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Renosterberg Local Municipality
(Registration number NC075)
Annual financial statements
for the year ended June 30, 2019
Renosterberg Local Municipality
(Registration number NC075)
Annual Financial Statements for the year ended June 30, 2019
General Information
Legal form of entity Municipality
Nature of business and principal activities Renosterberg Local Municipality is a local municipality performing the
functions as set out in the Constitution, Act 105 of 1996.
Mayoral committee
Executive Mayor Mr J Olifant
Councillors Mrs ME Bitterbos
Mr JJ Niklaas
Mrs SF Jantjies
ME EG Bekkers
Mr JMZ Posthumus
Mr H Booysen
Grading of local authority Category B as defined by the Municipal Structures Act, Act no.117 of
1998
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Accounting Officer Mr M Hoogbaard
Chief Finance Officer (CFO) ME G FSeptember (Acting)
Registered office 555 School Street
PAetrusville
8770
Business address RSchool Street
Petrusville
8770
Postal address D PO Box 112
Petrusville
8770
Bankers Standard Bank of South Afica Limited
Auditors Auditor-General South Africa
Attorneys Balden, Vogel & Vennote Inc
Sunil Narian Inc
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Renosterberg Local Municipality
(Registration number NC075)
Annual Financial Statements for the year ended June 30, 2019
General Information
Enabling legislation Municipal Finance Management Act (Act no. 56 of 2003)
Division of Revenue Act
The Income Tax Act (Act no. 58 of 1962)
Value Added Tax Act (Act no 89 of 1991)
Municipal Structures Act (Act no. 117 of 1998)
Municipal Systems Act (Act no. 32 of 2000)
Municipal Planning and Performance Management Regulations
Housing Act (Act no. 107 of 1997)
Skills Development Levies Act (Act no. 9 of 1999)
Employment Equity Act (Act no. 55 of 1998)
Unemployment Insurance Act (Act no. 30 of 1966)
Basic Conditions of Employment Act (Act no. 75 of 1997)
Supply Chain Management Regulations, 2005
Disaster Management Act of 2016
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Spatial Planning and Land Use Management Act (Act 16 of 2013)
Property Rates Act 6 of 2004
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Renosterberg Local Municipality
(Registration number NC075)
Annual Financial Statements for the year ended June 30, 2019
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
Statement of Financial Position 6
Statement of Financial Performance 7
Statement of Changes in Net Assets 8
Cash Flow Statement 9
Statement of Comparison of Budget and Actual Amounts 10 - 11
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Accounting Policies 14 - 42
Notes to the Annual Financial Statements 42 - 81
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COID Compensation for OcAcupational Injuries and Diseases
CRR Capital Replacement Reserve
DBSA Development BRank of South Africa
SA GAAP South African Statements of Generally Accepted Accounting Practice
GRAP GeneraDlly 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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Renosterberg Local Municipality
(Registration number NC075)
Annual Financial Statements for the year ended June 30, 2019
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 Tof 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
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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.
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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,
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assurance against material misstatement or deficit.
The accounting officer has reviewed the municipality’s cash flow forecast for the year to June 30, 2020 and, in the light of this
review and the current financial position, he is satisfied that the municipality has or has access to adequate resources to
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continue in operational existence for the foreseeable future.
Although the accounting officer are primarily responsible for the financial affairs of the municipality, they are supported by the
municipality's external auditors.
The external auditors are 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.
I certify that the remuneration of Councillors and in-kind benefits are within the upper limits of the framework envisaged in
Section 219 of the Constitution, read with the Remuneration of Public Office Bearers and the Minister of Corporative
Governance determination in accordance with this Act.
The annual financial statements set out on pages 5 to 81, which have been prepared on the going concern basis, were
approved by the accounting officer on December 11, 2020 and were signed on its behalf by:
Mr T Loko
Administrator
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Renosterberg Local Municipality
(Registration number NC075)
Annual Financial Statements for the year ended June 30, 2019
Accounting Officer's Report
The accounting officersubmitshis report for the year ended June 30, 2019.
1. Review of activities
Main business and operations
The municipality is engaged in providing municipal services and maintaining the best interest of the local community within the
Renosterberg municipal area and operates principally in South Africa.
Net surplus of the municipality was R4,446,126 (2018: deficitR20,438,727).
2. Going concern
We draw attention to the fact that at June 30, 2019, the municipality had an accumulated surplus of R404,200,434 and that the
municipality's total liabilities exceed its assets by R404,200,434.
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 aTnd that the realisation of assets and settlement of
liabilities, contingent obligations and commitments will occur in the ordinary course of business.
Furthermore management has reviewed the municipaltiy's cash flow forecast for the year ended 30 June 2018 and, in the light
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of this review and the current financial position, management is satisfied that the municipality has, or has access to, adequete
resources to continue it's operational existence for the foreseable future.
The municipality still has the ability to levy services, rates andA taxes and will continue to receive funding fro government as
evident from the Equitable Share allocations published in terms of the Division of Revenue Act (Act 1 of 2016).
For details of managements assumptions with respect to the municipality to the going concern assumption refer to note 42.
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3. Subsequent events
The accounting officeris not aware of any matter or circumstance arising since the end of the financial year.
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4. Accounting Officer's interest in contracts
No matters to report.
5. Accounting policies
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 Nationality Changes
Mr. S. Dick (Acting) South African Resigned Friday, 03 January 2020
Mr M Hoogbaard South Africa Appointed Monday, 06 January 2020
7. Auditors
Auditor-General South Africa will continue in office for the next financial period.
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Renosterberg Local Municipality
(Registration number NC075)
Annual Financial Statements for the year ended June 30, 2019
Statement of Financial Position as at June 30, 2019
Figures in Rand Note(s) 2019 2018
Restated*
Assets
Current Assets
Inventories 4 25,397 25,397
Other receivables from exchange transactions 5 323,567 323,567
Receivables from non-exchange transactions 6 2,322,503 568,180
VAT receivable 7 9,281,495 11,087,968
Receivables from exchange transactions 3 9,141,160 5,450,205
Cash and cash equivalents 2 673,798 -
21,767,920 17,455,317
Non-Current Assets
Investment property 8 25,151,884 25,151,884
Property, plant and equipment 9 508,473,347 500,547,535
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Intangible assets 10 271,991 271,991
533,897,222 525,971,410
Total Assets F 555,665,142 543,426,727
Liabilities
Current Liabilities A
Finance lease obligation 13 21,203 21,203
Payables from exchange transactions 15 118,191,505 109,854,235
Consumer deposits R 11 562,531 442,429
Employee benefit obligation 12 66,000 66,000
Unspent conditional grants and receipts 17 606,760 690,760
Provisions 16 - 2,243,288
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Long service awards 14 164,000 164,000
Bank overdraft 2 - 581,091
119,611,999 114,063,006
Non-Current Liabilities
Employee benefit obligation 12 1,209,000 1,209,000
Provisions 16 29,365,709 27,122,421
Long service awards 14 1,278,000 1,278,000
31,852,709 29,609,421
Total Liabilities 151,464,708 143,672,427
Net Assets 404,200,434 399,754,300
Accumulated surplus 18 404,200,434 399,754,300
* See Note 39
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Renosterberg Local Municipality
(Registration number NC075)
Annual Financial Statements for the year ended June 30, 2019
Statement of Financial Performance
Figures in Rand Note(s) 2019 2018
Restated*
Revenue
Revenue from exchange transactions
Service charges 19 10,796,232 12,205,484
Rental of facilities and equipment 20 476,942 393,459
Other income 21 87,543 41,442
Interest received - investment 22 - 226,267
Fair value adjustments - 249,029
Total revenue from exchange transactions 11,360,717 13,115,681
Revenue from non-exchange transactions
Taxation revenue
Property rates 23 3,657,550 3,535,661
Transfer revenue T
Government grants & subsidies 24 38,825,000 51,786,587
Fines, Penalties and Forfeits 3,000 11,916
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Total revenue from non-exchange transactions 42,485,550 55,334,164
Total revenue 25 53,846,267 68,449,845
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Expenditure
Employee related costs 26 (20,209,756) (19,618,788)
Remuneration of councillors 27 (2,877,580) (2,720,118)
Depreciation and amortisation R 28 (7,349,162) (15,354,694)
Impairment loss/ Reversal of impairments - (3,696,053)
Finance costs 29 (295) (10,167,818)
Debt Impairment D 30 (522,269) (9,798,892)
Repairs and maintenance 31 113,374 (196,238)
Bulk purchases 32 (7,145,772) (10,025,820)
Contracted services 33 (4,633,303) (8,868,178)
Actuarial losses - (513,669)
General Expenses 34 (6,775,378) (7,928,304)
Total expenditure (49,400,141) (88,888,572)
Surplus (deficit) for the year 4,446,126 (20,438,727)
* See Note 39
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Renosterberg Local Municipality
(Registration number NC075)
Annual Financial Statements for the year ended June 30, 2019
Statement of Changes in Net Assets
Accumulated Total net
Figures in Rand surplus assets
Balance at July 1, 2017 420,193,027 420,193,027
Restated* defcit for the year (20,438,727) (20,438,727)
Total changes (20,438,727) (20,438,727)
Restated* Balance at July 1, 2018 399,754,308 399,754,308
Deficit for the year 4,446,126 4,446,126
Total changes 4,446,126 4,446,126
Balance at June 30, 2019 404,200,434 404,200,434
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* See Note 39
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Renosterberg Local Municipality
(Registration number NC075)
Annual Financial Statements for the year ended June 30, 2019
Cash Flow Statement
Figures in Rand Note(s) 2019 2018
Restated*
Cash flows from operating activities
Receipts
Sale of goods and services 11,050,744 15,128,573
Grants 38,825,000 50,234,347
Interest income - 226,267
49,875,744 65,589,187
Payments
Employee costs (24,874,711) (20,184,741)
Suppliers (8,471,182) (25,475,446)
(33,345,893) (45,660,187)
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Net cash flows from operating activities 35 16,529,851 19,929,000
Cash flows from investing activities
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Purchase of property, plant and equipment 9 (20,341,930) (20,341,930)
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Cash flows from financing activities
Finance lease payments (47,857) (47,857)
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Net increase/(decrease) in cash and cash equivalents (3,859,936) (460,787)
Cash and cash equivalents at the beginning of the year (581,084) (120,295)
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Cash and cash equivalents at the end of the year 2 (4,441,020) (581,082)
* See Note 39
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