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Report of the auditor-general to the Western Cape Provincial Parliament and the council on the Breede Valley Municipality Report on the financial statements Introduction 41. (hava audlted the Mandl statamenta of tha Breads Valley Municipaily set out on pages 8 to $8, which comprise “ha statamant af fancial postion a8 at 3D June 2016, the statement of nancial performance, statement of changes in net asset, cash flow statement and sletement of budget comparison for the year than ended, as well as the nates, comprising a summary of significant accaunting policies and other explanatory informstion. Accounting officer's responsibility for the financial statements 2. Tha accounting officer is responsible tor the preparation and fair presentation of these financial statements in aocortiance wth South Afican Standerde of Gorarally Recognised Accounting Practice (SA Standards of GRAP) and the requirements of the Municipal Finance Management Act of South Alri, 2003 {Ac No, 64 of 2003) (MFMA) and the DMslon ef Revenue Act of South Africa, 2016 (Act No, 4 of 2015) (DORA), and for such intemal control. as the accounting officer determinas is necessary to enable the preperation of financial statements that are free from material misstatement, whether us to fraud or eto, Auditor-general’s responsi ity 3. My respansibilly is 1a express an ppinion on these financial stalemants based on my audit, I conducted my audit in accardanea with International Standards on Auditing Those atandards require that | comply wilh ethical equirernents, and plan and perform (he audit 10 obtain reasonable assuranca aboul whether the financial stalerents are bee fram material misstatement, 4, An audi involves perfonming procedures to obtain audit evidence about the amounts fand disclosures in ha financial statements. The provedures selected depend on tha auditors judgement, including the assessment ofthe risks cf materal misstatement of the financial statements, whather due to fraud or errr, In making those risk ‘assessments, the auditor considers internal control ralovant tothe muricipalty's preparation and fair presentation ofthe fnanclal statements In otdor to design audit procedures that are appropriate in the circumstances, but nat for the purpose of ‘sxpracelng an opinion on the effectiveness ofthe municipality's internal contol An audit also includes evaluating tha approptalonase of accounting policies used and the reasonebianess of accounting estimates made by management, as wel as evaluating the overall presentation of the financial stators 5. [hallave that the audit evidence I have oblained is suffciont end appropriate to provide 1 basis for my audit opinion. Opinion ©. In my opinion, tha financial statements present fi, in all mlerial respects, the financial position ef the Breede Velley Municipaliy as at 30 June 2016 and Its financial performance aed cash flaws for tha year then ended, in accordance with SA Standarda Sf GRAP and the requirements of the MFMA and DoRA, Emphasts of matters 7. I drawr attention tothe matters beiow. My opinion is not modified in raspecl of hase matters, Restaternent of corresponding figures 8. Ag disclosed in nots 80 to the fnenclal statements, the corresponding figures for 30 June 2076 have been restated as a result of errars discovered during the 2018-16 financial year in the financial etstements of the municipal at, and forthe year fended, 30 June 2016. Material losses/impairments 9. As disclosed in nole 4 to the financial staternents, the municipality provided for the impairment of grass trace and other receivables from exchange ensections amounting t0 R975 milion, 10, As disclogad in nola § ta the financlat statomants, the municipality provided for the impairment of gross trade and ather receivables fram nor-exchenge transactions. amounting to R63.5 milion. Additional matters ‘11. [raw attention to the matters below. My opinion Is not madtfied n respect of these matters. Unaudited supplementary schedules 12, The supplementary infomallon set out on pagas 99 to 124 does not form past of the Tinanetalstaternents and is presented es additional information. | have nol audited thie, information and, scootdingly, | do not express an opinion thereon, Unaudited disclosure notes 418. In tems af section 125(2){6) of the MFMA, the municipally is required to disclose particulars of non-compliance with this legislation. This disclosure requirement cd not form part of he audit of the financial statements and, secordingly, Ido not expracs an opinion thereon. 414, In eccardancs with the Public Audit Act of South Africa, 2004 {Act Na. 25 of 2004) (PAA) and the general notice issued in terms thereat, | have a reaponetbliy to report findings on the reperied performance information againet pradaterminad objectives for selected ‘objectives presented In the annual performenee report, compliance with legistaion and Intomal control. The objective of my tests was to identify reportable ndings 2s deserved under each subheading, but not to gether evidence to express assurance on these matters. Accordingly, | da nol express an opinion or conclusion on these matters. Predetermined objectives 15. I parfarmed procedures to obtain evidence about the usefunees and reliably ef the reported performance information forthe following selected objectives presented in the annual performance report ofthe muricipalty forthe year ended 90 June 2016: + Strategic objective: to provide, maintsin and sasure basic serviese and anoura social uplifiment for the Brearte Velley community on pages 103 10 107 1 Strategic objective: to create an enabling environment for smpioyment and poverty eradication through proactive sconomic development ane tourism an. ages 102 to 103 + Strategic objective: ansure a sustainable future through sound financial management, continuous revenue grown, corporate governance and risk management practioas on pages 98 to 100 16. | evaluated the usefuiness ofthe reported performanca information to datermine ‘whathor il was consistent wih the planned objectives. | futher performad tests to dotermine whether indicators and targets were well defined, verifiable, speci, measurable, time bound and relevant, as required by the Nalonal Treasury's Framework for Managing Programme Perfomanca Information 17, | eseessed the rolabiity of the reported performance infarmation te determine whether it ‘was valid, acourate and complete, 418. | did not Kentify material findings on the usefulness and rellabllly of the reported performenae information lor ie Following abjectives: + Strategic abjectve: to provide, maintain and assure bacle services and soclal Uplitment for the Braadla Valley community © Strategic objective: to create an enabling environmen for employment and poverty eradication through proactiva ecanomlc devalopment and touriem. + Strategic objective: assure a sustainable future through sound financial management, continuous revenue growth, comorale govemanca and risk management prectioas Additional matters 19. Although | identified no material findings on the usefulness and retiailly of tha reported Performance Information forthe ealectad objectives, | draw attention tothe following mauers: Achievement of planned targets 20. Refer to the annual performance report an pages 88 ta 197 for Infomation on the ‘achievement of the planned targets forthe year Adjustment of material misstatements 21. | idantiled material misstatements in the annual performance report submited for audling, These material misstalamonts mers on the reported performance information for stratogic objective: to provide, maintain and assure basic services and social upliftment for the Breeds Valley community; strategic objectva: to create an enabling lervirorment for employment and poverty eradication through proselive economic development and tourism, and strategic objective: assure a sustainable future through sound financial management, continuous revenue growth, corporete govemance and Fisk management praciicas. As management subsequenlly corracted the misstatements, | didnot ratze any material findings on the usefulness and reliability of tha reported perforata information. Compliance with legislation 22. | performed procedures to obtain evidenos that the municipality had complied with applicable legislation regarding financial matters, nanciel mansgamnent anv other related matters. I did notidentty any instances of malerial non-compliance wth specie mmallers in kay lagistaton, as set cut in the general notice issued in terms of the PAA. Internal control 23, | considered Internal control relevant to my audit of tha financial statements, annual performance report and compliance with legletation. I dk not dently any significant deficiencies in internal contol Other reports 24. | draw attention to the folowing engagement that could potentially have an impact on the municipalty’s nancial, nerfomnance and earmpliance-relsted matters. My opinion is not modified in respect ofthis engagement that Is progress, Investigations 25. An investigation initated by the munleipallly into allagations of the misappropriation of hevilage assets, as reported in the 2013-14 and 2014-18 aud roports, was stl in progress. The invasiigation was handed over to the Soulh African Palice Service for further investigation. Naditer- Generel Cape Town 30 Noveriber 2016 gt bail pute ances