DC22 uMgungundlovu AFS 2019-20 unaudited

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UMGUNGUNDLOVU DISTRICT MUNICIPALITY
(Registration number DC 22)
Annual Financial Statements
for the year ended 30 June 2020
UMGUNGUNDLOVU DISTRICT MUNICIPALITY
Annual Financial Statements for the year ended 30 June 2020
General Information
Mayoral committee
Executive Mayor TE Maphumulo (ANC)
SA Dlamini (ANC) - Deputy Mayor
RB Strachan (DA)
GM Ngubo (ANC)
TR Zuma (ANC)
BA Mchunu (ANC)
BC Nhlabathi (DA)
BE Zuma (IFP)
NP Msimang (ANC)
MS Mthethwa (ANC)
ME Dladla (ANC) - Speaker
Councillors DA Ndlela (ANC) - WHIP
NV Duze (ANC)
MM Thusi (IFP)
SW Dlamini (ANC)
S Majozi (ANC)
TA Hlatshwayo (DA)
SD Chonco (DA)
H Lake (DA)
B Khumalo (ANC)
SJ Luthuli (ANC)
NC Mabhida (ANC)
S Madlala (ANC)
BK Mkhize (IFP)
K Mkhize (ANC)
M Mthethwa (ANC)
MJ Mkhize (ANC)
S Mkhize (ANC)
N Phoswa (ANC)
S Gabela (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)
MS Bond (DA)
BC Sokhela (IFP)
R Soobiah (ANC)
E Xaba (DA)
HM Zondi (ANC)
N Zondo (ANC)
MK Dlamini (ANC)
Auditors Auditor General of South Africa
Registered Auditors
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UMGUNGUNDLOVU DISTRICT MUNICIPALITY
Annual Financial Statements for the year ended 30 June 2020
General Information
Legal form of entity Local Authority
District Municipality
Grading of local authority Grade 5
Registered office 242 Langalibalele Street
Pietermaritzburg
3201
Postal address P O Box 3235
Pietermaritzburg
3200
Controlling entity uMgungundlovu District Municipality - [Not Consolidated]
Bankers First National Bank
Rounding Level All figures are presented to the nearest R1
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UMGUNGUNDLOVU DISTRICT MUNICIPALITY
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 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 - 32
Notes to the Annual Financial Statements 33 - 76
Appendixes:
Appendix E(1): Actual versus Budget (Revenue and Expenditure) 77
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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UMGUNGUNDLOVU DISTRICT MUNICIPALITY
Annual Financial Statements for the year ended 30 June 2020
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 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 officer acknowledges that he is 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 officer 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 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 officerhas 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, heis satisfied that the municipality has or has access to adequate resources
to continue in operational existence for the foreseeable future.
The external auditors are responsible for independently reviewing and reporting on the municipality's annual financial
statements. The annual financial statements have been examined by the municipality and thier report is presented to the
Speaker and Council upon completion of the audit.
The annual financial statements set out on page 5, which have been prepared on the going concern basis, were approved
by the on 31 August 2020 and were signed on its behalf by:
Accounting Officer
DR Raymond Ngcobo
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UMGUNGUNDLOVU DISTRICT MUNICIPALITY
Annual Financial Statements for the year ended 30 June 2020
Statement of Financial Position as at 30 June 2020
2020 2019
Restated*
Note(s) R R
Assets
Current Assets
Cash and cash equivalents 3 88 893 452 46 261 559
Consumer debtors 4 75 839 756 56 433 219
Receivables from exchange transactions 5&54 6 952 538 5 608 206
Receivables from non-exchange transactions 6&54 - 2 006 345
Inventories 7 2 338 552 2 460 845
174 024 298 112 770 174
Non-Current Assets
Property, plant and equipment 8 2 039 867 585 1 955 506 554
Intangible assets 9 175 289 1 328 714
Heritage assets 10 4 000 4 000
2 040 046 874 1 956 839 268
Total Assets 2 214 071 172 2 069 609 442
Liabilities
Current Liabilities
Unspent conditional grants and receipts 11 26 542 731 23 085 118
Payables from exchange transactions 12 216 746 779 134 078 400
Consumer deposits 13 6 844 223 5 501 674
Other financial liabilities 14 10 007 903 9 670 186
VAT payable 15 36 696 172 37 903 449
Provisions 16 19 908 141 16 781 630
316 745 949 227 020 457
Non-Current Liabilities
Other financial liabilities 14 195 421 093 207 632 965
Provisions 16 32 580 095 33 284 647
228 001 188 240 917 612
Total Liabilities 544 747 137 467 938 069
Net Assets 1 669 324 035 1 601 671 373
Reserves
Revaluation reserve 55 24 628 860 24 628 860
Accumulated surplus 1 644 695 175 1 577 042 513
Total Net Assets 1 669 324 035 1 601 671 373
* See Note 47
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UMGUNGUNDLOVU DISTRICT MUNICIPALITY
Annual Financial Statements for the year ended 30 June 2020
Statement of Financial Performance
2020 2019
Restated*
Note(s) R R
Revenue
Revenue from exchange transactions
Service charges 17 289 380 518 253 281 877
Rental of facilities and equipment 18 11 177 256 517
Other income 19 4 164 947 7 136 436
Interest received - investment 20 6 091 244 8 089 955
Total revenue from exchange transactions 299 647 886 268 764 785
Revenue from non-exchange transactions
Taxation revenue
Interest from Outstanding Debtors 21 42 541 292 38 999 627
Transfer revenue
Government grants & subsidies 22 719 534 863 704 323 008
Donations 51 7 383 536 -
Fines, Penalties and Forfeits 23 673 266 -
Total revenue from non-exchange transactions 770 132 957 743 322 635
Total revenue 53 1 069 780 843 1 012 087 420
Expenditure
Employee related costs 24 (262 437 910) (242 235 172)
Remuneration of councillors 25 (11 606 018) (11 627 511)
Impairment of Assets 56 (4 210 864) (118 692)
Depreciation and amortisation 26 (46 264 584) (46 523 154)
Finance costs 27 (29 439 184) (11 502 271)
Lease rentals on operating lease (115 409) -
Debt Impairment 57 (173 479 169) (230 441 089)
Bulk purchases 28 (217 391 980) (161 412 143)
Contracted services 29 (202 156 621) (200 876 584)
Transfers and Subsidies 30 (5 083 500) (6 415 719)
General Expenses 31 (57 098 773) (46 446 461)
Total expenditure (1 009 284 012) (957 598 796)
Operating surplus 52 60 496 831 54 488 624
Loss on disposal of assets and liabilities 32 (3 641 996) -
Actuarial gains / (losses) 33 1 448 707 (1 471 810)
(2 193 289) (1 471 810)
Surplus for the year 58 303 542 53 016 814
* See Note 47
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UMGUNGUNDLOVU DISTRICT MUNICIPALITY
Annual Financial Statements for the year ended 30 June 2020
Statement of Changes in Net Assets
Revaluation Accumulated Total net
reserve surplus assets
R R R
Balance at 01 July 2018 24 628 860 1 524 025 699 1 548 654 559
Changes in net assets
Surplus for the year - 53 016 814 53 016 814
Total changes - 53 016 814 53 016 814
Opening balance as previously reported 24 628 860 1 696 339 628 1 720 968 488
Adjustments
Correction of errors - (110 329 104) (110 329 104)
Restated* Balance at 01 July 2019 as restated* 24 628 860 1 586 010 524 1 610 639 384
Changes in net assets
Correction of Prior year error - 381 112 381 112
Net income (losses) recognised directly in net assets - 381 112 381 112
Surplus for the year - 58 303 539 58 303 539
Total recognised income and expenses for the year - 58 684 651 58 684 651
Total changes - 58 684 651 58 684 651
Balance at 30 June 2020 24 628 860 1 644 695 175 1 669 324 035
Note(s) 55
* See Note 47
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UMGUNGUNDLOVU DISTRICT MUNICIPALITY
Annual Financial Statements for the year ended 30 June 2020
Cash Flow Statement
2020 2019
Restated*
Note(s) R R
Cash flows from operating activities
Receipts
Sale of goods and services 148 274 841 133 410 421
Grants 721 923 102 704 568 162
Interest income - Investment 6 091 244 8 089 955
Interest Income - Debtors - 2 854 732
876 289 187 848 923 270
Payments
Employee costs (271 633 910) (242 235 172)
Suppliers (156 154 137) (385 167 398)
Finance costs (29 439 184) (11 502 271)
(457 227 231) (638 904 841)
Net cash flows from operating activities 35 419 061 956 210 018 429
Cash flows from investing activities
Purchase of property, plant and equipment 8 (364 412 522) (206 655 628)
Purchase of other intangible assets 9 (143 386) (1 646 528)
Net cash flows from investing activities (364 555 908) (208 302 156)
Cash flows from financing activities
Repayment of other financial liabilities (11 874 155) (5 064 852)
Net cash flows from financing activities (11 874 155) (5 064 852)
Net increase/(decrease) in cash and cash equivalents 42 631 893 (3 348 579)
Cash and cash equivalents at the beginning of the year 46 261 559 49 610 138
Cash and cash equivalents at the end of the year 3 88 893 452 46 261 559
* See Note 47
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