The City of Johannesburg's IT systems are fallible, as water and electricity meter readings - the two services that account for more than 40% of its revenue - have been altered without supporting evidence.
The auditor-general (AG) has again qualified the city's financials for the 2010/11 year in its latest general report on the audit outcomes of local government, because of data discrepancies.
The Gauteng-specific report found system-integration shortcomings, leading to property categories in the billing system differing compared to the system which contains information on the classification and zoning of properties, which resulted in a qualification in revenue and accounts receivables.
“In addition, meter readings for Johannesburg Water and City Power, taken by contracted meter readers and submitted to the billing department, were amended, deleted or replaced in the billing system without supporting evidence,” notes the report.
As a result, the bulk of the city's billing charges are questionable. In the last financial year, service charges accounted for R15 billion of Johannesburg's R29 billion revenue, of which electricity amounted to R9.7 billion, while water was R2.7 billion.
For the nine months to March, the city was owed R14.3 billion by ratepayers, the bulk of which had been due for more than three months.
Accurate billing?
He adds that the audit outcome is not linked to project Phakama, which saw the city moving to SAP in November 2009. The R580 million plan to move its disparate legacy systems onto a common platform experienced post-implementation problems after June 2010, which led to thousands of residents complaining about grossly inflated readings and inaccurate bills. The city says it has resolved about 98% of the 200 000 queries that pre-date last October, with the balance being outstanding due to technical issues, such as deceased estates.
The new administration introduced a roadmap for revenue and billing enhancement.
Checks and balances
With regards to the amended readings, Maphologela says a dedicated exercise was carried out to analyse variances in data values between the city's systems, as well as harmonise the state of such data, in order to ensure billing accuracy. “This exercise has been extended to introduce regular checks and controls that will ensure alignment between the data values in the city's systems. The next major step in the roadmap will see the consolidation of the city's property data onto a single platform, which will eradicate the need for integration between systems and in so doing, eliminate the possibility of data inconsistencies altogether.”
He explains that the readings were changed in order to remedy anomalies. “In the event that billing based on actual meter readings result in abnormal charges, the city's billing controls prevent the generation and distribution of such invoices. This may be as a result of various scenarios (inaccurate meter readings, clock-overs, not all readings received where there may be multiple phases of supply, etc).” As a result of this and to prevent the over- or under-statement of the city's revenue, it applies an estimate reading for the period in question and the account is normalised upon receipt of the next actual meter reading.
The city has already taken steps to correct this problem through the Zero Tolerance campaign. To improve the source of the billing information and the quality of meter reading, the city will review every electricity and water meter in the metro. This review was launched in May and will continue through to June 2013. “It will establish whether or not every property actually has a functional meter, and will include the installation, repair or replacement of new or faulty meters.”
The city hopes to reach a clean audit status by 2013. “Issues raised by the AG in its latest report on Johannesburg's financial statements are being addressed. The AG's report for the 2010/11 financial year contains qualified opinions which are acknowledged by the city. The new city administration has taken proactive steps to strengthen internal control mechanisms, enhance revenue management and improve the consistency of data and records. This is the primary reason why we initiated the GDS2040 process during the second half of 2011 to evaluate the city's progress, measure our performance and, most importantly, chart a direction that will take us into the future,” says Maphologela.
No discipline
The AG's report noted that the city of Johannesburg, City Power and Johannesburg Water remained qualified in the 2010/11 year. The entities were qualified on meter readings and property categories, because of “inadequate financial disciplines such as regular reconciliations of revenue throughout the financial period”.
Last year, the utilities and the city were qualified because of unbilled revenue, system migration errors and adjusting journal entries. These issues were solved in the 2010/11 year “through the leadership effort to address system deficiencies and bill all revenue previously not raised”.
The city again had an issue with revenue in the period under audit, as did City Power. The city had a “new” problem with liabilities and expenditure, found the AG's report.
The AG found that while strategic plans, risk assessment frameworks and policies and procedures have been developed, the city has yet to approve these. However, it did find that Johannesburg has developed, approved and implemented a backup policy and disaster recovery plan.
Questionable
Joburg Advocacy Group founding member Lee Cahill says the city's systems lack integrity and the management of its IT leaves it open to abuse, data losses and errors.
Cahill says the property data integrity is questionable, because many properties have not been captured on the Phakama system. In addition, the fact that meter readings were found to have been alerted or deleted means that the bulk of revenue charges is questionable, she adds.
There is no way of measuring what data is being captured correctly, says Cahill. She notes that the city has appointed Motla Consulting Engineers to audit electricity meters. The process, which started last month, will run for a year.
However, Cahill says there is anecdotal evidence that the bulk of the data the auditors have been provided with is a “mess”.
Share
