Table Of ContentMoqhaka Local Municipality
Annual Financial Statements
for the year ended 30 June 2020
Moqhaka Local Municipality
Annual Financial Statements for the year ended 30 June 2020
General Information
Jurisdiction Number Municipal demarcation code FS201
Legal form of entity South African Category B Municipality (Local Municipality) as defined
by the Municipal Structures Act (Act no 117 of 1998).
Moqhaka Local Municipality is situated within the southern part of the
Fezile Dabi District in the Free State province. The seat of local
government is Kroonstad.
Nature of business and principal activities Moqhaka is a local municipality performing functions as set out in the
constitution (Act 105 of 1996).
Mayoral committee
Executive Mayor Phooko, P (Appointed: 24 May 2019)
Speaker Chakane,MS
Council Whip Khiba,SV
Members of the Mayoral Committee Green, MM
Kokami, KL
Magadlela, ZS
Manefeldt, ZJC
Mokoena, S
Moletsane, ER
Mpondo, VL
Rooskrans, B
Tladi, SB
Grading of local authority The Moqhaka Municipality is a grade 4 Local Authority in terms of
item IV of Government Notice R999 of 2 October 2001, published
in terms of the Remuneration of Public Office Bearers Act, 1998.
Accounting Officers Mqwathi, MS
Monyaki, SJ (Acting)
Chief Finance Officer (CFO) Marumo, T
Registered office Municipal Offices
Hill Street
Kroonstad
9499
Business address Municipal Offices
Hill Street
Kroonstad
9499
Postal address PO Box 302
Kroonstad
9500
Bankers ABSA Bank Limited
Auditor Auditor General of South Africa
Attorneys Du Randt & Louw
Majavu Incorporated
Poswa Incorporated
Tsotetsi & Mochunu Incorporated
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Moqhaka Local Municipality
Annual Financial Statements for the year ended 30 June 2020
General Information
Preparer The Chief Financial Officer
Members of council Baba, JM
Boeije, HME
Bolofo, LD
Dalton, CM
Geldenhuis, J
Hattingh, JM
Khasudi, D
Khunyeli, JM
Leboko, OA
Lithupa, MJ
Makae, HG
Makhanda, ML
Mahlatsi, MS
Mahlatsi, JR
Malejoane, AM
Marako, TJ
Mareka, J
Mntuze, ME
Mohoaladi, ME
Mpele, MPE
Mokotedi, MV
Muller, ND
Nhlapo, M
Nzunga, DN
Pietersen, ML
Pittaway, SH
Ramathibe, BS
Ramajoe,EL
Serapela, DJ
Thajane, MI
Van Schalkwyk, L
Viljoen, AH
Yho-Yho, M
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Moqhaka Local Municipality
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 provincial legislature:
Page
Accounting Officer's Responsibilities and Approval 5
Accounting Officer's Report 6
Statement of Financial Position 7
Statement of Financial Performance 8
Statement of Changes in Net Assets 9
Cash Flow Statement 10
Statement of Comparison of Budget and Actual Amounts 11
Accounting Policies 12 - 30
Notes to the Annual Financial Statements 32 - 78
The following supplementary information does not form part of the annual financial statements and is unaudited:
Appendixes:
Appendix A: Schedule of External loans 79
Appendix B: Analysis of Property, Plant and Equipment 82
Appendix C: Segmental analysis of Property, Plant and Equipment 88
Appendix D: Segmental Statement of Financial Performance 90
Appendix E: Actual versus Budget (Revenue and Expenditure) 92
Appendix F: Disclosure of Grants and Subsidies in terms of the Municipal Finance 95
Management Act
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Moqhaka Local Municipality
Annual Financial Statements for the year ended 30 June 2020
Index
COID Compensation for Occupational Injuries and Diseases
SCM Supply Chain Management
DBSA Development Bank of South Africa
EPWP Extended Public Works Programme
GRAP Generally Recognised Accounting Practice
MMC Member of Mayoral Committee
HDF Housing Development Fund
IAS International Accounting Standards
FMG Financial Management Grant
IPSAS International Public Sector Accounting Standards
COGTA Cooperative Governance and Traditional Affairs
MEC Member of the Executive Council
MFMA Municipal Finance Management Act
MIG Municipal Infrastructure Grant (Previously CMIP)
DWS Department of Water and Sanitation
IDP Integrated Development Plan
CIGFARO Chartered Institute of Goverment Finance, Audit and Risk Officers (Previously
known as IMFO
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Moqhaka Local Municipality
Annual Financial Statements for the year ended 30 June 2020
Accounting Officer's Responsibilities and Approval
The accounting officers are required by the Municipal Finance Management Act (Act 56 of 2003), to maintain adequate
accounting records and are 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 officers 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 Auditor-General is 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 officers acknowledge that they are 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
officers to meet these responsibilities, the accounting officers 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.
Based on the information and explanations given by management, the accounting officers are of the opinion 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.
The accounting officers have 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, they are satisfied that the municipality has or has access to adequate resources to
continue in operational existence for the foreseeable future.
I certify that the salaries, allowances and benefits of councillors as disclosed in note 32 of these annual financial
statements, are within the upper limits of the framework envisaged in Section 219 of the Constitution, read with the
Remuneration of Public Officer Bearers Act and the Minister of Provincial and Local Government's determination in
accordance with this Act.
The annual financial statements set out on page 7 to 75, which have been prepared on the going concern basis, were
approved by the accounting officers on 30 October 2020 and were signed on its behalf by:
Monyaki, SJ (Acting)
Accounting Officer
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Moqhaka Local Municipality
Annual Financial Statements for the year ended 30 June 2020
Accounting Officer's Report
The accounting officers submit their report for the year ended 30 June 2020.
1. Review of activities
Main business and operations
The municipality is a local authority providing municipal services and maintaining the best interest of the community in the
Moqhaka Municipal Area.
Net deficit of the municipality was R 205 149 883 (2019: deficit R 102 967 761).
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 business. The analysis of the going
concern is clearly depicted in note 51.
3. Subsequent events
The accounting officers are not aware of any matter or circumstance arising since the end of the financial year that could have
an impact on the annual financial statements, except for matters as outlined in note 52.
4. Accounting Officers' interest in contracts
The accounting officer Mr SM Mqwathi was charged during the 2018/19 financial year for irregular expenditure relating to one of
the appointed service provider.
5. Accounting policies
The financial statements have been prepared in accordance with the effective Standards of Generally Recognised
Accounting Practices (GRAP), including any interpretations and directives issued by the Accounting Standards Board and
in accordance with section 122 (3) of the Municipal Financial Management Act, (Act No. 56 of 2003).
6. Accounting Officers
The accounting officers of the municipality during the year and to the date of this report are as follows:
Name Nationality
Mqwathi, MS South African
Monyaki, SJ (Acting) South African
7. Auditor
Auditor General of South Africa will continue in office for the next financial period.
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Moqhaka Local Municipality
Annual Financial Statements for the year ended 30 June 2020
Statement of Financial Position as at 30 June 2020
Amounts in Rand Note(s) 2020 2019
Restated*
Assets
Current Assets
Cash and cash equivalents 3 5 343 218 8 574 172
Inventories 4 87 282 093 91 936 593
Investments 5 9 813 212 6 693 484
Receivables from exchange transactions 6 157 431 622 128 685 254
Receivables from non-exchange transactions 7 44 169 509 29 317 517
VAT receivable 18 42 270 866 46 492 654
346 310 520 311 699 674
Non-Current Assets
Heritage assets 8 7 761 921 7 761 921
Intangible assets 9 2 765 638 3 083 047
Investments 5 208 870 218 288
Investment property 10 93 227 881 92 529 032
Property, plant and equipment 11 2 049 880 753 2 120 064 194
Receivables from exchange transactions 6 3 312 982 4 599 798
Receivables from non-exchange transactions 7 359 575 574 207
2 157 517 620 2 228 830 487
Total Assets 2 503 828 140 2 540 530 161
Liabilities
Current Liabilities
Borrowings 14 1 721 457 1 597 911
Consumer deposits 12 13 022 242 13 582 234
Employee benefit obligations 19 7 214 125 6 602 082
Finance lease obligation 13 1 053 684 1 058 942
Payables from exchange transactions 15 529 019 925 423 299 737
Provisions 16 74 000 82 000
Unspent conditional grants and receipts 17 8 822 689 2 990 237
560 928 122 449 213 143
Non-Current Liabilities
Employee benefit obligation 19 38 585 197 42 508 000
Finance lease obligation 13 175 104 1 228 788
Borrowings 14 24 615 187 23 248 423
Provisions 16 124 231 920 63 889 329
187 607 408 130 874 540
Total Liabilities 748 535 530 580 087 683
Net Assets 1 755 292 610 1 960 442 478
Accumulated surplus 1 755 292 610 1 960 442 478
* See Note 49
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Moqhaka Local Municipality
Annual Financial Statements for the year ended 30 June 2020
Statement of Financial Performance
Amounts in Rand Note(s) 2020 2019
Restated*
Revenue
Revenue from exchange transactions
Fair value adjustments 43 1 091 779 132 752
Fees 27 1 128 743 1 270 859
Gains on employee benefit obligation 44 9 744 150 -
Interest received 28 31 633 534 26 763 213
Other income 29 21 727 346 17 979 427
Rental of facilities and equipment 26 3 059 999 6 636 146
Service charges 24 456 803 428 416 537 853
Total revenue from exchange transactions 525 188 979 469 320 250
Revenue from non-exchange transactions
Taxation revenue
Property rates 23 71 332 893 64 054 863
Transfer revenue
Fines 30 3 152 421 3 133 871
Government grants and subsidies 22 258 564 805 260 176 099
Public contributions and donations 25 - 7 738 310
Total revenue from non-exchange transactions 333 050 119 335 103 143
Total revenue 21 858 239 098 804 423 393
Expenditure
Bulk purchases 40 280 065 732 236 341 911
Contracted services 37 55 525 718 41 646 606
Depreciation and amortisation 34 114 617 489 113 428 526
Debt Impairment 33 91 487 353 108 856 709
Employee related costs 31 291 942 624 265 544 193
Finance costs 36 24 807 131 14 878 458
General Expenses 42 120 413 926 61 981 042
Grants and subsidies paid 39 2 513 160 46 149
Impairment loss on assets 35 2 270 788 429 940
Loss on disposal of assets 41 4 959 769 7 857 690
Remuneration of councillors 32 20 629 831 19 672 790
Repairs and maintenance 38 54 155 460 31 976 140
Loss on employee benefit obligation 44 - 4 731 000
Total expenditure 1 063 388 981 907 391 154
Deficit for the year (205 149 883) (102 967 761)
* See Note 49
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Moqhaka Local Municipality
Annual Financial Statements for the year ended 30 June 2020
Statement of Changes in Net Assets
Accumulated Total net
Amounts in Rand surplus assets
Balance at 01 July 2018 2 063 410 239 2 063 410 239
Deficit for the year (102 967 761) (102 967 761)
Total changes (102 967 761) (102 967 761)
Balance at 01 July 2018 as previously reported 1 959 346 889 1 959 346 889
Prior year adjustments (Refer Note 49) 1 095 604 1 095 604
Restated* Balance at 01 July 2019 as restated* 1 960 442 493 1 960 442 493
Deficit for the year (205 149 883) (205 149 883)
Total changes (205 149 883) (205 149 883)
Balance at 30 June 2020 1 755 292 610 1 755 292 610
* See Note 49
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