Final uMDM Annual Report 2016-2017 04-04-18

Emphasis of matters

7. I draw attention to the matters below. My opinion is not modified in respect of these matters.

Material losses and impairments

8. As disclosed in note 33 to the financial statements, the municipality incurred material losses amounting
to R36,66 million (7,39 million kilolitres) (2015: R32,87 million - 8,12 million kilolitres) as a result of
water distribution losses, ageing infrastructure, faulty meters and illegal connections, which represents
39% (2015: 46%) of the total water purchased.

9. As disclosed in note 24 to the financial statements, the municipality incurred material losses to the
amount of R50, 25 million (2015: R65, 92 million) as a result of a write-off of irrecoverable trade
debtors.

Additional matter
10. I draw attention to the matter below. My opinion is not modified in respect of this matter.

Unaudited disclosure notes

11. In terms of section 125(2) (e) of the MFMA the municipality is required to disclose particulars of
non-compliance with the MFMA. This disclosure requirement did not form part of the audit of the
financial statements and accordingly I do not express an opinion thereon.

Report on other legal and regulatory requirements

12. In accordance with the Public Audit Act of South Africa, 2004 (Act No. 25 of 2004) (PAA) and the
general notice issued in terms thereof, I have a responsibility to report findings on the reported
performance information against predetermined objectives for selected objectives presented
in the annual performance report, compliance with legislation and internal control. The objective of my
tests was to identify reportable findings as described under each subheading but not to gather
evidence to express assurance on these matters. Accordingly, I do not express an opinion or
conclusion on these matters.

Predetermined objectives

13. I performed procedures to obtain evidence about the usefulness and reliability of the reported
performance information for the provision of access to sustainable quality drinking water and sanitation
services; the improvement of access to basic levels of water; the improvement of access to basic levels
of sanitation and the maintenance of the district road network objectives presented in the annual
performance report of the municipality for the year ended 30 June 2016.

14. I evaluated the reported performance information against the overall criteria of usefulness and
reliability.

15. I evaluated the usefulness of the reported performance information to determine whether it was
consistent with the planned objectives. I further performed tests to determine whether indicators
and targets were well defined, verifiable, specific, measurable, time bound and relevant, as required by
the National Treasury’s Framework for Managing Programme Performance Information.

16. I assessed the reliability of the reported performance information to determine whether it was valid,
accurate and complete.

17. I did not identify any material findings on the usefulness and reliability of the reported performance
information for the selected objectives.

ANNUAL REPORT 2016/17 146

Additional matters
18. I identified no material findings on the usefulness and reliability of the reported performance information
for the selected objectives, however, I draw attention to the following matters:
Achievement of planned targets
19. The annual performance report on pages x to x includes information on the achievement of planned
targets for the year.
Compliance with legislation
20. I performed procedures to obtain evidence that the municipality complied with applicable legislation
regarding financial matters, financial management and other related matters. I did not identify any
instances of material non-compliance with specific matters in key legislation, as set out in the general
notice issued in terms of the PAA.
Internal control
21. I considered internal control relevant to my audit of the financial statements, annual performance report
and compliance with legislation. I did not identify any significant deficiencies in internal control.

Pietermaritzburg
30 November 2017

147 A N N U A L R E P O R T 2 0 1 6 / 1 7

APPENDICES

APPENDIX A

Committees and Committee purposes

The municipality has a multi-party portfolio committees being the Finance, Human Resource and Sound
Governance, Community Services, infrastructure, planning and Development and MPAC committees. The
aforementioned committees assist the executive committee in policy development and monitoring to accelerate
service delivery as well as the oversight of strategic programmes and projects.

Municipal Purpose
Committee

Finance The Portfolio Committee on Finance is a Section 80 Committee, responsible for the
Portfolio following functions, and making recommendations to the Executive Committee thereon:
Committee
1. Familiarise, interrogate and recommend to the Committee of the budget
and reports on economic issues, statistical information, agreements,
financial reports, and reports on economic and policy statements.
Sharpen public awareness of the budget and Government financial and economic
policies, and encourage informed debate on the budget.

2. Advise the executive committee on the district municipality’s domestic
borrowing policies.

3. Seek advice from all three spheres of Government, on financial and
other budget related matters.

1. Drive the entire budget process as alluded to by legislation, thus
ensuring that budgets are based on priorities and realistic income and
expenditure.

2. Advise on processes that need to be put in place for formulating and
monitoring the budget, throughout its cycle, that will enhance the
District.

Municipality’s role in appropriating and overseeing the budget, and make the budget
process more responsive to stakeholders.

3. Advise on budget programmes that need to be given special treatment
during budget implementation.

4. Ensure that the budget of the District Municipality is used as a primary
tool for implementing National and Provincial Policies.

5. Deal with any other budget related matter referred to the Committee by
the Executive Committee.

6. Develop policy proposals on all the areas of responsibility with the
intention of achieving municipal and/or general government objectives.

ANNUAL REPORT 2016/17 148

Municipal Purpose
Committee
To ensure the provision of efficient, economical and effective administration of the
Human municipality, to co-ordinate secretarial services,
Resources to oversee the delivery of the human resource services, and to render management
and Sound and transformation services;
Governance
To oversee the delivery of support services to the council and community; Exercise
delegated authority after considering a report from the designated officials for the
Human Resources & Sound

Governance Portfolio ,Introduce to Exco the recommendations from the Human
Resources & Sound Governance Portfolio Committee;

Introduce departmental reports on the functions of the relevant sections to Exco,
General administration inclusive council & committee secretariat, legal, council
support, policies & procedures, facilities

Management, capacity building & training, human resources, including,
Governance, democracy and Skills development.

The Portfolio Committee on Special Programmes is a Section 80 Committee,
responsible for the following functions, and making recommendations to the Executive
Committee thereon:

4. Oversight over the following functional areas:

5. Undertake the following special programmes in respect of Policy, Strategy and
Programmes.

1. Youth
2. HIV/Aids
3. Senior Citizens
4. People with Disability
5. Gender
6. Sports and Recreation
7. Rights of the Child

Infrastructure 6. Oversee municipal infrastructure development and services to meet the
Committee needs of the Municipality in the discharge of its responsibilities.

1. Oversee the commissioning of the best methods to deliver the aforementioned
municipal services and facilities to the maximum benefit of the community of the
municipality

Economic 2. The Portfolio Committee on Local Economic Development is a Section 80
Development Committee, responsible for the following functions, and recommendations to the
and Planning Executive Committee thereon:

3. Oversee the implementation of all applicable legislation relating to social and
economic development, national development

4. Programmes, provincial development programmes, trading regulations,
investment opportunities, transport, land affairs, electrification, housing and

149 A N N U A L R E P O R T 2 0 1 6 / 1 7

Municipal Purpose
Committee

public works.

5. Oversee all aspects, programmes and activities of local economic development.

6. Oversee all fiscal and other incentives designed to promote social and
economic development.

7. Oversee environmental management and ensuring environmental planning,
education, sustainable development management.

8. Oversee the provision of efficient environmental health services through
continuous monitoring and enforcement.

9. Develop policy proposals on all the areas of responsibility with the intention of
achieving municipal and/or general government objectives.

Municipal 10. Oversee municipal infrastructure development and services to meet the needs
Public of the Municipality in the discharge of its responsibilities.

Accounts 11. Oversee the commissioning of the best methods to deliver the aforementioned
Committee municipal services and facilities to the maximum

12. benefit of the community of the municipality

ANNUAL REPORT 2016/17 150

APPENDIX B

Councillors, Committee Allocation, and Council Attendance

PRESENT P

ABSENT WITH AN APOLOGY A

ABSENT WITHOUT AN APOLOGY O

FULL CO

NAME PARTY 27.01.17 24.02.17 31.03.
MAYOR – COUNCILLOR ANC: DIRECT A P P
TE MAPHUMULO (MAYOR)
DEPUTY MAYOR – PA
THANDIWE R ZUNGU ANC: PR
MSUNDUZI PP P
SPEAKER - MBUZELWA (DEPUTY PP P
EDWARD DLADLA MAYOR) AP P
MICHAEL S BOND PP A
ANC: DIRECT
BONANI ANGEL (SPEAKER) PP P
MCHUNU
DORCAS SIBONGILE DA: DIRECT PP P
MKHIZE (EXCO)

DENNIS NDLELA ANC: DIRECT
(EXCO)
GUGU M DLADLA
ANC: PR
MSUNDUZI
(EXC0)

ANC DIRECT
(COUNCIL
CHIEF WHIP)

ANC: PR
MSUNDUZI

151

OUNCIL 31.08.17 10.11.17 12.12.17
A P P
.17 26.05.17 30.06.17 11.08.17
PAA P P P

PAP

PPP P P P

PPP P P P

AAP P A P

PAP P A P

PPP P P P

PPP A P P

ANNUAL REPORT 2016/17

NAME PARTY 27.01.17 FULL CO
(EXC0) P 24.02.17 31.03.
BONGUMUSA P PP
NHLABATHI DA: PR
BUKELAPHI EPHRAIM MSUNDUZI PP
ZUMA (EXCO)
IFP: PR
DB PHUNGULA MSUNDUZI
(EXCO)

ANC: MSUNDUZI
EXCO

ANNUAL REPORT 2016/17

OUNCIL 31.08.17 10.11.17 12.12.17
.17 26.05.17 30.06.17 11.08.17

AAP P P P

PPP P P A

PP

152

FULL CO

NAME PARTY 27.01.17 24.01.17 31.03.
AMBOSIA SIBONGILE ANC: PR P P P
DLAMINI MSUNDUZI
MICHAEL ANC: PR P PP
KWENZAKUFANI IMPENDLE
DLAMINI PPP
SANDILE W DLAMINI ANC: WARD
52205035 PPP
NOMABHELU VALENCIA MSUNDUZI
DUZE ANC: DIRECT

SINDISIWE C GWALA ANC: WARD PPP
52205081
THEMBA ABRAM MSUNDUZI PPP
HLATSHWAYO DA: DIRECT PPA
JANIS E HOLMES
DA: WARD PAP
RENESHA JUGMOHAN 52202002
UMNGENI PPP
BHEKITHEMBA DA: WARD
KHUMALO 52205030 PPP
SBONELO J LUTHULI MSUNDUZI
ANC: WARD
52203002
MPOFANA
ANC: WARD
52201012
UMSHWATHI

153

OUNCIL 12.12.17
P
.17 26.05.17 30.06.17 11.08.17 31.08.17 10.11.17
P APP P A

P APP P

P APP P P

A PAP P A

P PAP P P

P PPA P P
P PPA P P

P PPP P P

P APP A P

P PPP P A

ANNUAL REPORT 2016/17

NOMUSA C MABHIDA ANC: DIRECT P P P

LINDA LINFORD ANC: WARD P P P

MADLALA 52205003

MSUNDUZI

S’THEMBISO D ANC: DIRECT P A P

MHLONGO

BRIGHTMAN IFP: PR P P P

KWAKHAKUNI MKHIZE UMSHWATHI

NTOMBIZONKE PHOSWA ANC: PR

RICHMOND

MOSES JABULANI ANC: DIRECT P P P

MKHIZE

MTUZA MKHIZE ANC: WARD P P P

52205021

MSUNDUZI

SIPHO MKHIZE ANC: DIRECT P P P

LC NGCOBO ANC: DIRECT P P P

NELISIWE Z NDLOVU ANC: WARD P P

52205020 P

MSUNDUZI

ANNUAL REPORT 2016/17

P PPP P P
P APP P P

A PPP P DECEASED
P PAP P A
A
P P
A PPP P P
P AAA P
A
P PPP P P
P PPP P RESIGNED
P PPP P

154

NAME 27.01.17 24.01.17 31.3.17 AMAK
P P P 26
INKOSI MZ
MTHULI A A P
INKOSI B NTANZI A P
PP
INKOSI NK P P P
MAPHUMULO
INKOSI NC A A P
MOLEFE P A
INKOSI ES ZUMA A P A
P
INKOSI T MKHIZE A A A

INKOSI NW A
ZONDI
INKOSI LZ A
DLAMINI
INKOSI N
MCHUNU

155

KHOSI 30.06.17 11.08.17 31.08.17 10.11.17 12.12.17
6.05.17 A P A P P

A P A P A
P A A P A

A P A P A

A A A A A
A P A A P
A A A A A

A A A A A

A A A

ANNUAL REPORT 2016/17

NAME PARTY EXECUTIVE C
20.10.16 24.11.16 19.01.17 25.01.17 14.02.17

MAYOR – ANC: P PPP
COUNCILLOR DIRECT PPP
TE (MAYOR) PPP
MAPHUMULO PPP
DEPUTY ANC: PR P PAP
MAYOR – MSUNDUZI PPP
THANDIWE R (DEPUTY PPA
ZUNGU MAYOR)
CHIEF WHIP - PPA
MBUZELWA ANC:
EDWARD DIRECT
DLADLA (SPEAKER)
MICHAEL S
BOND DA: DIRECT P
BONANI (EXCO) P
ANGEL P
MCHUNU ANC: A
DORCAS DIRECT
SIBONGILE (EXCO) P
MKHIZE
DENNIS ANC: PR
NDLELA MSUNDUZI
(EXC0)
CHRISTOPHE
R JUBA ANC
NDLELA DIRECT
(COUNCIL
CHIEF
WHIP)

ANC:
DIRECT
(EXCO)

ANNUAL REPORT 2016/17

COMMITTEE 16.05.17 20.06.17 25.07.17
7 23.02.17 22.03.17 25. 04.17 03.05.17

P PP P P AP

P PA P P PP

P PP P P PA

P PP P P PA
P AA A A AP
P PP P P PP
A AA P P PA

A RESIGN
ED

156

GUGU M ANC: PR P EXECUTIVE
DLADLA MSUNDUZI P PPP
(EXC0) P
BONGUMUSA PPP
NHLABATHI DA: PR
MSUNDUZI APA
BUKELAPHI (EXCO)
EPHRAIM
ZUMA IFP: PR
MSUNDUZI
(EXCO)

AMAKHOSI AMAKHOSI AMAKH AMAKH AMAKH AMAKH AMAKHO
PARTY OSI OSI OSI OSI SI
NAME 20.10.16 24.11.16 19.01.17 25.01.17 14.02.17

INKOSI MNZ P PAA
MTHULI

157

COMMITTEE
A PP P P PA

P PP P P PA

P PP P P PA

O AMAKHO AMAKH

SI OSI

7 23.02.17 25.04.17 16.05.17 20.06.17 25.07.17
A PA
PA A

ANNUAL REPORT 2016/17

INFRASTRUCTURE PO

NAME 06.10.2016 10.11.2016 02.02.2017 02.0
DEPUTY MAYOR – P P P P
THANDIWE R ZUNGU
(CHAIRPERSON) P P P P
MICHAEL S BOND P P P P

MELCHOR A P A P
KWENZAKUFANI DLAMINI P P P P
BHEKITHEMBA KHUMALO P P P P
P P P P
SBONELO J LUTHULI P A P P
P P P P
NOMUSA C MABHIDA A P O O
A P P O
BAZOLILE C SOKHELA A P O O

ROSS BRYAN STRACHAN

NHLANHLA ZONDO

INKOSI NC MOLEFE

INKOSI B NTANZI

INKOSI NW ZONDI

ANNUAL REPORT 2016/17

ORTFOLIO COMMITTEE
03.2017 20.04.2017 04.05.2017 01.06.2017 03.08.2017 07.09.2017

A P PP

P P PP
P P AA
P A PA
A P PO
P P PP
P P PP
P P PP
P P PO
O O PP
P P PP
O O OP

158

FINANCE PORTFO

NAME 13.10.16 16.11.16 09.02.2017 14.03.2017
MAYOR – COUNCILLOR TE P P P P
MAPHUMULO
(CHAIRPERSON) P P P P
P P P A
NOMABHELU VALENCIA P P
DUZE P A
RENESH JUGMOHAN P P
P P
SIPHO MKHIZE PP A P

GUGULETHU H. NGCOBO O P O A
O O
BONGUMUSA C. P P
NHLABATHI P P
MICHAEL V NTSHANGASE

BUKELANI E ZUMA PA

NTOMBIZOZWA PHOSWA Not a member

INKOSI NK MAPHAMULO P P

INKOSI ES ZUMA OO

159

OLIO OF SERVICES

13.04.17 12.05.2017 15.06.2017 18.08.17 21.09.17 19.10.17

A P A No Meeting P P

P A O No Meeting P O

A P P No Meeting P A

P P P No Meeting P P

P P P No Meeting P A

P P P No Meeting P P

P P P No Meeting A A

P A A No Meeting A P

OP P No Meeting O O

O O No Meeting O O

ANNUAL REPORT 2016/17

NAME 04.10.2016 ECONOMIC DEVELOPMENT AND P
P 01.11.2016 07 02.2017 07.03.2017 04.04.20
GUGU M
DLADLA P PPPP
(CHAIRPERSON)
PP
CLIVE LOTZ

MICHAEL BOND O O P P P

SANDILE W PPP PP

DLAMINI

SBONELO J P P A P P

LUTHULI

LINDA LINFORD P P P P P

MADLALA

DORCAS PPPAA

SIBONGILE

MKHIZE

BAZOLILE C P P P P P

SOKHELA

ROSS BRYAN P P P P P

STRACHAN

HAMILTON PPPPp

MLUNGISI

ZONDI

INKOSI MZ POO p O

MTHULI

ANNUAL REPORT 2016/17

PLANNING PORTFOLIO SERVICES
017 02.05.2017 14.06.2017 15.08.2017 05.09.2017 03.10.2017 07.11.17

P P P P PP
RESIGNED

P P A P PP
P P A P PP
P P P P PP
P P P P PP
O P O A PA
P O P P PP
A P P P PP
P P P P PP
O P P P OP

160

COMMUNITY SERVICES P

NAME 16.11.16 14.10.16 07.02.201
BONANI ANGEL MCHUNU
(CHAIRPERSON) PP P
CLIVE LOTS
PP P
MICHAEL S BOND
PP P
SINDISIWE C GWALA PP P
PP P
S’THEMBISO D MHLONGO PP A
PP P
DORCAS SIBONGILE MKHIZE PP P
PP P
DUDU CATHERINE MTSHALI PP P

LINDIWE C NGCOBO

MD NJOKWE

ELLIOT XABA

INKOSI T MKHIZE

161

PORTFOLIO COMMITTEE

17 04.04.2017 09.05.17 06.06.2017 08.08.17 08.08.17
PAA P P

RESIGNED

PPP P P
P
PPP P P
A
PPP P P
P
PPP A P
P
OPO P P

PPP P

PPP P

PPP P

0PP P

ANNUAL REPORT 2016/17

APPENDIX C

The Municipal Structures Act of 1998 (as amended) makes provision for the division of powers and functions
between the District and Local municipalities. These include the following for the uMgungundlovu District
Municipality;

SERVICES RENDERED

1. Integrated development planning for the District as a whole with alignment to the
Integrated Development Plans of the local municipalities in the District

2. Supply of water and sanitation to six of the local municipalities

3. Sewage purification works and sewage disposal at six of the local municipalities in the

District

4. Solid waste management throughout the District

5. Establishment and management of cemeteries and crematoria in six of the local

municipalities in the District

6. Emergency services (Fire and Disaster Management) in six of the local municipalities

7. Promotion of local economic development
8. Promotion of tourism development in the District

9. Town and Regional Planning and Geographic Information services throughout the

District

10. Municipal public works relating to any of the above services or any other functions

assigned to the District Municipality

11. Environmental Health Services

12. The imposition and collection of service charges, taxes, levies and duties as related to

the above functions or as may be assigned to the District

SERVICES NOT YET RENDERED
1. Regulation of passenger services

2. Municipal airports

3. Establishment and management of fresh produce markets and abattoirs

ANNUAL REPORT 2016/17 162

APPENDIX D

Assessment of the Performance of External Service Providers

Below is a list of all the tenders that were awarded for the 2016-2017 financial year. The monitoring of the
service providers performance is ensured through the general terms of the contract of the tender awarded.
Each user department reports to SCM on the performance of the service provider, and those service providers
who fail to perform necessary action are taken against them, this can include the cancellation and or
termination of the tender.

Assessment Key

Good – The Service Provider has been provided at acceptable standards and within the timeframes.
Poor – The Service Provider has provided below acceptable standards

NO. TENDER DESCRIPTION AWARD SUCCESSFUL AMOUNT ASSESSMENT
NO. STATUS
DATE BIDDER
GOOD POOR

1 01/2016 Supply of Jetting Truck 21/07/2016 Tower City 41 R 2,504,906.49

2 25/2016 Supply And Setup of 15/08/2016 Reinvent It R 185,000.00
Scaffolding for Mandela
Day Marathon

3 26/2016 Supply Start and 26/08/2016 Zernnies Trading Ltd R 419,233.65

Finishing Structure for

Mandela Day Marathon

4 28/2016 Supply Tents and 15/08/2016 Mavukani Trading R 600,000.00

Furniture for Mandela Enterprises

Day Marathon

5 11/2016 Upgrade Nkanyezini 7-Sep-16 Mlo Investment/New R 96,916,329.77

Community Water Boss/Zamisanani Jv

Supply

6 16/2016 Ocean Fire Services 7-Sep-16 Servicing of Fire R 89,490.00
Extinguishers

7 12/2016 Provision of Marketing 17-Jan-17 Yellowdot Media and R 6,882,000.00

and Communication Risk

Services

8 04/2017 Events Coordinator for 24-Apr-17 Mbusowethu Trading R 245,000.00
Budget Izimbizo

163 A N N U A L R E P O R T 2 0 1 6 / 1 7

NO. TENDER DESCRIPTION AWARD SUCCESSFUL AMOUNT ASSESSMENT
NO. STATUS
DATE BIDDER
GOOD POOR

9 04/2017 Events Coordinator for 24-Apr-17 Xolisisizwe Trading R 366,880.50

Budget Izimbizo and Projects

10 23/2016 Panel of Legal Advisors 26-Apr-17 TKN Incorporated Per Gazetted
Rates

11 23/2016 Panel of Legal 26-Apr-17 Taleni Godi Inc Per Gazetted
Advisors Rates

12 23/2016 Panel of Legal 26-Apr-17 Siyaya Attorneys Per Gazetted
Advisors Rates

13 23/2016 Panel of Legal 26-Apr-17 Poswa Incorporated Per Gazetted
Advisors Rates

14 23/2016 Panel of Legal 26-Apr-17 Mdledle Incorporated Per Gazetted
15 23/2016 Advisors Rates
16 23/2016
Panel of Legal 26-Apr-17 Hajra Patel Per Gazetted
17 23/2016 Advisors 26-Apr-17 Incoporated Rates
18 23/2016
Panel of Legal Pravina Govender Per Gazetted
Advisors Attorneys and Rates
Conveyances
Panel of Legal
Advisors 26-Apr-17 Siva Narsimaloo Per Gazetted
26-Apr-17 Chetty Rates
Panel of Legal
Advisors Matthew Francis Per Gazetted
Inc Rates

19 23/2016 Panel of Legal 26-Apr-17 Buthelezi Mtshali Per Gazetted
20 23/2016 Advisors Mzulwini Rates

Panel of Legal Attorneys Inc
Advisors
26-Apr-17 Potgiter Kunene Xaba Per Gazetted

(PKX) Attorneys Rates

21 23/2016 Panel of Legal 26-Apr-17 Mhlanga Per Gazetted
22 23/2016 Advisors 26-Apr-17 Incorporated Rates

Panel of Legal Venn Attorneys Per Gazetted
Advisors Rates

23 23/2016 Panel of Legal 26-Apr-17 Xaba Attorneys Per Gazetted
Advisors Incorporated Rates

24 01/2016 Variation Order - Supply 28-Mar-17 Tower City R 751,471.93
of One Jetting Truck Trading

25 01/2017 Maqongqo Water 28-Jun-17 Mmolana-Andel- R 19,116,346.37
Supply Phase 5 Mokoena Projects Cc

26 06/2017 Short Term 28-Jun-17 Serenity Services Cc R 467,205.00
Insurance

27 07/2017 Photocopy services 28-Jun-17 Nashua R 2,003,531.76
ANNUAL REPORT 2016/17 Maritzburg

164

APPENDIX E

Revenue Collection by Source

The only income vote is budget and Treasury office. Details on such are reflected in the Annual financial
statements.

APPENDIX F

Revenue Collection by vote

REVENUE COLLECTION AGAINST SERVICE CHARGES ON WATER AND
SANITATON BY AREA

REVENUE COLLECTION AGAINST SERVICE CHARGES ON WATER AND
SANITATION BY MONTH

* Further details on revenue collection is also reflected under chapter 5 of this annual report
165 A N N U A L R E P O R T 2 0 1 6 / 1 7

APPENDIX G

Conditional Grants received excl. MIG

Details on conditional grants received excluding MIG is reflected on the annual financial statements cash flow
statement and in note 28 of the AFS.

APPENDIX H

Capital Expenditure - New and Upgrades

Details on capital expenditure is reflected under service delivery chapter.

ANNUAL REPORT 2016/17 166

APPENDIX I

Capital Expenditure new asset programme

Details on capital expenditure is reflected under service delivery chapter.

APPENDIX J

Capital programme by Projects

Details on capital programme by project are reflected in chapter 3 under organization performance report.

APPENDIX K

Declaration of Loans and Grants

The uMgungundlovu District Municipality do not have loans to other persons or organs nor grant at this point.

167 A N N U A L R E P O R T 2 0 1 6 / 1 7

APPENDIX L

ANNUAL REPORT OF THE AUDIT AND PERFORMANCE AUDIT COMMITTEE
FOR

uMGUNGUNDLOVU DISTRICT MUNICIPALITY
FOR THE YEAR ENDED 30 JUNE 2017

INTRODUCTION

The uMgungundlovu District Municipality Audit and Performance Audit Committee has been established by
Council as an independent committee in terms of section 166 of the Municipal Finance Management Act
(MFMA), Act No. 56 of 2003, the Municipal Systems Act (MSA), Act 32 of 2000 and the Municipal Planning
and Performance Regulations, 2001. The Committee has adopted a formal Audit Committee Charter, which is
regularly updated and approved by Council.

The Committee is honoured to present its report for the financial year ended 30 June 2017.

AUDIT COMMITTEE MEMBERS AND ATTENDANCE

The Audit Committee Charter requires the Committee to consist of a minimum of three independent members,
with a minimum of four (4) meetings to be held per annum to give effect to the responsibilities assigned to the
Audit Committee in its Charter.

Name of Member Date of Appointment Date of
Termination
Ms. N.R. Sikhakhane 01 April 2012
(Tshabalala) – Chairperson 01 April 2012 Active
01 May 2014
Mr. D. O’Connor 01 May 2014 Active
Mr. S.D. Gabela Active
Ms. S. Keshav Active

During the year under review, the Committee held eleven (8) meetings, for both Audit and Performance Audit
Committee as listed below:

Date N.R.Sikhakhane D. O’Connor S. Keshav S.D. Gabela
(Tshabalala)
21 November 2016
(AC) x

21 November 2016 x
(PAC)

23 January 2017
(AC)

23 January 2017
(PAC)

ANNUAL REPORT 2016/17 168

Date N.R.Sikhakhane D. O’Connor S. Keshav S.D. Gabela
(Tshabalala)
8/8 8/8
24 April 2017
(AC)

24 April 2017
(PAC)

26 June 2017
(AC)

26 June 2017
(PAC)

Total 6/8 8/8

AUDIT COMMITTEE RESPONSIBILITIES

The Audit Committee has discharged its responsibilities in line with section 166 (2) of The Municipal Finance
Management Act, read with Regulation 14(3) and (4) (a) of the Municipal Planning and Performance
Management Regulations:

Regulation 14(3) and (4) (a) states the following as some of the responsibilities of performance audit
committee:
1. A performance audit committee must meet at least four times during the financial year of the
municipality concerned.
2. A special meeting of the performance audit committee may be called by any member of the committee.
3. A performance audit committee may determine its own procedures after consultation with the executive
mayor or the executive committee of the municipality concerned, as the case may be.
4. A performance audit committee must:
1. review the quarterly reports submitted to it in terms of regulation 14 (1)(c)(ii) of the Municipal Planning
and Performance regulations;
2. review the municipality’s performance management system and make recommendations in this regard
to the council of that municipality; and
3. at least twice during a financial year submit an audit report to the municipal council concerned.

The Audit Committee adopted its Terms of Reference at its meeting held on 21 November 2016, in line with
the requirements of section 166 of the Municipal Finance Management Act, No. 56 of 2003. Furthermore, the
Committee reports that we conducted our affairs in compliance with the charter.

We have met four times during the year and have commented and noted the reports tabled by the Internal
Audit Unit. As mandated by MFMA we have approved the Internal Audit Charter for the 2016/2017 financial
year at our meeting held on 21 November 2016.

THE EFFECTIVENESS OF INTERNAL CONTROL

The Audit Committee reviewed various reports from the Internal Audit Activity in terms of the approved audit
plan. Based on our evaluation of the work of the Internal Audit Activity as well as feedback from the Office of
the Auditor-General, the Committee is of the opinion that the adequacy and effectiveness of internal control
systems is generally sound provided all controls are properly implemented in all material aspects. These
controls must be regularly updated as the risk register, which is a live document is updated.

Furthermore, management’s commitment and interventions made in addressing the control deficiencies
identified is acknowledged.

169 A N N U A L R E P O R T 2 0 1 6 / 1 7

RISK MANAGEMENT AND GOVERNANCE

The Audit Committee has reviewed the adequacy of the design, implementation and monitoring of the
municipality’s risk management processes and the integration thereof into the municipality’s day to day
activities, including:
1. Reviewing the significant risks facing the municipality and the appropriateness of identified risk
responses.
2. Considering the appropriateness of management’s risk appetite and risk tolerance in accordance with
the risk management strategy set by the Council.
3. Ensuring that a formal risk assessment is undertaken at least annually.

The Committee acknowledges the risk management processes that management has put in place; however
the municipality needs to significantly increase its efforts in ensuring that the practice of risk management is
properly embedded in the operational processes of the municipality and monitored continuously.

PERFORMANCE MANAGEMENT

The Audit Committee has considered the quarterly reports of the Internal Audit Activity in relation to
performance management and can conclude that the performance management system in place is not
properly functional as we still have the following concerns that were raised in PREVIOUS YEAR with
management:

1. Performance Information is not submitted to internal audit on time to allow for proper review and
verification of the credibility of the performance reports;
2. Portfolio of evidence not always submitted for audit purposes resulting in the internal audit not being
able to ascertain the extent to which measurable outputs were achieved; and
3. Incomplete Portfolio of Evidence was submitted for audit purposes.

We are concerned to report that the culture of performance management has not yet been developed within
the Municipality to the extent to which we would expect, despite the elevation of performance reporting and
monitoring to Management Committee level.

We are also noted the effort made by the Municipality to have the issue of performance information as a
standing item on MANCO Meetings we hope this will in future improve the concerns raised above.

THE QUALITY OF IN-YEAR MANAGEMENT AND MONTHLY/ QUARTERLY RE-
PORTS SUBMITTED IN TERMS OF THE MFMA

The Committee has reviewed the content and quality of in-year management and monthly / quarterly report
submitted in terms of the MFMA and the Division of Revenue Act, and issues on completeness and accuracy
of the reports were raised with Management, to take the necessary corrective actions.

INTERNAL AUDIT

The Committee is satisfied that the internal audit work was conducted in accordance with the approved annual
audit plan, and with the content and quality of internal auditors quarterly reports prepared and issued for the
period under review.

ANNUAL REPORT 2016/17 170

EVALUATION OF FINANCIAL STATEMENTS

The Audit Committee has:
1. Reviewed with concern and discussed the municipality’s annual financial statements for the year ended
30 June 2017;
2. Reviewed the municipality’s compliance with legal and regulatory provisions; and
3. Reviewed the Auditor-General’s report and management responses thereto.
Despite our serious disappointment with the audit opinion received, the Committee concurs with and accepts
the Auditor-General's conclusions on the municipality’s annual financial statements and performance
information for the financial year under review.
Further matters for noting:-
1. the Municipality needs to ensure that Senior management positions are filled as a matter of urgency as
the current vacuum in certain positions is causing serious capacity issues;

2. RE REPORTED MATTERS:-

There are a number of matters that have been reported in previous financial years that are causing serious
financial loss to the Municipality and it is of serious concern to the Audit Committee that these maters seem to
be dragging on from year to year with little or no apparent progress:

1. Water losses
2. Very Poor Debtors Management - resulting in significant write offs
3. Irrecoverable Debt From Organs of State
4. Non-compliance with SCM policies and procedures
We are of the opinion that the audited annual financial statements and performance report be accepted and
read together with the report of the Auditor-General.

APPRECIATION

The Committee wishes to express its sincere appreciation to the Mayor, Council, Municipal Manager,
management and officials of the municipality for their support and cooperation during the year under review.
The Committee also acknowledges the support and assistance of the Office of the Auditor-General, CoGTA
and KZN Provincial Treasury.

N.R. SIKHAKHANE (TSHABALALA)
Chairperson of the Audit Committee
30 November 2017

171 A N N U A L R E P O R T 2 0 1 6 / 1 7

APPENDIX M

Annual Financial Statements 2016/2017 Financial Year

UMGUNGUNDLOVU DISTRICT MUNICIPALITY 172
Annual Financial Statements

for the year ended 30 June 2017

ANNUAL REPORT 2016/17

UMGUNGUNDLOVU DISTRICT MUNICIPALITY

Annual Financial Statements for the year ended 30 June 2017

General Information

Executive Committee TE Maphumulo (ANC)
Mayor TR Zungu (ANC)
Deputy Mayor MS Bond (DA)
Other councillors GM Ngube (ANC)
DS Mkhize (ANC)
Grading of local authority B A Mchunu (ANC)
WHIP BC Nhlabathi (DA)
SPEAKER BE Zuma (IFP)

MK Dlamini (ANC)
N V Duze (ANC)
AS Dlamini (ANC)
SW Dlamini (ANC)
SC Gwala (ANC)
TA Hlatshwayo (DA)
JE Holmes (DA)
R Jugmohan (DA)
B Khumalo (ANC)
SJ Luthuli (ANC)
NC Mabhida (ANC)
LL Madlala (ANC)
BK Mkhize (IFP)
K Mkhize (ANC)
M Mkhize (ANC)
MJ Mkhize (ANC)
S Mkhize (ANC)
DC Mtshali (IFP)
SD Mhlongo (ANC)
NZ Ndlovu (ANC)
KCS Nene (ANC)
MD Njokwe (ANC)
LC Ngcobo (ANC)
GH Ngcobo (ANC)
B Ngcongo (ANC)
SD Nkuna (ANC)
MV Ntshangase (ANC)
RB Strachan (DA)
BC Sokhela (IFP)
R Soobiah (ANC)
E Xaba (DA)
HM Zondi (ANC)
N Zondo (ANC)

Grade 5

DA Ndlela (ANC)

ME Dladla (ANC)

9

173 A N N U A L R E P O R T 2 0 1 6 / 1 7

UMGUNGUNDLOVU DISTRICT MUNICIPALITY

Annual Financial Statements for the year ended 30 June 2017

General Information

MANAGEMENT Municipal Manager- TLS Khuzwayo (ended 30 June 2017)
Executive Manager - Financial Services - SD Ncube-Dlamini
Registered office Executive Manager - Corporate Services - GH Bhengu (Appointed
Postal address from 1 May 2017)
Bankers Executive Manager - Technical Services - EB Mbambo
Auditors Executive Manager - Community Services - RM Baloyi
Website
Other Information 242 Langalibalele Street
Pietermartizburg
3201

P O Box 3235
Pietermaritzburg
3200

First National Bank

The Auditor General South Africa
Registered Auditors

www.umdm.gov.za

Telephone: 033 897 6700 Fax : 033 342 5502

10

ANNUAL REPORT 2016/17 174

UMGUNGUNDLOVU DISTRICT MUNICIPALITY
AUnMnuaGl FUinaNncGiaUl SNtatDemLenOtsVfoUr thDe yIeSarTeRndIeCd T30 MJunUe N20I1C7 IPALITY
IAnnnduealxFinancial Statements for the year ended 30 June 2017
Index

The reports and statements set out below comprise the annual financial statements presented to the provincial legislature:

The reports and statements set out below comprise the annual financial statements presented to the provinPciaagl elegislature:

Accounting Officer's Responsibilities and Approval P1a2ge

Accounting Officer's Repspoortnsibilities and Approval 117326

SAtcactoeumnetinntgoOf Fffincearn'sciaRlePpoosrtition 117437

Statement of Financial Peorsfiotiromnance for the year ended 30 June 2017 117548

Statement of CFihnaanngceiasl iPneNrfeotrmAsasnectes ffoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22001177 117659
CStaasthemFelonwt oSftaCtheamnegnetsfoinr tNhetyAesasreetsndfoerdth3e0 yJeuanree2n0d1e7d 30 June 2017 118760

SCtaastehmFelonwt oSftCatoemmpeanrtisfornthoef Byuedagr eetnadnedd A3c0tuJaulnAem20o1u7nts 118871
ASptaptreomperinationf CSotamtepmareisnotn of Budget and Actual Amounts 118982

AcpcporoupnrtiantgioPnoSlictaietesment 182301-923700
NAcocteosuntotinthgePAonlincuieasl Financial Statements 2032180 -- 263730

Notes to the Annual Financial Statements 38 - 67

COID Compensation for Occupational Injuries and Diseases

DCBOSIDA DCeovmeploepnmsaetniotnBfaonrkOocfcSuopuathionAafrlicInajuries and Diseases

GDBRSAAP GDevnelroapllmy eRnetcBoagnkiseodf SAocuctohuAnftrinicgaPractice

IGARSAP IGnetenrenraatliloynRaleAcocgconuisnetdinAg cSctoaunndtainrdgsPractice

IMASFO Instetirtnuatetioonf aMl uAncicoipuanltFinignaSntcaendOafrfdicsers

IPMSFAOS IntsetirtnuatetioonfaMl uPnuibcliipcaSl FecintoarncAeccOofufincteinrsg Standards

MIPES'As S MInutenrincaiptaiolnEanl tPitiuebslic Sector Accounting Standards

MEC's Meumnicbiepraol fEtnhteitiEesxecutive Council

MFEMCA Muenmicbiepraol Ff tinhaenEcxeeMcuatnivaegCemouennctiAl ct

MIFGMA Municipal IFnifnranstcreucMtuarneaGgeramnet nt Act

MIG Municipal Infrastructure Grant

11
11

175 A N N U A L R E P O R T 2 0 1 6 / 1 7

UMGUNGUNDLOVU DISTRICT MUNICIPALITY

Annual Financial Statements for the year ended 30 June 2017

Accounting Officer's Responsibilities and Approval

The accounting officer is required by the Municipal Finance Management Act (Act 56 of 2003), to maintain adequate
accounting records and is responsible for the content and integrity of the annual financial statements and related financial
information included in this report. It is the responsibility of the accounting officer to ensure that the annual financial statements
fairly present the state of affairs of the municipality as at the end of the financial year and the results of its operations and cash
flows for the period then ended. The external auditors are engaged to express an independent opinion on the annual financial
statements and were given unrestricted access to all financial records and related data.

The annual financial statements have been prepared in accordance with Standards of Generally Recognised Accounting
Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board.

The annual financial statements are based upon appropriate accounting policies consistently applied and supported by
reasonable and prudent judgements and estimates.

The accounting officer acknowledges that she is ultimately responsible for the system of internal financial control established
by the municipality and places considerable importance on maintaining a strong control environment. To enable the accounting
officer to meet these responsibilities, the accounting officer sets standards for internal control aimed at reducing the risk of
error or deficit in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly
defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk.
These controls are monitored throughout the municipality and all employees are required to maintain the highest ethical
standards in ensuring the municipality’s business is conducted in a manner that in all reasonable circumstances is above
reproach. The focus of risk management in the municipality is on identifying, assessing, managing and monitoring all known
forms of risk across the municipality. While operating risk cannot be fully eliminated, the municipality endeavours to minimise it
by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within
predetermined procedures and constraints.

The accounting officer is of the opinion, based on the information and explanations given by management, that the system of
internal control provides reasonable assurance that the financial records may be relied on for the preparation of the annual
financial statements. However, any system of internal financial control can provide only reasonable, and not absolute,
assurance against material misstatement or deficit.

The accounting officer has reviewed the municipality’s cash flow forecast for the year to 30 June 2018 and, in the light of this
review and the current financial position, she is satisfied that the municipality has or has access to adequate resources to
continue in operational existence for the foreseeable future.

auditors are responsible for independently auditing and reporting on the municipality's annual financial statements. The annual
financial statements have been examined by Auditor General and this report is presented to the speaker of the council upon
completion of the audit.

The annual financial statements set out on page 11747-25390, which have been prepared on the going concern basis, were approved
by the accounting officer on 31 August 2017 and were signed on its behalf by:

Accounting Officer
SD Ncube-Dlamini (Acting Accounting Officer)
Acting Accounting Officer

12

ANNUAL REPORT 2016/17 176

UMGUNGUNDLOVU DISTRICT MUNICIPALITY

Annual Financial Statements for the year ended 30 June 2017

Accounting Officer's Report

1. Ratio Analysis
 Liquidity Ratio - 2.38:1 (2.04:1)
The Municipality has enough short term assets to finance short term liabilities.
 Solvency Ratio - 4.26:1 (4.17:1).
Assets are over 5 times the liabilities , the Municipality will be able to meet all its short and long term obligations.
 Cash Ratio - 0.48:1 (0.65:1).
There is sufficient cash to pay short term liabilities.

2. Going concern
We draw attention to the fact that at 30 June 2017, the municipality had accumulated deficits of R 1 286 784 782 and that the
municipality's total assets exceeded its liabilities by R 1 310 849 259.
The annual financial statements have been prepared on the basis of accounting policies applicable to a going concern. This
basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of
liabilities, contingent obligations and commitments will occur in the ordinary course of business.
The ability of the municipality to continue as a going concern is dependent on a number of factors. The most significant of
these is that the accounting officer continues to procure funding for the ongoing operations.
3. Establishment of the development agency
The district has established a development agency which is wholly onwed by the district. The entity was incorporated on 6 June
2017 and has a mandate to implement high capacity local economic development projects. The agency will effectively transact
in the 2017/2018 financial year.

13

177 A N N U A L R E P O R T 2 0 1 6 / 1 7

UMGUNGUNDLOVU DISTRICT MUNICIPALITY Note(s) 2017 2016
Restated*
Annual Financial Statements for the year ended 30 June 2017

Statement of Financial Position as at 30 June 2017

Figures in Rand

Assets 2 2 472 384 1 675 716
Current Assets 3 217 404 459 269 881 479
Inventories 6 - 15 288 118
Receivables from exchange transactions 4 144 287 661 92 640 719
VAT receivable 5 94 043 319 178 511 262
Consumer debtors
Cash and cash equivalents 458 207 823 557 997 294

Non-Current Assets 7 1 254 580 212 1 117 175 195
Property, plant and equipment
Intangible assets 8 767 391 677 910

Total Assets 1 255 347 603 1 117 853 105

Liabilities 1 713 555 426 1 675 850 399
Current Liabilities
Other financial liabilities 9 8 634 097 55 801 644
Payables from exchange transactions
VAT payable 10 121 629 657 165 458 639
Consumer deposits
Unspent conditional grants and receipts 14 7 254 496 -
Provisions
15 5 907 544 5 588 628
Non-Current Liabilities
Other financial liabilities 11 16 770 548 17 028 096
Total Liabilities
Net Assets 12 31 809 986 29 207 040
Reserves
Revaluation reserve 192 006 328 273 084 047
Accumulated surplus
Total Net Assets 9 210 699 839 128 853 780
402 706 167 401 937 827

1 310 849 259 1 273 912 572

16 24 064 477 24 064 477
1 286 784 782 1 245 622 385
1 310 849 259 1 269 686 862

ANNUAL REPORT 2016/17 178

UMGUNGUNDLOVU DISTRICT MUNICIPALITY

Annual Financial Statements for the year ended 30 June 2017

Statement of Financial Performance for the year ended 30 June 2017

Figures in Rand Note(s) 2017 2016
Restated*

Revenue 17 124 228 853 125 457 447

Revenue from exchange transactions 23 308 202 18 152 505
Service charges
Interest received from customers late payments 205 215 201 960
Rental income
Other income 18 11 040 889 4 025 847
Interest received
29 15 432 321 17 019 400
Total revenue from exchange transactions
174 215 480 164 857 159
Revenue from non-exchange transactions
28 608 077 666 716 833 705
Transfer revenue 19 782 293 146 881 690 864
Government grants & subsidies
20 (198 158 827) (181 327 612)
Total revenue 21 (10 239 416) (10 937 383)

Expenditure (7 087 471) (9 002 250)
Employee costs 22 (61 521 906) (55 713 431)
Remuneration of councillors 23 (19 737 550) (10 252 994)
Administration 24 (61 029 639) (50 253 471)
Depreciation and amortisation
Finance costs (4 725 400) (1 592 826)
Debt impairment 25 (121 186 282) (105 044 656)
Repairs and maintenance 26 (142 306 896) (156 871 341)
Bulk purchases 27 (102 679 530) (93 441 773)
Contracted services
General expenses (728 672 917) (674 437 737)

Total expenditure 53 620 229 207 253 127

Operating surplus (16 683 542) (59 691)
Loss on disposal of assets
36 936 687 207 193 436
Surplus for the year

UMGUNGUNDLOVU DISTRICT MUNICIPALITY

Annual Financial Statements for the year ended 30 June 2017

Statement of Changes in Net Assets for the year ended 30 June 2017

Revaluation Accumulated Total net
assets
Figures in Rand reserve surplus

Balance at 01 July 2015 24 064 477 1 042 652 274 1 066 716 751
Changes in net assets
Surplus for the year - 202 970 111 202 970 111
- 202 970 111 202 970 111
Total changes 24 064 477 1 245 622 386 1 269 686 863

Opening balance as previously reported - 4 225 709 4 225 709
Adjustments 24 064 477 1 249 848 095 1 273 912 572
Correction of errors
- 36 936 687 36 936 687
Restated* Balance at 01 July 2016 as restated* - 36 936 687 36 936 687
Changes in net assets 24 064 477 1 286 784 782 1 310 849 259
Surplus for the year

Total changes

Balance at 30 June 2017

179 A N N U A L R E P O R T 2 0 1 6 / 1 7

UMGUNGUNDLOVU DISTRICT MUNICIPALITY

Annual Financial Statements for the year ended 30 June 2017

Cash Flow Statement for the year ended 30 June 2017

Figures in Rand Note(s) 2017 2016
Restated*

Cash flows from operating activities 91 197 685 67 002 561
626 640 041 678 573 480
Receipts
Receipts from customers and other 16 239 316 17 019 400
Grants
Interest income 734 077 042 762 595 441

Payments (208 398 243) (189 738 493)
Employee costs (113 615 892) (78 324 301)
Suppliers
Finance costs (22 862 781) (10 252 994)
Other contractual obligations (273 393 636) (253 760 373)

Net cash flows from operating activities (618 270 552) (532 076 161)

Cash flows from investing activities 30 115 806 490 230 519 280

Purchase of property, plant and equipment 7 (299 133 435) (426 663 752)
Proceeds from sale of property, plant and equipment 7 - (1)
Purchase of intangible assets 8 (1 717 849) (1 436 907)
Other movements in property plant and equipment
Net cash flows from investing activities 85 151 338 137 621 940

Cash flows from financing activities (215 699 946) (290 478 720)

Proceeds from long - term portion of long term liabilities 99 683 000 180 778 000
Repayment of long - term portion of long term liabilities (61 714 873) (81 614 070)
Movement in VAT payable (22 542 614) (23 186 881)
Net cash flows from financing activities 15 425 513 75 977 049

Net increase/(decrease) in cash and cash equivalents (84 467 943) 16 017 609
Cash and cash equivalents at the beginning of the year 178 511 262 162 493 654
Cash and cash equivalents at the end of the year 5 94 043 319 178 511 263

ANNUAL REPORT 2016/17 180

UMGUNGUNDLOVU DISTRICT MUNICIPALITY

Annual Financial Statements for the year ended 30 June 2017

Statement of Comparison of Budget and Actual Amounts

Budget on Accrual Basis

Approved Adjustments Final Budget Actual amounts Difference Reference
budget
on comparable between final

basis budget and

Figures in Rand actual

Statement of Financial Performance

Revenue

Revenue from exchange 159 651 000 (37 189 000) 122 462 000 124 228 853 1 766 853
transactions 7 080 000 3 920 000 11 000 000 15 432 321 4 432 321 Note 42 (A)
Service charges 55 297 000 34 554 306 (20 742 694) Note 42 (B)
Interest received investments 42 872 000 12 425 000
Other income - (rollup) 188 759 000 174 215 480 (14 543 520)
209 603 000 (20 844 000)
Total revenue from exchange
transactions

Revenue from non-exchange 584 355 000 29 556 000 613 911 000 608 077 666 (5 833 334)
transactions 793 958 000 8 712 000 802 670 000 782 293 146 (20 376 854)

Transfer revenue
Government grants & subsidies

Total revenue

Expenditure (191 692 000) (2 207 000) (193 899 000) (198 158 827) (4 259 827)
Personnel (13 189 000) 2 433 000 (10 756 000) (10 239 416) 516 584
Remuneration of councillors (31 800 000) (28 800 000) (60 600 000) (61 521 906) (921 906)
Depreciation and asset
Impairment (14 081 000) (5 519 000) (19 600 000) (19 737 550) (137 550) 42 (C)
Finance costs (102 828 000) (19 859 000) (122 687 000) (121 186 282) 1 500 718
Bulk purchases (122 915 000) (35 647 000) (158 562 000) (142 306 896) 16 255 104
Contracted Services (135 740 000) (81 255 000) (216 995 000) (175 522 040) 41 472 960
Other Expenses
54 426 083
Total expenditure (612 245 000) (170 854 000) (783 099 000) (728 672 917) 34 049 229
34 049 229
Surplus before taxation 181 713 000 (162 142 000) 19 571 000 53 620 229

Actual Amount on Comparable 181 713 000 (162 142 000) 19 571 000 53 620 229
Basis as Presented in the
Budget and Actual
Comparative Statement

18

181 A N N U A L R E P O R T 2 0 1 6 / 1 7

UMGUNGUNDLOVU DISTRICT MUNICIPALITY

Annual Financial Statements for the year ended 30 June 2017

Appropriation Statement

Figures in Rand

Original Budget Final Shifting of Virem
budget funds (i.t.o. (i.t.o
adjustments adjustments s31 of the appr
MFMA) polic
(i.t.o. s28 and budget

s31 of the

MFMA)

2017

Financial Performance 159 650 000 (37 189 000) 122 461 000 -
Service charges 7 080 000 3 920 000 11 000 000 -
Investment revenue -
Transfers recognised 584 355 000 29 557 000 613 912 000 -
Other own revenue 42 872 000 12 425 000 55 297 000 -
-
Total revenue 793 957 000 8 713 000 802 670 000 -

Employee costs (191 692 000) (2 207 000) (193 899 000) -
Remuneration of (13 189 000) 2 433 000 (10 756 000) -
councillors
Depreciation and asset (31 800 000) (28 800 000) (60 600 000) -
impairment -
Finance charges (14 081 000) (5 519 000) (19 600 000) -
Materials and bulk (102 828 000) (19 859 000) (122 687 000) -
purchases
Other expenditure (258 655 000) (116 902 000) (375 557 000)
(612 245 000) (170 854 000) (783 099 000)
Total expenditure 181 712 000 (162 141 000) 19 571 000
181 712 000 (162 141 000) 19 571 000
Surplus/(Deficit)

Surplus/(Deficit) for the
year

19

ANNUAL REPORT 2016/17

ment Final budget Actual Unauthorised Variance Actual Actual
outcome expenditure
o. council outcome outcome

roved as % of as % of

cy) final original

budget budget

122 461 000 124 228 853 1 767 853 101 % 78 %
11 000 000 15 432 321 4 432 321 140 % 218 %
(5 834 334) 104 %
613 912 000 608 077 666 (20 742 694) 99 %
55 297 000 34 554 306 62 % 81 %

802 670 000 782 293 146 (20 376 854) 97 % 99 %

- (193 899 000) (198 158 827) - (4 259 827) 102 % 103 %
- (10 756 000) (10 239 416)
- 516 584 95 % 78 %

(60 600 000) (61 521 906) - (921 906) 102 % 193 %

- (19 600 000) (19 737 550) - (137 550) 101 % 140 %
- (122 687 000) (121 186 282)
- 1 500 718 99 % 118 %

- (375 557 000) (317 828 936) - 57 728 064 85 % 123 %
- (783 099 000) (728 672 917) - 54 426 083 93 % 119 %
274 %
19 571 000 53 620 229 34 049 229 274 % 30 %
19 571 000 53 620 229 34 049 229 30 %

9

182

UMGUNGUNDLOVU DISTRICT MUNICIPALITY

Annual Financial Statements for the year ended 30 June 2017

Accounting Policies

1. Presentation of Annual Financial Statements

The annual financial statements have been prepared in accordance with the Standards of Generally Recognised
Accounting Practice (GRAP).

These annual financial statements have been prepared on an accrual basis of accounting and are in accordance with
historical cost convention as the basis of measurement, unless specified otherwise. They are presented in South African
Rand.

1.1 Presentation currency

These annual financial statements are presented in South African Rand, which is the functional currency of the municipality.

1.2 Property, plant and equipment

Property, plant and equipment are tangible non-current assets (including infrastructure assets) that are held for use in the
production or supply of goods or services, rental to others, or for administrative purposes, and are expected to be used during
more than one period.

The cost of an item of property, plant and equipment is recognised as an asset when:
 it is probable that future economic benefits or service potential associated with the item will flow to the
municipality; and
 the cost of the item can be measured reliably.

Property, plant and equipment is initially measured at cost.

The cost of an item of property, plant and equipment is the purchase price and other costs attributable to bring the asset to the
location and condition necessary for it to be capable of operating in the manner intended by management. Trade discounts and
rebates are deducted in arriving at the cost.

Where an asset is acquired through a non-exchange transaction, its cost is its fair value as at date of acquisition.

Where an item of property, plant and equipment is acquired in exchange for a non-monetary asset or monetary assets, or a
combination of monetary and non-monetary assets, the asset acquired is initially measured at fair value (the cost). If the
acquired item's fair value was not determinable, it's deemed cost is the carrying amount of the asset(s) given up.

When significant components of an item of property, plant and equipment have different useful lives, they are accounted for as
separate items (major components) of property, plant and equipment.

Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred
subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of
property, plant and equipment, the carrying amount of the replaced part is derecognised.

The initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located is also
included in the cost of property, plant and equipment, where the entity is obligated to incur such expenditure, and where the
obligation arises as a result of acquiring the asset or using it for purposes other than the production of inventories.

Recognition of costs in the carrying amount of an item of property, plant and equipment ceases when the item is in the location
and condition necessary for it to be capable of operating in the manner intended by management.

Items such as spare parts, standby equipment and servicing equipment are recognised when they meet the definition of
property, plant and equipment.

Major inspection costs which are a condition of continuing use of an item of property, plant and equipment and which meet the
recognition criteria above are included as a replacement in the cost of the item of property, plant and equipment. Any remaining
inspection costs from the previous inspection are derecognised.

Property, plant and equipment is carried at cost less accumulated depreciation and any impairment losses.

20

183 A N N U A L R E P O R T 2 0 1 6 / 1 7