JOHANNESBURG's billing chaos could result in the city receiving a qualified audit this year.

It emerged at a city council meeting yesterday that auditor-general Terence Nombembe had rejected City Power and Joburg Water's financial statements, questioning their revenue figures because of billing problems.

The city has a budget of R28,3bn , or R5,3bn more than Cape Town, SA's next wealthiest city. A qualified audit would affect the city's credit rating.

Johannesburg's financial statements for the financial year to June 20 2010 were submitted to the auditor-general by September 30 and the audit was due for completion by December. But Mr Nombembe had notified Johannesburg mayor Amos Masondo that he needed further assurances on revenue figures,

A report from Mr Masondo's office, released yesterday, read: "The reason for the delay (in the audit) has been the audit of the city's revenue.

"During the 2009-10 financial year, the city migrated from the Venus system previously used for billing and revenue management, to the new revenue and customer relations management system on SAP Phakama. While management has confidence in the reliability of the data submitted for auditing purposes, the auditor-general seeks assurance on the completeness of the revenue and therefore further auditing procedures are to be undertaken."

Mr Nombembe's office did not respond to queries from Business Day yesterday.

Democratic Alliance (DA) councillor John Mendelsohn, who sits on the city's finance committee, said yesterday that a qualified audit would be disastrous for the city.

"After just two years of unqualified (clean) audits, a qualified audit from the auditor- general would impact negatively. The city is heavily borrowed, with long-term borrowing of R15bn, and this would affect its credit rating and push up repayments on the loans."

During debate on the finalisation of the audit yesterday , DA councillor Patrick Atkinson said Mr Masondo and Parks Tau, the finance member of the mayoral committee, were living in a parallel universe in which they did not deal with the reality of the billing crisis.

"Mr Masondo and Mr Tau, why don't you try and phone the call centre or stand for days trying to sort out a bill that is clearly wrong?" he asked. He cited the case of a Craighall Park pensioner whose water had been cut off because she would not pay an erroneous bill of R106000. He said Mr Tau was "heartless".

Mayoral committee member Christine Walters responded that Mr Tau had "impeccable struggle DNA" and was a caring husband and father. She said the council had inherited a system that was a legacy of apartheid.

Project Phakama was installed in August last year.

Mr Mendelsohn proposed that Mr Masondo and Mr Tau resign - after apologising to all affected by the billing crisis.

In his reply Mr Masondo said the way that Mr Atkinson had "dared" to speak did not reflect the quality of what the council had so far achieved with Phakama, "When you think that 1-million accounts have been migrated to the new system and that in Johannesburg 10000 properties change hands each month, it is important to realise that very few organisations can handle services of this complexity."