Auditor-General of South Africa
uMzumbe Municipality - audit report
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
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
5. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a
basis for my audit opinion.
6. I draw attention to the matters below. My opinion is not modified in respect of these
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.
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
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.
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.
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
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.
30 November 2017
Auditing to build public confidence
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.
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
• 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.
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.