NW371 Moretele AFS 2019-20 unaudited

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Moretele Local Municipality
Annual Financial Statements
for the year ended 30 June 2020
Moretele Local Municipality
(Registration number NW371)
Annual Financial Statements for the year ended 30 June 2020
General Information
Legal form of entity Municipality in terms of section 1 of the Local Government: Municipal
Structures Act (Act No. 117 of 1998) read with section 155 (1) of the
Constitution of the Republic of South Africa (Act No. 108 of 1998)
Nature of business and principal activities The main business operations of the municipality is to engage in local
governance activities in terms of section 152 of the Constitution, which
includes planning and promotion of integrated development planning,
land, economic and environmental development and supplying of the
following services to the community: Waste management services (the
collection, disposal and purifying of waste, refuse and sewerage),
water services (supplying water to the public), and rates and general
services (all types of services rendered by the municipality, excluding
the supply of housing to the community, however including the rental
of units owned by the municipality to private entities).
Mayoral committee
Mayor MA Monaheng
Speaker TL Sekhaolela
Single Whip KJ Molefe
MPAC Chair MJ Kau
Exco Members JM Makwela
BM Mangema
NK Mleta
LA Motsepe
BD Sephelle
Councillors BW Baloyi
MM Chauke
PM Gwebu
TE Hlongwane
RME Kutume
SA Kutumela
RC Lekalakala
LM Letebele
PS Letlhabi
MG Madumo
SR Magalefa
ET Mahlangu
PP Mahlangu
GM Makhathulela
J Makhubela
JM Makwela
K Maluleka
BM Mangema
S Mathatho (Deceased June 2020)
MA Mathe
W Mavundla
DBS Mbekwa
NK Mleta
MC Moatshe
GM Modiba
SJ Modisa
SL Moekeletsi
JM Mohomana
LK Mokadi
SI Mokgara
KJ Molefe
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Moretele Local Municipality
(Registration number NW371)
Annual Financial Statements for the year ended 30 June 2020
General Information
SP Molomo
KO Moraka
EL Moselane
MJ Mosetlhe
ME Mosipa
MR Motsepe
MC Mphande
TT Ngobeni
S Nkwana
WM Ntseke
ZS Raletjena
MA Ramadi
CM Shai
D Sono
NR Tseke
Grading of local authority Grade 3
Demarcation code NW 371
Accounting Officer - (Acting) BT Makwela
Chief Financial Officer - (Acting) DB Klaas
Registered office 4065B Mathibestad
0404
Business address 4065B Mathibestad
0404
Postal address Private Bag X367
Makapanstad
0404
Bankers ABSA
First National Bank
Nedbank
Standard Bank
Auditors Auditor-General of South Africa
Attorneys Panel of attorneys for cost containment
Legislation governing the municipality's operations Constitution of the Republic of South Africa (Act No. 108 of 1996)
Division of Revenue Act (Act No. 4 of 2020)
Municipal Finance Management Act (Act No. 56 of 2003)
Municipal Property Rates Act (Act No. 6 of 2004)
Municipal Structures Act (Act No. 117 of 1998)
Municipal Systems Act (Act No. 32 of 2000)
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Moretele Local Municipality
(Registration number NW371)
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 council:
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
Accounting Policies 10 - 34
Notes to the Annual Financial Statements 35 - 77
ASB Accounting Standards Board
DBSA Development Bank of South Africa
GRAP Generally Recognised Accounting Practice
IFRS International Financial Reporting Standards
MFMA Municipal Finance Management Act (Act No. 56 of 2003)
SALGA South African Local Government Association
MIG Municipal Infrastructure Grant
MSIG Municipal Systems Improvement Grant
mSCOA Municipal Standard Chart of Accounts
WSIG Water Supply Infrastructure Grant
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Moretele Local Municipality
(Registration number NW371)
Annual Financial Statements for the year ended 30 June 2020
Accounting Officer's Responsibilities and Approval
The Accounting Officer is responsible for the preparation of the annual financial statements in terms of section 126(1) of the
MFMA. The Accounting Officer is required by the MFMA 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 were given
unrestricted access to all financial records and related data.
The annual financial statements have been prepared in accordance with Standards of GRAP including any Interpretations,
Guidelines and Directives issued by the ASB.
The annual financial statements are based upon appropriate accounting policies consistently applied and supported by
reasonable and prudent judgements and estimates.
I, as the Accounting Officer, acknowledge that Iam 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 me to meet
these responsibilities, I have set 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.
I am 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.
Ihave 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, Iam satisfied that the municipality has access to adequate resources to continue in operational existence for
the foreseeable future.
The municipality is wholly dependent on the community and government for continued funding of operations. The annual
financial statements are prepared on the basis that the municipality is a going concern and that the municipality has neither the
intention nor the need to liquidate or curtail materially the scale of the municipality.
I would like to bring the following matters to your attention:
I certify that the salaries, allowances and benefits of councillors, as disclosed in note 21 - Councillors remuneration 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 No. 20 of 1998) and the Minister of
Provincial and Local Government’s determination in accordance with the Act.
The annual financial statements set out on page 5 - 73 which have been prepared on the going concern basis, were approved
by the Accounting Officer on 31 October 2020 and were signed by:
BT Makwela
Accounting Officer - (Acting)
Mathibestad
Saturday, 31 October 2020
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Moretele Local Municipality
(Registration number NW371)
Annual Financial Statements for the year ended 30 June 2020
Statement of Financial Position as at 30 June 2020
Figures in Rand Note(s) 2020 2019
Restated*
Assets
Current Assets
Inventories 3 345 665 269 377
Operating lease asset 10 024 1 769
Receivables from exchange transactions 4&6 21 395 862 1 148 318
Receivables from non-exchange transactions 5&6 39 780 033 14 188 931
VAT receivable 1 436 970 -
Cash and cash equivalents 7 18 159 645 11 325 483
81 128 199 26 933 878
Non-Current Assets
Investment property 8 5 717 000 5 717 000
Property, plant and equipment and intangibles 9 1 186 440 714 1 131 863 550
Intangible assets 10 14 330 203 22 580 780
1 206 487 917 1 160 161 330
Total Assets 1 287 616 116 1 187 095 208
Liabilities
Current Liabilities
Finance lease obligation 11 15 029 181 24 540 241
Payables from exchange transactions 12 164 094 263 183 815 079
VAT payable - 2 592 386
Employee benefit obligation 13 1 169 000 126 000
Unspent conditional grants and receipts 14 4 184 597 2 433 662
184 477 041 213 507 368
Non-Current Liabilities
Finance lease obligation 11 - 15 028 999
Employee benefit obligation 13 4 983 000 5 693 000
Provision of Landfill site 15 9 025 726 8 917 435
14 008 726 29 639 434
Total Liabilities 198 485 767 243 146 802
Net Assets 1 089 130 349 943 948 406
Accumulated surplus 1 089 130 349 943 948 406
* See Note 34
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Moretele Local Municipality
(Registration number NW371)
Annual Financial Statements for the year ended 30 June 2020
Statement of Financial Performance
Figures in Rand Note(s) 2020 2019
Restated*
Revenue
Revenue from exchange transactions
Service charges 16 55 852 687 50 012 788
Rendering of services 9 653 16 375
Rental of facilities and equipment 80 235 228 714
Sale of goods 1 464 438 1 020 432
Operational revenue 17 993 549 1 821 562
Interest received 18 13 873 665 7 454 540
Actuarial gains 13 466 000 -
Total revenue from exchange transactions 72 740 227 60 554 411
Revenue from non-exchange transactions
Taxation revenue
Property rates 47 328 300 46 901 609
Transfer revenue
Government grants and subsidies 19 538 693 064 452 806 382
Public contributions and donations - 17 998 276
Fines, penalties and forfeits 1 340 875 635 470
Total revenue from non-exchange transactions 587 362 239 518 341 737
Total revenue 660 102 466 578 896 148
Expenditure
Employee related costs 20 (120 552 234) (115 030 888)
Remuneration of councillors 21 (20 085 922) (19 337 442)
Depreciation and amortisation (60 150 186) (66 280 531)
Impairment of assets 22 (8 611 535) (38 546 651)
Finance costs 23 (603 719) (2 039 184)
Bad debts written off (57 746 114) (40 658 357)
Bulk purchases 24 (33 811 561) (47 735 752)
Contracted services 25 (157 122 180) (160 133 232)
Loss on disposal of assets and liabilities (3 396 395) (10 042 783)
Actuarial losses 13 - (103 000)
Inventory consumed (791 707) (1 989 326)
General expenses 26 (56 294 636) (46 198 995)
Total expenditure (519 166 189) (548 096 141)
Surplus for the year 140 936 277 30 800 007
* See Note 34
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Moretele Local Municipality
(Registration number NW371)
Annual Financial Statements for the year ended 30 June 2020
Statement of Changes in Net Assets
Accumulated Total net
Figures in Rand surplus assets
Opening balance as previously reported 915 264 835 915 264 835
Adjustments
Prior year adjustments (refer note 33) (2 116 436) (2 116 436)
Balance at 01 July 2018 as restated* 913 148 399 913 148 399
Changes in net assets
Surplus for the year 30 800 007 30 800 007
Total changes 30 800 007 30 800 007
Restated* Balance at 01 July 2019 948 194 072 948 194 072
Changes in net assets
Surplus for the year 140 936 277 140 936 277
Total changes 140 936 277 140 936 277
Balance at 30 June 2020 1 089 130 349 1 089 130 349
* See Note 34
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Moretele Local Municipality
(Registration number NW371)
Annual Financial Statements for the year ended 30 June 2020
Cash Flow Statement
Figures in Rand Note(s) 2020 2019
Restated*
Cash flows from operating activities
Receipts
Sale of goods and services 58 707 259 38 088 916
Grants 540 443 999 454 800 276
Interest income 13 873 665 7 454 540
Other receipts 3 842 056 2 702 121
616 866 979 503 045 853
Payments
Employee costs (137 795 693) (127 760 069)
Suppliers (266 793 176) (233 446 625)
Finance costs (603 719) -
(405 192 588) (361 206 694)
Undefined difference compared to the cash generated from operations (66 531 627) 7 462 012
note
Net cash flows from operating activities 28 145 142 764 149 301 171
Cash flows from investing activities
Purchase of property, plant and equipment and intangibles 9 (113 709 632) (107 363 340)
Proceeds from sale of property, plant and equipment and intangibles 9 731 084 6 713 434
Purchase of intangible assets 10 (186 276) -
Net cash flows from investing activities (113 164 824) (100 649 906)
Cash flows from financing activities
Finance lease repayment (25 143 778) (49 613 706)
Net increase/(decrease) in cash and cash equivalents 6 834 162 (962 441)
Cash and cash equivalents at the beginning of the year 11 325 483 12 287 924
Cash and cash equivalents at the end of the year 7 18 159 645 11 325 483
* See Note 34
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Moretele Local Municipality
(Registration number NW371)
Annual Financial Statements for the year ended 30 June 2020
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
Statement of Financial Performance
Revenue
Revenue from exchange
transactions
Service charges 39 614 085 - 39 614 085 55 852 687 16 238 602
Rendering of services - - - 9 653 9 653
Rental of facilities and equipment 124 375 - 124 375 80 235 (44 140)
Sale of goods - - - 1 464 438 1 464 438
Operating revenue 2 542 997 - 2 542 997 993 549 (1 549 448)
Interest received 26 725 823 - 26 725 823 13 873 665 (12 852 158)
Total revenue from exchange 69 007 280 - 69 007 280 72 274 227 3 266 947
transactions
Revenue from non-exchange
transactions
Taxation revenue
Property rates 45 248 101 - 45 248 101 47 328 300 2 080 199
Transfer revenue
Government grants and 346 842 028 288 972 347 131 000 538 693 064 191 562 064
subsidies
Fines, penalties and forfeits - - - 1 340 875 1 340 875
Total revenue from non- 392 090 129 288 972 392 379 101 587 362 239 194 983 138
exchange transactions
Total revenue 461 097 409 288 972 461 386 381 659 636 466 198 250 085
Expenditure
Employee costs (142 823 078) - (142 823 078) (120 552 234) 22 270 844
Remuneration of councillors (22 978 021) - (22 978 021) (20 085 922) 2 892 099
Depreciation and amortisation (44 081 412) - (44 081 412) (60 150 186) (16 068 774)
Impairment of assets - - - (8 611 535) (8 611 535)
Finance cost (205 964) - (205 964) (603 719) (397 755)
Bad debts written off (47 832 519) - (47 832 519) (57 746 114) (9 913 595)
Bulk purchases (37 590 296) (6 000 000) (43 590 296) (33 811 561) 9 778 735
Contracted services (62 232 042) 13 834 535 (48 397 507) (157 356 230) (108 958 723)
General expenses (91 738 280) 4 877 004 (86 861 276) (56 852 293) 30 008 983
Total expenditure (449 481 612) 12 711 539 (436 770 073) (515 769 794) (78 999 721)
Operating surplus 11 615 797 13 000 511 24 616 308 143 866 672 119 250 364
Loss on disposal of assets and - - - (3 396 395) (3 396 395)
liabilities
Actuarial gains - - - 466 000 466 000
- - - (2 930 395) (2 930 395)
Surplus before taxation 11 615 797 13 000 511 24 616 308 140 936 277 116 319 969
Actual Amount on Comparable 11 615 797 13 000 511 24 616 308 140 936 277 116 319 969
Basis as Presented in the
Budget and Actual
Comparative Statement
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