Nelson Mandela Bay has received a qualified audit for the second consecutive year, with the Auditor-General flagging seven major financial and governance failings. Issues include misstated water revenue, unverified provisions for landfills and the Swartkops River, and billions in misreported contracts and capital commitments. Nelson Mandela Bay’s audit outcomes for the 2024/25 financial year have significantly deteriorated.
For the second consecutive year, the Auditor-General has issued a qualified opinion, citing seven material findings — even worse than the four reported in the previous year. A qualified audit opinion means an auditor found significant errors or issues in a company’s financial statements, but these problems are limited to specific areas and don’t affect the overall fairness of the report. The Eastern Cape division of the Auditor-General’s office identified issues in: The draft annual performance report is expected to be presented at a special council meeting on 29 January.
The auditors also found that the metro was overstating its service delivery achievements based on set targets, without any proof to corroborate the claims it made in its annual performance report. The audit report highlights how expenditure that the municipality incurred in previous years was incorrectly recognised in the current year. As a result, contracted services in the consolidated and separate statements of financial performance were overstated by R466-million and trade payable from exchange transactions in the consolidated and separate statements of financial position were overstated by the same amount.
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The report highlighted how repairs to the Matanzima Bridge in KwaNobuhle, which was damaged by a flood in 2024, were conducted through a deviation without following the competitive bidding process. Regarding service charges, the report states that the auditors could not obtain sufficient appropriate audit evidence that indigent subsidies for service charges had been properly accounted for, due to the status of the accounting records. “I was unable to confirm whether these subsidies were properly recorded by alternative means.
Consequently, I was unable to determine whether any adjustment was necessary to service charges stated at R9-billion to the consolidated and separate financial statements.” The report said the service charges for water in the previous year were recognised in the current year. As a result, revenue from water service charges in the consolidated and separate statements of the metro’s financial performance was overstated by R387-million and receivables from exchange transactions in the consolidated and separate statements were overstated by the same amount.
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