Table Of ContentMangaung Local Municipality Consolidated
Annual Financial Statements
for the year ended 30 June 2010
Mangaung Local Municipality Consolidated
Annual Financial Statements for the year ended 30 June 2010
General Information
Legal form of entity An organ of state within the local sphere of government exercising
legislative and executive authority.
Nature of business and principal activities Providing municipal services and maintaining the best interest of the
local community, mainly in the Mangaung area.
Jurisdiction of entity Area FS172, as a local municipality, as demarcated by the
Demarcation Board and indicated in the demarcation map published
for FS172.
Mayoral committee
Executive Mayor Mr FK Morule
Councillors
Speaker Councillor AT Stander
Deputy Executive Mayor Councillor MA Siyonzana
Councillor Members of The Mayoral Committee Councillor SKM Choene
Councillor KNL Makhanya
Councillor A Marais
Councillor NG Mokotjo
Councillor LS Moroka
Councillor NM Mzozana
Councillor FB Nzapheza
Councillor AN Phupha
Councillor CSK Sechoaro
Council Whip Councillor SM Sefuthi
Councillors of the Council Councillor NL Adoons
Councillor GM Bacela
Councillor FR Botes
Councillor PI Chobane
Councillor ME Dennis
Councillor GC Dithebe
Councillor JC Erasmus
Councillor SE Finger
Councillor GS Fouche
Councillor EK Goliath
Councillor JU Grobbelaar
Councillor MD Hlujane
Councillor W Horn
Councillor JS Human
Councillor TA Jacobs
Councillor TB Jacobs
Councillor DE Janse van Vuuren
Councillor CE Jenkinson
Councillor LR July
Councillor ZT Khi
Councillor MS Khutlane
Councillor JAA Lazenby
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Mangaung Local Municipality Consolidated
Annual Financial Statements for the year ended 30 June 2010
General Information
Councillor MJ Lephoi
Councillors of the Council (continued) Councillor SP Leraisa
Councillor TK Litabe
Councillor DG Lubbe
Councillor PP Machelebeta
Councillor TJ Makae
Councillor MM Makhele
Councillor BM Makoa
Councillor M Masoabi
Councillor MJ Matsoenslane
Councillor MA Mavuya
Councillor MB Mbange
Councillor TM Mfazwe
Councillor H Minnie
Councillor SO Mogorosi
Councillor BM Mohlouoa
Councillor ME Moilwa
Councillor LG Mokgothu
Councillor SG Moletsane
Councillor MR Mompati
Councillor TA Mophethe
Councillor B Motaung
Councillor KJ Mtshiwane
Councillor SS Nakedi
Councillor WT Nkikane
Councillor TS Nthako
Councillor GJ Olivier
Councillor JE Petersen
Councillor SD Phokoje
Councillor DJ Phuthi
Councillor XD Pongolo
Councillor JD Powell
Councillor JC Pretorius
Councillor MA Ramokone
Councillor FP Ramokotjo
Councillor TM Ramona
Councillor GK Saohatse
Councillor MA Seeco
Councillor E Snyman- Van Deventer
Councillor SN Soebehle
Councillor PM Somimi
Councillor SP Tanyane
Councillor AP Terblanche
Councillor AL Toba
Councillor MM Tsomela
Councillor PJJ Van Biljon
Councillor JP Van Der Merwe
Councillor R Van Der Merwe
Councillor AS Zerwick
Councillor NM Zophe
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Mangaung Local Municipality Consolidated
Annual Financial Statements for the year ended 30 June 2010
General Information
Grading of local authority High Capacity Municipality
Accounting Officer Mr. SJ Msibi
Chief Finance Officer (CFO) Mr. BR Taye
Registered office Bram Fisher Building
Cnr Nelson Mandela Street and Markgraaff street
Bloemfontein
9301
Business address Bram Fisher Building
Cnr Nelson Mandela Street and Markgraaff street
Bloemfontein
9301
Postal address P O Box 288
Bloemfontein
9300
Auditors The Auditor-General of South Africa
Attorneys Bezuidenhouts Attorneys
Bosiu Attorneys
EG Coopers Attorneys
Fourie Attorneys
Hill, McHardy & Herbst Attorneys
Kramer Weihmann & Joubert Attorneys
Mabalane Seobe Attorneys
NW Phalatsi & Partners Attorneys
Rosendorff Reitz Barry Attorneys
Van der Merwe & Sorour Attorneys
Vermaak & Dennis Attorneys
Debt collectors Messrs Alberts
Messrs Bezuidenhouts
Messrs Claude Reid
Messrs Hill, McHardy & Herbst
Messrs Matsepes
Messrs Naudes
Messrs Phatshoane Henne Inc
Messrs Rosendorff, Reits Barry
Messrs Stander, Venter & Kleynhans
Messrs Symington & De Kok
Messrs Thoabala Attorney
Messrs Van Wyk & Preller
Messrs Vermaak & Dennis
Messrs Vorster & Partners
Messrs Webbers
Messrs NICS (National Integrated Credit Solution)
Grading of local authority Mangaung Local Municipality is a Grade 5 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.
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Mangaung Local Municipality Consolidated
Annual Financial Statements for the year ended 30 June 2010
General Information
Relevant legislation The Constitution of the Republic of South Africa
The Municipal Structures Act 117 of 1998
The Municipal Systems Act 32 of 2000
The Municipal Finance Management Act 56 of 2003
The Municipal Property Rates Act 6 of 2004
The Basic Conditions of the Employment Act 75 of 1997
The Value Added Tax Act 89 of 1991
The Skills Development Act 9 of 1999
The Water Service Act 108 of 1997
The Housing Act of 1997
The Promotion of Access to Information Act 2 of 2000
The Disaster Management Act 57 of 2000
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Mangaung Local Municipality Consolidated
Annual Financial Statements for the year ended 30 June 2010
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 6
Accounting Officer's Report 7
Statement of Financial Position 8
Statement of Financial Performance 9
Statement of Changes in Net Assets 10
Cash Flow Statement 11
Accounting Policies 12 - 32
Notes to the Annual Financial Statements 33 - 90
Appendixes:
Appendix A: Schedule of External loans 91-92
Appendix B: Analysis of Property, Plant and Equipment 93-94
Appendix C: Segmental analysis of Property, Plant and Equipment 95
Appendix D: Segmental Statement of Financial Performance 96
Appendix E: Actual versus Budget (Revenue and Expenditure) 97
Appendix F: Disclosure of Grants and Subsidies in terms of the Municipal Finance 98-99
Management Act
Abbreviations
COID Compensation for Occupational Injuries and Diseases
DBSA Development Bank of South Africa
GRAP Generally Recognised Accounting Practice
HDF Housing Development Fund
IAS International Accounting Standards
IMFO The Institute of Municipal Finance Officers
IPSAS International Public Sector Accounting Standards
ME's Municipal Entities
MEC Member of the Executive Council
MFMA Municipal Finance Management Act
MIG Municipal Infrastructure Grant (Previously CMIP)
IFRS International Financial Reporting Standards
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Mangaung Local Municipality Consolidated
Annual Financial Statements for the year ended 30 June 2010
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 group 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 Generally Recognised Accounting
Practice (GRAP).
The 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 group and places considerable importance on maintaining a strong control environment. To enable the accounting officer to
meet these responsibilities, the he 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 group and all employees are required to maintain the highest ethical standards in ensuring the group’s business
is conducted in a manner that, in all reasonable circumstances, is above reproach. The focus of risk management in the group
is on identifying, assessing, managing and monitoring all known forms of risk. While operating risk cannot be fully eliminated,
the group 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 officerhas reviewed the group’s cash flow forecast for the year to 30 June 2011 and, in the light of this review
and the current financial position, he is satisfied that the group 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 group, he is supported by the group's
external auditors.
The external auditors are responsible for independently reviewing and reporting on the group's annual financial statements.
The annual financial statements have been examined by the group's external auditors and their report is presented on page 7.
The annual financial statements set out on pages 7 to 90, which have been prepared on the going concern basis, were
approved by the accounting officer on 30 September 2010 and were signed on behalf of the group by:
Mr. SJ Msibi
City Manager
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Mangaung Local Municipality Consolidated
Annual Financial Statements for the year ended 30 June 2010
Accounting Officer's Report
The accounting officersubmitshis report for the year ended 30 June 2010.
1. Review of activities
Main business and operations
The group is engaged in providing municipal services and maintaining the best interest of the local community, mainly in
the Mangaung area, and operates principally in South Africa.
The operating results for the year were satisfactory. The financial position of the group is also satisfactory.
Net surplus of the group was R302,397,991 (2009: surplusR193,291,058).
2. Going concern
We draw attention to the fact that at 30 June 2010, the group had an accumulated surplus of R 1,812,321,297 and that the
group's total assets exceed its liabilities by R3,396,324,392.
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 ability of the group to continue as a going concern is dependent on a number of factors. The most significant of these is
that the accounting officer continues to procure funding for the ongoing operations for the group.
3. Subsequent events
The accounting officer has evaluated the events after year end, and no matter or circumstance arising since the end of the
financial year will have an impact on the current annual financial statements.
4. Accounting Officer's interest in contracts
None.
5. Accounting policies
The annual financial statements have been prepared in accordance with Standards of Generally Recognised Accounting
Practice (GRAP) issued by the Accounting Standards Board in accordance with the Municipal Finance Management Act (Act
56 of 2003).
6. Accounting Officer
The accounting officer of the group, during the year and to the date of this report is, as follows:
___________________________
Mr. SJ Msibi
City Manager
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Mangaung Local Municipality Consolidated
Annual Financial Statements for the year ended 30 June 2010
Statement of Financial Position
2010 2009
Note(s) R R
Current Assets
Current portion of non-current receivables 7 14,060,235 3,922,453
Inventory 10 53,449,088 49,101,949
Other receivables from exchange transactions 11 78,258,916 79,757,987
Other receivables from non-exchange transactions 12 395,802 315,258
Consumer receivables from exchange transactions 13 315,544,995 256,477,220
Cash and cash equivalents 14 45,461,179 284,482,251
507,170,215 674,057,118
Non-Current Assets
Property, plant and equipment 4 4,222,094,411 2,790,755,113
Intangible assets 5 2,808,295 5,133,548
Investments 6 10,367 8,695
Non-current receivables 7 11,775,846 15,598,560
4,236,688,919 2,811,495,916
Total Assets 4,743,859,134 3,485,553,034
Liabilities
Current Liabilities
Current portion of non-current borrowings 21 1,976,260 1,785,058
Finance lease liability 22 1,916,360 1,769,870
Unspent conditional grants and receipts 23 232,726,540 419,121,478
Payables from exchange transactions 25 539,150,477 371,790,186
Payables from non-exchange transactions 26 3,660,624 3,251,757
VAT payable 27 68,184,606 55,472,888
Consumer deposits 28 63,476,048 57,408,625
911,090,915 910,599,862
Non-Current Liabilities
Defined benefit plan obligation 9 350,917,000 297,121,000
Non-current borrowings 21 10,517,383 12,493,642
Finance lease liability 22 723,766 1,518,500
Non-current provisions 24 74,285,678 69,859,875
436,443,827 380,993,017
Total Liabilities 1,347,534,742 1,291,592,879
Net Assets 3,396,324,392 2,193,960,155
Net Assets
Reserves
Housing development fund 15 11,202,948 21,376,064
Revaluation reserve 16 584,022,037 584,022,037
Mark-to-market reserve 17 7,832 6,160
Other NDR 18 899,850,291 -
Self insurance reserve 19 74,606,710 73,132,814
COID reserve 20 14,313,277 13,654,505
Accumulated surplus 1,812,321,297 1,501,768,575
Total Net Assets 3,396,324,392 2,193,960,155
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Mangaung Local Municipality Consolidated
Annual Financial Statements for the year ended 30 June 2010
Statement of Financial Performance
2010 2009
Note(s) R R
Revenue
Property rates 31 338,503,889 278,659,802
Service charges 32 1,382,717,567 1,090,396,508
Fines 1,385,004 4,733,684
Government grants and subsidies 33 858,670,800 716,894,915
Income for agency services - 191,255
Other income 34 39,804,666 97,138,138
Licences and permits 199,304 237,948
Interest earned 40 69,897,561 63,043,544
System upgrades 12,267,290 11,850,458
Rental of facilities and equipment 44 18,678,273 18,903,447
Services Southern Free State towns 7,930,867 6,447,068
Total Revenue 2,730,055,221 2,288,496,767
Expenditure
General expenses 35 314,190,031 195,646,604
Employee related costs 37 695,516,688 589,630,129
Remuneration of councillors and board members 38 22,283,203 20,639,076
Bad debts and provision for bad debts 39 93,235,427 256,960,387
Depreciation and amortisation 41 171,250,568 158,909,801
Finance costs 42 64,987,247 44,522,462
Repairs and maintenance 128,706,846 135,056,172
Contracted services 110,601,478 73,354,938
Grants and subsidies paid 45 7,557,577 6,316,663
Bulk purchases 46 819,161,107 614,193,567
Total Expenditure (2,427,490,172)(2,095,229,799)
(Profit)/Loss due to foreign exchange transactions (167,058) 24,090
Surplus for the period 302,397,991 193,291,058
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