LIM335 Maruleng AFS 2014-15 audited

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MARULENG MUNICIPALITY
ANNUAL FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
MARULENG MUNICIPALITY
GENERAL INFORMATION
GENERAL INFORMATION

Members of the Council

PA Mafologele Mayor

MC Magoro Speaker

MJ Nyathi Members of the Executive Committee
PH Ratshoshi

ML Mongadi (Chief Whip) Members
EC Du Preez
MP Mashumu
B Rakganya
MS Malapane
MC Mahlako
MR Malepe
SA Nyathi
LV Shaai
TA Mathaba
MD Popela
JT Morema
MM Rakgoale
ME Mathaba
RB Sekgobela
PE Shai
MR Mametja
IH Malatjie
MJ Maahlo
MJ Rakgoale
TD Mogale

Acting Municipal Manager
ML Mokonyane

Chief Financial Officer
E Makamu

Grading of Local Authority 3

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MARULENG MUNICIPALITY

Auditors
Auditor-General
Bankers
Standard Bank
Registered Office: Municipal Offices
Physical address: 65 Springbok St./-str. 65
Hoedspruit
1380
Postal address: P.O. Box/Posbus 627
Hoedspruit
1380
Telephone number: [phone]
Fax number: [phone]
E-mail address: [email protected]

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MARULENG MUNICIPALITY

INDEX

The reports and statements set out below comprise the annual financial statements
presented to the Audit Committee of Maruleng Municipality:

Index Page
Accounting Officer's Responsibilities and Approval 4
Statement of Financial Position 6
Statement of Financial Performance 7
Cash Flow Statement 8
Actuals Versus Budget Comparison 9
Statement of Changes in Net Assets 11
Accounting Policies 12-30
Notes to the Annual Financial Statements 31-47

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MARULENG MUNICIPALITY
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 responsible
for reporting on the fair presentation of the annual financial statements.

The annual financial statements have been prepared in accordance with Standards of Generally
Recognised Accounting Practices (GRAP). 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 ultimate responsibility 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 officer to meet these responsibilities, the
accounting officer sets standards for internal control aimed at reducing the risk of error or loss 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.

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

The accounting officer has reviewed the municipality’s cash flow forecast for the year to 30 June
2016 and, in the light of this review and the current financial position, is satisfied that the
municipality has or has access to adequate resources to continue in operational existence for the
foreseeable future.

The municipality is wholly dependent on the service charges and grants for continued funding of
operations. The annual financial statements are prepared on the basis that the municipality is a
going concern and that Maruleng Municipality has neither the intention nor the need to liquidate
or curtail materially the scale of the municipality.

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MARULENG MUNICIPALITY

The Accounting Officer further certifies that the remuneration of councillors as disclosed in the
relevant note to the financial statements is in accordance with the Public Office Bearers Act (Act
20 of 1998) and the Minister of Co-operative Governance and Traditional Affairs' determination of
upper limits of the salaries, allowances and benefits as promulgated annually.

The annual financial statements set out on pages 6 to 47, which have been prepared on the
going concern basis, were approved on 31 August 2015 and were signed on behalf of the
Municipality by:

_________________________ _________________________
ML MOKONYANE DATE
ACTING ACCOUNTING OFFICER
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MARULENG MUNICIPALITY
STATEMENT OF FINANCIAL POISITION
As at 30 June 2015
Notes 2015 2014
R R
ASSETS Restated
Current assets
Inventories 2 66 533 84 328
Receivable from exchange transactions 3 1 268 322 429 577
Receivable from non-exchange transactions 4 1 615 237 1 632 138
Other receivables 5 486 001 18 524 472
VAT receivable 6 8 216 268 3 359 254
Cash and cash equivalents 7 57 272 914 43 104 959
68 925 275 67 134 729
Non-current assets
Property, plant & equipment 8 288 914 838 278 987 230
Intangible assets 9 773 486 377 620
Investment property carried at fair value 10 4 183 574 3 679 938
Heritage assets 11 216 000 216 000
294 087 898 283 260 787
TOTAL ASSETS 363 013 173 350 395 517
LIABILITIES
Current liabilities
Trade and other payables from exchange 12
transactions 6 456 167 2 029 615
Trade and other payables from non exchange 13
transactions 1 826 888 1 406 040
Unspent conditional grants and receipts 14 5 036 039 9 227 398
Short-term obligations to employees 15 3 398 363 4 502 564
Current portion of finance lease obligation 0 180 550
16 717 457 17 346 166
Non-current liabilities
Long-term obligations to employees 16 5 902 394 4 477 698
5 902 394 4 477 698
TOTAL LIABILITIES 22 619 851 21 823 864
NET ASSETS 340 393 322 328 571 652

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MARULENG MUNICIPALITY
STATEMENT OF FINANCIAL PERFORMANCE
For the year ended 30 June 2015
Notes 2015 2014
R R
REVENUE Restated
Revenue from exchange transactions
Service charges 17.1 3 179 464 2 564 209
Finance income 17.2 2 882 082 1 816 214
Rental of facilities and equipment 324 656 269 430
Licences and permits 2 865 584 2 328 118
Agency fees 17.3 1 387 150 1 952 081
Other revenue 17.4 2 279 817 1 631 335
Total revenue from exchange transactions 12 918 752 10 561 388
Revenue fron non exchange transactions
Taxation revenue
Property rates 18.1 29 368 837 12 594 085
Traffic fines 18.2 771 410 221 172
Transfer revenue
Government grants and subsidies received - operating 19 76 724 114 68 062 483
Government grants and subsidies received - capital 19 34 830 221 27 869 161
Total revenue from non exchange transactions 141 694 583 108 746 901
TOTAL REVENUE 154 613 334 119 308 289
EXPENDITURE
Employee related costs 20 38 899 197 30 704 717
Remuneration of councillors 21 7 805 186 7 664 592
Bad debts 31 021 458 2 827 451
Depreciation and amortisation expense 22 28 846 179 28 284 145
Finance cost 23 8 187 86 022
lease rental 154 431 0
Repairs and maintenance 1 703 406 1 296 906
General expenses 24 27 061 450 21 602 833
Contracted services 25 6 819 324 5 613 865
Loss on disposal of Assets 26 976 478 11 032 973
TOTAL EXPENDITURE 143 295 297 109 113 504
NET SURPLUS BEFORE: 11 318 037 10 194 785
Surplus on valuation of heritage assets 0 0
Fair value adjustment of investment property 503 636 0
NET SURPLUS FOR THE YEAR 11 821 673 10 194 785

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MARULENG MUNICIPALITY

STATEMENT OF CASHFLOWS
For the year ended 30 June 2015
2015 2014
Note R R
Restated
CASH FLOWS FROM OPERATING ACTIVITIES
RECEIPTS 137 024 242 116 113 411
Service charges 483 031 481 001
Property rates 22 382 867 12 594 085
Grants and subsidies 107 362 976 101 417 000
Other receipts 6 795 368 1 621 326
PAYMENTS (85 403 499) (71 180 088)
Employee costs (38 578 703) (30 704 717)
Remuneration for councillors (7 805 186) (7 664 592)
Suppliers (30 736 780) (6 910 771)
Other payments (8 282 830) (25 900 009)
Cash generated from operations 28 51 620 743 44 933 323
Investment revenue/ interests received 2 882 082 1 816 214
Interest Paid ( 8 187) ( 86 022)
Net Cash From Operating Activities 5 4 494 638 4 6 663 515
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment and other assets (40 146 134) ( 22 491 906)
Loss on disposal of assets 0 ( 10 349 033)
Net cash used in investing activities (40 146 134) (32 840 939)
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of finance lease liabilities ( 180 550) ( 256 297)
Net cash used in financing activities ( 180 550) ( 256 297)
Increase in cash and cash equivalents 14 167 954 13 566 279
Cash and cash equivalents at beginning of the year 43 104 959 29 538 680
Cash and cash equivalents at end of the year 57 272 913 43 104 959

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MARULENG MUNICIPALITY
ACTUAL VERSUS BUDGET COMPARISON
For the year ended 30 June 2015
REVENUE BUDGET ACTUAL VARIANCE VAR
EXPL
NOTE
Revenue from exchange transactions
Service charges 3 127 000 3 179 464 52 464 1.68% F
Finance income 2 257 000 2 882 082 625 082 27.70% F a
Rental of facilities and equipment 322 109 324 656 2 547 0.79% F
Licences and permits 2 867 400 2 865 584 ( 1 816) -0.06% U
Agency fees 703 000 1 387 150 684 150 97.32% F b
Other revenue 1 506 247 2 279 817 773 570 51.36% F c
Total revenue from exchange transactions 10 782 756 12 918 752 2 135 996 F
Revenue fron non exchange transactions
Taxation revenue
Property rates 29 547 413 29 368 837 ( 178 576) -0.60% U
Government grants and subsidies received - operating 77 279 559 76 724 114 ( 555 445) -0.72% U
Government grants and subsidies received - capital 34 310 839 34 830 221 519 382 1.51% F
Total revenue from non exchange transactions 1 41 137 811 140 923 173 108 525 729 U
TOTAL REVENUE 151 920 567 153 841 924 110 661 724 U
EXPENDITURE
Employee related costs 42 449 878 38 899 197 3 550 681 8.36% F
Remuneration of councillors 8 552 170 7 805 186 746 984 8.73% F
Bad debts 3 700 000 31 021 458 (27 321 458) -738.42% U d
Depreciation and amortisation expense 33 000 000 28 846 179 4 153 821 12.59% F e
Finance cost 78 000 8 187 69 813 89.50% F f
Operating lease rental - 154 431 ( 154 431) g
Repairs and maintenance 2 808 318 1 703 406 1 104 911 39.34% F h
General expenses 38 134 262 27 061 450 11 072 812 29.04% F i
Contracted services 7 426 247 6 819 324 606 923 8.17% F
Loss on disposal of Assets 0 976 478 ( 976 478)
TOTAL EXPENDITURE 136 148 875 143 295 297 (7 146 422) F
NET SURPLUS BEFORE: 15 771 692 10 546 627 117 808 147 F
Surplus on valuation of heritage assets 0 0 0 F
Fair value adjustment of investment property 0 503 636 503 636 F
NET SURPLUS FOR THE YEAR 15 771 692 11 050 263 118 311 783 F
aThemunicipalityinitiallybudgetedforinterestbasedoncurrentinvestmentbalancesandftrensferredthatwould
bereceivededfromthenatoionalrevenuefundintermsoftheDORA,alsotakingintoaccounttheestimatedtiime
that money would be held as suplus balances before being put to use. However the municipality ended up
receiving aditional funding in excess of R13 millions for MIG projects. The said additional funding ended up

bThe budgetforagbency fees basedonthe income growthfactorasprovided byNational Treasury. Duringthe
courseofthefinancialyearthemunicipalityexperiencedunexpectedtransactionvolumeswhichpushedreceipts
above the growth factor.
cOtherincomeincludestrafficfineswhichwereinthepreviousfinancialyearbudgetedandaccountedforoncash
basis. The municipality hadachange inaccountingpolicy intermswhereof trafficfineswereaccountedforon
accrual basis, resulting in unbudgeted excess as the budget was cash-based.

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