KZN254 Dannhauser AFS 2019-20 unaudited

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Dannhauser Local Municipality
Annual Financial Statements
for the year ended June 30, 2020
Dannhauser Local Municipality
(Registration number KZ254)
Annual Financial Statements for the year ended June 30, 2020
General Information
Legal form of entity Category B municipality in terms of section 3 of the Local Government
Municipal Structures Act, 1998 (Act 117 of 1998) read with section 155
of the Constitution of the Republic of South Africa, 1996.
Municipal demarcation code KZN 254
Grading of local Municipality Grade 2
Capacity of local authority Low Capacity Municipality

Nature of business and principal activities The main business operations of the municipality is to engage in local
governance activities, which includes planning and promotion of
integrated development planning, land, economic and environmental
development, levying of rates and supplying of general services to the
community. The municipality is also involved in dermacation and
grading of land.
Mayor Cllr Phakathi J.P.
Speaker Cllr Ngubeni Z.S.
Councillors Cllr Buthelezi M.A.
Cllr Dlamini S.D.
Cllr Dubazana X.M.
Cllr Dube N.S.
Cllr Nair P.G.
Cllr Hlathswayo N.S.
Cllr Hlathswayo V.R.
Cllr Kumalo N.P.
Cllr Kunene M.
Cllr Manyati N.G.R.
Cllr Matlaba M.N.
Cllr Mazibuko R.N.
Cllr Mfusi E.S.
Cllr Mkhize M.S.
Cllr Mkhumane M.S.
Cllr Msibi S.D.
Cllr Ndaba V.M.
Cllr Ndlovu S.N.
Cllr Nene P.P.
Cllr Ngidi M.A.
Cllr Radebe A.N.
Cllr Sibisi S.S.
Cllr Sithole S.G.
Accounting Officer Mr Nkosi W.B
Chief Finance Officer (CFO) Mrs Mohapi D.M.
Registered office 8 Church Street
Dannhauser
3080
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Dannhauser Local Municipality
(Registration number KZ254)
Annual Financial Statements for the year ended June 30, 2020
General Information
Business address 8 Church Street
Dannhauser
3080
Postal address Private Bag X1011
Dannhauser
3080
Auditors Auditor General of South Africa
Attorneys Rafiq Khan & Co. Attorneys at Law
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Dannhauser Local Municipality
(Registration number KZ254)
Annual Financial Statements for the year ended June 30, 2020
Index
The reports and statements set out below comprise the annual financial statements presented to the provincial legislature:
Index Page
Accounting Officer's Responsibilities and Approval 4
Accounting officer's Report 5
Statement of Financial Position 6
Statement of Financial Performance 7
Statement of Changes in Net Assets 8
Cash Flow Statement 9
Statement of Comparison of Budget and Actual Amounts 10
Accounting Policies 11 - 34
Notes to the Annual Financial Statements 35 - 66
Abbreviations
COID Compensation for Occupational Injuries and Diseases
CRR Capital Replacement Reserve
DBSA Development Bank of South Africa
GRAP Generally Recognised Accounting Practice
HDF Housing Development Fund
IAS International Accounting Standards
CIGFARO Chartered Institute of Government Finance, Audit and Risk Officers
IPSAS International Public Sector Accounting Standards
MEC Member of the Executive Council
MIG Municipal Infrastructure Grant (Previously CMIP)
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Dannhauser Local Municipality
(Registration number KZ254)
Annual Financial Statements for the year ended June 30, 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 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 June 30, 2021 and, in the light of this
review and the current financial position, he is satisfied that the municipality has or has access to adequate resources to
continue in operational existence for the foreseeable future.
Although the accounting officer is primarily responsible for the financial affairs of the municipality, he is supported by the
municipality's external auditors.
The accounting officer certifies that the salaries, allowances and benefits of councillors as disclosed in note 26 to these annual
financial statements are within the upper limits of the framework envisaged in section 219 of the Constitution of the Republic of
South Africa, read with the Remuneration of Public Office Bearers Act, Act 20 of 1998 and the Minister of Provincial and Local
Government’s determination in accordance with the Act.
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's external auditors.
The annual financial statements set out on pages 6 to 63, which have been prepared on the going concern basis, were
approved by the accounting officer on October 30, 2020 and were signed by:
Mr Nkosi W.B
Accounting Officer
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Dannhauser Local Municipality
(Registration number KZ254)
Annual Financial Statements for the year ended June 30, 2020
Accounting officer's Report
The accounting officer submits his report for the year ended June 30, 2020.
1. Review of activities
Main business and operations
The main business operations of the municipality is to engage in local governance activities, which includes planning and
promotion of integrated development planning, land, economic and environmental development, levying of rates and supplying
of general services to the community.
The operating results and state of affairs of the municipality are fully set out in the attached annual financial statements and
do not in our opinion require any further comment.
2. Going concern
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 busines
3. Subsequent events
The accounting officer is not aware of any matter or circumstance arising since the end of the financial year.
4. Accounting policies
The annual financial statements have been prepared in accordance with the Standards of Generally Recognised Accounting
Practices (GRAP) including any interpretations of such Statements issued by the Accounting Standards Board.
5. Accounting Officer
The accounting officer of the municipality during the year and to the date of this report is as follows:
Name
Mr Nkosi W.B
6. Auditors
Auditor General of South Africa of South Africa will continue in office for the next financial period.
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Dannhauser Local Municipality
(Registration number KZ254)
Annual Financial Statements for the year ended June 30, 2020
Statement of Financial Position as at June 30, 2020
Figures in Rand Note(s) 2020 2019
Restated*
Assets
Current Assets
Receivables from exchange transactions 7 4,936,435 1,824,463
VAT receivable 8 1,482,249 1,351,098
Receivables from non-exchange transactions 9 7,195,911 22,322,027
Cash and cash equivalents 10 29,222,059 20,553,029
42,836,654 46,050,617
Non-Current Assets
Investment property 3 8,768,000 8,768,000
Property, plant and equipment 4 466,323,022 455,840,388
Heritage assets 5 97,185 97,185
475,188,207 464,705,573
Total Assets 518,024,861 510,756,190
Liabilities
Current Liabilities
Finance lease obligation - 1
Unspent conditional grants and receipts 11 3,674,458 217,781
Other financial liabilities 12 5,195,528 1,585,736
Employee benefit obligation 6 675,000 211,109
Provisions 13 4,593,913 16,341,878
Payables from exchange transactions 14 20,096,833 19,180,988
34,235,732 37,537,493
Non-Current Liabilities
Other financial liabilities 12 32,679,772 11,893,022
Employee benefit obligation 6 6,202,000 6,556,262
38,881,772 18,449,284
Total Liabilities 73,117,504 55,986,777
Net Assets 444,907,357 454,769,413
Accumulated surplus 444,907,357 454,769,413
* See Note 39 & 38
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Dannhauser Local Municipality
(Registration number KZ254)
Annual Financial Statements for the year ended June 30, 2020
Statement of Financial Performance
Figures in Rand Note(s) 2020 2019
Restated*
Revenue
Revenue from exchange transactions
Service charges 16 1,144,638 1,034,870
Rental of facilities and equipment 17 42,558 111,662
Rendering of services 19 1,076,831 -
Licences and permits 20 1,435,794 3,000,118
Other income 21 179,184 2,480,510
Interest received - investment 22 1,925,835 3,144,619
Total revenue from exchange transactions 5,804,840 9,771,779
Revenue from non-exchange transactions
Taxation revenue
Property rates 23 26,598,703 19,099,542
Transfer revenue
Government grants & subsidies 24 114,814,326 107,707,470
Fines, Penalties and Forfeits 18 568,900 1,577,538
Total revenue from non-exchange transactions 141,981,929 128,384,550
Total revenue 15 147,786,769 138,156,329
Expenditure
Employee related costs 25 (30,803,325) (29,651,600)
Remuneration of councillors 26 (10,704,492) (9,044,404)
Depreciation and amortisation 27 (41,222,068) (34,317,390)
Finance Costs 29 (3,796,599) (1,591,054)
Contracted services 30 (30,371,174) (42,117,457)
General Expenses 31 (18,075,430) (40,968,520)
Total expenditure (134,973,088) (157,690,427)
Operating surplus (deficit) 12,813,681 (19,534,099)
Gain (loss) on disposal of assets and liabilities 439,639 (3,098,796)
Fair value adjustments - 1,752,921
Impairment loss 28 (23,115,373) (26,786,789)
(22,675,734) (28,132,664)
Deficit for the year (9,862,053) (47,666,763)
* See Note 39 & 38
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Dannhauser Local Municipality
(Registration number KZ254)
Annual Financial Statements for the year ended June 30, 2020
Statement of Changes in Net Assets
Accumulated Total net
Figures in Rand surplus assets
Balance at July 1, 2018 as restated* 502,436,173 502,436,173
Changes in net assets
Surplus for the year (47,666,757) (47,666,757)
Total changes (47,666,757) (47,666,757)
Balance at 01 July 2019 456,211,536 456,211,536
Changes in net assets
Prior year error (1,442,126) (1,442,126)
Net income (losses) recognised directly in net assets (1,442,126) (1,442,126)
Surplus for the year (9,862,053) (9,862,053)
Total recognised income and expenses for the year (11,304,179) (11,304,179)
Total changes (11,304,179) (11,304,179)
Balance at June 30, 2020 444,907,357 444,907,357
* See Note 39 & 38
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Dannhauser Local Municipality
(Registration number KZ254)
Annual Financial Statements for the year ended June 30, 2020
Cash Flow Statement
Figures in Rand Note(s) 2020 2019
Restated*
Cash flows from operating activities
Receipts
Service charges 17,142,723 20,134,412
Government grants and subsidies 118,271,000 107,707,470
Interest income 1,925,835 3,144,619
Other cash item 2,754,867 7,169,828
140,094,425 138,156,329
Payments
Employee costs (30,792,779) (39,014,598)
Suppliers (62,228,428) (65,735,458)
Finance Charges (3,796,599) (1,591,054)
(96,817,806) (106,341,110)
Net cash flows from operating activities 33 43,276,619 31,815,219
Cash flows from investing activities
Purchase of property, plant and equipment 4 (55,479,713) (68,949,572)
Proceeds from sale of property, plant and equipment 4 439,637 137,585
Proceeds from sale of biological assets that form part of an agricultural activity - 70,000
Net cash flows from investing activities (55,040,076) (68,741,987)
Cash flows from financing activities
Proceeds from other financial liabilities - 4,401,461
Repayment of other financial liabilities 20,432,488 -
Finance lease payments (1) (7,702)
Net cash flows from financing activities 20,432,487 4,393,759
Net increase/(decrease) in cash and cash equivalents 8,669,030 (32,533,009)
Cash and cash equivalents at the beginning of the year 20,553,029 53,086,038
Cash and cash equivalents at the end of the year 10 29,222,059 20,553,029
* See Note 39 & 38
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