KZN226 Mkhambathini AFS 2019-20 unaudited

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Mkhambathini Municipality
Annual Financial Statements
for the year ended 30 June 2020
Mkhambathini Municipality
(Registration number KZN 226)
Annual Financial Statements for the year ended 30 June 2020
General Information
Legal form of entity Municipality
Nature of business and principal activities Delivering of basic services to the community (refuse removal, road
and elecreicity infrastructure and other community socio-activities)
Mayoral committee Cllr E Ngcongo (Mayor)
Cllr LZ Lembethe (Deputy Mayor)
Cllr TA Gwala (Speaker)
Councillors Cllr KR Mofokeng (EXCO Member)
Cllr RN Lembethe (MPAC Chair)
Cllr MR Ntuli
Cllr RN Zondo
Cllr RB Mkhize
Cllr MR Shandu
Cllr S Ngidi
Cllr NW Ntombela
Cllr ZF Mbambo
Cllr PN Maphanga
Cllr NN Phungula
Chief Finance Officer (CFO) Mr TE Gambu
Municipal Website www.mkhambathini.gov.za
Business address 18 Old Main Road
Camperdown
3720
Postal address Private Bag X04
Camperdown
3720
Contact number 031 785 9300
Auditors Auditor-General
Bank First National Bank
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Mkhambathini Municipality
(Registration number KZN 226)
Annual Financial Statements for the year ended 30 June 2020
Index
The reports and statements set out below comprise the annual financial statements presented to the provincial legislature:
Page
Accounting Officer's Responsibilities and Approval 3
Accounting Officer' s Report 4
Statement of Financial Position 5
Statement of Financial Performance 6
Statement of Changes in Net Assets 7
Cash Flow Statement 8
Statement of Comparison of Budget and Actual Amounts 9 - 10
Accounting Policies 11 - 24
Notes to the Annual Financial Statements 25 - 47
Appendix G(3): Budgeted Financial Performance (revenue and expenditure) 48
COID Compensation for Occupational Injuries and Diseases
CRR Capital Replacement Reserve
DBSA Development Bank of South Africa
SA GAAP South African Statements of Generally Accepted Accounting Practice
GRAP Generally Recognised Accounting Practice
GAMAP Generally Accepted Municipal Accounting Practice
HDF Housing Development Fund
IAS International Accounting Standards
IMFO Institute of Municipal Finance Officers
IPSAS International Public Sector Accounting Standards
ME's Municipal Entities
MEC Member of the Executive Council
MFMA Municipal Finance Management Act
MIG Municipal Infrastructure Grant (Previously CMIP)
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Mkhambathini Municipality
(Registration number KZN 226)
Annual Financial Statements for the year ended 30 June 2020
Accounting Officer's Responsibilities and Approval
The accounting officersare required by the Municipal Finance Management Act (Act 56 of 2003), to maintain adequate
accounting records and are 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 officers 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 was 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 officersacknowledge that theyare ultimately responsible for the system of internal financial control established
by the municipality and place considerable importance on maintaining a strong control environment. To enable the accounting
officers to meet these responsibilities, the 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 officersare 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 officershave reviewed the municipality’s cash flow forecast for the year to 30 June 2021 and, in the light of this
review and the current financial position, theyare satisfied that the municipality has access to adequate resources to continue
in operational existence for the foreseeable future.
I certify that the salaries, allowances and benefis of councillors as disclosed in note 23 of these annual financial statements are
within the upper limit of the framework envisaged in section 219 of the constitution, read with the Remuneration of Public
Officers Bearer Act and the Minister of Provincial and Local Government determination in accordance with this Act.
The annual financial statements set out on pages 4 to 47, which have been prepared on the going concern basis, were
approved by the on 30 September 2020 .
Accounting Officer
Mr S Mngwengwe
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Mkhambathini Municipality
(Registration number KZN 226)
Annual Financial Statements for the year ended 30 June 2020
Accounting Officer' s Report
The accounting officerssubmittheir report for the year ended 30 June 2020.
1. Subsequent events
The accounting officersare not aware of any matter or circumstance arising since the end of the financial year.
2.
The accounting officers's details during the year and to the date of this report are as follows:
Name Nationality Changes
Mr S Mngwengwe South African MM appointed as from 16 January 2020
Miss ZM Mdlazi South African appointed Acting MM as from 05 March 2019 to 15
January 2020.
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Mkhambathini Municipality
(Registration number KZN 226)
Annual Financial Statements for the year ended 30 June 2020
Statement of Financial Position as at 30 June 2020
Figures in Rand Note(s) 2020 2019
Restated*
Assets
Current Assets
Inventories 159 458 -
Operating lease asset 6 88 400 88 400
Receivables from exchange transactions 8&10 1 675 179 2 159 503
Receivables from non-exchange transactions 9&10 19 902 048 18 359 940
Cash and cash equivalents 11 65 453 736 63 941 151
87 278 821 84 548 994
Non-Current Assets
Investment property 3 19 683 600 4 523 600
Property, plant and equipment 4 150 970 647 136 585 617
Intangible assets 5 488 430 409 323
171 142 677 141 518 540
Total Assets 258 421 498 226 067 534
Liabilities
Current Liabilities
Payables from exchange transactions 14 3 940 933 5 199 105
VAT payable 15 1 029 409 383 238
Unspent conditional grants and receipts 12 444 068 469 127
Provisions 13 2 576 332 2 353 095
7 990 742 8 404 565
Non-Current Liabilities
Employee benefit obligation 7 4 158 000 4 210 196
Total Liabilities 12 148 742 12 614 761
Net Assets 246 272 756 213 452 773
Revaluation reserve 15 160 000 -
Accumulated surplus 231 112 756 213 452 773
Total Net Assets 246 272 756 213 452 773
* See Note
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Mkhambathini Municipality
(Registration number KZN 226)
Annual Financial Statements for the year ended 30 June 2020
Statement of Financial Performance
Figures in Rand Note(s) 2020 2019
Restated*
Revenue
Revenue from exchange transactions
Service charges 17 528 201 525 667
Interest received - refuse removal 4 304 939 4 589 786
Commissions received 1 315 691 1 552 924
Other income 19 685 628 673 936
Total revenue from exchange transactions 6 834 459 7 342 313
Revenue from non-exchange transactions
Property rates 21 17 369 337 14 291 859
Property rates - penalties imposed 21 940 603 3 697 592
Transfer revenue
Government grants & subsidies 22 85 168 060 79 993 754
Fines, Penalties and Forfeits 23 190 27 055
Licenses and Permits 3 508 816 4 909 459
Other income 18 96 755 101 636
Total revenue from non-exchange transactions 107 106 761 103 021 355
Total revenue 16 113 941 220 110 363 668
Expenditure
Employee Related Cost 23 (37 651 600) (34 632 406)
Remuneration of councillors 24 (6 023 555) (5 809 171)
Contributions to Employee benefits (Long Service) 25 - (637 330)
Depreciation and amortisation 26 (9 715 689) (8 138 724)
Reversal of impairments 27 (229 255) (583 732)
Debt Impairment 28 - (1 539 532)
Loss on disposal of assets and liabilities/ (Transfers to other organ of state) (113 285) (195 350)
General Expenses 29 (41 374 548) (30 764 297)
External Auditors (1 173 307) (1 233 373)
Total expenditure (96 281 239) (83 533 915)
Surplus for the year 17 659 981 26 829 753
* See Note
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Mkhambathini Municipality
(Registration number KZN 226)
Annual Financial Statements for the year ended 30 June 2020
Statement of Changes in Net Assets
Revaluation Accumulated Total net
Figures in Rand reserve surplus assets
Balance at 01 July 2018 - 186 623 020 186 623 020
Surplus for the year - 26 829 753 26 829 753
Total changes - 26 829 753 26 829 753
Restated* Balance at 01 July 2019 - 213 452 775 213 452 775
Changes in net assets
Net income (losses) recognised directly in net assets - - -
Surplus for the year - 17 659 981 17 659 981
Total recognised income and expenses for the year - 17 659 981 17 659 981
Total changes - 17 659 981 17 659 981
Undefined Difference 15 160 000 - 15 160 000
Balance at 30 June 2020 15 160 000 231 112 756 246 272 756
* See Note
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Mkhambathini Municipality
(Registration number KZN 226)
Annual Financial Statements for the year ended 30 June 2020
Cash Flow Statement
Figures in Rand Note(s) 2020 2019
Restated*
Cash flows from operating activities
Receipts
Sale of goods and services 17 369 337 17 487 965
Grants 85 143 001 79 497 210
Interest Received 6 816 646 6 721 292
109 328 984 103 706 467
Payments
Employee costs (37 651 600) (34 632 406)
Remuneration of Councillors (6 023 555) (5 809 171)
Cash Paid to Suppliers (41 772 597) (32 006 698)
(85 447 752) (72 448 275)
Other cash item 14 244 921 -
Net cash flows from operating activities 33 38 126 153 31 258 192
Cash flows from investing activities
Purchase of property, plant and equipment 4 (36 312 743) (26 290 430)
Purchase of other intangible assets 5 (300 825) -
Net cash flows from investing activities (36 613 568) (26 290 430)
Net increase in cash and cash equivalents 1 512 585 4 967 762
Cash and cash equivalents at the beginning of the year 63 941 151 58 973 389
Cash and cash equivalents at the end of the year 11 65 453 736 63 941 151
* See Note
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Mkhambathini Municipality
(Registration number KZN 226)
Annual Financial Statements for the year ended 30 June 2020
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
transactions
Service charges 541 780 180 000 721 780 528 201 (193 579) (a)
Interest received (trading) 3 408 647 28 000 3 436 647 4 304 939 868 292 (d)
Commissions received 2 112 735 - 2 112 735 1 315 691 (797 044) (b)
Other income 669 190 385 156 1 054 346 685 628 (368 718) (c)
Total revenue from exchange 6 732 352 593 156 7 325 508 6 834 459 (491 049)
transactions
Revenue from non-exchange
transactions
Taxation revenue
Property rates 22 114 206 (3 415 123) 18 699 083 17 369 337 (1 329 746) (e)
Property rates - penalties 1 810 886 - 1 810 886 940 603 (870 283) (d)
imposed
Transfer revenue
Government grants & subsidies 69 072 000 (5 000) 69 067 000 85 168 060 16 101 060 (f)
Fines, Penalties and Forfeits 28 109 - 28 109 23 190 (4 919)
Licenses and permits 4 604 539 - 4 604 539 3 508 816 (1 095 723) (b)
Other revenue - - - 96 755 96 755 (c)
Total revenue from non- 97 629 740 (3 420 123) 94 209 617 107 106 761 12 897 144
exchange transactions
Total revenue 104 362 092 (2 826 967) 101 535 125 113 941 220 12 406 095
Expenditure
Employee related cost (38 326 701) (253 304) (38 580 005) (37 651 600) 928 405 (g)
Remuneration of councillors (5 989 438) (110 562) (6 100 000) (6 023 555) 76 445 (h)
Depreciation and amortisation (8 294 490) (1 863 090) (10 157 580) (9 715 689) 441 891 (j)
Impairment loss/ Reversal of (2 754 504) - (2 754 504) (229 255) 2 525 249
impairments
Repairs and Maintenance (8 000 000) - (8 000 000) (5 391 695) 2 608 305 (l)
General Expenses (38 414 252) (9 397 629) (47 811 881) (37 156 160) 10 655 721 (l)
Total expenditure (101 779 385) (11 624 585) (113 403 970) (96 167 954) 17 236 016
Loss on disposal of assets and - - - (113 285) (113 285) (m)
liabilities
Operating surplus before capital - - - - -
expenditure
Transfer recognised - Capital - - - - -
Sub-Total before operational - - - (113 285) (113 285)
revenue and expenditure
Surplus or (Deficit) for the year 2 582 707 (14 451 552) (11 868 845) 17 659 981 29 528 826
after capital expenditure
Surplus or (Deficit) for the year 2 582 707 (14 451 552) (11 868 845) (734 279) 29 528 826
after capital expenditure
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