Table Of ContentMtubatuba Local Municipality
Annual Financial Statements
for the year ended 30 June 2020
Mtubatuba Local Municipality
(Registration number KZN 275)
Annual Financial Statements for the year ended 30 June 2020
General Information
Legal form of entity Municipality
Nature of business and principal activities Operating as a Local Municipality
Executive Committee
Mayor Cllr. MC Zungu
Cllr NJ Mlambo- Deputy Mayor
Cllr MM Davies - Speaker
Councillors Cllr LM Mkwananzi
Cllr MQ Mkwananzi
Cllr V Ncamphalala
Cllr M Shobede
Cllr MA Gina
Cllr P Tembe
Cllr NG Khumalo
Cllr ZE Nyawo
Cllr JM Gumede
Cllr F Mpanza
Cllr S Shezi
Cllr RM Bukhoshi
Cllr SR Khumalo
Cllr M Ndlovu
Cllr N Zuma
Cllr V Madonsela
Cllr P Mkwananzi
Cllr S Sibiya
Cllr D Ntuli
Cllr Z Mhlongo
Cllr SJ Khoza
Cllr SM Khumalo
Cllr SM Gumede
Cllr P Msweli
Cllr R BB Mkwananzi
Cllr G Msane
Cllr M Mtethwa
Cllr A Mabika
Cllr P Ntshalintshali
Cllr J Lembede
Cllr T Zikhali
Cllr Z Mtethwa
Cllr K Mpontshana
Cllr M Govender
Cllr S Vilane
Cllr E Ntuli
Grading of local authority Grade 3
Accounting Officer Mr SR Ntuli
Chief Finance Officer (CFO) Mrs SQ Mntambo
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Mtubatuba Local Municipality
(Registration number KZN 275)
Annual Financial Statements for the year ended 30 June 2020
General Information
Accounting Officer Mr SR Ntuli
Registered office Lot 105 Inkosi Mtubatuba Road
Mtubatuba
3935
Business address Lot 105 Inkosi Mtubatuba Road
Mtubatuba
3935
Postal address P O Box 52
Mtubatuba
3935
Bankers First National Bank
Mtubatuba
Auditors Auditor General South Africa
Registered Auditors
Attorneys Ngubane & Associates
Nxumalo & Partners
Khathi & Mkhize Attorneys
Garlicke & Bosfield
Matthew Francis Attorneys
Miya Incorporated
Nompumelelo Hadebe Inc
Lalpasard Incorporated
Mdledle Incorporated
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Mtubatuba Local Municipality
(Registration number KZN 275)
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 4
Accounting Officer's Report 5 - 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 - 13
Accounting Policies 14 - 33
Notes to the Annual Financial Statements 34 - 66
COID Compensation for Occupational Injuries and Diseases
CRR Capital Replacement Reserve
DBSA Development Bank of South Africa
SA GAAP South African Statements of Generally Accepted Accounting Practice
GRAP Generally Recognised Accounting Practice
GAMAP Generally Accepted Municipal Accounting Practice
HDF Housing Development Fund
IAS International Accounting Standards
IMFO 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)
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Mtubatuba Local Municipality
(Registration number KZN 275)
Annual Financial Statements for the year ended 30 June 2020
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 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 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 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 accounting officer 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 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 municipality’s cash flow forecast for the year to 30 June 2021 and, in the light of this
review and the current financial position, heis satisfied that the municipality has or has access to adequate resources to
continue in operational existence for the foreseeable future.
The external auditorsare responsible for independently reviewing and reporting on the municipality's annual financial
statements. The annual financial statements have been examined by the municipality's external auditors and their report is
presented on page 5.
The annual financial statements set out on page 5, which have been prepared on the going concern basis, were approved by
the accounting officer on 31 October 2020 and were signed on its behalf by:
Mr SR Ntuli
Municipal Manager
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Mtubatuba Local Municipality
(Registration number KZN 275)
Annual Financial Statements for the year ended 30 June 2020
Accounting Officer's Report
The accounting officersubmitshis report for the year ended 30 June 2020.
1. Review of activities
Main business and operations
The municipality is engaged in operating as a local municipality and operates principally in South Africa.
The operating results and state of affairs of the municipality are fully set out in the attached annual financial statements and
do not in our opinion require any further comment.
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.
3. Subsequent events
The accounting officeris not aware of any matter or circumstance arising since the end of the financial year.
4. Accounting Officer's interest in contracts
The Accounting Officer has no interests in the contracts awarded during the year under review.
5. Accounting policies
Details to be input here...
The annual financial statements prepared in accordance with the South African Statements of Generally Accepted Accounting
Practice (GAAP), including any interpretations of such Statements issued by the Accounting Practices Board, and in
accordance with the prescribed Standards of Generally Recognised Accounting Practices (GRAP) issued by the Accounting
Standards Board as the prescribed framework by National Treasury.
6. Accounting Officer
The accounting officer of the municipality during the year and to the date of this report is as follows:
Name
Mr SR Ntuli
7. Corporate governance
General
The accounting officeris committed to business integrity, transparency and professionalism in all its activities. As part of this
commitment, the accounting officer supports the highest standards of corporate governance and the ongoing development of
best practice.
Executive mayor and Municipal Manager
The roles of Executive mayor and the Municipal Manager are separate, with responsibilities divided between them, so that no
individual has unfettered powers of discretion.
Remuneration
The upper limits of the remuneration of the Councillors and section 56 Managers of the municipality, are determined by the
Department of Co-operative governance and traditional affairs.
Internal audit
The municipality outsourced its internal audit function during the year under review.
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Mtubatuba Local Municipality
(Registration number KZN 275)
Annual Financial Statements for the year ended 30 June 2020
Accounting Officer's Report
The annual financial statements set out on page 5, which have been prepared on the going concern basis, were approved by
the accounting officer on 31 October 2020 and were signed on its behalf by:
Mr SR Ntuli
Municipal Manager
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Mtubatuba Local Municipality
(Registration number KZN 275)
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
Receivables from exchange transactions 1,293,028 640,533
Receivables from non-exchange transactions 8 1,350,186 11,728,923
VAT receivable 9 - 1,983,111
Consumer debtors 10 23,212,647 43,696,870
Cash and cash equivalents 11 34,828,855 47,248,103
60,684,716 105,297,540
Non-Current Assets
Investment property 3 32,082,001 32,082,000
Property, plant and equipment 4 447,803,253 416,212,410
Intangible assets 5 746,429 1,317,182
Heritage assets 6 1,104,835 1,104,835
481,736,518 450,716,427
Total Assets 542,421,234 556,013,967
Liabilities
Current Liabilities
Payables from exchange transactions 14 41,158,723 53,121,856
VAT payable 15 586,806 -
Consumer deposits 137,799 -
Unspent conditional grants and receipts 12 18,029,193 47,212,664
Provisions 13 5,296,874 6,346,966
65,209,395 106,681,486
Non-Current Liabilities
Employee benefit obligation 7 2,264,000 2,264,000
Provisions 13 22,861,771 20,889,332
25,125,771 23,153,332
Total Liabilities 90,335,166 129,834,818
Net Assets 452,086,068 426,179,149
Reserves
Revaluation reserve 47,841,911 27,598,810
Accumulated surplus 404,244,164 398,580,333
Total Net Assets 452,086,075 426,179,143
* See Note 38 & 37
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Mtubatuba Local Municipality
(Registration number KZN 275)
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 17 5,598,509 4,545,232
Rendering of services 392,780 1,879,105
Rental of facilities and equipment 524,096 280,968
Licences and permits 19 779,816 1,397,958
Other income 1,722 -
Interest received - investment 22 1,199,339 1,065,479
Total revenue from exchange transactions 8,496,262 9,168,742
Revenue from non-exchange transactions
Taxation revenue
Property rates 23 36,407,960 34,070,102
Interest, Dividends and Rent on Land 21 11,467,103 11,194,902
Transfer revenue
Government grants & subsidies 24 211,050,758 190,028,566
Fines, Penalties and Forfeits 18 1,556,127 1,575,412
Total revenue from non-exchange transactions 260,481,948 236,868,982
Total revenue 16 268,978,210 246,037,724
Expenditure
Employee related costs 25 (83,969,146) (83,891,876)
Remuneration of councillors 26 (16,274,780) (14,436,357)
Depreciation and amortisation 27 (29,294,598) (34,119,005)
Finance costs 28 (2,026,803) (3,202,556)
Lease rentals on operating lease 20 (2,822,098) (2,467,935)
Debt Impairment 29 (52,248,089) (12,441,361)
Contracted services 30 (52,127,342) (59,805,560)
Loss on disposal of assets and liabilities (1,574,049) (310,020)
General Expenses 31 (22,977,479) (42,854,693)
Total expenditure (263,314,384) (253,529,363)
Surplus (deficit) for the year 5,663,826 (7,491,639)
* See Note 38 & 37
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Mtubatuba Local Municipality
(Registration number KZN 275)
Annual Financial Statements for the year ended 30 June 2020
Statement of Changes in Net Assets
Revaluation Accumulated Total net
Figures in Rand reserve surplus assets
Opening balance as previously reported - 378,481,765 378,481,765
Adjustments
Correction of errors 27,598,810 27,590,207 55,189,017
Balance at 01 July 2018 as restated* 27,598,810 406,071,972 433,670,782
Changes in net assets
Surplus for the year - (7,491,639) (7,491,639)
Total changes - (7,491,639) (7,491,639)
Opening balance as previously reported 27,598,810 377,208,297 404,807,107
Adjustments
Correction of errors - 21,372,041 21,372,041
Restated* Balance at 01 July 2019 as restated* 27,598,810 398,580,338 426,179,148
Changes in net assets
Revaluation of Landfil site 20,243,101 - 20,243,101
Net income (losses) recognised directly in net assets 20,243,101 - 20,243,101
Surplus for the year - 5,663,826 5,663,826
Total recognised income and expenses for the year 20,243,101 5,663,826 25,906,927
Total changes 20,243,101 5,663,826 25,906,927
Balance at 30 June 2020 47,841,911 404,244,164 452,086,075
Note(s)
* See Note 38 & 37
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