supply chain management and technical unit contributed to the decline in the control environment.
"Municipal leadership did not consistently reinforce accountability, compliance, disciplined financial management and effective oversight. There is continued reliance on the audit process to improve quality of financial statements and annual performance reports."
Rabonda noted that nearly 80% of municipal entities remained in what the AG describes as a "false assurance" environment.
"Something needs to be done to get them out of that environment and get them to a point where they are able to say we have credible financial statements, credible performance reports, and also we have complied materially with all applicable financial management laws and regulations," Rabonda told MPs.
The AG highlighted widespread compliance failures across municipal entities, identifying Pikitup, the Joburg Property Company and the Johannesburg Roads Agency among those with the most severe levels of non-compliance.
According to Rabonda, some entities recorded material findings in four out of five key compliance areas, indicating systemic weaknesses in governance and oversight.
"These are entities that have got the most prevalent areas of non-compliance and they need to learn in terms of implementing compliance management systems that are going to drive a culture that takes laws and regulations seriously," he said.
The audit office also expressed concern over the state of the city's information and communications technology (ICT) environment, describing it as a growing risk to municipal operations and service delivery.
Rabonda stressed that ICT should be regarded as a strategic governance priority rather than an administrative afterthought.
"A resilient and well-governed ICT environment is a fundamental enabler to municipalities' service delivery objectives," he said.
The AG identified several weaknesses, including poor IT project governance, delayed system implementation, ineffective IT contracts and service level agreements, unsupported payments, duplicated service provider contracts and excessive reliance on external consultants.
The report also found inadequate IT controls and insecure legacy systems. Rabonda warned that the city's ICT environment had deteriorated significantly.
"It was amber in the previous year when we were saying it is concerning, but has regressed to say ICT environment in the city needs intervention. Otherwise it is going to be a big risk to their service delivery and also to their viability going forward," he said.
The AG further highlighted failures by municipal entities to adhere to service level agreement requirements for resolving resident complaints and queries.
Infrastructure projects were another area of concern. Site visits conducted by the AG revealed serious shortcomings in project management, maintenance and operational oversight.
Among the projects flagged was the Northern Wastewater Treatment Plant, where auditors observed deteriorating infrastructure, inadequate maintenance and non-compliance with water quality guidelines.
"There is significant concern due to deteriorating infrastructure, poor maintenance and failure to meet water-related guidelines," Rabonda said.
He added that stronger monitoring and maintenance interventions were needed to ensure reliable access to clean drinking water for residents.
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