Skip to main content

Full text of "KZN213 Umzumbe Audit Report 2016-17"

See other formats


Auditor-General of South Africa 


uMzumbe Municipality - audit report 

2016-17 




Report of the auditor-general to the KwaZulu-Natal Provincial 
Legislature and the council on the uMzumbe Municipality 


Report on the audit of the financial statements 


Opinion 

1. I have audited the financial statements of the uMzumbe Municipality set out on pages ... 
to .... which comprise the statement of financial position as at 30 June 2017, the 
statement of financial performance, statement of changes in net assets, cash flow 
statement and statement of comparison of budget information with actual information for 
the year then ended, as well as the notes to the financial statements, including a 
summary of significant accounting policies. 

2. In my opinion, the financial statements present fairly, in all material respects, the 
financial position of the uMzumbe Municipality as at 30 June 2017, and its financial 
performance and cash flows for the year then ended in accordance with the South 
African Standards of Generally Recognised Accounting Practice (SA Standards of 
GRAP) and the requirements of the Municipal Finance Management Act of South Africa, 
2003 (Act No. 56 of 2003) (MFMA) and the Division of Revenue Act of South Africa, 

2016 (Act No. 3 of 2016) (DoRA). 

Basis for opinion 

3. I conducted my audit in accordance with the International Standards on Auditing (ISAs). 
My responsibilities under those standards are further described in the auditor-general’s 
responsibilities for the audit of the financial statements section of this report. 

4. I am independent of the municipality in accordance with the international Ethics 
Standards Board for Accountants’ Code of ethics for professional accountants (IESBA 
code) and the ethical requirements that are relevant to my audit in South Africa. I have 
fulfilled my other ethical responsibilities in accordance with these requirements and the 
IESBA code. 

5. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a 
basis for my audit opinion. 

Other matters 

6. I draw attention to the matters below. My opinion is not modified in respect of these 
matters. 

Unaudited disclosure notes 

7. In terms of section 125(2)(e) of the MFMA, the municipality is required to disclose 
particulars of non-compliance with the MFMA in the financial statements. This disclosure 
requirement did not form part of the audit of the financial statements and, accordingly, I 
do not express an opinion thereon. 


1 



Unaudited supplementary schedules 


8. The supplementary schedules set out on pages xx to xx does not form part of the 
financial statements and is presented as additional information. I have not audited these 
schedules and, accordingly, I do not express an opinion thereon. 

Responsibilities of the accounting officer for the financial statements 

9. The accounting officer is responsible for the preparation and fair presentation of the 
financial statements in accordance with the SA Standards of GRAP and the 
requirements of the MFMA and DoRA, and for such internal control as the accounting 
officer determines is necessary to enable the preparation of financial statements that are 
free from material misstatement, whether due to fraud or error. 

10. In preparing the financial statements, the accounting officer is responsible for assessing 
the municipality’s ability to continue as a going concern, disclosing, as applicable, 
matters relating to going concern and using the going concern basis of accounting 
unless the intention is to liquidate the municipality or cease operations, or there is no 
realistic alternative but to do so. 

Auditor-general’s responsibilities for the audit of the financial statements 

11. My objectives are to obtain reasonable assurance about whether the financial 
statements as a whole are free from material misstatement, whether due to fraud or 
error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is 
a high level of assurance, but is not a guarantee that an audit conducted in accordance 
with the ISAs will always detect a material misstatement when it exists. Misstatements 
can arise from fraud or error and are considered material if, individually or in aggregate, 
they could reasonably be expected to influence the economic decisions of users taken 
on the basis of these financial statements. 

12. A further description of my responsibilities for the audit of the financial statements is 
included in the annexure to this auditor’s report. 


Report on the audit of the annual performance report 


Introduction and scope 

13. In accordance with the Public Audit Act of South Africa, 2004 (Act No. 25 of 2004) (PAA) 
and the general notice issued in terms thereof, I have a responsibility to report materia! 
findings on the reported performance information against predetermined objectives for 
selected objectives presented in the annual performance report. I performed procedures 
to identify findings but not to gather evidence to express assurance. 

14. My procedures address the reported performance information, which must be based on 
the approved performance planning documents of the municipality. I have not evaluated 
the completeness and appropriateness of the performance indicators included in the 
planning documents. My procedures also did not extend to any disclosures or assertions 
relating to planned performance strategies and information in respect of future periods 


2 



that may be included as part of the reported performance information. Accordingly, my 
findings do not extend to these matters. 

15.1 evaluated the usefulness and reliability of the reported performance information in 
accordance with the criteria developed from the performance management and reporting 
framework, as defined in the general notice, for objective 2 - basic service delivery and 
infrastructure development on pages x to x, presented in the annual performance report 
of the municipality for the year ended 30 June 2017. 

16.1 performed procedures to determine whether the reported performance information was 
consistent with the approved performance planning documents. I performed further 
procedures to determine whether the indicators and related targets were measurable 
and relevant, and assessed the reliability of the reported performance information to 
determine whether it was valid, accurate and complete. 

17.1 did not raise any material findings on the usefulness and reliability of the reported 
performance information for the basic service delivery and infrastructure objective. 

Other matters 

18.1 draw attention to the matters below. 

Achievement of planned targets 

19. The annual performance report on pages x to x includes information on the achievement 
of planned targets for the year and explanations provided for the under- or 
overachievement of targets. 

Adjustment of material misstatements 

20.1 identified material misstatements in the annual performance report submitted for 
auditing. These material misstatements were on the reported performance information of 
the basic service delivery and infrastructure objective. As management subsequently 
corrected the misstatements, I did not raise any material findings on the usefulness and 
reliability of the reported performance information. 


Report on the audit of compliance with legislation 


Introduction and scope 

21. In accordance with the PAA and the general notice issued in terms thereof, I have a 
responsibility to report material findings on the compliance of the municipality with 
specific matters in key legislation. I performed procedures to identify findings but not to 
gather evidence to express assurance. 

22.1 did not raise material findings on compliance with the specific matters in key legislation 
as set out in the general notice issued in terms of the PAA. 


3 



Other information 


23. The accounting officer is responsible for the other information. The other information 
comprises the information included in the annual report, which includes the mayor’s 
report and the municipal manager’s report. The other information does not include the 
financial statements, the auditor’s report and those selected objectives presented in the 
annual performance report that have been specifically reported on in the auditor’s report. 

24. My opinion on the financial statements and findings on the reported performance 
information and compliance with legislation do not cover the other information and I do 
not express an audit opinion or any form of assurance conclusion thereon. 

25. In connection with my audit, my responsibility is to read the other information and, in 
doing so, consider whether the other information is materially inconsistent with the 
financial statements and the selected objectives presented in the annual performance 
report, or my knowledge obtained in the audit, or otherwise appears to be materially 
misstated. 

26.1 did not receive the other information prior to the date of this auditor’s report. When J do 
receive and read this information, and if I conclude that it contains any material 
misstatements, I am required to communicate the matter to those charged with 
governance and request that the other information be corrected. If the other information 
is not corrected, I may have to retract this auditor’s report and re-issue an amended 
report as appropriate. If it is corrected, however, this will not be necessary. 


Internal control deficiencies 


27.1 considered internal control relevant to my audit of the financial statements, reported 
performance information and compliance with applicable legislation; however, my 
objective was not to express any form of assurance thereon. 

28.1 did not identify any significant deficiencies in internal control. 



Pietermaritzburg 
30 November 2017 



AUDITOR-GENERAL 
SOUTH AFRICA 


Auditing to build public confidence 


4 








Annexure - auditor-general’s responsibility for the audit 


1 As part of an audit in accordance with the ISAs, I exercise professional judgement and 
maintain professional scepticism throughout my audit of the financial statements, and the 
procedures performed on reported performance information for selected objectives and 
on the municipality’s compliance with respect to the selected subject matters. 

Financial statements 

2. In addition to my responsibility for the audit of the financial statements as described in 
the auditor’s report, I also: 

• identify and assess the risks of material misstatement of the financial statements 
whether due to fraud or error, design and perform audit procedures responsive to 
those risks, and obtain audit evidence that is sufficient and appropriate to provide a 
basis for my opinion. The risk of not detecting a material misstatement resulting 
from fraud is higher than for one resulting from error, as fraud may involve collusion, 
forgery, intentional omissions, misrepresentations, or the override of internal 
control. 

• obtain an understanding of internal control relevant to the audit in order to design 
audit procedures that are appropriate in the circumstances, but not for the purpose 
of expressing an opinion on the effectiveness of the municipality’s internal control. 

• evaluate the appropriateness of accounting policies used and the reasonableness 
of accounting estimates and related disclosures made by the council, which 
constitutes the accounting officer. 

• conclude on the appropriateness of the use of the going concern basis of 
accounting in the preparation of the financial statements by the council, which 
constitutes the accounting officer. I also conclude, based on the audit evidence 
obtained, whether a material uncertainty exists related to events or conditions that 
may cast significant doubt on the municipality’s ability to continue as a going 
concern. If I conclude that a material uncertainty exists, I am required to draw 
attention in my auditor’s report to the related disclosures in the financial statements 
about the material uncertainty or, if such disclosures are inadequate, to modify the 
opinion on the financial statements. My conclusions are based on the information 
available to me at the date of the auditor’s report. However, future events or 
conditions may cause a municipality to cease continuing as a going conoern. 

• evaluate the overall presentation, structure and content of the financial statements, 
including the disclosures, and whether the financial statements represent the 
underlying transactions and events in a manner that achieves fair presentation. 


5 


Communication with those charged with governance 

3. I communicate with the accounting officer regarding, among other matters, the planned 
scope and timing of the audit and significant audit findings, including any significant 
deficiencies in internal control that I identify during my audit. 

4. I also confirm to the accounting officer that t have complied with relevant ethical 
requirements regarding independence, and communicate all relationships and other 
matters that may reasonably be thought to have a bearing on my independence and, 
where applicable, related safeguards. 


6