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Tswelopele Local 
Municipality 

Draft Annual Report 
2012 / 2013 





TSWELOPELE LOCAL MUNICIPALITY 


" A municipality in progress" 


Page 2 


TABLE OF CONTENTS 


A- CHAPTER 1: Mavor's Foreword and Executive Summarv 

1. Mayor's Foreword 

2. Municipal Overview 

3. Municipal Functions, Population and Environmental Overview 

Page 5-11 

B- CHAPTER 2: Governance 

1. Political Governance Structure 

2. Administrative Governance Structure 

3. Intergovernmental Relations 

4. Public Accountability and Participation 

5. Corporate Governance 

Page 12 -21 

C- CHAPTER 3: Service Deliverv Performance 

1. Departmental Key Service Delivery Performance Flighlights 

Page 22-46 

D- CHAPTER 4: Oraanizational Develooment Performance fll^ 

1. Municipal Workforce 

2. Managing Municipal Workforce Levels 

3. Capacitation of the Municipal Workforce 

4. Management of Staff Expenditure 

Page 47-59 

E- CHAPTER 5: Financial Performance 

1. Statement of Financial Performance 

2. Spending Against Capital Budget 

3. Cash Flow Management and Investments 

4. Other Financial Matters 

Page 60 -65 

F- CHAPTER 6: Auditor-General Audit Findinas 

1. Auditor-General Report 

2. Municipality's Audit Action plan 

Page 66 -80 

Glossary of terms 

Page 81-82 

G- APPENDICES DESCRIPTIONS 

Page 83 


Page 3 


1. APPENDIK A; COUNCILLORS; COMITTEES ALLOCATION AND COUNCIL ATTENDANCE 

2. APPENDIK B: COMMITEES AND COMMITTEE PURPOSES 

3. APPENDIK C: THIRD-TIER ADMINISTRATIVE STRUCTURE 

4. APPENDIK D: FUNCTIONS OF A MUNICIPALITY 

5. APPENDIK E: WARD REPORTING 

6. APPENDIK F: WARD INFORMATION 

7. APPENDIK G: RECOMMENDATIONS OF THE MUNICIPAL AUDIT COMMITTEE 2012/13 

8. APPENDIK H: LONG TERM CONTRACTS AND PUBLIC-PRIVATE PARTNERSHIPS 

9. APPENDIX I: MUNICIPAL ENTITY/SERVICE PROVIDER PERFORMANCE SCHEDULE 

10. APPENDIKJ: DISCLOSURES OF FINANCIAL INTEREST 

11. APPENDIK K(I) : REVENUE COLLECTION PERFORMANCE BYVOTE 

12. APPENDIK K (II) : REVENUE COLLECTION PERFORMANCE BY SOURCE 

13. APPENDIK L: CONDITIONAL GRANTS RECEIVED EXCLUDING MIG 

14. APPENDIX M (I): CAPITAL EXPENDITURE - NEW & UPGRADE/RENEWAL PROGRAMMES 

15. APPENDIX M (II): CAPITAL EXPENDITURE - UPGRADE/RENEWAL PROGRAMME 

16. APPENDIX N - CAPITAL PROGRAMME BY PROJECT YEAR 

17. APPENDIX 0 - CAPITAL PROGRAMME BY PROJECT BY WARD YEAR 

18. APPENDIX P- SERVICE BACKLOGS EXPERIENCED BY THE COMMUNITY WHERE ANOTHER SPHERE IS 
RESPONSIBLE FOR SERVICE PROVISION 

19. APPENDIX Q - DECLARATION OF LOANS AND GRANTS MADE BY THE MUNICIPALITY 

20. APPENDIX R - ANNUAL FINANCIAL STATEMENTS 


Page 4 


CHAPTER 1 

COMPONENT A: MAYOR'S FOREWORD 

The Annual Report is compiled in line with Section 45 of the Municipal Systems Act, 2000 [Act 32 
of 2000] and Section 21 of the Municipal Finance Management Act, 2003 [Act 56 of 2003]. The 
performance of Tswelopele Local Municipality is described in the Annual Report and annual 
financial statements. We therefore believe that this report will serve to enhance public 
accountability and transparency in the affairs of the municipality. 

The mission of the municipality is to be accountable, transparent and to be non-racial 
municipality that promotes economic development and provides sustainable services and 
improves the quality of life in the community, and we are currently striving to achieve this with 
limited resources at our disposal. 

In order to significantly contribute to the economy through our activities in line with the 
Provincial Growth and Development Strategy, we would need to step up our performance on 
what we have achieved and put corrective measures where we have not lived up to expectations. 
To this, we shall re-channel resources both human and financial where they are needed most. 
The Auditor General's report instructs our administration to put more effort in order to properly 
manage state resource. We are hopeful that we will move towards improvement in this regard. 

We committed ourselves as public servants to provide our community with quality services so as 
to eradicate unemployment, inequality and poverty at all levels. 

When the municipality considers and deliberates on any issue, it holds open sessions to which 
members of the public and stakeholders are invited to submit their views and comments so as to 
identify the needs of the community including prioritization of those needs. The views of the 
community on strategies, programmes and services are addressed through the Integrated 
Development Plan for the purpose of helping the Council. The public and other stakeholders are 
invited by means of the distribution of flyers, pamphlets, loud-hailing and or announcements at 
public meetings. 

I take this opportunity to thank the hard working staff led by the Municipal Manager, my 
colleagues and fellow Councillors, my church and family as well as the community of 
Tswelopele who have supported us and made these milestones achievable. Together we can 
work faster and smarter and must do more to make Tswelopele a better place for all who live in 
it. 


Signed by: 

MAYOR: CLR. M.E. MATHIBE 


Page 5 



1.1 MUNICIPAL MANAGER'S OVERVIEW 


During the preparation of this annual report, various legislative requirements were adhered to. I 
have also considered the importance of reliability, usefulness and relevance of the annual 
financial statements and performance information as contained herein. Section 121(3) of the 
Municipal Finance Management Act 2003, read together with section 46 of the Municipal 
Systems Act 2000, prescribes the minimum contents of an annual report of a municipality. 

This Annual Report therefore provides an authoritative record of the activities of Tswelopele 
Local Municipality that we embarked on during the 2012/13 financial year. The report presents 
us with an opportunity to reflect on our achievements since the last reporting period, and also to 
provide a detailed account of our performance as the municipality against our strategic plans 
and resources that were at our disposal for the period of 2012/13. 

The Integrated Development Plan (IDP), Budgets, Service Delivery and Budget Implementation 
Plans (SDBIP's), Performance Plans and Agreements of section 57 managers, still remains the key 
service delivery planning tools that we have to utilize in an effort to deliver sustainable services 
to our communities. 

In order to achieve the vision of the municipality we endeavour to align our planning with 
policy priorities adopted by the National and Provincial Governments, as well as ensuring that 
there is alignment of programs between ourselves, the District, Provincial and National 
Government. The alignment with 5 National Key Performance Areas was adopted and 
incorporated into our plans during the planning period. 

I undertook the initiative to review the municipal organizationaI structure in order to achieve the 
efficiency and effectiveness towards delivering the services to our communities. Various critical 
positions will be filled in the financial year 2013 / 14. The municipality has received a financially 
unqualified audit opinion with other matters and an action plan has been put in place to address 
the deficiencies identified. Positive strides have been towards ensuring that the municipality 
receives a clean audit outcome going forward. 

The functionality of the audit committee has been instrumental in the achievement of unqualified 
audit opinion. The committee adhered to their meeting schedule and frequently advised the 
municipality on matters of financial and non-financial. Various corporate related policies were 
developed, reviewed and approved for implementation to enhance the internal controls. 

The Budget and Treasury office worked tirelessly to ensure that it curbs any form of financial 
mismanagement. Compliance with all the reporting requirements have been adhered to 
including the reporting on grants received. The municipality acknowledges that, a lot of work 
still needs to be done in improving revenue collection. 


Page 6 


In the previous reporting period, we identified a number of initiatives that should be targeted for 
the implementation in this reporting period. Key to these initiatives were the programmes 
relating to economic sustainability and the creation of a conducive environment for economic 
activities to uplift the economy of the municipal jurisdiction. 

As the Municipal Manager of this institution, I hereby wish to extend my appreciation to the 
Mayor for her visionary leadership, the Speaker, all Councillors, the hardworking management 
team and all dedicated officials for their unwavering support. 


Signed by: 

MUNICIPAL MANAGER: MR. TL MKHWANE 


Page 7 


1.2 MUNICIPAL FUNCTIONS, POPULATION AND ENVIRONMENTAL OVERVIEW 
BACKGROUND DATA 

Tswelopele Local Municipality performs some of the functions outlined in Schedules 4 and 5 of 
the Constitution of the Republic of South Africa Act. 91,9% of our population that have access to 
basic level of electricity (10 Amps connection); 76,72% access to basic level of waste removal and 
76,82% access to basic level of sanitation. The majority of our roads are gravel roads that we 
maintain regularly depending on the availability of equipment and resources. The maintenance 
referred to above includes storm-water drainage, public lighting and patching of pot-holes. 
Other services such as library and environmental health are rendered by the District 
Municipality. 

1.2.1 DEMOGRAPHIC PROFILE 

Tswelopele Municipality is 6 506, 68 square kilometres in extent. The demographic profile of the 
municipality according to the most recent information available is shown in the table below: 



1996 - Stats SA 

2001- Stats SA 

2011-Stats SA 

No. of households 

12 623 

12 624 

11 992 

Average people 

4,40 

4,2 

4 

Total population 

58 858 

55 591 

47 625 


The key statistics mentioned above as reflected in Census 2001 are shown to place the 
municipality's performance in the proper context. The net population decreased in the 
municipality between 1996 and 2001 was 2 318 people (1 110 households). 

According to the graph below, the population number in the municipality appears to decline, 
recording a marginal decline of 1.2% over 2001 to 2011. The number of households has declined 
from 12 624 in 2001 to 11 992 in 2011. The cause of the decline has to be investigated as it is 
dangerous to assign reasons that have not been properly tested and interrogated. 


Page 8 


Households 


Population 


56000 1 
54000 - 
52000 - 
50000 - 
48000 - 
46000 - 
44000 -■ 


53 714 



2001 


47 625 



2011 


12500 

12400 

12300 

12200 

12100 

12000 

11900 

11800 

11700 



2001 


11992 



2011 


■ Tswelopele 


■ Tswelopele 


Source: Statistics SA, Census 2011 


1.2.2 ECONOMIC PROFILE 

There is a contention that "negative growth in the agricultural sector can be attributed to a 
number of factors including drought, precarious weather conditions, and market conditions. 
There are other factors causing a large percentage of commercial farmers to experience financial 
problems. Most farmers are also mechanizing their operations, which is causing job losses and 
migration to urban areas. As the economies of the smaller towns are based on businesses 
supporting agriculture, the business climate of the smaller towns is showing negative trends" 
(source: web.ndmc.gov.za/ profiles/fs). 

The above observation equally applies to Tswelopele Community, the struggling farming 
situation does not only create job losses and migration to Bultfontein and Hoopstad, but also 
puts a lot of pressure on services such as water usage and waste water disposal facilities. 


1.2.3 TOURISM 

It is reported that tourism in this area is suppressed because the area lacks natural attractions and 
also because the tourism infrastructure of the area is highly underdeveloped and will need 
substantial upgrading before any serious attempts towards tourism promotion is done. Despite 
the above there is potential to develop tourism in specific areas like eco-tourism, game farming 
and cultural tourism (source: web.ndmc.gov.za/profiles/fs). 


1.3 SERVICE DELIVERY OVERVIEW 

We continue to ensure that the highest standards of services are provided to our community 
despite of a number of challenges that we face including financial constraints. We are mindful of 
the fact that it is almost impossible to deal with back-logs in all aspects of service delivery. This is 
mainly so because as the municipality addresses the current back-logs, the existing infrastructure 
needs to be maintained and upgraded and both of these exercise (covering the back-logs and 
maintaining the existing infrastructure) need financial attention. 


Page 9 


1.4 FINANCIAL HEALTH OVERVIEW 


The population of the Municipality is dominated by indigent, unemployed and poor households. 
As a result the municipality's revenue is based on the limited contribution from part of the 
community that can pay for the services that they receive and mainly on the Equitable Share 
received from National Treasury. The bigger portion of our operating and capital expenditure 
derives from Grants, Equitable Share and allocations by the District Council. 


Total Capital Expenditure: 2011/2012 to 201!yi3 

Detail 

2010A1 

imjii 

201^13 

Original Budget 

18 790 000 

20 799 000 

35 571 000 

Adjustment Budget 

- 

- 

35 571 000 

Actual 

18 790 000 

14 323 109 

35 571 000 



CAPITAL EXPENDITURE: 

Comparison of the capital budget over three financial years (2011/12 - 2012/13) shows a steady 
increase, albeit on a smaller scale. 


1.5 ORGANISATIONAL DEVELOPMENT OVERVIEW 
ORGANISATIONAL DEVELOPMENT PERFORMANCE 

Tswelopele Municipality continues to maintain a steady workforce. This happens despite the size 
of our municipality and the ability of our municipality to attract competent individuals who are 
knowledgeable and possess the necessary working experience. 


1.6 AUDITOR GENERAL REPORT 

The municipality obtained a financially unqualified audit opinion from the Auditor General for 
the 2012/13 financial year. This was made possible by the hardworking personnel and the 
introduction of control systems. Determination and dedication on addressing matters contained 
in the action plan also assisted in realizing this outcome. However the municipality is striving 
towards a clean audit. 


Page 10 


1.7 STATUTORY ANNUAL REPORT PROCESS 


Below is an exposition of the processes that must be followed in order to comply with the 
compilation of the Budget; review of the IDP; submitting monthly and quarterly reports; 
preparation of the performance Report, Annual Financial Statements and annual Report: 


No 

Activity 

Timeframe 

1 

Consideration of next financial year's Budget and IDP process plan. Except for the 
legislative content, the process plan should confirm in-year reporting formats to 
ensure that reporting and monitoring feeds seamlessly into the Annual Report 
process at the end of the Budget/IDP implementation period. 

July 

2 

Implementation and monitoring of approved Budget and IDP commences (In-year 
financial reporting). 


3 

Finalise 4* quarter Report for previous financial year 


4 

Submit draft 2012/13 Annual Report to Intemal Audit and Auditor-General 


5 

Audit/Performance committee considers draft Annual Report of the mimicipality 


6 

Mayor tables the unaudited Annual Report 


7 

Municipality submits draft Annual Report including annual financial statements 
and performance report to Auditor General. 

August 

8 

Annual Performance Report as submitted to Auditor General to be provided as 
input to the IDP Analysis Phase 



Auditor General assesses draft Annual Report including Annual Financial 

September 
- October 

9 

Statements and Performance data 

10 

Municipalities receive and start to address the Auditor General's comments 


11 

Mayor tables Annual Report and audited Financial Statements to Council 
complete with the Auditor- General's Report 

November 

12 

Audited Annual Report is made public and representation is invited 


13 

Oversight Committee assesses Annual Report 


14 

Council adopts Oversight report 


15 

Oversight report is made public 

December 

16 

Oversight report is submitted to relevant provincial councils 


17 

Commencement of draft Budget/ IDP finaIization for next financial year. Annual 
Report and Oversight Reports to be used as input. 

January 


THE ANNUAL REPORT PROCESSES 

Compliance with the above process is important in that it creates predictability, uniformity and 
stability. If this is not strictly adhered to, synergy between the various steps and processes will 
not be created. This also serves as a good management tool in that it mandates what processes 
should be implemented at what stage. For Tswelopele Municipality to meet the timelines 
mentioned above, most of the items have been included in the Performance Plans of Senior 
Managers as deliverables. 


Page 11 


CHAPTER 2 

GOVERNANCE 

Matters of govemance are taken very seriously by all structures within the Municipality. The 
relationship between Politicians and the Administration is very good. Although each structure 
understands and appreciates its own roles and those of others, a culture of co-operation and 
consultation is the order of the day. Key role-players in the Municipality believe in the principle 
of Co-operative governance as stipulated in section 41 of the Constitution. The relationship 
between Tswelopele Municipality and Provincial Government, Department of Co-operative 
Governance and Traditional Affairs (COGTA) and the District Municipality is very good. Their 
inputs and assistance to our municipality is invaluable. The different spheres of government 
meet regularly through the Inter-Governmental Relations Meetings convened to discuss matters 
of mutual interest. Tswelopele Municipality receives the necessary support in an effort to 
strengthen our capacity as prescribed by Section 154(1) of the Constitution. 

POLITICAL AND ADMINISTRATIVE GOVERNANCE 

The Tswelopele Local Municipality is a Collective Executive System combined with a Ward 
Participatory System (according to section 9 (b) of the Municipal Structures Act, 1998 (Act 117 of 
1998) with the Council as the highest decision making body. Both the legislative and executive 
authority of the Municipality is vested in Council. The Municipality is a Category B Municipality 
as outlined by Section 155 of the Constitution. The Municipal Manager is the head of the 
administration and also the accounting officer and reports to both the Mayor and the Council. 

2.1 POLITICAL GOVERNANCE 

INTRODUCTION TO POLITICAL GOVERNANCE 

The Mayor is the key figure in the Municipality in terms of section 52 of the Municipal Finance 
Management Act (MFMA), Act 56 of 2003. She is the Chairperson of the Executive Committee 
(EXCO) that is responsible for receiving reports from various Section 80 Committees of Council 
and makes recommendations to Council as determined by Section 49 of the Municipal Structures 
Act, 1998 (Act 117 of 1998. The Speaker is the Chairperson of Council and performs function as 
stipulated in Section 37 of the Municipal Structures Act, 117 of 1998. 


Page 12 



THE POLITICAL STRUCTURE 


The Political Structure of the Council for Tswelopele Municipality is composed as 
follows: 


A. MAYOR 


Cllr ME Mathibe - The Mayor presides at the meetings of the Executive Committee. She 
performs duties and functions including any ceremonial functions, and exercise powers 
delegated to the Mayor by Council or the Executive Committee. 


B. SPEAKER 


Cllr TA Matlakala - Presides at Council meetings and performs duties and exercises powers 
delegated to the Speaker in terms of section 59 of Local Government: Municipal Systems Act, Act 
32 of 2000. Eurthermore the Speaker has the following functions: 

> to ensure that the Council meets at least quarterly; 

> to maintain order during Council meeting; 

> to ensure compliance in the Council and Council Committees with code of conduct; 

> to ensure that Council meetings are conducted in accordance with rules and orders of the 
Council. 


C. EXECUTIVE COMMITTEE MEMBERS 


Members of the Executive Committee are as follows: 

• Cllr. M.E. Mathibe (Chairperson by virtue of being the Mayor); 

• Cllr. P.P. Moalosi; and 

• Cllr. C. Horn. 

The powers and functions of the Executive Committee are as stipulated in section 44 of the 
Structures Act. 


D. COUNCILLORS 


Tswelopele Local Council is constituted of 15 Councillors (i.e.8 ward councilors and 7 
Proportional Representative Councilors). The names of Councillors and constituencies are 
summarized below: 


Page 13 






WARD 

WARD COUNCILLORS 

PR. COUNCILLORS 

Wardl 

Cllr. B.P. Esau 

Cllr. M.E. Mathibe 

Ward2 

Cllr. P.P. Moalosi 

Cllr. M.S. Bonokoane 

WardS 

Cllr. T.A. Matlakala 

Cllr. K.R. Phukuntsi 

Ward4 

Cllr. D.A. Njodina 

Cllr. M.J. Taljaard 

WardS 

Cllr. M.W. Raseu 

Cllr. C. Horn 

Ward6 

Cllr. MJ Ngexe 

Cllr. E.C. Joubert 

Ward7 

Cllr. T.T. Taedi 

Cllr. M.M. Snyer 

WardS 

Cllr. M.S. Baleni 



POLITICAL DECISION-TAKING 

The Council of Tswelopele Local Municipality is a Collective Executive System and it consists of 
the Council, which is the highest decision making body and it meets quarterly, and the Executive 
Committee which meets once every month. 

The Percentage Number of Resolutions Implemented vis-a-vis the Percentage of Number 
Decision Taken is about 100%. 


2.2 ADMINISTRATIVE GOVERNANCE 

The Municipal Manager is the accounting officer of the municipality in terms Section 60 of the 
MPMA and must provide guidance on compliance with this Act to political structures; political 
office bearers, and officials of the municipality and any entity under the sole or shared control of 
the municipality. Although the Municipal Manager is at the apex of the administration, the 
administration of Tswelopele Municipality functions as a collective unit and meets regularly to 
address various service delivery issues. 

TOP MANAGEMENT 

The Top Management of the Municipality is constituted as follows: 

1. The Municipal Manager: Mr. TL Mkhwane 

As mentioned above, the Municipal Manager is the accounting officer of the municipality in 
terms Section 60 of the MPMA and must provide guidance on compliance with this Act to 
political structures; political office bearers, and officials of the municipality and any entity under 
the sole or shared control of the municipality. 


Page 14 


2. Director Corporate Services: Mr. S Rabanye 


This department is a catalyst of all Municipal Departments. It provides support and auxiliary 
services to both Political Structures and the Administration. It is responsible for legal, human 
resources, personnel records, secretariat, archives, performance management and training. 

3. Director Community Services: Ms. Z Tindleni 

The Department ensures proper planning takes place and ensures that social and emergency 
services are provided. The Department is also responsible for the implementation of community 
services. 

4. Chief Financial Services: Mr. L Moletsane 

The Department provides corporate financial management and accounting services as prescribed 
by Section 81 of the MFMA. The incumbent of this position performs and accounts to the 
Municipal Manager. 

5. Director Infrastructure Services: Mr. B Dikoko 

The major responsibilities of this department include the management of all technical services 
such as water provision, sanitation services, electricity provision and maintenance of roads 
infrastructure. 


COMPONENT B: INTERGOVERNMENTAL RELATIONS 

CO-OPERATIVE GOVERNANCE AND INTERGOVERNMENTAL RELATIONS 

It is required that municipalities exercise their executive and legislative authority within the 
constitutional system of co-operative governance envisaged Section 41 of the Constitution. The 
relationship between Tswelopele Municipality, National and Provincial Governments, 
Department of Co-operative Governance and Traditional Affairs (COGTA) Lejweleputswa 
District Municipality is very good. Their inputs and assistance to our municipality is invaluable. 

2.3 INTERGOVERNMENTAL RELATIONS 

INTERGOVERNMENTAL STRUCTURES 

Tswelopele Municipality participates in a number of structures aimed at enhancing 
Intergovernmental relations as prescribed by Chapter 3 of the Constitution and Section 3 of the 
Systems Act. These include outreach prograrrrmes of National Ministers; Provincial Cabinet 
Lekgotla; SALGA; National and Provincial Treasuries; District Municipality's Intergovernmental 


Page 15 



Relations Meetings and mainly through interactions when compiling the IDP through a structure 
called IDP Forums and IDP Steering Committees. 


COMPONENT C: PUBLIC ACCOUNTABILITY AND PARTICIPATION 


OVERVIEW OF PUBLIC ACCOUNTABILITY AND PARTICIPATION 

Section 15(b) of the Systems Act requires a municipality to establish and organize its 
administration to facilitate and inculcate a culture of accountability amongst its staff. Section 
16(i): states that a municipality must develop a system of municipal govemance that 
compliments formal representative governance with a system of participatory governance. 
Section 18(i) (d) requires a municipality to supply its community with information concerning 
municipal governance, management and development. 

The above objectives are achieved by holding public meetings; ward meetings; communication 
with and through Non-Governmental Organizations and through the use of Community 
Development Workers. Political leaders of parties represented in Council also give feedback to 
the community through meetings of those structures. 

2.4 PUBLIC MEETINGS 

COMMUNICATION, PARTICIPATION AND FORUMS 

The following mechanisms are used as tools to ensure public participation and communication 
with the citizens within Tswelopele local municipal area. These include Loud -hailers, the Rock 
local radio, Lesedi FM and local News -papers. Ward Councillors, Community Development 
Workers and Ward Committees hold sectional meetings in their respective wards to enhance 
public participation by consulting their constituencies. 

The IDP and budget consultative meetings are held as stipulated by law through different 
forums and they are inclusive of Steering committee, Representative/ stakeholders Forums, 
Sectional, Ward and Mass meetings. AII these meetings are held on scheduled dates and 
communicated to the public through local newspapers as prescribed by the law. The challenge is 
non-attendance by other sectors during these consultative meeting. 

During the year under review a different approach was used to consult with, educators; nurses; 
people with disabilities and farmers to get a clear understanding what they are expecting from 
the municipality and also the need to meet their obligations. 

The efficiency and effectiveness of these forums is improved through taking members to 
workshops that provide them with relevant skills and feedback to the larger community. 


Page 16 



WARD COMMITTEES 


Ward Committees are said to be the eyes, ears and strong link between the Municipality, Ward 
Councillors and the community. They are the people with more knowledge regarding service 
delivery issues within the municipal area as they work and interact with those communities 
regularly. The fact that Ward Committee members must be resident within the area where they 
serve ensures that these are people who are not only close to those communities, but are also are 
affected daily by what the Municipality does in those areas. During consultations, e.g. Imbizo's 
with the communities by the municipality and sector departments, Ward Committee members 
are more positioned to help with rendering service offered by the said departments. 


PUBLIC 

MEETINGS 

Nature and Purpose 
of meeting 

Date of event 

Number of 
Participating 
Municipal 
Councillors 

Number of 
Participating 
Municipal 
Administrators 

Number of 
Community 
members 
attending 

Manner of feedback 
given to commimity 

Lejweleputswa 

Oversight 

Committee-Public 

hearing 

11 March 2013 

AII 

Councillors 

Municipal 

Personnel 

Public 

Consultative 

Budget and IDP 
meetings 

Dec 2012 to 
May-June 2013 

AII 

Councillors 

Municipal 

Personnel 

Public 

Consultative 


THE EFFECTIVENESS OF THE PUBLIC MEETINGS HELD 

The meetings were effective in that members of the public, Councillors and municipal officials 
were able to get first- hand information from key decision makers, to ask questions directly and 
to raise their problems regarding service delivery by all spheres of government and obtain 
responses immediately. 

2.5 IDP PARTICIPATION AND ALIGNMENT 


IDP Participation and Alignment Criteria* 

Yes/No 

Does the mimicipality have impact, outcome, and input indicators? 

Yes 

Does the IDP have priorities, objectives, KPI's, development strategies? 

Yes 

Does the IDP have multi-year targets? 

Yes 

Are the above aligned and can they calculate into a score? 

No 

Does the budget align directly to the KPI's in the strategic plan? 

Yes 

Do the IDP KPI's align to the Section 57 Managers? 

Yes 

Do the IDP KPI's lead to a functional area KPI's as per the SDBIP? 

Yes 

Were the indicators commimicated to the public? 

Yes 

Were the four quarter aligned reports submitted within the stipulated time frames? 

No 


Page 17 


COMPONENT D: CORPORATE GOVERNANCE 


Tswelopele Municipality is always determined to adhere to principles of good governance at all 
times. These include aspects of managing risk; Measures aimed at addressing Fraud and Anti- 
Corruption and to protect whistle-blowers; Open, credible and transparent Supply Chain 
Management processes; Adherence to the rule of law; Providing Information to the public and 
other stakeholders and providing good quality and reliable services. 

2.6 RISK MANAGEMENT 

Section 62(1) (c) of the MFMA requires a municipality to have and maintain an effective, efficient 
and transparent system of risk management. As a result, the municipality has developed and 
approved the Anti-Fraud and Corruption Policy; has appointed an Audit Committee that meets 
once a quarter and emphasizes on maintaining proper records for every transaction done. The 
municipality has also adopted a Risk Management Policy. The short-coming of the Municipality 
in this regard is the development of the risk register on the water, sewerage and the electricity 
network. The municipality is intending to appoint the official responsible for risk matters in 
2013/14 financial year. 

The top 5 risks within our Municipality that need urgent attention are the following: 

a. the extent of the Unaccounted For Water and Electricity; 

b. reliance on Grants and Equitable Share; 

c. lack of expertise on specific areas of our operations; 

d. Development of By-Laws to enforce implementation of certain resolutions; and 

e. Implementation of all laws applicable to Municipalities. 


2.7 ANTI-CORRUPTION AND FRAUD 

FRAUD AND ANTI-CORRUPTION STRATEGY 

Section 83 (c) of the Systems Act, 2000 requires service providers to be chosen through a process 
which minimizes the possibility of fraud and corruption. Over and above these measures, the 
municipality has adopted the Supply Chain Management Policy, the Procurement Policy and the 
Internal Audit Charter. 


Page 18 



2.8 SUPPLY CHAIN MANAGEMENT 


OVERVIEW SUPPLY CHAIN MANAGEMENT 

Section 110-119 of the MFMA; the Supply Chain Management (SCM) Regulations 2005; and 
relevant MFMA circulars issued by National Treasury require processes and guidance manuals 
to help ensure that SCM arrangements provide appropriate goods and services, offer best value 
for money and minimize the opportunities for fraud and corruption. To comply with legislation 
and circulars mentioned above, Tswelopele Council has adopted the Procurement Policy and the 
Supply Chain Management Policy. Improvements are required on the placement of tenders and 
quotations on the Municipality's website. The municipality with a view of improving the Supply 
Chain Management processes, has centralized the procurement of goods and services. 

2.9 BY-LAWS 


By-laws Introduced dming 201^13 

Name of By-Law 

Newly 

Devel 

oped 

Revised 

Public 

Participation 
Conducted 
Prior to the 
Adoption of 
By-Laws 
(Yes/No) 

Dates of 
Public 

Participation 

By-Laws 

Gazetted 

(Yes/No) 

Date of 
Publication 

Property Rates 
By-Law 

No 

Yes 

yes 

19-20 

February 

2013 

Not Yet done 

Not Yet done 


The Property Rates By-Laws were compiled and public hearings were held in all the towns 
falling under the jurisdiction of our Municipality. The inputs of the community are still being 
incorporated into the draft document. After the completion of this process, the By-Laws will be 
promulgated in the Provincial Gazette to have an effect of the law. The promulgated By-Laws 
will have an impact on the Property Rates and will inform the budget of the Municipality on an 
Annual basis. 

The municipality is currently having a challenge of rationalizing all applicable by-laws. In the 
new financial year the municipality will robustly embark on rationalizing all applicable by-laws. 


Page 19 



2.10WEBSITE 


Documents published on the Municipality's Website 

(Yes/No) 

Current annual and adjustments budgets and all budget-related document 

No 

AII current budget-related policies 

No 

The previous annual report (2010/11) 

No 

The annual report (2011/12) published 

No 

AII current performance agreements required in terms of section 57(1) (b) of the Municipal 
Systems Act (2011/12) and resulting scorecards 

No 

AII service delivery agreements (2012/13) 

No 

AII long-term borrowing contracts (2012/13) 

No 

AII supply chain management contracts above a prescribed value (give value) for 2012/13 

No 

An information statement containing a list of assets over a prescribed value that have been 
disposed in terms of section 14 (2) or (4) during 2012/13 

No 

Contracts agreed in 2012/13to which subsection (1) of section 33 apply, subject to 
subsection (3) of that section 

No 

Public-private partnership agreements referred to in section 120 made in 2012/13 

No 

AII quarterly reports tabled m the council in terms of section 52(d) during 2012/13 

No 


WEBSITE CONTENT AND ACCESS TO INEORMATION 

Section 75 of the MFMA prescribes information that must be placed on the municipality's 
website. This was not completely complied with by the Municipality. The solution will be to 
appoint/ designate a person whose responsibility will be to comply with the provisions of the 
law. Due to the Municipality's financial constraints this has not been achieved. The Municipality 
is considering entering into an agreement with the host of our website to assist with this exercise. 


2.11 PUBLIC SATISEACTION ON MUNICIPAL SERVICES 

PUBLIC SATISFACTION SURVEY LEVELS 

Tswelopele Municipality did not conduct any formal or structured customer satisfaction surveys 
during the year under review. This was due to the limitations of financial resources. However, 
public and ward meetings were used to get views of the community on the services provided by 
Tswelopele Municipality. Views gathered at public and ward meetings are immediately brought 
to the attention of the responsible officials for ratification. 

In the new financial year the municipality will install suggestion boxes at all municipal premises, and 
comments made thereof will be attended to. 


Page 20 


SERVICE PROVIDERS PERFORMANCE 


SERVICE 

PROVIDER 

PROJECT NAME 

BUDGET VALUE 

CONTRACT 

DURATION 

PROJECT 

STATUS 

END USER REMARKS 

Kamati 

Incorporated 

Development of the 
health and safety policy 

R95 000,00 

Less than a 
year 

Completed 

The services provided were 
satisfactorily and in 
accordance with the contract. 

Friday 

Management 

Solutions 

Preparation of the 
annual performance 
report and armual 
report 

R195 000,00 

Less than 6 
months 

Completed 

The services provided were 
satisfactorily and rn 
accordance with the contract. 

Friday 

Management 

Solutions 

Development and 
preparation of 
performance 
agreements for 2012/13 
Financial Year 

R194 370,00 

Less than 6 
months 

Completed 

The services provided were 
satisfactorily and in 
accordance with the contract. 

Fire Equipment 
Sales and 

Services 

Fire extinguishers for 
Bultfontein and 

Hoopstad 

R9 301.26 

Once off 

Completed 

The services provided were 
satisfactorily and rn 
accordance with the contract. 

UTDHR 

Consulting 

Development of a WSP 
for 2013/14 and ATRfor 
2012/13 Fmancial year 

R39 900,00 

Once off 

Completed 

The services provided were 
satisfactorily and rn 
accordance with the contract 

The Wox 

Workshop for Ward 
Committee Members 

R80 000,00 

Once off 

Completed 

The services provided were 
satisfactorily and in 
accordance with the contract. 

Ultimate 

Dynamic 

NEP Consulting 
Engineers 

Bultfontein: 

Construction of new 
sewer treafment works 

R63 500 000,00 

21 Months 

Completed 

Few delays occurred but the 
objective was finally achieved. 
Project is under retention 

JV_ Down 

Touch Inv 
/ Golden Mile 
Holding 

NEP Consulting 
Engineers 

Phahameng: 

Construction and 
upgradmg of 2.5km 
roads 

RIO 300 955. 31 

9 Months 

Completed 

The objective was achieved 
without serious challenges 

Tshenolo 

Resources/ 

Ishmael 

Construction JV 
NEP Consulting 
Engineers 

Tikwana: Construction 
and upgrading of 2.5km 
roads 

R6 500 000,00 

4 Months 

Completed 

The Project was successfully 
implemented and completed 

Skhokho Civils 
No consultant 

Hoopstad/ Tikwana: 
Fencing of Cemetery 
(Kameeldoring) 

R686 240.06 

4 Months 

Completed 

The Project was successfully 
implemented and completed 

No Contractor 

Aurecon 

Consulting 

Hoopstad/Tikwana: 
UpgradingWaste Water 
Treatment Works 

R46 166 665,00 

21 Months 


Project delayed and Budget 
maintenance is not approved 

Distrnctive 

Choice 

MVD Kalahari 
Consulting 

Bult/ Phahameng: 
Upgrading of Sports 
Facilities (Phase 1) 

R4 561 313,00 

4 Months 


The Project was delayed by 
Material Supplier and cash- 
flow challenges 


Page 21 


IchapteiTs 


SERVICE DELIVERY PERFORMANCE (PERFORMANCE REPORT PART I) 
INTRODUCTION 

Constitution of the Republic of South Africa guides Tswelopele Municipality in providing 
services as outlined in Schedules 4 (Part B) and 5 (Part B) of the Republic of South Africa Act, 
(Act 108 of 1996). These services include water provision, waste water (sanitation), electricity 
distribution, waste management (including refuse removal and solid waste disposal) and the 
facilitation of housing and provision of sites. In accordance with National Treasury Guidelines 
and Directives, the Municipality also provides Free Basic Services to indigent households within 
our communities. This is meant to provide relief to those households that are not able to pay 
their consumer accounts. 


COMPONENT A: BASIC SERVICES 


The extent to which Tswelopele Municipality provides services such as water; waste water 
(sanitation); electricity; waste management and housing services will be provided and 
achievements realised will be discussed and a summary of free basic services will be reported. 


3.1 WATER PROVISION 


The Water Services Act of 1997 and the General Enabling Act of 2005 dictate how Water 
Authorities and Water Service Providers should provide the water services as well as the quality 
of water that needs to be supplied. 100% of households within the municipal area have access to 
the basic level of clean water. 

We are glad to announce that during the Blue Drop Awards Ceremony held by the Department 
of Water Affairs on the 8* May 2012, Tswelopele Local Municipality received an overall Blue 
Drop Score of 92, 42%. This score is less than 3% from a Blue Drop Status. However, Tswelopele 
has taken the lead in the Free State Province in the Green Drop Status. 


Page 22 







The indicators are described in detail below. 


Water Services Delivery Levels 


Households 

Description 

2009/10 

2010/11 

2011/12 

20iyi3 

Actual 

No. 

Actual 

No. 

Actual 

No. 

Actual 

No. 

Water- (above minimum level) 





Piped water inside dwelling 

1294 

3512 

3820 

3820 

Piped water inside yard (but not in dwelling) 

9012 

8279 

7971 

7971 

Usingpublic tap (within lOOmfrom dwelling) 

9012 

0 

0 

0 

Other water supply (within 200) 

0 

0 

0 

0 

Minimum Service Level and sub-total 

10306 

11791 

11791 

11791 

Minimum Service Level and Above Percentage 

100% 

100% 

100% 

100% 

Water- (below minimum level) 





Using public tap (more than lOOmfrom dwelling) 

0 

0 

0 

0 

Other water supply (more than lOOmfrom dwelling) 

0 

0 

0 

0 

No water supply 

0 

0 

0 

0 

Below Minimum Service Level sub-total 

0 

0 

0 

0 

Below Minimum Service Level Percentage 

0 

0 

0 

0 

Total number of households including informal 
settlements 

10306 

11791 

11791 

11791 


Page 23 


Households -Water Service Delivery Levels below the Minimum 







Households 

Description 

2009A0 

2010A1 

201V12 

20iyi3 

Actual 

Actual 

Actual 

Original 

Budget 

Adjusted 

Budget 

Actual 


No. 

No. 

No. 

No. 

No. 

No. 

FORMAL SETTLEMENTS 







Total households 

10306 

11791 

11791 

11791 

11791 

11791 

Households below minimum service 
level 

0 

0 

0 

0 

0 

0 

Proportion ofhouseholds below 
minimum service level (%) 

0 

0 

0 

0 

0 

0 

INFORMAL SETTLEMENTS 

0 

0 

0 

0 

0 

0 

Total households 

0 

0 

0 

0 

0 

0 

Households below minimum service 
level 

0 

0 

0 

0 

0 

0 

Proportion ofhouseholds below 
minimum service level 

0 

0 

0 

0 

0 

0 


EMPLOYEES: WATER SERVICES 

Job level 

2011/12 

201V13 

Employees 

No. 

Posts 

No. 

Employees 

No. 

Vacancies 

(fulltime 

equivalents) 

No. 

Vacancies ( as 
a % of total 
posts) 

0-3 

2 

3 

3 

0 

0% 

4-6 

4 

4 

4 

0 

0% 

7-9 

2 

2 

2 

0 

0% 

10-12 

0 

0 

0 

0 

0% 

13-15 

0 

0 

0 

0 

0% 

16-18 

0 

0 

0 

0 

0% 

19-20 

0 

0 

0 

0 

0% 

Total 

8 

9 

9 

0 

0% 


Page 24 


Water Service Objectives 

Service Objectives 

Service Indicators 
(i) 

Outline Service 
Targets 

(ii) 

2010/2011 

2011/2012 

2012/2013 

Target 

Actual 

Target 

Actual 

Target 

‘Previous 

Year 

(iii) 

(iv) 

‘Previous 

Year 

(V) 

‘Current 

Year 

(vi) 

(vii) 

‘Current 

Year 

(viii) 

‘Current 

Year 

(ix) 

Service Objective 

BASIC SERVICES 

Households without 
minimum water 
supply 

Numberof 
households 
(HHs) without 
supply at year 
end) 

1 336 

1 336 

1 336 

1 336 

1 336 

1 336 

1 336 

BASIC SERVICES 

Improve water 
conservation 

Reduce 
unaccountable 
water levels 
compared to the 
baselineofYear 
-1 (xxx kilolitres 
(KLs) 

unaccounted for 
during theyr) 

10% 

KLs) 

10% 

KLs) 

10% 

KLs) 

10% 

KLs) 

40% 

KLs) 

0 

10% 

KLs) 



3.2 WASTE WATER (SANITATION) PROVISION 
INTRODUCTION TO SANITATION PROVISION 

We are still committed to provide the highest level of sanitation services to residents. In our area 
of jurisdiction the highest level of sanitation services provided by the municipality is a flush 
toilet connected to the sewerage system and the basic level of service includes flush toilet with 
sceptic tank and a PIT latrine with ventilation. 

The indicators for sanitation services are depicted below: 


Page 25 


Sanitation Services Delivery Levels 


Households 

Description 

2010/11 

2011/12 

20iyi3 

Actual No. 

Actual 

No. 

Actual 

No. 

Sanitation/sewerage- (above minimum level) 




Flush toilet (connected to sewerage) 

10 438 

10 438 

10 438 

Flush toilet (with septic tank) 

17 

17 

17 

Qiemical toilet 

0 

0 

0 

Pit toilet (Ventilated) 

0 

0 

0 

Other toilet provisions (above minimum level) 




Minimum Service Level and Above sub-total 

10 455 

10 455 

10 455 

Minimum Service Level and Above Percentage 

100% 

100% 

100% 

Sanitation/sewerage- (below minimum level) 




Bucket toilet 

0 

0 

0 

Other toilet provisions (below minimum service level) 

1336 

1336 

1336 

No toilet provision 

0 

0 

0 

Below Minimum Service Level sub-total 

1336 

1336 

1336 

Below Minimum Service Level Percentage 

Total number of households including informal settlements 

13% 

13% 

13% 

11 791 

11 791 

11 791 


Households -Sanitation Service Delivery Levels below the Minimum Standard 

Description 

2009A0 

2010/11 

2011/12 

20iyi3 


Actual 

No. 

Actual 

No. 

Actual 

No. 

Original 

Budget 

No. 

Adjusted 

Budget 

No. 

Actual 

No. 

FOMAL SETTLEMENTS 

10 306 

11 791 

11 791 

10 306 

11 791 

11 791 

Total households 

10 306 

11 791 

11 791 

11 791 

0 

11 791 

LLouseholds below minimum service 
level 

0 

0 

0 

1336 

1336 

1336 


Page 26 


Proportion ofhouseholds below 
minimum service level (%) 

0 

0 

0 

13% 

13% 

13% 

Households below minimum service 
level 

0 

0 

0 

1336 

1336 

1336 

Proportion ofhouseholds below 
minimum service level 

0 

0 

0 

1336 

1336 

1336 


EMPLOYEES: SANITATION SERVICES 

Job level 

2011/12 

20iyi3 

Employees 

No. 

Posts 

No. 

Employees 

No. 

Vacancies 

(fulltime 

equivalents) 

No. 

Vacancies ( as 
a % of total 
posts) 

% 

0-3 

16 

19 

17 

2 

7,69% 

4-6 

7 

7 

7 

0 

0 

7-9 

0 

0 

0 

0 

0 

10-12 

0 

0 

0 

0 

0 

13-15 

0 

0 

0 

0 

0 

16-18 

0 

0 

0 

0 

0 

19-20 

0 

0 

0 

0 

0 

Total 

23 

26 

24 

2 

7,69% 


OVERALL SANITATION SERVICES PERFORMANCE 

The Upgrading of Tikwana Waste Water Treatment Plant designs are complete and the 
construction will start in the 2013/2014 financial year. The municipality is still faced with 
construction of sewer reticulation of 837 erven in Phahameng and 499 in Tikwana, the approval 
of the application for funding is still awaited. 


Page 27 


Waste Wa 

ter (Sanitation) Service 

Service Objectives 

Service Indicators 

(i) 

Outiine 

Service 

Targets 

(ii) 

2009/10 

2010/11 

2011/12 

2012/3 

Target 

Actuai 

Target 

Actuai 

Target 

‘Previous 

Year 

(iii) 

(iv) 

‘Previous 

Year 

(V) 

‘Current 

Year 

(vi) 

(vii) 

‘Current 

Year 

(viii) 

‘Current 

Year 

(ix) 

‘Foiiowing 

Year 

(X) 

BASIC SERVICES 

(Provision oftoilets 
within standard ) 

Households 

(HHs) 

provided 

with 

minimum 

sanitation 

100% 

100% 

100% 

100% 

100% 

100% 

100% 

100% 



3.3 ELECTRICITY 

For the purpose of electricity provision, basic level of access to electricity is defined as including 
connection of the household to the grid and basic level of service includes 10 Amp connection. 
Electricity Generation and Transmission is the sole responsibility of ESKOM. Tswelopele 
Municipality is licensed by the National Energy Regulator of South Africa (NERSA) only to 
distribute electricity within its area of jurisdiction. The Tswelopele Municipality has noted over 
time that electricity is no longer a cheap commodity and that it is no longer in abundance as it 
used to be. As a result, the municipality continues to appeal to users to use it sparingly and to 
take measures intended to reduce pressure on the national grid. 

The indicators for electricity services are depicted below (the figures below apply only to the 
municipality's licenced area and exclude the Eskom licence area): 


Page 28 



Electricity Services Delivery Levels 


Households 

Description 

2009/10 

2010/11 

2011/21 

20iyi3 


Actual 

No. 

Actual 

No. 

Actual 

No. 

Actual 

No. 

Energy- (above minimum level) 

Electricity (at ieast minimum service ievei) 

Eiectricity - prepaid (mmimum service ievei) 

1408 

106 

1408 

106 

1408 

106 

1408 

106 

Minimum Service Levei and Above sub-totai 

1514 

1514 

1514 

1514 

Minimum Service Levei and Above Percentage 

100% 

100% 

100% 

100% 

Energy- (below minimum level) 

Eiectricity (< minimum service ievei) 

Eiectricity - prepaid (< minimum service ievei) 

Other energy sources 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 


0 

0 

0 

0 

Beiow Minimum Service Levei sub-totai 

1514 

1514 

1514 

1514 

Beiow Minimum Service Levei Percentage 





Total number of households including informal 
settlements 






Households -Electricity Service Delivery Levels below the Minimum 






Households 


Description 

2009A0 

2010A1 

2011A2 

20iyi3 


Actual 

Actual 

Actual 

Original 

Adjusted 

Actual 


No. 

No. 

No. 

Budget 

Budget 

No. 





No. 

No. 


FORMAL SETTLEMENTS 

0 

0 

0 

0 

0 

0 

Total households 







Households below minimum service 
level 

0 

0 

0 

0 

0 

0 

Proportion ofhouseholds below 
minimum service level (%) 

0 

0 

0 

0 

0 

0 

INFORMAL SETTLEMENTS 

0 

0 

0 

0 

0 

0 

Total households 







Househoids beiow minimum 







Service ievei 

Proportion of househoids beiow 

0 

0 

0 

0 

0 

0 

minimum service ievei 

0 

0 

0 

0 

0 

0 


Page 29 


The National government has provided targets to be met by all spheres of government by 2014. 
However, it is clear from the information provided above that Tswelopele is far ahead of the 
targets as 100% of its customers have access to the Minimum Level of Service on electricity. The 
challenge may be in rural areas (farms) falling in our area where the back-logs are still to be 
established by us and brought to the attention of Eskom. 


EMPLOYEES IN ELECTRICITY SERVICES 

Job level 

2011/12 

201^13 


Employees 

Posts 

Employees 

Vacancies 

Vacancies ( as 


No. 



(fulltime 

a % of total 



No. 

No. 

equivalents) 

posts) 





No. 

% 

0-3 

1 

1 

1 

0 

0 

4-6 

1 

1 

1 

0 

0 

7-9 

0 

0 

0 

0 

0 

10-12 

2 

2 

2 

0 

0 

13-15 

0 

0 

0 

0 

0 

16-18 

0 

0 

0 

0 

0 

19-20 

0 

0 

0 

0 

0 

Total 

4 

4 

4 

0 

0 


OVERALL PERFORMANCE OF ELECTRICITY SERVICES 

Tswelopele Municipality plans to provide the following; upgrading on the electricity service in 
the 2013/14 Financial Year, Upgrading of 65 industrial Erven in Hoopstad Phase 1 and Erven 
799-806 industrial Erven at Hoopstad (Bloemhof Entrance). 


Electricity Service Objectives 

Service 

Objectives 

Outline 

Service 

2009/10 

2010/11 

2011/12 

iQiyis 


Targets 

Target 

Actual 

Target 

Actual 

Target 



*Previous 


*Previous 

*Current 


*Current 

Year 

*Current 

Year 

*Following 

Year 

Service Indicators 


Year 


Year 

Year 





(i) 

(ii) 

(iii) 

(iv) 

(V) 

(vi) 

(vii) 

(viii) 

(ix) 

(X) 

Service Objective xxx 

BASIC 

Additional 

1 514 

1 514 

1 514 

1 514 

15 14 

1 514 

1 514 

1 514 

SERVICES 

households 









(Provision of 
minimum supply 
of electricity) 

(HHs) 

provided 

with 

minimum 










supply 
during the 










year 










Page 30 



(Number 

of HHs 

below 

minimum 

supply 

level) 

0 

0 

0 

0 

0 

0 

0 

0 



3.4 WASTE MANAGEMENT 

Tswelopele Municipality spares no effort to ensure that refuse removal is done at least once a 
week at every house-hold, to ensure the efficient management of the solid waste disposal sites, to 
prevent littering and to ensure that the street and pavements are regularly cleaned. Although 
there are still isolated areas of inconsistency, remedial action is taken where such are detected. 

The indicators for waste management services are depicted below: 


Solid Waste Services Delivery Levels 


Households 


Description 

2009/10 

2010/11 

2011/12 

20iyi3 


Actual 

Actual 

Actual 

Actual 


No. 

No. 

No. 

No. 

Solid waste- (minimum level) 





Removed at least once a week 

10 306 

10 455 

10 455 

10 455 

Minimum Service Level and Above sub-total 

10 306 

10 455 

10 455 

10 455 

Minimum Service Level and Above Percentage 

100% 

100% 

100% 

100% 

Solid Waste Removal- (below minimum level) 





Removed less frequently than once a week 

0 

0 

0 

0 

Using communal refuse dump 

0 

0 

0 

0 

Using own refuse dump 

0 

0 

0 

0 

Other rubbish disposal 

0 

0 

0 

0 

No rubbish disposal 

0 

0 

0 

0 

Below Minimum Service Level sub-total 

0 

0 

0 

0 

Below Minimum Service Level Percentage 

0 

0 

0 

0 

Total number of households including informal 
settlements 

10 306 

11 791 

11 791 

11 791 


Page 31 


EMPLOYEES IN SOLID WASTE MANAGEMENT SERVICES 

Job level 

2011/12 

20iyi3 

Employees 

No. 

Posts 

No. 

Employees 

No. 

Vacancies 

(fulltime 

equivalents) 

No. 

Vacancies ( as 
a % of total 
posts) 

% 

0-3 

44 

55 

52 

3 

5,45% 

4-6 

10 

10 

10 

0 

0 

7-9 

0 

0 

0 

0 

0 

10 -12 

0 

0 

0 

0 

0 

13 -15 

0 

0 

0 

0 

0 

16 -18 

0 

0 

0 

0 

0 

19 -20 

0 

0 

0 

0 

0 

Total 

54 

55 

52 

3 

5,45 % 


Waste Management Service Objectives 

Service 

Objectives 

Service 

Indicators 

(i) 

Outline 

Service 

Targets 

(ii) 

2009A0 

2010/11 

2011/12 

20iyi3 

Target 

Actual 

Tar 

get 

Actual 

Target 

*Previous 

Year 

(iii) 

(iv) 

*Previous 

Year 

(v) 

^Ciurent 

Year 

(vi) 

(vii) 

^Ciurent 

Year 

(viii) 

^Ciurent 

Year 

(ix) 

*Following 

Year 

(X) 

Service Objective 

BASIC 

SERVICES 

(Provision of 
weekly 
coUection 
service per 
household (HH) 

Refuse 
Removal is 
done at 
least once a 
week at 
every 
household 

10 306 

10 306 

10 306 

10 306 

10 306 

10 306 

10 306 

11 791 

BASIC 

SERVICES 

(Proportion of 
landfill sites in 
compliance 
with the 
Enviromental 
Conservation 

Act 1989) 

One 

registered 
land fill site 
in 

Hoopstad 
and one 
unlicensed 
landfill site 
in 

Bultfontein 
is due to 
financial 
constraints 

1 

1 

1 

1 

1 

1 

1 

1 












Page 32 


3.5 HOUSING 


INTRODUCTION TO HOUSING 

Housing in the Free State Province is a provincial competency unless in instances where a 
municipality has been accredited by the provincial government to build government funded 
houses. This is not the case in Tswelopele Municipality. The responsibility of Tswelopele 
Municipality with regards to housing is to allocate (sites), provide infrastructure and to maintain 
a waiting list of residents who qualify for RDP houses. The amount of houses built within the 
municipal area in any given year depends solely on the number of housing units allocated by the 
provincial government. The responsibility of the municipality in this regard is to identify 
beneficiaries and to assist applicants to complete application forms 


PERCENTAGE OF HOUSEHOLDS WITH ACCESS TO BASIC HOUSING 

Year End 

Total households (including 
formal and informal 
settlements) 

Households in formal 
settlements 

Percentage of HH's in 
formal settlements 

2009/10 

10 306 

185 

1.79 

2010/11 

11 791 

1696 

14,3 

2011/12 

11 791 

1696 

14,3 

20iyi3 

11 791 

1696 

14,3 


EMPLOYEES: HOUSING SERVICES 

Job level 

2011/12 

20iyi3 

Employees 

No. 

Posts 

No. 

Employees 

No. 

Vacancies 

(fulltime 

equivalents) 

No. 

Vacancies ( as 
a % of total 
posts) 

% 

0-3 

0 

0 

0 

0 

0 

4-6 

0 

0 

0 

0 

0 

7-9 

0 

0 

0 

0 

0 

10-12 

4 

4 

4 

0 

0 

13-15 

0 

0 

0 

0 

0 

16-18 

0 

0 

0 

0 

0 

19-20 

0 

0 

0 

0 

0 

Total 

4 

4 

4 

0 

0 


THE OVERALL PERFORMANCE OF THE HOUSING SERVICES 

The provision of housing services, especially people who qualify per different categories is the 
sole competency of the Free State Department of Human Settlement. As a result it is not possible 
for Tswelopele to budget for this expenditure. During the year under review, no housing 
allocations were made for our Municipality. 


Page 33 


3.6 FREE BASIC SERVICES AND INDIGENT SUPPORT 


INTRODUCTION TO FREE BASIC SERVICES AND INDIGENT SUPPORT 

Tswelopele Municipality regulates the access of consumers to Pree Basic Services (PBS) and 
maintain a ledger of such indigents. The total value of PBS services is determined in a way that 
can be recovered from the available portion of the equitable share. We have however, established 
that the electricity tariff as currently implemented may not reflect the actual cost of the service. 
This anomaly is currently receiving attention. The electricity figures below cover only the 
municipality's supply area and excludes the Eskom area of supply. 

It is also worth noting that PBS on electricity is provided to Indigent residents with each 
household receiving the first 50 kW/h free of charge monthly. 


FREE BASIC SERVICES TO LOW INCOME HOUSEHOLDS 

Number of households 


Households earning less than R2 800-00 per month 



Total 

Free Basic 
Water 

Free Basic 
Sanitation 

Free Basic 
Electricity 

Free Basic 
Refuse 

Access 

% 

Access 

% 

Access 

% 

Access 

% 

2010/11 

3 087 

3 087 

100 

3 087 

100 

1408 

100 

3 087 

100 

2011/12 

3 087 

3 087 

100 

3 087 

100 

1408 

100 

3 087 

100 

20iyi3 

3 965 

3 965 

100 

3 965 

100 

3 965 

100 

3 965 

100 


PREE BASIC SERVICES AND INDIGENT SUPPORT 

Indigent Support is restricted to residents of the municipality within municipal supply area, it 
specifically targets those who are unable to pay for their municipal accounts. An indigent register 
is kept for registered indigents and updated regularly. 


Free Basic Service Policy Objectives 

Service 

Objectives 

Service 

Indicators 

(i) 

Outline 

Service 

Targets 

(ii) 

2010/11 

2011/12 

20iyi3 

Target 

Actual 

Target 

^Previous Year 

(v) 

^Ciurent 

Year 

(vi) 

(vii) 

^Ciurent 

Year 

(viii) 

^Ciurent 

Year 

(ix) 

^FoIIowing 

Year 

(X) 

Service Objective 

Free Basic 
Services 

Free basic 
services and 
Indigent 
support 

100% 

3 087 

100% 

3 087 

100% 

3 087 

100% 

3 087 

100% 

3 965 




Page 34 


COMPONENT B: ROAD TRANSPORT 


This component includes: roads; transport; and waste water (storm water drainage). 

3.7 ROADS 

INTRODUCTION TO ROADS 

The majority of our roads are dominated by dirt and gravel roads (especially in the former black 
townships) and few tarred roads. Our strategies include, budget allowing, the tarring or paving 
of current dirt roads; filling of pot-holes as well as the rehabilitation of the current tarred roads. 
Because of the financial constraints and our inability to generate enough (own) revenue, this 
municipality largely depends on grants and allocations from both the Provincial and National 
spheres of government. During the 2012/13 Financial Year, the Municipality embarked on a 
process of constructing roads both in Tikwana and Phahameng whereby 2,5km of roads was 
constructed in each area. The municipality will continue to persuade both Provincial and 
National spheres of government to fund the upgrading of the roads. A total of 155 unemployed 
enjoyed the benefits of this projects and the Municipality strives to continue doing even more. 


GRAVEL ROAD INFRASTRUCTURE 

Kilometres 

Year 

Total Gravel 

Roads 

New gravel roads 
completed 

Gravel Roads 
upgraded to tar 

Gravel Roads 
Graded/maintained 

2009A0 

98,8 

+- Ikm 

0 

98,8 

2010A1 

98,8 

0 

0 

98,8 

2011A2 

98,8 

500m 

0 

180,5 

2012A3 

93,8 

1 km 

5Km 

180,5 


TARRED ROAD INFRASTRUCTURE 

Year 

Total tarred 
roads 

New tar roads 

Existing tar 
Roads re- 
tarred 

Existing tar 
roads re- 
sheeted 

Tar roads 
Maintained 

2009A0 

54 Km 

0 

0 

0 

1,5 Km 

2010A1 

54 Km 

0 

0 

0 

l,5Km 

2011A2 

54 Km 

0 

0 

0 

5km 

2012A3 

61 Km 

5Km 

0 

0 

61 Km 


Public Works includes Roads, Storm Water and Waste Water. AII personnel do work in all 
sections. 


Page 35 




EMPLOYEES: ROADS 

Job level 

2011/12 

20iyi3 

Employees 

No. 

Posts 

No. 

Employees 

No. 

Vacancies 
(fulltime 
equivalents) No. 

Vacancies ( as a 
% of total 
posts) % 

0-3 

17 

17 

16 

1 

2,70 

4-6 

14 

14 

14 

0 

0 

7-9 

2 

3 

3 

0 

0 

10-12 

2 

3 

2 

1 

2,70 

13-15 

0 

0 

0 

0 

0 

16-18 

0 

0 

0 

0 

0 

19-20 

0 

0 

0 

0 

0 

Total 

35 

37 

35 

2 

5,40 % 


Road Service Objectives 

Service Objectives 

Service Indicators 

(i) 

Outline 

Service 

Targets 

(ii) 

2009/10 

2010/11 

1011/11 

1011/13 

Target 

Actual 

Target 

Actual 

Target 

Previous 

Year 

(iii) 

(iv) 

^Previou 
s Year 
(v) 

^Ciurent 

Year 

(vi) 

(vii) 

^Ciurent 

Year 

(viii) 

^CiuTent Year 

(ix) 

Service Objective 

BASIC SERVICESAND 
INFRASTRUCTURE 

Kilometers 
of gravel 
roads 

98,8 kms 

gravel 

roads 

98,8 kms 

gravel 

roads 

98,8 kms 

gravel 

roads 



98,8 kms 

gravel 

roads 

180,5 kms gravel roads 
paved 

BASIC SERVICESAND 
INFRASTRUCTURE 

kms of 
mimicipal 
roads 
developed 

54 kms 

54 kms 

54 kms 

54 kms 


54 kms 

61 kms 



3.8 TRANSPORT 

THE OVERALL PERFORMANCE OF TRANSPORT 

Tswelopele Local Municipality does not provide any train, bus or taxi services to its community. 
As a result there are no Employees, Financial nor Capital Costs reported associated with the 
provision of this service. 


Page 36 


COMPONENT C: PLANNING AND DEVELOPMENT 


This component includes: planning; and local economic development. 

INTRODUCTION TO PLANNING AND DEVELOPMENT 

Tswelopele's geographic position as well as its limited scope of growth coupled with the large 
population unemployed provides very little opportunities for planning and development. The 
biggest activities currently include building plans; rezoning applications; applications for 
consolidation and consent use. 

3.9 PLANNING 

INTRODUCTION TO PLANNING 

In the former Black Townships the biggest challenge is that the practice of erecting new houses 
and extension of existing housing units occurs without residents submitting building plans to the 
municipality for approval. A further challenge is that residents run businesses at their houses 
without applying for such properties to be rezoned. Although this is a serious problem, the 
municipality has to balance legal compliance with the need to stimulate small business 
development. We accept that this matter needs to be addressed in a manner that strikes a balance 
between compliance and the need to stimulate small business initiatives. 


Application for Land Use Development 

Details 

Formalization of 
townships 

Rezoning 

Built 

Control 

loiyii 

20iyi3 

2011112 

20iyi3 

2011/12 

20iyi3 

Planning application 
received 

0 

0 

1 

3 

130 

190 

Determination made in 
year of receipt 

0 

0 

1 

3 

130 

189 

Determination made in 
following year 

2 

0 

0 

0 

0 

0 

Applications withdrawn 

0 

0 

0 

0 

0 

1 

Applications outstanding 
at year end 

0 

0 

0 

0 

0 

0 


Tswelopele Municipality does not have a dedicated planning department or division. All the 
functions associated with planning are normally outsourced. This option seems to be the most 
cost-effective. 


Page 37 




Planning Policy Objectives 

Service 

Objectives 

Service 

Indicators 

(i) 

Outline 
Service Targets 

(ii) 

2009A0 

2010/11 

2011/12 

20iyi3 

Target 

Actual 

Target 

Actual 

Target 

^Previous 

Year 

(iii) 

(iv) 

^Previous 

Year 

(v) 

^Ciurent 

Year 

(vi) 

(vii) 

^Ciurent 

Year 

(viii) 

^Ciurent 

Year 

(ix) 

Service Objective xxx 

BASIC 

Approval or 

0 

0 

0 

130 

130 

189 

190 

SERVICES 

rejection of all 








AND 

build 








INFRASTRUC 

environment 








TURE 

applications 









Reduction in 

No 

No 

No 

No 

No 

No 



planning 

planning 

planning 

planning 

planning 

planning 

planning 

1 


decisions 

decisions 

decisions 

decisions 

decisions 

decisions 

decisions 



overturned 

overturne 

overturne 

overturne 

overturne 

overturne 

overturned 




d 

d 

d 

d 

d 




3.10 LOCAL ECONOMIC DEVELOPMENT (INCLUDING TOURISM) 

INTRODUCTION TO ECONOMIC DEVLOPMENT 

The Local Economic Development (LED) Eunction of the Municipality is located in the 
Community Services Directorate. The Local Economic Development Strategy is still in a draft 
format and will be tabled before Council for approval; this is through the assistance of the 
Lejweleputswa District Municipality. The LED function includes Infrastructural Development, 
Informal Trade and by-Iaws, rural development, Identification, upgrading and establishment of 
tourism facilities and tourism sector plans. LED in this municipality has not been quite effective 
and as a result the municipality reviewed the organogram with a view to accommodate 
dedicated officials in the department. 

LOCAL ECONOMIC DEVELOPMENT 


The formal employment sector is unable to provide the number of jobs that are required. As a 
result Local Economic Development becomes a key driver of job creation. During the 2012/13 
financial year the number of jobs created through LED initiatives were 442. 


Job Creation through EPWP projects 

Details 

EPWP Project 
No. 

Job creation through 

EPWP Project No. 

2010/11 

0 

0 

2011/12 

2 

72 

2012/12, 

4 

156 


Page 38 



EMPLOYEES: LOCAL ECONOMIC DEVELOPMENT SERVICES 

Job level 

2011/12 

20iyi3 

Employees 

No. 

Posts 

No. 

Employees 

No. 

Vacancies 

(fulltime 

equivalents) 

No. 

Vacancies ( as 
a % of total % 
of total posts) 

% 

0-3 

0 

0 

0 

0 

0 

4-6 

0 

0 

0 

0 

0 

7-9 

0 

0 

0 

0 

0 

10-12 

1 

2 

1 

1 

50 % 

13-15 

0 

0 

0 

0 

0 

16-18 

0 

0 

0 

0 

0 

19-20 

0 

0 

0 

0 

0 

Total 

1 

2 

1 

1 

50% 


COMPONENT D: COMMUNITY & SOCIAL SERVICES 


This component includes: libraries; archives; community halls; cemeteries and crematoria; child 
care; aged care; social programmes, theatres. 

3.11 LIBRARIES, ARCHIVES AND COMMUNITY FACILITIES 

In this category the municipality provides only the following functions/services: maintenance of 
library premises (as the actual library services are provided by the Free State Provincial 
government and public halls). 


EMPLOYEES: Libraries; Archives; Museums; Community Eacilities; Others 

Job level 

2011/12 

20iyi3 

Employees 

No. 

Posts 

No. 

Employees 

No. 

Vacancies 

(fulltime 

equivalents) 

No. 

Vacancies ( as 
a 

% of total 
posts) 

% 

0-3 

13 

13 

13 

1 

7,14% 

4-6 

0 

0 

0 

0 

0 

7-9 

0 

0 

0 

0 

0 

10-12 

1 

1 

1 

0 

0 

13-15 

0 

0 

0 

0 

0 

16-18 

0 

0 

0 

0 

0 

19-20 

0 

0 

0 

0 

0 

Total 

14 

14 

14 

1 

7,14% 


Page 39 




3.12 CEMETERIES, CREMATORIUMS, PARKS AND SPORTS GROUNDS 


INTRODUCTION TO CEMETERIES, CREMATORIUMS, SPORTS RECREATION SERVICES AND HALLS 

Tswelopele Municipalities does not own or provide crematorium facilities and services. Below are the 
statistics for the 2012/13 Financial Year. 


EMPLOYEES: Cemeteries/Sports Recreation and Halls 

Job level 

2011/12 

201^13 

Employees 

No. 

Posts 

No. 

Employees 

No. 

Vacancies 

(fulltime 

equivalents) 

No. 

Vacancies ( as 
a % of total 
posts) 

% 

0-3 

25 

25 

24 

1 

4,87 % 

4-6 

5 

5 

4 

0 

0 

7-9 

1 

1 

1 

0 

0 

10-12 

0 

0 

0 

0 

0 

13-15 

0 

0 

0 

0 

0 

16-18 

0 

0 

0 

0 

0 

19-20 

0 

0 

0 

0 

0 

Total 

41 

41 

39 

2 

4,87 % 


Capital Expenditure 201!yi3: Cemeteries, Parks and Sports Grounds 

Capital Projects 

20iyi3 

Adjustment 

Budget 

Actual 

Expenditure 

Variance from 
original budget 

Total All 

11 400 000 

10 635 970 

100% 

Fencing of Cemeteries 

11 400 000 

6 074 657 

100% 

Upgrading of Sports 

Facilities Phase 1 

0 

4 561 313 

100% 



THE OVERALL PERFORMANCE OF CEMETERIES, PARKS & SPORTS GROUNDS 

Tswelopele Local Municipality undertook a project for fencing of cemeteries in Tikwana and 
Phahameng. The total of 552m long and 2, 4 high concrete palisade fences were erected during 
the year under review. The municipality also upgraded sports facilities in Phahameng Phase 1 
and the following activities were upgraded and constructed; internal water, sewer and electricity 


Page 40 


network; new main pavilion with ablution and change rooms; rehabilitation of multipurpose 
tennis/netball courts; building of new soccer field and installation of irrigation system. 


COMPONENT E: SECURITY AND SAFETY 


This component includes: traffic; fire; disaster management, licensing, control of animals, and 
control of public nuisances, etc. 

3.13 TRAFFIC AND LAW ENFORCEMENT 

TRAFFIC AND LAW ENFORCEMENT 

Tswelopele Local Municipality has only three traffic officers (peace officers). Their function also 
includes law enforcement and traffic. Tswelopele Local Municipality is faced with a challenge of 
safe and secure municipal buildings. In the 2013/14 financial year the municipality will seriously 
become security conscious, amongst others is to fence all municipal premises. 


TRAFFIC AND LAW ENFORCEMENT DATA 


Details 

2011 

2011/12 

201^13 

Actual 

No. 

Estimate 

No. 

Actual 

No. 

Estimate 

No. 

1 

Number of road traffic accidents during 
the year 

14 

7 

6 

5 

2 

Number of by-law mfringements 
attended 

733 

600 

593 

700 

3 

Number of traffic officers in the field on 
any average day 

2 

4 

2 

3 

4 

Number of traffic officers on duty on an 
average day 

2 

2 

2 

3 


EMPLOYEES: Traffic and Disaster Management 

Job level 

2011/12 

20iyi3 

Employees 

No. 

Posts 

No. 

Employees 

No. 

Vacancies 

(fulltime 

equivalents) 

No. 

Vacancies ( as 
a % of total 
posts) 

% 

0-3 

0 

0 

0 

0 

0 

4-6 

0 

2 

0 

0 

25% 

7-9 

2 

4 

3 

1 

0 

10-12 

0 

0 

0 

0 

0 

13-15 

0 

0 

0 

0 

0 

16-18 

0 

1 

0 

0 

0 

19-20 

0 

0 

0 

0 

0 

Total 

2 

8 

6 

3 

25% 


Page 41 




COMPONENT F: CORPORATE POLICY OFFICES AND OTHER SERVICES 


This component includes: corporate policy offices, financial services, human resource services, 
ICT services, property services. 

3.14 EXECUTIVE AND COUNCIL 

This component includes: Executive office (Mayor; Speaker; Councillors and Municipal 
Manager). 

INTRODUCTION TO THE EXECUTIVE AND COUNCIL 

The part comprises of two components, namely political and administration. The political 
component consists of the Mayor who is the Chairperson of the Executive Committee (Exco) as 
well as the Speaker who is the Chairperson of Council and is also responsible for ward 
committees. The administration component is headed by the Municipal Manager who is the head 
of the administration and the Accounting Officer of the Municipality. 


SERVICE STATISTICS FOR THE EXECUTIVE AND COUNCIL 

FREQUENCY OF MEETINGS 

TYPES OF MEETINGS 

Eour (4) 

Council Meetings 

Eleven (11) 

Exco Meetings 

Eour (4) 

Special Meetings 


The statistics for the Executive and Council during the period under review are as follows: 


EMPLOYEES: EXECUTIVE AND COUNCIL 

Job level 

2011/12 

20iyi3 

Employees 

No. 

Posts 

No. 

Employees 

No. 

Vacancies 

(fulltime 

equivalents) 

No. 

Vacancies ( as a 
% of total 
posts) 

% 

0-3 

0 

0 

0 

0 

0 

4-6 

2 

3 

1 

2 

14,28% 

7-9 

6 

6 

6 

0 

0 

10-12 

4 

5 

4 

1 

7,14% 

13-15 

0 

0 

0 

0 

0 

16-18 

0 

0 

0 

0 

0 

19-20 

0 

0 

0 

0 

0 

Total 

12 

14 

11 

3 

21,42% 


Page 42 




THE PERFORMANCE OF THE EXECUTIVE AND COUNCIL: 


The council has a responsibility to oversee the performance of the Executive Committee; Council 
Committees and the Administration. During the year under review the Council exercised this 
oversight work with due diligence. It held both the Executive Committee and the Administration 
to the highest level of scrutiny and oversight. The Executive Committee also ensured that the 
reports and recommendations that went to Council were thoroughly scrutinized and 
investigated. This assisted in ensuring that the best decisions were taken by the Council. It is also 
worth mentioning that Tswelopele Council operates as one entity and that it always aspires to 
take decisions that are in the best interest of all the residents, irrespective of their individual 
members' political party and persuasion. 

In order to facilitate and strengthen accountability of the Council, the municipality has 
resuscitated the section 80 committees which are solely meant to assist and advice EXCO to take 
informed decisions. 


The Executive and Council Objectives 

Service 

Objectives 

Outline 

Service 

2009A0 

2010/11 

2011/12 

20iyi3 


Targets 

Target 

Actu 

al 

Target 

Actua 

1 

Target 

Service 

Indicators 

(i) 

(ii) 

^Previ 

ous 

Year 

(iii) 

(iv) 

^Previo 
us Year 
(v) 

^Curre 
nt Year 
(vi) 

(vii) 

^Curre 
nt Year 

(viii) 

“‘^Curre 
nt Year 

(ix) 

^Followi 
ng Year 

(X) 

Service Objective 

GOOD 

GOVERNANCE 

% of Council 
resolutions 
implemented 

100% 

100% 

100% 

100% 

100% 

100% 

100% 

100% 

GOOD 

GOVERNACE 

% agendas 
and minutes 
available for 
Council 

100% 

100% 

100% 

100% 

100% 

100% 

100% 

100% 



3.15 FINANCIAL SERVICES 
INTRODUCTION FINANCIAL SERVICES 

The Einance Department is headed by the Chief Einancial Officer who accounts to the Municipal 
Manager. The finance department is divided into the following sections: Revenue, Expenditure, 
Budget Treasury and Office and Supply Chain. 


Page 43 


EMPLOYEES: EINANCIAL SERVICES 

Job level 

IQiyil 

20iyi3 

Employees 

No. 

Posts 

No. 

Employees 

No. 

Vacancies 

(fulltime 

equivalents) 

No. 

Vacancies ( as 
a % of total 
posts) 

% 

0-3 

0 

1 

0 

1 

5% 

4-6 

7 

8 

6 

1 

5% 

7-9 

5 

5 

5 

0 

0 

10-12 

5 

5 

5 

1 

0 

13-15 

0 

0 

0 

0 

0 

16-18 

1 

1 

1 

1 

0 

19-20 

0 

0 

0 

0 

0 

Total 

18 

20 

16 

4 

20% 


Financial Service Objectives 

Service 

Objectives 

Service 

Indicators 

(i) 

Outline 

Service 

Targets 

(ii) 

2009/10 

2010/11 

2011/12 

201V13 

Target 

Actual 

Target 

Actual 

Target 

*Previous 

Year 

(iii) 

(ix) 

*Previous 

Year 

(X) 

*Current 

Year 

(Xi) 

(Xii) 

*Current 

Year 

(Xiii) 

*Current 

Year 

(ix) 

*Following Year 

(X) 

Service Objective 

MUNICIPAL 

FINANCIAL 

VIABILITY 

No more 
than x% of 
creditors 
raised (in 
Rand value) 
during the 
year 

outstanding 
(o/s) at year 
end 

No more 
than T0% 
of current 
yr 

creditors 
o/s at yr 
end 

No more 
than A0% 
of current 
yr 

creditors 
o/s at jT 
end 

No more 
than T1 % 
of current 
yr 

creditors 
o/s at yr 
end 

No more 
than T1 % 
of current 
yr 

creditors 
o/s at yr 
end 

No more 
than A1 % 
of current 
yr 

creditors 
o/s at yr 
end 

No more 
thanT2% 
of current 
yr 

creditors 
o/s at yr 
end 

No more 
thanT5% 
of current 
yr 

creditors 
o/s at yr 
end 

No more than 
T5% of current yr 
creditors o/s at 
yr end 

MUNICIPAL 

FINANCIAL 

VIABILITY 

x% 

reduction in 
number of 
invoices 
raised over 
the previous 
year's target 

T0% 

reduction 
in invoices 
raised; 
target 
limit of 

invoices 

A0% 

reduction 

in 

invoices 
raised; 
target 
limit of 
invoices 

Tl% 

reduction 
in invoices 
raised; 
target 
limit of 

invoices 

Tl% 

reduction 

in 

invoices 
raised; 
target 
limit of 
invoices 

Al% 

reduction 

in 

invoices 
raised; 
target 
limit of 
invoices 

T2% 

reduction 

in 

invoices 
raised; 
target 
limit of 
invoices 

T5% 

reduction 

in 

invoices 
raised; 
target 
limit of 
invoices 

T5% reduction in 
invoices raised; 
target limit of 
invoices 

Improving 
speed of legal 
measures to 

recover 

revenues 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 



Page 44 


3.16 HUMAN RESOURCE SERVICES 


INTRODUCTION TO HUMAN RESOURCE SERVICES 

The Human Resources function is located within the Departinent of Corporate Services and is 
headed by the Executive Manager Corporate Services who is accountable to the Municipal 
Manager. The Section serves as a catalyst to all Departments of the Municipality. The 
Department is also crucial in providing support to Political Office-Bearers. 


GENDER 

TOTAL NUMBER OF 
EMPLOYEES 

Females 

51 

Males 

181 


Below are statistics of employees in the Corporate Department (excluding other Departments): 


EMPLOYEES: Human Resources Services 

Job level 

2011/12 

201^13 

Employees 

No. 

Posts 

No. 

Employees 

No. 

Vacancies 

(fulltime 

equivalents) 

No. 

Vacancies ( as a 
% of total 
posts) 

% 

0-3 

3 

3 

3 

0 

0 

4-6 

0 

1 

0 

1 

11,11% 

7-9 

2 

2 

2 

0 

0 

10-12 

1 

1 

1 

0 

0 

13-15 

0 

0 

0 

0 

0 

16-18 

1 

1 

1 

0 

0 

19-20 

0 

0 

0 

0 

0 

Total 

7 

8 

7 

1 

11,11 


Human Resource Services Objectives 

Service Objectives 

Outline 

2009A0 

2010/11 

2011/12 

20iyi3 


Service 

Target 

Actual 

Target 

Actual 

Target 


Targets 

^Previous 


^Previous 

^Ciurent 


^Ciurent 

Year 

^Ciurent 

Year 

^Following 

Year 

Service Indicators 


Year 


Year 

Year 





(i) 

(ii) 

(iii) 

(iv) 

(v) 

(vi) 

(vii) 

(viii) 

(ix) 

(X) 

Service Objective 

GOOD 

Job 









GOVERNANCE 

description 

reviewed 

1 

1 

1 

1 

1 

1 

1 

1 

GOOD 

Work skills 









GOVERNANCE 

Plan 

developed 

1 

1 

1 

1 

1 

1 

1 

1 


Page 45 





Equity Plan 

1 

1 

1 

1 

1 

1 

1 

1 


Vacancies 
filled within 

3 months 

100% 

100% 

100% 

100% 

100% 

100% 

100% 

100% 



3.17 INFORMATION AND COMMUNICATION TECHNOLOGY (ICT) SERVICES 

Tswelopele Local Municipality did not provide any of the ICT services in-house. In instances 
where they were required by the Municipality, an external service provider was appointed. 


Page 46 


CHAPTER 4 


ORGANISATIONAL DEVELOPMENT PERFORMANCE 
(PERFORMANCE REPORT PART II) 


INTRODUCTION 

Tswelopele Municipality is dedicated toward the objectives of Local Government as outlined in 
Chapter 7 of the Constitution of the Republic of South Africa Act, 1996 (Act 108 of 1996). These 
objectives are to provide democratic and accountable government for local communities; to 
ensure the provision of services to communities in a sustainable manner; to promote social and 
economic development; to provide a safe and healthy environment; to encourage the 
involvement of communities and community based organization in the matters of local 
government. 

COMPONENT A: INTRODUCTION TO THE MUNICIPAL PERSONNEL 

Below is an outline of Roles and Responsibilities of various Stakeholders in the Management of 
Performance Management System (PMS) at Tswelopele Local Municipality. 


ROLES AND RESPONSIBILITIES OF STAKEHOLDERS IN THE MANAGEMENT 

OF THE PMS 


A. MUNICIPAL COUNCIL'S POLITICAL OVERSIGHT ROLES AND 
RESPONSIBILITIES 


Planning 

Monitoring 

Review 

Reporting 

Performance Audit 

1. Adopts priorities 

1. Approves the 

1. Receives externally 

1. Notes the mimicipal 

and objectives of the 

annual review 

audited 

annual audit plan 

Integrated 

programme of the 

performance reports 

and any substantial 

Development Plan. 

IDP, including the 

from the Mayor 

changes to it. 

2. Adopts the PMS 

review of key 

every quarter. 

2. Can receive reports 

framework. 

performance 

2. Reports the 

directly from the 

3. Adopts the 

indicators and 

municipality 

Audit Committee. 

mimicipality's 

performance targets. 

performance to the 

3. Approves the 

corporate strategy 

2. Approves the 

community twice a 

implementation of 

that includes key 

annual 

year. 

the 

performance 

improvement 

3. Approves 

recommendations of 

indicators and 

measures of the 

recommendations 

the Audit 

performance targets. 

mimicipality as part 

for the improvement 

Committee with 

4. Assigns the 

of the new 

of the performance 

regard to both 

responsibility for the 

municipal strategic 

management 

improvement in the 

management of the 

scorecard. 

system. 

performance of the 

PMS to the Mayor. 

3. Approves any 

4. Annually approves 

mimicipality or 


Page 47 





Planning 

Monitoring 

Review 

Reporting 

Performance Audit 

5. Adopts SDBIPS. 

changes to the 
priorities, objectives, 
key performance 
rndicators and 
performance targets 
of the mrmicipality. 

performance 
appraisal of the 
mrmicipal manager 
and other section 57 
employees. 

5. Submits the 

mrmicipal armual 
report to the 

Auditor General and 
the MEC. 

rmprovement of fhe 
performance 
management system 
itself. 

4. Receives 

performance audit 
report from the 
Auditor General and 
approves 

implementation of 
its 

recommendations. 


B. ROLES AND RESPONSIBILITIES OF THE EXECUTIVE COMMITTEE 


Planning 

Monitoring 

Review 

Reporting 

Performance Audit 

1. Submits priorities and 
objectives of the IDP to 
Council for approval. 

2. Submits the PMS 
framework for approval. 

3. Submits the mrmicipality's 
corporate strategy that 
mcludes key performance 
mdicators and performance 
targets for approval. 

4. Approves the SDBIP 

5. Mandate the Mayor to enter 
rnto a performance 
agreement with the 

Municipal manager on 
behalf of Council. 

6. Assigns the responsibility 
for the management of the 
PMS to the Municipal 
Manager. 

1. Proposes to Council, the 
armual review 
programme of the IDP, 
mcludmg the review of 
key performance 
mdicators and 
performance targets. 

2. Proposes the armual 
performance 
improvement measures 
of the mrmicipality. 

3. Proposes changes to the 
priorities, objectives, key 
performance rndicators 
and performance targets 
of the mrmicipality. 

4. Quarterly evaluates the 
performance of the 
mrmicipality against 
adopted KPIs and 
targets. 

5. Quarterly reviews the 
performance of 
departments to improve 
the economy, efficiency 
and effectiveness of the 
mrmicipality. 

6. Quarterly and armually 
evaluates the 

1. Receives performance 
reports quarterly from 
the Municipal Manager 

2. Receives performance 
reports twice a year 
from the Audit 
Committee. 

3. Receives Monthly 
financial indicators and 
quarterly performance 
reports from the 
Municipal Manager on 
the performance of 
section 57 employees. 

4. Reports to Council on 
the performance of the 
mrmicipality once every 
quarter. 

5. Reports to Council on 
the recommendations 
for the improvement of 
the performance 
management system. 

6. Armually reports to 
Council on the 
performance of the 
Municipal Manager 
and other section 57 
employees. 

1. Submits the mrmicipal 
armual audit plan and 
any substantial 
changes to it to 

Council for approval. 

2. Approves the 
implementation of the 
recommendations of 
the intemal auditor 
with regard to both 
improvement in the 
performance of the 
municipality or 
rmprovement of the 
performance 
management system 
itself. 

3. Receives performance 
audit report from the 
Auditor General and 
makes 

recommendations to 
Council. 


Page 48 






Planning 

Monitoring 

Review 

Reporting 

Performance Audit 


performance of the 
Municipal Manager. 




C. ROLES AND RESPONSIBILITIES OF THE MUNICIPAL MANAGER 


Planning 

Implementation 

Monitoring 

Review 

Reporting 

Performance 

Audit 

1. Coordmates the 

1. Manages the overall 

1. Formulates the 

1. Receives 

1. Formulates the 

process of IDP needs 

implementation of the 

annual review 

performance 

mrmicipal 

identrfication and 

IDP. 

programme of 

reports 

armual audit 

prioritization among 

2. Ensures that all role 

the IDP, 

quarterly from 

plan. 

all stakeholders. 

players implement the 

including the 

the intemal 

2. Formulates a 

including community 

provisions of the PMS 

review of key 

auditor. 

response to the 

structures. 

framework. 

performance 

2. Receives 

recommendati 

2. Coordinates the 

3. Ensures that the SDBIP 

indicators and 

performance 

ons of the 

formulation and 

serve the achievement of 

performance 

reports twice a 

rntemal 

revision of the PMS 

corporate performance 

targets for the 

year from the 

auditor and 

framework. 

targets. 

consideration 

Performance 

the Audit 

3. Coordinafes the 

4. Ensures that the SDBIP 

of Council 

Audit 

Committee. 

formulation and 

is implemented 

Committees 

Committee. 

3. Formulates a 

revision of the 

according to the 

and the Mayor. 

3. Receives 

response to 

municipality's 

approved targets and 

2. Formulates the 

monthly 

performance 

corporate strategy that 

timeframes. 

armual 

departmental 

audit report of 

includes key 

5. Implements 

performance 

performance 

the 

performance 

performance 

improvement 

reports from 

4. Auditor 

indicators and 

improvement measures 

measures of 

HoD's. 

General and 

performance targets. 

approved by the Mayor 

the 

4. Reports once 

makes 

4. Leads the process of 

and the Council. 

municipality 

quarterly to 

recommendati 

the formulation and 

6. Ensures that 

as part of the 

council 

ons to the 

revision of the SDBIP. 

performance objectives 

new corporate 

committees 

Mayor. 

5. Enters into a 

in the section 57 

strategy and 

and the Mayor 


performance 

employee's performance 

SDBIP. 

on the 


agreemenf with other 

agreements are 

3. Quarterly 

performance of 


section 57 employees 

achieved. 

reviews the 

Directorates. 


on behalf of Council 


performance of 

5. Reports on the 




departments to 

implementatio 




improve the 

n of 




economy. 

improvement 




efficiency and 

measures 




effectiveness of 

adopted by the 




the 

Mayor and 




mrmicipality. 

Council. 




4. Quarterly and 

6. Armually 




armually 

reports on the 




evaluates the 

performance of 




performance of 

section 57 




section 57 

employees. 




employees. 

7. Submit the 



Page 49 




Planning 

Implementation 

Monitoring 

Review 

Reporting 

Performance 

Audit 




municipal 
annual report 
to the Mayor 



D. ROLES AND RESPONSIBILITIES OF COUNCIL COMMITTEES 


Planning 

Monitoring 

Review 

Reporting 

Performance Audit 

1. Advice the Mayor on 
priorities and objectives 
of the Integrated 
Development Plan. 

2. Deliberates and advice 
on the corporate 
strategy and SDBIP that 
includes key 
performance indicators 
and performance 
targets. 

3. Ensures that concerns 
of community 
structures are taken 
into account in 
discharging their 
responsibilities. 

1. Participate in the 
formulation of the 
annual review 
programme of the IDP. 

2. Participate in the 
formulation of proposals 
for the armual 
performance 
improvement measures 
of the mrmicipality as 
part of the corporate 
strategy. 

3. Quarterly evaluates the 
performance of their 
portfolios against 
adopted KPIs and 
targets. 

4. Quarterly reviews the 
performance of their 
portfolios to improve the 
economy, efficiency and 
effectiveness of the 
mrmicipality. 

1. Receives quarterly 
reports from the 

Directors responsible for 
their portfolios before 
they are tabled at the 
Mayor and Council. 

2. Reports to the Mayor on 
the recommendations for 
the improvement of the 
performance 
management system. 

1. Participate in the 
formulation of the armual 
audit plan. 

2. Advises the Mayor on the 
implementation of the 
recommendations of the 
intemal auditor with 
regard to both the 
improvement in the 
performance of the 
mrmicipality and 
improvement of the 
performance management 
system itself. 


Page 50 




E. ROLES AND RESPONSIBILITIES OF HEADS OF DEPARTMENTS 


Planning 

Monitoring 

Implementation 

Review 

Reporting 

Performance 

Audit 

1. Participates in the 

1. Manages the 

1. Participates in the 

1. Submit 

1. Participates in 

IDP process 

implementation of 

formulation of the 

monthly 

the 

2. Participates in the 

fhe SDBIP. 

annual review 

section 71 

formulation of 

formulation and 

2. Ensures that the 

programme of the 

reports 

the response to 

revision of the 

SDBIPis 

IDP, including the 

2. Comment on 

the 

municipality's 

implemented 

review of key 

section 71 

recommendati 

corporate strategy 

accordmg to the 

performance 

reports on 

ons of fhe 

that includes key 

approved targets 

indicafors and 

material 

intemal 

performance 

and timeframes. 

performance 

variances 

auditor and 

indicafors and 

3. Implements 

targets for the 

3. Reports on the 

the 

performance 

performance 

consideration of 

implementatio 

Performance 

targets. 

improvement 

Council 

n of 

Audit 

3. Develop Technical 

measures approved 

Committees and 

improvement 

Committee. 

SDBIP 

by the Mayor and 

the Mayor. 

measures 

2. Participates in 

4. Enters into a 

the Council. 

2. Annually reviews 


the 

performance 

4. Manages the 

the performance of 


formulation of 

agreement with the 

implementation of 

the Municipality 


the response to 

Municipal 

subordmates' 

3. Quarterly and 


performance 

Manager. 

performance 

annually evaluates 


audif report of 

5. Manages the 

measurement 

the performance of 


the Auditor 

development of 

system. 

the department. 


General and 

subordinafes' 

5. Ensures that 



makes 

performance 

performance 



recommendati 

measurement 

objectives in the 



ons to the 

system. 

performance 



Municipal 


agreements are 



Manager 


achieved. 





F. ROLES AND RESPONSIBILITIES OF STAFF 


Planning 

Implementation 

Review 

Reporting 

1. Participates m the 
development of fhe SDBIP 

2. Participafes in the 
development of their own 
performance measurement. 

1. Executes individual 
work plans. 

1. Participates in the 
review of unif 
plans. 

2. Participates in the 
review of own 
performance. 

1. Reports to Irne 
manager on the 
implementation of 
their work plans. 


Page 51 



G. ROLES AND RESPONSIBILITIES OF INTERNAL AUDIT 


Planning 

Monitoring 

Review 

Reporting 

1. Participates in the 
formulation of fhe Audif 
Commiffee Charfer. 

2. Parficipafes in fhe 
formulafion of fhe annual 
audif plan. 

1. Review the functionality of fhe PMS 
sysfem 

2. Compliance wifh fhe Acf 

3. Audif fhe resulfs of fhe performance 
measuremenfs 

4. The exfenf fo which the municipality's 
performance measuremenfs are 
reliable in measuring the performance 
of mimicipalifies by makrng use of 
indicafors 

1. Report to the MM and to 
the Performance Audif 
Commiffee regarding fhe 
performance measuremenfs 

2. Receive annual 
performance and budgef 
reports from council 

3. Parficipafe in the 
development of fhe 

Oversighf report 


H. ROLES AND RESPONSIBILITIES OF THE PERFORMANCE /AUDIT 
COMMITTEE 


Planning 

Monitoring 

Review 

Reporting 

1. Plan the work of fhe 
Performance Audif 
Commiftee 

1. Review the reports submitted to it; 

2. Review the Municipality's PMS and 
make recommendations m this regard 
to the Municipal Council; and 

3. Must focus on fhe economy, efficiency, 
effecfiveness and impacf in so far as 
fhe KPI's and performance fargefs sef 
by fhe mimicipalify are concerned 

1. Af least twice during the 
financial year submif an 
audit report to the 

Municipal Council; 

2. Participate in the 
development of fhe 

Oversighf report 


I. ROLES AND RESPONSIBILITIES OF THE COMMUNITY 


Planning 

Monitoring 

Review 

Reporting 

1. Participate in the drafting and 
implementation of fhe mimicipalify's 
IDP fhrough esfablished forums 

2. Parficipafes in the development of fhe 
PMS, fo Commenf on KPIs and fargefs 
sef for the municipality every year 

3. Make representations on the draft 
armual budget 

1. Participate in the armual 
review of performance 
fhrough fheir involvemenf 
in fhe developmenf of the 
Oversight Report. 

1. Receive armual 
performance and 
budgef reporfs from 
council 

2. Parficipafe in the 
development of fhe 
Oversight report 


Page 52 





4.1 EMPLOYEE TOTALS, TURNOVER AND VACANCIES 


EMPLOYEES 

Description 

2011/12 

201^13 


Employees 

Approved 

Employees 

Vacancies 

Vacancies 


No. 

Posts No 

No. 

No. 

% 

Water 

8 

17 

16 

1 

5,88% 

Waste Water (Sanitation) 

23 

35 

29 

6 

17,42% 

Electricity 

4 

5 

4 

1 

20,00% 

Waste Management 

54 

55 

52 

3 

5,45% 

Public Works ,includes Roads, 
Storm Water, Waste Water, 
Workshop & Admin Personnel 

35 

42 

36 

6 

14,28 

Housing Services 

4 

4 

4 

0 

0 

HR Services, Committee and 
Library 

14 

14 

13 

1 

7,14% 

Local Economic Development 

1 

2 

1 

1 

50% 

Executive & Council Employees 

12 

11 

10 

1 

9,09% 

Community and Social 
Development 

4 

5 

5 

0 

0 

Financial Services 

18 

20 

18 

2 

10% 

Traffic and Disaster 

2 

8 

6 

2 

25,00% 

Cemeteries and Halls 

31 

41 

39 

2 

4,87% 

Human Resource Services 

7 

8 

7 

1 

11,11% 

Risk Management 


2 

1 

1 

50% 

Procurement Services 


1 

1 

0 

0 

Financial Services 


20 

16 

4 

20,00% 

TOTALS 

218 

263 

233 

30 

6,66 


VACANCY RATE 201^13 

Designation 

*Total 
Approved 
Posts No. 

^Vacancies (Total 
time 

that vacancies exist 
using fulltime 
equivalents) 

No. 

^Vacancies (as a 
Proportion of total 
posts in each 
category) 

% 

Municipal Manager 

1 

0 

0 

CFO 

1 

0 

0 

Other Sec. 57 Managers (excluding finance 
posts) 

4 

1 

25% 

Other Sec. 57 Managers (finance posts) 

0 

0 

0 

Traffic Officers 

4 

1 

25% 

Fire fighters 

0 

0 

0 

Senior management: Levels 13-16 
(excluding finance posts 

2 

0 

0 


Page 53 


Senior management : Levels 13-16 (finance 
posts) 

1 

1 

100% 

Highly skilled supervision: Levels 9-12 
(finance posts) 

5 

0 

0 

TOTALS 

18 

3 

17,64% 


TURN-OVER RATE: 201^13 

Details 

Total Employees as of 
Beginning of financial 
year No. 

Terminations during 
the Financial Year No. 

Turn-over Rate* 

2010/11 

216 

11 

5,55% 

2011/12 

218 

5 

2,29%% 

20iyi3 

237 

10 

4,22% 


VACANCIES AND TURNOVER: 

The Municipality has been able to retain staff across all levels and occupational categories. The 
impact that the current Minimum Competency Levels as prescribed by National Treasury will 
have on the staff turnover is unknown at this stage. 


COMPONENT B: MANAGING THE MUNICIPAL WORKFORCE 


INTRODUCTION TO MUNICIPAL WORKFORCE MANAGEMENT 

Our municipality has developed and adopted a number of policies that are intended to create a 
fair, efficient and transparent system on matters affecting the employees. These documents are 
not only adopted but have been posted on our website to ensure that they are easily accessible. 
The municipality reviews these policies regularly to ensure that they are on par with best 
practices, new and amended legislation. 

4.2 POLICIES 


HUMAN RESOURCES POLICIES AND PLANS 

No. 

Name of Policy 

Completed 

% 

Reviewed 

% 

Date adopted by council or 
comment on failure to adopt 

1. 

Affirmative Action 

0 

0 

N/A 

2. 

Attraction and Retention 

100 

0 

Still to be adopted. 

3. 

Code of conduct for employees 

100 

100 

As contained in the 

Municipal Systems Act (, Act 
32 of 2000). 

4. 

Delegations, Authority and 
Responsibility 

100 

100 

22 February 2006 


Page 54 




HUMAN RESOURCES POLICIES AND PLANS 

No. 

Name of Policy 

Completed 

% 

Reviewed 

% 

Date adopted by council or 
comment on failure to adopt 

5. 

Disciplinary Code and 

Procedure 

100 

100 

As approved by parties to 
the SALGBC. 

6. 

Essential Services 

100 

100 

As approved by parties to 
the Local Labour Forum 

7. 

Employee Assistance/wellness 

100 

100 

22 August 2011 

8. 

Employment Equity 

100 

100 

Adopted on 30 November 
2010. 

9. 

Exit Management 

100 

0 

See item 2 above 

10. 

Grievance Procedure 

100 

100 

As approved by parties to 
SALGBC. 

11. 

HIV/AIDS 

100 

100 

22 August 2011 

12. 

Human Resources Policy 

100 

100 

22 August 2011 

13. 

Information Technology 

100 

0 

Adopted on 29 March 2006 

14. 

Job Evaluation 

100 

100 

As approved by parties to 
SALGBC. 

15. 

Leave 

100 

100 

22 August 2011 

16. 

Occupational Health and Safety 

100 

100 

22 August 2011 

17. 

Official Housing 

100 

100 

22 August 2011 

18. 

Official Journey 

100 

100 

22 August 2011 

19. 

Official transport to attend 
funerals 

100 

100 

22 August 2011 

20. 

Official Working Hours and 
Overtime 

100 

100 

22 August 2011 

21. 

Organisational Rights 

100 

0 

Adopted by parties to 
SALGBC. 

22. 

PayroII Deductions 

100 

0 

Adopted on 30 May 2001. 

23. 

Performance Managemenf and 
Developmenf 

100 

100 

Adopted on 30th November 
2010. 

24. 

Recruifmenf, Selecfion and 
Appoinfmenfs 

100 

100 

22 August 2011 

25. 

Remimerafion Scales and 
Allowances 

100 

100 

Determined by parties to 
SALGBC. 

26. 

Resefflemenf 

100 

100 

22 August 2011 

27. 

Sexual Harassmenf 

100 

100 

22 August 2011 

28. 

Skills Developmenf 

100 

100 

22 August 2011 

29. 

Smoking 

100 

100 

22 August 2011 

30. 

Special Skills 

100 

0 

Retention and Exit Policy 
pendrng approval. 

31. 

Work Organisafion 

100 

0 

As per approved staff 
esfablishmenf. 

32. 

Uniforms and Profecfive 

Clofhing 

100 

100 

22 Augusf 2011 

33. 

Ofher 

100 

100 



Page 55 


4.3 INJURIES, SICKNESS AND SUSPENSIONS 


Number and Cost of Injury on Duty 

Type of Injury 

Injury 

Leave 

Taken 

Days 

Employee 

using 

injury 

leave 

Days 

Proportion 
employees 
using sick 
leave 

% 

Average 
Injury Leave 
per employee 
Days 

Required basic medical attention only 

31 

5 

2,14% 

6,2 days 

Temporary total disablement 

0 

0 

0 

0 

Permanent disablement 

0 

0 

0 

0 

Fatal 

0 

0 

0 

0 

TOTAL 

31 

5 

2,14% 

6,2days 


Number of days and Cost of Sick Leave (excluding injury of duty) 

Designations 

Total 

sick 

leave 

Proportion 
of sick 
leave 
without 
certification 

Employees 
using sick 
leave 

Total 

employees 
in post* 

*Average sick leave 
per Employee 

Days 

% 

No. 

No. 

Days 

Lower skilled (level 1-2) 

268 

8,2% 

94 

117 

2,85% 

Skilled (levels 3-5) 

51 

5,88% 

20 

39 

2,55 

Highly skilled 
production (levels 6-8) 

39 

10,25% 

20 

43 

1,95 

Highly skilled 
supervision (levels 9-12) 

33 

6,06% 

15 

25 

2,2 

Senior Management 
(levels 13-15) 

1 

100% 

1 

27 


MM and Sec. 57 

0 

0 

0 


0 

TOTAL 

392 


150 

233 

2,6 


INJURY AND SICK LEAVE: 

TJie total number of days taken/ used by employees during 2012/13 financial year is 1679 days 
involving 596 employees. 


Page 56 




Number and Period of Sus 

jensions 

Positions 

Nature of Alleged 
Misconduct 

Date of 
Suspension 

Details of Disciplinary 
Action taken or Status of 
Case and Reasons why 
not Finalised 

Date 

Finalised 

Debtors Clerk 

Gross msubordination 

29/01/13 to 
date 

SAMWU took case to 
SALGBC 

N/A 


Disciplinary Action Taken on Cases of Financial Misconduct 

Position 

Nature of Alleged Misconduct 
and Rand Value of the loss to the 
municipality 

Disciplinary action taken 

Date 

Finalized 

Cashier 

Theft =R40 280-21 

Suspended 23/11/12, 
Disciplinary hearing. SAMWU 
took case to SALGBC 

N/A 


SUSPENSIONS AND CASES OF FINANCIAL MISCONDUCT 

During the term under review there was only one (1) incident of suspension and case of financial 
misconduct. 

4.4 PERFORMANCE REWARDS 

The only reward system applicable currently at the municipality is the payment of performance 
bonuses to the Municipal Manager and Managers accountable to the Municipal Manager. At the 
time of drafting this report no performance bonus for the 2012/13 financial year had been paid as 
the performance of the affected employees had not yet been evaluated. 


COMPONENT C: CAPACITATING THE MUNICIPAL WORKFORCE 


WORKFORCE CAPACITY DEVELOPMENT 

A key document in this regard is the Skills Development Plan drawn in terms of the Skills 
Development Act. Assessment of skills levels of employees and gaps are regularly identified and 
external interventions sought and implemented in line with the Plan. 

The information provided below is about the Minimum Competency Levels determined by the 
National Treasury Levels that certain categories of employees must comply with; by the 31 
January 2011 or at least apply for Special Merit Cases where the Municipality does not comply. 


Page 57 





COMPONENT C: MANAGING THE WORKFORCE EXPENDITURE 


4.5 EMPLOYEE EXPENDITURE 


Number of Employees Whose Salaries Were Increased Due To Their Positions Being Upgraded 

Beneficiaries 

Gender 

1 1 


Male 

Female 

lOtal 

Lower skilled (levels 1-2) 

0 

0 

0 

Skilled (levels 3-5) 

0 

0 

0 

Highly skilled production (levels 6-8) 

0 

0 

0 

Highly skilled supervision (levels 9-12) 

1 

0 

1 

Senior Management (levels 13-16) 

0 

1 

1 

MM and Section 57 

0 

0 

0 

TOTAL 

1 

1 

2 


Employees Whose Salary Levels Exceeded The Grade Determined By Job Evaluation 

Occupation 

Number of 
employees 

Job evaluation 
level 

Remrmeration Level 

Executive Secretary 

1 

T7 

Old Post Level 6/1 

Principle Clerk-Debtors 

1 

T7 

Old PL3 

Principle Clerk-Debtors 

1 

T7 

Old PL6/1 

Traffic Officer 

1 

T9 

Old PL4/1 

Disaster Management Officer 

1 

T9 

Old PLl 

General Worker 

1 

T2 

Old PL2 

General Worker 

1 

T2 

Old PL 14/1 

General Worker 

4 

T2 

01dPL15/l 


Employees not appointed to established posts 

Department 

Level 

Date of 
appointment 

No. 

Appointed 

Reasons for appointment when 
no established post exist 

N/A 

N/A 

N/A 

N/A 

N/A 


Page 58 







Skills Development 

Management level 

Gender 

Employees as at the beginning of the 
financial year 

No. 

MM and S57 

Female 

1 

Male 

3 

Legislators, senior officials and managers 

Female 

0 

Male 

0 

Professionals 

Female 

3 

Male 

11 

Plant and machine operators and assemblers 

Female 

0 

Male 

5 

Male 

0 

Sub total 

Female 

4 

Male 

18 

Total 


22 


DISCLOSURES OF FINANCIAL INTERESTS 

During the year under review, no employees or councillors had declared any interest on any 
work done to the municipality or any organ of state. 


Page 59 


CHAPTER 5 


FINANCIAL PERFORMANCE 
INTRODUCTION 

Chapter 5 contains information regarding financial performance and highlights specific 
accomplishments . 

The chapter comprises of three components: 

Component A: Statement of Financial Performance 
Component B: Spending Against Capital Budget 
Component C: Other Financial Matters 

The municipality sought to contain inflationary pressures during the financial year through 
anticipating it during the budget preparation process and factoring it into the budget. 


Page 60 



COMPONENT A: STATEMENTS OF FINANCIAL PERFORMANCE 


5.1 STATEMENTS OF FINANCIAL PERFORMANCE 



Statement of Financial Performance 




Fisures in Rand 

Notels') 

2013 

2012 

Revenue 




Service charges 

23 

32 202 116 

27 754 677 

Rental of facilities and equipment 

24 

882 534 

389 622 

Interest received (trading) 


104 165 

265 387 

Licences and permits 


1350 

1100 

Sale of game 


158 522 

197 300 

Other income 

25 

1 064 852 

533 027 

Interest received - investment 


419 298 

815 952 

Dividends received 


258 565 

69 042 

Property rates 

26 

7 477 676 

6 571 275 

Government grants and subsidies 

27 

98 413 772 

97 697 348 

Fines 


259 400 

248 300 

Total revenue 


141 242 250 

134 543 030 

Expenditure 




Personnel 

28 

(38 525 232) 

(32 001 458) 

Remimeration of councillors 

29 

(4 025 443) 

(3 670 373) 

Depreciation and amortisation 

30 

(19 330 543) 

(20 290 458) 

Frnance costs 

31 

(3 586 642) 

(2 661 095) 

Movement in bad debt provision 

32 

(4 112 517) 

(6 260 335) 

Repairs and maintenance 


(6 677 885) 

(5 534 176) 

Bulk purchases 

33 

(28 337 970) 

(24 839 234) 

General Expenses 

34 

(21 045 2661 

(19 232 8091 


Total expenditure (125 641 498) 1114 489 938) 


Operating surplus 

15 600 752 

20 053 092 

Loss on disposal of assets and liabilities 

(66 862) - 


Fair value adjustments - game 

156 274 

176 804 

Fair value adjustments - shares 

35 74 075 

615 151 


163 487 

791 955 

Surplus for the vear 

15 764 239 

20 845 047 

Attributable to: 

Owners of the controllmg entity 

15 764 239 

20 845 047 


Page 61 




5.2 GRANTS 


OPERATING TRANSFERS AND GRANTS: 

Grants received were from the following sources: Equitable Share; Financial Management Grant; Lottery; 
Municipal Systems Improvement Grant; Municipal Infrastructure Grant and Skills Development Grant. 


COMPONENT B: SPENDING AGAINST CAPITAL BUDGET 


INTRODUCTION TO SPENDING AGAINST CAPITAL BUDGET 

Capital expenditure relates mainly to construction projects that will have value lasting over many years. 
Capital expenditure is funded from grants, borrowings and operating expenditures and surpluses. 
Component B deals with capital spending indicating where the funding comes from and whether 
Municipalities are able to spend the available fundrng as planned. 

5.3 CAPITAL SPENDING ON LARGEST PROJECTS 


Capital Expenditure of 3 largest projects* 

Name of Project 

201^13 

Variance 

Original 

Budget 

Adjustment 

Budget 

Actual 

Expenditure 

Original 

Variance 

(O/o) 

Adjustment 

variance 

(%) 

Construction of Sewerage 
Network 

25 015 000 

25 015 000 

25 015 000 

0% 

0% 

Construction of Athletic Fields 

9 500 000 

6 500 000 

5 921 148 

38% 

32% 

Fencing of Cemeteries 

1 900 000 

1 900 000 

153 509 

92% 

0% 


5.4 BASIC SERVICES AND INFRASTRUCTURE BACKLOGS - OVERVIEW 
INTRODUCTION TO BASIC SERVICE AND INFRASTRUCTURE BACKLOGS 

The need and cost of backlogs are the result of migration into an area; migration out of an area; 
the trend towards disaggregation of families into more than one housing unit; and the cost of 
renewing and upgrading core infrastructure. 


Page 62 





Municipal Infrastructure Grant (MIG)’^ Expenditure 201^13 

R' 

Details 

Budget 

Adjustments 

Budget 

Actual 

Variance 

Major conditions 
applied by donor 
(continue below if 
necessary) 

Budget 

Adjust- 

ments 

Budget 

Infrastructure - 
Sanitation 




0/ 

/0 

0/ 

/0 


Reticulation 

25 015 000 

25 015 000 

25 015 000 

0/ 

/0 

0/ 

/0 

100% Expenditure 
on Grants 

Total 

25 015 000 

25 015 000 

25 015 000 

0/ 

/0 

0/ 

/0 




5.5 BORROWING AND INVESTMENTS 


INSTRUMENT 

2011/12 

20iyi3 

Municipality 



Long term Loans (annuity/ reducing balance) 

0 

0 

Long term Loans (non-annuity) 

0 

0 

Local Registered Stock 

0 

0 

Installment Credit 

0 

0 

Linancial leases 

425 729 

0 

PPP Liabilities 

0 

0 

Linance Granted By Cap Equipment Supplier 

0 

0 

Market Bonds 

0 

0 

Non-Market Bonds 

0 

0 

Bankers Acceptance 

0 

0 

Linancial Derivatives 

0 

0 

Other Securities 

0 

0 

Municipality Total 

425 729 

0 


The Municipality has two loans with DBSA; the loans were acquired in 1984 and 2005, during the 
year under review Municipality did not make any borrowings. 

5.6 PUBLIC PRIVATE PARTNERSHIPS 

Tswelopele Municipality has not entered into any Public Private Partnerships (PPP) or any 
Municipal Services Partnerships as contemplated by Section 83(l)-(4) of the Municipal Systems 
Act (Act 32 of 2000; the White Paper on Municipal Services Partnerships nor in the Treasury 
Guidelines. 


Page 63 



COMPONENT C: OTHER FINANCIAL MATTERS 


5.7 SUPPLY CHAIN MANAGEMENT 

The Municipality has adopted updated Supply Chain Management and Procurement Policies in 
accordance with the guidelines set down by the SCM Regulations 2005. The Policy was amended 
following the changing of legislation in December 2011 to re-determine the BBBEE threshold and 
points allocation. No Councilors are members of any committee handling Supply Chain 
Processes. 


5.8 GRAP COMPLIANCE 

GRAP is the acronym for Generally Recognized Accounting Practice and it provides the rules by 
which municipalities are required to maintain their financial accounts. Successful GRAP 
compliance will ensure that municipal accounts are comparable and more informative for the 
municipality. It will also ensure that the municipality is more accountable to its citizens and 
other stakeholders. Information on GRAP compliance is needed to enable National Treasury to 
assess the pace of progress and consider the implications. 

AII standards of GRAP as disclosed in National treasury directive 5 have been complied with by 
the municipality. 

5.9 SERVICE CHARGES (Outstanding Debtors as at 30 June 2013) 

As at 30 June 2013, Tswelopele Eocal Municipality had outstanding debtors of R 32,568,807, of 
which 90% are debtors over 365 days. 


The table below shows debtors per source for the two financial years, i.e. 2012/2013 and 
2011 / 2012 financial years: 


Debtors by source 

2012/2013 Gross Amount 

2011 / 2012 Gross Amount 

Property Rates 

R 4,861,478 

R 5,572,122 

Electricity 

R 2,642,979 

R 2,135,672 

Water 

R 6,783,161 

R 6,494,558 

Sewerage 

R 9,968,928 

R 9,287,487 

Refuse 

R 6,976,233 

R 6,684,078 

Housing Rental 

R 1,335,028 

R 1,473,325 

Total 

R 32,568,807 

R 31,644,242 


• The information on the table above is further depicted by the graph below: 


Page 64 




RIO 000 000.00 
R9 000 000.00 
R8 000 000.00 
R7 000 000.00 
R6 000 000.00 
R5 000 000.00 
R4 000 000.00 
R3 000 000.00 
R2 000 000.00 
R1 000 000.00 
RO.OO 



■ 2012/2013 Fin year 

■ 2011/2012 Fin Year 


• From the above table and graph, it can clearly be seen that the debtors increased from 
2011/2012 by R 924,565.00. This is cause for concern given the fact that most people do 
not register for indigent, and yet they are not paying for the services they consume, this 
situation has led to Municipality to depend on grants for their day to day operation, and 
in future it may stifle service delivery. 


• The municipality provides for expected credit losses relating to consumer debtors. At the 
end of each reporting period, the municipality assesses whether there is any objective 
evidence that a financial asset or group of financial assets is impaired. If there is objective 
evidence that an impairment loss on a financial asset has occurred, the loss is recognized 
in surplus or deficit. 

• During 2012/2013 financial year, municipality impaired debtors to the value of R 
24,887,512, this accounts for 76% of total debtors, this effectively means that, if 
Municipality were to embark on a robust credit control mechanism, only 24% of debtors 
will be able to pay. 

• Auditor General raised a concern about this impairment, and recommended that council 
enforce their council adopted debt recovery policy without fear or favor. 

• Tswelopele Local Municipality further wrote off debtors to the value of R 4,503,471. 

• The municipality plans to embark on a robust revenue enhancement strategy to address 
all the grey areas mentioned above. 


Page 65 




CHAPTER 6 


AUDITOR GENERAL AUDIT FINDINGS 
INTRODUCTION 

Section 188(1) (b) of the Constitution states that the functions of the Auditor-General includes the 
auditing and reporting on the accounts, financial statements and financial management of all 
municipalities. Section 45 of the Municipal Systems Act states that the results of performance 
measurement must be audited annually by the Auditor-General. 


COMPONENT A: AUDITOR-GENERAL OPINION OF FINANCIAL STATEMENTS 2012/13 
6.1 AUDITOR GENERAL REPORT 2012/13 

During the 2012/13 Financial Year, Tswelopele Municipality obtained a financially unqualified 
Audit Report with other matters. The matters raised by the Auditor-General as well as remedial 
action plan developed by the Municipality are as outlined below: 


AUDITOR-GENERAL REPORT ON SERVICE DELIVERY PERFORMANCE 201^13 

Audit Report Status: Unqualified Audit Opinion 

Non-Compliance Issues 

Remedial Action Taken 



Various issues raised 

Audit Action Plan developed to address the non- 
compliance issues 





AUDITOR-GENERAL REPORT ON FINANCIAL PERFORMANCE 201^13 

Audit Report Status: Unqualified report 


Non-Compliance Issues 

Remedial Action Taken 

Various matters 

The Audit Action Plan developed to address the 
non-compliance issues 




Page 66 




REPORT OF THE AUDITOR-GENERAL TO THE FREE STATE LEGISLATURE AND THE 

COUNCIL ON THE TSWELOPELE LOCAL MUNICIPALITY 

REPORT ON THE FINANCIAL STATEMENTS 

Introduction 

1 . I have audited the financial statements of the Tswelopele Local Municipality set out on pages 
86 to 185, which comprise the statement of financial position as at 30June2013, the 
statement of financial performance, statement of changes in net assets and cash flow 
statement for the year then ended and statement of comparison of budget and actual 
amounts, and the notes, comprising a summary of significant accounting policies and other 
explanatory information. 

Accounting officer’s responsibility for the financial statements 

2. The accounting officer is responsible for the preparation and fair presentation of the financial 
statements in accordance with 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, 2012 (Act No. 5 of 2012) (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. 

Auditor-general’s responsibility 

3. My responsibility is to express an opinion on the financial statements based on my audit. I 
conducted my audit in accordance with the Public Audit Act of South Africa, 2004 (Act No. 25 
of 2004) (PAA), the general notice issued in terms thereof and International Standards on 
Auditing. Those standards require that I comply with ethical requirements and plan and 
perform the audit to obtain reasonable assurance about whether the financial statements are 
free from material misstatement. 

4. An audit involves performing procedures to obtain audit evidence about the amounts and 
disclosures in the financial statements. The procedures selected depend on the auditor® 
judgement, including the assessment of the risks of material misstatement of the financial 
statements, whether due to fraud or error. In making those risk assessments, the auditor 
considers internal control relevant to the entityè preparation and fair presentation of the 
financial statements 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 
entityè internal control. An audit also includes evaluating the appropriateness of accounting 
policies used and the reasonableness of accounting estimates made by management, as 
well as evaluating the overall presentation of the financial statements. 

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

Opinion 

6. In my opinion, the financial statements present fairly, in all material respects, the financial 
position of the Tswelopele Local Municipality as at 30 June 2013 and its financial 
performance and cash flows for the year then ended in accordance with SA Standards of 
GRAP and the requirements of the MFMA and DoRA. 


Page 67 


Emphasis of matters 

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

Restatement of corresponding figures 

8. As disclosed in note 48 to the financial statements, the corresponding figures for 30 June 
2012 have been restated as a result of errors discovered during 2013 in the financial 
statements of the municipality at, and for the year ended, 30 June 201 2. 

Material losses and impairments 

9. As disclosed in note 4 to the financial statements, material losses to the amount of R4 503 
471 (2012: R3 379 784) were incurred as a result of bad debts written off. 

10. As disclosed in note 4 to the financial statements, a provision for impairment to the amount 
of R24 887 512 (2012: R25 278 466) was made with regard to amounts owing to the 
municipality in respect of consumer debts amounting to R32 698 943 (2012: R706 702). 

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS 

1 1 . In accordance with the PAA and the general notice issued in terms thereof, I report the 
following findings relevant to performance against predetermined objectives, compliance with 
laws and regulations and internal control, but not for the purpose of expressing an opinion. 

Predetermined obiectives 

12. I performed procedures to obtain evidence about the usefulness and reliability of the 
information in the annual performance report as set out on pages 16 to 56 of the annual 
report. 

13. The reported performance against predetermined objectives was evaluated against the 
overall criteria of usefulness and reliability. The usefulness of information in the annual 
performance report relates to whether it is presented in accordance with the National 
Treasury® annual reporting principles and whether the reported performance is consistent 
with the planned development objectives. The usefulness of information further relates to 
whether indicators and targets are measurable (i.e. well defined, verifiable, specific, 
measurable and time bound) and relevant as required by the National Treasury® Framework 
for managing programme performance information (FMPPI). 

14. The reliability of the information in respect of the selected development objectives is 
assessed to determine whether it adequately reflects the facts (i.e. whether it is valid, 
accurate and complete). 

The material findings are as follows: 

Usefulness of information 

15. Section 46 of the Municipal Systems Act, 2000 (Act No. 32 of 2000) (MSA) requires 
disclosure in the annual performance report of measures taken to improve performance 
where planned targets were not achieved. The performance report submitted by the 
municipality for audit purposes did not include actual performance for the year. I could 
therefore not conclude as to whether the municipality had achieved its planned targets and 
reasons for not achieving, where applicable. This was due to the lack of adequate 
knowledge and skills by officials and inadequate oversight over performance reporting. 


Page 68 


16. The MSA, section 41 (c), requires that the actual achievements against all planned indicators 
and targets must be reported annually. The annual performance report submitted for audit 
purposes did not include the actual performance of 100% of all planned objectives, indicators 
and targets specified in the integrated development plan for the year under review. This was 
due to the lack of adequate knowledge and skills by officials and inadequate oversight over 
performance reporting. 

17. The FMPPI requires that performance targets be specific in clearly identifying the nature and 
required level of performance. A total of 98% of the targets were not specific in clearly 
identifying the nature and the required level of performance. This was due to the lack of 
adequate knowledge and skills by officials and inadequate oversight over performance 
reporting. 

18. The FMPPI requires that performance targets be measurable. The required performance 
could not be measured for 100% of the targets. The nature and required level of 
performance were not clearly specified for each target. This was due to the fact that 
management was aware of the requirements of the FMPPI but did not receive the necessary 
training to enable application of the principles. 

19. The FMPPI requires that the time period or deadline for delivery be specified. A total of 51% 
of the targets were not time bound in specifying a time period or deadline for delivery. This 
was due to the lack of adequate knowledge and skills by officials and inadequate oversight 
over performance reporting. 

20. The FMPPI requires that indicators should have clear unambiguous data definitions so that 
data is collected consistently and is easy to understand and use. A total of 36% of the 
indicators were not well defined in that clear, unambiguous data definitions were not 
available to allow for data to be collected consistently. This was due to the lack of adequate 
knowledge and skills by officials and inadequate oversight over performance reporting. 

21. The FMPPI requires that it must be possible to validate the processes and systems that 
produce the indicator. A total of 100% of the indicators were not verifiable in that valid 
processes and systems that produce the information on actual performance did not exist. 
This was due to the lack of key controls in the relevant systems of collection, collation, 
verification and storage of actual performance information 


Reliability of information 

22. The FMPPI requires that institutions should have appropriate systems to collect, collate, 
verify and store performance information to ensure valid, accurate and complete reporting of 
actual achievements against planned objectives, indicators and targets. 

I was unable to obtain the information and explanations I considered necessary to satisfy 
myself as to the reliability of information presented with respect to 1 00% of the development 
objectives. This was due to limitations placed on the scope of my work as actual performance 
was not included in the annual performance report and the municipalityè records did not 
permit the application of alternative procedures to determine the actual performance that 
should have been reported. 


Page 69 


Compliance with laws and requlations 

23. I performed procedures to obtain evidence that the entity has complied with applicable laws 
and regulations regarding financial matters, financial management and other related matters. 
My findings on material non-compliance with specific matters in key applicable laws and 
regulations as set out in the general notice issued in terms of the PAA are as follows: 

Strategic planning and performance management 

24. The municipality did not establish a performance management system, as required by 
section 38(a) of the MSA. 

Budget 

25. Expenditure was incurred in excess of the limits of the amounts provided for in the votes of 
the approved budget, in contravention of section 15 of the MFMA. 

Annual financial statements, performance and annual reports 

26. The financial statements submitted for auditing were not prepared in all material respects in 
accordance with the requirements of section 122 of the MFMA. Material misstatements of 
non-current assets, current assets, liabilities, expenditure and disclosure items identified by 
the auditors in the submitted financial statement were subsequently corrected, resulting in 
the financial statements receiving an unqualified audit opinion. 

27. The council's oversight report on the 2011-12 annual report was not made public within 
seven days of its adoption, as required by section 129(3) of the MFMA. 

28. The annual performance report for the year under review does not include the performance 
of the municipality, a comparison of the performance with set targets, a comparison with the 
previous financial year and measures taken to improve performance as required by section 
46(1 )(a), (b) and (c) of the MSA. 


Audit committee 

29. The audit committee did not meet at least four times a year, as required by section 166(4)(b) 
of the MFMA. 

30. The audit committee did not advise the accounting officer and municipal council on matters 
relating to risk management, performance management and performance evaluation as 
required by section 166(2)(a) of the MFMA. 

31. The audit committee did not advise the accounting officer and municipal council on matters 
relating to compliance with legislation, as required by section 166(2)(a)(vii) of the MFMA. 

32. The audit committee did not review the municipality® performance management system and 
make recommendations to the council, as required by municipal planning and performance 
management (MPPM) regulation 14(4)(a)(ii). 

33. The audit committee did not review the quarterly internal audit reports on performance 
measurement, as required by MPPM regulation 14(4)(a)(i). 

34. The audit committee did not submit, at least twice during the financial year, an audit report 
on the review of the performance management system to the council, as required by MPPM 
regulation 14(4)(a)(iii). 


Page 70 


Internal audit 


35. The internal audit unit did not function as required by section 165(2) of the MFMA, in that: 

(a) it did not prepare a risk-based audit plan and an internal audit programme for the 
financial year under review 

(b) it did not report to the audit committee on the implementation of the internal audit plan. 

36. The internal audit unit did not advise the accounting officer and report to the audit committee 
on matters relating to compliance with the MFMA, DoRA and other applicable legislation, as 
required by section 165(2)(b)(vii) of the MFMA. 

Procurement and contract management 

37. Goods and services with a transaction value of below R200 000 were procured without 
obtaining the required price quotations as required by SCM regulation 17(a) and (c). 

Expenditure management 

38. Money owing by the municipality was not always paid within 30 days or an agreed period, as 
required by section 65(2)(e) of the MFMA. 

39. An adequate management, accounting and information system was not in place which 
recognised expenditure when it was incurred and accounted for creditors, as required by 
section 65(2)(b) of the MFMA. 

40. Reasonable steps were not taken to prevent unauthorised, irregular expenditure and fruitless 
and wasteful expenditure, as required by section 62(1 )(d) of the MFMA. 

Revenue management 

41 . A credit control and debt collection policy was not implemented, as required by section 96(b) 
of the MSA and section 62(1)(f)(iii) of MFMA. 

Assets management 

42. An adequate management, accounting and information system which accounts for assets 
was not in place, as required by section 63(2)(a) of the MFMA. 

Consequence management 

43. Irregular expenditure incurred by the municipality was not investigated to determine whether 
any person was liable for the expenditure, in accordance with the requirements of section 
32(2) of the MFMA. 

Internal control 

44. I considered internal control relevant to my audit of the financial statements, the annual 
performance report and compliance with laws and regulations. The matters reported below 
under the fundamentals of internal control are limited to the significant deficiencies that 
resulted in, the findings on the annual performance report and the findings on compliance 
with laws and regulations included in this report. 


Page 71 


Leadership 


45. The municipal council and senior management did not provide adequate leadership as they 
did not ensure that the municipality had an approved performance management system. The 
accounting officer did not ensure that officials responsible for performance planning, 
monitoring, evaluation and reporting had the required competencies to enable them to 
perform their responsibilities. There were no consequences for incomplete and inaccurate 
performance by officials. 

46. The accounting officer did not exercise oversight responsibility over compliance with laws 
and regulations, which resulted in material repeat findings on predetermined objectives and 
non-compliance with laws and regulations being reported. This was due to a lack of 
consequences for poor performance by officials and changes in key senior management as 
the new accounting officer, chief financial officer and technical manager were appointed in 
the last quarter of the financial year. 

47. The accounting officer did not exercise adequate oversight over IT governance as processes 
to address findings on IT reported in the previous years were only initiated after the year- 
end. This was mainly due to the slow response by the political leadership as changes in key 
senior management were implemented in the last quarter of the financial year. 

Financial and performance management 

48. On-going monitoring and supervisory reviews over performance and compliance reporting 
were not adequate. Internal control weaknesses were not identified and corrected in time to 
ensure accurate and complete reporting. This was due to changes in key senior 
management in the last quarter of the financial year and lack of consequences for poor 
performance as officials were not held responsible for inaccurate and incomplete 
performance reporting and contravention of laws and regulations. 

Governance 

49. The audit committee did not provide adequate oversight over governance and internal 
controls as some members were appointed after year-end. The accounting officer and 
municipal council did not ensure that a properly constituted audit committee was fully 
operational throughout the year. This resulted in inadequate oversight over the internal audit 
function. The municipal council did not ensure that members of the audit committee were 
appointed in time to perform the oversight responsibility. 

50. Work performed by the internal audit function was not based on a risk assessment and 
therefore had limited impact on addressing key weaknesses in performance management 
and compliance with laws and regulations. This was due to a lack of effective leadership by 
the accounting officer as risk assessment was not prioritised and implemented. 

Bloemfontein 

30 November 2013 




AtjditinQ to huild puhlir. conf/c/ence? 


Page 72 


DETAILED MUNICIPAL ACTION PLAN TO ADDRESS ISSUES RAISED BY THE AUDITOR 
GENERAL. 


FINDINGS 

RESPONSIBLE 

DEPARTMENT 

RESPONSIBLE 

PERSON 

DUE DATE 

REMEDIAL ACTION 

EX.18.Risk Identification and 
management 

MUNICIPAL 

MANAGER 

MM 

12/31/2013 

The risk officer is appointed will start 
on 01/02/2014 

EX.15.Employee Cost - Performance 
Evaluations not done 

MUNICIPAL 

MANAGER 

Strategic Manager 

30/03/2014 

Performance Management Framework is in 
place, SDBIP is in place and quarterly 
reports prepared and are presented to 
council. 

EX.2:(CoA2)Audit Committee 

MUNICIPAL 

MANAGER 

Internal Auditor 


There is a budget for special investigations. 

EX.13.Internal audit: Internal 

control issues identified 

MUNICIPAL 

MANAGER 

Municipal 

Manager 


The departmental structure for internal 
audit has been approved and the 
appointment wih be in January 2014. 
Ref. to EX 18 

EX.122.AFS - compliance 

MUNICIPAL 

MANAGER 

Internal Auditor 


Audit completion list and the exception 
register are performed after every audit 
and the exception register 

EX.16.AOPO - Performance 

management system not established 

MUNICIPAL 

MANAGER 

Strategic Manager 

30/03/2014 

Performance Management Framework wih 
incorporate the PMS system and 
monitoring and measurement of 

performance is done on a quarterly basis. 

EX.21.AOPO - Municipal IDP not 
compliant 

MUNICIPAL 

MANAGER 

Strategic Manager 

31/05/2014 

IDP reviewed and the performance targets 
and general KPI's were incorporated into 
IDP. Disaster Management Plan has been 
developed. Departmental SDBIP developed 
as per the IDP. 

EX.24.AOPO - Service Delivery and 
Budget Implementation Plan 

MUNICIPAL 

MANAGER 

Strategic Manager 

31/05/2014 

SDBIP developed and approved by mayor 
and monitors on quarterly monitored. 
SDBIP and IDP are fuhy aligned and taken 
with the council. KPI's not in the IDP were 
incorporated and taken to council 

EX.34.AOPO: Performance not 

reported 

MUNICIPAL 

MANAGER 

Strategic Manager 

31/07/2014 

Annual Report to indicate incorporate 
evaluahon of performance targets against 
the IDP and measures taken to improve 
performance 

EX.35.AOPO - No Key performance 
targets set in IDP 

MUNICIPAL 

MANAGER 

Strategic Manager 

Ongoing 

IDP was reviewed and the performance 
targets and general KPI's were incorporated 
into IDP. 

EX.37.AOPO - No Key Performance 
Indicator set for development 
priority in IDP 

MUNICIPAL 

MANAGER 

Strategic Manager 

Ongoing 

IDP was reviewed and the performance 
targets and general KPI's were incorporated 
into IDP. 

EX.115.AOPO - No consistency in 
development objectives, indicators 
and targets between IDP, SDBIP 
and APR 

BTO/MUNICIPAL 

MANAGER 

Strategic Manager 

31/05/2014 

SDBIP and IDP are fuhy aligned and taken 
with the council. KPI's not in the IDP were 
incorporated and taken to council 

EX.116.AOPO - Key performance 
indicators and targets not verifiable 

MUNICIPAL 

MANAGER 

Strategic Manager 

31/05/2014 

IDP reviewed and verifiable performance 
targets and KPI's were incorporated into 
IDP. 

EX.117.AOPO - Performance targets 
not specific and time bound 

MUNICIPAL 

MANAGER 

Strategic Manager 

31/05/2014 

IDP reviewed and specific and time bound 
performance targets and KPI's were 
incorporated into IDP. 

EX.118.AOPO - Targets not 
achieved 

MUNICIPAL 

MANAGER 

Strategic Manager 

30/03/2014 

Performance monitored on quarterly basis 

EX.119.AOPO - Limitation actual 
performance not reported 

MUNICIPAL 

MANAGER 

Strategic Manager 

Ongoing 

Actual Performance is monitored and 
reported on quarterly basis 

EX.120.AoPl:performance 
indicators not weh defined 

MUNICIPAL 

MANAGER 

Strategic Manager 

31/05/2014 

IDP was reviewed and the performance 
targets and general KPI's were incorporated 
into IDP. 


Page 73 


FINDINGS 

RESPONSIBLE 

DEPARTMENT 

RESPONSIBLE 

PERSON 

DUE DATE 

REMEDIAL ACTION 

EX.l:(CoA l)Planning: CFO did not 
sign monthly reconciliations 

Budget & Treasury 
(CFO) 

Manager: 

Revenue & 

budget 

30-Jun-14 

Monthly bank reconciliations and 
investment registers to be signed by CFO 

EX.63.ADJUSTED: Cash and bank - 
Difference between AFS balance 
and bank confirmation. 

Budget & Treasury 
(CFO) 

Chief Expenditure 
Clerk 

Continuous 
beginning 31 

January 2014 

Maintain a register of cancelled cheques 
and ensure these have been written back 
into the cashbook on a monthly basis 

ADJUSTED: EX.55.Commitment: 

Incorrect Classification 

Budget & Treasury 
(CFO)/Technical 

Asset Practitioner 

Continuous 
beginning 31 

January 2014 

Maintain a contract/commitment register. 
Update on a monthly basis 

EX.137.ADJUSTED:Commitments:D 
isclosure not complete 

Budget & Treasury 
(CFO)/Techmcal 

Asset Practitioner 

Continuous 
beginning 31 

January 2014 

Maintain a contract/commitment register. 
Update on a monthly basis 

EX.80.Employee Cost: Payroll 

Budget & Treasury 
(CFO) 

Manager: SCM & 
Exp 

Continuous 
beginning 25 

January 2014 

Changes made on payroll master file to be 
reviewed and approved by independent 
senior official on a monthly basis 

EX.93.Employee Cost: Journals 

Budget & Treasury 
(CFO) 

Manager: SCM & 
Exp 

Continuous 
beginning 31 

January 2014 

All journals to be approved by the Chief 
Financial Officer and a Senior Manager 

EX.131.0ther Disclosures: Non 
_compliance 

Budget & Treasury 
(CFO) 

Manager: SCM & 
Exp 

30-Jun-14 

AFS disclosures 

EX.114.ADJUSTED: AFS: High level 
review 

Budget & Treasury 
(CFO) 

Manager: SCM & 
Exp 

30-Jun-14 

AFS disclosures 

EX.123. ADJUSTED. AFS:Review 

Budget & Treasury 
(CFO) 

Manager: SCM & 
Exp 

30-Jun-14 

AFS disclosures 

EX.42.PPE: Monthly reconciliation 
not performed 

Budget & Treasury 
(CFO) 

Asset Practitioner 

Continuous 
beginning 31 

January 2014 

Ensure monthly reconciliations 

between general ledger and asset 

register are performed 

EX.64.PPE: asset register does not 
contain scan code number 

Budget & Treasury 
(CFO) 

Asset Practitioner 

Continuous 
beginning 31 

January 2014 

Asset Register to be updated on a 
continuous basis. The asset register to 
contain detailed location details for the new 
additions and scan codes 

EX.67.PPE: Completeness of Land 
register 

Budget & Treasury 
(CFO) 

Asset Practitioner 

Continuous 
beginning 31 

January 2014 

Regularly obtain the listing of municipal 
properties as per the Title Deeds Office and 
compare to the municipal properties per 
the asset register. Investigate and file 
adequate supporting documentation to 
support the changes 

EX.77.PPE: Location errors 

identified 

Budget & Treasury 
(CFO) 

Asset Practitioner 

Bi-annual starting 
31 January 2014 

Perform regular asset counts and reconcile 
to the ledger. Update locations and assess 
conditions of assets. Ensure all assets are 
bar-coded 

EX.84.ADJUSTED:PPE: Title deeds 
(Rights to land not verified) 

Budget & Treasury 
(CFO) 

Income 

Accountant 

Continuous 
beginning 31 

January 2014 

Title deeds to all municipal properties to 
me maintained. 

EX.128.PPE &Depreciation: 

Accounting policy 

Budget & Treasury 
(CFO) 

Asset Practitioner 

30-Jun-14 

Accounting policy to be consistent and 
agree to source 

EX.129.ADJUSTED: PPE: 

Completeness of land (landfill sites 
& borrow pits) 

Budget & Treasury 
(CFO)/Technical 

Asset Practitioner 

30-Jun-14 

Ensure completeness of asset register. 

EX.31.Inventory - stock records not 
reconciled to General Ledger and 
physical counts. 

Budget & Treasury 
(CFO)/Technical 

Asset Practitioner 

Monthly / quarterl 
y beginning 31 
January 2014 

Regular inventory counts to be performed 
and the stock listing reconciled to the 
General Ledger. 

EX.65.ADJUSTED: Inventory: 

Difference between inventory 
listing and general ledger 

Budget & Treasury 
(CFO)/Techmcal 

Asset Practitioner 

Continuous 
beginning 31 

January 2014 

Regular updates to be done for issues of 
inventory 


Page 74 


FINDINGS 

RESPONSIBLE 

DEPARTMENT 

RESPONSIBLE 

PERSON 

DUE DATE 

REMEDIAL ACTION 

EX.71. ADJUSTED: Inventory: 
Incorrect valuation of water. 

Budget & Treasury 
(CFO)/TechnicaI 

Asset Practitioner 

30-Jun-14 

The cost/unit of water to be determined 
and used for the valuation of inventory 

EX.23.ADJUSTED:Investment 
Property - completeness not 
confirmed 

Budget & Treasury 
(CFO) / Corporate 

Asset Practitioner 

Continuous 
beginning 31 

January 2014 

Ensure the Investment Property Register is 
reconciled to the rental agreements 
regularly to ensure completeness of 
investment properties. Liaise with Legal 
Manager for any changes and update 
accordingly 

EX.28.ADJUST:Investment property 
- inadequate disclosure 

Budget & Treasury 
(CFO) 

Manager: SCM & 
Exp 

30-Jun-14 

AFS disclosures 

EX.73.Leases: Non-compliance with 
GRAP 

Budget & Treasury 
(CFO) 

Asset Practitioner 

30-Jun-14 

Determine the accounting treatment of the 
radio tower in relation to supporting 
documentation. Ensure all lease 

expenditure is accounted for 

EX.78. ADJUSTED: Leases: Cell 
phones classified as other assets 
instead of leased assets 

Budget & Treasury 
(CFO) 

Asset Practitioner 

30-Jun-14 

Review all cell-phone contracts and ensure 
correctly accounted for 

EX.82.PPE: Assets not included in 
the FAR 

Budget & Treasury 
(CFO) 

Asset Practitioner 

Bi-annual starting 
31 January 2014 

Continuously update asset register for all 
asset movements and assess conditions 

EX.39.ADJUSTED:Expenditure:Cu: 
Transactions recorded in incorrect 
period 

Budget & Treasury 
(CFO) 

Expenditure 

Accountant 

30-Aug-14 

Ensure transactions are recorded in the 
correct accounting period (Creditors) 

EX.90.ADJUSTEDProcurement: 
Internal control findings 

Budget & Treasury 
(CFO) 

CFO/MM 

Continuous 
beginning 31 

January 2014 

1. Delegations procedures to be in place 

EX.90.ADJUSTEDProcurement: 
Internal control findings 

Budget & Treasury 
(CFO) 

Manager: SCM & 
Exp 

Continuous 
beginning 31 

January 2014 

2. Plan for addressing internal & external 
audit findings on SCM to be implemented. 
Compliance to the plan to be monitored on 
a monthly/quarterly basis by appropriate 
level of management. Address internal 
control deficiencies 

EX.90.ADJUSTED Procurement: 

Internal control findings 

Budget & Treasury 
(CFO) 

Manager: SCM & 
Exp 

31-Jul-14 

3. Accounting Officer to submit to the 
Council, within 30 days after financial year 
end, a report on the implementation of the 
SCM policy of the municipality and of any 
municipal entity under its sole or shared 
control. 

EX.90.ADJUSTED Procurement: 

Internal control findings 

Budget & Treasury 
(CFO) 

SCM practitioner 

Continuous 
beginning 31 

January 2014 

4. Publish on the website of the 
municipality a register of bids received on 
time. 

EX.90.ADJUSTED Procurement: 

Internal control findings 

Budget & Treasury 
(CFO) 

SCM Practitioner 

Continuous 
beginning 31 

January 2014 

5. Contract registers to be implemented to 
record contracts awarded and monitor 
expenditure on contracts. 

EX.90.ADJUSTED Procurement: 

Internal control findings 

Budget & Treasury 
(CFO) 

Risk Officer 

30-Jun-14 

6. Audit Committee's review of municipal 
compliance with laws and regulations to 
include compliance with SCM regulations 

EX.90.ADJUSTED Procurement: 

Internal control findings 

Budget & Treasury 
(CFO) 

Risk Officer 

30-Jun-14 

7. Audit Committee's report of effectiveness 
of internal controls to cover controls 
around the SCM system. 

EX.90.ADJUSTED Procurement: 
Internal control findings 

Budget & Treasury 
(CFO) 

Risk Officer 

31-Mar-14 

8. A risk assessment of the SCM system to 
be performed 

EX.111.ADJUSTED: Procurement: 
Non compliance 

Budget & Treasury 
(CFO) 

Expenditure 

Accountant 

Continuous 
beginning 31 

January 2014 

l.Procurement procedures and 

requirements to be monitored for 
procurement up to R200,000 (Adequate 
quotations to be obtained and suppliers to 
be on the Supplier database) 

EX.111.ADJUSTED: Procurement: 

Non compliance 

Budget & Treasury 
(CFO) 

Expenditure 

Accountant 

Continuous 
beginning 31 
January 2014 

2. Contracts above R200,000 to comply with 
the SCM policy 


Page 75 


FINDINGS 

RESPONSIBLE 

DEPARTMENT 

RESPONSIBLE 

PERSON 

DUE DATE 

REMEDIAL ACTION 

EX.113.ADJUSTED Procurement: 
Irregular expenditure 

Budget & Treasury 
(CFO) 

SCM practitioner 

Continuous 
beginning 31 
January 2014 

Ex.lll result in irregular expenditure 

EX.138. ADJUSTED: Unauthorised 
Expenditure 

Budget & Treasury 
(CFO) 

Manager: SCM & 
Exp 

31 January 2014 & 
30 June 2014 

AFS disclosures 

EX.14.Payables - Creditor's 
reconciliation not performed 

Budget & Treasury 
(CFO) 

Chief Expenditure 
Clerk 

Continuous 
beginning 31 
January 2014 

Monthly creditors reconciliations to be 
performed to ensure the accuracy and 
completeness of outstanding creditor 
balances 

EX.49.ADJUSTED: Trade and other 
payables - Payment not made 
within 30 days of receiving of 
invoice 

Budget & Treasury 
(CFO) 

Chief Expenditure 
Clerk 

Continuous 
beginning 31 
January 2014 

Monitoring procedures to be put in place 
including performing creditors' 
reconciliations on a monthly basis. 

EX.134.ADJUSTED. Trade payables 
- Existence and Valuation 

Budget & Treasury 
(CFO) 

Expenditure 

Accountant 

Continuous 
beginning 31 
January 2014 

Review the creditors listing on a monthly 
basis and reconcile to the General ledger 

EX.26. AOPO - Adjusted budget 

Budget & Treasury 
(CFO) 

Manager: 
Revenue & 
budget 

l-Mar-14 

1. The adjustment budget to be made public 
after it approval by the Council. 

EX.26. AOPO - Adjusted budget 

Budget & Treasury 
(CFO) 

Manager: 
Revenue & 
budget 

lO-Mar-14 

2. The adjustment budget to be submitted 
to the National and Provincial Treasury 
within ten days after approval by council. 

EX.33.Budget not based on 
development priorities and 
objectives in IDP 

Budget & Treasury 
(CFO)/ Municipal 
Manager 

Manager: 
Revenue & 
budget/ IDP 
Officer 

30-Apr-14 

Ensure that, the budget and IDP 
preparation processes are aligned so that 
adequate resources are provided for the 
achievement of planned objectives. 

EX.115.AOPO - No consistency in 
development objectives, indicators 
and targets between IDP, SDBIP 
and APR 

Budget & Treasury 
(CFO)/ Municipal 
Manager 

CFO 

Continuous 
beginning 31 
January 2014 

Implement a performance management 
system. 

EX.30. Bad Debts - No steps not 
taken to recover the debt 

Budget & Treasury 
(CFO) 

Manager: 
Revenue & 
budget 

Continuous 
beginning 31 
January 2014 

Implement the municipal credit control and 
debt collection policy 

EX.40.Consumer Debtors: No 
Authorisation for Journals Passed 

Budget & Treasury 
(CFO) 

Manager: 
Revenue & 
budget 

Continuous 
beginning 31 
January 2014 

Implement adequate controls over 
processing of adjusting journals to prevent 
unauthorised transactions. 

EX.46.ADJUSTED: Suspense 
account: Incorrect allocation of 
finance costs 

Budget & Treasury 
(CFO) 

Manager: 
Revenue & 
budget 

Continuous 
beginning 31 
January 2014 

Review expense allocations regularly to 
ensure correct classification 

EX.70.Consumer Deposits: 

Differences Between in Deposit 
register and Financial statements 

Budget & Treasury 
(CFO) 

Manager: 
Revenue & 
budget 

Continuous 
beginning 31 
January 2014 

Ensure that monthly reconciliation 
between general ledger and the deposit 
register is performed and any reconciling 
items followed up timeously 

EX.5:(CoA l)Bank and cash: Cash 
delivered to bank 

Budget & Treasury 
(CFO) 

Manager: 
Revenue & 
budget 

7-Jan-14 

Municipal Traffic Officers to escort the 
income accountant to the bank until such 
time that the municipality appoints the 
permanent security officer. 

EX.6:(CoA3) Revenue: Difference 
between SEBATA and Valuation 
roll 

Budget & Treasury 
(CFO) 

Manager: 
Revenue & 
budget 

Continuous 
beginning 31 
January 2014 

1. Reconcile formal valuation roll to billing 
module valuation roll. 

EX.6:(CoA3) Revenue: Difference 
between SEBATA and Valuation 
roll 

Budget & Treasury 
(CFO) 

Manager: 
Revenue & 
budget 

Continuous 
beginning 31 
January 2014 

2. Implement supplementary valuation roll. 

EX.6:(CoA3) Revenue: Difference 
between SEBATA and Valuation 
roll 

Budget & Treasury 
(CFO) 

Manager: 
Revenue & 
budget 

Continuous 
beginning 31 
January 2014 

3. Reconcile the valuation roll to actual rate 
levied 

EX.7:Revenue: No register for direct 
deposit 

Budget & Treasury 
(CFO) 

Manager: 
Revenue & 
budget 

Continuous 
beginning 31 
January 2014 

Implement adequate controls over daily 
and monthly processing and reconciling of 
transactions relating to direct income. 


Page 76 


FINDINGS 

RESPONSIBLE 

DEPARTMENT 

RESPONSIBLE 

PERSON 

DUE DATE 

REMEDIAL ACTION 

EX.9.(CoA5)Receivables: Loan 
agreement not signed by 
municipality representative {EX.9) 

Budget & Treasury 
(CFO) 

Manager: 
Revenue & 
budget 

Continuous 
beginning 31 
January 2014 

Debt agreement with service debtors to be 
approved by delegated officials to 
provide legal basis for compliance and 
enforcement. 

EX.38.Revenue - Valuation Roll 

Budget & Treasury 
(CFO) 

Manager: 
Revenue & 
budget 

Continuous 
beginning 31 
January 2014 

Ensure that the municipal website is 
updated with all the information prescribed 
in terms of applicable laws and regulations. 
The municipal valuation roll should be 
revised to include all the required 
information. 

EX.59.Revenue: Internal controls 
relating to reconnection/ 

Connection fees 

Budget & Treasury 
(CFO) 

Manager: 
Revenue & 
budget 

Continuous 
beginning 31 
January 2014 

1. New connections to be supported by 
application forms or signed by the official 
from the municipality as authorisation 

EX.59.Revenue: Internal controls 
relating to Reconnection/ 

Connection fees 

Budget & Treasury 
(CFO) 

Manager: 
Revenue & 
budget 

Continuous 
beginning 31 
January 2014 

2. Implement adequate controls to ensure 
collection of debtors 3. Ensure correct 
classification of income 

EX.59.Revenue: Internal controls 
relating to Reconnection/ 

Connection fees 

Budget & Treasury 
(CFO) 

Manager: 
Revenue & 
budget 

Continuous 
beginning 31 
January 2014 

3. Ensure correct classification of 

disconnection & connection fees 

EX.60.Revenue: Internal controls 
relating to the rental of halls 

Budget & Treasury 
(CFO) 

Manager: 
Revenue & 
budget 

Continuous 
beginning 31 
January 2014 

1. Maintain a register for all the deposit and 
rental income received for the rental of 
halls. 3. Ensure deposit paid agrees to tariff 
listing 

EX.60.Revenue: Internal controls 
relating to the rental of halls 

Budget & Treasury 
(CFO) 

Manager: 
Revenue & 
budget 

Continuous 
beginning 31 
January 2014 

2. Reconcile the registers to the GL 

EX.60.Revenue: Internal controls 
relating to the rental of halls 

Budget & Treasury 
(CFO) 

Manager: 
Revenue & 
budget 

Continuous 
beginning 31 
January 2014 

3. Ensure deposit paid agrees to tariff 
listing 

EX.61.Revenue: Valuation Roll not 
reconciled 

Budget & Treasury 
(CFO) 

Manager: 
Revenue & 
budget 

Continuous 
beginning 31 
January 2014 

Regularly update the valuation roll with 
changes in property ownership and new 
property developments. 

EX.61.Revenue: Valuation Roll not 
reconciled 

Budget & Treasury 
(CFO) 

Manager: 
Revenue & 
budget 

Continuous 
beginning 31 
January 2014 

2. Perform reconciliations between the 
rateable valuation roll and the SEBATA 
system. 

EX.44.Value Added Tax - Vat 
returns not submitted to SARS 
timeously 

Budget & Treasury 
(CFO) 

Expenditure 

Accountant 

Continuous 
beginning 31 
January 2014 

Ensure that VAT returns are submitted to 
the Receiver of Revenue before the due 
date. 

EX47. Adjusted: Revenue: Income 
from fines measured incorrectly 

Community 

Services 

Director 

Community 

Services 

On-going 

Reconciliation of Traffic control document 
by adding a payment column that stipulate 
the amount paid from the Magistrate Court 
in order to have the actual amount received 
after fines were issued. Thereafter compare 
the amount of fines that were issued and 
the amount that was received from the 
issued fines that were paid from the 
Magistrate Court. 

EX.32.Employee costs: Lack of 
controls over new appointments 

Corporate Services 

Director 

Corporate 

Services 

To be monitored 
on an on-going 
basis 

The director corporate services should also 
ensure that all appointments are done in 
accordance with the municipality's Human 
Resources Policy and requirements of the 
law 

EX.94.ISA:Information technology 
governance 

Corporate Services 

Director 

Corporate 

Services 

IT was appointed 

4 November 2013 

Management should consider increasing 
the IT staff capacity to allow roles and 
responsibilities to be allocated to different 
staff members to ensure the provision and 
maintenance of effective IT security that is 
in line with business requirements and 
good practices. The entity should obtain the 
skills needed to implement the policies, e.g. 
via training. 


Page 77 


FINDINGS 

RESPONSIBLE 

DEPARTMENT 

RESPONSIBLE 

PERSON 

DUE DATE 

REMEDIAL ACTION 

EX.95.ISA: Service Level agreement 
not monitored by management 

Corporate Services 

Director 

Corporate 

Services 

28 February 2014 

Service performance reviews should 
regularly be conducted for all external 
service providers and timeously corrective 
action should be taken to remedy any 
deficiencies identified. 

EX.96.ISA:Lack of designed IT 
security policy 

Corporate Services 

Director 

Corporate 

Services 

31 March2014 

In the absence of a government-wide IT 
security framework, assistance should be 
sought from the district municipality for 
the development or revision of the IT 
security policies. Furthermore, 

management should ensure that IT 
vacancies are filled with appropriately 
skilled staff. Where necessary, the skills of 
staff should be developed through 
appropriate training intervention 

EX.97.ISA:Lack of designed patch 
management procedures 

Corporate Services 

IT Officer 

31 March2014 

The responsibility for the patch 
management process should be delegated 
to a specific individual to ensure that the 
organisation's network and systems are 
protected by the required patches/updates. 
The patch management procedures should 
also be formally documented and approved 
to ensure consistency should the party or 
individual responsible for this activity leave 
the municipality. 

EX.98.ISA:Lack of designed user 
access management procedures 

Corporate Services 

ITOfficer 

31 March2014 

Management should ensure that a user 
account management policy and related 
procedures are developed and 

implemented to ensure that: A Single access 
form is developed for all applications in use 
at the entity, Users who sign on to any 
application are required to have their own 
user IDs allocated to them, the access 
allocation for new users, changes to 
existing user's access and procedures for 
dealing with resignations, terminations and 
retirements are clearly documented and 
managed, And time frames for notifying 
the staff of user movements are 
documented. 

EX.99.ISA:Formal access request 
documentation 

Corporate Services 

IT Officer 

31 March2014 

Management should ensure that a user 
account management policy and related 
procedures are developed and 

implemented to ensure that: A Single access 
form is developed for all applications in use 
at the entity, Users who sign on to any 
application are required to have their own 
user IDs allocated to them, the access 
allocation for new users, changes to 
existing user's access and procedures for 
dealing with resignations, terminations and 
retirements are clearly documented and 
managed, And time frames for notifying 
the staff of user movements are 
documented. 


Page 78 


FINDINGS 

RESPONSIBLE 

DEPARTMENT 

RESPONSIBLE 

PERSON 

DUE DATE 

REMEDIAL ACTION 

EX.100.ISA: Review of users access 
and privileges on all financial 
systems 

Corporate Services 

IT Officer 

31 March2014 

Management should ensure that a user 
account management policy and 

procedures are developed and 

documented. The responsibility for the 
review of user profiles lies with the system 
owners (business), IT merely facilitates the 
process. Segregation of duties reviews 
should be conducted at least twice per year 
depending on the number or users on the 
system and the frequency of changes to the 
user access/profiles. 

EX.101.ISA:Review of activities of 
person granting user access 

Corporate Services 

IT Officer 

31 March2014 

The activities of the system controller with 
regard to user account management should 
be reviewed by an independent person or 
party on a regular basis. Evidence of such 
reviews should be retained for future 
reference and audit purposes. 

EX.102.ISA:Formal processes to 
manage upgrades 

Corporate Services 

IT Officer 

31 March2014 

Application change control standards and 
procedures should be developed and 
should include key elements such as 
ensuring that updates are approved and 
tested prior to implementation. 

EX.103.ISA:Formal change requests 
documentation for 
upgrades/ up dates 

Corporate Services 

IT Officer 

31 March2014 

Change management policies and 

procedures should be developed. 

Appropriately skilled individuals should be 
employed to manage the process. When 
the services of contractors are sued, it 
should be ensured that skills are 
transferred to the municipality's IT staff to 
prevent the contractors from operating in 
the five environments. 

EX.104.1SA: Monitoring of access to 
live environment granted to 
vendors 

Corporate Services 

IT Officer / 
Finance 

31 March2014 

When the services of contractors are used, it 
should be ensured that skills are 
transferred to the municipality's IT staff to 
prevent the contractors from operating in 
the production environment or to enable 
the monitoring of their actions. 

EX.105.1SA: Backups performed, 
verified and checked for completion 

Corporate Services 

ITOfficer / 
Finance 

Continuously 

Management should ensure that backups 
and restoration processes are established to 
ensure IT service continuity. 

EX.4:(CoA3) Revenue: Fixed rental 
contract without escalation 

Community 

Services/Corporate 

services 

Manager HR 
&Legal Services 

To be monitored 
on ongoing basis 

No fixed rental agreement will be signed 
without input of Legal Services going 
forward and Corporate Services will be 
responsible for drafting and administering 
of all Contracts 

EX.112: Leave payout: Leave 
payment in excess of 48 days 

Corporate Services 

Manager HR 
&Legal Services 

31 June 2014 

Consultation with affected employees will 
be held in due course to address the matter 
and the proposed action will be that of 
employees taking or selling leave days in 
order for them to remain in 48 capped leave 
days. 

EX.107.Service delivery: Road 
Infrastructure 

Technical 

Technical Officers 

31/03/2014 

Operations and maintenance plan 

EX.109.Service delivery: Road 
Infrastructure 

Technical 

Technical Officers 

31/03/2014 

Operations and maintenance plan 

EX.110.Service Delivery - Access to 
basic levels of water services 

Technical 

Technical 
Officers/ 
Supervisors/Proc 
ess controller 

28/02/2014 

Training of supervisor and process 
controllers 


Page 79 


FINDINGS 

RESPONSIBLE 

DEPARTMENT 

RESPONSIBLE 

PERSON 

DUE DATE 

REMEDIAL ACTION 

EX.121.Service delivery: Basic 
services: Sanitation 

Technical 

Technical 
Officers/ 
Supervisors / Proc 
ess controller 

28/02/2014 

Training of supervisor and process 
controllers 

EX.124.Service delivery: Water 
services Deveiopment pian 

Technical 

Director 

31/03/2014 

Review of WSDP and Council to adopt 

EX.48.Inventory - daiiy 
reconciiiation of fuel received/ 
issued 

Technical 

Director 

31/01/2014 

Appointment of Inventory persormel 

EX.65.ADJUSTED: Inventory: 
Difference between inventory 
listins and general led^er 

Technical / BTO 

Technical Officers 

31/01/2014 

Proper recording on inventory 

EX.69.Inventory: No monthly 
reconciliation performed 

Technical 

Technical Officers 

31/01/2014 

Proper recording on inventory 

Provisions: Land fill sites 

Technical 

Director 

l-Mar-14 

Appointment of Waste Manager 

EX.127.Cosumer debtors: No 
controls to limit usage of water 

Technical 

Director 

31/10/2014 

Installation of water meters 


Page 80 


Accessibility indicators 

Explore whether the intended beneficiaries are able to access services or outputs. 

Accountability 

documents 

Documents used by executive authorities to give “full and regular" reports on the matters under 
their control to Parliament and provincial legislatures as prescribed by the Constitution. This 
includes plans, budgets, in-year and Armual Reports. 

Activities 

The processes or actions that use a range of inputs to produce the desired outputs and ultimately 
outcomes. In essence, activities describe "ivhat we do" . 

Adequacy indicators 

The quantity of input or output relative to the need or demand. 

Annual Report 

A report to be prepared and submitted annually based on the regulations set out in Section 121 of 
the Municipal Finance Management Act. Such a report must include annual financial statements as 
submitted to and approved by the Auditor-General. 

Approved Budget 

The annual financial statements of a mimicipality as audited by the Auditor General and approved 
by council or a provincial or national executive. 

Baseline 

Current level of performance that a mimicipality aims to improve when setting performance 
targets. The baseline relates to the level of performance recorded in a year prior to the planning 
period. 

Basic municipal service 

A mimicipal service that is necessary to ensure an acceptable and reasonable quality of life to 
citizens within that particular area. If not provided it may endanger the public health and safety or 
the environment. 

Budget year 

The financial year for which an annual budget is to be approved - means a year ending on 30 Jime. 

Cost indicators 

The overall cost or expenditure of producing a specified quantity of outputs. 

Distribution indicators 

The distribution of capacity to deliver services. 

Financial Statements 

Includes at least a statement of financial position, statement of financial performance, cash-flow 
statement, notes to these statements and any other statements that may be prescribed. 

General Key performance 
indicators 

After consultation with MECs for local government, the Minister may prescribe general key 
performance indicators that are appropriate and applicable to local government generally. 

Impact 

The results of achieving specific outcomes, such as reducing poverty and creating jobs. 

Inputs 

All the resources that contribute to the production and delivery of outputs. Inputs are "what we use 
to do the work". They include finances, personnel, equipment and buildings. 

Integrated Development 
Plan (IDP) 

Set out mimicipal goals and development plans. 

National Key 
performance areas 

A Service delivery & infrastructure 

A Economic development 

A Municipal transformation and institutional development 

A Financial viability and management 

A Good governance and community participation 

Outcomes 

The medium-term results for specific beneficiaries that are the consequence of achieving specific 
outputs. Outcomes should relate clearly to an institution's strategic goals and objectives set out in its 
plans. Outcomes are "what we wish to achieve". 

Outputs 

The final products, or goods and services produced for delivery. Outputs may be defined as "what 
we produce or deliver". An output is a concrete achievement (i.e. a product such as a passport, an 
action such as a presentation or immxmization, or a service such as processing an application) that 
contributes to the achievement of a Key Result Area. 

Performance Indicator 

Indicators should be specified to measure performance in relation to input, activities, outputs, 
outcomes and impacts. An indicator is a type of information used to gauge the extent to 
which an output has been achieved (policy developed, presentation delivered, service rendered) 



Performance Information 

Generic term for non-financial information about municipal services and activities. Can also be used 
interchangeably with performance measure. 

Performance Standards: 

The minimum acceptable level of performance or the level of performance that is generally 
accepted. Standards are informed by legislative requirements and service-level agreements. 
Performance standards are mutually agreed criteria to describe how well work must be done in 
terms of quantity and/or quality and timeliness, to clarify the outputs and related activities of a job 
by describing what the required result should be. In this EPMDS performance standards are 
divided into indicators and the time factor. 

Performance Targets: 

The level of performance that mimicipalities and its employees strive to achieve. Performance 
Targets relate to current baselines and express a specific level of performance that a mtmicipality 
aims to achieve within a given time period. 

Service Delivery Budget 
Implementation Plan 

Detailed plan approved by the mayor for implementing the municipality's delivery of services; 
including projections of the revenue collected and operational and capital expenditure by vote for 
each month. Service delivery targets and performance indicators must also be included. 

Vote: 

One of the main segments into which a budget of a mimicipality is divided for appropriation of 
money for the different departments or fimctional areas of the municipality. The Vote specifies the 
total amoimt that is appropriated for the purpose of a specific department or fimctional area. 

Section 1 of the MFMA defines a "vote" as: 

a) one of the main segments into which a budget of a municipality is divided for the appropriation ofmoney 
for the different departments orfunctional areas ofthe municipality; and 

b) which specifies the total amount that is appropriated for the purposes of the department or functional area 
concerned 


Page 82 


APPENDICES 


APPENDIX A - COUNCILLORS; COMMITTE ALLOCATION AND COUNCIL ATTENDANCE 


COUNCILLORS, COMMITEES ALLOCCATED AND ATTENDANCE 

Council Members 

FuII 

Time/ 

Part 

Time 

FiypT 

Committees Allocated 

*Ward 

and/Party 

Represented 

Percentag 
e Council 
Meetings 
Attendanc 

e 

Percentage 
Apologies for 
non- 

attendance 

% 

% 

Cllr ME Mathibe 

FT 

Executive Committee; 
Finance Committee. 

PR 

98% 

2% 

Cllr TA Matlakala 

FT 

Finance Committee; 
Housing 

Ward 3 [ANC] 

100% 

0 

Cllr PP Moalosi 

PT 

Finance Committee 

Ward 2 [ANCj 

100% 

0 

Cllr. KR Phukuntsi 

PT 

None 

PR [ANCl 

100% 

0 

Cllr TT Taedi 

PT 

Housing and Erven. 

Ward7[ANCl 

99.9% 

1% 

Cllr MS Baleni 

PT 

Infrastructure and 

Basic Services 

WardS [ANCj 

100% 

0 

Cllr. MS Bonokoane 

PT 

none 

PR [ANCj 

100% 

0 

Cllr MW Raseu 

PT 

None 

Ward 5 [ANC] 

100% 

0 

Cllr DA Njodina 

PT 

None 

Ward 4 [ANC] 

100% 

0 

Cllr MJ Taljaard 

PT 

None 

PR [ANC] 

92% 

8% 

Cllr C Horn 

PT 

None 

PR [DA] 

97% 

3% 

Cllr MM Snyer 

PT 

None 

PR [Cope] 

88% 

12% 

Cllr.EC Joubert 

PT 

None 

PR [DA] 

99.9% 

1% 

Cllr BP Esau 

PT 

None 

Ward 1 [ANC] 

100% 

0 

Cllr MJ Ngexe 

PT 

None 

Ward 6 [ANC] 

100% 

0 


APPENDIX B - COMMITTEES AND COMMITTEE PURPOSES 


COMMITTEES (other than Executive Committee) AND PURPOSES OF COMMITTEES 

Municipal Committees 

Purpose of Committee 

Finance Committee 

Deals with mrmicipal financial management. 

Audit Committee 

It is independent advisory body to council, municipal manager and 
management staff on financial controls, risk management, accounting 
policies, performance management etc. 

Housing & Erven 

Deals with housing & erven matters within mrmicipal jurisdiction. 

Local Labour Forum[LLF] 

It is platforms were organised labour and the employer negotiates and 
bargains on issues affecting labour at local level. 

Education 

Deals with local educational matters. 

Sports 

Deal with issues affecting all sporting code. 

Agriculture & Rural Development 

Deals with all matters pertaining to agriculture and rural development. 

Economic Development 

Deals with local economic development issues. 

Social Development 

Deal with social & wehare issues affecting the commrmity. 



APPENDIX C - THIRD TIER ADMINISTRATIVE STRUCTURE 


THIRD TIER STRUCTURE 

Directorate 

Director 

Corporate Services 

Director: Corporate Services- Mr. S Rabanye 

Financial Services 

Chief Financial Officer- Mr. L Moletsane 

Community Services 

Director Community Services- Ms. Z Tindleni 

Technical Services 

Director Infrastructure -Mr. B Dikoko 


APPENDIX D -EUNCTIONS OE THE MUNICIPALITY 


MUNICIPAL FUNCTIONS 

Municipal Functions 

Function Applicable 
to Municipality 
(Yes/No) 

Function 
Applicable to 
Entity (Yes/No) 

Constitution Schedule 4, Part B functions 



Air Pollution 

Yes 

Not Applicable 

Building regulations 

Yes 

Not Applicable 

Child care facilities 

No 

Not Applicable 

Electricity and gas reticulation 

Yes 

Not Applicable 

Fire fighters services 

No 

Not Applicable 

Local Tourism 

Yes 

Not Applicable 

Municipal Airports 

No 

Not Applicable 

Municipal plarming 

Yes 

Not Applicable 

Municipal public transport 

No 

Not Applicable 

Municipal public works only in respect of the needs of 
municipalities in the discharge of their responsibilities to 
administer function specifically assigned to them under the 
Constitution or any other 

Yes 

Not Applicable 

Pontoons, ferries, jefties, piers and harbours, excluding the 
regulation of rnternational and national shipping and matters 
related 

No 

Not Applicable 

Storm-water management in built-up areas 

Yes 

Not Applicable 

Trading regulations 

Yes 

Not Applicable 

Water and sanitation services limited to potable water supply 
systems and domestic waste-water and sewerage system 

Yes 

Not Applicable 


Page 84 


MUNICIPAL FUNCITIONS 

Municipal Functions 

Function Applicable to 
Municipality 
(Yes/No 

Function Applicable to 
Entity (Yes/No) 

Constitution Schedule 5, part B functions: 



Beaches and amusement facilities 

No 

Not Applicable 

Cemeteries, funeral parlours and crematoria 

Yes 

Not Applicable 

Cleansing; 

No 

Not Applicable 

Control of public nuisances 

Yes 

Not Applicable 

Control of undertakmgs that sell liquor to public 

No 

Not Applicable 

Facilities for the accommodation, care and burial of 
animals 

No 

Not Applicable 

Fencing and Fence 

Yes 

Not Applicable 

Licensmg of dogs 

Yes 

Not Applicable 

Licensmg and control of undertakings that sell food to 
the public 

Yes 

Not Applicable 

Local amenities 

Yes 

Not Applicable 

Local sport facilities 

Yes 

Not Applicable 

Markets 

No 

Not Applicable 

Municipal abattoirs 

No 

Not Applicable 

Municipal parks and recreation 

Yes 

Not Applicable 

Municipal roads 

Yes 

Not Applicable 

Noise pollution 

Yes 

Not Applicable 

Pounds 

Yes 

Not Applicable 

Refuse removal, refuse dumps and solid waste disposal 

Yes 

Not Applicable 

Street tradrng 

Yes 

Not Applicable 

Street lighting 

Yes 

Not Applicable 

Traffic and parkrng 

Yes 

Not Applicable 


APPENDIX E - WARD REPORTING 


FUNCTIONALITY OF WARD COMMITTEES 

Ward 

Name 

(Number) 

Name of Ward Councillor and elected 
ward committee members 

Committees 

established 

(Yes/No) 

Number of 
monthly 
Committee 
meetings held 
during the year 

Number of 
monthly reports 
submitted to the 
Speaker's office 
on time 

Number of 
quarterly 
public ward 
meetings held 
during the year 

1 [One] 

Cllr BP Esau 

Ward Committees (S. Thebesoa, D. 

Thulo, S. Sonopo, N. Tolela, D. 

Malanka, G.Maerman, R. Vanrooi, N. 
Jonas, L. Peter). 

Yes 

10 

4 

4 

2 [Two] 

Cllr TA Matlakala 

Ward Committees (G. Skosana, Z. 
Noveld, T. Mtsewu, Z. Jan, M. Monang, 
V. Magaxane, M. Leaba, C.Klaas, S. 

Yes 

9 

4 

4 


Page 85 



Molaoa). 





3 [Three] 

Cllr PP Moalusi 

Ward Committees (I. Ramosa, T. Maki, 
M. Ranothsi, N. Wittes, L. Khalaki, N. 
Manju, M. Rens, T. Bangani, N. 
Motsoeneng ) 

Yes 

7 

4 

4 

4 [Four] 

Cllr DA Njodina 

Ward Committees (M. Molefe, N. 
Dasheka, M. Sesotlo, J. Gasemetse, V. 
Maripa, M. Nteo, S. Mabogole, S. 
Mambalo, K. Dandiso ). 

Yes 

10 

4 

4 

5 [Five] 

Cllr MW Raseu 

Ward Committees (M. Motshabi, P. 
Masekwa, S. Leeuw, T. Ditjhaba, M. 
Marametse, D. Makgetla, D. Matlatse, 

T. Kgang, M. Metsing). 

Yes 

5 

0 

3 

6 [Six] 

Cllr MJ Ngexe 

Ward Committee fS. Seoke, K. 

Kamolane, C. Mphatsoe, G. Phetlo, N. 
Saliwe, M. Maphisa, J.Seretsi, S. Kgang, 
N. Libazi ). 

Yes 

5 

0 

2 

7 [Seven] 

Cllr TT Taedi 

Ward Committees (M. Pan, M. Seitisho, 
M. Nthatisi, N. Qankase, M. Mkabane, 

L. Gotyana, W. Vinger, O. Phukuntsi ). 

Yes 

5 

0 

3 

8 [Eight] 

Cllr MS Baleni 

Ward Committees ( T. Raitibane, S. 
Moshoeshoe, N. Lekaota, V. Sixaxa, M. 
Gotyane, L. Nkomo, D. Lephoi, D. 
Molope, D. Mmusi) 

Yes 

5 

0 

4 


APPENDIX F - WARD INFORMATION 


Capital Projects: largest in 201^13 

No. 

Project Name and detail 

Start date 

End Date 

Total Value 

1 

Fencrng of Cemeteries 




2 

Upgrading of Sports facilities 






Page 86 


APPENDIX G-RECOMMENDATIONS OE THE MUNICIPAL AUDIT COMMITTEE 2012/13 


MUNICIPAL AUDIT COMMITTEE RECOMMENDATIONS 

Date of Committee 

Committee recommendations during 201^13 

Recommendations 



adopted 

14 October 2011 

Intemal Audit Policy documents and the Audit Committee 

Charter be adopted 

Yes 

08 December 2011 

Risk Management Policy documents and Risk Assessment report 
and register be adopted 

Yes 

05 April 2012 

The Municipality must develop a performance management 
system 

No 


The Municipality must prepare and submit to the Mayor for 
approval a Service Delivery and Budget Implementation Plan 

Yes 


The revised Internal Audit Strategy adopted 

Yes 


The Municipality appoint a Risk Officer to take on risk 
management functions 

Yes 


APPENDIX H - LONG TERM CONTRACT AND PUBLIC PRIVATE PARTNERSHIPS 


Long Term Contracts (largest Contracts Entered into 201^13) 

Name of Service 
Provider 

Description of Service 
Rendered by the Service 
Provider 

Start Date of 
Contract 

Expiry date of 
Contract 

Project 

Manager 

Contract 
Value per 
Annum/ha 

Vivier Trust 

Arable Land (Camps A- 
E) 

15 September 2010 

15 August 

2020 

N/A 

R 175105 

Loomer Boerdery 

Arable Land (Camps F-I) 

15 September 2010 

15 August 

2020 

N/A 

R 95 718 

Tikwe Farmers 

Arable Land (Camps 

4&9) 

01 September 2006 

31 August 

2031 

N/A 

R 32 148 

Reasebetsa 

Farmers Trust 

Arable Land (Camps 1-3) 

01 October 2010 

31 August 

2020 

N/A 

R 1133 750 

C Horn 

Arable Land (Camps 

4&9) 

01 December 2010 

31 October 

2020 

N/A 

R 11 73 915 

Hlanganani 

Project 

Arable Land (Camps 5-6) 

01 November 2010 

31 October 

2020 

N/A 

R 1 708 155 

Bultfontein 
Farming Project 

Arable Land (Camps 7,8 
and 10) 

01 November 2010 

30 April 2015 

N/A 

R 1 192 300 

Kopano 

Tswelopele 

Arable Land (Camps 11 
&12) 

01 July 2009 

30 April 2019 

N/A 

R 1 649 430 

Matla Farming 
Community 

Arable Land (Camp 13) 

01 October 2009 

31 August 

2019 

N/A 

R 506 400 


Page 87 


Reasebetsa 

Farmers Trust 

Arable Land (Camps 14 
&15) 

01 October 2010 

31 August 

2020 

N/A 

R 162 600 

G.D Oosthuizen 

Arable Land (Camps 
16,21,22 & 24) 

01 October 2010 

31 October 

2020 

N/A 

R4 752 118 

FG Nzapheza 

Arable Land (Camp 25) 

01 October 2012 

31 October 

2020 

N/A 

R 10 351 50 

Phahameng CMC 


01 February 

31 March 2020 

N/A 

R 13 955 94 

Hoopstad 

Vliegklub 



30 June 2053 

N/A 

R50 00 

Caravan Park 

Park (erven 4960) 


31 December 
2027 

N/A 

R20 00 

Unoscan 

Lapa(Game reserve) 


31 July 2019 

N/A 

R 5 544 00 



APPENDIX I - MUNICIPAL ENTITY OR SERVICE PROVIDER PEREORMANCE SCHEDULE 


For the period under review the municipality did not have any Entity. 


APPENDIX J - DISCLOSURES OE EINANCIAL INTERESTS 


DISCLOSURES OF FINANCIAL INTERESTS 

Position 

Name 

Description of Financial 
Interests* (Nil/ or details) 

Mayor 

Cllr ME Mathibe 

declared 

Members of Exco 

Cllr PP Moalosi 

declared 


Cllr C Horn 

declared 

Speaker 

Cllr TA Matlakala 

declared 

Councillors 

Cllr MJ Taljaard 

declared 


Cllr KR Phukuntsi 

declared 


Cllr MS Bonokoane 

declared 


Cllr MS Baleni 

declared 


Cllr EC Joubert 

declared 


Cllr MM Snyer 

declared 


Cllr BP Essau 

declared 


Cllr DA Njodina 

declared 


Cllr MJ Ngexe 

declared 


Cllr MW Raseu 

declared 


Cllr C Horn 

declared 

Municipal Manager 

TL Mkhwane 


Chief Financial Officer 

L Moletsane 


Director: Corporate Services 

S Rabanye 


Director: Technical Services 

B Dikoko 


Director: Commimity 
Services 

Z Tindleni 



Page 88 


APPENDIX K - I & II REVENUE COLLECTION BY VOTE & BY SOURCE 


Information is included in the attached annual tinancial statements 


APPENDIX L - CONDITIONAL GRANTS RECEIVED EXCLUDING MIG 


CONDITIONAL GRANTS EXCLUDING MIG: 

Tswelopele Local Municipality met all the conditions ot the grants received and all the reports that were 
mandatory were provided to the tunders. 

APPENDIX M - SERVICE BACKLOGS EXPERIENCED BY THE COMMUNITY WHERE 
ANOTHER SPHERE OE GOVERNMENT IS RESPONSIBLE EOR SERVICE PROVISION 


Services and Locations 

Scale of Backlogs 

Impact of Backlogs 

Housing: 

Insufficient housrng units. The service 
provider is the Department of COGTA. 

New shacks are erected 
regularly. 

Residents do not have houses and 
some resorts to illegal occupation of 
land. 



APPENDIX N - CAPITAL EXPENDITURE NEW ASSETS 


Information is included m the attached armual fmancial statements 


APPENDIX O - UPGRADES OR RENEWAL PROGRAMME 


Information is included in the attached armual financial statements 


APPENDIX P - DECLARATION OE LOANS AND GRANTS MADE BY THE MUNICIPALITY 


DECLARATION OF LOANS AND GRANTS MADE BY THE MUNICIPALITY 201^13 

AIl Organisations or 
Persons in receipt of 
LoansVGrants* provided 
by the municipality 

Nature of 
project 

Conditions 
attached to 
funding 

Value 201VI3 
R'OOO 

Total Amount 
committed over 
previous and 
future years 

None 

None 

None 

None 

None 


Page 89 




APPENDIX Q - AUDITED ANNUAL EINANCIAL STATEMENTS 


AUDITED ANNUAL FINANCIAL STATEMENTS FOR 201^13 OF TSWELOPELE LOCAL 
MUNICIPALITY. 


Page 90 


Tswelopele Local Municipality 
(Registration number FS183) 
Financial statements 
for the year ended 30 June 2013 


Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

General Information 


Legal form of entity Local Municipality 

Nature of business and principal activities Providing municipal services and maintain the best interests of 

the local community mainly in the Tswelopele area. 


Executive committee Mathibe, ME (Mayor) 

Moalosi, PP 
Horn, C 

Councillors Matlakala, TA (Speaker) 

Baleni, MS 
Bonokwane, MS 
Eseu, BP 
Joubert, EC 
Njodina, DA 
Ngexe, MJ 
Phukuntsi, KR 
Raseu, MW 
Taedi, TT 
Taljaard, MJ 
Snyer, MM 

Grading of local authority Medium Capacity 

Grade 3 in terms of Remuneration of Public Office Bearers Act. 


Accounting Officer Mkhwane, TL 

Chief Finance Officer (CFO) Moletsane, L 


Business address 


Postal address 


Bankers 

Auditors 


Civic Centre 
Bosman Street 
Bultfontein 
9670 

PO Box 3 

Bultfontein 

9670 

ABSA Bank Limited 

The Auditor-General of South Africa 


1 




Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

lndex 

The reports and statements set out below comprise the financial statements presented to the provincial 


legislature: 

Contents Page 

Accounting Officer's Responsibilities and Approval 4 

Statement of Financial Position 5-6 

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 - 14 

Accounting Policies 15 - 44 

Notes to the Financial Statements 45 - 83 

Appendixes: (The appendixes do not form part of the financial statements and are unaudited) 

Appendix A: Schedule of External loans 84 

Appendix B: Analysis of Property, Plant and Equipment 87 

Appendix C: Segmental analysis of Property, Plant and Equipment 93 

Appendix D: Segmental Statement of Financial Performance 94 

Appendix E(l): Actual versus Budget (Revenue and Expenditure) 96 

Appendix E(2): Actual versus Budget (Acquisition of Property, Plant and 97 

Equipment) 

Appendix F: Disclosure of Grants and Subsidies in terms of the Municipal 98 

Finance Management Act 


2 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

lndex 


Abbreviations 

COID 

CRR 

DBSA 

SA GAAP 

GRAP 

GAMAP 

HDF 

lAS 

IMFO 

IPSAS 

ME's 

MEC 

MFMA 

MIG 


Compensation for Occupational Injuries and Diseases 
Capital Replacement Reserve 
Development Bank of South Africa 

South African Statements of Generally Accepted Accounting Practice 

Generally Recognised Accounting Practice 

Generally Accepted Municipal Accounting Practice 

Housing Development Fund 

International Accounting Standards 

Institute of Municipal Finance Officers 

International Public Sector Accounting Standards 

Municipal Entities 

Member of the Executive Council 

Municipal Finance Management Act 

Municipal Infrastructure Grant (Previously CMIP) 


3 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

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 financial statements and 
related financial information included in this report. It is the responsibility of the accounting officer to 
ensure that the 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 financial statements and was given 
unrestricted access to all financial records and related data. 

The 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 financial statements are based upon appropriate accounting policies consistently applied and supported 
by reasonable and prudent judgements and estimates. 

The accounting officer acknowledges that he is 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 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 financial statements. However, any system of internal financial control can 
provide only reasonable, and not absolute, assurance against material misstatement or deficit. 

The annual financial statements set out on pages 5 to 83, which have been prepared on the going concern 
basis, were approved by the accounting officer on 30 August 2013 and were signed on its behalf by: 


TL Mkhwane 
Municipal Manager 


4 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Statement of Financial Position as at 30 June 2013 

Figures in Rand Note(s) 2013 2012 


Assets 


Current Assets 


Cash and cash equivalents 

3 

14 110 511 

15 219 754 

Consumer debtors 

4 

7 681 295 

6 365 776 

Inventories 

5 

219 728 

166 493 

Other receivables from exchange transactions 

6 

707 376 

821 068 

Other receivables from non-exchange transactions 

7 

2 143 152 

4 311 139 

VAT receivable 

8 

801 756 

1 825 207 



25 663 818 

28 709 437 

Non-Current Assets 




Biological assets that form part of an agricultural activity 

9 

1 131476 

816 680 

Intangible assets 

10 

18 685 

12 091 

Investment property 

11 

23 876 000 

23 876 000 

Other financial assets 

12 

897 182 

823 107 

Property, plant and equipment 

13 

358 208 179 

347 242 209 



384 131 522 

372 770 087 

Total Assets 


409 795 340 

401 479 524 

Liabilities 




Current Liabilities 




Borrowings 

14 

1 694 349 

566 036 

Consumer deposits 

15 

538 253 

478 702 

Finance lease obligation 

16 

636 931 

601 962 

Payables from exchange transactions 

17 

16 477 308 

22 676 304 

Provisions 

18 

490 000 

442 000 

Retirement benefit obligation 

19 

419 000 

425 000 

Unspent conditional grants and receipts 

20 

- 

2 546 130 

VAT payable 


51439 

265 747 



20 307 280 

28 001 881 


Non-Current Liabilities 


Borrowings 

14 

11 848 214 

12 484 

907 

Finance lease obligation 

16 

360 974 

908 

595 

Provisions 

18 

18 684 078 

17 253 

592 



30 893 266 

30 647 094 

Total Liabilities 

51 200 546 

58 648 975 

Net Assets 

358 594 794 

342 830 549 



5 
















Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Statement of Financial Position as at 30 June 2013 


Figures in Rand 

Note(s) 2013 

2012 

Net Assets 

Reserves 

Accumulated surplus 

358 594 794 

342 830 549 

Total Net Assets 358 594 794 342 830 549 


358 594 794 342 830 549 







Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Statement of Financial Performance 


Figures in Rand 

Note(s) 

2013 

2012 

Revenue 




Service charges 

23 

32 202 116 

27 754 677 

Rental of facilities and equipment 

24 

882 534 

389 622 

Interest received (trading) 


104 165 

265 387 

Licences and permits 


1 350 

1 100 

Sale of game 


158 522 

197 300 

Other income 

25 

1 064 852 

533 027 

Interest received - investment 


419 298 

815 952 

Dividends received 


258 565 

69 042 

Property rates 

26 

7 477 676 

6 571 275 

Government grants and subsidies 

27 

98 413 772 

97 697 348 

Fines 


259 400 

248 300 

Total revenue 


141 242 250 

134 543 030 

Expenditure 




Personnel 

28 

(38 525 232) 

(32 001458) 

Remuneration of councillors 

29 

(4 025 443) 

(3 670 373) 

Depreciation and amortisation 

30 

(19 330 543) 

(20 290 458) 

Finance costs 

31 

(3 586 642) 

(2 661 095) 

Movement in bad debt provision 

32 

(4 112 517) 

(6 260 335) 

Repairs and maintenance 


(6 677 885) 

(5 534 176) 

Bulk purchases 

33 

(28 337 970) 

(24 839 234) 

General Expenses 

34 

(21 045 266) 

(19 232 809) 

Total expenditure 


(125 641 498)(114 489 938) 

Operating surplus 


15 600 752 

20 053 092 

Loss on disposal of assets and liabilities 


(66 862) 

- 

Fair value adjustments - game 


156 274 

176 804 

Fair value adjustments - shares 

35 

74 075 

615 151 



163 487 

791 955 


Surplus forthe year 

15 764 239 

20 845 047 

Attributable to: 



Owners of the controlling entity 

15 764 239 

20 845 047 


7 












Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 


Statement of Changes in Net Assets 



Accumulated 

Total net 

Figures in Rand 

surplus 

assets 

Balance at 01 July 2011 

321 985 502 

321 985 502 

Changes in net assets 



Surplus/(deficit) for the period 

20 845 047 

20 845 047 

Total changes 

20 845 047 

20 845 047 

Opening balance as previously reported 

320 514 220 

320 514 220 

Adjustments 



Correction of errors (note 48) 

22 316 335 

22 316 335 

Balance at 01 July 2012 as restated 

342 830 555 

342 830 555 

Changes in net assets 



Surplus/(deficit) for the period 

15 764 239 

15 764 239 

Total changes 

15 764 239 

15 764 239 


Total changes 

Balance at 30 June 2013 


358 594 794 358 594 794 











Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Cash Flow Statement 

Figures in Rand Note(s) 2013 2012 


Cash flows from operating activities 


Receipts 


Sale of goods and services 


38 786 401 

40 385 900 

Grants 


95 867 642 

96 762 437 

Interest income 


419 298 

815 952 

Dividends received 


146 218 

69 042 



135 219 559 

138 033 331 

Payments 




Employee costs 


(43 126 129) 

(33 147 998) 

Suppliers 


(59 225 029) 

(58 847 757) 

Finance costs 


(3 292 073) 

(2 267 242) 

(105 643 231) (94 262 997) 

Net cash flows from operating activities 

38 

29 576 328 

43 770 334 

Cash flows from investing activities 




Purchase of property, plant and equipment 

13 

(30 284 190) 

(34 870 971) 

Proceeds from sale of property, plant and equipment 

13 

155 122 

- 

Purchase of other intangible assets 

10 

(240 902) 

(223 117) 

Proceeds from sale of biological assets that form part of an agricultural 

9 

- 

102 698 

activity 




Net cash flows from investing activities 


(30 257 623) (34 991390) 

Cash flows from financing activities 




Movement in borrowings 


491 620 

(503 229) 

Movement in other liability 


- 

(1 000) 

Finance lease payments 


(807 221) 

(852 392) 

Distributions to owners 


(112 347) 

- 

Net cash flows from financing activities 


(427 948) 

(1 356 621) 

Net increase/(decrease) in cash and cash equivalents 


(1 109 243) 

7 422 323 

Cash and cash equivalents at the beginning of the year 


15 219 754 

7 797 431 

Cash and cash equivalents at the end of the year 

3 

14 110 511 

15 219 754 


9 
















Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 


Statement of Comparison of Budget and Actual Amounts 


Budget on Accrual Basis 


Approved 

Adjustments 

Final Budget 

Actual amounts 

Difference 

Reference 


budget 



on comparable 

between final 






basis 

budget and 


Figures in Rand 





actual 


Statement of Financial Performance 







Revenue 







Revenue from exchange 
transactions 

Service charges 

23 884 289 

8 198 711 

32 083 000 

32 202 116 

119 116 

23 

Rental of facilities and equipment 

583 490 

215 510 

799 000 

882 534 

83 534 

24 

Interest received (trading) 

448 200 

(448 200) 

- 

104 165 

104 165 


Licences and permits 

947 

353 

1300 

1350 

50 


Other income 

149 400 

664 600 

814 000 

158 522 

(655 478) 

25 

Other income - (rollup) 

524 473 

(524 473) 

- 

1 064 852 

1 064 852 


Interest received - investment 

373 500 

106 500 

480 000 

419 298 

(60 702) 


Dividends received 

97 110 

(97 110) 

- 

258 565 

258 565 


Total revenue from exchange 
transactions 

26 061 409 

8 115 891 

34 177 300 

35 091 402 

914 102 


Revenue from non-exchange 
transactions 







Taxation revenue 







Property rates 

2 314 344 

1 770 656 

4 085 000 

7 477 676 

3 392 676 

26 

Government grants & subsidies 

49 110 284 

17 205 716 

66 316 000 

98 413 772 

32 097 772 

27 

Transfer revenue 







Fines 

114 216 

117 784 

232 000 

259 400 

27 400 


Total revenue from non-exchange 
transactions 

51 538 844 

19 094 156 

70 633 000 

106 150 848 

35 517 848 


Total revenue 

77 600 253 

27 210 047 

104 810 300 

141 242 250 

36 431 950 


Expenditure 

Personnel 

(28 670 586) 

(6 767 634) 

(35 438 220) 

(38 525 232) 

(3 087 012) 

28 

Remuneration of councillors 

(3 725 187) 

(849 593) 

(4 574 780) 

(4 025 443) 

549 337 

29 

Depreciation and amortisation 

- 

- 

- 

(19 330 543) 

(19 330 543) 

30 

Finance costs 

(1 516 261) 

(829 739) 

(2 346 000) 

(3 586 642) 

(1 240 642) 

31 

Debt impairment 

(1 867 878) 

(632 622) 

(2 500 500) 

(4 112 517) 

(1 612 017) 

32 

Repairs and maintenance 

(5 745 924) 

- 

(5 745 924) 

(6 677 885) 

(931 961) 


Bulk purchases 

(19 871969) 

(343 031) 

(20 215 000) 

(28 337 970) 

(8 122 970) 

33 

General Expenses 

(18 183 585) 

(18 371991) 

(36 555 576) 

(21 045 266) 

15 510 310 

34 

Total expenditure 

(79 581 390) 

(27 794 610) 

(107 376 000) 

(125 641 498) 

(18 265 498) 


Operating surplus 

(1 981 137) 

103 773 479 

(2 565 700) 

15 600 752 

18 166 452 


Loss on disposal of assets and 
liabilities 

- 

- 

” 

(66 862) 

(66 862) 


Gain on fair value adjustment 

- 

- 

- 

156 274 

156 274 


Fair value adjustments 

- 

- 

- 

74 075 

74 075 

35 


- 

- 

- 

163 487 

163 487 


Surplus before taxation 

(1 981 137) 

103 773 479 

101 792 342 

15 764 239 

(86 028 103) 



10 
















Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 


Statement of Comparison of Budget and Actual Amounts 


Budget on Accrual Basis 

Figures in Rand 

Approved 

budget 

Adjustments 

Final Budget Actual amounts 
on comparable 
basis 

Difference 

between final 
budget and 
actual 

Reference 


Actual Amount on Comparable 
Basis as Presented in the Budget 
and Actual Comparative Statement 


(1 981 137) 103 773 479 101 792 342 


15 764 239 (86 028 103) 







Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 


Statement of Comparison of Budget and Actual Amounts 


Budget on Accrual Basis 

Figures in Rand 

Approved 

budget 

Adjustments 

Final Budget Actual amounts 
on comparable 
basis 

Difference 

between final 
budget and 
actual 

Reference 


Statement of Financial Position 
Assets 

Current Assets 


Inventories 

89 000 

- 

89 000 

219 728 

130 728 

5 

Other receivables from exchange 

- 

- 

- 

707 376 

707 376 

6 

transactions 







Other receivables from non- 

4 276 000 

(2 552 304) 

1 723 696 

2 143 152 

419 456 

7 

exchange transactions 







VAT receivable 

- 

- 

- 

801 756 

801 756 

8 

Consumer debtors 

19 763 000 

- 

19 763 000 

7 681 295 

(12 081 705) 

4 

Cash and cash equivalents 

7 825 000 

- 

7 825 000 

14 110 511 

6 285 511 

3 


31 953 000 

(2 552 304) 

29 400 696 

25 663 818 

(3 736 878) 


Non-Current Assets 







Biological assets that form part of 

1 067 000 

- 

1 067 000 

1 131476 

64 476 

9 

an agrlcultural activity 







Investment property 

13 066 000 

- 

13 066 000 

23 876 000 

10 810 000 

11 

Property, plant and equipment 

553 347 000 

- 

553 347 000 

358 208 179 

(195 138 821) 

13 

Intangible assets 

- 

- 

- 

18 685 

18 685 

10 

Other financial assets 

212 000 

- 

212 000 

897 182 

685 182 

12 


567 692 000 

- 

567 692 000 

384 131 522 

(183 560 478) 


Total Assets 

599 645 000 

(2 552 304) 

597 092 696 

409 795 340 

(187 297 356) 


Liabilities 







Current Liabilities 







Borrowings 

1 351 000 

- 

1351000 

1 694 349 

343 349 

14 

Finance lease obligation 

- 

- 

- 

636 931 

636 931 

16 

Payables from exchange 

19 103 000 

- 

19 103 000 

16 477 308 

(2 625 692) 

17 

transactions 







VAT payable 

- 

- 

- 

51439 

51439 


Consumer deposits 

452 000 

- 

452 000 

538 253 

86 253 

15 

Retirement benefit obligation 

- 

- 

- 

419 000 

419 000 

19 

Provisions 

- 

- 

- 

490 000 

490 000 

18 


20 906 000 

- 

20 906 000 

20 307 280 

(598 720) 


Non-Current Liabilities 







Borrowings 

14 432 000 

- 

14 432 000 

11848 214 

(2 583 786) 

14 

Finance lease obligatlon 

- 

- 

- 

360 974 

360 974 

16 

Provisions 

3 491 000 

- 

3 491 000 

18 684 078 

15 193 078 

18 


17 923 000 

- 

17 923 000 

30 893 266 

12 970 266 


Total Liabilities 

38 829 000 

- 

38 829 000 

51 200 546 

12 371 546 


Net Assets 

560 816 000 

(2 552 304) 

558 263 696 

358 594 794 

(199 668 902) 




12 

















Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 


Statement of Comparison of Budget and Actual Amounts 


Budget on Accrual Basis 

Figures in Rand 

Approved 

budget 

Adjustments 

Final Budget 

Actual amounts 
on comparable 
basis 

Difference Reference 

between final 
budget and 
actual 

Net Assets 

Net Assets Attributable to Owners 
of Controlling Entity 

Reserves 

Capital replacement reserve 
Accumulated surplus 

350 490 000 

210 326 000 

(2 552 304) 

350 490 000 

207 773 696 

358 594 794 

(350 490 000) 

150 821 098 


Total Net Assets 


(2 552 304) 558 263 696 358 594 794 (199 668 902) 


560 816 000 








Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 


Statement of Comparison of Budget and Actual Amounts 


Budget on Accrual Basis 


Approved Adjustments 

Final Budget 

Actual amounts 

Difference 

Reference 


budget 


on comparable 

between final 





basis 

budget and 


Figures in Rand 




actual 


Cash Flow Statement 






Cash flows from operating activities 






Receipts 

Sale of goods and services 

35 178 000 

35 178 000 

41 920 343 

6 742 343 


Grants 

102 731 000 

102 731 000 

98 336 699 

(4 394 301) 


Interest income 

660 000 

660 000 

419 298 

(240 702) 


Dividends received 

- 

- 

146 218 

146 218 



138 569 000 

138 569 000 

140 822 558 

2 253 558 


Payments 

Employee costs 

(36 379 000) 

(36 379 000) 

(43 251 675) 

(6 872 675) 


Suppliers 

(66 428 000) 

(66 428 000) 

- 

66 428 000 


Finance costs 

(2 346 000) 

(2 346 000) 

- 

2 346 000 



(105 153 000) 

(105 153 000) 

(43 251 675) 

61 901 325 


Net cash flows from operating 
activities 

33 416 000 

33 416 000 

97 570 883 

64 154 883 


Cash flows from investing activities 

Purchase of property, plant and 
equipment 

(35 371 000) 

(35 371 000) 

(30 284 190) 

5 086 810 

13 

Proceeds from sale of property, 
plant and equipment 

- 


155 122 

155 122 

13 

Purchase of other intangible assets 

- 

- 

(240 902) 

(240 902) 

10 

Net cash flows from investing 
activities 

(35 371 000) 

(35 371 000) 

(30 369 970) 

5 001 030 


Cash flows from financing activities 

Repayment of borrowings 

(448 000) 


491 620 

491 620 


Movement in current portion of 
long-term provision 

(596 000) 


■ 



Finance lease payments 

- 

- 

(807 221) 

(807 221) 


Distributions to owners 

- 

- 

(112 347) 

(112 347) 


Net cash flows from financing 
activities 

(1 044 000) 

- 

(427 948) 

(427 948) 


Net increase/(decrease) in cash and 
cash equivalents 

(2 999 000) 

(1 955 000) 

66 772 965 

68 727 965 


Cash and cash equivalents at the 
beginning of the year 

7 825 000 

7 825 000 

15 219 754 

7 394 754 


Cash and cash equivalents at the 
end of the year 

4 826 000 

5 870 000 

81 992 719 

76 122 719 


Additional text 


14 


















Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Accounting Policies 


1. Presentation of Financial Statements 

The financial statements have been prepared in accordance with the Standards of Generally Recognised 
Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting 
Standards Board. 

These financial statements have been prepared on an accrual basis of accounting and are in accordance with 
historical cost convention unless specified otherwise. They are presented in South African Rand. 

A summary of the significant accounting policies, which have been consistently applied, are disclosed below. 

These accounting policies are consistent with the previous period. 

1.1 Significant judgements and sources of estimation uncertainty 

In preparing the financial statements, management is required to make estimates and assumptions that 
affect the amounts represented in the financial statements and related disclosures. Use of available 
information and the application of judgement is inherent in the formation of estimates. Actual results in the 
future could differ from these estimates which may be material to the financial statements. Significant 
judgements include: 

Trade receivables / Held to maturity investments and/or loans and receivables 

The municipality assesses its trade receivables, held to maturity investments and loans and receivables for 
impairment at the end of each reporting period. In determining whether an impairment loss should be 
recorded in surplus or deficit, management makes judgements as to whether there is observable data 
indicating a measurable decrease in the estimated future cash flows from a financial asset. 

The impairment for trade receivables, held to maturity investments and loans and receivables is calculated 
on a portfolio basis, based on historical loss ratios, adjusted for national and industry-specific economic 
conditions and other indicators present at the reporting date that correlate with defaults on the portfolio. 
These annual loss ratios are applied to loan balances in the portfolio and scaled to the estimated loss 
emergence period. 

Allowance for slow moving, damaged and obsolete stock 

An allowance is recognised to write stock down to the lower of cost or net realisable value. Management 
have made estimates of the selling price and direct cost to sell on certain inventory items. 


15 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Accounting Policies 


1.1 Significant judgements and sources of estimation uncertainty (continued) 

Fairvalue estimation 

The fair value of financial instruments traded in active markets (such as trading and available-for-sale 
securities) is based on quoted market prices at the end of the reporting period. The quoted market price 
used for financial assets held by the municipality is the current bid price. 

Quoted market prices or dealer quotes for similar instruments are used for long-term debt. Other 
techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining 
financial instruments. The fair value of interest rate swaps is calculated as the present value of the estimated 
future cash flows. The fair value of forward foreign exchange contracts is determined using quoted forward 
exchange rates at the end of the reporting period. 

The carrying value less impairment provision of trade receivables and payables are assumed to approximate 
their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the 
future contractual cash flows at the current market interest rate that is available to the municipality for 
similar financial instruments. 

Provisions 

Provisions were raised and management determined an estimate based on the information available. 
Additional disclosure of these estimates of provisions are included in note 18 - Provisions. 

Useful lives of waste and water network and other assets 

The municipality's management determines the estimated useful lives and related depreciation charges for 
the waste water and water networks. This estimate is based on industry norm. Management will increase 
the depreciation charge where useful lives are less than previously estimated useful lives. 

Post retirement benefits 

The present value of the post retirement obligation depends on a number of factors that are determined on 
an actuarial basis using a number of assumptions. The assumptions used in determining the net cost 
(income) include the discount rate. Any changes in these assumptions will impact on the carrying amount of 
post retirement obligations. 

The municipality determines the appropriate discount rate at the end of each year. This is the interest rate 
that should be used to determine the present value of estimated future cash outflows expected to be 
required to settle the pension obligations. In determining the appropriate discount rate, the municipality 
considers the interest rates of high-quality corporate bonds that are denominated in the currency in which 
the benefits will be paid, and that have terms to maturity approximating the terms of the related pension 
liability. 

Other key assumptions for pension obligations are based on current market conditions. Additional 
information is disclosed in Note 19. 


16 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Accounting Policies 


1.1 Significant judgements and sources of estimation uncertainty (continued) 

Allowance for doubtful debts 

On debtors an impairment loss is recognised in surplus and deficit when there is objective evidence that it is 
impaired. The impairment is measured as the difference between the debtors carrying amount and the 
present value of estimated future cash flows discounted at the effective interest rate, computed at initial 
recognition. 

1.2 Biological assets that form part of an agricultural activity 

The fair value of game is determined based on market prices of livestock of similar age, breed, and genetic 
merit. 

A gain or loss arising on initial recognition of biological assets that form part of an agricultural activity or 
agricultural produce at fair value less estimated point-of-sale costs and from a change in fair value less 
estimated point-of-sale costs of a biological assets that form part of an agricultural activity is included in 
surplus or deficit for the period in which it arises. 

1.3 Investment property 

Investment property is property (land or a building - or part of a building - or both) held to earn rentals or for 
capital appreciation or both, rather than for: 

• use in the production or supply of goods or services or for 

• administrative purposes, or 

• sale in the ordinary course of operations. 

Owner-occupied property is property held for use in the production or supply of goods or services or for 
administrative purposes. 

Investment property is recognised as an asset when, it is probable that the future economic benefits or 
service potential that are associated with the investment property will flow to the municipality, and the cost 
or fair value of the investment property can be measured reliably. 

Investment property is initially recognised at cost. Transaction costs are included in the initial measurement. 

Where investment property is acquired through a non-exchange transaction, its cost is its fair value as at the 
date of acquisition. 

Costs include costs incurred initially and costs incurred subsequently to add to, or to replace a part of, or 
service a property. If a replacement part is recognised in the carrying amount of the investment property, 
the carrying amount of the replaced part is derecognised. 


17 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Accounting Policies 


1.3 Investment property (continued) 

Fair value 

Subsequent to initial measurement investment property is measured at fair value. 

The fair value of investment property reflects market conditions at the reporting date. 

A gain or loss arising from a change in fair value is included in net surplus or deficit for the period in which it 
arises. 

If the entity determines that the fair value of an investment property under construction is not reliably 
determinable but expects the fair value of the property to be reliably measurable when construction is 
complete, it measures that investment property under construction at cost until either its fair value 
becomes reliably determinable or construction is completed (whichever is earlier). If the entity determines 
that the fair value of an investment property (other than an investment property under construction) is not 
reliably determinable on a continuing basis, the entity measure that investment property using the cost 
model (as per the accounting policy on Property, plant and equipment). The residual value of the investment 
property is then assumed to be zero. The entity apply the cost model (as per the accounting policy on 
Property, plant and equipment) until disposal of the investment property. 

Once the entity becomes able to measure reliably the fair value of an investment property under 
construction that has previously been measured at cost, it measures that property at its fair value. Once 
construction of that property is complete, it is presumed that fair value can be measured reliably. If this is 
not the case, the property is accounted for using the cost model in accordance with the accounting policy on 
Property, plant and equipment. 

1.4 Property, plant and equipment 

Property, plant and equipment are tangible non-current assets (including infrastructure assets) that are held 
for use in the production or supply of goods or services, rental to others, or for administrative purposes, and 
are expected to be used during more than one period. 

The cost of an item of property, plant and equipment is recognised as an asset when: 

• it is probable that future economic benefits or service potential associated with the item will flow to 
the municipality; and 

• the cost of the item can be measured reliably. 

Property, plant and equipment is initially measured at cost. 

The cost of an item of property, plant and equipment is the purchase price and other costs attributable to 
bring the asset to the location and condition necessary for it to be capable of operating in the manner 
intended by management. Trade discounts and rebates are deducted in arriving at the cost. 

Where an asset is acquired through a non-exchange transaction, its cost is its fair value as at date of 
acquisition. 


18 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Accounting Policies 


1.4 Property, plant and equipment (continued) 

Where an item of property, plant and equipment is acquired in exchange for a non-monetary asset or 
monetary assets, or a combination of monetary and non-monetary assets, the asset acquired is initially 
measured at fair value (the cost). If the acquired item's fair value was not determinable, it's deemed cost is 
the carrying amount of the asset(s) given up. 

When significant components of an item of property, plant and equipment have different useful lives, they 
are accounted for as separate items (major components) of property, plant and equipment. 

Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and 
costs incurred subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the 
carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is 
derecognised. 

The initial estimate of the costs of dismantling and removing the item and restoring the site on which it is 
located is also included in the cost of property, plant and equipment, where the entity is obligated to incur 
such expenditure, and where the obligation arises as a result of acquiring the asset or using it for purposes 
other than the production of inventories. 

Recognition of costs in the carrying amount of an item of property, plant and equipment ceases when the 
item is in the location and condition necessary for it to be capable of operating in the manner intended by 
management. 

Major spare parts and stand by equipment which are expected to be used for more than one period are 
included in property, plant and equipment. In addition, spare parts and stand by equipment which can only 
be used in connection with an item of property, plant and equipment are accounted for as property, plant 
and equipment. 

Major inspection costs which are a condition of continuing use of an item of property, plant and equipment 
and which meet the recognition criteria above are included as a replacement in the cost of the item of 
property, plant and equipment. Any remaining inspection costs from the previous inspection are 
derecognised. 

Property, plant and equipment is carried at cost less accumulated depreciation and any impairment losses. 

Any increase in an asset's carrying amount, as a result of a revaluation, is credited directly to a revaluation 
surplus. The increase is recognised in surplus or deficit to the extent that it reverses a revaluation decrease 
of the same asset previously recognised in surplus or deficit. 

Any decrease in an asset's carrying amount, as a result of a revaluation, is recognised in surplus or deficit in 
the current period. The decrease is debited directly to a revaluation surplus to the extent of any credit 
balance existing in the revaluation surplus in respect of that asset. 

The revaluation surplus in equity related to a specific item of property, plant and equipment is transferred 
directly to retained earnings when the asset is derecognised. 


19 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Accounting Policies 


1.4 Property, plant and equipment (continued) 

The revaluation surplus in equity related to a specific item of property, plant and equipment is transferred 
directly to retained earnings as the asset is used. The amount transferred is equal to the difference between 
depreciation based on the revalued carrying amount and depreciation based on the original cost of the 
asset. 

Property, plant and equipment are depreciated on the straight line basis over their expected useful lives to 
their estimated residual value. 

Property, plant and equipment is carried at cost less accumulated depreciation and any impairment losses. 

Property, plant and equipment is carried at revalued amount, being the fair value at the date of revaluation 
less any subsequent accumulated depreciation and subsequent accumulated impairment losses. 

Revaluations are made with sufficient regularity such that the carrying amount does not differ materially 
from that which would be determined using fair value at the end of the reporting period. 

Any increase in an asset's carrying amount, as a result of a revaluation, is credited directly to a revaluation 
surplus. The increase is recognised in surplus or deficit to the extent that it reverses a revaluation decrease 
of the same asset previously recognised in surplus or deficit. 

Any decrease in an asset's carrying amount, as a result of a revaluation, is recognised in surplus or deficit in 
the current period. The decrease is debited in revaluation surplus to the extent of any credit balance existing 
in the revaluation surplus in respect of that asset. 

The useful lives of items of property, plant and equipment have been assessed as follows: 


Item 

Average useful life 

Land and buildings 


• Land 

Indefinite 

• Buildings 

30 - 45 years 

Leased assets 

5 years 

Furniture and fixtures 

6 years 

IT equipment 

3 years 

Infrastructure 


• Electricity 

20 years 

• Roads and paving 

15 - 30 years 

• Sewerage 

20 - 30 years 

• Water 

20 - 30 years 

Other property, plant and equipment 

10 years 


The residual value, and the useful life and depreciation method of each asset are reviewed at the end of 
each reporting date. If the expectations differ from previous estimates, the change is accounted for as a 
change in accounting estimate. 

Reviewing the useful life of an asset on an annual basis does not require the entity to amend the previous 
estimate unless expectations differ from the previous estimate. 

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total 
cost of the item is depreciated separately. 


20 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Accounting Policies 


1.4 Property, plant and equipment (continued) 

The depreciation charge for each period is recognised in surplus or deficit unless it is included in the carrying 
amount of another asset. 

Items of municipality are derecognised when the asset is disposed of or when there are no further economic 
benefits or service potential expected from the use of the asset. 

The gain or loss arising from the derecognition of an item of property, plant and equipment is included in 
surplus or deficit when the item is derecognised. The gain or loss arising from the derecognition of an item 
of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, 
and the carrying amount of the item. 

Assets which the municipality holds for rentals to others and subsequently routinely sell as part of the 
ordinary course of activities, are transferred to inventories when the rentals end and the assets are 
available-for-sale. These assets are not accounted for as non-current assets held for sale. Proceeds from 
sales of these assets are recognised as revenue. All cash flows on these assets are included in cash flows 
from operating activities in the municipality. 

1.5 Intangible assets 

An asset is identified as an intangible asset when it: 

• is capable of being separated or divided from an entity and sold, transferred, licensed, rented or 
exchanged, either individually or together with a related contract, assets or liability; or 

• arises from contractual rights or other legal rights, regardless whether those rights are transferable 
or separate from the municipality or from other rights and obligations. 

Intangible assets are initially recognised at cost. 

An intangible asset acquired through a non-exchange transaction, the cost shall be its fair value as at the 
date of acquisition. 

Expenditure on research (or on the research phase of an internal project) is recognised as an expense when 
it is incurred. 

Intangible assets are carried at cost less any accumulated amortisation and any impairment losses. 

An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is 
no foreseeable limit to the period over which the asset is expected to generate net cash inflows or service 
potential. Amortisation is not provided for these intangible assets, but they are tested for impairment 
annually and whenever there is an indication that the asset may be impaired. For all other intangible assets 
amortisation is provided on a straight line basis over their useful life. 

The amortisation period and the amortisation method for intangible assets are reviewed at each reporting 
date. 

Reassessing the useful life of an intangible asset with a finite useful life after it was classified as indefinite is 
an indicator that the asset may be impaired. As a result the asset is tested for impairment and the remaining 
carrying amount is amortised over its useful life. 


21 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Accounting Policies 


1.5 Intangible assets (continued) 

Internally generated brands, mastheads, publishing titles, customer lists and items similar in substance are 
not recognised as intangible assets. 

Amortisation is provided to write down the intangible assets, on a straight line basis, to their residual values 
as follows: 

Item 

Software licences 
Computer software 
Website 

Intangible assets are derecognised: 

• on disposal; or 

• when no future economic benefits or service potential are expected from its use or disposal. 

1.6 Financial instruments 

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability 
or a residual interest of another entity. 

The amortised cost of a financial asset or financial liability is the amount at which the financial asset or 
financial liability is measured at initial recognition minus principal repayments, plus or minus the cumulative 
amortisation using the effective interest method of any difference between that initial amount and the 
maturity amount, and minus any reduction (directly or through the use of an allowance account) for 
impairment or uncollectibility. 

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by 
failing to discharge an obligation. 

Derecognition is the removal of a previously recognised financial asset or financial liability from an entity's 
statement of financial position. 

The effective interest method is a method of calculating the amortised cost of a financial asset or a financial 
liability (or group of financial assets or financial liabilities) and of allocating the interest income or interest 
expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated 
future cash payments or receipts through the expected life of the financial instrument or, when appropriate, 
a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the 
effective interest rate, an entity shall estimate cash flows considering all contractual terms of the financial 
instrument (for example, prepayment, call and similar options) but shall not consider future credit losses. 
The calculation includes all fees and points paid or received between parties to the contract that are an 
integral part of the effective interest rate (see the Standard of GRAP on Revenue from Exchange 
Transactions), transaction costs, and all other premiums or discounts. There is a presumption that the cash 
flows and the expected life of a group of similar financial instruments can be estimated reliably. However, in 
those rare cases when it is not possible to reliably estimate the cash flows or the expected life of a financial 
instrument (or group of financial instruments), the entity shall use the contractual cash flows over the full 
contractual term of the financial instrument (or group of financial instruments). 


Useful life 

1 year 
3 years 
Indefinite 


22 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Accounting Policies 


1.6 Financial instruments (continued) 

Fair value is the amount for which an asset could be exchanged, or a liability settled, between 
knowledgeable willing parties in an arm's length transaction. 

A financial asset is: 

• cash; 

• a residual interest of another entity; or 

• a contractual right to: 

receive cash or another financial asset from another entity; or 

exchange financial assets or financial liabilities with another entity under conditions that are 
potentially favourable to the entity. 

A financial liability is any liability that is a contractual obligation to: 

• deliver cash or another financial asset to another entity; or 

• exchange financial assets or financial liabilities under conditions that are potentially unfavourable to the 
entity. 

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate 
because of changes in market interest rates. 

Liquidity risk is the risk encountered by an entity in the event of difficulty in meeting obligations associated 
with financial liabilities that are settled by delivering cash or another financial asset. 

Loans payable are financial liabilities, other than short-term payables on normal credit terms. 

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because 
of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and 
other price risk. 

Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate 
because of changes in market prices (other than those arising from interest rate risk or currency risk), 
whether those changes are caused by factors specific to the individual financial instrument or its issuer, or 
factors affecting all similar financial instruments traded in the market. 

A financial asset is past due when a counterparty has failed to make a payment when contractually due. 

A residual interest is any contract that manifests an interest in the assets of an entity after deducting all of 
its liabilities. A residual interest includes contributions from owners, which may be shown as: 

• equity instruments or similar forms of unitised capital; 

• a formal designation of a transfer of resources (or a class of such transfers) by the parties to the 
transaction as forming part of an entity's net assets, either before the contribution occurs or at the time 
of the contribution; or 

• a formal agreement, in relation to the contribution, establishing or increasing an existing financial 
interest in the net assets of an entity. 

Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a 
financial asset or financial liability. An incremental cost is one that would not have been incurred if the entity 
had not acquired, issued or disposed of the financial instrument. 


23 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Accounting Policies 


1.6 Financial instruments (continued) 

Financial instruments at amortised cost are non-derivative financial assets or non-derivative financial 
liabilities that have fixed or determinable payments, excluding those instruments that: 

• the entity designates at fair value at initial recognition; or 

• are held for trading. 

Financial instruments at cost are investments in residual interests that do not have a quoted market price in 
an active market, and whose fair value cannot be reliably measured. 

Financial instruments at fair value comprise financial assets or financial liabilities that are: 

• derivatives; 

• combined instruments that are designated at fair value; 

• instruments held for trading. A financial instrument is held for trading if: 

it is acquired or incurred principally for the purpose of selling or repurchasing it in the near-term; 
or 

on initial recognition it is part of a portfolio of identified financial instruments that are managed 
together and for which there is evidence of a recent actual pattern of short term profit-taking; 

non-derivative financial assets or financial liabilities with fixed or determinable payments that are 
designated at fair value at initial recognition; and 

financial instruments that do not meet the definition of financial instruments at amortised cost or 
financial instruments at cost. 

Classification 

The entity has the following types of financial assets (classes and category) as reflected on the face of the 
statement of financial position or in the notes thereto: 


Class 

Consumer receivables 
Other receivables 
Unlisted shares 


Category 

Financial asset measured at amortised cost 
Financial asset measured at amortised cost 
Financial asset measured at fair value 


The entity has the following types of financial liabilities (classes and category) as reflected on the face of the 
statement of financial position or in the notes thereto: 


Class Category 

otherfinancial liabilities Financial liability measured at amortised cost 

Trade and other payables Financial liability measured at amortised cost 

Initial recognition 

The entity recognises a financial asset or a financial liability in its statement of financial position when the 
entity becomes a party to the contractual provisions of the instrument. 

The entity recognises financial assets using trade date accounting. 


24 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Accounting Policies 


1.6 Financial instruments (continued) 

Initial measurement of financial assets and financial liabilities 

The entity measures a financial asset and financial liability initially at its fair value plus transaction costs that 
are directly attributable to the acquisition or issue of the financial asset or financial liability. 

The entity measures a financial asset and financial liability initially at its fair value [if subsequently measured 
at fair value]. 

The entity first assesses whether the substance of a concessionary loan is in fact a loan. On initial 
recognition, the entity analyses a concessionary loan into its component parts and accounts for each 
component separately. The entity accounts for that part of a concessionary loan that is: 

• a social benefit in accordance with the Framework for the Preparation and Presentation of Financial 
Statements, where it is the issuer of the loan; or 

• non-exchange revenue, in accordance with the Standard of GRAP on Revenue from Non-exchange 
Transactions (Taxes and Transfers), where it is the recipient of the loan. 


25 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Accounting Policies 


1.6 Financial instruments (continued) 

Subsequent measurement of financial assets and financial liabilities 

The entity measures all financial assets and financial liabilities after initial recognition using the following 
categories: 

• Financial instruments at fair value. 

• Financial instruments at amortised cost. 

• Financial instruments at cost. 

All financial assets measured at amortised cost, or cost, are subject to an impairment review. 

Fair value measurement considerations 

The best evidence of fair value is quoted prices in an active market. If the market for a financial instrument is 
not active, the entity establishes fair value by using a valuation technique. The objective of using a valuation 
technique is to establish what the transaction price would have been on the measurement date in an arm's 
length exchange motivated by normal operating considerations. Valuation techniques include using recent 
arm's length market transactions between knowledgeable, willing parties, if available, reference to the 
current fair value of another instrument that is substantially the same, discounted cash flow analysis and 
option pricing models. If there is a valuation technique commonly used by market participants to price the 
instrument and that technique has been demonstrated to provide reliable estimates of prices obtained in 
actual market transactions, the entity uses that technique. The chosen valuation technique makes maximum 
use of market inputs and relies as little as possible on entity-specific inputs. It incorporates all factors that 
market participants would consider in setting a price and is consistent with accepted economic 
methodologies for pricing financial instruments. Periodically, an municipality calibrates the valuation 
technique and tests it for validity using prices from any observable current market transactions in the same 
instrument (i.e. without modification or repackaging) or based on any available observable market data. 

The fair value of a financial liability with a demand feature (e.g. a demand deposit) is not less than the 
amount payable on demand, discounted from the first date that the amount could be required to be paid. 

Reclassification 

The entity does not reclassify a financial instrument while it is issued or held unless it is: 

• combined instrument that is required to be measured at fair value; or 

• an investment in a residual interest that meets the requirements for reclassification. 

Where the entity cannot reliably measure the fair value of an embedded derivative that has been separated 
from a host contract that is a financial instrument at a subsequent reporting date, it measures the combined 
instrument at fair value. This requires a reclassification of the instrument from amortised cost or cost to fair 
value. 

If fair value can no longer be measured reliably for an investment in a residual interest measured at fair 
value, the entity reclassifies the investment from fair value to cost. The carrying amount at the date that fair 
value is no longer available becomes the cost. 

If a reliable measure becomes available for an investment in a residual interest for which a measure was 
previously not available, and the instrument would have been required to be measured at fair value, the 
entity reclassifies the instrument from cost to fair value. 


26 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Accounting Policies 


1.6 Financial instruments (continued) 

Gains and losses 

A gain or loss arising from a change in the fair value of a financial asset or financial liability measured at fair 
value is recognised in surplus or deficit. 

For financial assets and financial liabilities measured at amortised cost or cost, a gain or loss is recognised in 
surplus or deficit when the financial asset or financial liability is derecognised or impaired, or through the 
amortisation process. 

Impairment and uncollectibility of financial assets 

The entity assess at the end of each reporting period whether there is any objective evidence that a financial 
asset or group of financial assets is impaired. 

Financial assets measured at amortised cost: 

If there is objective evidence that an impairment loss on financial assets measured at amortised cost has 
been incurred, the amount of the loss is measured as the difference between the asset's carrying amount 
and the present value of estimated future cash flows (excluding future credit losses that have not been 
incurred) discounted at the financial asset's original effective interest rate. The carrying amount of the asset 
is reduced directly OR through the use of an allowance account. The amount of the loss is recognised in 
surplus or deficit. 

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related 
objectively to an event occurring after the impairment was recognised, the previously recognised 
impairment loss is reversed directly OR by adjusting an allowance account. The reversal does not result in a 
carrying amount of the financial asset that exceeds what the amortised cost would have been had the 
impairment not been recognised at the date the impairment is reversed. The amount of the reversal is 
recognised in surplus or deficit. 

Financial assets measured at cost: 

If there is objective evidence that an impairment loss has been incurred on an investment in a residual 
interest that is not measured at fair value because its fair value cannot be measured reliably, the amount of 
the impairment loss is measured as the difference between the carrying amount of the financial asset and 
the present value of estimated future cash flows discounted at the current market rate of return for a 
similar financial asset. Such impairment losses are not reversed. 


27 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Accounting Policies 


1.6 Financial instruments (continued) 

Derecognition 
Financial assets 

The entity derecognises financial assets using trade date accounting. 

The entity derecognises a financial asset only when: 

• the contractual rights to the cash flows from the financial asset expire, are settled or waived; 

• the entity transfers to another party substantially all of the risks and rewards of ownership of the 
financial asset; or 

• the entity, despite having retained some significant risks and rewards of ownership of the financial 
asset, has transferred control of the asset to another party and the other party has the practical ability 
to sell the asset in its entirety to an unrelated third party, and is able to exercise that ability unilaterally 
and without needing to impose additional restrictions on the transfer. In this case, the entity : 

derecognise the asset; and 

recognise separately any rights and obligations created or retained in the transfer. 

If the entity transfers a financial asset in a transfer that qualifies for derecognition in its entirety and retains 
the right to service the financial asset for a fee, it recognise either a servicing asset or a servicing liability for 
that servicing contract. If the fee to be received is not expected to compensate the entity adequately for 
performing the servicing, a servicing liability for the servicing obligation is recognised at its fair value. If the 
fee to be received is expected to be more than adequate compensation for the servicing, a servicing asset is 
recognised for the servicing right at an amount determined on the basis of an allocation of the carrying 
amount of the larger financial asset. 

If, as a result of a transfer, a financial asset is derecognised in its entirety but the transfer results in the entity 
obtaining a new financial asset or assuming a new financial liability, or a servicing liability, the entity 
recognise the new financial asset, financial liability or servicing liability at fair value. 

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the 
sum of the consideration received is recognised in surplus or deficit. 

If the transferred asset is part of a larger financial asset and the part transferred qualifies for derecognition 
in its entirety, the previous carrying amount of the larger financial asset is allocated between the part that 
continues to be recognised and the part that is derecognised, based on the relative fair values of those parts, 
on the date of the transfer. For this purpose, a retained servicing asset is treated as a part that continues to 
be recognised. The difference between the carrying amount allocated to the part derecognised and the sum 
of the consideration received for the part derecognised is recognised in surplus or deficit. 

If a transfer does not result in derecognition because the entity has retained substantially all the risks and 
rewards of ownership of the transferred asset, the entity continue to recognise the transferred asset in its 
entirety and recognise a financial liability for the consideration received. In subsequent periods, the entity 
recognises any revenue on the transferred asset and any expense incurred on the financial liability. Neither 
the asset, and the associated liability nor the revenue, and the associated expenses are offset. 

Financial liabilities 


28 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Accounting Policies 


1.6 Financial instruments (continued) 

The entity removes a financial liability (or a part of a financial liability) from its statement of financial 
position when it is extinguished — i.e. when the obligation specified in the contract is discharged, cancelled, 
expires or waived. 

An exchange between an existing borrower and lender of debt instruments with substantially different 
terms is accounted for as having extinguished the original financial liability and a new financial liability is 
recognised. Similarly, a substantial modification of the terms of an existing financial liability or a part of it is 
accounted for as having extinguished the original financial liability and having recognised a new financial 
liability. 

The difference between the carrying amount of a financial liability (or part of a financial liability) 
extinguished or transferred to another party and the consideration paid, including any non-cash assets 
transferred or liabilities assumed, is recognised in surplus or deficit. Any liabilities that are waived, forgiven 
or assumed by another entity by way of a non-exchange transaction are accounted for in accordance with 
the Standard of GRAP on Revenue from Non-exchange Transactions (Taxes and Transfers). 

Presentation 

Interest relating to a financial instrument or a component that is a financial liability is recognised as revenue 
or expense in surplus or deficit. 

Dividends or similar distributions relating to a financial instrument or a component that is a financial liability 
is recognised as revenue or expense in surplus or deficit. 

Losses and gains relating to a financial instrument or a component that is a financial liability is recognised as 
revenue or expense in surplus or deficit. 

Distributions to holders of residual interests are debited by the entity directly to net assets, net of any 
related income tax benefit [where applicable]. Transaction costs incurred on residual interests is accounted 
for as a deduction from net assets, net of any related income tax benefit [where applicablej. 

A financial asset and a financial liability are only offset and the net amount presented in the statement of 
financial position when the entity currently has a legally enforceable right to set off the recognised amounts 
and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. 

In accounting for a transfer of a financial asset that does not qualify for derecognition, the entity does not 
offset the transferred asset and the associated liability. 

1.7 Leases 

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to 
ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and 
rewards incidental to ownership. 

When a lease includes both land and buildings elements, the entity assesses the classification of each 
element separately. 


29 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Accounting Policies 


1.7 Leases (continued) 

Finance leases - lessor 

The municipality recognises finance lease receivables as assets on the statement of financial position. Such 
assets are presented as a receivable at an amount equal to the net investment in the lease. 

Finance revenue is recognised based on a pattern reflecting a constant periodic rate of return on the 
municipality's net investment in the finance lease. 

Finance leases - lessee 

Finance leases are recognised as assets and liabilities in the statement of financial position at amounts equal 
to the fair value of the leased property or, if lower, the present value of the minimum lease payments. The 
corresponding liability to the lessor is included in the statement of financial position as a finance lease 
obligation. 

The discount rate used in calculating the present value of the minimum lease payments is the interest rate 
implicit in the lease. 

Minimum lease payments are apportioned between the finance charge and reduction of the outstanding 
liability. The finance charge is allocated to each period during the lease term so as to produce a constant 
periodic rate of on the remaining balance of the liability. 

Any contingent rents are expensed in the period in which they are incurred. 

Operating leases - lessor 

Operating lease revenue is recognised as revenue on a straight-line basis over the lease term. 

Initial direct costs incurred in negotiating and arranging operating leases are added to the carrying amount 
of the leased asset and recognised as an expense over the lease term on the same basis as the lease 
revenue. 

The aggregate cost of incentives is recognised as a reduction of rental revenue over the lease term on a 
straight-line basis. 

The aggregate benefit of incentives is recognised as a reduction of rental expense over the lease term on a 
straight-line basis. 

Income for leases is disclosed under revenue in statement of financial performance. 

Operatlng leases - lessee 

Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The 
difference between the amounts recognised as an expense and the contractual payments are recognised as 
an operating lease asset or liability. 


30 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Accounting Policies 


1.8 Inventories 

Inventories are initially measured at cost except where inventories are acquired through a non-exchange 
transaction, then their costs are their fair value as at the date of acquisition. 

Subsequently inventories are measured at the lower of cost and net realisable value. 

Inventories are measured at the lower of cost and current replacement cost where they are held for; 

• distribution at no charge or for a nominal charge; or 

• consumption in the production process of goods to be distributed at no charge or for a nominal charge. 

Net realisable value is the estimated selling price in the ordinary course of operations less the estimated 
costs of completion and the estimated costs necessary to make the sale, exchange or distribution. 

Current replacement cost is the cost the municipality incurs to acquire the asset on the reporting date. 

The cost of inventories comprises of all costs of purchase, costs of conversion and other costs incurred in 
bringing the inventories to their present location and condition. 

The cost of inventories of items that are not ordinarily interchangeable and goods or services produced and 
segregated for specific projects is assigned using specific identification of the individual costs. 

The cost of inventories is assigned using the first-in, first-out (FIFO) formula. The same cost formula is used 
for all inventories having a similar nature and use to the municipality. 

When inventories are sold, the carrying amounts of those inventories are recognised as an expense in the 
period in which the related revenue is recognised. If there is no related revenue, the expenses are 
recognised when the goods are distributed, or related services are rendered. The amount of any write-down 
of inventories to net realisable value or current replacement cost and all losses of inventories are recognised 
as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of 
inventories, arising from an increase in net realisable value or current replacement cost, are recognised as a 
reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs. 

1.9 Impairment of cash-generating assets 

Cash-generating assets are those assets held by the municipality with the primary objective of generating a 
commercial return. When an asset is deployed in a manner consistent with that adopted by a profit- 
orientated entity, it generates a commercial return. 

Impairment is a loss in the future economic benefits or service potential of an asset, over and above the 
systematic recognition of the loss of the asset's future economic benefits or service potential through 
depreciation (amortisation). 

Carrying amount is the amount at which an asset is recognised in the statement of financial position after 
deducting any accumulated depreciation and accumulated impairment losses thereon. 

A cash-generating unit is the smallest identifiable group of assets held with the primary objective of 
generating a commercial return that generates cash inflows from continuing use that are largely 
independent of the cash inflows from other assets or groups of assets. 


31 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Accounting Policies 


1.9 Impairment of cash-generating assets (continued) 

Costs of disposal are incremental costs directly attributable to the disposal of an asset, excluding finance 
costs and income tax expense. 

Depreciation (Amortisation) is the systematic allocation of the depreciable amount of an asset over its useful 
life. 

Fair value less costs to sell is the amount obtainable from the sale of an asset in an arm's length transaction 
between knowledgeable, willing parties, less the costs of disposal. 

Recoverable amount of an asset or a cash-generating unit is the higher its fair value less costs to sell and its 
value in use. 

Useful life is either: 

(a) the period of time over which an asset is expected to be used by the municipality; or 

(b) the number of production or similar units expected to be obtained from the asset by the municipality. 

1.10 Impairment of non-cash-generating assets 

Cash-generating assets are those assets held by the municipality with the primary objective of generating a 
commercial return. When an asset is deployed in a manner consistent with that adopted by a profit- 
orientated entity, it generates a commercial return. 

Non-cash-generating assets are assets other than cash-generating assets. 

Impairment is a loss in the future economic benefits or service potential of an asset, over and above the 
systematic recognition of the loss of the asset's future economic benefits or service potential through 
depreciation (amortisation). 

Carrying amount is the amount at which an asset is recognised in the statement of financial position after 
deducting any accumulated depreciation and accumulated impairment losses thereon. 

A cash-generating unit is the smallest identifiable group of assets held with the primary objective of 
generating a commercial return that generates cash inflows from continuing use that are largely 
independent of the cash inflows from other assets or groups of assets. 

Costs of disposal are incremental costs directly attributable to the disposal of an asset, excluding finance 
costs and income tax expense. 

Depreciation (Amortisation) is the systematic allocation of the depreciable amount of an asset over its useful 
life. 

Fair value less costs to sell is the amount obtainable from the sale of an asset in an arm's length transaction 
between knowledgeable, willing parties, less the costs of disposal. 

Recoverable service amount is the higher of a non-cash-generating asset's fair value less costs to sell and its 
value in use. 

Useful life is either: 

(a) the period of time over which an asset is expected to be used by the municipality; or 


32 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Accounting Policies 


1.10 Impairment of non-cash-generating assets (continued) 

(b) the number of production or similar units expected to be obtained from the asset by the municipality. 

1.11 Employee benefits 

Employee benefits are all forms of consideration given by an entity in exchange for service rendered by 
employees. 

A qualifying insurance policy is an insurance policy issued by an insurer that is not a related party (as defined 
in the Standard of GRAP on Related Party Disclosures) of the reporting entity, if the proceeds of the policy 
can be used only to pay or fund employee benefits under a defined benefit plan and are not available to the 
reporting entity's own creditors (even in liquidation) and cannot be paid to the reporting entity, unless 
either: 

• the proceeds represent surplus assets that are not needed for the policy to meet all the related 
employee benefit obligations; or 

• the proceeds are returned to the reporting entity to reimburse it for employee benefits already paid. 
Termination benefits are employee benefits payable as a result of either: 

• an entity's decision to terminate an employee's employment before the normal retirement date; or 

• an employee's decision to accept voluntary redundancy in exchange for those benefits. 

Other long-term employee benefits are employee benefits (other than post-employment benefits and 
termination benefits) that are not due to be settled within twelve months after the end of the period in 
which the employees render the related service. 

Vested employee benefits are employee benefits that are not conditional on future employment. 

Composite social security programmes are established by legislation and operate as multi-employer plans to 
provide post-employment benefits as well as to provide benefits that are not consideration in exchange for 
service rendered by employees. 

A constructive obligation is an obligation that derives from an entity's actions where by an established 
pattern of past practice, published policies or a sufficiently specific current statement, the entity has 
indicated to other parties that it will accept certain responsibilities and as a result, the entity has created a 
valid expectation on the part of those other parties that it will discharge those responsibilities. 

Post-employment benefits 

Post-employment benefits are employee benefits (other than termination benefits) which are payable after 
the completion of employment. 

Post-employment benefit plans are formal or informal arrangements under which an entity provides post- 
employment benefits for one or more employees. 

Multi-employer plans are defined contribution plans (other than state plans and composite social security 
programmes) or defined benefit plans (other than state plans) that pool the assets contributed by various 
entities that are not under common control and use those assets to provide benefits to employees of more 
than one entity, on the basis that contribution and benefit levels are determined without regard to the 
identity of the entity that employs the employees concerned. 


33 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Accounting Policies 


1.11 Employee benefits (continued) 

Post-employment benefits: Defined contribution plans 

Defined contribution plans are post-employment benefit plans under which an entity pays fixed 
contributions into a separate entity (a fund) and will have no legal or constructive obligation to pay further 
contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee 
service in the current and prior periods. 

When an employee has rendered service to the entity during a reporting period, the entity recognise the 
contribution payable to a defined contribution plan in exchange for that service: 

• as a liability (accrued expense), after deducting any contribution already paid. If the contribution 
already paid exceeds the contribution due for service before the reporting date, an entity recognise 
that excess as an asset (prepaid expense) to the extent that the prepayment will lead to, for example, a 
reduction in future payments or a cash refund; and 

• as an expense, unless another Standard requires or permits the inclusion of the contribution in the cost 
of an asset. 

Where contributions to a defined contribution plan do not fall due wholly within twelve months after the 
end of the reporting period in which the employees render the related service, they are discounted. The rate 
used to discount reflects the time value of money. The currency and term of the financial instrument 
selected to reflect the time value of money is consistent with the currency and estimated term of the 
obligation. 

1.12 Provisions and contingencies 

Provisions are recognised when: 

• the municipality has a present obligation as a result of a past event; 

• it is probable that an outflow of resources embodying economic benefits or service potential will be 
required to settle the obligation; and 

• a reliable estimate can be made of the obligation. 

The amount of a provision is the best estimate of the expenditure expected to be required to settle the 
present obligation at the reporting date. 

Where the effect of time value of money is material, the amount of a provision is the present value of the 
expenditures expected to be required to settle the obligation. 

The discount rate is a pre-tax rate that reflects current market assessments of the time value of money and 
the risks specific to the liability. 

Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another 
party, the reimbursement is recognised when, and only when, it is virtually certain that reimbursement will 
be received if the municipality settles the obligation. The reimbursement is treated as a separate asset. The 
amount recognised for the reimbursement does not exceed the amount of the provision. 

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Provisions 
are reversed if it is no longer probable that an outflow of resources embodying economic benefits or service 
potential will be required, to settle the obligation. 


34 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Accounting Policies 


1.12 Provisions and contingencies (continued) 

Where discounting is used, the carrying amount of a provision increases in each period to reflect the passage 
of time. This increase is recognised as an interest expense. 

A provision is used only for expenditures for which the provision was originally recognised. 

Provisions are not recognised for future operating deficits. 

If an entity has a contract that is onerous, the present obligation (net of recoveries) under the contract is 
recognised and measured as a provision. 

A constructive obligation to restructure arises only when an entity: 

• has a detailed formal plan for the restructuring, identifying at least: 

the activity/operating unit or part of a activity/operating unit concerned; 
the principal locations affected; 

the location, function, and approximate number of employees who will be compensated for 
services being terminated; 

the expenditures that will be undertaken; and 
when the plan will be implemented; and 

• has raised a valid expectation in those affected that it will carry out the restructuring by starting to 
implement that plan or announcing its main features to those affected by it. 

A restructuring provision includes only the direct expenditures arising from the restructuring, which are 
those that are both: 

• necessarily entailed by the restructuring; and 

• not associated with the ongoing activities of the municipality 

No obligation arises as a consequence of the sale or transfer of an operation until the municipality is 
committed to the sale or transfer, that is, there is a binding arrangement. 

After their initial recognition contingent liabilities recognised in entity combinations that are recognised 
separately are subsequently measured at the higher of: 

• the amount that would be recognised as a provision; and 

• the amount initially recognised less cumulative amortisation. 

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse 
the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with 
the original or modified terms of a debt instrument. 

Loan commitment is a firm commitment to provide credit under pre-specified terms and conditions. 

The municipality recognises a provision for financial guarantees and loan commitments when it is probable 
that an outflow of resources embodying economic benefits and service potential will be required to settle 
the obligation and a reliable estimate of the obligation can be made. 

Determining whether an outflow of resources is probable in relation to financial guarantees requires 
judgement. Indications that an outflow of resources may be probable are: 

• financial difficulty of the debtor; 

• defaults or delinquencies in interest and capital repayments by the debtor; 


35 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Accounting Policies 


1.12 Provisions and contingencies (continued) 

• breaches of the terms of the debt instrument that result in it being payable earlier than the agreed 
term and the ability of the debtor to settle its obligation on the amended terms; and 

• a decline in prevailing economic circumstances (e.g. high interest rates, inflation and unemployment) 
that impact on the ability of entities to repay their obligations. 

Where a fee is received by the municipality for issuing a financial guarantee and/or where a fee is charged 
on loan commitments, it is considered in determining the best estimate of the amount required to settle the 
obligation at reporting date. Where a fee is charged and the municipality considers that an outflow of 
economic resources is probable, an municipality recognises the obligation at the higher of: 

• the amount determined using in the Standard of GRAP on Provisions, Contingent Liabilities and 
Contingent Assets; and 

• the amount of the fee initially recognised less, where appropriate, cumulative amortisation recognised 
in accordance with the Standard of GRAP on Revenue from Exchange Transactions. 

1.13 Revenue from exchange transactions 

Revenue is the gross inflow of economic benefits or service potential during the reporting period when 
those inflows result in an increase in net assets, other than increases relating to contributions from owners. 

An exchange transaction is one in which the municipality receives assets or services, or has liabilities 
extinguished, and directly gives approximately equal value (primarily in the form of goods, services or use of 
assets) to the other party in exchange. 

Fair value is the amount for which an asset could be exchanged, or a liability settled, between 
knowledgeable, willing parties in an arm's length transaction. 

Measurement 

Revenue is measured at the fair value of the consideration received or receivable, net of trade discounts and 
volume rebates. 


36 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Accounting Policies 


1.13 Revenue from exchange transactions (continued) 

Rendering of services 

When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue 
associated with the transaction is recognised by reference to the stage of completion of the transaction 
at the reporting date. The outcome of a transaction can be estimated reliably when all the following 
conditions are satisfied: 

• the amount of revenue can be measured reliably; 

• it is probable that the economic benefits or service potential associated with the transaction will 
flow to the municipality; 

• the stage of completion of the transaction at the reporting date can be measured reliably; and 

• the costs incurred for the transaction and the costs to complete the transaction can be measured 
reliably. 

When services are performed by an indeterminate number of acts over a specified time frame, revenue is 
recognised on a straight line basis over the specified time frame unless there is evidence that some other 
method better represents the stage of completion. When a specific act is much more significant than any 
other acts, the recognition of revenue is postponed until the significant act is executed. 

When the outcome of the transaction involving the rendering of services cannot be estimated reliably, 
revenue is recognised only to the extent of the expenses recognised that are recoverable. 

Service revenue is recognised by reference to the stage of completion of the transaction at the reporting 
date. Stage of completion is determined by . 

Interest, royalties and dividends 

Revenue arising from the use by others of entity assets yielding interest, royalties and dividends is 
recognised when: 

• It is probable that the economic benefits or service potential associated with the transaction will flow to 
the municipality, and 

• The amount of the revenue can be measured reliably. 

Interest is recognised, in surplus or deficit, using the effective interest rate method. 

Royalties are recognised as they are earned in accordance with the substance of the relevant agreements. 

Dividends, or their equivalents are recognised, in surplus or deficit, when the municipality's right to receive 
payment has been established. 

Service fees included in the price of the product are recognised as revenue over the period during which the 
service is performed. 

1.14 Revenue from non-exchange transactions 

Revenue comprises gross inflows of economic benefits or service potential received and receivable by an 
municipality, which represents an increase in net assets, other than increases relating to contributions from 
owners. 


37 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Accounting Policies 


1.14Revenue from non-exchange transactions (continued) 

Conditions on transferred assets are stipulations that specify that the future economic benefits or service 
potential embodied in the asset is required to be consumed by the recipient as specified or future economic 
benefits or service potential must be returned to the transferor. 

Control of an asset arise when the municipality can use or otherwise benefit from the asset in pursuit of its 
objectives and can exclude or otherwise regulate the access of others to that benefit. 

Exchange transactions are transactions in which one entity receives assets or services, or has liabilities 
extinguished, and directly gives approximately equal value (primarily in the form of cash, goods, services, or 
use of assets) to another entity in exchange. 

Expenses paid through the tax system are amounts that are available to beneficiaries regardless of whether 
or not they pay taxes. 

Fines are economic benefits or service potential received or receivable by entities, as determined by a court 
or other law enforcement body, as a consequence of the breach of laws or regulations. 

Non-exchange transactions are transactions that are not exchange transactions. In a non-exchange 
transaction, an municipality either receives value from another municipality without directly giving 
approximately equal value in exchange, or gives value to another municipality without directly receiving 
approximately equal value in exchange. 

Restrictions on transferred assets are stipulations that limit or direct the purposes for which a transferred 
asset may be used, but do not specify that future economic benefits or service potential is required to be 
returned to the transferor if not deployed as specified. 

Stipulations on transferred assets are terms in laws or regulation, or a binding arrangement, imposed upon 
the use of a transferred asset by entities external to the reporting municipality. 

Tax expenditures are preferential provisions of the tax law that provide certain taxpayers with concessions 
that are not available to others. 

The taxable event is the event that the government, legislature or other authority has determined will be 
subject to taxation. 

Taxes are economic benefits or service potential compulsorily paid or payable to entities, in accordance with 
laws and or regulations, established to provide revenue to government. Taxes do not include fines or other 
penalties imposed for breaches of the law. 

Transfers are inflows of future economic benefits or service potential from non-exchange transactions, other 
than taxes. 


38 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Accounting Policies 


1.14Revenue from non-exchange transactions (continued) 

Recognition 

An inflow of resources from a non-exchange transaction recognised as an asset is recognised as revenue, 
except to the extent that a liability is also recognised in respect of the same inflow. 

As the municipality satisfies a present obligation recognised as a liability in respect of an inflow of resources 
from a non-exchange transaction recognised as an asset, it reduces the carrying amount of the liability 
recognised and recognises an amount of revenue equal to that reduction. 

Measurement 

Revenue from a non-exchange transaction is measured at the amount of the increase in net assets 
recognised by the municipality. 

When, as a result of a non-exchange transaction, the municipality recognises an asset, it also recognises 
revenue equivalent to the amount of the asset measured at its fair value as at the date of acquisition, unless 
it is also required to recognise a liability. Where a liability is required to be recognised it will be measured as 
the best estimate of the amount required to settle the obligation at the reporting date, and the amount of 
the increase in net assets, if any, recognised as revenue. When a liability is subsequently reduced, because 
the taxable event occurs or a condition is satisfied, the amount of the reduction in the liability is recognised 
as revenue. 

Transfers 

Apart from Services in kind, which are not recognised, the municipality recognises an asset in respect of 
transfers when the transferred resources meet the definition of an asset and satisfy the criteria for 
recognition as an asset. 

The municipality recognises an asset in respect of transfers when the transferred resources meet the 
definition of an asset and satisfy the criteria for recognition as an asset. 

Transferred assets are measured at their fair value as at the date of acquisition. 

Fines 

Fines are recognised as revenue when the receivable meets the definition of an asset and satisfies the 
criteria for recognition as an asset. 

Assets arising from fines are measured at the best estimate of the inflow of resources to the municipality. 

Where the municipality collects fines in the capacity of an agent, the fine will not be revenue of the 
collecting entity. 

Bequests 

Bequests that satisfy the definition of an asset are recognised as assets and revenue when it is probable that 
the future economic benefits or service potential will flow to the municipality, and the fair value of the 
assets can be measured reliably. 


39 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Accounting Policies 


1.14Revenue from non-exchange transactions (continued) 

Gifts and donations, including goods in-kind 

Gifts and donations, including goods in kind, are recognised as assets and revenue when it is probable that 
the future economic benefits or service potential will flow to the municipality and the fair value of the assets 
can be measured reliably. 

Services in-kind 

Services in-kind are not recognised. 

Services in-kind are recognised as revenue and as assets. 

1.15 Investment income 

Investment income is recognised on a time-proportion basis using the effective interest method. 

1.16 Borrowing costs 

Borrowing costs that are directly attributable to the acquisition, construction or production of a 
qualifying asset are capitalised as part of the cost of that asset until such time as the asset is ready for its 
intended use. The amount of borrowing costs eligible for capitalisation is determined as follows: 

• Actual borrowing costs on funds specifically borrowed for the purpose of obtaining a qualifying asset 
less any investment income on the temporary investment of those borrowings. 

• Weighted average of the borrowing costs applicable to the municipality on funds generally borrowed 
for the purpose of obtaining a qualifying asset. The borrowing costs capitalised do not exceed the 
total borrowing costs incurred. 

The capitalisation of borrowing costs commences when all the following conditions have been met: 

• expenditures for the asset have been incurred; 

• borrowing costs have been incurred; and 

• activities that are necessary to prepare the asset for its intended use or sale are undertaken. 

When the carrying amount or the expected ultimate cost of the qualifying asset exceeds its recoverable 
amount or recoverable service amount or net realisable value or replacement cost, the carrying amount 
is written down or written off in accordance with the accounting policy on Impairment of Assets as per 
accounting policy number 1.9 and 1.10. In certain circumstances, the amount of the write-down or write- 
off is written back in accordance with the same accounting policy. 

Capitalisation is suspended during extended periods in which active development is interrupted. 

1.17 Comparative figures 

Where necessary, comparative figures have been reclassified to conform to changes in presentation in the 
current year. 

l.lSUnauthorised expenditure 

Unauthorised expenditure means: 

• overspending of a vote or a main division within a vote; and 


40 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Accounting Policies 


l.lSUnauthorised expenditure (continued) 

• expenditure not in accordance with the purpose of a vote or, in the case of a main division, not in 
accordance with the purpose of the main division. 

All expenditure relating to unauthorised expenditure is recognised as an expense in the statement of 
financial performance in the year that the expenditure was incurred. The expenditure is classified in 
accordance with the nature of the expense, and where recovered, it is subsequently accounted for as 
revenue in the statement of financial performance. 

1.19Fruitless and wasteful expenditure 

Fruitless expenditure means expenditure which was made in vain and would have been avoided had 
reasonable care been exercised. 

All expenditure relating to fruitless and wasteful expenditure is recognised as an expense in the statement of 
financial performance in the year that the expenditure was incurred. The expenditure is classified in 
accordance with the nature of the expense, and where recovered, it is subsequently accounted for as 
revenue in the statement of financial performance. 

1.20 Irregular expendlture 

Irregular expenditure that was incurred and identified during the current financial year and which was not 
condoned by the National Treasury or the relevant authority must be recorded appropriately in the irregular 
expenditure register. If liability for the irregular expenditure can be attributed to a person, a debt account 
must be created if such a person is liable in law. Immediate steps must thereafter be taken to recover the 
amount from the person concerned. If recovery is not possible, the accounting officer or accounting 
authority may write off the amount as debt impairment and disclose such in the relevant note to the 
financial statements. The irregular expenditure register must also be updated accordingly. If the irregular 
expenditure has not been condoned and no person is liable in law, the expenditure related thereto must 
remain against the relevant programme/expenditure item, be disclosed as such in the note to the financial 
statements and updated accordingly in the irregular expenditure register. 

Irregular expenditure is expenditure that is contrary to the Municipal Finance Management Act (Act No.56 of 
2003), the Municipal Systems Act (Act No.32 of 2000), and the Public Office Bearers Act (Act No. 20 of 1998) 
or is in contravention of the economic entity's supply chain management policy. Irregular expenditure 
excludes unauthorised expenditure. Irregular expenditure is accounted for as expenditure in the Statement 
of Financial Performance and where recovered, it is subsequently accounted for as revenue in the Statement 
of Financial Performance. 

1.21 Use of estimates 

The preparation of financial statements in conformity with Standards of GRAP requires the use of certain 
critical accounting estimates. It also requires management to exercise its judgement in the process of 
applying the municipality's accounting policies. The areas involving a higher degree of judgement or 
complexity, or areas where assumptions and estimates are significant to the financial statements are 
disclosed in the relevant sections of the financial statements. Although these estimates are based on 
management's best knowledge of current events and actions they may undertake in the future, actual 
results ultimately may differ from those estimates. 


41 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Accounting Policies 


1.22 Presentation of currency 

These financial statements are presented in South African Rand. 

1.23 0ffsetting 

Assets, liabilities, revenue and expenses have not been offset except when offsetting is required or 
permitted by a Standard of GRAP 

1.24Conditional grants and receipts 

Revenue received from conditional grants, donations and funding are recognised as revenue to the extent 
that the municipality has complied with any of the criteria, conditions or obligations embodied in the 
agreement. To the extent that the criteria, conditions or obligations have not been met a liability is 
recognised. 

1.25 Budget information 

Municipality are typically subject to budgetary limits in the form of appropriations or budget authorisations 
(or equivalent), which is given effect through authorising legislation, appropriation or similar. 

General purpose financial reporting by municipality shall provide information on whether resources were 
obtained and used in accordance with the legally adopted budget. 

The approved budget is prepared on an accrual basis and presented by programmes linked to performance 
outcome objectives. 

The approved budget covers the fiscal period from 01/07/2012 to 30/06/2013. 

The financial statements and the budget are on the same basis of accounting therefore a comparison with 
the budgeted amounts for the reporting period have been included in the Statement of comparison of 
budget and actual amounts. 

The Statement of comparative and actual information has been included in the financial statements as the 
recommended disclosure when the financial statements and the budget are on the same basis of accounting 
as determined by National Treasury. 

The municipality makes use of conservative budgeting techniques and can be seen as the main reason for 
the material differences between actual and expected cash flows as per page 12. 

Comparative information is not required. 

1.26Related parties 

The municipality operates in an economic sector currently dominated by entities directly or indirectly owned 
by the South African Government. As a consequence of the constitutional independence of the three 
spheres of government in South Africa, only entities within the national sphere of government are 
considered to be related parties. 


42 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Accounting Policies 


1.26 Related parties (continued) 

Management are those persons responsible for planning, directing and controlling the activities of the 
municipality, including those charged with the governance of the municipality in accordance with legislation, 
in instances where they are required to perform such functions. 

Close members of the family of a person are considered to be those family members who may be expected 
to influence, or be influenced by, that management in their dealings with the municipality. 

Only transactions with related parties not at arm's length or not in the ordinary course of business are 
disclosed. 

1.27 Commitments 

'Commitment' may be referred to as the intention to commit to an outflow from the municipality of 
resources embodying economic benefits. 

Generally, a commitment arises when a decision is made to incur a liability in the form of a purchase 
contract (or similar documentation). Such a contractual commitment would be accompanied by, but not 
limited to, actions taken to determine the amount of the eventual resource outflow or a reliable estimate 
e.g. a quote, and conditions to be satisfied to establish an obligation e.g. delivery schedules. 

These preconditions ensure that the information relating to commitments is relevant and capable of reliable 
measurement. 

The municipality may enter into a contract on or before the reporting date for expenditure over subsequent 
accounting periods e.g. a contract for construction of infrastructure assets, the purchase of major items of 
plant and equipment or significant consultancy contracts. In these events, a commitment exists at the 
reporting date as the municipality has contracted for expenditure but work has not commenced and no 
payments have been made. 


43 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Accounting Policies 


1.28 Events after the reporting date 

Events after the reporting date are those that occur between the end of the reporting period and when the 
financial statements are authoriied for issue. 

Events after the end of reporting period may be classified into two types: 

Adjusting Events - Those events that provide further evidence about conditions that existed at the end of 
reporting period. 

Non-Adjusting Events - Those events that reflect conditions that arose after the end of reporting period. 

If any events occur after the end of the reporting period that provide further evidence of conditions that 
existed at the end of reporting period (i.e. Adjusting Events), then the financial statements must be adjusted 
accordingly. 

The municipality does not adjust the financial statements in respect of those events after the end of 
reporting period that reflect conditions that arose after the end of reporting period (i.e. Non-Adjusting 
Events). 

The nature and estimate of the financial impact of material non-adjusting events shall be disclosed in the 
financial statements. 

Non-Adjusting Events are considered material if they could influence the economic and financial decisions of 
the users of financial statements. 


44 





Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 

Figures in Rand 2013 2012 


2. New standards and interpretations 

2.1 Standards and interpretations effective and adopted in the current year 

In the current year, the municipality has adopted the following standards and interpretations that are 
effective for the current financial year and that are relevant to its operations: 


Standard/ Interpretation; 


• GRAP 23: Revenue from Non-exchange Transactions 

• GRAP 24: Presentation of Budget Information in the 
Financial Statements 

• IPSAS 21: Impairment of Non Cash-Generating Assets 

• GRAP 21: Impairment of non-cash-generating assets 

• GRAP 26: Impairment of cash-generating assets 

• GRAP 104: Financial Instruments 


Effective date; 

Years beginning on or 
after 

01 April 2012 
01 April 2012 

01 April 2009 
01 April 2012 
01 April 2012 
01 April 2012 


Expected impact; 


Low 

Low 

Low 

Low 

Low 

Low 


2.2 Standards and Interpretations early adopted 


The municipality has chosen to early adopt the following standards and interpretations: 


Standard/ Interpretation; 

Effective date; 

Years beginning on or 
after 

Expected impact; 

• GRAP 25: Employee benefits 

01 April 2013 

Low 


45 






Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 

Figures in Rand 2013 2012 


2. New standards and interpretations (continued) 

2.3 Standards and interpretations issued, but not yet effective 

The municipality has not applied the following standards and interpretations, which have been published 
and are mandatory for the municipality's accounting periods beginning on or after 01 July 2013 or later 
periods: 


Standard/ Interpretation; 

Effective date; 

Years beginning on or 
after 

Expected impact; 


GRAP 105: Transfers of functions between entities 

under common control 

01 April 

2014 

Low 


GRAP 106: Transfers of functions between entities 

not under common control 

01 April 

2014 

Low 


GRAP 107: Mergers 

01 April 

2014 

Low 


GRAP 20: Related parties 

01 April 

2013 

Low 


IGRAP 11: Consolidation - Special purpose entities 

01 April 

2014 

Low 


IGRAP 12: Jointly controlled entities - Non-monetary 
contributions by ventures 

01 April 

2014 

Low 


GRAP 6 (as revised 2010): Consolidated and Separate 
Financial Statements 

01 April 

2014 

Low 


GRAP 7 (as revised 2010): Investments in Associates 

01 April 

2014 

Low 


GRAP 8 (as revised 2010): Interests in Joint Ventures 

01 April 

2014 

Low 


GRAP 1 (as revised 2012): Presentation of Financial 
Statements 

01 April 

2013 

Low 


GRAP 3 (as revised 2012): Accounting Policies, 

Change in Accounting Estimates and Errors 

01 April 

2013 

Low 


GRAP 7 (as revised 2012): Investments in Associates 

01 April 

2013 

Low 


GRAP 9 (as revised 2012): Revenue from Exchange 
Transactions 

01 April 

2013 

Low 


GRAP 12 (as revised 2012): Inventories 

01 April 

2013 

Low 


GRAP 13 (as revised 2012): Leases 

01 April 

2013 

Low 


GRAP 16 (as revised 2012): Investment Property 

01 April 

2013 

Low 


GRAP 17 (as revised 2012): Property, Plant and 
Equipment 

01 April 

2013 

Low 


GRAP 31 (as revised 2012): Intangible Assets 
(Replaces GRAP 102) 

01 April 

2013 

Low 


IGRAP16: Intangible assets website costs 

01 April 

2013 

Low 


IGRAPl (as revised 2012):Applying the probability 
test on initial recognition of revenue 

01 April 

2013 

Low 


3. Cash and cash equivalents 

Cash and cash equivalents consist of: 


46 






Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 


Figures in Rand 


2013 2012 


3. Cash and cash equivalents (continued) 


4. 


Bank balances 2 547 586 5 718 004 

Short-term deposits 11 562 925 9 501 750 


14 110 511 15 219 754 


The municipality had the following bank accounts 


Account number / Bank statement balances Cash book balances 

description 

30 June 2013 30 June 2012 30 June 2011 30 June 2013 30 June 2012 30 June 2011 


ABSA Bank - Cheque 
account - 810142227 

2 543 746 

5 718 004 

306 880 

2 543 746 

5 718 004 

306 880 

ABSA Bank - Money 
Market account - 

9108352550 

1 540 638 

4 473 716 

4 242 395 

1 540 638 

4 473 716 

4 242 395 

Nedbank - 32 day notice 

22 288 

5 028 034 

- 

22 288 

5 028 034 

- 

account - 

03/7662023052/00000 

3 

Stanlib - Cash plus fund 
-551621715 

- 

- 

3 245 216 

- 

- 

3 245 216 

FNB - Investment 

10 000 000 

- 

- 

10 000 000 

- 

- 

account 







Total 

14 106 672 

15 219 754 

7 794 491 

14 106 672 

15 219 754 

7 794 491 

Consumer debtors 







Gross balances 

Rates 





4 861478 

5 572 122 

Electricity 





2 642 979 

2 132 672 

Water 





6 783 161 

6 494 558 

Sewerage 





9 969 928 

9 287 487 

Refuse 





6 976 233 

6 684 078 

Flousing rental 





1 335 028 

1 473 325 


32 568 807 31 644 242 


47 











Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 


Figures in Rand 


2013 2012 


4. Consumer debtors (continued) 


Less: Allowance for impairment 


Rates 

(4 741525) 

(4 659 707) 

Electricity 

(265 160) 

(301412) 

Water 

(4 871 212) 

(5 237 466) 

Sewerage 

(8 414 142) 

(8 105 145) 

Refuse 

(5 533 952) 

(5 664 357) 

Housing rental 

(1 061 521) 

(1310 379) 

(24 887 512) (25 278 466) 

Net balance 



Rates 

119 953 

912 415 

Electricity 

2 377 819 

1 831 260 

Water 

1 911 949 

1 257 092 

Sewerage 

1 555 786 

1 182 342 

Refuse 

1 442 281 

1 019 721 

Housing rental 

273 507 

162 946 


7 681 295 

6 365 776 

Rates 



Current (0 -30 days) 

69 741 

388 400 

31 - 60 days 

62 760 

116 447 

61 - 90 days 

60 488 

92 511 

91 - 120 days 

58 901 

83 272 

121-365 days 

4 609 588 

4 891492 

Impairment 

(4 741525) 

(4 659 707) 


119 953 

912 415 

Electricity 



Current (0 -30 days) 

92 405 

1 746 203 

31 - 60 days 

40 463 

51 627 

61 - 90 days 

22 339 

15 287 

91 - 120 days 

16 704 

13 885 

121-365 days 

2 471 068 

305 670 

Impairment 

(265 160) 

(301412) 


2 377 819 

1 831 260 


48 













Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 


Figures in Rand 


2013 2012 


4. Consumer debtors (continued) 


Water 


Current (0 -30 days) 

213 371 

505 867 

31 - 60 days 

206 029 

187 656 

61 - 90 days 

195 643 

180 733 

91 - 120 days 

188 465 

167 959 

121-365 days 

5 979 653 

5 452 343 

Impairment 

(4 871 212) 

(5 237 466) 


1 911 949 

1 257 092 

Sewerage 



Current (0 -30 days) 

252 046 

394 030 

31 - 60 days 

243 291 

209 226 

61 - 90 days 

240 254 

204 153 

91 - 120 days 

240 962 

204 642 

121-365 days 

8 993 375 

8 275 437 

Impairment 

(8 414 142) 

(8 105 146) 


1 555 786 

1 182 342 

Refuse 



Current (0 -30 days) 

163 262 

333 181 

31 - 60 days 

158 774 

144 911 

61 - 90 days 

159 538 

142 561 

91 - 120 days 

154 898 

150 323 

121-365 days 

6 339 761 

5 913 101 

Impairment 

(5 533 952) 

(5 664 356) 


1 442 281 

1 019 721 

Housing rental 



Current (0 -30 days) 

3 642 

22 069 

31 - 60 days 

2 809 

26 323 

61 - 90 days 

2 976 

7 819 

91 - 120 days 

3 143 

6 469 

121-365 days 

1322 458 

1 410 645 

Impairment 

(1 061 521) 

(1310 379) 


273 507 

162 946 


49 













Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 

Figures in Rand 2013 2012 


4. Consumer debtors (continued) 

Summary of debtors by customer classification 


Consumers 


Current (0 -30 days) 

31 - 60 days 

61 - 90 days 

91 - 365 days 

651 977 

667 002 

592 785 

26 736 522 

2 350 738 

596 636 

509 732 

24 569 128 


28 648 286 

28 026 234 

Industrial/ commercial 

Current (0 -30 days) 

65 160 

723 265 

31 - 60 days 

63 557 

46 552 

61 - 90 days 

32 288 

39 242 

91 - 365 days 

1465 222 

1 273 154 


1 626 227 

2 082 213 

National and provincial government 

Current (0 -30 days) 

16 390 

490 518 

31 - 60 days 

11 504 

109 459 

61 - 90 days 

7 521 

108 151 

91 - 365 days 

124 947 

890 128 


160 362 

1 598 256 


Impaired consumer debtor balance 

7 681 295 

6 365 776 

Gross consumer debtor impairment 

(24 887 512) (25 278 466) 

Gross consumer debtor balance 

32 698 943 

31 706 702 

Reconciliation of allowance for impairment 

Balance at beginning of the year 

Contributions to allowance 

Debt impairment written off against allowance 

(25 278 466) 
(4 112 517) 
4 503 471 

(22 397 915) 
(6 260 335) 
3 379 784 

(24 887 512) (25 278 466) 


50 
















Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 

Figures in Rand 2013 2012 


4. Consumer debtors (continued) 

Receivables from exchange and non-exchange transactions 


Exchange transactions 


Electricity 

2 

642 

979 

2 

132 

672 

Water 

6 

783 

161 

6 

494 

558 

Sewerage 

9 

969 

928 

9 

287 

487 

Refuse 

6 

895 

718 

6 

684 

078 

Housing rental 

1 

335 

028 

1 

473 

325 


27 626 814 

26 072 120 


Non-exchange transactions 

Rates 4 861 478 5 572 122 


The creation and release of allowance for impaired receivables have been included in operating expenses 
in the statement of financial performance (note 32). Amounts charged to the allowance account are 
generally written off when there is no expectation of recovering additional cash. 

The maximum exposure to credit risk at the reporting date is the fair value of each class of loan 
mentioned above. The municipality does not hold any collateral as security. 

The municipality's impairment methodology is based on the assumptions listed below. 

Debtor types to be fully impaired: 

1. Non-indigents, schools, industrial, municipal, business, government, farms, hospital, church, small 
businesses - Council approved write-offs 

2. Indigents - Impair all ageing buckets 

Debtor types where accounts older than 90 days were tested for recoverability: 

Non-indigents, schools, industrial, municipal, business, government, farms, hospital, church, small 
businesses 

The municipality's discounting methodology is based on the assumptions listed below. 

The ability to pay is determined by allocating a weight to payments made in different months. Recent 
month's payments are assigned a higher weight as the trend is more likely to continue than payments 
more than 12 months ago. 

The discount rate is linked to the interest payable on the DBSA loans which are the major source of credit 
funding of the municipality. 


51 









Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 

Figures in Rand 

2013 

2012 

5. Inventories 



Water 

27 286 

61 522 

Fuel (Diesel) 

42 820 

29 025 

Electrical 

91 164 

43 104 

Water equipment 

53 646 

20 801 

Mechanical 

4 812 

12 041 


219 728 

166 493 

6. Other receivables from exchange transactions 



Prepayments 

176 895 

176 895 

Other receivables 

530 481 

446 873 

Other receivables (Sale of game) 

- 

197 300 


707 376 

821 068 

7. Other receivables from non-exchange transactions 



Government grants and subsidies - Lotto Grant 

2 143 152 

4 311 139 

8. VAT receivable 



VAT receivable 

801 756 

1 825 207 

9. Biological assets that form part of an agricultural activity 

2013 

2012 




Cost / Accumulated 

Valuation depreciation 
and 

accumulated 

impairment 

Carrying 

value 

Cost / 
Valuation 

Accumulated 

depreciation 

and 

accumulated 

impairment 

Carrying 

value 

Biological assets - game 

1131476 

1 131476 

816 680 

816 680 

Reconciliation of biological assets that form part of an agricultural activity - 2013 



Opening Disposals 

Gains or 

Other 

Total 


balance 

losses arising 

changes, 




from changes i 

Tiovements 




in fair value 



Biological assets - game 

816 680 

- 

156 274 

158 522 

1 131476 


52 
















Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 

Figures in Rand 2013 2012 


9. Biological assets that form part of an agricultural activity (continued) 

Reconciliation of biological assets that form part of an agricultural activity - 2012 



Opening 

Disposals Gains or 

Other 

Total 


balance 

losses arising 

changes, 




from changes 

movements 




in fair value 



Biological assets - game 

1 067 100 

(102 698) 176 804 

(324 526) 

816 680 

Non - Financial information 





Quantities of each biological asset 





Blesbok 



39 

34 

Blue Wildebeest 



- 

2 

Oryx 



40 

32 

Kudu 



20 

21 

Lechwe 



4 

4 

Impala 



14 

12 

Red Hartebeest 



7 

6 

Springbok 



281 

224 

Black Springbok 



20 

24 

Black Wildebeest 



102 

77 

Ostrich 



15 

19 

Zebra 



10 

10 

Horse 



2 

- 


554 465 


Methods and assumptions used in determining fair value 

The latest bid prices from game auctions were used as fair values. 

10. Intangible assets 




2013 



2012 



Cost / 

Accumulated 

Carrying 

Cost / 

Accumulated 

Carrying 


Valuation 

amortisation 

value 

Valuation 

amortisation 

value 



and 



and 




accumulated 



accumulated 




impairment 



impairment 


Licences 

699 439 

(690 746) 

8 693 

458 537 

(457 773) 

764 

Computer software 

16 681 

(16 681) 

- 

16 681 

(15 346) 

1 335 

Website 

9 992 

- 

9 992 

9 992 

- 

9 992 

Total 

726 112 

(707 427) 

18 685 

485 210 

(473 119) 

12 091 


53 









Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 

Figures in Rand 2013 2012 


10. Intangible assets (continued) 

Reconciliation of intangible assets - 2013 



Opening 

Additions 

Amortisation 

Total 


balance 




Licenses 

764 

240 902 

(232 973) 

8 693 

Computer software 

1 335 

- 

(1 335) 

- 

Website 

9 992 

- 

- 

9 992 


12 091 

240 902 

(234 308) 

18 685 

Reconciliation of intangible assets - 2012 






Opening 

Additions 

Amortisation 

Total 


balance 




Licenses 

36 450 

223 117 

(258 803) 

764 

Computer software 

3 061 

- 

(1726) 

1 335 

Website 

9 992 

- 

- 

9 992 


49 503 

223 117 

(260 529) 

12 091 

11. Investment property 

2013 



2012 


Cost / Accumulated 

Carrying 

Cost / 

Accumulated 

Carrying 

Valuation depreciation 

value 

Valuation depreciation 

value 

and 



and 


accumulated 



accumulated 


impairment 



impairment 


Investment property 23 876 000 

23 876 000 23 876 000 

23 876 000 

Reconciliation of investment property - 2013 





Opening 

Additions 

Other 

Fair value 

Total 

balance 


changes, 

adjustments 




movements 



Investment property 23 876 000 

- 

- 

- 23 876 000 

Reconciliation of investment property - 2012 





Opening 

Additions 

Other 

Fair value 

Total 

balance 


changes, 

adjustments 




movements 



Investment property 18 249 000 

- 

5 000 000 

627 000 23 876 000 


54 















Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 

Figures in Rand 2013 2012 


11. Investment property (continued) 

A register containing the information required by section 63 of the Municipal Finance Management Act is 
available for inspection at the registered office of the municipality. 

Details of valuation 

Unless there is an indication of significant changes in the fair value of its investment property the 
municipality revalues its investment property every fours years when the valuation roll is updated . 

The effective date of the revaluations was 29 June 2012. Revaluations were performed by an 
independent valuer, Mr R Pretorius [Quantity Surveyor, Professional Associated Valuer], of Modisenyane 
Property Consultants CC. Pretorius is not connected to the municipality and have recent experience in 
location and category of the investment property being valued. 

The valuation was based on open market value for existing use. 

Amounts recognised in surplus and deficit for the year. 

Change in fair value recognised in surplus or deficit - 627 000 

• a description of the investment property, 

• an explanation of why fair value cannot be determined reliably, 

• if possible, the range of estimates within which fair value is highly likely to lie, and 

• on disposal of investment property not carried at fair value: 

the fact that the entity has disposed of investment property not carried at fair value, 
the carrying amount of that investment property at the time of sale, and 
the amount of gain or loss recognised. 

12. Other financial assets 
Designated at fair value 

Unlisted shares 897 182 823 107 

49 383 shares held in Senwes Limited 
75 732 shares held in Senwesbel Limited 


Non-current assets 

Designated at fair value 897 182 823 107 


55 







Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 


Figures in Rand 


2013 2012 


13. Property, plant and equipment 




2013 



2012 



Cost / 
Valuation 

Accumulated 

depreciation 

and 

accumulated 

impairment 

Carrying 

value 

Cost / 
Valuation 

Accumulated 

depreciation 

and 

accumulated 

impairment 

Carrying 

value 

Land 

25 941 254 

(1 119 598) 

24 821 656 

25 941 254 

(559 799) 

25 381 455 

Buildings 

99 836 709 

(33 713 748) 

66 122 961 

90 965 238 

(29 040 910) 

61 924 328 

Leasehold property 

2 865 475 

(2 293 341) 

572 134 

2 779 415 

(1 948 715) 

830 700 

Furniture and fixtures 

1 268 348 

(842 856) 

425 492 

1 115 415 

(693 737) 

421 678 

IT equipment 

61 804 

(33 851) 

27 953 

55 805 

(13 976) 

41 829 

Infrastructure 

340 845 073 

(84 105 207) 

256 739 866 

258 972 552 

(71301078) 187 671474 

Other property, plant 

10 593 210 

(9 109 068) 

1 484 142 

10 205 615 

(8 916 204) 

1 289 411 

and equipment 

Capital work in progress 8 013 975 

- 

8 013 975 

69 681 334 

- 

69 681 334 

Total 

489 425 848 (131 217 669) 358 208 179 

459 716 628 (112 474 419) 347 242 209 

Reconciliation of property, plant and equipment - 2013 

Opening Additions Disposals Other non- Depreciation 

Total 

Land 

balance 

25 381 455 



cash 

(559 799) 24 

821 656 

Buildings 

61 924 328 

162 649 

- 

8 708 822 

(4 672 838) 66 

122 961 

Leasehold property 

830 700 

86 060 

- 

- 

(344 626) 

572 134 

Furniture and fixtures 

421 678 

152 933 

- 

- 

(149 119) 

425 492 

IT equipment 

41 829 

5 999 

- 

- 

(19 875) 

27 953 

Infrastructure 

187 671 474 

- 

- 81 872 521 (12 804 129) 256 

739 866 

Other property, plant 

1 289 411 

962 565 

(221 984) 

- 

(545 850) 1 

484 142 

and equipment 

Capital work in 

69 681 334 28 913 984 

- (90 581343) 

8 

013 975 

progress 








347 242 209 30 284 190 

(221 984) 

- (19 096 236) 358 208 179 


56 












Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 

Figures in Rand 2013 2012 


13. Property, plant and equipment (continued) 

Reconciliation of property, plant and equipment - 2012 



Opening 

balance 

Additions 

Disposals Other non- 
cash 

Depreciation 

Total 

Land 

16 587 663 

- 

9 353 591 

(559 799) 

25 381 455 

Land and buildings 

67 183 894 

- 

- 

(5 259 566) 

61 924 328 

Leasehold property 

1 246 676 

- 

- 

(415 976) 

830 700 

Furniture and fixtures 

555 908 

28 640 

- 

(162 870) 

421 678 

IT equipment 

- 

55 805 

- 

(13 976) 

41 829 

Infrastructure 

199 893 760 

- 

- 

(12 222 286) 

187 671 474 

Other property, plant 
and equipment 

2 136 893 

547 966 

- 

(1 395 448) 

1 289 411 

Capital work in 
progress 

35 442 774 

34 238 560 



69 681 334 


323 047 568 

34 870 971 

9 353 591 

(20 029 921) 347 242 209 


Included in the cost of land is the capitalised rehabilitation costs relating to a borrow pit and two landfill 
sites which are situated in Bultfontein farm 396 and Kameeldoorn 35. 

A register containing the information required by section 63 of the Municipal Finance Management Act is 
available for inspection at the registered office of the municipality. 

14. Borrowings 


At amortised cost 


Annuity loans 

The annuity loans comprise two DBSA loans. The endowments are made 
on a six-monthly basis. The last loan will be redeemed on 31 December 

2024. The loans carry interest at 11% and 14% per annum respectively. 

13 542 563 

13 050 943 

Non-current liabilities 



At amortised cost 

11 848 214 

12 484 907 

Current liabilities 



At amortised cost 

1 694 349 

566 036 

Consumer deposits 



Electricity 

315 745 

281 073 

Water 

222 508 

197 629 


538 253 

478 702 


57 












Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 

Figures in Rand 

16. Finance lease obligation 

Minimum lease payments due 

- within one year 

- in second to fifth year inclusive 

less: future finance charges 

Present value of minimum lease payments 

Present value of minimum lease payments due 

- within one year 

- in second to fifth year inclusive 


Non-current liabilities 
Current liabilities 


17. Payables from exchange transactions 

Trade payables 

Payments received in advanced 
Accrued leave pay 
Accrued bonus 
Deposits received 
Cash suspense accounts 
Other payables 


2013 


2012 


810 002 934 144 

420 220 2 040 245 

1 230 222 2 974 389 

(216 559 ) (1 005 293 ) 

1 013 663 1 969 096 

636 931 471706 

376 733 1 497 390 

1 013 664 1 969 096 

360 974 908 595 

636 931 601 962 

997 905 1 510 557 


3 060 262 2 406 019 

2 712 020 2 360 066 

3 965 169 4 540 623 

801 645 725 217 

2 300 1 000 

742 811 894 304 

5 193 101 11 749 075 

16 477 308 22 676 304 














Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 


Figures in Rand 




2013 

2012 

18. Provisions 






Reconciliation of provisions - 2013 






Opening 

Additions 

Utilised 

Reversed 

Change in 

Total 

Balance 


during the 

during the 

discount 




year 

year 

factor 


Environmental 9 353 592 

rehabilitation 

905 486 

“ 

~ 

~ 

10 259 078 

Medical contribution 4 941 000 

431 000 

(430 000) 

164 000 

- 

5 106 000 

provision 

Long service awards 3 401 000 

provision 

442 000 

(341 000) 

31 000 

276 000 

3 809 000 

17 695 592 

1 778 486 

(771 000) 

195 000 

276 000 

19 174 078 

Reconciliation of provisions - 2012 






Opening 

Additions 

Utilised 

Reversed 

Change in 

Total 

Balance 


during the 

during the 

discount 




year 

year 

factor 


Environmental 

rehabilitation 

9 353 592 

~ 

~ 

~ 

9 353 592 

Medical contribution 4 517 000 

438 000 

(342 000) 

328 000 

- 

4 941 000 

provision 

Long service awards 2 726 000 

provision 

372 000 

(267 000) 

333 000 

237 000 

3 401 000 

7 243 000 

10 163 592 

(609 000) 

661 000 

237 000 

17 695 592 

Non-current liabilities 




18 684 078 

17 253 592 

Current liability (long service awards) 




490 000 

442 000 





19 174 078 

17 695 592 

Environmental rehabilitation provision 


59 












Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 

Figures in Rand 2013 2012 


18. Provisions (continued) 

Borrow pits 

The provision relates to the estimated future rehabilitation costs relating to two existing open borrow 
pits in Bultfontein. 

The total area of the borrow pits to be rehabilitated is 8,422 square meters. 

The expected date of rehabilitation is in 2032 and therefore the expected useful life is estimated at 21 
years. 

The useful life and expected date of rehabilitation could decrease depending on the extent of material 
needed for upcoming developments. 

The current weighted average cost of borrowings of the municipality is 11% and this percentage was used 
as discount factor in future rehabilitation costs. 


Landfill sites 

The provision relates to the estimated future rehabilitation costs relating to two existing landfill sites in 
Bultfontein and Hoopstad respectively. 

The expected date of rehabilitation is in 2032 and therefore the expected useful life is estimated at 21 
years. 

It assumed that the current population growth of the town and therefore the dumping rate will not 
significantly change over the useful life of the landfill sites. 

The current weighted average cost of borrowings of the municipality is 11% and this percentage was used 
as discount factor in future rehabilitation costs. 

The evaluation of rehabilitation procedures and costs was performed by NEP Consulting Engineers. 

Employee benefit cost provision 


60 






Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 

Figures in Rand 2013 2012 


18. Provisions (continued) 

The medical contribution and long service provisions are actuarial calculations which were performed by 
ZAQ. 

ZAQ is an actuarial consulting company specialising in the valuation of employee benefit liabilities for 
accounting disclosure purposes. 

Their team has done a large number of these calculations for private and public sector organizations. 

Members of their executive committee include: 

- Niel Fourie FASSA, CERA 

- Pieter Wasserfall B-Comm Actuarial Science 

- Dennis De Wet B-Comm (Flons) Financial Analysis 


Long service award liability 

The Projected Unit Credit funding method has been used to determine the past-service liabilities at the 
valuation date and the projected annual expense in the year following the valuation date. 

The expected value of each employee's long service award is projected to the next interval by allowing 
for future salary growth. 

Long service benefits are awarded in the form of leave days and a percentage of salary. The awarded 
leave days have been converted into a percentage of the employee's annual salary. The conversion is 
based on a 250 working day year. 

The calculated award values are then discounted at the assumed discount interest rate to the date of 
calculation. The calculation also allows for mortality, retirements and withdrawals from service. 

The accrued liability is determined on the basis that each employee's long service benefit accrues 
uniformly over the working life of an employee up to the end of the interval at which the benefit 
becomes payable. Further it is assumed that the current policy for awarding long service awards remains 
unchanged in the future. 

The two most important financial variables used in the valuation are the discount rate and salary 
inflation. 


Post-employment medical aid liabilities 

The liability relates to future medical expenses which will be incurred by the municipality on behalf of 
retired employees. 

The future cash flows will continue until the mortality of all members. The mortality is therefore the 


61 






Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 

Figures in Rand 2013 2012 


18. Provisions (continued) 

uncertainty relating to the provision. 

The Projected Unit Credit funding method has been used to determine the past-service liabilities at the 
valuation date and the projected annual expense in the year following the valuation date. 

The expected value of each employee and their spouse's future medical aid subsidies is projected by 
allowing for future medical inflation. The calculated values are then discounted at the assumed discount 
interest rate to the date of calculation. 

The calculation also allows for mortality. The accrued liability is determined on the basis that each 
employee's medical aid benefit accrues uniformly over the working life of an employee up until 
retirement. 

Further it is assumed that the current policy for awarding medical aid subsidies remains unchanged in the 
future. It is also assumed that all active members will remain on the same medical aid option. 

As at the valuation date, the medical aid liability of the Municipality was unfunded, i.e. no dedicated 
assets had been set aside to meet this liability. We therefore did not consider any assets as part of our 
valuation. 

The two most important financial variables used in our valuation are the discount- and medical aid 
inflation rates. 

19. Employee benefit obligations 

The amounts recognised in the statement of financial position are as follows: 

Short-term portion of the post-employment liability 

Medical-aid 419 000 425 000 


20. Unspent conditional grants and receipts 

Unspent conditional grants and receipts comprises of: 

Unspent conditional grants and receipts 

Skills Development Grant 
Lotto Grant 

Free State Provincial Grant (fencing of cemetry) 

2 546 130 


216 825 
582 814 
1 746 491 


62 








Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 

Figures in Rand 2013 2012 


20. Unspent conditional grants and receipts (continued) 
Movement during the year 


Balance at the beginning of the year 

2 546 130 

2 320 438 

Additions during the year 

- 

33 605 349 

Income recognition during the year 

(2 546 130) 

(33 379 657) 


- 

2 546 130 

See note 27 for reconciliation of grants from National/Provincial Government. 



Current portion of long-term provision 



Post-employment liability 



Medical-aid 

419 000 

425 000 

Revenue 



Service charges 

32 202 116 

27 754 677 

Rental of facilities and equipment 

882 534 

389 622 

Interest received (trading) 

104 165 

265 387 

Licences and permits 

1 350 

1 100 

Sale of game 

158 522 

197 300 

Other income 

1 064 852 

533 027 

Interest received - investment 

419 298 

815 952 

Dividends received 

258 565 

69 042 

Property rates 

7 477 676 

6 571 275 

Government grants and subsidies 

98 413 772 

97 697 348 

Fines 

259 400 

248 300 


141 242 250 

134 543 030 

The amount included in revenue arising from exchanges of goods or 



services are as follows: 



Service charges 

32 202 116 

27 754 677 

Rental of facilities and equipment 

882 534 

389 622 

Interest received (trading) 

104 165 

265 387 

Licences and permits 

1 350 

1 100 

Sale of game 

158 522 

197 300 

Other income - (rollup) 

1 064 852 

533 027 

Interest received - investment 

419 298 

815 952 

Dividends received 

258 565 

69 042 


35 091 402 

30 026 107 


63 












Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 

Figures in Rand 2013 2012 


22. Revenue (continued) 

The amount included in revenue arising from non-exchange 
transactions is as follows: 

Taxation revenue 


Property rates 

7 477 676 

6 571 275 

Transfer revenue 



Government grants & subsidies 

98 413 772 

97 697 348 

Fines 

259 400 

248 300 


106 150 848 

104 516 923 

Service charges 



Sale of electricity 

19 645 964 

16 270 826 

Sale of water 

4 915 378 

4 600 910 

Sewerage and sanitation charges 

4 925 589 

4 441 376 

Refuse removal 

2 715 185 

2 441 565 


32 202 116 

27 754 677 

Rental of facilities and equipment 



Facilities and equipment 



Rental of facilities 

878 956 

386 657 

Rental of equipment 

3 578 

2 965 


882 534 

389 622 


An amount of R 670,223 which relates to revenue from investment property is included the R 882,534 
disclosed above. 

25. Otherincome 


Building plan fees 

- 

493 

Commission received 

195 485 

155 964 

Sundry income 

97 298 

33 101 

Grave fees 

144 134 

111 158 

Connection fees 

492 671 

101 486 

Gravel sales 

14 151 

26 585 

Building plan fees 

20 603 

15 509 

Late payment penalty 

74 140 

69 261 

Opening of graves 

21466 

12 814 

Special meter readings 

4 904 

6 656 


1 064 852 

533 027 


64 













Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 

Figures in Rand 2013 2012 

26. Property rates 
Rates received 

State 

Property rates 


1 119 537 1 114 992 

6 358 139 5 456 283 







Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 

Figures in Rand 2013 2012 


27. Government grants and subsidies 


Equitable share 

62 058 000 

55 333 000 

Municipal Infrastructure Grant 

30 344 000 

25 015 039 

Municipal Systems Improvement Grant 

800 000 

840 000 

Financial Management Grant 

1 500 000 

1 450 000 

Lotto Grant 

582 814 

5 921 148 

Free State Provincial Grant 

1 746 491 

153 509 

COGTA Grant 

- 

8 414 652 

District Municipality Grant 

50 000 

50 000 

EPWP Government Grant (operating) 

1 000 000 

520 000 

Skills Development Grant 

332 467 

- 


98 413 772 97 697 348 


Equitable Share 

In terms of the Constitution, this grant is used to subsidise the provision of basic services to indigent 
community members. 

All registered indigents receive a monthly subsidy of which is funded from the grant. 

Municipal Infrastructure Grant 

Current-year receipts 30 344 000 25 010 000 

Conditions met - transferred to revenue (30 344 000) (25 010 000) 


Conditions still to be met - remain liabilities (see note 20). 

The grant is utilised to supplement municipal capital budgets to eradicate backlogs in municipal 
infrastructure providing basic services for the benefit of poor households. The grant was used to 
construct roads, sewerage and water infrastructure as part of the upgrading of informal settlement areas. 

Skills Development Grant 

Balance unspent at beginning of year 216 825 127 615 

Current-year receipts 115 643 89 210 

Conditions met - transferred to revenue (332 468) 


216 825 


Conditions still to be met - remain liabilities (see note 20). 


66 











Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 


Figures in Rand 

2013 

2012 

27. Government grants and subsidies (continued) 

A workplace skills plan and training report must be submitted to LGSETA in compliance with the Skills 

Development Act before the unspent amount will be transferred. 



Lotto Grant 

Balance unspent at beginning of year 

582 814 

2 192 823 

Current-year receipts 

- 

4 311 139 

Conditions met - transferred to revenue 

(582 814) 

(5 921 148) 


- 

582 814 

Conditions still to be met - remain liabilities (see note 20). 

The grant was utilised in the construction of an athletics track in Tikwana. 



Municipal Systems Improvement Grant 

Balance unspent at beginning of year 

- 

- 

Current-year receipts 

800 000 

840 000 

Conditions met - transferred to revenue 

(800 000) 

(840 000) 


- 

- 

Conditions still to be met - remain liabilities (see note 20). 



Finance Management Grant 

Current-year receipts 

1 500 000 

1 450 000 

Conditions met - transferred to revenue 

(1 500 000) 

(1 450 000) 


- 

- 

Conditions still to be met - remain liabilities (see note 20). 



Free State Provincial Grant 

Balance unspent at beginning of year 

1 746 491 

- 

Current-year receipts 

- 

1 900 000 

Conditions met - transferred to revenue 

(1746 491) 

(153 509) 


- 

1 746 491 

Conditions still to be met - remain liabilities (see note 20). 

The grant was utilised in the fencing of a cemetry in the municipal area. 

COGTA grant 




67 












Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 


Figures in Rand 

2013 

2012 

27. Government grants and subsidies (continued) 

Current-year receipts 

- 

8 414 652 

Conditions met - transferred to revenue 

- 

(8 414 652) 


- 

- 

Conditions still to be met - remain liabilities (see note 20). 



District Municipality Grant 

Current-year receipts 

50 000 

50 000 

Conditions met - transferred to revenue 

(50 000) 

(50 000) 


- 

- 

Conditions still to be met - remain liabilities (see note 20). 

The grant was received to assist the municipality in the redemption of their DBSA loan. 


EPWP government grant (operating) 

Current-year receipts 

1 000 000 

520 000 

Conditions met - transferred to revenue 

(1 000 000) 

(520 000) 


- 

- 


Conditions still to be met - remain liabilities (see note 20). 

The grant was received to assist the municipality in job creation. 


68 









Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 


Notes to the Financial Statements 


Figures in Rand 

2013 

2012 

28. Employee related costs 

Basic 

24 901 355 

21 543 590 

Medical aid - company contributions 

2 060 670 

1 739 693 

UIF 

254 604 

211 883 

SDL 

335 108 

259 594 

Leave pay provision charge 

1 724 178 

1 135 879 

Other short term costs 

15 889 

10 539 

Post-employment benefits - Pension - Defined contribution plan 

4 498 031 

3 736 734 

Travel, motor car, accommodation, subsistence and other allowances 

2 532 249 

1 494 275 

Overtime payments 

2 050 850 

1 526 180 

Long-service awards 

132 000 

- 

Flousing benefits and allowances 

14 782 

15 091 

Termination benefits 

5 516 

328 000 


38 525 232 

32 001 458 

The remuneration of staff is within the upper limits of the SALGA Bargaining Council determinations. 

Remuneration of Section 57 Managers 

Remuneration of TL Mkhwane (Municipal Manager) 

Annual remuneration 

207 000 

- 

Car allowance 

23 927 

- 

Contributions to UIF, medical and pension funds 

75 342 

- 


306 269 

- 

Remuneration of KJ Motlhale (Previous Municipal Manager) 

Annual remuneration 

643 255 

501 000 

Car allowance 

75 329 

92 715 

Contributions to UIF, medical and pension funds 

151 543 

189 108 

Performance and other bonuses 

64 748 

29 000 


934 875 

811 823 

Remuneration of NL Moletsane (Chief Financial Officer) 

Annual remuneration 

174 000 

- 

Car allowance 

27 164 

- 

Contributions to UIF, medical and pension funds 

47 640 

- 


248 804 

- 

Remuneration of JW Young (Previous Chief Financial Officer) 

Annual remuneration 

847 428 

504 000 

Car allowance 

87 008 

86 599 

Contributions to UIF, medical and pension funds 

224 063 

235 130 


1 158 499 

825 729 


69 















Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 


Notes to the Financial Statements 


Figures in Rand 

2013 

2012 

28. Employee related costs (continued) 

Remuneration of BP Dikoko (Executive ManagerTechnical Services) 

Annual remuneration 

153 000 


Car allowance 

22 250 

- 

Contributions to UIF, medical and pension funds 

51 462 

- 


226 712 

- 

Remuneration of PW De Bruin (Previous Executive ManagerTechnical 
Services) 

Annual remuneration 

784 129 

477 000 

Car allowance 

176 121 

167 733 

Contributions to UIF, medical and pension funds 

235 262 

214 078 


1 195 512 

858 811 

Remuneration of SS Rabanye (Executive Manager Corporate Services)) 

Annual remuneration 

537 089 

460 500 

Car allowance 

87 594 

88 420 

Contributions to UIF, medical and pension funds 

185 355 

218 712 

Performance and other bonuses 

40 250 

38 500 


850 288 

806 132 

Remuneration ZK Tindleni (Executive Manager Community Services) 

Annual remuneration 

150 000 


Car allowance 

25 637 

- 

Contributions to UIF, medical and pension funds 

62 463 

- 


238 100 

- 

Remuneration MJ Mahlanyane (Previous Executive Manager 

Community Services) 

Annual remuneration 

539 068 

439 200 

Car allowance 

84 909 

107 957 

Contributions to UIF, medical and pension funds 

111 570 

128 948 

Performance and other bonuses 

51417 

36 000 


786 964 

712 105 


70 













Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 

Figures in Rand 2013 2012 


29. Remuneration of councillors 

3 368 179 2 784 221 

474 232 315 600 

19 651 

183 032 550 901 

4 025 443 3 670 373 


In-kind benefits 

The Mayor and Speaker are full-time. Each is provided with an office and secretarial support at the cost 
of the Council. 

The Mayor has use of a Council-owned vehicle for official duties. 

The Mayor and Speaker have full-time drivers. 

The remuneration of the political office-bearers and councillors are within the upper limits as determined 
by the framework envisaged in section 219 of the Constitution. 

30. Depreciation and amortisation 

Property, plant and equipment 19 330 543 20 290 458 


31. Finance costs 

Non-current borrowings 
Trade and other payables 
Finance leases 

Unwinding costs on provisions 

3 586 642 2 661 095 


1 540 611 1 603 459 

144 195 598 

294 569 393 853 

1 607 267 663 185 


Councillors 

Councillors' pension contribution 
Executive Committee Members 
Councillors' contribution to medical aid 


32. Debt impairment 

Debt impairment 


4 112 517 6 260 335 


The municipality provides for expected credit losses relating to consumer debtors. 

At the end of each reporting period, the municipality assesses whether there is any objective evidence 
that a financial asset or group of financial assets is impaired. 

If there is objective evidence that an impairment loss on a financial asset has occurred, the loss is 
recognised in surplus or deficit. 


71 












Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 

Figures in Rand 2013 2012 

33. Bulk purchases 

Electricity 25 285 762 21 656 741 

Water 3 052 208 3 182 493 

28 337 970 24 839 234 

34. General expenses 


Advertising 

240 913 

61 575 

Auditors remuneration 

2 274 041 

1 675 640 

Bank charges 

218 494 

211 763 

Cleaning 

46 908 

829 495 

Consulting and professional fees 

593 267 

(34 686) 

Consumables 

- 

201 

Entertainment 

87 142 

59 316 

Insurance 

329 532 

269 079 

Fuel and oil 

1 650 574 

1 665 159 

Printing and stationery 

714 452 

814 074 

Protective clothing 

137 243 

194 886 

Royalties and license fees 

541 

- 

Subscriptions and membership fees 

774 029 

604 292 

Telephone and fax 

714 828 

604 099 

Training 

547 534 

851 831 

Travel - local 

823 958 

758 820 

Radio and television licenses 

14 519 

11 859 

Vehicle licences 

73 019 

72 223 

Valuation costs 

944 160 

359 470 

Sewerage assessment (Green Drop) 

187 313 

143 677 

Operating grant expenditure 

4 014 467 

3 823 641 

Water quality assessment (Blue Drop) 

187 313 

127 343 

Other expenses 

6 471019 

6 129 052 


21 045 266 

19 232 809 


Other expenses include the following amounts: 

- Chemicals for water purification R 1,554,124 

- SALGA membership fees R 416,250 

- Departmental levies (electricity) R 1,051,983 

- Ward Committee Members R 380,500 

35. Fair value adjustments 

Investment property (Fair value model) 

Other financial assets 

• Other financial assets (Designated as at FV through P&L) 

74 075 615 151 


627 000 
74 075 (11 849) 


72 











Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 

Figures in Rand 2013 2012 

36. Investment revenue 


Dividend revenue 

Unlisted financial assets - Local 258 565 69 042 


Interest revenue 

ABSA - current account 2 106 880 

Interest - call accounts 417 192 815 072 


419 298 815 952 


677 863 884 994 


37. Auditors' remuneration 

Fees 2 274 041 1 675 640 

38. Cash generated from operations 


Surplus 

15 764 239 

20 845 047 

Adjustments for: 



Depreciation and amortisation 

19 330 543 

20 290 458 

Loss on sale of assets and liabilities 

66 862 

- 

Fair value adjustment on biological assets 

(156 274) 

(176 804) 

Fair value adjustments 

(74 075) 

(615 151) 

Finance costs - Finance leases 

294 569 

393 853 

Debt impairment 

4 112 517 

6 260 335 

Movements in operating lease assets and accruals 

- 

(3 609) 

Movements in retirement benefit assets and liabilities 

(6 000) 

- 

Movements in provisions 

1 478 486 

1 110 876 

Other non-cash items (donation) 

- 

(5 000 000) 

Other non-cash items 

(158 517) 

968 386 

Changes in working capital: 



Inventories 

(53 235) 

(77 701) 

Other receivables from exchange transactions 

113 692 

(683 551) 

Other receivables from non-exchange transactions 

2 167 987 

(4 311 139) 

Consumer debtors 

(5 428 036) 

(5 512 425) 

Payables from exchange transactions 

(6 198 994) 

7 000 347 

VAT 

809 143 

3 028 925 

Unspent conditional grants and receipts 

(2 546 130) 

225 692 

Consumer deposits 

59 551 

26 795 












Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 


Figures in Rand 

2013 

2012 

39. Commitments 



Authorised capital and operational expenditure 



Already contracted for but not provided for 

• Property, plant and equipment 

• Financial consulting 

273 600 

195 505 

5 669 922 


469 105 

5 669 922 

Not yet contracted for and authorised by accounting officer 

• Property, plant and equipment 

37 207 962 


This committed expenditure relates to a sewerage network and the upgrading of an electricity network. 

The Municipal Infrastructure Grant will be used to finance the sewerage network whilst the upgrading of 
the electricity network will be financed from own funding. 

Operating leases - as lessee (expense) 



Minimum lease payments due 

- within one year 

- in second to fifth year inclusive 

14 464 

26 518 

14 464 

40 982 


40 982 

55 446 

Operating leases - as lessor (income) 



Minimum lease payments due 

- within one year 

- in second to fifth year inclusive 

- later than five years 

662 737 

2 479 323 

1 011 129 

670 223 

2 567 861 

1 250 677 


4 153 189 

4 488 761 


Certain of the municipality's property is held to generate rental income. Lease agreements are non- 
cancellable and have terms from 5 to 20 years. There are no contingent rents receivable. 


74 













Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 

Figures in Rand 2013 2012 


40. Risk management 

Financial risk management 

The municipality's activities expose it to a variety of financial risks: market risk (including fair value 
interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. 

The municipality's overall risk management program focuses on the unpredictability of financial markets 
and seeks to minimise potential adverse effects on the municipality's financial performance. Risk 
management is carried out by a central treasury department (entity treasury) under policies approved by 
the accounting officer. The accounting officer provides written principles for overall risk management, as 
well as written policies covering specific areas, such as interest rate risk, credit risk and investment of 
excess liquidity. 

Liquidity risk 

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the 
availability of funding through an adequate amount of committed credit facilities. Due to the dynamic 
nature of the underlying businesses, municipality treasury maintains flexibility in funding by maintaining 
availability under committed credit lines. 

The municipality's risk to liquidity is a result of the funds available to cover future commitments. The 
municipality manages liquidity risk through an ongoing review of future commitments and credit 
facilities. 

The table below analyses the municipality's financial liabilities into relevant maturity groupings based on 
the remaining period at the statement of financial position to the contractual maturity date. The 
amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 


months equal their carrying balances as the impact of discounting is 

not significant. 


At 30June 2013 

Less than 1 

Between 1 

Between 2 

Over 5 years 


year 

and 2 years 

and 5 years 


Borrowings 

3 159 911 

2 008 038 

6 024 115 

13 052 250 

Finance lease obligation 

810 002 

420 220 

- 

- 

Trade and other payables 

11 710 473 

- 

- 

- 

At 30June 2012 

Less than 1 

Between 1 

Between 2 

Over 5 years 


year 

and 2 years 

and 5 years 


Borrowings 

2 106 607 

2 106 607 

6 024 115 

15 060 288 

Finance lease obligation 

934 144 

810 002 

420 220 

- 

Trade and other payables 

17 410 464 

- 

- 

- 


Risk from biological assets 

The municipality is exposed to financial risks arising from changes in game prices. The municipality does 
not anticipate that game prices will decline significantly in the foreseeable future. The municipality has 
not entered into derivative contracts to manage the risk of a decline in game prices. 


75 






Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 

Figures in Rand 2013 2012 


40. Risk management (continued) 

Interest rate risk 

As the municipality has no significant interest-bearing assets, the municipality's income and operating 
cash flows are substantially independent of changes in market interest rates. 

Fair value interest rate risk 

Financial instrument Current 

interest rate 

Fixed interest loan from 11.90 % 

DBSA- 61000141 

Fixed interest loan from 13.45 % 

DBSA - 61002008 

Credit risk 

Credit risk consists mainly of cash deposits, cash equivalents and trade debtors. The municipality only 
deposits cash with major banks with high quality credit standing and limits exposure to any one counter- 
party. 

Trade receivables comprise a widespread customer base. Management evaluated credit risk relating to 
customers on an ongoing basis. If customers are independently rated, these ratings are used. Otherwise, 
if there is no independent rating, risk control assesses the credit quality of the customer, taking into 
account its financial position, past experience and other factors. Individual risk limits are set based on 
internal or external ratings in accordance with limits set by the board. The utilisation of credit limits is 
regularly monitored. Sales to retail customers are settled in cash or using major credit cards. 

Consumer balances outstanding for more than three months are reviewed for impairment and provided 
for as bad debts as applicable. 

Financial assets exposed to credit risk at year end were as follows: 


Due in less 
than a year 
2 214 018 

17 863 


Due in one to 
two years 
1 393 734 


Due in two to 
three years 
1318 457 


Due in three 
to four years 
1 233 956 


Due after five 
years 
5 277 067 


Financial instrument 

2013 

2012 

ABSA Bank - Cheque account 

2 543 746 

5 718 004 

ABSA Bank - Money Market account 

1 540 638 

4 473 716 

Nedbank - 32 day notice account 

22 288 

5 028 034 

FNB - Investment account 

10 000 000 

- 

Consumer debtors 

7 681 295 

6 365 776 

Receivables from exchange transactions 

707 376 

821 068 

Investment in unlisted shares 

897 182 

823 107 


76 






Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 

Figures in Rand 2013 2012 


40. Risk management (continued) 

Price risk 

The municipality is exposed to equity securities price risk because of investments held by the municipality 
and classified on the statement of financial position either as available-for-sale or at fair value through 
surplus or deficit. The municipality is not exposed to commodity price risk. To manage its price risk arising 
from investments in equity securities, the municipality diversifies its portfolio. Diversification of the 
portfolio is done in accordance with the limits set by the municipality. 

The table below summarises the impact of increases/decreases of the indexes on the municipality's 
surplus for the year and on equity. The analysis is based on the assumption that the equity indexes has 
increased/decreased by 5% with all other variables held constant and all the municipality's equity 
instruments moved according to the historical correlation with the index: 



Impact on surplus in Rand 

Impact on other 




components of equity in 




Rand 

Financial instrument 

2013 

2012 

2013 2012 

Senwes Limited shares 

25 926 

22 222 

- 

Senwesbel Limited shares 

18 933 

18 933 

- 


Surplus for the year would increase/decrease as a result of gains or losses on equity securities classified 
as at fair value through surplus or deficit. Other components of equity would increase/decrease as a 
result of gains or losses on equity securities classified a available-for-sale. 

41. Goingconcern 

The 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 municipality to continue as a going concern is dependent on a number of factors. The 
most significant of these is that the accounting officer continue to procure funding for the ongoing 
operations for the municipality. 

42. Unauthorised expenditure 

Opening balance - 6 791 189 

Unauthorised expenditure - current year 1981775 1913 745 

Approval by Council or condoned (1740 671) (8 704 934) 

241 104 


77 







Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 

Figures in Rand 2013 2012 


43. Fruitless and wasteful expenditure 


Fruitless and wasteful expenditure - current year 98 842 1411 

Approval by Council or condoned (98 842) (1411) 



44. Irregular expenditure 

Opening balance 

Irregular expenditure - current year 
Approval by Council or condoned 

2 672 537 2 076 997 


2 076 997 1 778 151 

1 743 720 2 076 997 

(1 148 180) (1778 151) 


45. Additional disclosure in terms of Municipal Finance Management Act 
Contributions to organised local government 

416 250 498 134 

(416 250) (498 134) 


Current year subscription / fee 
Amount paid - current year 


Audit fees 



Current year fee 

2 255 197 

1 664 322 

Amount paid - current year 

(2 255 197) 

(1664 322) 


PAYE and UIF 



Current year subscription / fee 

5 258 747 

3 588 401 

Amount paid - current year 

(5 258 747) 

(3 588 401) 


Pension and Medical Aid Deductions 

7 379 220 5 319 656 

(7 379 220) (5 319 656) 


Current year subscription / fee 
Amount paid - current year 












Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 

Figures in Rand 2013 2012 


45. Additional disclosure in terms of Municipal Finance Management Act (continued) 

VAT 

VAT receivable 801 756 1 825 207 

VAT payable 51 439 265 747 

853 195 2 090 954 


Not all VAT returns were submitted by the due date during the 2012/2013 financial year. 

Councillors' arrear consumer accounts 

The following Councillors had arrear accounts outstanding for more than 90 days at 30 June 2013: 


30June 2013 


Horn, C 
Taedi, TT 


Outstanding Outstanding Total 

Iessthan90 more than 90 
days days 

26 765 26 765 

9 702 9 702 

36 467 36 467 


30June 2012 


Horn, C 
Raseu, MC 
Taedi, TT 


Outstanding Outstanding Total 

Iessthan90 more than 90 
days days 

13 383 13 383 

373 373 

6 837 6 837 

20 593 20 593 


Bulk electricity and water distribution losses 

In terms of section 36 of the Municipal Supply Chain Management Regulations any deviation from the 
Supply Chain Management Policy needs to be approved/condoned by the City Manager and noted by 
Council. The expenses incurred as listed hereunder have been condoned. 

Management's best estimated value of bulk eletricity and water distribution losses are as follows: 

Distribution losses 2013 (Kwh) 2013 (%) 2012 (Kl) 2012 (%) 

Electricity 3 205 004 11 4 264 733 16 

Water 1 908 396 50 2 118 625 55 

5 113 400 61 6 383 358 71 


79 













Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 

Figures in Rand 2013 2012 

46. Utilisation of Long-term liabilities reconciliation 

Long-term liabilities raised 13 542 563 13 050 943 

Long-term liabilities have been utilized in accordance with the Municipal Finance Management Act. 
Sufficient cash has been set aside to ensure that long-term liabilities can be repaid on redemption date. 

47. Related parties 

Councillor Florn is currently leasing arable land from the municipality at R 11,739.15 per annum. 


80 







Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 

Figures in Rand 2013 2012 


48. Prior period errors 
Revenue 

Commission paid in prior years were reallocated to the correct accounts and removed from suspense 
accounts. The total correction amounts to R 19,226.41. 

Income relating to the 2011/2012 financial year was incorrectly recognised in the current financial year 
and had to be corrected retrospectively. The correction amounts to R 300. 

Traffic fines were previously incorrectly recognised on the cash basis. This was corrected and increased 
the income from fines by R 151,870.00. 

Expenditure 

The unwinding cost of the provisions relating to employees was previously shown as employee costs. This 
was corrected and moved to finance costs. The amount moved to finance costs is R 663,000. 

Expenditure relating to the 2011/2012 financial year was incorrectly accounted for in 2012/2013 and had 
to be corrected. The total correction amounts to R 2,312.52. 

Expenditure relating to the 2010/2011 financial year was not previously recorded in the correct period 
and had to be corrected. The total correction amounts to R 794. 

Current liabilities 

The Eskom deposits included in the payables balances were understated for a couple of years and were 
corrected retrospectively. The total understatement amounts to R 76,359.49. 

A payable balance of R 29,190.84 had to be corrected retrospectively. 

Payments to creditors amounting to R 429,513.45 were not allocated to the payable balances and had to 
be corrected. 

Professional fees were overstated in the prior year when the payment of creditors was allocated against 
the expense and not the payable balance. The correction amounts to R 384,204.70. 

An audit adjustment of R 265,746.58 was incorrectly processed in 2011/2012 and had to be corrected in 
2012/2013. 

Non-current liabilities 

The provision for landfill and borrow pit rehabilitation was understated and the correction resulted in an 
increase in the liability (R 8,969,274.28), land (R 8,969,274.28), accumulated depreciation (R 198,135.16) 
and depreciation (R 537,207.50). 

A prior year wrong allocation of a payment was corrected and had decreased the trade creditors balance 
by R 48,562.86. 

Current assets 


81 






Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 

Figures in Rand 2013 2012 


48. Prior period errors (continued) 

Errors in the municipality's billing system resulted in an overstatement of consumer debtors. This was 
corrected and the net effect is a decrease of R 62,459.96 in consumer debtors. 

Non-current assets 

In 2009/2010 capital expenditure was not capitalised to the capital work in progress account. The 
completed project was moved from work in progress to infrastructure in 2012/2013 and the amount not 
capitalised to work in progress in 2009/2010 was corrected retrospectively. The total correction 
amounted to R 21,537,638.70. 


Land valued at R 47,990.87 was transferred from property, plant and equipment to investment property 
as it has been let under operating lease for the last couple of years. 

The correction of the error(s) results in adjustments as follows: 


Statement of financial position 

Trade and other payables 

Property, plant and equipment 

Opening Accumulated Surplus or Deficit 

Other receivables 

Consumer debtors 

Provisions 

887 417 

- 30 595 676 

- (22 316 330) 

151 870 
(62 460) 

- (8 969 274) 

Statement of Financial Performance 

Other income 

General expenses 

(815 170) 
837 542 

Cash flow statement 


Cash flow from operating activities 

Sale of goods and services 

Suppliers and employees 

725 760 
- (7 244 316) 

- (6 518 556) 

Cash flow from investing activities 

Property, plant and equipment additions 

- 30 308 778 

Cash flow from financing activities 

Accumulated surplus adjustments 

- (22 316 330) 


82 









Tswelopele Local Municipality 

(Registration number FS183) 

Financial Statements for the year ended 30 June 2013 

Notes to the Financial Statements 

Figures in Rand 2013 2012 


49. Contingencies 

The municipality implemented the Categorisation and Job Evaluation Wage Curves Collective Agreement, 
dated 21 April 2010. The Independent Municipal and Allied Trade Union [IMATU] declared a dispute and 
the matter went to the Labour Court, where IMATU won the case in June 2012. SALGA appealed against 
the court order and the final outcome of the appeal was not known at the reporting date. There is 
uncertainty with regards to the contingent liability and the municipality is still awaiting the final outcome 
of the appeal. 


83 






Tswelopele Local Municipality 

Appendix A 

June 2013 


Schedule of external loans as at 30 June 2013 


Loan 

Redeemable Balance at 

Interest 

Redeemed 

Balance at 

Carrvinq 

Other Costs 

Number 

30 June 

accrued 

written off 

30 June 

Value of 

in 


2012 

during the 

during the 

2013 

Property, 

accordance 



period 

period 


Plant & 

with the 






Equip 

MFMA 


Rand 

Rand 

Rand 

Rand 

Rand 

Rand 


Loan Stock 


Structured loans 


Funding facility 


Development Bank of South 
Africa 

Loan 61000141 12 882 964 767 308 236 711 13 413 561 

Loan 61002008 167 979 11 297 37 988 141 288 


Page 84 



Tswelopele Local Municipality 
Appendix A 

June 2013 


Schedule of external loans as at 30 June 2013 


Loan 

Redeemable Balance at 

Interest 

Redeemed 

Balance at 

Carrying 

Other Costs 

Number 

30 June 

accrued 

written off 

30 June 

Value of 

in 


2012 

during the 

during the 

2013 

Property, 

accordance 



period 

period 


Plant & 

with the 






Equip 

MFMA 


Rand 

Rand 

Rand 

Rand 

Rand 

Rand 


13 050 943 778 605 274 699 13 554 849 

Bonds 


Other loans 


Lease liability 

Finance leases 1 510 557 - 512 652 997 905 


1 510 557 512 652 997 905 

Annuity loans 


Page 85 



Tswelopele Local Municipality 
Appendix A 

June 2013 


Schedule of external loans as at 30 June 2013 


Loan 

Redeemable Balance at 

Interest 

Redeemed 

Balance at 

Carrying 

Other Costs 

Number 

30 June 

accrued 

written off 

30 June 

Value of 

in 


2012 

during the 

during the 

2013 

Property, 

accordance 



period 

period 


Plant & 

with the 






Equip 

MFMA 


Rand 

Rand 

Rand 

Rand 

Rand 

Rand 



- 

- 

- 

- 

- 

- 


- 

- 

- 

- 

- 

- 

Government loans 


- 

- 

- 

- 

- 

- 


- 

- 

- 

- 

- 

- 


- 

- 

- 

- 

- 

- 


- 

- 

- 

- 

- 

- 


- 

- 

- 

- 

- 

- 


- 

- 

- 

- 

- 

- 

Total external loans 

Loan Stock 

_ 

_ 

_ 

_ 

_ 

_ 

Structured loans 

- 

- 

- 

- 

- 

- 

Funding facility 

- 

- 

- 

- 

- 

- 

Development Bank of South Africa 

13 050 943 

778 605 

274 699 

13 554 849 

- 

- 

Bonds 

- 

- 

- 

- 

- 

- 

Other loans 

- 

- 

- 

- 

- 

- 

Lease liability 

1 510 557 

- 

512 652 

997 905 

- 

- 

Annuity loans 

- 

- 

- 

- 

- 

- 

Government loans 

- 

- 

- 

- 

- 

- 


- 

- 

- 

- 

- 

- 


- 

- 

- 

- 

- 

- 


- 

- 

- 

- 

- 

- 


- 

- 

- 

- 

- 

- 


- 

- 

- 

- 

- 

- 


14 561 500 

778 605 

787 351 

14 552 754 

- 

- 


Page 86 



Tswelopele Local Municipality 
Tswelopele Local Municipality 
Appendix B 

June 2013 


Analysis of property, plant and equipment as at 30 June 2013 
Cost/Revaluation Accumulated depreciation 


Opening 

Additions 

Disposals 

Transfers 

Revaluations 

Other changes, 

Closing 

Opening 

Disposals 

Transfers 

Depreciation 

Impairment loss 

Closing 

Carrying 

Balance 





movements 

Balance 

Balance 





Balance 

value 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 


Land and buildings 


Land (Separate for AFS purposes) 25 941 254 ... . . 25941 254 (559799) - - (559799) - (1 119 598) 24821 656 

Buildings(SeparateforAFSpurposes) 82 488261 162 649 - 8 708 822 - - 91 359 732 (26008437) - - (4 255 773) - (30264210) 61 095 522 

108 429 515 162 649 - 8 708 822 - 117 300 986 (26 568 236) - - (4 815 572) (31 383 808) 85 917 178 

Infrastructure 


Roads, Pavements & Bridges 83 060 025 - - 18 223 548 - - 101 283 573 (37 468 367) - - (5 250 773) - (42 719 140) 58 564 433 


Transmission & Reticuiation 

Water purification 

Sewerage purification 

Waste Management 

Other (work in progress) 

32 155 547 

102 376 527 

41 230 360 

150 093 

69 681 334 28 913 984 

19 678 

63 629 295 

32 155 547 
102 396 205 
104 859 655 
150 093 
98 595 318 

(3 962 886) 

(21 372 058) 

(8 373 326) 

(124 441) 

(90 581 343) 

(789 957) 

(4 105 848) 

(2 647 502) 

(10 050) 

(4 752 843) 
(25 477 906) 
(11 020 828) 
(134 491) 
(90 581 343) 

27 402 704 
76 918 299 
93 838 827 
15 602 

8 013 975 


328 653 886 28 913 984 

81 872 521 

439 440 391 

(71 301 078) 

(90 581 343) 

(12 804130) 

(174 686 551) 

264 753 840 

Community Assets 









Recreational faciiities 

Cemeteries 

4 899 257 

3 577 721 

- 

4 899 257 

3 577 721 

(2 215 002) 

(817 472) 

- 

(253 884) 

(163 181) 

(2 468 886) 
(980 653) 

2 430 371 

2 597 068 


8 476 978 

8 476 978 

(3 032 474) 

(417 065) 

(3 449 539) 

5 027 439 


Page 87 



Tswelopele Local Municipality 
Tswelopele Local Municipality 
Appendix B 

June 2013 

Analysis of property, plant and equipment as at 30 June 2013 
Cost/Revaluation Accumulated depreciation 


Opening Additions Disposals Transfers Revaluations Other changes, Closing Opening Disposals Transfers Depreciation Impairment loss Closing Carrying 
Balance movements Balance Balance Balance value 

Rand Rand Rand Rand Rand Rand Rand Rand Rand Rand Rand Rand Rand Rand 


Heritage assets 
Specialised vehicles 
Other assets 


General vehicles 

7 079 126 

534 877 

(574 970) 

Computer Equipment 

677 024 

268 743 

- 

Furniture & Fittings 

1 115415 

152 933 

- 

Office Equipment 

55 805 

5 999 

- 

Office Equipment - Leased 

2 779 415 

86 060 

- 

Other 

2 449 466 

158 945 

- 


14 156 251 

1 207 557 

(574 970 ) 


7 039 033 

(5 864 796) 

352 986 

(388 967) 

(5 900 777 ) 

1 138 256 

945 767 

(619 590) 

- 

(111341) 

(730 931 ) 

214 836 

1 268 348 

(693 737) 

- 

(149 119) 

(842 856 ) 

425 492 

61 804 

(13 976) 

- 

(19 874) 

(33 850 ) 

27 954 

2 865 475 

(1 948 714) 

- 

(344 627) 

(2 293 341 ) 

572 134 

2 608 411 

(2 431 818) 

- 

(45 542) 

(2 477 360 ) 

131 051 

14 788 838 

(11 572 631 ) 

352 986 

(1 059 470 ) 

(12 279 115 ) 

2 509 723 


Page 88 



Tswelopele Local Municipality 
Tswelopele Local Municipality 
Appendix B 

June 2013 


Analysis of property, plant and equipment as at 30 June 2013 
Cost/Revaluation Accumulated depreciation 


Opening 

Additions 

Disposals 

Transfers 

Revaluations 

Other changes, 

Closing 

Opening 

Disposals 

Transfers 

Depreciation 

Impairment loss 

Closing 

Carrying 

Balance 





movements 

Baiance 

Balance 





Balance 

value 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 


Total property plant and equipment 


Land and buildings 
infrastructure 

Community Assets 

Other assets 

108 429 515 
328 653 886 

8 476 978 

14 156 251 

162 649 

28 913 984 

1 207 557 

(574 970) 

8 708 822 

81 872 521 

- 

- 

117 300 986 
439 440 391 

8 476 978 
14 788 838 

(26 568 236) 

(71 301 078) 

(3 032 474) 

(11 572 631) 

352 986 

(90 581 343) 

(4 815 572) 

(12 804 130) 

(417 065) 

(1 059 470) 

(31 383 808) 
(174 686 551) 
(3 449 539) 
(12 279 115) 

85 917 178 
264 753 840 

5 027 439 

2 509 723 


459 716 630 

30 284 190 

(574 970) 

90 581 343 

- 

- 

580 007 193 

(112 474 419) 

352 986 

(90 581 343) 

(19 096 237) 

(221 799 013) 

358 208 180 

Agricuitural/Biological assets 

Biologicai assets - game 

816 680 

183 014 

- 

- 

156 274 

(24 492) 

1 131 476 

- 

- 

- 

- 

- 

1 131 476 


816 680 

183 014 

- 

- 

156 274 

(24 492) 

1 131 476 

- 

- 

- 

- 

- 

1 131 476 

Intangible assets 

Licences, software and website 

485 210 

240 901 

- 

- 

- 

- 

726 111 

(473 119) 

- 

- 

(234 308) 

(707 427) 

18 684 


485 210 

240 901 

- 

- 

- 

- 

726 111 

(473 119) 

- 

- 

(234 308) 

(707 427) 

18 684 

Investment properties 

investment property 

23 923 991 






23 923 991 






23 923 991 


23 923 991 

- 

- 

- 

- 

- 

23 923 991 

- 

- 

- 

- 

- 

23 923 991 

Totai 

Land and buildings 

108 429 515 

162 649 

. 

8 708 822 

. 

. 

117 300 986 

(26 568 236) 

. 

. 

(4 815 572) 

(31 383 808) 

85 917 178 

infrastructure 

328 653 886 

28 913 984 

- 

81 872 521 

- 

- 

439 440 391 

(71 301 078) 

- 

(90 581 343) 

(12 804 130) 

(174 686 551) 

264 753 840 

Community Assets 

8 476 978 

- 

- 

- 

- 

- 

8 476 978 

(3 032 474) 

- 

- 

(417 065) 

(3 449 539) 

5 027 439 

Other assets 

14 156 251 

1 207 557 

(574 970) 

- 

- 

- 

14 788 838 

(11 572 631) 

352 986 

- 

(1 059 470) 

(12 279 115) 

2 509 723 

Agriculturai/Biological assets 

816 680 

183 014 

- 

- 

156 274 

(24 492) 

1 131 476 

- 

- 

- 

- 

- 

1 131 476 

intangibie assets 

485 210 

240 901 

- 

- 

- 

- 

726 111 

(473 119) 

- 

- 

(234 308) 

(707 427) 

18 684 

investment properties 

23 923 991 

- 

- 

- 

- 

- 

23 923 991 

- 

- 

- 

- 

- 

23 923 991 


484 942 511 

30 708 105 

(574 970) 90 581 343 

156 274 

(24 492) 605 788 771 (112 947 538) 

352 986 (90 581 343) 

(19 330 545) 

(222 506 440) 383 282 331 


Page 89 



Tswelopele Local Municipality 
Tswelopele Local Municipality 
Appendix B 


Analysis of property, plant and equipment as at 30 June 2012 
Cost/Revaluation Accumulated depreciation 


Opening 

Additions 

Disposals 

Transfers 

Revaluations 

Other changes, 

Closing 

Opening 

Disposals 

Transfers 

Depreciation 

Impairment loss 

Closing 

Carrying 

Balance 





movements 

Balance 

Balance 





Balance 

value 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 


Land and buildings 





Land (Separate for AFS purposes) 1 6 587 663 

Buildings (Separate for AFS purposes) 82 488 261 

9 353 591 

25 941 254 

82 488 261 (21 249 948) 

(559 799) 

(4 758 489) 

(559 799) 25 381 455 

(26 008 437) 56 479 824 


Infrastructure 


99 075 924 

9 353 591 

108 429 515 (21 249 948) 

(5 318 288) 

(26 568 236) 81 861 279 


Roads, Pavements & Bridges 
Transmission & Reticuiation 

Water purification 

Sewerage purification 

Waste Management 

Other (work in progress) 

83 060 025 - 

32 155 547 

102 376 527 

41 230 360 - 

150 093 

35 442 775 34 238 559 

83 060 025 
32 155 547 
102 376 527 
41 230 360 
150 093 
69 681 334 

(31 861 519) 

(3 172 871) 

(17 227 988) 

(6 702 023) 

(114 391) 

(5 606 848) 

(790 015) 

(4 144 070) 

(1 671 303) 

(10 050) 

(37 468 367) 
(3 962 886) 
(21 372 058) 
(8 373 326) 
(124 441) 

45 591 658 
28 192 661 
81 004 469 
32 857 034 
25 652 
69 681 334 


294 415 327 34 238 559 

328 653 886 

(59 078 792) 

(12 222 286) 

(71 301 078) 

257 352 808 

Communlty Assets 







Recreational faciiities 

4 899 257 

4 899 257 

(1 877 105) 

(337 897) 

(2 215 002) 

2 684 255 

Cemeteries 

3 577 721 - 

3 577 721 

(654 291) 

(163 181) 

(817 472) 

2 760 249 


8 476 978 

8 476 978 

(2 531 396) 

(501 078) 

(3 032 474) 

5 444 504 


Page 90 



Tswelopele Local Municipality 
Tswelopele Local Municipality 
Appendix B 

June 2013 


Analysis of property, plant and equipment as at 30 June 2012 
Cost/Revaluation Accumulated depreciation 


Opening 

Additions 

Disposals 

Transfers 

Revaluations 

Other changes, 

Closing 

Opening 

Disposals 

Transfers 

Depreciation 

Impairment loss 

Closing 

Carrying 

Balance 





movements 

Balance 

Balance 





Balance 

value 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 


Heritage assets 








Specialised vehicles 








Other assets 








General vehicles 

6 543 973 

535 153 

7 079 126 

(4 590 911) 

(1 273 885) 

(5 864 796) 

1 214 330 

Computer Equipment 

677 024 

. 

677 024 

(505 662) 

(113 928) 

(619 590) 

57 434 

Furniture & Fittings 

1 086 775 

28 640 

1115415 

(530 867) 

(162 870) 

(693 737) 

421 678 

Office Equipment 

- 

55 805 

55 805 

- 

(13 976) 

(13 976) 

41 829 

Office Equipment - Leased 

2 779 415 

. 

2 779 415 

(1 532 739) 

(415 975) 

(1 948 714) 

830 701 

Other 

2 436 652 

12 814 

2 449 466 

(2 424 183) 

(7 635) 

(2 431 818) 

17 648 


13 523 839 

632 412 

14 156 251 

(9 584 362) 

(1 988 269) 

(11 572 631) 

2 583 620 


Page 91 



Tswelopele Local Municipality 
Tswelopele Local Municipality 
Appendix B 

June 2013 


Analysis of property, plant and equipment as at 30 June 2012 
Cost/Revaluation Accumulated depreciation 


Opening 

Additions 

Disposals 

Transfers 

Revaluations 

Other changes, 

Closing 

Opening 

Disposals 

Transfers 

Depreciation 

Impairment loss 

Closing 

Carrying 

Balance 





movements 

Baiance 

Balance 





Balance 

value 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 


Total property plant and equipment 


Land and buildings 

Infrastructure 

Community Assets 

Other assets 

99 075 924 
294 415 327 

8 476 978 

13 523 839 

9 353 591 

34 238 559 

632 412 

- 

- 

- 

108 429 515 
328 653 886 

8 476 978 
14 156 251 

(21 249 948) 

(59 078 792) 

(2 531 396) 

(9 584 362) 

(5 318 288) 

(12 222 286) 

(501 078) 

(1 988 269) 

(26 568 236) 
(71 301 078) 
(3 032 474) 
(11 572 631) 

81 861 279 
257 352 808 

5 444 504 

2 583 620 


415 492 068 

44 224 562 

- 

- 

- 

459 716 630 

(92 444 498) 

(20 029 921) 

(112 474 419) 

347 242 211 

Agricuitural/Biological assets 

Biological assets - game 

1 067 100 

133 441 

(102 698) 


(281 163) 

816 680 




816 680 


1 067 100 

133 441 

(102 698) 

- 

(281 163) 

816 680 

- 

- 

- 

816 680 

Intangible assets 

Licences, software and website 

262 093 

223 117 




485 210 

(212 583) 

(260 536) 

(473 119) 

12 091 


262 093 

223 117 

- 

- 

- 

485 210 

(212 583) 

(260 536) 

(473 119) 

12 091 

Investment properties 

Investment property 

18 249 000 

5 000 000 


627 000 


23 876 000 




23 876 000 


18 249 000 

5 000 000 

627 000 

23 876 000 - 

23 876 000 


Total 

Land and buildings 
Infrastructure 
Community Assets 
Other assets 

Agricultural/Biological assets 
Intangible assets 
Investment properties 

435 070 261 49 581 120 (102 698) - 627 000 (281 163) 484 894 520 (92 657 081) - - (20 290 457) - (112 947 538) 371 946 982 


99 075 924 
294 415 327 
8 476 978 
13 523 839 
1 067 100 
262 093 
18 249 000 


9 353 591 
34 238 559 

632 412 
133 441 
223 117 
5 000 000 


(102 698) 


(281 163) 


108 429 515 
328 653 886 
8 476 978 
14 156 251 
816 680 
485 210 
23 876 000 


(21 249 948) 
(59 078 792) 
(2 531 396) 
(9 584 362) 

(212 583) 


(5 318 288) 
(12 222 286) 
(501 078) 
(1 988 269) 

(260 536) 


(26 568 236) 
(71 301 078) 
(3 032 474) 
(11 572 631) 

(473 119) 


81 861 279 
257 352 808 
5 444 504 
2 583 620 
816 680 
12 091 
23 876 000 


Page 92 



Tswelopele Local Municipality 
Appendix C 

June 2013 


Segmental analysis of property, plant and equipment as at 30 June 2013 
Cost/Revaluation Accumulated Depreciation 


Opening 

Additions 

Disposals 

Transfers 

Revaluations 

Other changes, 

Closing 

Opening 

Disposals 

Transfers 

Depreciation 

Impairment deficit 

Closing 

Carrying 

Balance 





movements 

Balance 

Balance 





Balance 

value 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 


Municipality 

Executive & Council/Mayor and 

Council 

Finance & Admin/Finance 

Planning and Deveiopment/Economic 
Development/Plan 

Comm. & Social/Libraries and archives 
Road Transport/Roads 

328 364 713 

1 832 196 
715 497 

33 387 542 

9 147 683 

91 195 009 

260 207 

28 985 

49 932 
417416 

(438 000) 

(136 970) 

419 121 722 

2 092 403 
744 482 

33 437 474 

9 428 129 

(91 072 303) 

(1 117 260) 
(536 537) 

(11 708 632) 

(8 039 688) 

216016 

136 970 

(16 545 138) 

(323 115) 

(112 140) 

(1 722 895) 

(392 948) 

(107 401 425) 

(1 440 375) 
(648 677) 

(13 431 527) 
(8 295 666) 

311 720 297 

652 028 
95 805 

20 005 947 

1 132 463 


373 447 631 

91 951 549 

(574 970) 

464 824 210 

(112 474 420) 

352 986 

(19 096 236) 

(131 217 670) 

333 606 540 

Total 










Municipality 

373 447 631 

91 951 549 

(574 970) 

464 824 210 

(112 474 420) 

352 986 

(19 096 236) 

(131 217 670) 

333 606 540 


373 447 631 

91 951 549 

(574 970) 

464 824 210 (112 474 420) 

352 986 

(19 096 236) 

(131 217 670) 333 606 540 


Page 93 



Tswelopele Local Municipality 

Appendix D 

June 2013 


Segmental Statement of Financial Performance for the year ended 
Prior Year Current Year 


Actual 

Actual 

Surplus 

Actual 

Actual 

Surplus 

Income 

Expenditure 

/(Deficit) 

Income 

Expenditure 

/(Deficit) 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 


Municipality 


526 912 

27 539 

187 

(27 012 275)Executive & Council/Mayor and Council 

49 079 

534 

50 012 384 

(932 850) 

69 020 445 

12 758 

318 

56 262 127 Finance & Admin/Finance 

1 442 

777 

4 605 134 

(3 162 357) 

- 


- 

- Planning and Development/Economic 


- 

- 

- 




Development/Plan 





- 


- 

- Flealth/Clinics 


- 

- 

- 

14 772 201 

10 085 

749 

4 686 452 Comm. & Social/Libraries and archives 

4 754 

915 

10 232 091 

(5 477 176) 

- 


- 

- Housing 


- 

- 

- 

- 

774 

026 

(774 026) Public Safety/Police 

1 580 

010 

1 382 032 

197 978 

5 921 148 

933 

962 

4 987 1 86 Sport and Recreation 

582 

814 

1 361 631 

(778 817) 

2 441 565 

7 046 

984 

(4 605 419)Environmental Protection/Pollution 


- 

- 

- 




Control 





4 491 376 

6 488 

566 

(1 997 190)Waste Water Management/Sewerage 

28 761 

124 

13 707 223 

15 053 901 

29 982 

10 016 

162 

(9 986 180)Road Transport/Roads 

17 

729 

10 838 728 

(10 820 999) 

4 631 225 

6 758 

856 

(2 127 631)Water/Water Distribution 

18 782 

862 

8 128 828 

10 654 034 

16 421 517 

22 085 

105 

(5 663 588) Electricity /Electricity Distribution 

36 403 

970 

25 373 445 

11 030 525 

17 078 614 

10 003 

023 

7 075 591 Cther/Air Transport 


- 

- 

- 


135 334 985 114 489 938 20 845 047 

Municipal Owned Entities 


141 405 735 125 641 496 15 764 239 


Other charges 


135 334 985 114 489 938 


20 845 047 Municipality 

- Municipal Ōwned Entities 

- Other charges 


141 405 735 125 641 496 15 764 239 


Page 94 









Tswelopele Local Municipality 
Appendix D 

June 2013 


Segmental Statement of Financial Performance for the year ended 
Prior Year Current Year 


Actual 

Actual 

Surplus 


Actual 

Actual 

Surplus 

Income 

Expenditure 

/(Deficit) 


Income 

Expenditure 

/(Deficit) 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 

Rand 


- 

- 

135 334 985 114 489 938 20 845 047 Total 

141 405 735 125 641 496 15 764 239 


Page 95 






Tswelopele Local Municipality 
Appendix E(1) 

June 2013 


Actual versus Budget(Revenue and Expenditure) for the year ended 30 Juni 

2013 


Current year Current year 


2013 

2013 


Act. Bal. 

Adjusted Variance 

Explanation of Significant Variances 


budget 

greater than 10% versus Budget 

Rand 

Rand Rand 

Var 


Revenue 





Property rates 

7 477 676 

4 085 000 

3 392 676 

83.1 

Service charges 

32 202 117 

32 083 000 

119 117 

0.4 

Rental of facilities and 

882 534 

799 000 

83 534 

10.5 

equipment 

Interest received (trading) 

104 165 


104 165 


Licences and permits 

1 350 

1 300 

50 

3.8 

Fines 

259 400 

232 000 

27 400 

11.8 

Other income 

1 064 852 

814 000 

250 852 

30.8 

Other income - (rollup) 

- 

- 

- 

- 

Sale of game 

158 522 

- 

158 522 

- 

Government grants 

98 413 772 

66 316 000 

32 097 772 

48.4 

Interest received - 
investment 

419 298 

480 000 

(60 702) 

(12.6) 

Dividends received 

258 565 

- 

258 565 

- 


141 242 251 

104 810 300 

36 431 951 

34.8 

Expenses 





Personnel 

(38 525 232) 

(35 136 000) 

(3 389 232) 

9.6 

Remuneration of 
councillors 

(4 025 443) 

(4 877 000) 

851 557 

(17.5) 

Depreciation 

(19 330 543) 

- 

(19 330 543) 

- 

Finance costs 

(3 586 642) 

(2 346 000) 

(1 240 642) 

52.9 

Debt impairment 

(4 112 517) 

(2 500 500) 

(1 612 017) 

64.5 

Repairs and maintenance 
- General 

(6 677 885) 

(6 261 079) 

(416 806) 

6.7 

Bulk purchases 

(28 337 970) 

(20 215 000) 

(8 122 970) 

40.2 

General Expenses 

(21 045 266) 

(36 040 421) 

14 995 155 

(41.6) 


(125 641 498)(107 376 000) 

(18 265 498) 

17.0 

Other revenue and costs 





Gain or loss on disposal 
of assets and liabilities 

(66 862) 

- 

(66 862) 

- 

Fair value adjustments 

74 075 

- 

74 075 

- 

Gains or losses on 

156 274 

- 

156 274 

- 

biological assets and 
agricultural produce 

163 487 


163 487 


Net surplus/ (deficit) for 

15 764 240 

(2 565 700) 

18 329 940 714.4) 

the year 






Page 96 


Tswelopele Local Municipality 
Appendix E(2) 

June 2013 


Budget Analysis of Capital Expenditure as at 30 June 

2010 


Additions Revised Variance Variance Expianation of significant 
Budget variances from budget 

Rand Rand Rand % 


Municipaiity 


Executive & Council/Mayor and 

1 195 009 1 

195 009 

- 

- 

Council 

Finance & Admin/Finance 

260 207 

260 207 



Planning and 

28 985 

28 985 

- 

- 

Development/Economic 

Development/Plan 

Comm. & Social/Libraries and 

49 932 

49 932 



archives 

Road Transport/Roads 

417416 

417416 


. 

Other/Air Transport 

- 

- 

- 

- 


1 951 549 1 951 549 

- 

- 

Municipai Owned Entities 






8 014 

- 

(8 014) 

- 


Other charges 


Page 97 



Tswelopele Local Municipality 
Appendix F 

Disclosures of Grants and Subsidies in terms of Section 123 MFMA, 56 of 2003 
June 2013 


Quarterly Receipts 

Quarterly Expenditure 

Grants and Subsidies delay 
withheld 

Jun 

Sep 

Dec 

Mar 

Jun 

Jun 

Sep 

Dec 

Mar 

Jun 

Jun 


Dec 

Mar 

3 711 772 

- 

- 

- 

- 

- 

- 

- 

- 

3 711 772 

- 

- 

- 

- 

62 058 000 

- 

- 

- 

- 

- 

- 

- 

- 

62 058 000 

- 

- 

- 

- 

800 000 

- 

- 

- 

- 

- 

- 

- 

- 

800 000 

- 

- 

- 

- 

1 500 000 

- 

- 

- 

- 

- 

- 

- 

- 

1 500 000 

- 

- 

- 

- 

30 344 000 









30 344 000 





98 413 772 

- 

- 

- 

- 

- 

- 

- 

- 

98 413 772 

- 

- 

- 

- 


Name of 
Grants 


Name of 
organ of 
state or 
municipal 
entity 


Other grants 

(EPWP, SDG, 

DMG, FSPG, 

Lotto) 

Equitable 

Share 

Municipal 

Systems 

Improvement 

Grant 

Finance 

Management 

Grant 

Municipal 

Infrastructure 

Grant / 

Integrated 

Natlonal 

Electrlfication 

Programme 


Note: A municipality should provide additional information on how a grant was spent per Vote. This excludes allocations from the Equitable Share. 


Section 5 - Page 98-17 January 2014 - 10:09 AM