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Report of the auditor-general to the Gauteng Provincial Legislature and the council on Germiston Phase II Housing Company SOC Ltd Report on the financial statements Intreduction 1. nays audited ths Financial statements of -he Germision Phase I Housing Company SOC Lid set outon pages ..t0..., whic? compries the statement of financial position 2s ai 30 June 2015. the statement of financial performance, slalement of charges n nel asses, cash flow statement, sister ent of comparison of budget and actual for te year then ended, as well a the notes, comprising @ summary of signficant accounting policies and othe explanatory information Accounting officer's responsibility for the financlal statements 2. The accountng offcer is responsible for the preparation and far presentation of these financial stetements in accordance wih the South African Standards of Generally Recognised Accounting Practice (SA Standards of GRAP) and the requirements of the Municipal Finance ‘Management Act of South Atica, 2008 (Act No. 86 of 2003) (MFMA) and for auch inlernel ‘control as t12 accounting officer determines is necessary tc enable the oreparation of financial state nents that ara free from material misstatement, whoather dus to fra. or eror Auditor-general’s responsibiity 2. Wy responsibilty is to express an opinion an these nancial statements based on my audi. | ccondur:ed my aut in accordance with Inlemational Standards an Auclting. Those standards require thal! comply with ethical requirements, and pian and perform the aucit to obtain reasonable assurance about whether the flnancial slatamants ava frae from materia! ‘risstatement. 4. An aud invaluas parforrning procedures to obtsin sucit evidence about the amounts and disclosures in the financial statements. Tha procedures selactad depend on tha aucitor’s Judgement, including tie assessment ofthe “sks of materia misstatement of the financial statements, whelhor due to fraud or aor. In making those risk eesessrnenls, the auditor onsiders internal control ralavant ta the munlcipal entity's preraration and fair presentation of the financial siatements in order to design aucit procedures that are apprepriate in the roumslances, but nol for the purpose a” expressing an opirion on the effectiveness of the ‘municipal entity's internal control. An audit also Includes avaluating tha appropriateness of faroounting policies used and the reasonableness of accounting estimates made by Management, as well as evaluating the overall presentation ofthe financial statements, {believe thatthe audit evidence | have obtained is euficiant and appropriate lo provide a becis for my audit opinion. Opinion 8. Imm opinion the financial stalements present fairly in sll material respecte, the financial Positer of tha Germiston Phase II Housing Company SOC Lid as at 39 Jura 2015 and its finencisl perormance and cash flaws for the year then ended, n aocordarce with the SA ‘Standards oF GRAP and the requirements of the MFMA and Compenes Act. Emphasis of matter 7. draw attention to the matter below. My opinion isnot madifiad in wasps ofthis matte Amalgamation of related entities 8. With reference to note 29 te the financial statements itshauld be noted thal the Board has assed a resolution on 30 June 2016 Wo proveed with amalgamating the folowing related parlis inle a sirgle company, namely Ekurhtleni Development Coraany ($00) Lid, Pharoe Park Housing Gor pany (SOC) Ltd, Phase Il Housing Company (SOG) Lté and Lethabong Housing Insttuta (SOC) NPC. ‘The key operations of these entities will continue to function normally in the singla entity, and wil prevent a duplication of functions and reeult in elignment with SHRA funding requirements, Tha Tinancia effect of the amalgamation can however not bs quentifisd et reporting dave. Due to the matotial uncerisinly ofthe timing, funding and coat of the amalgamation procate, ‘management is ofthe opinion that this wl not affect the entity's abilty to continue as a going concern for financial statement reporting pursoses. Additional matters 10. | draw attention tothe matters below. My opinion is nat nod ed in respec; af these matters. ‘Other reports required by the Companies Act 11. As part of my audit of ths financial statements for he year ended 30 June 2016, | have read the Directors responsialty and apnraval and the Directors’ Report for the purasee of doulifying whether there are matetial inconsistencies Setween tha reports and the audited financial staternants. Thase reporis ara the responsibilty of the respective preparers. Based ‘on reading these reports [have nat Idan ed material inconsistencies between the reports and the audited financial statements. have not audited thase reporls and accordingly da not ‘exqess an opin‘on an them. Unaudited disclosure notes 12. Imterms of section 125(2¥a) of the MFMA, the rmunicipal entity is requ red ta disclose particua’s of non-compliance with the RIFWMIA. This dlsclosure requirement aie no: frm part at the audit of the financial stetements and accordingly . da not express an opinion thereon, 19. In accordance wih the Public Audit Act af South Afica, 2004 (Act No. 2b of 2004) {PAA} and the general notice isaved in terme thereof, [have a responsibly to “sport findings on the ‘eporied periomanca Information against pradataemined objectives for selected objectives presented in the annual performance repart, compliance with legislation and Internal control ‘The objective of my tests was to identify reportable findings as described under each sulbnading but not fe gather evidence tc axprass assiiranea an thae malters. Ancoringly, | do not express an opinion or conctus on on these matters. Predetermined objectives 14 | performs: procedures ta obtain evidence about the usefulness and reliatilty of tre reported performance Information fa” ihe following selected objectives presented in the annual formance report ofthe municipal ently for the year ended 30 lene 2018: 1 Objootiva 1: Numbor of nev: units constructed to nocommadete social housing target market on pages x to x + Objective 2; Revenue colectes as a percentage at amount billed forthe year excluding arrears on pagas 10 x + Objective 4: ktectve maragement at existirg sicck on pages x to x 15. | evaluated the reparted parionnance Infomation agalnel the averal efterie of usefulness and reliabilty 16, | evaluated the usefulness of the reported performance intormetion to determine wherherit sas prasentad in accordance wih the National Treasurys annual reposting principles and whether the reparted performance wae consiste t with he planned objectives. fuer perfor ed :ests to delermine whether indicators and targets were well defined, veritable, Specie, measurabla, tne bound and relevant, a& requlred by the Natlonal Treasury's Framework for managing prograrame pertarmance information (FPP) 17. Lassessed the reliability ofthe reported perormance intermalion ta determine whether itwas vali, acourala and camplaie, 18. Idid not identity any materia fidings on the usefulness and reiabilty of tho reported perfermance information for the selected objectives Compliance with legislation 10. | performed procedures fo obtein evidence that the municipal entity had complied wth applica’ e logislalion regarding Gnancial mallers, Neancial management and other ralated makers, 20, | did nol ideniily any instances of material non-compliance wilh specie matters in “ey lagislatca, as ¢et out In the ga-ieral nae Issued In tims ofthe PAA. Infernal control 24. | considered internal control ralavan ta my auelt af the financial stetemonts, the parformance report and complance with legislation. | didnt identfy any significant deficiencies in internal contrl adide- Gener f Echannesturg 30 November 2015