MP323 Umjindi AFS 2015-16 audited

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Umjindi Local Municipality
Audited Annual Financial Statements
for the year ended June 30, 2016
Umjindi Local Municipality
Audited Annual Financial Statements for the year ended June 30, 2016
General Information
Members of Council L.V.Mashaba (Executive Mayor)
P.V.Mkhatshwa (Speaker)
N.E.Mkhabela (Member of Mayoral Committee)
Councillors M.J.Hlophe (Member of Mayoral Committee)
N.E.Nsimbini (Member of Mayoral Committee)
Members:
H.L.Shongwe
A.M.Simelane
A.S.Mthunywa
M.C.Nkosi
S.I.Gama
P.C.W.Minnaar
M.E.Jacobs
T.R.Manyisa
S.Mabuza
P.M.Mnisi
B.N.Mathebula
D.T.Chibi
S.P.Msibi
Grading of local authority 03
Municipal demarcation code MP323
Municipal Manager D.P.Msibi
Acting Chief Financial Officer C van der Westuizen
Business address CNR General & De Vilier's street
Barberton
1300
Postal address P. O. Box 33
Barberton
1300
Bankers First National Bank LTD
Auditors Auditor General SA
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Umjindi Local Municipality
Audited Annual Financial Statements for the year ended June 30, 2016
Index
The reports and statements set out below comprise the audited annual financial statements presented to the provincial
legislature:
Index Page
Accounting Officer's Responsibilities and Approval 3
Statement of Financial Position 4
Statement of Financial Performance for the year ended 30 June 2016 5
Statement of Changes in Net Assets for the year ended 30 June 2016 6
Cash Flow Statement for the year ended 30 June 2016 7
Statement of Comparison of Budget and Actual Amounts for the year ended 30 June 2016 8 - 12
Accounting Policies 13 - 32
Notes to the Annual Financial Statements for the year ended 30 June 2016 33 - 78
The following supplementary information does not form part of the audited annual financial statements and is unaudited:
Appropriation Statement for the year ended 30 June 2016 79 - 80
Appendixes:
Appendix A: Schedule of External loans 81
Appendix B: Analysis of Property, Plant and Equipment 82
Appendix D: Segmental Statement of Financial Performance 88
Abbreviations
DBSA Development Bank of Southern Africa
SA GAAP South African Statements of Generally Accepted Accounting Practice
GRAP Generally Recognised Accounting Practice
IAS International Accounting Standards
IMFO Municipal Finance Management Act 56 of 2003
IPSAS International Public Sector Accounting Standards
PPE Property, Plant and Equipment
RUL Remaining Useful Life
WIP Work in Progress
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Umjindi Local Municipality
Audited Annual Financial Statements for the year ended June 30, 2016
Accounting Officer's Responsibilities and Approval
The accounting officeris 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 audited annual financial statements and related
financial information included in this report. It is the responsibility of the accounting officer to ensure that the audited 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 and internal auditors are engaged to express an
independent opinion on the audited annual financial statements and were given unrestricted access to all financial records
and related data.
The audited annual financial statements have been prepared in accordance with General Recognised Accounting
Standards (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board.
The audited annual financial statements are based upon appropriate accounting policies consistently applied and supported
by reasonable and prudent judgements and estimates.
The accounting officeracknowledges that heis 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 officeris 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
audited annual financial statements. However, any system of internal financial control can provide only reasonable, and not
absolute, assurance against material misstatement or deficit.
The audited annual financial statements set out on pages 4 to 80, which have been prepared on the going concern basis,
were approved by the on August 31, 2016 and were signed by him:
DP Msibi
Acting Accounting Officer
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Umjindi Local Municipality
Audited Annual Financial Statements for the year ended June 30, 2016
Statement of Financial Position as at June 30, 2016
Figures in Rand Note(s) 2016 2015
Restated*
Assets
Current assets
Inventories 3 86,764,741 56,548,451
Receivables from exchange transactions 4 309,675 512,406
Receivables from non-exchange transactions 5 776,700 587,034
VAT receivable 6 3,329,495 -
Consumer receivables 7 44,248,814 45,200,194
Cash and cash equivalents 8 15,204,346 9,666,554
150,633,771 112,514,639
Non-Current assets
Investment property 9 5,534,000 5,066,362
Property, plant and equipment 10 935,074,488 848,221,907
Intangible assets 11 149,776 151,088
Heritage assets 12 529,508 529,508
Investments in controlled entities 13 100 100
Deposits - Eskom 54 3,023,000 3,023,000
944,310,872 856,991,965
Total Assets 1,094,944,643 969,506,604
Liabilities
Current liabilities
Current portion of long term liabilities 14 623,423 681,608
Trade & other payables from exchange transactions 15 51,129,913 54,138,665
Trade & other payable from non-exchange transactions 16 29,769 33,078
VAT payable 17 - 1,195,150
Consumer deposits 18 2,838,077 2,733,339
Employee benefit obligation 19 5,226,000 6,492,000
Unspent conditional grants and receipts 20 1,448,077 5,784,504
Provisions 21 1,994,943 1,063,442
63,290,202 72,121,786
Non-Current Liabilities
Long term liabilities 14 963,781 1,587,206
Employee benefit obligation 19 15,054,000 12,731,000
Provisions 21 13,788,319 13,055,887
29,806,100 27,374,093
Total liabilities 93,096,302 99,495,879
Net assets 1,001,848,341 870,010,725
Accumulated surplus 1,001,848,341 870,010,725
* See Note 51 & 42
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Umjindi Local Municipality
Audited Annual Financial Statements for the year ended June 30, 2016
Statement of Financial Performance for the year ended 30 June 2016
Figures in Rand Note(s) 2016 2015
Restated*
Revenue
Revenue from exchange transactions
Service charges 22 134,561,944 116,657,823
Rental of facilities and equipment 669,651 827,847
Interest received - outstanding debtors 6,605,705 5,739,873
Income from agency services 1,433,423 1,367,617
Licences and permits 1,759,656 1,545,556
Other income 23 8,556,144 4,552,067
Interest received - external investment 24 1,973,896 1,094,294
Total revenue from exchange transactions 155,560,419 131,785,077
Revenue from non-exchange transactions
Taxation revenue
Property rates 25 24,254,892 22,732,193
Transfer revenue
Government grants & subsidies 26 191,581,427 127,718,930
Public contributions and donations 1,514,640 10,095,201
Traffic fines 815,000 604,700
Total revenue from non-exchange transactions 218,165,959 161,151,024
Total revenue 373,726,378 292,936,101
Expenditure
Employee related costs 27 (90,715,359) (82,020,530)
Remuneration of councillors 28 (6,109,591) (5,740,464)
Depreciation and amortisation 29 (28,555,105) (27,207,087)
Impairment of assets 30 (919,449) (34,376)
Finance costs 31 (471,342) (2,984,053)
Debt Impairment 32 (20,859,851) (7,649,401)
Repairs and maintenance (2,545,834) (1,959,170)
Material and bulk purchases 33 (80,251,422) (69,052,191)
Contracted services 34 (12,782,426) (13,169,049)
Transfers and subsidies paid 35 (8,943,444) (6,771,990)
General expenses 36 (27,990,666) (23,265,325)
Total expenditure (280,144,489) (239,853,636)
Operating surplus 93,581,889 53,082,465
Gain (loss) on disposal of assets (1,026,472) (5,261)
Fair value adjustments 37 39,282,194 (5,183,372)
38,255,722 (5,188,633)
Surplus for the year 131,837,611 47,893,832
* See Note 51 & 42
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Umjindi Local Municipality
Audited Annual Financial Statements for the year ended June 30, 2016
Statement of Changes in Net Assets for the year ended 30 June 2016
Accumulated Total net
Figures in Rand surplus assets
Opening balance as previously reported 840,927,871 840,927,871
Prior period error adjustments (18,810,978) (18,810,978)
Balance at July 1, 2014 as restated* 822,116,893 822,116,893
Changes in net assets
Surplus for the year 47,893,832 47,893,832
Total changes 47,893,832 47,893,832
Restated* Balance at July 1, 2015 870,010,730 870,010,730
Changes in net assets
Surplus for the year 131,837,611 131,837,611
Total changes 131,837,611 131,837,611
Balance at June 30, 2016 1,001,848,341 1,001,848,341
See note 42 for prior period error adjustments disclosure
* See Note 51 & 42
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Umjindi Local Municipality
Audited Annual Financial Statements for the year ended June 30, 2016
Cash Flow Statement for the year ended 30 June 2016
Figures in Rand Note(s) 2016 2015
Restated*
Cash flows from operating activities
Receipts
Property rates 20,135,366 16,385,799
Sale of goods and services 119,252,004 109,112,620
Government grants & subsidies 187,245,000 133,503,434
Interest received - external investment 1,973,896 1,094,294
Other receipts 19,473,639 15,308,715
348,079,905 275,404,862
Payments
Employee costs (94,459,516) (84,409,940)
Suppliers (130,991,996) (123,518,834)
Finance costs (471,342) (2,984,053)
(225,922,854) (210,912,827)
Net cash flows from operating activities 38 122,157,051 64,492,035
Cash flows from investing activities
Purchase of property, plant and equipment 10 (115,880,270) (61,167,016)
Purchase of other intangible assets 11 (57,384) (60,045)
Net cash flows from investing activities (115,937,654) (61,227,061)
Cash flows from financing activities
Repayment of long term liabilities (681,610) (931,830)
Net cash flows from financing activities (681,610) (931,830)
Net increase/(decrease) in cash and cash equivalents 5,537,787 2,333,144
Cash and cash equivalents at the beginning of the year 9,666,554 7,333,410
Cash and cash equivalents at the end of the year 8 15,204,341 9,666,554
* See Note 51 & 42
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Umjindi Local Municipality
Audited Annual Financial Statements for the year ended June 30, 2016
Statement of Comparison of Budget and Actual Amounts for the year ended
30 June 2016
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 133,837,000 - 133,837,000 134,561,944 724,944 53.1
Rental of facilities and 1,359,000 - 1,359,000 669,651 (689,349) 53.2
equipment
Interest receivable- outstanding 2,120,000 - 2,120,000 6,605,705 4,485,705 53.3
debtors
Income from agency services 1,211,000 - 1,211,000 1,433,423 222,423 53.4
Licences and permits 1,790,000 - 1,790,000 1,759,656 (30,344) 53.5
Other income 6,101,000 - 6,101,000 8,556,144 2,455,144 53.6
Interest received - external 371,000 - 371,000 1,973,896 1,602,896 53.7
investment
Gains on disposal of assets 7,648,000 - 7,648,000 - (7,648,000)
Total revenue from exchange 154,437,000 - 154,437,000 155,560,419 1,123,419
transactions
Revenue from non-exchange
transactions
Taxation revenue
Property rates 18,604,000 - 18,604,000 24,254,892 5,650,892 53.8
Transfer revenue
Government grants & subsidies 71,408,000 - 71,408,000 191,581,427 120,173,427 53.9
Public contributions and - - - 1,514,640 1,514,640 53.10
donations
Traffic fines 267,000 - 267,000 815,000 548,000 53.11
Total revenue from non- 90,279,000 - 90,279,000 218,165,959 127,886,959
exchange transactions
Total revenue 244,716,000 - 244,716,000 373,726,378 129,010,378
Expenditure
Employee costs (91,518,000) - (91,518,000) (90,715,359) 802,641 53.12
Remuneration of councillors (7,463,000) - (7,463,000) (6,109,591) 1,353,409 53.13
Depreciation and amortisation (24,380,000) - (24,380,000) (28,555,105) (4,175,105) 53.14
Impairment of assets - - - (919,449) (919,449) 53.15
Finance costs (799,000) - (799,000) (471,342) 327,658 53.16
Lease rentals on operating lease - - - - -
Allowance for impairement of (16,294,000) - (16,294,000) (20,859,851) (4,565,851) 53.17
debtors
Repairs and maintenance (4,862,118) - (4,862,118) (2,545,834) 2,316,284 53.18
Material and Bulk purchases (71,721,000) - (71,721,000) (80,251,422) (8,530,422) 53.19
Contracted Services (12,466,000) - (12,466,000) (12,782,426) (316,426)
Transfers and Subsidies (8,375,000) - (8,375,000) (8,943,444) (568,444) 53.20
General Expenses (48,427,882) - (48,427,882) (27,990,666) 20,437,216 53.21
Transfer recognised: Capital 114,650,000 (2,114,000) 112,536,000 - (112,536,000)
Total expenditure (171,656,000) (2,114,000) (173,770,000) (280,144,489) (106,374,489)
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Umjindi Local Municipality
Audited Annual Financial Statements for the year ended June 30, 2016
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
Operating surplus 73,060,000 (2,114,000) 70,946,000 93,581,889 22,635,889
Gain/ (loss) on disposal of - - - (1,026,472) (1,026,472) 53.22
assets
Fair value adjustments - - - 39,282,194 39,282,194 53.23
- - - 38,255,722 38,255,722
Surplus before taxation 73,060,000 (2,114,000) 70,946,000 131,837,611 60,891,611
Actual Amount on Comparable 73,060,000 (2,114,000) 70,946,000 131,837,611 60,891,611
Basis as Presented in the
Budget and Actual
Comparative Statement
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