annual report 2010 - 2011 - Intsika Yethu Municipality

INTSIKA YETHU LOCAL MUNICIPALITY | ANNUAL REPORT 2010 - 2011

Foreword by the Mayor 

The primary purpose of the Annual Report 2010/2011 is to provide an 

audited account of the performance of the Intsika Yethu Local Municipality 

and the management of the budget. The Annual Report also 

provides a valuable opportunity to inform readers about the priorities and activities 

of the municipality, the progress it is making and the challenges it has to 

confront. 

On behalf of all the councillors I would like to express appreciation for the guidance 

and support provided by our management. In this regard strategic goals 

were informed by the objectives set out by previous year strategic planning. To 

attain these goals the municipality focused attention and resources on implementing 

the key priorities. 

As a level of the individual citizen, the priority is for the municipality to have 

processes, people and places that are efficient, responsive to people’s needs. This 

Annual Report provides a direct account of how far the municipality has achieved goals and the challenges that 

still need to be addressed. 

The municipality plays a key role in the management of bettering the lives of its communities which forms part 

of rest of the world. The Annual Report indicates how the municipality is responding to those serious challenges 

of service delivery. The Annual Report also focuses on the transformation of the Municipality as the organisation, 

its systems, and structure. The municipality has prioritised the improvement of the financial management and 

controls. 

Massive progress has been made in this and other areas, as indicated in the Annual Report. The senior management 

and staff have shown that it is capable of driving operations effectively and to respond strategically to challenges. 

In conclusion, I would like to thank the previous council for their contribution prior to their retirement. 

…………………… 

K VIMBAYO 

HON MAYOR 

INTSIKA YETHU LOCAL MUNICIPALITY / 3

FOREWORD BY THE 

MUNICIPAL MANAGER 

Intsika Yethu Local Municipality is one of the municipalities in the Chris 

Hani District Municipality whose function is the bettering lives of communities 

by provision of water and sanitation, construction of access roads 

and to generally bring service delivery to people. Despite the historical challenges 

posed by the vastness and the geographical terrain of the area as well as 

service delivery backlogs that are now systematically being attended, progress 

has been achieved in the year under review 2010/2011 compared to the previous 

year. 

The municipality has established solid relations with National and Provincial 

Departments of Public Works and Local Government who have assisted the 

municipality immensely in its efforts to change the lives of Intsika Yethu communities. 

Intsika Yethu Local Municipality is very conscious about what is expected 

of it in connection to service delivery issues and the improvement of the 

quality of the life of the communities and job creation. 

The municipality has focussed on areas of urgent need as identification of its service delivery plan (SDBIP) and 

reported periodically in compliance with the relevant legislation. Whilst the municipality is mainly dependent on 

grants as the main source of funding, there has been concerted effort in improving revenue collection by the way 

being aggressive in revenue collection for service rendered by the municipality to those that are not indigent. 

As a result of the above efforts the municipality’s service delivery has improved tremendously and furthermore, 

through the EPWP programme, jobs have been created. 

Priority areas for the coming year would be to continue the intensification of the provision of services particularly 

water and sanitation and to improve on revenue collection and creation of jobs and job opportunities through local 

economic development within the municipality area. 

…………………… 

Z SHASHA 

MUNICIPAL MANAGER 


The Vision: 

“A people centred, developmentally focused rural local municipality in which all of its inhabitants have access to 

quality service delivery and participate in vibrant and well-balanced social and economic development”. 

The Mission: 

“Endeavours to advance its developmental local government mandate through a sustained focus onsound and accountable 

governance, physical and social infrastructure appropriate for sustainable development in our Municipal 

area”. 

Principles and Values of IYLM 

IYLM adopts the “Batho Pele Principles”, together with other underlying principles aligned to this value 

framework, which include the following: Democracy, as realised through consultation, transparency, and accountability; 

Respect & Courtesy; Responsiveness; Quality Services; Redress; and Value for Money. 

The IYLM in consultation with its local communities, as part of its Council and IDP representative processes, 

adopted the following set of values, in line with the above. These values are to guide how the Municipality 

performs its mandate, as well as how it interacts with those who remain the owners of development (i.e. its 

inhabitants as the beneficiaries of development and service delivery). 

To be responsive to the needs of citizens and partner-local municipalities. 

To be transparent, accountable and participative in our dealings with each other and our partners. 

To cultivate a work ethic focused on performance, achievement and results. 

To promote and pursue key National, Provincial and local development goals. 

To ensure a representative organisation. 

To be democratic in the pursuance of our objectives. 

To show mutual respect, trust and ensure high levels of co-operation and discipline in our dealing with 

one another. 


Lokishini - C 

3 

Mtwaku - B 

Mtwaku - A 

Dayimani - D 

Lalini - L 

Esiqikini - A 

Dlakavu 

Matyeni - E 

Esigxeni 

Kuholi 

Dudumashe - C 

Nyongwana 

Kwandungwane - C 

Dudumashe - A 

Mbinzana 

Bilatye 

Tyelerha 

Maya - C 

Damane 

Lalini - K 

Ntlakwefolo 

Sihlabeni 

4 

Farmer - A 

Upper Lanti 

Sawulana - A 

Ngqanga 

Emkhukhwini 

Mtshingeni 

Kwantsinga 

Lubisi 

Cube - A 

Zwelitsha - cc 

Township 

2 

Mangweni - B 

Sabalele -A 

20 

Mthonjeni - F 

Tshatshu - BB 

Ngxwashu - A 

Bhukhwana 

Ndulini 

Kusabalele 

Bhencuthi 

Cungcwana 

Landport 

Qungu 

Lanti - A 

Kwagcina - A 

Eluqolweni - B 

Nyongwane - B 

Mgongxo - B 

Mgongxo - A 

Ngxwashu - B 

Nyamankulu 

Mmangweni - J 

Mdange 

Sidwadweni - B Zingquthu 

Matshona - A 

Ncambalala 

5 

Jokwe 

Cube - B 

Sdubi point Tafeni - A 

Camama Forest 

Ntshintshi 

Tafeni - B 

Canama 

Hoita 

Liqolo 

Hoyana 

Endwashini 

Dekes Hill 

Banzi - A 

Sentile 

Mphakathini 

Bomplas - B 

19 

Cambalala 

Magwala - B 

Mkobeni - A 

Mtimbini 

Tunzini - B 

Kwamnqanqeni Mqanqeni 

Magwala - D 

Jamani - A 

Maqwatini - A 

Khayamandi - B 

Emkobeni 

Ngxingweni - A 

Khayamandi - A 

Wodehouse 

Magwala 

Diphini - D 

Magwala - A 

Qolweni - A 

Maqwathini - C Mtingwevu 

15 

Tyhawana 

1 

Nququ 

Hoyana 

Chamama - B 

Kwandlangisa 

Exeni - B 

Nquqhu - B 

Cofimvaba 

14 

Hala - BB 

Gcina - K 

21 

Ngxabangu 

16 

Tshamazimba 

Nonqonqwama 

Dipini - A 

Chris Hani 

Mlenze 

Sikhobeni - A 

Mahlubini - E 

Kwanyoka 

Mtingwevu - C 

Mtingwevu Mission 

Nquqhu - A 

Bolana - B 

Bolana - A 

Kwandungwane - D 

Mtshanyana - A Mtshanyana - B 

Sijula 

Mahlubini - B 

Kwandungwane - E 

Mpunga 

Taiwan 

Mahlatini - A 

7 

Qutse 

Qutsa 

Nxelesa 

Qolweni - B 

Mtyangwe 

Lower Qutsa 

Qombolo - G 

Mdeni - AC 

Banti 

Komkhulu - O 

Endensa 

Ntsela 

Mbulu 

Gongqo 

Ngcacha 

Ntlakwevenkile 

Mbojweni 

Maxambeni 

Mission - G 

Entlini 

Ncwane 

Kwebulana 

Mission - F 

Mankane 

Ajoliwe 

Ngudle 

Jojweni - N 

Qwili 

Nqumakala Nomadamba 

Kwamzola 

Kwangali 

Ngceza - A 

Gxwalibomvu - A 

Elwalweni 

Endenxa - A 

Lujilo - A 

Mbulu 

Ncora Irrigation 

Gasini - A 

Nomadambe 

Gesini 

Kwachotha 

Kwazulu - A 

Cubeni 

Qombolo - B 

Mafengwini 

Eluqolweni - BB 

13 

Ngceza - B Qombolo - E 

Khwebulana - A 

Qombolo - H 

Mxobozweni 

Komkhulu - P 

Qombolo - F 

Kwahange 

Mantanjeni - A 

Gwadela 

Xeni - A 

Mtsheko - A 

Kwamlondleni - B 

Kwamlondleni - A 

Esikolweni - A 

Mahlungulu - A 

Mvumelwano - A 

Mdeni - R 

Galali - A 

18 

Malangwane 

Mkuthukeni 

Khwebulana - B 

Ncora School 

Mahlungulu - C 

Mdeni/ezantsi 

Gushed 

Emrhotshozweni 

Luthuli 

Lutuli 

Kwadukatole Goloza 

Komkhulu - RR Mbulukhweza - A 

6 

Mbulukhweza - B 

Komkhulu - T 

Mbulukweza 

8 

Willow - B 

Mbulu mission 

Hange - B 

Lower Ncora 

10 

Kwalumandi 

Mgwenyana 

Gcingca 

Jojweni - S 

Kwa Mbaxa 

Gcibhala - B 

Lahlangubo - D 

Mtshabe 

Mission - H 

Lurshabeni 

Matafeni - B 

Mhlahlane - F 

Mkhwinti 

Ebusini 

Mission - C 

Home 

Luqoleneni 

Ezantsi - C 

Mdeni - T 

Eqolweni - A 

Zawukana 

Khalana 

Mdunjeni Marhawuleni 

Ngdumenya 

Longqayi 

Matafeni - A 

Bhotani - B 

Melika 

Gasini - B 

Mhlahlane - E 

Sobotini 

Tsomo 

Esigangeni - A 

Pesikeni 

Mgqwazini 

Ntsongeni - A 

Fraser's Garage 

Jara - A 

Tshayelela 

Bololitye Store 

Luqolweni - D 

Gugwini - B 

Ngxongweni - A 

Ngcongcolorha - A 

Ngcongcolorha - B 

Ndenxe - A 

Mgababa - A 

Luqolweni - F 

Ngingqini - A 

Jerusalem - A 

17 

Kwazulu - B 

Ngwemnyama - G 

Komkhulu - Q 

Mbombela 

Daza 

Bhotani - A 

Nobhokhwe - A 

Mahlubini - D Mahlubini - C 

Majwareni - B 

Nyhebe 

Nobhokhwe - B 

Mangobonlu Mahlubini - A 

Emahlubini - A 

East Bank 

Tenza - B 

Zolo 

Nongqothi 

Matolanyile - A 

Matolanyile - B 

12 

Nobokwe - B 

Vrystad 

Ngqwaru 

Kwamaduma 

Chifini 

Makhwababa 

Besi 

Komkhulu - M 

Ngojini - I 

Mdeni - V 

Mabhentseni 

Kwandungwana - A 

Tshatshu - C 

Layitini 

11 

Halalani 

Mdibaniso 

Sixhotyeni - A 

Ezidulini 

Qitsi 

Eqitsi 

Ndlunkulu - A 

Ndwashini 

Magqoleni 

Sodom 

Ncatsheni 

Qwebeqwebe 

Main 

Mkhwezweni -B 

9 

Jwqyi 

Emandlaneni 

Nyathi - A 

Ngwevana - C 

Kwandaba 

Xonya - B 

Cwecweni - A 

Matyabomvu 

Etoleni 

Magezimeni 

Nxamalele - A 

1 

Nxamalele Store 

Chaba - D 

Nxamalele - B 

Eluxeni - C 

Manuneni 

Mziwini 

2 

Emmangweni -A 

Chaba - E 

Emaqakamzini 

Emaqomeni - B 

Elalini - C 

Mqonci - A 

Sikhobeni - B 

Kuchaba 

Libiza 

Mqonu 

Nqutura 

Esikobeni - B 

Makhambi 

Sgubudwini 

Nabileyo - B 

Emazizini - A 

Khethi - A 

Nabileyo - A 

Kofu 

Lalini - AA 

Engasa 

Khethi - B 

Kwasofika 

Esiqikini - b 

Ntshingeni - A 

Manxiweni - C 

Emqonci 

Komkhulu - CA 

Mqonci - B 

Zundwana 

Kuntonga 

Overview of the Report 

The Annual Report 2010/2011 aims to convey to the reader what the municipality has 

achieved during the financial year of 2010/2011. Drawing the municipal strategic plan, its 

highlights both the achievements as well as the challenges facing the Municipal Departments 

during the reporting period. In order to meet the requirements set by the Easter Cape 

Treasury Department, the Annual Report is structured into four main parts. 

Part 1 

General information 

• Introduction and Overview 

• Foreword by the Mayor 

• Foreword by the Municipal Manager 

• Executive Summary 

Part 2 

Key Performance Achievement Reports 

Part 3 

Audited Statements and other financial information 

Part 4 

Good Governance 

CHRIS HANI DISTRICT MUNICIPALITY (DC 13) 

Eastern Cape Province 

Intsika Yethu Local Municipality 

Intsika Yethu 

Contact Details 

Joseph Jankie 

Tel : 045 808 4742 

Fax : 045 838 5959 

Email : jjankie@chrishanidm.co.za 

Disclaimer 

Chris Hani District Municipality in no way accepts resposibility for 

the accuracy or completeness of the data presented on this map, 

and will not be held liable for damages, including loss of profits or 

consequential damage, arising out of the use of this information. 

. 

Produced by : CHDM GIS Unit 

Projection : Transverse Mercator 

Sphere : 

Datum : WGS84 

File Name : Water Service Delivery 

File Path : C:/GISDB/Water Service Delivery 

Revision No. : 3 

Scale1:130 000 

Date : 22 April 2008 

0 4.5 9 18 27 36 

Kilometers 

Legend 

Road Network 

National Road 

Ward Boundaries 

New LM Boundary 

Settlements 

Old LM Boundary 


EXECUTIVE SUMMARY 

The population of Intsika Yethu is estimated to be 194 246 people living in 44 768 

households. This population size also implies that 22% of the Chris Hani district 

population resides in Intsika Yethu. The average household size in the municipality 

is 4 people per household. 

There are still major challenges ahead given that over two thirds (76%) of the population 

is indigent with unemployment estimated over 50%. About 53% of our population is 

females while males account for only 47%. 

About 60% of our population is children in the school going age group (0-19 years). 

About 7% falls within the pension age group. Only 33% are in working age group (20 

– 64 years). This means that there is a high dependency ratio as 67 % of the population 

depends on the 33% workforce in the area. 

OVERVIEW OF THE 

MUNICIPALITY 

Intsika Yethu Local Municipality is a democratic elected category B municipality made up of 

the representative councilors and administration staff. It is one of the eight local municipalities 

found within the Chris Hani District Municipality. The municipality is purely rural with a 

population of about 194 000. Intsika Yethu Municipality practices its duties through its communities 

from all 21 wards. The councilors of Intsika Yethu Local Municipality form part of the local 

allocated government working directly with the local people. The municipality excises its duties 

through its constituent communities. Under the municipality’s jurisdiction is: 

• Cofimvaba 

• Tsomo 

Unemployment and poverty affects a large number of people within the municipal areas. The 

council forms part of the local sphere of government, closely located to the people. The Intsika 

Yethu Local Municipality exercises its duties and functions through its constituent areas. 

Africans represent the largest population group in the Municipal area. Mini farming is the biggest 

source of livelihood in the area. The area of Intsika Yethu offer a diverse range of opportunities 

in industries linked to agriculture and other industries. 

Key features of the Local Economy 

- 

- 

Farming: grain, poultry and dried fruit 

Growing tourism sector 

Livestock improvement Tourism has been added to the economic base of Intsika Yethu. Slowly the 

Municipality is becoming more noticeable on tourism maps due to its rich history and culture. 


MEMBERS OF EXECUTIVE 

COMMITTEE 

Hon Mayor: Councilor K Vimbayo 

SPU Portfolio Head: Councillor N Stata 

Local Economic Development and Planning: Councillor William Mdwayingana 

Infrastructure Development and Planning: Councillor Myathaza 

Community Services Department: Councillor N A Tshangana – Nkota 

Corporate Services Department: Councillor N Ntsaluba 

Water Services: Councillor K Mdleleni 

Six managers of departments 

• 

• 

• 

• 

• 

• 

Municipal Manager: Mr Z Shasha 

LED: Mr K Maceba 

Infrastructure Plan & Dev: Mr S Koyo 

Community Services: Ms Y Mniki 

Corporate Services: Ms Nkuhlu 

Budget and Treasury: Mr M Dyushu 

Portfolio Head: 

Water n Sanitation: 

Cllr K Mdleleni 


Corporate Services: 

Cllr N Ntsaluba 


Special Programmes 

Unit: Cllr N Stata 


Infrastructure & Planning: 

Cllr S Myataza 


Budget & Treasury: 

Cllr J Cengani 

Portfolio Head for Local Economic 

Development and Planning: 

Cllr W Mdwayingana 

Portfolio Head for 

Community Services: 

Cllr N Tshangana – Nkota 


CHAPTER ONE 

Human resource and other organization management – KPA 1 

Human Resources and Other Organisation Management 

• Total number of approved posts; 193 

• The total number of vacant posts in the entire institution: 12 

• Six Performance Agreements were submitted. 

1.2 Staff development initiatives during the Financial Year 

See attached list. 

1.3 Key HR statistics per functional area 

1. 

a. 

Full time staff complement per functional area (examples are given below) 

MM/Section 57 and Line Managers 

Approved positions (e.g. MM – S57 etc…) 

Number of approved and 

budgeted posts per position 

Filled posts 

Vacant posts 

1 Municipal Manager’s Office 10 09 01 

2 Corporate Services Department 29 26 01 

3 Budget and Treasury Department 29 25 04 

4 Community Services Department 83 77 6 

5 LED and Planning Department 9 9 - 

6 Technical Services Department 46 40 06 

2. 

Technical staff registered with professional bodies 

Technical 

Service: Water 

Services 

Total number of 

technical service 

managers 

Total number 

pending registration 

in the accredited 

professional body 

Total number pending 

registration confirmation 

in the accredited 


5 4 1 - 

Total number not 

yet registered in 

the accredited 


3. 

Level of education and skills 

Total number of Staff 

Number of staff without 

Grade 12 

Number of staff with 

Senior Certificate only 

Number of staff with Tertiary/ 

accredited professional training 

207 93 30 80 


4. 

Trends on total personnel expenditure 

Financial Years 

Total number of staff 

Total approved 

operating Budget 

2006-2007 

2007-2008 50 550 663 30 097 425 

2008-2009 63 840 937 34 097 695 

2009-2010 118 891 631 42 486 563 

Personnel expenditure 

(salary and salary 

related) 

Percentage of 

expenditure 

5. 

List of pension and medical aids to whom employees belong (please add if necessary) 

Names of pension fund 

Number of 

members 

Names of medical Aids 

Number of members 

Cape Joint 159 Bonitas 85 

Samwu Provident Fund 10 Discovery LA Health 16 

Eastern Cape Group Scheme 5 Samwu Med. 21 

Hosmed 8 

1.4 Senior officials’ wages and benefits; 

Municipal Manager: R 745 253 

Managers reporting directly to the Municipal Manager: R 670 892 

1.5 Implementation of the Performance Management System (PMS): 

Both individual and institutional PMS are fully implemented, individual at the level of senior managers only. 

1.6 Annual performance as per key performance indicators in municipal transformation and organizational 

development 

Indicator Name 


people (planned for 

) during the year 

under review 

Achievement 

level during the 

year under review 

Achievement 

percentage during 

the year 

1 

Vacancy rate for all 

approved and budgeted 

posts; 

2 

3 

Percentage of appointment 

in strategic 

positions (Municipal 

Manager and Section 57 

Managers) 

Percentage of Section 

57 Managers including 

Municipal Managers 

who attended at least 1 

skill development training 

course within the FY 

6 6 100% 

6 6 100% 


4 

5 

6. 

7 

10 

11 

12 


Percentage of Managers 

in Technical Services 

with a professional 

qualification 

Percentage of municipalities 

within the 

district area that have a 

fully functional Performance 

Management 

System (DM only) 

Percentage of staff that 

have undergone a skills 

audit (including competency 

profiles) within the 

current 5 years term 

Percentage of councilors 

who attended a skill 

development training 

within the current 5 year 

term 

Percentage of staff 

complement with disability 

Percentage of female 

employees 

Percentage of employees 

that are aged 35 or 

younger 


people (planned for 

) during the year 

under review 

Achievement 

level during the 

year under review 

1 1 100% 

46 46 100% 

207 2 3,9% 

207 80 41% 

207 89 46% 

Achievement 

percentage during 

the year 

Intsika Yethu Local Municipality won the Most Improved Work Place award in 2010. The awards were provincial LGSITA 

Awards which were held in East London. The award means that the municipality is keen on skills development and that will 

have a good impact on issues of service delivery. The award was comprised of a trophy and R15 000 check. 

CHALLENGES 

• Training & Development Policies 

• Records Management and lack of space for registry function 

REMEDIAL ACTIONS 

• Two training & development policies have been developed. 

• Workshops on record management have been attended by key officials 

• Filing cabinets have been purchased though we have space challenges 


Chapter TWO 

Basic Service delivery performance highlights – KPA 2 

Annual performance as per key performance indicators in Electricity services 

Indicator name 

Total number of household/customer 

expected to 

benefit 

Estimated backlogs (actual 

numbers) 

1 

Percentage of households with access 

to electricity services 

14 304 35 128 

2 

4 

Percentage of indigent households 

with access to basic electricity services 

Percentage of indigent households 

with access to free alternative energy 

sources 

3879 71.7 

6113 

The major challenges are 

• Resource constraints 

• Skills shortage 

• Escalating costs 

• Way-leave problems 

• Settlement densities 

• Ground conditions 

• Contractual challenges (contractors) 

• Inadequate funding 

• Economic condition impact 

• Non-standard material 

These problem can be address by training youth on the skills that are needed. 


Road maintenance 

The municipality is responsible for the construction, maintenance and upgrading of local access roads and stormwater 

infrastructure. The DR (district roads) are under the Chris Hani District Municipality and there is an R61 

road which is under SANRAL. 

Level and standards in road maintenance services 

The entire road network of mainly gravel roads is generally in poor condition and in need of upgrading and maintenance. 

There is a target of 70 km of roads to be maintained of which 45% is done. Of the tarred roads length 

about 7 km are urban access roads running within towns of Cofimvaba and Tsomo. The most of these access 

roads need the construction of bridges and storm water. 

Annual performance as per key performance indicators in road maintenance services 

1 

2 

4 

5 


Percentage of households without 

access to gravel or graded roads 

Percentage of road infrastructure 

requiring upgrade 

Percentage of planned new road 

infrastructure actually constructed 

Percentage of capital budget reserved 

for road upgrading and maintenance 

effectively used. 


household/customer 

expected to benefit 

60 

70 60 

30 

Estimated backlogs (actual 

numbers) 

Major challenges in road maintenance services and remedial actions 

Bridges are the major challenge in the access roads. However lack of funding for maintenance tended to 

determine the gains and work done in this area as most gravel roads have fallen victim to terrestrial rains. 

Waste management 

Waste management services delivery strategy and main role-players 

The Intsika Yethu Municipality employs a two pronged approach in terms of waste management by promoting 

cleanliness as well as alleviation of poverty. The street cleaning is done by casual workers recruited from 

the different wards on a three month rotational basis. This project is funded through the Extended Public 

Works Programme. Awareness campaigns are conducted annually at both units (Tsomo & Cofimvaba). 

Households within the CBD have been supplied with industrial wheelie bins and 200 litre bin liners. Waste 

collection is done once a week per area and the densely populated areas have also been supplied with skip bins 

and steel bins which are collected once a week. 

The municipality has a partnership with Buyisa e bag which has supplied bailing machines for both the transfer 

and landfill sites. Waste is sorted at the site by sorters trained by Buyisa e bag and other sorters have been 

deployed at Boxer supermarkets to sort at the source. This is done to minimise waste that goes to the cell. 

The Department of Economic Development and Environmental Affairs is supporting the municipality also 

in terms of forming a Waste Management Co-operative. 

The Integrated Waste Management Plan (IWMP) is being reviewed as circumstances have changed since 2005 

when it was drafted. The IWMP is drafted by the District Municipality in consultation with local municipalities 

and is therefore adopted at the District and implemented by the local municipalities. Implementation is done 

as follows: 


• Implementation of current legislation 

• Implementation of waste minimisation strategies e.g. sorting of waste at source and site 

• Compliance with DWAF landfill requirementsWaste disposal processes 

• Waste collection & transportation 

• Waste disposal 

• Sorting 

• Public private partnerships (Injabulo Yethu & Buyisa e-bag) 

• Waste volumes recording 

1. 

Community and social services function’s performance 

Function: Community and Social Services 

Sub Function: All inclusive 

Reporting Level Detail Total 

Overview: 

Includes all activities associated with the provision of 

community and social services 

Description of the 

Activity: 

The function of provision of various community and 

social services within the municipality is administered 

as follows and includes: 

 

These services extend to include , but 

do not take account of which resides 

within the jurisdiction of government. The municipality has a 

mandate to: 

 

The strategic objectives of this function are to: 

 

The key issues for 200X/0Y are: 

 

Analysis of the 

Function: 

 

1 Nature and extent of facilities provided: 

no of facilities: 

no of users: 

- Library services 01 1000 

- Museums and art galleries 0 

- Other community halls/facilities 15 3000 

- Cemeteries and crematoriums 02 5000 

- Child care (including crèches etc) 03 500 

- Aged care (including aged homes, home help) 01 100 

- Schools 

- Sporting facilities (specify) 03 2500 


Reporting Level Detail Total 

- Parks 0 

Note: the facilities figure should agree with the assets 

register 

2 

Number and cost to employer of all personnel associated 

with each community services function: 

R(000s) 

- Library services 

- Museums and art galleries 

- Other community halls/facilities 

- Cemeteries and crematoriums 03 R160 000.00 

- Child care 

- Aged care 

- Schools 

- Sporting facilities 

- Parks 

Note: total number to be calculated on full-time 

equivalent (FTE) basis, total cost to include total salary 

package 

6 

Total operating cost of community and social services 

function 

R (000s) 

Key Performance 

Area 

Performance During the Year, Performance Targets 

Against Actual Achieved and Plans to Improve 

Performance 

Current 

Target 

• Approved HIV/ 

AIDS strategy; 

• Approved Disaster 

management policy 

frameworks and 

plans (Metro and 

DM) 

< List here the actual performance achieved over the financial 

year, and the variance between performance planned and actual 

performance, providing an explanation of the variance. Also 

provide details of any improvements planned for next year. 

Water services 

Water services delivery strategy and main role-players: 

Intsika Yethu Municipality is acting on behalf of the Chris Hani District Municipality as a water services provider, 

dealing with day to day operations and maintenance of water services. The role players in this are the District Municipality, 

Department of Water Affairs, CBO’s, CSP’s and the Local Municipality with its communities. 

Levels and standards in water services: 

The service standard ranges from a basic (RDP) one to a moderate standard mostly in the urban centres. Targeting 

in terms of the provision is done by the Water Services Authority which is Chris Hani District Municipality. 


CHAPTER THREE 

MUNICIPAL LOCAL ECONOMIC DEVELOPMENT FRAMEWORK- (KPA 3) 

In response to pervasive poverty, under-development and high rate of unemployment of its people, Intsika 

Yethu Municipality developed its Local Economic Development Strategy (LED Strategy), as a tool that will 

guide and inform its growth and development initiatives within the municipality. 

The primary goal of the local economic development strategy is to ensure the rejuvenation of the local economy, 

facilitate the competitiveness of sectors in which the municipality has a comparative advantage and ensure sustained 

economic growth that creates jobs and improve Intsika Yethu and improves the quality of life of all residents. 

The strategy identifies the following sectors; Agriculture, Tourism, Forestry and SMME as critical in transforming 

the local economy of Intsika Yethu Municipality. In essence, the thrust of IYM strategy is underpinned by the following 

strategic pillars; 

• Coherent agrarian system that promotes agro-processing, 

• Institutional innovation and good governance that is complimentary to economic growth and development. 

• Promotion of SMME development biased towards rural industrialisation and 

• Increased forestry productivity and creation of processing hubs. 

Setting of LED unit and the availability of LED expertise 

The Intsika Yethu LED unit is existing and fully functional. It is composed of qualified staff of Manager: LED 

and Planning, Secretary, LED Coordinator, Programme Managers (Agric & Forestry, SMME), Tourism Officer, 

LED Support Clerk and Tourism Intern. 

LED stakeholder forum functionality 

The LED Forum is yet to be established, but plans are at an advanced stage to have one at Intsika Yethu. 

Funding opportunities of LED activities 

The municipality alone cannot achieve its strategic intent and the strategy therefore has been crafted to accommodate 

inputs in the form of funding, skills development and resources from external funders or partners. 

Progress towards achieving the LED key objectives 

Improve public and market confidence 

Progress towards achieving the LED key objectives 

(a) Improve public and market confidence 

SPATIAL DEVELOPMENT FRAMEWORK 

In terms of Section 26(e) of the Municipal Systems Act (Act No. 32 of 2000) the Spatial Development Framework 

(SDF) is a legally required component of the Municipality’s Integrated Development Framework (IDP) to provide 

basic guidelines for a land use management system of the municipality. 

The current SDF of Intsika Yethu Municipality dates back to 2006. In order to ensure that development will take 

place in an integrated and sustainable manner, the IDP’s and SDF’s of local and district municipalities authorities 

have to be updated and aligned with the goals. 


The “Spatial Development Framework” (SDF) consists of the following components: 

A review of the institutional capacity of the Municipality to deal with development applications, with par- 

ticular reference to current procedures, which are used to assess development applications. Procedures for 

dealing with non compliance and illegal land use activities should be included within this review 

o 

o 

o 

o 

o 

o 

o 

o 

o 

o 

o 

o 

o 

o 

o 

o 

o 

o 

o 

o 

o 

o 

o 

o 

o 

o 

o 

o 

o 

Current land use patterns of Intsika Yethu 

Growth/Demands/ Needs 

Spatial imbalances in current land use patterns in the municipality 

Analysis of vacant land in the Intsika Yethu Municipality 

Land availability/suitability for future development 

Existing infrastructure and capacity implications 

Capital expenditure programme for implementing the Spatial Development Framework 

Illustrated plan of the desired spatial form 

Basic guidelines for land management 

Earmark restricted development zone 

Heritage sites 

Wetland Game and natural reserves 

Steep slopes of greater than 1:6 

Major river banks 

1:50 yrs flood line 

Settlement hierarchy 

Flexibility (Land use management 

Accessibility 

Spatial Integration – bringing together previously separate development 

Cluster approach 

List all projects at a particular location and indicate by arrows 

Trends and issues from analysis. Indicate by arrow where development is currently taking place 

Any localised land use management principle/guidelines 

Project location 

Maps 

Complete natural environment and biodiversity of the municipal area 

A strategic environmental assessment to determine areas where no development should take place 

Cadastral and jurisdictional 


The key issues relating to IYM spatial development are as follows:- 

o 

o 

o 

o 

o 

Dispersed Settlement Pattern: Pockets of developed urban centres surrounded by scattered undeveloped 

rural villages, which implies great costs to fulfil every basic human right to basic infrastructure and 

services 

Fragmentation: - There is a high need to systematically address the fragmented nature of development 

to promote the integration of urban and rural areas over time (phased development approach which will 

optimise on existing capacity and resources to generate the most spin-offs effects from investment). 

A strategic approach is required, which enables geographic areas to be prioritised for different levels of 

investment to ensure ongoing sustainable development and which will have the most spin-off effects for 

continued economic growth in the IYM area. 

Limited economic activity outside of urban centres 

Need to build on the agricultural and tourism potential of the area and target investment to other LED 

related initiatives and programmes taking place outside of the urban centres that have potential for growth 

and to generate economic spin – off. 

The IYM has many sensitive and conservative worthy areas within its region. The landscape is primarily characterised 

by irregular topography with mountain ranges, rolling grassland and various dams and rivers. This special and 

multi-faceted environment also presents, many opportunities for the social and economic development of the area. 

Land use patterns consist of medium and low residential areas, both formal and informal, light industrial areas and 

agricultural areas to a very large extent. The municipality is characterised by a high unemployment rate in all prime 

economic sectors. The role of local government is to act as an economic development agent, it is therefore critical 

and in order to guide any proposed development and land use management system. 

The objectives of our SDF are as follows:- 

o 

o 

o 

o 

o 

o 

o 

o 

o 

o 

o 

o 

To provide a strategic, indicative and flexible forward planning instrument to guide decisions on land 

development. 

To provide a set of policies, principles and directives for spatial development 

To provide a clear and logical framework for private and public sector investment 

To promote sustainable development in terms of the natural and built environment 

To facilitate social, economic and environmental sustainability 

To provide a framework for dealing with key issues such as natural resources management, land reform 

and land use management. 

To facilitate the development of aesthetic urban form and landscape. 

Updating and refinement of the current SDF document in order to comply with legal requirements and 

be conversant with recent developments within the region 

Amendment and expansion of the existing documentation based on the NSDP, PGDP, Eastern Cape 

Spatial Development Framework, Chris Hani District Municipality SDF and IDP (CHDM IDP and IYM 

IDP) in order to ensure proper alignment. 

Incorporation and alignment of all relevant information and proposals of IYM 

Ensuring public and governmental participation of the concerned stakeholders in the planning process, 

namely (inter alia) the communities concerned CHDM, EC Province, sector departments, parastatals and 

business institutions 

Creating a strategic framework to facilitate the development of an appropriate land use system 


The main objective is to produce an SDF, including the following:- 

o 

o 

Display of the circumstances and realities of IYM. 

Land Use Guidelines and maps about:- 

• Desired patterns of the land use in IYM 

• Spatial reconstruction of the municipal landscape, including 

• Correction of spatial imbalances and spatial disintegration 

• Desired directions of growth 

• Movements networks 

• Conservation of natural and built environment 

• Identification of areas in which particular types of land use should be encouraged or 

discouraged 

• Areas in which intensity of land developments should be increased or reduced 

• Preferential focal areas for certain of land uses of housing 

Strategic framework to facilitate the development of an appropriate land use management system. 

A chapter on the Land Reform and Settlement Plan, giving an updated summary and indicating the im- 

plications 

Maps visually indicating, or where appropriate describing the desire spatial form of the municipal area. 

Strategic framework and basic guidelines for a land use management system in the municipal area 

A Capital Expenditure Framework for the municipality’s development programmes and budget process 

A strategic assessment for the environment impact of the SDF 

Executive Summary. 

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Comparative and Competitive advantage of Intsika Yethu Municipality 

An analysis of Intsika Yethu economy indicates that is has high levels of concentration with high dependency on 

community services. The analysis of the local economy indicates that sectors with a comparative advantage at 

Intsika Yethu are community services, agriculture, trade and construction. These are the sectors the strategy has 

identified as key to unlocking the economic potential of the municipality. In addition to these sectors, tourism has 

been identified as having potential for growth. 


Intensify Enterprise support and business development 

• The type of business development services (BDS) provided to SMME’s 

‣ The SMMES across the district have been organised into a business chamber. The purpose is to give them 

a voice and to enable them to participate meaningfully to local economic development initiatives of Intsika 

Yethu. Secondly, to lobby and influence the municipality and other government sectors and external 

donors in areas of their interest. 

‣ Training has also been to members of the chamber on various aspects, e.g. business management 

• Public and private partnerships established 

The partnerships established with strategic partners in 2008/9 are as follows; 

‣ Ruliv 

‣ Department of Minerals and Energy 

‣ Development Bank of South Africa 

• Number of new formal SMME established within the municipality 

The new formal LED Support structures that were established in are as follows; 

‣ Local Tourism Organisation 

‣ Chamber 

‣ Cooperatives 

• Number of new employment opportunities through Expanded Public Works Programs and Public 

and Private Partnerships. 

The Lapesi project has continued 

3.3 Annual performance as per key performance indicators in LED 

1 

2 

3 

4 

5 


Percentage of LED Budget spent on 

LED related activities. 

Number of LED stakeholder forum 

held 

Percentage of SMME that have 

benefited from a SMME support 

program 

Number of job opportunities created 

through EPWP 

Number of job opportunities created 

through PPP 

Target set for 

the year 

R5 191 

659.00 

Achievement level 

during the year 

(absolute figure) 

R4 672 

493.10 

Achievement percentage 

during the 

year 

90% 

nil nil Nil 

250 133 53% 

2500 1584 63% 

nil nil nil 


3.4 Challenges regarding LED strategy implementation 

The success of the strategy rests on two main pillars: 

a) Buy in and support by all stakeholders identified in the strategy and 

b) Resource allocation (people & money) and commitment to implement; 

The serious challenge to the implementation of the LED strategy is under-funding. The budget allocated 

to LED department is pittance, trivial to an extent that it is a mockery to the very same concept /notion 

of local economic development of the area. The solution is simple, more money should be put in the 

LED department in a more or less the same level that the Infrastructure department is being funded. The 

economic sectors or sector departments should endeavour to plough more money on the strategic programmes 

and projects as identified in our LED Strategy. 


In order to come out with spatial development proposals for the area, it is essential to come out with the spatial 

objectives and strategies as follows: 

Objective and Strategies 

CHAPTER FOUR 

SPATIAL OBJECTIVES AND STRATEGIES 

Key Spatial Dev. 

Issue 

Uneven development 

in the area (between 

rural and urban 

areas). 

Fragmented nature 

of development in 

the area 

Untapped development 

potential in the 

area 

Lack of effective 

and efficient land use 

management system 

in the area 

Objectives 

Encourage urban and regional integration 

and rectification of past imbalances. 

Provision of appropriate level of services 

to meet the needs of the communities in 

the Intsika Yethu Municipality, that is, provision 

of basic services based on constitutional 

rights. 

Prioritised public sector investment in areas 

of growth and opportunity. 

Target strategic investment in development 

zones (focus areas) that have development 

potential 

Promote the integration of urban and rural 

areas in a phased programme. 

Promote regional connectivity. 

Support local economic opportunities 

in the municipal area for local economic 

development. 

Encourage land reform towards more intensive 

land uses. 

Protect the natural systems in the area. 

Manage dev 

Strategies 

Establish a clear hierarchy of settlement. 

Identify Special Development Areas, 

that is, areas of particular development 

potential or areas where priority spending 

is required (special need areas) – nodal 

centres, development corridors, special 

development areas. 

Develop a settlement pattern which 

conforms to the approved zonal policy 

of CHDM Land Reform and Settlement 

Plan that meets the particular requirements 

of the municipality. 

Create sustainable human settlement with 

quality physical, economic and social 

environments. 

Planning for densification /infill and 

careful expansion of existing settlements 

on productive agricultural resources. 

Promote integration of spatial development 

by means of efficient transport 

network system. 

Identify and prioritise economic opportunity 

areas. 

Identify and prioritise strategic economic 

linkages 

Develop a sustainable local Land Use 

Management System to promote co-ordinated, 

harmonious and environmentally 

sustainable development.

OUTCOMES 

The outcome of the above objectives and strategies are indicated in the Table below. 

Outcome 

Sustainable Environment Accessible Municipality An Efficient Community 

The responsible use of natural 

resources. 

A sustainable rates base. 

Focused investment. 

Sustained economic growth. 

Sustainable settlements. 

Cultural heritage 

A physical urban structure that 

promotes accessibility. 

Equity within the urban and 

rural system 

Diversity within urban system. 

Form and structure that lead to greater 

efficiency. 

Protection of existing investments 

Open space system 

Focus activities and investment. 

Infrastructure viability. 

Managed growth 

SPATIAL DEVELOPMENT PROPOSALS 

KEY SPATIAL DEVELOPMENT FEATURES 

The Spatial Development Framework is influenced by the following factors: 

(i) 

(ii) 

(iii) 

(iv) 

(v) 

Cofimvaba and Tsomo will remain the primary commercial economic hub of the Municipality where 

the majority of work opportunities will be established. 

The other settlements will serve as service centres with economic growth potentials focusing on tourism 

and providing a service to the agricultural community. 

An effective road network (although in poor conditions) exists in the study area. 

Tourism Potential: The area has significant tourism potential, especially, the natural beauty of the 

area including the dams, the spectacular landscape, the cultural heritage and other natural and cultural 

resources in the area. The development, marketing and intensive exploitation of the existing tourism 

sector should be supported to contribute to future economic growth. 

Agricultural Sector: The agricultural sector of the entire Intsika Yethu is extremely prominent. Future 

economic growth in the agricultural sector exists when considering small scale processing industries 

and intensive farming activities. 

Based on the above factors, the following key development features/ structuring elements have been identified 

for Intsika Yethu Municipality SDF. 

SPATIAL STRUCTURING ELEMENTS 

The SDF needs to be indicative and therefore the need to adopt a set of structuring elements that can guide the 

future structure of the urban and rural form of the municipal area must be identified. The following spatial structuring 

elements have been identified, namely: 

• Development Nodes (informed by settlement hierarchy). 

• Development Corridors 

• Special Priority Development Areas 


• Strategic Development Zones 

• Environmental Management Areas 

Development Nodes 

These are areas where development (facilities, services and economic opportunities) tends to concentrate. Different 

types of nodes can be distinguished, such as, urban nodes, development nodes, social nodes, rural nodes (villages) 

and transportation distribution hubs). 

The Intsika Yethu Municipality study therefore identifies certain nodes and settlements in line with the levels of 

investment and hierarchy (see Map 2.2) but in determining the settlement hierarchy; the following guidelines were 

used: 

• Settlements with significant economic and physical growth potentials 

• Settlement with unique character 

• Population 

• Functions performed 

• Availability of services 

• Location characteristics (accessibility and centrality of settlements- transport links, etc) 

In line with the CHDM Spatial Development Framework Review (2009/2010), the following urban and rural 

nodes, based on the settlement hierarchy, have been identified. 

Proposed Settlement Hierarchy 

Urban Nodes 

Node Type Settlement Spatial Development Priorities 

Level 2 

Major Service Centre 

(Regional Service 

Centre) 

Level 2 

Minor Service Centre 

(Sub-Regional 

Service Centre) 

Cofimvaba 

(An existing mixed land 

uses and key urban node 

and a regional centre in 

the study area) 

Tsomo 

(An existing mixed land 

use node and a sub- regional 

centre). 

Land Use Management and Administration 

CBD Revitalization and Renewal 

Sustainable Human Settlement Programme. 

Public-funded Housing Development 

Infrastructure and Social Facilities provision and upgrade 

Limited urbanization 

Urban aesthetics and land use management 

Environmental Management (Tourism) 

Sustainable Human Settlement Programme. 

Public-funded Housing Development 

Infrastructure and Social Facilities provision, maintenance 

and upgrade 


Rural Nodes 

Node Type Settlement Spatial Development Priorities 

Level 2 

Rural Node 

(Rural 

Service Centre) 

Level 2 – Rural 

Villages 

Ncora, Qamata/Bilatye 

Mtshingeni 

Lubisi 

Sabalele 

All other existing villages 

Areas where medium order community facilities can be bundled 

in order to ensure that a greater number of rural residents 

are served in a more efficient and effective way. 

Ideally, these and future rural service centres are located in 

close proximity to public transport routes to ensure maximum 

accessibility to facilities 

Local planning to maximize use of resources 

Local land use schemes to be negotiated 

Basic level of service extension. 

Local planning to maximize use of resources 

Local land use schemes to be negotiated 

Extracted from CHDM Spatial Development Framework Review (2009/2010) 

Development Corridors 

Development corridors are characterized by higher order ribbon-like development along routes that would otherwise 

be classified as movement corridors. These occur on various levels, from local development corridors along 

the main streets of the towns or even along rivers to regional and provincial corridors. Different types of corridors 

can be distinguished such as development corridors, movement corridors and activity corridors. 

The R61 from Queenstown through Cofimvaba, Ngcobo to Mthatha has been identified as the East Corridor, 

one of the four major development corridors in the Chris Hani District Municipality SDF. 


However, this study has identified an additional corridor, Tsomo–Ndabakazi Development Corridor. 

Fig. Map 2.2: Development Corridor Strategy 

SPECIAL (PRIORITY) DEVELOPMENT AREAS 

The Special Development Areas as identified by the CHDM Spatial Development Framework Review 

(2009/2010) and this study include the following: 

(i) 

(ii) 

(iii) 

(iv) 

Priority Basic Need Areas. 

Targeted Focus Areas as proposed by the CHDM Land Reform and Settlement Plan (2005). 

Strategic Development Zones, that is, areas with LED potentials, such as, Agriculture and Forestry 

Sectors, Tourism Sector and Manufacturing Sector. 

Others – Infrastructure, Housing, Social Services, etc. 

Priority Basic Need Areas 

These are areas of greatest need, requiring special need for investment to upgrade levels of service (water supply, 

sanitation, access roads, electricity, etc) and social facilities (schools, health, community facilities, etc) to the accepted 

minimum level to improve the level of well being of communities. 

It should involve the investment of basic infrastructure as well as poverty alleviation programmes and projects 

such as community gardens, tourism, street trading and other SMME initiatives in Intsika Yethu Municipality. It 

should be indicated that Intsika Yethu Municipal area falls within the priority basic need areas within the CHDM. 

Targeted Focus Areas (Proposed Development Zones) 

Six development zones (see Map 2.3) have been identified in the Chris Hani District Land Reform and Settlement 

Plan (LR & SP) within which specific land reform and/or settlement planning (spatial planning) and land use management 

actions are necessary or desirable. These targeted areas coincide with the proposed settlement hierarchy 

(nodal) proposals outlined above. These zones are indicated in the table below. 


Land use management: 

Number Property Application Applicant Update 

1. 

Remainder Erf 1, 

Cofimvaba 

Revitilisation of 

Subdivision 

Mrs Yengwa 

Awaiting Council Resolution 

2. 


Cofimvaba 

Subdivision 

Eskom TSC 

Awaiting Council Resolution 

3. 

Erf 143, Cofimvaba 

Rezoning 

Sakawuli’s Properties 

Approved by Council, 

awaiting approval from 

LUMB 

4. Erf 24, Cofimvaba Rezoning Mr. Njamela 



LUMB 

5. 


Rezoning 

6. Erf 90, Tsomo Rezoning 

Sakawuli’s Properties 

Mr. Sibulele Khweba 

Approved on the 

04/07/2008 

Approved on the 

19/02/2007 

7. Erf 14, Cofimvaba Rezoning Zamani Wholesalers 



LUMB 

8. 


Rezoning 

Mrs Nophelo Nongwevu 

Approved 

9. Erf 49, Cofimvaba Rezoning Ms X M Martins Approved 

10. Erf 89, Cofimvaba Rezoning Mzingisi Hlanjwa 

11. 

12. 



Rezoning Mrs N. Nongwevu Approved 

Rezoning Mr.N.R.Golifili Approved 

13. Erf 94, Cofimvaba Rezoning Mr Somzi 



LUMB 

14. Erf 42, Tsomo Rezoning 

Mr. 

M.M.Mkhunyana 



LUMB 

15. 

Erf 131-Erf 134, 

Cofimvaba 

Consolidation and 

then Subdivision 

Lundi – Luvu Business 

Ventures 

Approved 

16. Erf 79, Cofimvaba Rezoning 

17 Erf 30, Cofimvaba Rezoning 

Sibiya Jacob Gouman 

HDM CON- 

STRUCTION 



LUMB 



LUMB 


Number Property Application Applicant Update 

18 


Township Establishment 

NPM Planning 

Design Stage 

19 Thabo Village 


NPM Planning 


Surveyed awaiting approval 

from LUMB 

20 Ext 4 Tsomo 


NPM Planning 


Surveyed awaiting 

approved by LUMB, 


Surveyor General 

21 

Section C, Ext 4 

Cofimvaba 


Pemro 

Submitted to LUMB 

22 


Cofimvaba 

Rezoning, Subdivision 

and Consolidation 

Eris Property 

Group, Mhlaba 

Group 

Awaiting approval from 

DFA Tribunal 

23 Joe Slovo 


Setplan 

Awaiting Land Transfer 

24 Nyanisweni 


Complan 

Complete 

25 St Marks 500 


Sektor 

Complete 

INFRASTRUCTURE ANNUAL REPORT 2010/11 

Basic service delivery area 30 June 2011 

Water backlogs (6KL/month) Required Budgeted Actual 

Backlogs to be eliminated (n0. 

HH not receiving the minimum 

standard service) 

Backlogs to be eliminated (%: 

total HH identified as backlog/ 

total number of HH in the 

municipality 

Spending on new infrastructure 

to eliminate backlogs (R000) 

Spending on renewal of existing 

infrastructure to eliminate 

backlog (R000) 

Total spending to eliminate 

backlogs (R000) 

90192 R31,468,729 

49% R31,468,729 

68% R31,468,729 R21,398,735 

R590430.00 R401492.40 

R91,693,529 R62753092.10 

Spending on maintenance to 

ensure no new backlogs (R000) 

Electricity backlogs 

(30KWH/month) 

R26000000 

R23000000 


Basic service delivery area 30 June 2011 30 June 200.. 

Water backlogs (6KL/month) Required Budgeted Actual required budgeted Actual 




139,923.180 139,923.80 139,923.80 139,923.80 


total HH identified as backlog/total 

numb of HH in the 

municipality 

4024 1100 



139,923.180 








Sanitation backlogs 




112280 R60,224,800 R52265.311 




municipality 

61% R60,224,800 R52265.311 



R52265.311 








R500000.00 

R91693.529 

R4000000.00 

Road maintenance backlogs 




1050 km R25.5m 1195 km R968.950m R2.875m R2.875m 


Basic service delivery area 30 June 2011 30 June 200.. 

Water backlogs (6KL/month) Required Budgeted Actual required budgeted Actual 




municipality 

87.9% 2.6% 0.3% 0.3% 



R75m R34m R34m R120m R25.935m 25.935m 




R15m R2.5m R2.5m R15m R2.875m R2.875m 

Key Performance 

Area 

Performance During the Year, Performance Targets Against 

Actual Achieved and Plans to Improve Performance 

Current 

Target 

2010/11 

1.Water treatment. 

During the 2010/11 Financial year, we managed to spend 88% of the 

budgeted amount of R26000000.00. 

100% 

2.Sewage treatment. 

Our target for the 2011/2012 financial year is 100% of the budgeted 

amount of R30000000.00 because there has been an improvement in 

our systems and new staff members have been employed. 

3.water reticulation. 

4.Human resource 

Management. 

5.Financial Management 


1. 

Water distribution function’s performance 

Function: 

Sub 

Function: 

Water 

Water Distribution 

Reporting Level Detail Total Cost 

Overview: Includes the bulk purchase and distribution of water 

Description of 

the Activity: 

Water distribution 

is 

When the 

communities 

are served with 

water from 

the plant to 

the reservoirs 

and from the 

reservoirs to the 

houses or Businesses. 

The water purchase and distribution functions of the municipality 

are administered as follows and include: 

Raw water from dam or river is bought from the department of 

water affairs. It is then transported through pipes to the water treatment 

plant. From there it is treated with Chemicals and pumped to 

the reservoirs. 

< The Municipality buys raw water from DWA and it is piped to the 

water treatment plant. Chemicals which the Municipality buys from 

the Private sector are added to the water and pumped to the reservoirs. 

The cost of water,chemicals and labour are then added to arrive at 

the price of treated water. 

The mandate of the Municipality is to provide water and is not to be 

a water services authority. 

 

The strategic objectives of this function are to: 

< To provide clean drinking water and sanitation to the communities 

at a minimal cost. 

The key issues for 2010/11 are: 

< Fixing of damaged water infrastructure and the target is to get a 

blue drop award. 

` 

1 Number and cost to employer of all personnel associated with the 

R (000s) 

water distribution function: 

- Professional (Engineers/Consultants) 

- Field (Supervisors/Foremen) 4 R104000.00 

- Office (Clerical/Administration) 3 R442000.00 


Reporting Level Detail Total Cost 

- Non-professional (blue collar, outside workforce) 43 R2064000.00 

- Temporary 

- Contract 

Note: total number to be calculated on full-time equivalent (FTE) 

basis, total cost to include total salary package. 

2 Percentage of total water usage per month 

77.8% 32.96Ml 

Note: this will therefore highlight percentage of total water stock 

used per month 

3 Total volume and cost of bulk water purchases in kilolitres and rand, 

R (000s) 

by category of consumer 

- Category 1 42.3Ml R6768.00 

- Category 2 

- Category 3 

- Category 4 

4 Total volume and receipts for bulk water sales in kilolitres and rand, 

R (000s) 

by category of consumer: 

- Category 1 ) 395.6Ml R1978000.00 

- Category 2 (total number of households) 



5 Total year-to-date water losses in kilolitres and rand R (000s) 

200m from dwelling same 

- Borehole 174862 

- Spring 

- Rain-water tank 

Note: if other types of services are available, please provide details 

7 Number and cost of new connections: R (000s) 

3681 

8 Number and cost of disconnections and reconnections: R (000s) 

 

9 Number and total value of water projects planned and current: R (000s) 

- Current (financial year after year reported on) 17 31,468,729 

- Planned (future years) ` 

Note: provide total project and project value as per initial or revised 

budget 

10 Anticipated expansion of water service: R (000s) 

- Piped water inside dwelling 

- Piped water inside yard 


- Piped water on community stand: distance < 200m from dwelling 

- Piped water on community stand: distance > 200m from dwelling 

- Borehole 

- Spring 


Note: provide total number of households anticipated to benefit and 

total additional operating cost per year to the municipality 

11 Estimated backlog in number (and cost to provide) water connection: R (000s) 

- Piped water inside dwelling 

- Piped water inside yard 

- Piped water on community stand: distance < 200m from dwelling 90192 

- Piped water on community stand: distance > 200m from dwelling 

- Borehole 

- Spring 


Note: total number should appear in IDP, and cost in future budgeted 

capital housing programmes 

12 Free Basic Service Provision: 

- Quantity (number of households affected) 180384 

- Quantum (value to each household) 

Note: Provide details of how many households receive the FBS 

provision, and the average value it means per household. Describe in 

detail the level of Free Basic Services provided. 

13 Type and number of grants and subsidies received: R (000s) 

ROLE PLAYERS Roles RESPONSIBILITIES 

MUNICIPALITY 

• Municipal Council 

To deliver houses 

Prioritise housing project. 

Identification of the need or demand 

for housing . 

Ensure that the housing sector 

plan is in place. 

• Municipal Officials 

Register beneficiaries 

Ensuring the demand is a chapter 

in the IDP. 

• Communities 

• Traditional leaders 

• Town Planners 

• Surveyors 

• Conveyances 

Agree on the land to be utilised 

Approve land for development 

Produce an approved layout 

plans for the identified area 

To provide an approved SG diagram 

To register the township and 

beneficiaries 

Categorise the communities according 

to their housing needs 

and income levels, in order to 

provide for them accordingly. 

Ensure that you obtain well 

located land for the different levels 

of the communities. 

Ensure that the land belongs to 

the municipality. 

Engage planners to prepare layout 

plans and lodge the layout plans to 

the land use board. After approval 

Surveys must be made and lodged 

with the surveyor general 

Apply for funding 

Provincial Department 

National Department of Human Settlements 

Receive the Business plan and 

forward it to the National Department 

for funding. 

Make approval of the Township 

submission. 

On approval of the funds .It has 

to ensure that the supply chain 

processes are followed and the 

contractor is introduced to the 

municipality 

Funding housing programs 


LEVELS & STANDARDS IN HOUSING & TOWN PLANNING SERVICES 

LEVELS Standards Town Planning services 

Low cost housing 

Middle income housing 

The complete project has high 

standard as it was a pilot for even 

the Provincial Govt. 

No delivery yet but provisions 

are underway. Thabo Village will 

be our show case that will be an 

integration of both the middle 

income housing, CRU and social 

housing 

They met the standards though 

they were outsourced 

The project is in the stage of approval 

from the land use board as 

well as consolidation of even for 

CRUs 


Total Number of 

households/customers 

Estimated 

backlog(Actual 

Number) 

Target for 

the following 

yr 

No. of 

Households 

% of 

Achievement 

during the 

yr. 

% of the households 

living in 

informals 

1.3% 

% of informal 

settlements that 

have been provided 

with basic services 

% of households 

informal housing 

that conforms to 

the minimum building 

standards for 

residential Houses 


1.27 SPATIAL PLANNING 

PREPARATION AND APPROVAL OF SDF PROCESSES 

Dissemination strategy: SDF is obtainable from the municipal website 

In an electronic Version obtainable in the municipal office 

In a hard copy in the municipal offices 

Community involvement in developing the SDF document 

Implementation: Reference is made to the SDF for any spatial provision 

It assists in explaining the different nodes as planned. 

It is used as a guiding document in any project. 

All projects are in line with the SDF. 

SUBMITTED APPLICATIONS 

Rezoning Sub-Division Consent Use Removal Of Restrictions 

6 2 0 0 1 

Township 

Establishments 

MAJOR CHALLLENGES IN SPATIAL PLANNING SERVICES AND REMEDIAL 

ACTIONS 

1. 

2. 

Suitable and surveyed areas are invaded 

Communities do not want to comply with legislative requirements such as registering land, submitting building 

plans etc. 

REMEDIAL ACTION 

Evictions 

Law enforcement 

Awareness on impact of invasion 

GOOD GOVERNANCE AND PUBLIC PARTICIPATION 

Overview of the executive and council functions and achievements 

Intsika Yethu Local Municipality is governed by a council of 46 members and an Executive Committee of 9 

members including the mayor. A number of members of the Executive Committee preside over specific portfolio 

committees; this ensures active participation by councillors. The function of Council and the Executive Committee 

are: 

The Council 

The Speaker is responsible for the legislative function of the council. The legislative functions of the council 

include: 

- 

- 

The passing of by-laws and formulation of policies 

The oversight of the executive and administration 


- 

- 

- 

- 

The approval and amendment of rates and other taxes, levies, and duties 

The approval or amendment of the municipality Integrated Development Plan 

The setting of tariff charges 

The entering into Municipality Service Partnerships and the appointment of the section of section 57 

manager 

The Executive Committee 

The Executive Committee is responsible for the overall management, coordination, monitoring the performance 

of administration programmes, prioritisation and drafting of policies and by-laws. The municipality has 5 standing 

committees. The municipality has established these committees according to the Municipal Structures Act. 

Public participation and consultation 

During the Mayoral Imbizo’s the municipality utilises a local radio station (Vukani FM) and local newspaper 

(Skawara News) as a means of consulting and mobilising its communities, as it is very paramount for them to have 

a say in council decisions and service delivery. 

The Ward Councillors together with Community Development workers and Ward Committees also played a vital 

role as they serve as the close link between the communities and the municipality in mobilising for such occasions. 

When there is a public hearing, proper communications are made through announcements in community radio i.e. 

Vukani Community Radio. Public Hearings also publicised by two way communication that is in between the ward 

councillor and the residents at large and also the CDW’s. The municipality has also enhanced the way of conveying 

the message when there will be public hearing and imbizo’s through the tool of loud hailing to its communities. 

Customer Satisfaction Surveys: English and Xhosa questionnaires are established and made available to measure 

the satisfaction of the public/ commuters. These questionnaires distributed and then collected quarterly to all 23 

wards of the Intsika Yethu municipality as the way of getting feedback from the public. 

Ward committees’ establishment and functionality 

As the Handbook of Ward Committees outlines that during the sitting of the meetings of the ward committee 

members, the ward councillor of that particular ward is regarded as chairperson. According to the reports forwarded 

by the ward councillor to the Speaker’s Office that are furnished by credential lists shown a good attendance of 

the committee members into wards meetings. 

As the ward committee members are ward based and their meetings are convened and held in their respective 

wards, the minutes are written and filled by committee secretaries and some copies are forwarded to their ward 

councillors. 

Availability of ward committee activity reports: each and every ward had its own program of action where each 

committee member performs his/her tasks and in turn reports to his/her ward councillor. 

Community Development Workers performance monitoring 

To try and monitor the Community Development Work, the municipality has purchased a prefab which will be 

utilised as offices by CDW’s. That will make it easy for the municipality to work and monitor the CDW’s. A full 

time municipal official was made available for coordinate CDW’s. The municipality has made sits available for 

CDW’s in the council meeting to make it easy for issues for the CDW’s to follow and understand matters of local 

government and development. 

The municipality is in the process of coordinating the reports of the CDW’s and assist where necessary before 

they are forwarded to the province. 

As we all know that the CDWs are ward based and regarded as the foot soldiers for service delivery, they compile 

reports based on their findings in their wards. The monthly reports are handed over to the speaker’s office and 

to the Department of Local Government and Traditional Affairs. 


A vast number of cases are identified and reported in almost all the 23 wards of Intsika Yethu jurisdiction each and 

every month. Interventions by Government Departments in these cases are required. 

CDWs also play a prominent role as publicity and mobilising tool for municipal and government sector gatherings 

in their wards. 

Communication Strategy 

The strategy is guided by the Integrated Development Plan (IDP) which seeks to achieve the prescriptions of our 

vision and mission, the Provincial Growth and Development Plan (PGDP), Public Participation Framework 2005. 

The National Government Communications Plan and the SALGA National Communications Conference Resolutions 

(May 2006). 

The municipality has completed the development of the Communication Strategy. This strategy is reviewed on a 

yearly basis. This programme was spear headed by the Department of Corporate Services. The strategy is to work 

towards achieving the goals of the Institution. 

Objectives 

To encourage meaningful public participation through promotion of government programmes. 

To promote and articulate Intsika Yethu Municipality plans policies and achievements. 

To facilitate proactive communication on matters of disaster risk management, health and environmental issues. 

To strengthen and improve internal communication systems. 

To reinforce intergovernmental relations through coordination of communication programmes and activities 

amongst the three spheres of government 

To create and maintain sound relations with the media houses 

The document was presented to Executive Committee off the municipality and it was approved and it still waiting 

for approval of the Council. 

There is one communication official responsible for the section of communication. The office does have enough 

infrastructure to utilise when participating in communication activities. 

Anti-Corruption Strategy 

The municipality utilises an anti-corruption strategy document that was developed by the Department of Local 

Government through a service provider. The municipality in the process of implementing the strategy. 

Inter-governmental Relations 

An Inter-governmental Forum sits on quarterly basis during the financial year. 


Intsika Yethu Municipality 

ANNUAL FINANCIAL STATEMENTS 

for the year ended 30 June 2010 



STATEMENT OF FINANCIAL POSITION 

as at 30 June 2010 

Note 2010 2009 

R 

R 

ASSETS 

Current assets 

Cash and cash equivalents 1 24 931 734 24 458 515 

Trade receivables from exchange transactions 3 309 186 1 201 570 

Other receivables from non-exchange transactions 4 621 802 1 215 487 

Other receivables from exchange transactions 5 9 876 467 5 286 093 

Investments 6 2 856 693 2 315 274 

VAT receivable 10 1 825 693 10 308 984 

Non-current assets 

Investments 7 - 208 995 

Property, plant and equipment 8 28 601 130 - 

Total assets 69 022 705 44 994 917 

LIABILITIES 

Current liabilities 

Trade and other payables from exchange transactions 9 11 064 350 3 733 534 

Current portion of borrowings 12 121 795 192 051 

Non-current liabilities 

Non-current borrowings 12 3 524 429 3 680 911 

Total liabilities 14 710 574 7 606 497 

Net assets 54 312 131 37 388 420 

NET ASSETS 

Accumulated surplus / (deficit) 54 312 131 37 388 420 

Total net assets 

54 312 131 37 388 420 



STATEMENT OF FINANCIAL PERFORMANCE 

for the year ending 30 June 


R 

R 

Revenue 

Property rates 15 1 617 990 1 074 372 

Service charges 16 273 498 292 861 

Rental of facilities and equipment 17 668 323 607 880 

Interest earned - external investments 18 1 552 789 2 385 883 

Interest earned - outstanding receivables 19 90 896 126 608 

Fines 70 910 27 133 

Licences and permits 667 617 504 054 

Government grants and subsidies 20 81 116 840 67 658 106 

Other income 21 2 608 123 393 549 

Total revenue 88 666 985 73 070 446 

Expenses 

Employee related costs 22 30 655 009 21 465 921 

Remuneration of councillors 23 10 269 294 9 639 112 

Bad debts 2 819 204 - 

Repairs and maintenance 3 004 345 1 474 703 

Finance costs 24 - 80 036 

Bulk purchases 25 - - 

Contracted services 26 113 229 188 486 

General expenses 27 24 881 959 27 901 139 

Total expenses 71 743 039 60 749 397 

Surplus / (deficit) for the period 16 923 946 12 321 049 



STATEMENT OF CHANGES IN NET ASSETS 


Accumulated 

Surplus/(Deficit) 

Total: Net 

Assets 

Note R R 

Balance at 30 June 2008 37 471 253 37 471 253 

Changes in accounting policy 31 (18 327 664) (18 327 664) 

Correction of prior period error 6 062 188 6 062 188 

Restated balance 25 205 777 19 143 589 

Correction of prior period error 32 (138 406) (138 406) 


Balance at 30 June 2009 37 388 420 31 326 232 

c 32 (236) (236) 

Restated balance 37 388 184 37 388 184 


Balance at 30 June 2010 54 312 131 54 312 131 



CASH FLOW STATEMENT 



R 

R 

CASH FLOWS FROM OPERATING ACTIVITIES 

Cash receipts from ratepayers, government and others 92 420 560 66 281 904 

Cash paid to suppliers and employees (64 763 157) (54 788 780) 

28 27 657 402 11 493 124 

Interest received 1 643 684 2 512 491 

Interest paid - (80 036) 

Net cash flows from operating activities 29 301 087 13 925 579 

CASH FLOWS FROM INVESTING ACTIVITIES 

Purchase of fixed assets (28 601 130) (19 651 610) 

Proceeds from sale of investments 16 666 484 

Net cash flows from investing activities (28 601 130) (2 985 126) 

CASH FLOWS FROM FINANCING ACTIVITIES 

Proceeds from borrowings - 3 872 962 

Repayment of borrowings (226 738) - 

Net cash flows from financing activities (226 738) 3 872 962 

Net increase / (decrease) in net cash and cash equivalents 473 218 14 813 415 

Net cash and cash equivalents at beginning of period 

Net cash and cash equivalents at end of 

period 

24 458 516 9 645 101 

29 24 931 734 24 458 516 



SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

for the year ending 30 June 2010 

1 BASIS OF ACCOUNTING 

1.1 BASIS OF PRESENTATION 

The annual financial statements have been prepared on an accrual basis of accounting and are in 

accordance with historical cost convention unless specified otherwise. 

These annual financial statements have been prepared in accordance with Generally Recognised 

Accounting Practice (GRAP), issued by the Accounting Standards Board in accordance with Section 

122(3) of the Municipal Finance Management Act, (Act No 56 of 2003). 

In accordance with section 122(3) of the Municipal Finance Management Act (Act No.56 of 2003), 

the Municipality has adopted Standards of GRAP and the transitional provisions as applicable as 

issued by the Accounting Standards Board during the financial year, which are fundamentally different 

to the fund accounting policies adopted in previous financial years. Comparative amounts 

have been restated retrospectively to the extent possible. 

The principal accounting policies adopted in the preparation of these annual financial statements 

Those standards of GRAP and interpretations of such standards applicable to the operations of the 

GRAP 1 

GRAP 2 

GRAP 3 

GRAP 5 

GRAP 6 

GRAP 9 

Presentation of Financial Statements 

Cash flow statements 

Accounting Policies, Changes in Accounting Estimates and Errors 

Borrowing Costs 

Consolidated and Separate Financial Statements 

Revenue from Exchange Transactions 

GRAP 12 Inventories 

GRAP 13 Leases 

GRAP 14 

GRAP 16 

GRAP 17 

GRAP 19 

GRAP 100 

GRAP 102 

IPSAS 20 

IPSAS 21 

Events after the Reporting Date 

Investment Property 

Property, Plant and Equipment 

Provisions, Contingent Liabilities and Contingent Assets 

Non-current Assets Held for Sale and Discontinued Operations 

Intangible Assets 

Related Pary Disclosure 

Impairment of Non Cash-Generating Assets 


IFRS 7 

IAS 19 

IAS 32 

IAS 36 

IAS 39 

IFRIC 4 

Financial Instruments: Disclosure 

Employee Benefits 

Financial Instruments: Presentation 

Impairment of Assets 

Financial Instruments: Recognition and Measurement 

Determining whether an arrangement contains a lease 

The standards prescribed are the effective Standards of Generally Recognised Accounting Practice 

(GRAP), inlcuding any interpretations and directives issued by the Accounting Standards Board. The 

impact of the mentined directives on the financial statements, specifically Directive 4 is disclosed in 

the various accounting policies below. 

Assets, liabilities, revenues and expenses have not been offset except when offsetting is required or 

permitted by a Standard of GRAP. 

The accounting policies applied are consistent with those used to present the previous year’s financial 

statements, unless explicitly stated. The details of any changes in accounting policies are 

explained in the relevant policy. 

1.2 PRESENTATION CURRENCY 

These annual financial statements are presented in South African Rand, which is the functional currency 

of the municipality. 

1.3 GOING CONCERN ASSUMPTION 

These annual financial statements have been prepared on the assumption that the municipality will 

continue to operate as a going concern for at least the next 12 months. 

1.4 COMPARATIVE INFORMATION 

Budget information in accordance with GRAP 1 and 24, has been provided in the notes to these 

financial statements and forms part of the audited annual financial statements. 

When the presentation or classification of items in the annual financial statements is amended, 

prior period comparative amounts are restated. The nature and reason for the reclassification is 

disclosed. Where accounting errors have been identified in the current year, the correction is made 

retrospectively as far as is practicable, and the prior year comparatives are restated accordingly. 

Where there has been a change in accounting policy in the current year, the adjustment is made 

retrospectively as far as is practicable, and the prior year comparatives are restated accordingly. 

1.5 

STANDARDS, AMENDMENTS TO STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EF- 

FECTIVE 

The following GRAP standards have been issued but are not yet effective and have not been early 

adopted by the municipality: 

GRAP 18 Segment Reporting - issued March 2005 

GRAP 21 Impairment of non cash generating assets - issued March 2009 

GRAP 23 Revenue from Non-Exchange Transactions (Taxes and Transfers) - issued February 2008 

GRAP 24 Presentation of Budget Information in Financial Statements - issued November 2007 

GRAP 25 Employee benefits - issued November 2009 

GRAP 26 Impairment of cash generating assets - issued March 2009 

GRAP 103 Heritage Assets - issued July 2008 

GRAP 104 Financial Instruments - issued October 2009 


Application of all of the above GRAP standards will be effective from a date to be announced by 

the Minister of Finance. This date is not currently available. 

The following standards, amendments to standards and interpretations have been issued but are 

not yet effective and have not been early adopted by the municipality: 

IAS 19 Employee Benefits - effective 1 January 2009 

IFRIC 17 Distribution of Non-cash Assets to Owners - effective 1 July 2009 

IAS 39 Financial Instruments: Recognition and Measurement - portions of standard effective 1 July 

2009 

IFRS 7 Financial Instrument Disclosure - issued August 2009 

Management has considered all of the above mentioned GRAP standards issued but not yet effective 

and anticipates that the adoption of these standards will not have a significant impact on the 

financial position, financial performance or cash flows of the municipality. 

2 PROPERTY, PLANT AND EQUIPMENT 

2.1 INITIAL RECOGNITION 

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 year. Items of property, plant and 

equipment are initially recognised as assets on acquisition date and are initially recorded 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 the municipality. Trade discounts and rebates are deducted in arriving at the 

cost. The cost also includes the necessary costs of dismantling and removing the asset and restoring 

the site on which it is located. 

When significant components of an item of property, plan and equipment have different useful lives, 

they are accounted for as separate items (major components) of property, plant and equipment. 

Where an asset is acquired by the municipality for no or nominal consideration (i.e. a non-exchange 

transaction), the cost is deemed to be equal to the fair value of that asset on the date acquired. 

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. 

Major spare parts and servicing equipment qualify as property, plant and equipment when the municipality 

expects to use them during more than one period. Similarly, if the major spare parts and 

servicing equipment can be used only in connection with an item of property, plant and equipment, 

they are accounted for as property, plant and equipment. 

2.2 SUBSEQUENT MEASUREMENT - COST MODEL 

Subsequent to initial recognition, items of property, plant and equipment are measured at cost less 

accumulated depreciation and impairment losses. Land is not depreciated as it is deemed to have 

an indefinite useful life. 

Where the municipality replaces parts of an asset, it derecognises the part of the asset being replaced 

and capitalises the new component. Subsequent expenditure incurred on an asset is capitalised 

when it increases the capacity or future economic benefits associated with the asset. 


2.3 DEPRECIATION AND IMPAIRMENT 

Depreciation is calculated on the depreciable amount, using the straight-line method over the estimated 

useful lives of the assets. Depreciation only commences when the asset is available for use, 

unless stated otherwise. Components of assets that are significant in relation to the whole asset and 

that have different useful lives are depreciated separately. The annual depreciation rates are based 

on the following estimated average asset lives: 

Infrastructure 

Other 

Roads and Paving 10 years Buildings 30 years 

Sewerage 15 years Office equipment 3- 5 years 

Furniture and fittings 

10 years 

Bins and containers 

5-10 years 

Community Landfill sites 30 years 

Buildings 30 years Computer equipment 4 years 

Halls 

30 years 

Libraries 

30 years 

Other assets 

30 years 

The residual value, the useful life of an asset and the depreciation method is reviewed annually 

and any changes are recognised as a change in accounting estimate in the Statement of Financial 

Performance. 

The municipality tests for impairment where there is an indication that an asset may be impaired. 

An assessment of whether there is an indication of possible impairment is done at each reporting 

date. Where the carrying amount of an item of property, plant and equipment is greater than the 

estimated recoverable amount (or recoverable service amount), it is written down immediately to 

its recoverable amount (or recoverable service amount) and an impairment loss is charged to the 

Statement of Financial Performance. 

2.4 DERECOGNITION 

Items of Property, plant and equipment 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 on the disposal or retirement of an item of property, plant and equipment is determined 

as the difference between the sales proceeds and the carrying value and is recognised in 

the Statement of Financial Performance. 

2.5 TRANSITIONAL PROVISION 

In terms of Directive 4 the municipality are not required to measure property, plant and equipment 

for reporting periods beginning on or after a date within three years following the date of initial 

adoption of the Standard of GRAP on Property, Plant and Equipment. The Standard of GRAP on 

Property, Plant and Equipment was initially adopted on 1 July 2009. 

Due to the fact that the municipality has taken advantage of the transitional provisions, property, 

plant and equipment were not recognised and measured in accordance with the Standards of GRAP 

on: Property, Plant and Equipment, the Presentation of Financial Statements and Non-current Assets 

Held for Sale and Discontinued Operation. 

Property, plant and equipment acquired prior to the date of initial adoption of the Standard of GRAP 

are measured at provisional amounts (Nil value) in line with Directive 4. Additions to property, plant 

and equipment since the Standard of GRAP of Property, Plant and Equipment was initially adopted 

are recognised at cost. No depreciation is recognised on these assets as all the related elements of 

the depreciation calculation could not be considered at year end. 

No measurement adjustments were made for the year ending 30 June 2010. 


3 INTANGIBLE ASSETS 


An intangible asset is an identifiable non-monetary asset without physical substance. Examples include 

computer software, licences, and development costs. The municipality recognises an intangible 

asset in its Statement of Financial Position only when it is probable that the expected future 

economic benefits or service potential that are attributable to the asset will flow to the municipality 

and the cost or fair value of the asset can be measured reliably. 

Internally generated intangible assets are subject to strict recognition criteria before they are capitlised. 

Research expenditure is never capitalised, while development expenditure is only capitalised 

to the extent that: 

• the municipality intends to complete the intangible asset for use or sale; 

• it is technically feasible to complete the intangible asset; 

• the municipality has the resources to complete the project; and 

• it is probable that the municipality will receive future economic benefits or service potential. 

Intangible assets are initially recognised at cost. 

Where an intangible asset is acquired by the municipality for no or nominal consideration (i.e. a 

non-exchange transaction), the cost is deemed to be equal to the fair value of that asset on the date 

acquired. 

Where an intangible asset 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. 


Intangible assets are subsequently carried at cost less accumulated amoritisation and impairments. 

The cost of an intangible asset is amortised over the useful life where that useful life is finite. Where 

the useful life is indefinite, the asset is not amortised but is subject to an annual impairment test. 

3.3 AMORTISATION AND IMPAIRMENT 

Amortisation is charged so as to write off the cost or valuation of intangible assets over their estimated 

useful lives using the straight line method. The annual amortisation rates are based on the 

following estimated average asset lives: 

Computer software 

3 - 5 years 

The amortisation period and the amortisation method for an intangible asset with a finite useful 

life are reviewed at each reporting date and any changes are recognised as a change in accounting 

estimate in the Statement of Financial Performance. 

The municipality tests intangible assets with finite useful lives for impairment where there is an indication 

that an asset may be impaired. An assessment of whether there is an indication of possible 

impairment is done at each reporting date. Where the carrying amount of an item of an intangible 

asset is greater than the estimated recoverable amount (or recoverable service amount), it is written 

down immediately to its recoverable amount (or recoverable service amount) and an impairment 

loss is charged to the Statement of Financial Performance. 


3.4 DERECOGNITION 

Intangible assets 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 on 

the disposal or retirement of an intangible asset is determined as the difference between the sales 

proceeds and the carrying value and is recognised in the Statement of Financial Performance. 

3.5 TRANSITIONAL PROVISIONS 

In terms of Directive 4 the municipality are not required to measure intangible assets for reporting 

periods beginning on or after a date within three years following the date of initial adoption of the 

Standard of GRAP on Intangible assets. The Standard of GRAP on Intangible assets was initially adopted 

on 1 July 2009. 

Due to the fact that the municipality has taken advantage of the transitional provisions, intangible 

assets were not recognised and measured in accordance with the Standards of GRAP on: Intangible 

assets, the Presentation of Financial Statements and Non-current Assets Held for Sale and Discontinued 

Operation. 

4 INVESTMENT PROPERTY 

Intangible assets acquired prior to the date of initial adoption of the Standard of GRAP are measured 

at provisional amounts (Nil value) in line with Directive 4. Additions to intangible assets since the 

Standard of GRAP of Intangible assets was initially adopted are recognised at cost. No depreciation 

is recognised on these assets as all the related elements of the depreciation calculation could not 

be considered at year end. 



Investment property includes property (land or a building, or part of a building, or both land or 

buildings held under a finance lease) held to earn rentals and/or for capital appreciation, rather than 

held to meet service delivery objectives, the production or supply of goods or services, or the sale of 

an asset in the ordinary course of operations. 

At initial recognition, the municipality measures investment property at cost including transaction 

costs once it meets the definition of investment property. However, where an investment property 

was acquired through a non-exchange transaction (i.e. where it acquired the investment property 

for no or a nominal value), its cost is its fair value as at the date of acquisition. 

The cost of self-constructed investment property is the cost at date of completion. 


Investment property is measured using the cost model. Under the cost model, investment property 

is carried at cost less any accumulated depreciation and any accumulated impairment losses. 

Depreciation is calculated on the depreciable amount, using the straight-line method over the estimated 

useful lives of the assets. Components of assets that are significant in relation to the whole 

asset and that have different useful lives are depreciated separately. The annual depreciation rates 

are based on the following estimated average asset lives: 

Investment property 

30 years 


In terms of Directive 4 the municipality are not required to measure Investment Property for reporting 

periods beginning on or after a date within three years following the date of initial adoption of 

the Standard of GRAP on Investment property. The Standard of GRAP on Investment property was 

initially adopted on 1 July 2009. 


Due to the fact that the municipality has taken advantage of the transitional provisions, investment 

property were not recognised and measured in accordance with the Standards of GRAP on: Investment 

property, the Presentation of Financial Statements and Non-current Assets Held for Sale and 

Discontinued Operation. 

Investment property acquired prior to the date of initial adoption of the Standard of GRAP are measured 

at provisional amounts (Nil value) in line with Directive 4. Additions to investment property 

since the Standard of GRAP of Investment property was initially adopted are recognised at cost. No 

depreciation is recognised on these assets as all the related elements of the depreciation calculation 

could not be considered at year end. 


5 FINANCIAL INSTRUMENTS 

5.1 CLASSIFICATION 

The classification of financial assets and liabilities into categories, is based on judgement by management. 

The municipality classifies financial assets and financial liabilities into the following categories: 

The municipality has various types of financial instruments and these can be broadly categorised as 

either financial assets or financial liabilities. 

A financial asset is any asset that a cash or contractual right to receive cash or another financial asset 

or equity. The municipality has the following types of financial assets: 

- Investments in fixed deposits (banking institutions) 

- Consumer debtors 

- Certain other debtors 

- Short-term investment deposits 

- Bank balances and cash 

The financial assets of the municipality are classified as follows into the four categories allowed: 

Type of financial asset Classification in terms of IAS 39.09 

Short-term investment deposits Held-to-maturity investments 

Bank balances and cash Loans and receivables 

Consumer debtors Loans and receivables 

Other debtors Loans and receivables 

Investments in fixed deposits Held-to-maturity investments 

Loans and receivables are non derivative financial assets with fixed or determinable payments that 

are not quoted in an active market. They are included in current assets, except for maturities greater 

than 12 months, which are classified as non-current assets. Loans and receivables are recognised 

initially at cost which represents fair value. After initial recognition financial assets are measured at 

amortised cost, using the effective interest rate method less a provision for impairment. 

Held-to-maturity investments are financial assets with fixed or determinable payments and fixed 

maturity where the municipality has the positive intent and ability to hold the investment to maturity. 


Cash includes cash on hand (including petty cash) and cash with banks (including call deposits). Cash 

equivalents are short-term highly liquid investments, readily convertible into known amounts of 

cash, that are held with registered banking institutions with maturities of three months or less and 

are subject to an insignificant risk of change in value. For the purposes of the cash flow statement, 

cash and cash equivalents comprise cash on hand, deposits held on call with banks, net of bank 

overdrafts. 

The municipality categorises cash and cash equivalents as financial asset: loans and receivables. 

A financial liability is a contractual obligation to deliver cash or another financial asset to another 

entity. The municipality has the following types of financial liabilities: 

- Long-term liabilities 

- Certain other creditors 

- Short-term loans 

- Current portion of long-term liabilities 

There are two main categories of financial liabilities, the classification determining how they are 

measured. Financial liabilities may be measured as: 

- Fair value through profit or loss; or 

- Other financial liabilities 

Financial liabilities that are measured at fair value through profit or loss are financial liabilities that 

are essentially held for trading (i.e. purchased with the intention to sell or repurchase in the short 

term; derivatives other than hedging instruments or are part of a portfolio of financial instruments 

where there is recent actual evidence of short-term profiteering or are derivatives). Financial liabilities 

that are measured at fair value through profit or loss are stated at fair value, with any resulting 

gain or loss recognised in the Statement of Financial Performance. 

Any other financial liabilities are classified as “other financial liabilities” and are initially measured at 

amortised cost using the effective interest method, with interest expense recognised on an effective 

yield basis. 

In accordance with IAS 39.09 the financial liabilities of the municipality are all classified as “other 

financial liabilities”. 

Classification depends on the purpose for which the financial instruments were obtained / incurred 

and takes place at initial recognition. Classification is re-assessed on an annual basis, except for derivatives 

and financial assets designated as at fair value through surplus or deficit, which shall not be 

classified out of the fair value through surplus or deficit category. 


Financial instruments are initially recognised at fair value. 

5.3 SUBSEQUENT MEASUREMENT 

Financial Assets are categorised according to their nature as either financial assets at fair value 

through profit or loss, held-to maturity, loans and receivables, or available for sale. Financial liabilities 

are categorised as either at fair value through profit or loss or financial liabilities carried at 

amortised cost (“other”). The subsequent measurement of financial assets and liabilities depends 

on this categorisation and, in the absence of an approved GRAP Standard on Financial Instruments, 

is in accordance with IAS 39. 


5.3.1 INVESTMENTS 

Investments, which include listed government bonds, unlisted municipal bonds, fixed deposits and 

short-term deposits invested in registered commercial banks, are categorised as either held-tomaturity 

where the criteria for that categorisation are met, or as loans and receivables, and are 

measured at amortised cost. Where investments have been impaired, the carrying value is adjusted 

by the impairment loss, which is recognised as an expense in the period that the impairment is 

identified. Impairments are calculated as being the difference between the carrying amount and 

the present value of the expected future cash flows flowing from the instrument. On disposal of an 

investment, the difference between the net disposal proceeds and the carrying amount is charged 

or credited to the Statement of Financial Performance. 

5.3.2 TRADE AND OTHER RECEIVABLES 

Trade and other receivables are categorised as financial assets: loans and receivables and are initially 

recognised at fair value and subsequently carried at amortised cost. Amortised cost refers to 

the initial carrying amount, plus interest, less repayments and impairments. An estimate is made for 

doubtful receivables based on a review of all outstanding amounts at year-end. Significant financial 

difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, 

and default or delinquency in payments (more than 30 days overdue) are considered indicators 

that the trade receivable is impaired. Impairments are determined by discounting expected future 

cash flows to their present value. Amounts that are receivable within 12 months from the reporting 

date are classified as current. 

An impairment of trade receivables is accounted for by reducing the carrying amount of trade receivables 

through the use of an allowance account, and the amount of the loss is recognised in 

the Statement of Financial Performance within operating expenses. When a trade receivable is uncollectible, 

it is written off. Subsequent recoveries of amounts previously written off are credited 

against operating expenses in the Statement of Financial Performance. 

5.3.3 TRADE PAYABLES AND BORROWINGS 

Financial liabilities consist of trade payables and borrowings. They are categorised as financial liabilities 

held at amortised cost, are initially recognised at fair value and subsequently measured at 

amortised cost which is the initial carrying amount, less repayments, plus interest. 

5.3.4 CASH AND CASH EQUIVALENTS 

Cash includes cash on hand (including petty cash) and cash with banks (including call deposits). 

Cash equivalents are short-term highly liquid investments, readily convertible into known amounts 

of cash, that are held with registered banking institutions with maturities of three months or less 

and are subject to an insignificant risk of change in value. For the purposes of the cash flow statement, 

cash and cash equivalents comprise cash on hand, deposits held on call with banks, net of 

bank overdrafts. The municipality categorises cash and cash equivalents as financial assets: loans 

and receivables. 

Bank overdrafts are recorded based on the facility utilised. Finance charges on bank overdraft are 

expensed as incurred. Amounts owing in respect of bank overdrafts are categorised as financial liabilities: 

other financial liabilities carried at amortised cost. 

6 UNAUTHORISED EXPENDITURE 

7 IRREGULAR EXPENDITURE 

Unauthorised expenditure is expenditure that has not been budgeted, expenditure that is not in 

terms of the conditions of an allocation received from another sphere of government, municipality 

or organ of state and expenditure in the form of a grant that is not permitted in terms of the Municipal 

Finance Management Act (Act No.56 of 2003). Unauthorised expenditure is accounted for 

as an expense in the Statement of Financial Performance and where recovered, it is subsequently 

accounted for as revenue in the Statement of Financial Performance. 

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), the Public Office Bearers Act 

(Act No. 20 of 1998) or is in contravention of the Municipality’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. 


Fruitless and wasteful expenditure is expenditure that was made in vain and would have been 

avoided had reasonable care been exercised. Fruitless and wasteful 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. 

9 PROVISIONS AND CONTINGENCIES 

Provisions are recognised when the municipality has a present or constructive obligation as a result 

of past events, it is probable that an outflow of resources embodying economic benefits will be 

required to settle the obligation and a reliable estimate of the provision can be made. Provisions 

are reviewed at reporting date and adjusted to reflect the current best estimate. Where the effect is 

material, non-current provisions are discounted to their present value using a pre-tax discount rate 

that reflects the market’s current assessment of the time value of money, adjusted for risks specific 

to the liability. 

The municipality does not recognise a contingent liability or contingent asset. A contingent liability 

is disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. 

A contingent asset is disclosed where an inflow of economic benefits is probable. 

Future events that may affect the amount required to settle an obligation are reflected in the 

amount of a provision where there is sufficient objective evidence that they will occur. Gains from 

the expected disposal of assets are not taken into account in measuring a provision. Provisions are 

not recognised for future operating losses. The present obligation under an onerous contract is recognised 

and measured as a provision. 

10 LEASES 

A provision for restructuring costs is recognised only when the following 

criteria over and above the recognition criteria of a provision have been met 

: (a) The municipality has a detailed formal plan 

for the restructuring identifying at least: 

- the business or part of a business 

concerned; 

- the principal locations affected; 

- the location, function, 

and approximate number of employees who will be compensated for terminating their services; 

- the expenditures that will be undertaken; an 

d 

- when the plan will be implemented; an 

d 

(b) The municipality 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. 

10.1 MUNICIPALITY AS LESSEE 

Leases are classified as finance leases where substantially all the risks and rewards associated with 

ownership of an asset are transferred to the municipality. Property, plant and equipment or intangible 

assets subject to finance lease agreements are initially recognised at the lower of the asset’s 

fair value and the present value of the minimum lease payments. The corresponding liabilities are 

initially recognised at the inception of the lease and are measured as the sum of the minimum lease 

payments due in terms of the lease agreement, discounted for the effect of interest. In discounting 

the lease payments, the municipality uses the interest rate that exactly discounts the lease payments 

and unguaranteed residual value to the fair value of the asset plus any direct costs incurred. 

Subsequent to initial recognition, the leased assets are accounted for in accordance with the stated 

accounting policies applicable to property, plant, equipment or intangibles. The lease liability is reduced 

by the lease payments, which are allocated between the lease finance cost and the capital repayment 

using the effective interest rate method. Lease finance costs are expensed when incurred. 

The accounting policies relating to derecognition of financial instruments are applied to lease payables. 

The lease asset is depreciated over the shorter of the asset’s useful life or the lease term. 


Operating leases are those leases that do not fall within the scope of the above definition. Operating 

lease rentals are accrued on a straight-line basis over the term of the relevant lease. 

10.2 MUNICIPALITY AS LESSOR 

Under a finance lease, the municipality recognises the lease payments to be received in terms of 

a lease agreement as an asset (receivable). The receivable is calculated as the sum of all the minimum 

lease payments to be received, plus any unguaranteed residual accruing to the municipality, 

discounted at the interest rate implicit in the lease. The receivable is reduced by the capital portion 

of the lease instalments received, with the interest portion being recognised as interest revenue 

on a time proportionate basis. The accounting policies relating to derecognition and impairment of 

financial instruments are applied to lease receivables. 

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant 

lease. 

11 REVENUE 

11.1 REVENUE FROM EXCHANGE TRANSACTIONS 

Revenue from exchange transactions refers to revenue that accrued to the municipality directly 

in return for services rendered / goods sold, the value of which approximates the consideration 

received or receivable. 

Service charges relating to water are based on consumption. Meters are read on a monthly basis 

and are recognised as revenue when invoiced. Provisional estimates of consumption are made 

monthly when meter readings have not been performed. The provisional estimates of consumption 

are recognised as revenue when invoiced. Adjustments to provisional estimates of consumption are 

made in the invoicing period in which meters have been read. These adjustments are recognised as 

revenue in the invoicing period. The estimates of consumption between meter readings are based 

on the previous three months average usage. 

Service charges relating to refuse removal are recognised on a monthly basis in arrears by applying 

the approved tariff to each property that has improvements. 

Service charges from sewerage and sanitation are based on the number of sewerage connections on 

each developed property using the tariffs approved from Council and are levied monthly. 

Interest revenue is recognised on a time proportion basis. 

Revenue from the rental of facilities and equipment is recognised on a straight-line basis over the 

term of the lease agreement. 

Dividends are recognised on the date that the Municipality becomes entitled to receive the dividend. 

Revenue arising from the application of the approved tariff of charges is recognised when the relevant 

service is rendered by applying the relevant gazetted tariff. This includes the issuing of licences 

and permits. 

Revenue from the sale of goods is recognised when substantially all the risks and rewards in those 

goods is passed to the consumer. 

Revenue arising out of situations where the municipality acts as an agent on behalf of another entity 

(the principal) is limited to the amount of any fee or commission payable to the municipality as 

compensation for executing the agreed services. 


11.2 REVENUE FROM NON-EXCHANGE TRANSACTIONS 

Revenue from non-exchange transactions refers to transactions where the municipality received 

revenue from another entity without directly giving approximately equal value in exchange. Revenue 

from non-exchange transactions is generally recognised to the extent that the related receipt 

or receivable qualifies for recognition as an asset and there is no liability to repay the amount. 

Revenue from property rates is recognised when the legal entitlement to this revenue arises. Penalty 

interest on unpaid rates is recognised on a time proportionate basis. 

Fines constitute both spot fines and summonses. Revenue from spot fines and summonses is recognised 

when payment is received, together with an estimate of spot fines and summonses that will 

be received based on past experience of amounts collected. 

Revenue from public contributions and donations is recognised when all conditions associated with 

the contribution have been met or where the contribution is to finance property, plant and equipment, 

when such items of property, plant and equipment qualifies for recognition and first becomes 

available for use by the municipality. Where public contributions have been received but the municipality 

has not met the related conditions, a deferred income (liability) is recognised. 

Contributed property, plant and equipment is recognised when such items of property, plant and 

equipment qualifies for recognition and become available for use by the municipality. 

Revenue from the recovery of unauthorised, irregular, fruitless and wasteful expenditure is based on 

legislated procedures, including those set out in the Municipal Finance Management Act (Act No.56 

of 2003) and is recognised when the recovery thereof from the responsible councillors or officials 

is virtually certain. 

11.3 GRANTS, TRANSFERS AND DONATIONS 

Grants, transfers and donations received or receivable are recognised when the resources that have 

been transferred meet the criteria for recognition as an asset. A corresponding liability is raised to 

the extent that the grant, transfer or donation is conditional. The liability is transferred to revenue 

as and when the conditions attached to the grant are met. Grants without any conditions attached 

are recognised as revenue when the asset is recognised. 

12 BORROWING COSTS 

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying 

assets are capitalised to the cost of that asset unless it is inappropriate to do so. The municipality 

ceases the capitalisation of borrowing costs when substantially all the activities to prepare 

the asset for its intended use or sale are complete. It is considered inappropriate to capitalise borrowing 

costs where the link between the funds borrowed and the capital asset acquired cannot be 

adequately established. Borrowing costs incurred other than on qualifying assets are recognised as 

an expense in surplus or deficit when incurred. 

13 EMPLOYEE BENEFITS 

13.1 SHORT TERM EMPLOYEE BENEFITS 

Remuneration to employees is recognised in the Statement of financial performance as the services 

are rendered, except for non-accumulating benefits, which are only recognised when the specific 

event occurs. 

The municipality has opted to treat its provision for leave pay as a provision. 

The costs of all short-term employee benefits such as leave pay, are recognised during the period in 

which the employee renders the related services. The liability for leave pay is based on the total accrued 

leave days at year end and is shown as a provision. The municipality recognised the expected 

cost of performance bonuses only when the municipality has a present legal or constructive obligation 

to make such payment and a reliable estimate can be made. 


13.2 DEFINED CONTRIBUTION PLANS 

A defined contribution plan is a plan under which the municipality pays fixed contributions into a 

separate entity. The municipality has no legal or constructive obligation to pay further contributions 

if the fund does not hold sufficient assets to pay all employees the benefits relating to service in the 

current or prior period. 

The municipality’s contributions to the defined contribution funds are established in terms of the 

rules governing those plans. Contributions are recognised in the Statement of financial performance 

in the period in which the service is rendered by the relevant employees. The municipality has not 

further payment obligations once the contributions have been paid. 

14 IMPAIRMENT OF ASSETS 

14.1 IMPAIRMENT OF ASSETS 

The municipality assesses at each reporting date whether there is any indication that an asset may 

be impaired. If any such indication exists, the municipality estimates the recoverable service amount 

of the asset. 

Irrespective of whether there is any indication of impairment, the municipality also: 

- tests intangible assets with an indefinite useful life or intangible assets not yet available for use for 

impairment annually by comparing its carrying amount with its recoverable amount. This impairment 

test is performed during the annual period and at the same time every period. 

If there is any indication that an asset may be impaired, the recoverable service amount is estimated 

for the individual asset. If it is not possible to estimate the recoverable service amount of the individual 

asset, the recoverable service amount of the cash-generating unit to which the asset belongs 

is determined. 

The recoverable service amount of an asset or a cash-generating unit is the higher of its fair value 

less costs to sell and its value in use. 

If the recoverable service amount of an asset is less than its carrying amount, the carrying amount of 

the asset is reduced to its recoverable service amount. That reduction is an impairment loss. 

An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is 

recognised immediately in surplus or deficit. Any impairment loss of a revalued asset is treated as 

a revaluation decrease. 

An impairment loss is recognised for cash-generating units if the recoverable service amount of the 

unit is less than the carrying amount of the unit. The impairment loss is allocated to reduce the carrying 

amount of the assets of the unit as follows: 

- to the assets of the unit, pro rata on the basis of the carrying amount of each asset in the unit. 

A municipality assesses at each reporting date whether there is any indication that an impairment 

loss recognised in prior periods for assets may no longer exist or may have decreased. If any such 

indication exists, the recoverable service amounts of those assets are estimated. 

The increased carrying amount of an asset attributable to a reversal of an impairment loss does not 

exceed the carrying amount that would have been determined had no impairment loss been recognised 

for the asset in prior periods. 


A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortisation 

is recognised immediately in surplus or deficit. Any reversal of an impairment loss of a revalued 

asset is treated as a revaluation increase. 


In terms of Directive 4 the municipality are not required to measure Property, plant and equipment, 

Intangible assets and Investment Property for reporting periods beginning on or after a date within 

three years following the date of initial adoption of the relevant Standard of GRAP. The Standard 

of GRAP on Property, Plant and Equipment, Intangible assets and Investment Property was initially 

adopted on 1 July 2009. 

Due to the fact that the municipality has taken advantage of the transitional provisions, the municipality 

have not assess impairment. 

15 VALUE ADDED TAX 

The Municipality accounts for Value Added Tax on the payment basis. 

16 TRANSITIONAL PROVISIONS 

The Municipality has taken advantage of the transitional provisions for Medium and Low Capacity 

Municipalities as set out in Directive 4 paragraph .63 to .70 (Investment property), .73 to .83 (Property, 

plant and equipment) and .110 to .118 (Intangible assets) issued by the Accounting Standards 

Board. This further brings into effect paragraph .94E of Directive 4 which indicates that municipalities 

are not required to recognise provisions (which form part of the cost of an asset) in their financial 

statements as a result of applying the transitional provisions in other Standards of GRAP and 

are required to apply the disclosure requirements about the provisions related to those assets in 

accordance with the relevant GRAP standard. 



NOTES TO THE FINANCIAL STATEMENTS 


1 CASH AND CASH EQUIVALENTS 


R 

R 

Cash and cash equivalents consist of the following: 

Cash at bank 24 930 850 24 457 632 

24 930 850 24 457 632 

The Municipality has the following bank accounts: - 

Current Account (Primary Bank Account) 

First National Bank - Cofimvaba Branch: Account Num- 

Cash book balance at beginning of year 14 162 708 9 645 101 

Cash book balance at end of year 17 485 092 14 162 708 

Bank statement balance at beginning of year 15 583 139 18 197 593 

Bank statement balance at end of year 17 586 189 15 583 139 

Current Account (Other Account) 

First National Bank - Cofimvaba Branch: Account Number 

62101651398 


62090678320 


62022332316 

Cash book balance at beginning of year 10 294 923 7 807 935 

Cash book balance at end of year 7 445 758 10 294 923 

Bank statement balance at beginning of year 10 695 880 2 410 157 

Bank statement balance at end of year 7 680 392 10 695 880 

Cash on hand 884 884 

Total cash and cash equivalents 24 931 734 24 458 515 


2 CONSUMER DEBTORS 

Gross Balances 

Provision for 

Doubtful Debts 

Net Balance 

Trade receivables R R R 


Service debtors 

Rates 3 777 547 (3 155 745) 621 802 

Refuse 624 181 (449 520) 174 661 

Other services 496 733 (362 208) 134 525 

Total 4 898 461 (3 967 473) 930 988 

as at 30 June 2009 

Service debtors 

Rates 2 363 756 (793 223) 1 215 487 

Water 791 041 (223 848) 791 041 

Sewerage 95 428 (27 004) 95 428 

Refuse 315 101 (104 194) 315 101 

Total 3 565 326 (1 148 269) 2 417 057 

Rates: Ageing 

Current (0 – 30 days) 125 485 78 521 

31 - 60 Days 117 616 73 597 

61 - 90 Days 108 034 67 601 

91 - 120 Days 3 426 412 2 144 037 

Total 3 777 547 2 363 756 

Electricity, Water, Sewerage and Refuse: Ageing 

31 - 60 Days 129 081 97 209 

61 - 90 Days 916 116 880 022 

91 - 120 Days 75 718 224 339 

Total 1 120 915 1 201 570 

Reconciliation of the doubtful debt provision 

Balance at beginning of the year 1 148 269 3 753 753 

Contributions to provision 2 819 204 1 148 269 

Doubtful debts written off against provision - (3 753 753) 

Balance at end of year 3 967 473 1 148 269 

Trade receivables impaired 

As of 30 June 2010, trade receivables of R 2,8 million 

(2009: R 1,1 million) were impaired and provided for. 

The amount of the provision was R 3,9 million as of 30 

June 2010 (2009: R 1,1 million). 

The fair value of trade and other receivables approximates 

their carrying amounts. 


3 TRADE RECEIVABLES FROM EXCHANGE TRANSACTIONS 

Trade debtors 309 186 1 201 570 

309 186 1 201 570 

Credit quality of trade and other receivables 

Trade and other receivables consists of: 

Trade receivables 

Amounts included under trade receivables from exchange 

transactions 

Amounts included under other receivables from nonexchange 

transactions 

309 186 1 201 570 

621 802 1 215 487 

930 988 2 417 057 

The following represents information on the credit quality 

of trade receivables that are neither past due nor 

impaired: 

Trade receivables 

Counterparties with external credit rating 

A (Government accounts) 139 648 

B (Businesses) 316 536 

C (Domestic and other) 474 804 

930 988 

Analysis of table: 

A - The debtors are of good credit quality and no default 

in payment is expected. 

B - The debtors are usual good payers, but there is a 

possibility that the debtor may not be able to pay on 

time. 

C - These debtors usually pay, but have previously paid 

late and therefore there is a possibility that these debtors 

will not be recoverable. 

Trade and other receivables past due but not impaired 

The ageing of amounts past due but not impaired is as 

follows: 

Trade receivables 930 988 2 417 057 

1-30 days past due - - 

31-60 days past due 246 697 170 806 

61 - 90 days past due 684 291 2 246 251 

930 988 2 417 057 


4 

OTHER RECEIVABLES FROM NON-EXCHANGE 

TRANSACTIONS 

Assessment rate debtors 621 802 1 215 487 

621 802 1 215 487 

5 OTHER RECEIVABLES FROM EXCHANGE TRANSACTIONS 

Other debtors 9 876 467 5 286 093 

Total Other Debtors 9 876 467 5 286 093 

6 INVESTMENTS 

Deposits - - 

Call investments 838 775 590 138 

Other investments 2 017 918 1 725 136 

2 856 693 2 315 274 

7 NON CURRENT INVESTMENTS 

Financial Instruments 

Other investments - 208 995 

- 208 995 



NOTES TO THE FINANCIAL STATEMENTS 


8 

PROPERTY, PLANT AND 

EQUIPMENT 

8.1 

Reconciliation of Carrying 

Value 

Land Buildings Infrastructure Community Other Assets Total 

R R R R R R 

as at 1 July 2009 

Cost/Revaluation 

- - 

- - 

- - - - 

- - - - 

Acquisitions 537 739 8 806 125 14 330 964 3 150 214 1 776 088 28 601 130 

Capital under Construction 

- 2 313 315 719 575 57 046 - 3 089 936 

as at 30 June 2010 537 739 8 806 125 14 330 964 3 150 214 1 776 088 28 601 130 

Cost/Revaluation 

Accumulated depreciation 

and impairment 

losses 

537 739 

8 806 125 14 330 964 3 150 214 1 776 088 28 601 130 

- - 

- - - - 

Refer to Appendix B for more detail on property, 

plant and equipment 

8.2 Other information 

The Municipality has 

taken advantage of the 

transitional provisions 

for Medium and Low 

Capacity Municipalities 

as set out in Directive 

4 paragraph .73 to .83 

issued by the Accounting 

Standards Board. 

Municipalities who take 

advantage of the transitional 

provisions are 

not required to measure 

property, plant and 

equipment for reporting 

periods beginning on or 

after a date within three 

years following the date 

of initial adoption of 

the Standard of GRAP 

on Property, Plant and 

Equipment. 


APPENDIX A 

SCHEDULE OF EXTERNAL LOANS 


EXTERNAL LOANS Loan number Redeemable Date 

Balance at 30 

June 2009 

Received during 

the period 

Redeemed / 

written off during 

the period 

Balance at 30 

June 2010 

Carrying Value of 

Property, Plant & 

Equipment 

R R R R R R 

Other Costs in 

accordance with 

MFMA 

GOVERNMENT LOANS 

- DBSA @ 5% EC102527 30/09/2028 3 872 962 - (226 738) 3 646 224 3 792 927 - 

Total Government Loans 

TOTAL EXTERNAL LOANS 


Planning by Reviewed Performed by Final review 

Client details 

Client name: Intsika Yethu Municipality 

Year end: 30 June 2011

INTSIKA YETHU MUNICIPALITY 

Annual Financial Statements 

for the year ended 30 June 2011


Annual Financial Statements for the year ended 30 June 2011 

General Information 

Legal form of entity 


Mayoral committee Before 18 May 2011 After 18 May 2011 

Executive Mayor Mr SD Plata K Vimbayo 

Speaker Mr M Sokujika AZ Mbotholoshi 

Chief Wip Mr AZ Mbotholoshi S Myataza 

Councillors K Vimbayo Elected Executive Mayor 

WN Mdwayingana WN Mdwayingana 

N Tshangana 

N Tshangana - Nkota 

S Myataza 

Elected Chief Whip 

N Boyana 

KF Mdleleni 

N Berana 

J Cengani 

K Ntsaluba 

K Ntsaluba 

HM Hewu 

HM Hewu 

N Magaga 

N Magaga 

N Tsomo 

MM Mbebe 

MM Mbebe 

ML Papiyana 

ML Papiyana 

Z Qayiya 

Z Qayiya 

D Kapsile 

D Kapsile 

NE Stata 

NE Stata 

P Nqandela 

P Nqandela 

MN Mkhumbuzi 

M Mahali 

M Mahali 

NS Mafanya 

NS Mafanya 

LN Ntshanka - 

L Mbambiso - 

TSN Bizana - 

NT Tayitile - 

FN Dangazele 

FN Dangazele 

MN Rigala 

M Yamile 

M Yamile 

N Giyose - 

Z Jabanga - 

NF Kopman - 

M Kolofana - 

MG Kuse - 

VG Matomela 

VG Matomela 

B Mboniswa 

B Mboniswa 

J Mdekazi - 

NE Mdlungu - 

N Mteli - 

MG Ntshinka - 

JN Peter - 

M Shasha 

M Shasha 

MT Shugu - 

S Tame 

S Tame 

PN Tukwayo - 

V Tyhulu - 

M Yotsi - 

1



General Information 

Grading of local authority Grade 2 

- N Ntloko 

- ZS Matshikiza 

- N Bani 

- N Jada 

- NH Mgodeli 

- NA Somdyala 

- M Zulu 

- HM Nobongoza 

- NP Gadeni 

- MA Mbotshane 

- MI Bititsha 

- Z Mxi 

- S Mkunyana 

- M Gulubela 

- AN Rotyi 

- N Mto 

- NV Hexana 

- NG Futiso 

Chief Finance Officer (CFO) 

Mr M Dyushu 

Accounting Officer 

Mr Zamuxolo Shasha 

Business address Building No. 201 

Main Street 

Cofimvaba 

5380 

Postal address Private Bag X 1251 

Cofimvaba 

5380 

Bankers 

Auditors 

First National Bank 

Auditor General of South Africa 

2



Index 

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

Index 

Page 

Accounting Officer's Responsibilities and Approval 4 

Audit Committee Report 5 - 6 

Accounting Officer's Report 9 - 10 

Statement of Financial Position 11 

Statement of Financial Performance 12 

Statement of Changes in Net Assets 13 

Statement of Cash Flows 14 

Accounting Policies 15 - 22 

Notes to the Annual Financial Statements 23 - 39 

Appendixes: 

Appendix A: Schedule of External loans 41 

Appendix E(1): Actual versus Budget (Revenue and Expenditure) 48 

Abbreviations 

DBSA 

SA GAAP 

GRAP 

GAMAP 

IMFO 

MFMA 

MIG 

Development Bank of South Africa 

South African Statements of Generally Accepted Accounting Practice 

Generally Recognised Accounting Practice 

Generally Accepted Municipal Accounting Practice 

Institute of Municipal Finance Officers 

Municipal Finance Management Act 

Municipal Infrastructure Grant (Previously CMIP) 

3



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 annual financial statements and related financial 

information included in this report. It is the responsibility of the accounting officer to ensure that the annual financial statements 

fairly present the state of affairs of the municipality as at the end of the financial year and the results of its operations and cash 

flows for the period then ended. The external auditors are engaged to express an independent opinion on the annual financial 

statements and was given unrestricted access to all financial records and related data. 

The annual financial statements have been prepared in accordance with Standards of Generally Recognised Accounting 

Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board. 

The annual financial statements are based upon appropriate accounting policies consistently applied and supported by 

reasonable and prudent judgements and estimates. 

The accounting 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 annual 

financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, 

assurance against material misstatement or deficit. 

The accounting officer has reviewed the municipality’s cash flow forecast for the year to 30 June 2012 and, in the light of this 

review and the current financial position, he is satisfied that the municipality has or has access to adequate resources to 

continue in operational existence for the foreseeable future. 

The municipality is largely dependent on the grant allocated through the Division of revenue act (Dora) for continued funding of 

operations. The annual financial statements are prepared on the basis that the municipality is a going concern and that the 

Intsika Yethu Municipality has neither the intention nor the need to liquidate or curtail materially the scale of the municipality. 

Although the accounting officer is primarily responsible for the financial affairs of the municipality, he is supported by the 

municipality's Chief Financial Officer. 

The Office of the Auditor General is responsible for independently reviewing and reporting on the municipality's annual 

financial statements. The annual financial statements have been examined by the municipality's external auditors and their 

report is presented on page 7. 

The annual financial statements set out on pages 9 to 39, which have been prepared on the going concern basis, were 

approved by the on 30 August 2011 and were signed on its behalf by: 


Municipal Manager 

4



Audit Committee Report 

We are pleased to present our report for the financial year ended 30 June 2011. 

Audit committee members and attendance 

The audit committee consists of the members listed hereunder and should meet 4 times per annum as per its approved terms 

of reference. During the current year 6 number of meetings were held. 

Name of member 

Number of meetings attended 

Mr Abor Yeboah (Chairperson) 6 out of 6 

Mrs Tracey Putzier 5 out of 6 

Ms Zoleka Madikazi 4 out of 6 

Audit committee responsibility 

We report that we have adopted appropriate formal terms of reference in our charter in line with the requirements of section 

38(10)(1) of the PFMA and Treasury Regulation 3.1. We further report that we have conducted our affairs in compliance with 

this internal audit charter. 

The effectiveness of internal control 

The system of internal controls applied by the municipality over financial and risk management is effective, efficient and 

transparent. In line with the MFMA and the King II Report on Corporate Governance requirements, Internal Audit provides 

the Audit Committee and management with assurance that the internal controls are appropriate and effective. This is 

achieved by means of the risk management process, as well as the identification of corrective actions and suggested 

enhancements to the controls and processes. From the various reports of the Internal Auditors, the Audit Report on the 

annual financial statements, and the management letter of the Auditor-General South Africa, it was noted that no matters 

were reported that indicate any material deficiencies in the system of internal control or any deviations there from. 

Accordingly, we can report that the system of internal control over financial reporting for the period under review was 

efficient and effective. 

The quality of in year management and monthly/quarterly reports submitted in terms of the MFMA and the Division of Revenue 

Act. 

We are satisfied with the content and quality of monthly and quarterly reports prepared and issued by the auditors of the 

municipality during the year under review. 

Evaluation of annual financial statements 

We have: 

 

 

 

 

 

Reviewed and discussed the audited annual financial statements to be included in the annual report, with the 

Auditor-General and the auditors; 

Reviewed the Auditor-General of South Africa's management letter and management’s response thereto; 

Reviewed changes in accounting policies and practices; 

Reviewed the entities compliance with legal and regulatory provisions; 

Reviewed significant adjustments resulting from the audit. 

We concur with and accept the Auditor-General of South Africa's report the annual financial statements, and are of the opinion 

that the audited annual financial statements should be accepted and read together with the report of the Auditor-General of 

South Africa. 

Internal audit 

We are satisfied that the internal audit function is operating effectively and that it has addressed the risks pertinent to the 

municipality and its audits. 

Auditor-General of South Africa 

We have met with the Auditor-General of South Africa to ensure that there are no unresolved issues. 

Chairperson of the Audit Committee 

5



Audit Committee Report 

Date: 

6

Report of the Auditor General 

To the Provincial Legislature of Intsika Yethu Municipality 

Report on the financial statements 

I have audited the accompanying annual financial statements of the Intsika Yethu Municipality which comprise the statement of 

financial position as at 30 June 2011, statement of financial performance, statement of changes in net assets and cash flow 

statement for the year then ended, and a summary of significant accounting policies and other explanatory notes, and the 

[directors’ / accounting officer’s / accounting authority’s] report, as set out on pages 9 to 39. 

Responsibility of the for the annual financial statements 

The accounting officer is responsible for the preparation and fair presentation of these annual financial statements in 

accordance with [the applicable reporting framework/basis of accounting] [and in the manner required by the [Public Finance 

Management Act, 1999 (Act No. 1 of 1999) (PFMA)] [Local Government: Municipal Finance Management Act, 2003 (Act No. 56 

of 2003) (MFMA)] [Auditor-General audit circular 1 of 2005] and the [Companies Act, 1973 (Act No. 61 of 1973)] [any applicable 

enabling legislation]. This responsibility includes: 

designing, implementing and maintaining internal control relevant to the preparation and fair presentation of annual 

financial statements that are free from material misstatement, whether due to fraud or error; 

selecting and applying appropriate accounting policies; and 

making accounting estimates that are reasonable in the circumstances. 

Responsibility of the Auditor-General 

As required by [section 188 of the Constitution of the Republic of South Africa, 1996 read with section 4 of the Public Audit Act, 

2004 (Act No. 25 of 2004) (PAA)] [and section XX of any applicable legislation], my responsibility is to express an opinion on 

these annual financial statements based on my audit. 

I conducted my audit in accordance with the International Standards on Auditing. Those standards require that I comply with 

ethical requirements and plan and perform the audit to obtain reasonable assurance whether the annual financial statements 

are free from material misstatement. 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual financial 

statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material 

misstatement of the annual financial statements, whether due to fraud or error. In making those risk assessments, the auditor 

considers internal control relevant to the entity’s preparation and fair presentation of the annual 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 entity’s internal control. 

An audit also includes evaluating the: 

appropriateness of accounting policies used; 

reasonableness of accounting estimates made by management; and 

overall presentation of the financial statements. 

Paragraph 11 et seq. of the Statement of Generally Recognised Accounting Practice, GRAP 1 Presentation of Financial 

Statements requires that financial reporting by entities shall provide information on whether resources were obtained and used 

in accordance with the legally adopted budget. As the budget reporting standard is still in the process of being developed, I 

have determined that my audit of any disclosures made by [name of entity] in this respect will be limited to reporting on noncompliance 

with this disclosure requirement. 

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

Basis of accounting 

The entity’s policy is to prepare annual financial statements on [the basis of accounting determined by the National Treasury] 

[entity-specific basis of accounting] as set out in [accounting policy note ] [note to the financial statements]. 

7

Report of the Auditor General 

In my opinion the annual financial statements present fairly, in all material respects, the financial position of Intsika Yethu 

Municipality as at 30 June 2011 and its financial performance and cash flows for the year then ended, in accordance with 

[the applicable reporting framework/basis of accounting] [and in the manner required by the PFMA/MFMA (if the entity falls 

within the scope of the PFMA/MFMA) and Companies Act, 1973 (if the entity falls within the scope of the Companies Act) or 

section xx of the entity’s enabling legislation (if the entity does not fall within the scope of the PFMA/MFMA)]. 

Without qualifying my audit opinion, I draw attention to the following matter(s): 

Auditor General of South Africa 

8



Accounting Officers Report 

The accounting officer submits his report for the year ended 30 June 2011. 

1. Incorporation 

The municipality was incorporated on 05 December 2000 and obtained its certificate to commence business on the same day. 

2. Review of activities 

Main business and operations 

The municipality is engaged in municipality and operates principally in South Africa. 

The operating results and state of affairs of the municipality are fully set out in the attached annual financial statements and 

do not in our opinion require any further comment. 

3. Going concern 

We draw attention to the fact that at 30 June 2011, the municipality had accumulated surplus of R 66 452 225 and that the 

municipality's total liabilities exceed its assets by R 36 074 102. 

The annual financial statements have been prepared on the basis of accounting policies applicable to a going concern. This 

basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of 

liabilities, contingent obligations and commitments will occur in the ordinary course of business. 

4. Subsequent events 

The accounting officer is not aware of any matter or circumstance arising since the end of the financial year. 

5. Accounting policies 

The annual financial statements prepared in accordance with the South African Statements of Generally Accepted Accounting 

Practice (GAAP), including any interpretations of such Statements issued by the Accounting Practices Board, and in 

accordance with the prescribed Standards of Generally Recognised Accounting Practices (GRAP) issued by the Accounting 

Standards Board as the prescribed framework by National Treasury. 

6. 

The accounting officer of the municipality during the year and to the date of this report is as follows: 

Name 


Nationality 

South African 

7. Corporate governance 

General 

The Municipality is committed to business integrity, transparency and professionalism in all its activities. As part of this 

commitment, the Municipality supports the highest standards of corporate governance and the ongoing development of best 

practice. 

The municipality confirms and acknowledges its responsibility to total compliance with the Code of Corporate Practices and 

Conduct ("the Code") laid out in the King Report on Corporate Governance for South Africa 2002. The Municipality discuss the 

responsibilities of management in this respect, at Councillors meetings and monitor the municipality's compliance with the code 

on a three monthly basis. 

The salient features of the municipality's adoption of the Code is outlined below: 

9



Accounting Officers Report 

Audit and risk committee 

In terms of section 166 of the Municipal Finance Management Act, each municipal entity must have an audit committee, 

subject to subsection (6). 

An audit committee is an independent advisory body which must: 

(a) advise the municipal council, the political office-bearers, the accounting officer and the management staff of the 

municipality, or the board of directors, the accounting officer and the management staff of the municipal entity. 

(b) review the annual financial statements to provide the council of the municipality or, in the case of a municipal entity, the 

council of the parent municipality and the board of directors of the entity, with an authoritative and credible view of the financial 

position of the municipality or municipal entity, its efficiency and effectiveness and its overall level of compliance with this Act, 

the annual Division of Revenue Act and any other applicable legislation. 

Internal audit 

The municipality has partailly outsourced its internal audit function to PriceWaterhouseCoopers (PWC) to assist the Municipal 

in-house internal audit team. This is in compliance with the Municipal Finance Management Act, 2003. 

8. Bankers 

First National Bank 

Account No. 62022331003 

Branch Name: Cofimvaba 

9. Auditors 

Auditor General of South Africa will continue in office for the next financial period. 

10



Statement of Financial Position 

Figures in Rand Notes 2011 2010 

Assets 

Cash and cash equivalents 2 9 934 517 24 435 645 

Current Assets 

Investments 2 405 299 2 399 860 

Other receivables from non-exchange transactions 5 11 506 873 4 883 778 

Trade receivables from exchange transactions 7 3 863 525 3 967 118 

VAT receivable 6 1 390 023 2 211 667 

29 100 237 37 898 068 

Non-Current Assets 

Property, plant and equipment 4 61 638 497 27 280 204 

Intangible assets 35 58 037 - 

61 696 534 27 280 204 

Non-Current Assets 61 696 534 27 280 204 

Current Assets 29 100 237 37 898 068 

Total Assets 90 796 771 65 178 272 

Liabilities 

Current Liabilities 

Current portion of borrowings 36 349 092 121 795 

Trade and other payables from exchange transactions 9 11 517 964 5 768 199 

Current Provisions 8 3 134 068 2 197 285 

15 001 124 8 087 282 

Non-Current Liabilities 

Non-Current Borrowing 9 343 428 3 524 429 

Non-Current Liabilities 9 343 428 3 524 429 

Current Liabilities 15 001 124 8 087 282 

Total Liabilities 24 344 552 11 611 711 

Assets 90 796 771 65 178 272 

Liabilities (24 344 552) (11 611 711) 

Net Assets 66 452 219 53 566 561 

11



Statement of Financial Performance 


Revenue 

Property rates 11 3 402 286 1 617 990 

Service charges 12 376 339 1 302 736 

Rental of facilities and equipment 427 566 495 686 

Fines 113 025 70 910 

Licences and Permits 1 256 813 667 617 

Government grants & subsidies 13 99 032 765 81 044 468 

Receipts 9 720 473 - 

Interest - outstanding receivables 522 832 90 896 

Interest - external investments 692 938 1 056 695 

Other income 14 635 602 550 186 

Total Revenue 116 180 639 86 897 184 

Expenditure 

Personnel 16 (42 290 417) (30 682 830) 

Remuneration of councillors 17 (10 877 367) (10 269 293) 

Finance costs 20 (4 197) (185 388) 

Bad debts 18 (7 062 239) (2 819 204) 

Repairs and maintenance (8 422 481) (2 950 807) 

Bulk purchases 24 (352 225) (503 651) 

Contracted services 22 (218 255) (113 229) 

General Expenses 15 (32 962 557) (23 420 352) 

Total Expenditure (102 189 738) (70 944 754) 

Gain on disposal of assets and liabilities 23 233 87 307 

Revenue 116 180 639 86 897 184 

Expenditure (102 189 738) (70 944 754) 

Other 23 233 87 307 

Surplus for the year 14 014 134 16 039 737 

12



Statement of Changes in Net Assets 

Figures in Rand 

Accumulated 

surplus 

Total net 

assets 

Opening balance as previously reported 37 527 060 37 527 060 

Adjustments 

Prior year adjustments (235) (235) 

Balance at 01 July 2009 as restated 37 526 825 37 526 825 

Changes in net assets 


Total changes 53 566 559 53 566 559 

Balance at 01 July 2010 52 438 091 52 438 091 

Changes in net assets 


Total changes 14 014 134 14 014 134 

Balance at 30 June 2011 66 452 225 66 452 225 

13



Statement of Cash Flows 


Cash flows from operating activities 

Receipts 

Cash recieved from ratepayers, government and other 110 828 817 92 702 502 

Payments 

Cash paid to suppliers and employees (96 448 768) (66 267 944) 

Finance costs (4 197) (185 388) 

Interest received 556 400 1 147 591 

(95 896 565) (65 305 741) 

Total receipts 110 828 817 92 702 502 

Total payments (95 896 565) (65 305 741) 

Net cash flows from operating activities 25 14 932 252 27 396 761 

Cash flows from investing activities 

Purchase of property, plant and equipment 4 (34 358 293) (27 280 204) 

Proceeds from sale of property, plant and equipment 4 23 233 87 307 

Purchase of intangible assets 35 (58 037) - 

Purchase of an asset (43 846) - 

Net cash flows from investing activities (34 436 943) (27 192 897) 

Cash flows from financing activities 

Repayment of current portion of borrowings 349 092 - 

Repayment of Borrowings 5 735 611 (226 738) 

Net cash flows from financing activities 6 084 703 (226 738) 

Net increase/(decrease) in cash and cash equivalents (14 501 125) (22 874) 

Cash and cash equivalents at the beginning of the year 24 435 642 24 458 516 

Cash and cash equivalents at the end of the year 2 9 934 517 24 435 642 

14



Accounting Policies 

1. Presentation of Annual Financial Statements 

The annual financial statements have been prepared in accordance with the effective Standards of Generally Recognised 

Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards 

Board, in accordance with Section 122(3) of the Municipal Finance Management Act, (Act No 56 of 2003). 

These annual financial statements have been prepared on an accrual basis of accounting and are in accordance with historical 

cost convention unless specified otherwise. Comparative amounts have been restated retrospectively to the extent possible. 

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 annual financial statements, management is required to make estimates and assumptions that affect the 

amounts represented in the annual 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 annual financial statements. Significant judgements include: 

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 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 including transaction costs once it meets the definition of investment property. 

However, where an investment property was acquired through a non-exchange transaction (i.e. where it acquired the 

investment property for no or a nominal value) its cost is its fair value as at the date of acquisition. Transaction costs are 

included in the initial measurement. 

Where investment property is acquired at no cost or for a nominal cost, 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. 

Compensation from third parties for investment property that was impaired, lost or given up is recognised in surplus or deficit 

when the compensation becomes receivable. 

Property interests held under operating leases are classified and accounted for as investment property in the following 

circumstances: 

When classification is difficult, the criteria used to distinguish investment property from owner-occupied property and from 

property held for sale in the ordinary course of business, are as follows: 

15




1.3 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 at no cost, or for a nominal cost, its cost is its fair value as at date of acquisition. 

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. 

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. 

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

Item 

Average useful life 


Roads and Paving 10 years 

Sewerage 15 years 

Community 

Buildings 30 years 

Community Halls 30 years 

Libraries 30 years 

Others 30 years 

Others 

Buildings 30 years 

Office Equipment 3 - 5 years 

Furniture and Fittings 10 years 

Bins and Containers 5 - 10 years 

Landfill sites 30 years 

Computer Equipment 4 years 

Items of property, plant and equipment 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. 

16




1.3 Property, plant and equipment (continued) 

Transitional provision 

According to the transitional provision, the municipality is not required to measure property, plant and equipment for reporting 

periods beginning on or after a date within three years following the date of initial adoption of the Standard of GRAP on 

Property, plant and equipment. Property, plant and equipment has accordingly been recognised at provisional amounts, as 

disclosed in note 4. The transitional provision expires on 30 June 2012. 

Until such time as the measurement period expires and property, plant and equipment is recognised and measured in 

accordance with the requirements of the Standard of GRAP on Property, plant and equipment, the municipality need not 

comply with the Standards of GRAP on: 

Presentation of Financial Statements (GRAP 1), 

The Effects of Changes in Foreign Exchange Transactions (GRAP 4), 

Leases (GRAP 13), 

Segment Reporting (GRAP 18), 

Non-current Assets Held for Sale and Discontinued Operations (GRAP 100) 

The exemption from applying the measurement requirements of the Standard of GRAP on Property, plant and equipment 

implies that any associated presentation and disclosure requirements need not be complied with for property, plant and 

equipment not measured in accordance with the requirements of the Standard of GRAP on Property, plant and equipment. 

1.4 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. 

An intangible asset is recognised when: 

it is probable that the expected future economic benefits or service potential that are attributable to the asset will 

flow to the municipality; and 

the cost or fair value of the asset can be measured reliably. 

Intangible assets are initially recognised at cost. 

An intangible asset acquired at no or nominal cost, the cost shall be its fair value as at the date of acquisition. 

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

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. 

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 

Computer software 

Useful life 

3 years 

17




1.5 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. 

Operating leases - lessor 

Under a finance lease, the municipality recognises the lease payments to be received in terms of a lease agreement as an 

asset (receivable). The receivable is calculated as the sum of all the minimum lease payments to be received, plus any 

unguaranteed residual accruing to the municipality, discounted at the interest arte implicit in the lease. The receivable is 

reduced by the capital portion of the lease instalments received, with the interest portion being recognised as interest revenue 

on a time proportionate basis. The accounting policies relating to derecognition and impairment of financial instruments are 

applied to lease receivables. 

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. 

Operating leases - lessee 

Leases are classified as finance leases where substantially all the risks and rewards associated with ownership of an asset are 

transferred to the municipality. Property, plant and equipment or intangible assets subject to finance lease agreements are 

initially recognised at the lower of the asset's fair value and the present value of the minimum leases payments. The 

corresponding liabilities are initially recognised at the inception of the lease and are measured as the sum of the minimum 

lease payments due in the terms of the lease agreement, discounted for the effect of interest. In discounting the lease 

payments, the municipality uses the interest rate that exactly discounts the lease payments and unguarenteed residual value to 

the fair value of the asset plus any direct costs incurred. 

Subsequent to initial recognition, the leased assets are accounted for in accordance with the stated accounting policies 

applicable to property, plant, equipment or intangibles. The lease liability is reduced by the leases payments, which are 

allocated between the lease finance costs and the capital repayment using the effective interest rate method. Lease finance 

costs are expensed when incurred. The accounting policies relating to derecognition of financial instruments are applied to 

lease payables. The lease asset is depreciated over the shorter of the asset's useful life or the lease term. 

Operating leases are those leases that do not fall within the scope of the above definition. Operating leases rentals are accrued 

on a straight-line basis over the term of the relevant lease. 

1.6 Employee benefits 

Short-term employee benefits 

Remuneration to employees is recognised in the Statement of financial performance as the services are rendered, except for 

non-accumulatating benefits, which are only recognised when the specific event occurs. 

The municility has opted to treat its provision for leave pay as a provision. 

The costs of all short-term employee benefits such as leave pay, are recognised during the period in which the employee 

renders the related services. The liability for leave pay is based on the total accrued leave days at year end and is shown as a 

provision. The municipality recognised the expected cost of performance bonuses only when the municipality has a present 

legal or constructive obligation to make such payment and a reliable estimate can be made. 

Defined contribution plans 

A defined contribution plan is a plan under which the municipality pays fixed contributions into a separate entity. The 

municipality has no legal or constructive obligation to pay furthuer contributions if the fund does not hold sufficient assets to 

pay all employees the benefits relating to service in the current or prior period. 

The municipality's contributions to the defined contribution funds are established in terms of the rules governing those plans. 

Contributions are recognised in the Statement of financial performance in the period in which the service is rendered by the 

relevant employees, The municipality has not further payment obligations once the contributions have been paid. 

18




1.7 Provisions and contingencies 

Provisions are recognised when the municipality has a present or constructive obligation as a result of past events, it is 

probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable 

estimate of the provision can be made, Provisions are reviewed at reporting date and adjusted to reflect the current best 

estimate. Where the effect is material, non-current provisions are discounted to their present value using a pre-tax discount 

rate that reflects the markers current assessment of the time value of money, adjusted for risks specific to the liability. 

The municipality does not recognise a contigent liability or contigent asset. A contigent liability is disclosed unless the 

possibility of an outflow of resources embodying economic benefits is remote. A contigent asset is disclosed where an 

inflow of economic benefits is probable. 

Future events that may affect the amount required to settle an obligation are reflected in the amount of a provision where 

there is sufficient objective evidence that they will occur. Gains from the expected disposal of assets are not taken into 

account in measuring a provision. Provisions are not recognised for future operating losses. The present obligation under 

an onerous contract is recognised and measured as a provision. 

A provision for restructuring costs is recognised only when the following criteria over and above the recognition criteris of a 

provision have been met:. 

a) The municipality has a detailed formal plan for the restructuring identifying at least: 

the business or part of a business concerned 

the principal locations affected 

the location, function and approximate number of employee who will be compensated for terminating their services 

the expenditures that will be undertaken; and 

when the plan will be implemented 

b) The municipality 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. 

Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note 30. 

1.8 Revenue from exchange transactions 

Revenue from exchange transactions refers to revenue that accrued to the municipality directly in return for services rendered/ 

goods sold, the value of which approximates the consideration received or receivable. 

Services charges relating to water are based on consumption. Meters are read on a monthly basis and are recognised as 

revenue when invoiced. Provisional estimates of consumption are made onthly when meter readings have not been performed. 

The provinsional estimates of consumption are recognised as revenue when invoiced. Adjustments to provisional estimates of 

consumption are made in the invoicing period in which meters have been read. These adjustments are recognised as revenue 

in the invoicing period. The estimates of consumption between meter readings are based on the previous three months 

average usage. 

Service charges relating to refuse removal are recognised on a monthly basis in arrears by applying the approved tariff to each 

property that has improvements. 

Service charges from sewerage and sanitation are based on the number of sewerage connections on each development 

property using the tariffs approved from Council and are levied monthly. 

Revenue from the rental of facilities and equipment is recognised on a straight-line basis over the term of the lease agreement. 

Revenue arising fro the application of the approved tariff of charges is recognised when the relevant service is rendered by 

applying the relevant gazetted tariff. This includes the issuing of licences and permits. 

Revenue from the sale of goods is recognised when substantially all the risks and rewards in those goods is passed to the 

consumer. 

Revenue arising out of situations where the municipality acts as an agent on behalf of another entity (the principal) is limited to 

the amount of any fee or commission payable to the municipality as compensation for executing the agreed services 

19




1.8 Revenue from exchange transactions (continued) 

Measurement 

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

Rendering of services 

Revenue from non-exchange transactions refers to transactions where the municipality received revenue from another entity 

without directly giving approximately equal value in exchange. Revenue from non-exchange transactions is generally 

recognised to the extent that the related receipt or receivable qualifies for recognition as an asset and there is no liability to 

repay the amount. 

Revenue from property rates is recognised when the legal entitlement to this revenue arises. Peanlty interest on unpaid rates is 

recognised on a time proportionate basis. 

Fines constitute both spot fines and summonses. Revenue from spot fines and summonses is recognised when payment is 

received, together with an estimate of spot fines and summonses that will be received based on past experiences of amounts 

collected. 

Revenue from public contributions and donations is recognised when all conditions associated with the contribution have been 

met or where the contribution is to finance property, plant and equipment, when such items of property, plant and equipment 

qualifies for recognition and first becomes available for use by the municipality. Where public contributions have been received 

but the municipality has not met the related conditions, a deferred income (liability) is recognised. 

Contributed property, plant and equipment is recognised when such items of property, plant and equipment qualifies for 

recognition and become available for use by the municipality. 

Revenue from the recovery of unauthorised, irregular, fruitless and wasterful expenditure is based on legislated procedures, 

including those set out in the Municipal Finance Management Act (Act No.56 of 2003) and is recognised when the recovery 

thereof from the responsible councillors or officials is virtually certain. 

Interest 

Interest revenue is recognised on a time proportion basis. 

1.9 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. 

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. 

20




1.9 Revenue from non-exchange transactions (continued) 

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. 

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 nonexchange 

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. 

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. 

Grants, Transfers and Donations 

Grants, transferes and donations received or receivable are recognised when the resources that have been transferred meet 

the criteria for recognition as an asset. A corresponding liability is raised to the extent that the grant, transfer or donation is 

conditional. The liability is transferred to revenue as and when the conditions attached to the grant are met. Grants without any 

conditions attached are recognised as revenue when the asset is recognised. 

21




1.10 Investment income 

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

1.11 Borrowing costs 

Borrowing costs that are directly attributed to the acquisition, construction or production of qualifying assets are capitalised 

to the cost of that asset unless it is inappropriate to do so. The municipality ceases the capitalisation of borrowing costs 

when substantially all the activities to prepare the asset for its intended use or sale are complete. It is considered 

inappropriate to capitalise borrowing costs where the link between the funds borrowed and the capital asset acquired 

cannot be adequately establised. Borrowing costs incurred other than on qualifying asets are recognised as an expense in 

surplus or deficit when incurred. 

1.12 Unauthorised expenditure 

Unauthorised expenditure means: 

overspending of a vote or a main division within a vote; and 

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. 

1.13 Fruitless 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. 

1.14 Irregular expenditure 

(a) this Act; or 

(b) the State Tender Board Act, 1968 (Act No. 86 of 1968), or any regulations made in terms of the Act; or 

(c) any provincial legislation providing for procurement procedures in that provincial government. 

Irregular expenditure is expenditure that is contrar to the Municipal Finance Management Act (Act No. 56 of 2003), the 

Municipality Systems Act (Act No. 32 of 2000), the Public Office Bearers Act (Act No. 20 of 1998) or is in contravention of the 

Municipality'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. 

1.15 Investments 

Where the carrying amount of an investment is greater than the estimated recoverable amount, it is written down immediately 

to its recoverable amount and an impairment loss is charged to the statement of financial performance. 

22



Notes to the Annual Financial Statements 

Figures in Rand 2011 2010 

2. Cash and cash equivalents 

Cash and cash equivalents consist of: 

Cash on hand 4 259 884 

Bank balances 9 930 258 24 434 761 

3. New standards and interpretations 

3.1 Standards and interpretations effective and adopted in the current year 

9 934 517 24 435 642 

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: 

GRAP 23: Revenue from Non-exchange Transactions 

Revenue from non-exchange transactions arises when an entity receives value from another entity without directly giving 

approximately equal value in exchange. An asset acquired through a non-exchange transaction shall initially be measured 

at its fair value as at the date of acquisition. 

This revenue will be measured at the amount of increase in net assets recognised by the municipality. 

An inflow of resources from a non-exchange transaction recognised as an asset shall be recognised as revenue, except to 

the extent that a liability is recognised for the same inflow. As an entity 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 will reduce the carrying 

amount of the liability recognised as recognise an amount equal to that reduction. 

This Standard has been approved by the Board but its effective date has not yet been determined by the Minister of 

Finance. The effective date indicated is a provisional date and could change depending on the decision of the Minister of 

Finance. 

The effective date of the standard is for years beginning on or after 01 April 2010. 

The municipality has adopted the standard for the first time in the 2011 annual financial statements. 

The impact of the standard is not material. 

3.2 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 2011 or later periods: 

GRAP 25: Employee benefits 

The objective of GRAP25 is to prescribe the accounting and disclosure for employee benefits. The Standard requires an 

municipality to recognise: 

a liability when an employee has provided service in exchange for employee benefits to be paid in the future; and 

an expense when an municipality consumes the economic benefits or service potential arising from service 

provided by an employee in exchange for employee benefits. 

GRAP25 must be applied by an employer in accounting for all employee benefits, except share based payment 

transactions. 

GRAP25 defines, amongst others, the following: 

Employee benefits as all forms of consideration given by an municipality in exchange for service rendered by 

employees; 

Defined contribution plans as post-employment benefit plans under which an municipality 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; 

23




3. New standards and interpretations (continued) 

Defined benefit plans as post-employment benefit plans other than defined contribution plans; 

Multi-employer plans as 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 municipality that employs the employees 

concerned; 

Other long-term employee benefits as employee benefits (other than post-employment benefits and termination 

benefits) that is not due to be settled within twelve months after the end of the period in which the employees 

render the related service; 

Post-employment benefits as employee benefits (other than termination benefits) which are payable after the 

completion of employment; 

Post-employment benefit plans as formal or informal arrangements under which an municipality provides postemployment 

benefits for one or more employees; 

Short-term employee benefits as employee benefits (other than termination benefits) that are due to be settled 

within twelve months after the end of the period in which the employees render the related service; 

State plans as plans other than composite social security programmes established by legislation which operate 

as if they are multi-employer plans for all entities in economic categories laid down in legislation; 

Termination benefits as 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; 

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

Short-term employee benefits; 

- All short-term employee benefits; 

- Short-term compensated absences; 

- Bonus, incentive and performance related payments; 

Post-employment benefits: Defined contribution plans; 

Other long-term employee benefits; 

Termination benefits. 


The municipality has early adopted the standard for the first time in the 2011 annual financial statements. 

The impact of the standard is set out in note Changes in Accounting Policy. 

GRAP 104: Financial Instruments 

The standard prescribes recognition, measurement, presentation and disclosure requirements for financial instruments. 

Financial instruments are defined as those contracts that results in a financial asset in one municipality and a financial 

liability or residual interest in another municipality. A key distinguishing factor between financial assets and financial 

liabilities and other assets and liabilities, is that they are settled in cash or by exchanging financial instruments rather than 

through the provision of goods or services. 

One of the key considerations in initially recognising financial instruments is the distinction, by the issuers of those 

instruments, between financial assets, financial liabilities and residual interests. Financial assets and financial liabilities are 

distinguished from residual interests because they involve a contractual right or obligation to receive or pay cash or another 

financial instrument. Residual interests entitle an municipality to a portion of another municipality’s net assets in the event of 

liquidation and, to dividends or similar distributions paid at management’s discretion. 

In determining whether a financial instrument is a financial asset, financial liability or a residual interest, an municipality 

considers the substance of the contract and not just the legal form. 

Where a single instrument contains both a liability and a residual interest component, the issuer allocates the instrument 

into its component parts. The issuer recognises the liability component at its fair value and recognises the residual interest 

as the difference between the carrying amount of the instrument and the fair value of the liability component. No gain or 

loss is recognised by separating the instrument into its component parts. 

Financial assets and financial liabilities are initially recognised at fair value. Where an municipality subsequently measures 

financial assets and financial liabilities at amortised cost or cost, transactions costs are included in the cost of the asset or 

liability. 

24





The transaction price usually equals the fair value at initial recognition, except in certain circumstances, for example, where 

interest free credit is granted or where credit is granted at a below market rate of interest. 

Concessionary loans are loans either received by or granted to another municipality on concessionary terms, e.g. at low 

interest rates and flexible repayment terms. On initial recognition, the fair value of a concessionary loan is the present value 

of the agreed contractual cash flows, discounted using a market related rate of interest for a similar transaction. The 

difference between the proceeds either received or paid and the present value of the contractual cash flows is accounted 

for as non-exchange revenue by the recipient of a concessionary loan in accordance with Standard of GRAP on Revenue 

from Non-exchange Revenue Transactions (Taxes and Transfers), and using the Framework for the Preparation and 

Presentation of Financial Statements (usually as an expense) by the grantor of the loan. 

Financial assets and financial liabilities are subsequently measured either at fair value or, amortised cost or cost. An 

municipality measures a financial instrument at fair value if it is: 

a derivative; 

a combined instrument designated at fair value, i.e. an instrument that includes a derivative and a non-derivative 

host contract; 

held-for-trading; 

a non-derivative instrument with fixed or determinable payments that is designated at initial recognition to be 

measured at fair value; 

an investment in a residual interest for which fair value can be measured reliably; and 

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

Derivatives are measured at fair value. Combined instruments that include a derivative and non-derivative host contract are 

accounted for as follows: 

Where an embedded derivative is included in a host contract which is a financial instrument within the scope of 

this Standard, an entity can designate the entire contract to be measured at fair value or, it can account for the 

host contract and embedded derivative separately using GRAP 104. An municipality is however required to 

measure the entire instrument at fair value if the fair value of the derivative cannot be measured reliably. 

Where the host contract is not a financial instrument within the scope of this Standard, the host contract and 

embedded derivative are accounted for separately using GRAP 104 and the relevant Standard of GRAP. 

Financial assets and financial liabilities that are non-derivative instruments with fixed or determinable payments, for 

example deposits with banks, receivables and payables, are measured at amortised cost. At initial recognition, an 

municipality can however designate such an instrument to be measured at fair value. 

An municipality can only measure investments in residual interests at cost where the fair value of the interest cannot be 

determined reliably. 

Once an municipality has classified a financial asset or a financial liability either at fair value or amortised cost or cost, it is 

only allowed to reclassify such instruments in limited instances. 

An entity derecognises a financial asset, or the specifically identified cash flows of an asset, when: 

the cash flows from the asset expire, are settled or waived; 

significant risks and rewards are transferred to another party; or 

despite having retained significant risks and rewards, an municipality has transferred control of the asset to 

another municipality. 

An municipality derecognises a financial liability when the obligation is extinguished. Exchanges of debt instruments 

between a borrower and a lender are treated as the extinguishment of an existing liability and the recognition of a new 

financial liability. Where an municipality modifies the term of an existing financial liability, it is also treated as the 

extinguishment of an existing liability and the recognition of a new liability. 

An municipality cannot offset financial assets and financial liabilities in the statement of financial position unless a legal right 

of set-off exists, and the parties intend to settle on a net basis. 

GRAP 104 requires extensive disclosures on the significance of financial instruments for an municipality’s statement of 

financial position and statement of financial performance, as well as the nature and extent of the risks that an municipality is 

exposed to as a result of its annual financial statements. Some disclosures, for example the disclosure of fair values for 

instruments measured at amortised cost or cost and the preparation of a sensitivity analysis, are encouraged rather than 

required. 

25





GRAP 104 does not prescribe principles for hedge accounting. An municipality is permitted to apply hedge accounting, as 

long as the principles in IAS 39 are applied. 

This Standard has been approved by the Board but its effective date has not yet been determined by the Minister of 

Finance. The effective date indicated is a provisional date and could change depending on the decision of the Minister of 

Finance. 


The municipality expects to adopt the standard for the first time in the 2012 annual financial statements. 

It is unlikely that the amendment will have a material impact on the municipality's annual financial statements. 

4. Property, plant and equipment 

Cost / 

Valuation 

2011 2010 

Accumulated Carrying value Cost / 

depreciation 

Valuation 

and 

accumulated 

impairment 

Accumulated Carrying value 

depreciation 

and 

accumulated 

impairment 

Land 537 739 - 537 739 537 739 - 537 739 

Buildings 11 145 324 - 11 145 324 8 365 712 - 8 365 712 

Motor vehicles 1 289 749 - 1 289 749 - - - 

Office equipment 926 267 - 926 267 - - - 

IT equipment 185 299 - 185 299 - - - 

Infrastructure 39 423 816 - 39 423 816 13 396 091 - 13 396 091 

Community 8 130 303 - 8 130 303 3 150 214 - 3 150 214 

Other property, plant and 

equipment 

- - - 1 830 448 - 1 830 448 

Total 61 638 497 - 61 638 497 27 280 204 - 27 280 204 

Reconciliation of property, plant and equipment - 2011 

Opening Additions Total 

balance 

Land 537 739 - 537 739 

Buildings 8 365 712 2 779 612 11 145 324 

Motor vehicles - 1 289 749 1 289 749 

Office equipment - 926 267 926 267 

IT equipment - 185 299 185 299 

Infrastructure 13 396 091 26 027 725 39 423 816 

Community 3 150 214 4 980 089 8 130 303 

Other property, plant and equipment 1 830 448 (1 830 448) - 

27 280 204 34 358 293 61 638 497 

26





4. Property, plant and equipment (continued) 

Reconciliation of property, plant and equipment - 2010 


balance 

Land - 537 739 537 739 

Buildings - 8 365 712 8 365 712 

Infrastructure - 13 396 091 13 396 091 

Community - 3 150 214 3 150 214 

Other property, plant and equipment - 1 830 448 1 830 448 

Borrowing costs capitalised 

- 27 280 204 27 280 204 

Infrastructure 120 256 - 

The Municipality has taken advantage of the transitional provisions for Medium and Low Capacity Municipalities as set out in 

Directive 4 paragraph .73 to.83 issued by the Accounting Standards Board. Municipalities who take advantage of the 

transitional provisions are not required to measure property, plant and equipment for reporting periods beginning on or after a 

date within three years following the date of initial adoption of the Standard of GRAP on Property, Plant and Equipment. 

5. Other receivables from non-exchange transactions 

Trade debtors (4 442 794) 4 098 216 

Employee costs in advance - 785 562 

Deposits 15 949 667 - 

6. Value Added Tax Receivable 

11 506 873 4 883 778 

Value Added Tax 1 390 023 2 211 667 

7. Trade and Other Receivables from Exchange Transactions 

Gross balances 

Rates 1 208 370 4 103 001 

Water 1 464 932 1 464 932 

Sewerage 280 004 280 004 

Refuse 408 366 624 182 

Housing rental 502 453 - 

Other (specify) (600) 1 462 472 

3 863 525 7 934 591 

Less: Provision for debt impairment 

Other (specify) (3 406 059) (3 967 473) 

Net balance 

Rates 1 208 370 4 103 001 

Water 1 464 932 1 464 932 

Sewerage 280 004 280 004 

Refuse 408 366 624 182 

Housing rental 502 453 - 

Other (specify) (600) (2 505 001) 

3 863 525 3 967 118 

27





7. Trade and Other Receivables from Exchange Transactions (continued) 

Rates 

Current (0 -30 days) (2 792 270) 125 485 

31 - 60 days 288 131 117 616 

61 - 90 days 120 500 108 034 

91 - 120 days 3 338 073 3 426 412 

954 434 3 777 547 

Refuse and Sewerage: Ageing 

Current (0 -30 days) 186 216 336 313 

31 - 60 days 31 806 3 044 592 

61 - 90 days 29 487 776 140 

91 - 120 days 572 835 - 

820 344 4 157 045 

Rental: Ageing 

Current (0 -30 days) 330 391 - 

31 - 60 days 32 213 - 

61 - 90 days 32 213 - 

91 - 120 days 40 490 - 

Summary of debtors by customer classification 

435 307 - 

Less: Provision for debt impairment 

Balance at beginning of the year - (1 148 269) 

Contributions to provision (3 406 059) (2 819 204) 

(3 406 059) (3 967 473) 

Reconciliation of debt impairment provision 

Contributions to provision (3 406 059) (3 967 473) 

8. Provisions 

Reconciliation of provisions - 2011 


Balance 

Leave Provision 2 197 285 727 508 2 924 793 

Landfill site - 209 275 209 275 

Legal proceedings provisions 

2 197 285 936 783 3 134 068 

A brief description of the nature of the obligation and the expected timing of any resulting outflows of economic benefits or 

service potential. 

An indication of the uncertainties about the amount or timing of those outflows. Where necessary to provide adequate 

information, an entity shall disclose the major assumptions made concerning future events, as addressed in paragraph .61. 

The amount of any expected reimbursement, stating the amount of any asset that has been recognised for that expected 

reimbursement. 

28





9. Trade and other payables from exchange transactions 

Trade payables 11 517 964 5 768 199 

10. Revenue 

Property rates 3 402 286 1 617 990 


Rental of facilities & equipment 427 566 495 686 

Income from agency services 113 025 70 910 

Fines 1 256 813 667 617 

Government grants & subsidies 99 032 765 81 044 468 

Receipts - CHDM (WSP) 9 720 473 - 

Interest earned - outstanding debtors 522 832 90 896 

Interest earned - external investments 692 938 1 056 695 

115 545 037 86 346 998 

The amount included in revenue arising from exchanges of goods or services 

are as follows: 


Rental of facilities & equipment 427 566 495 686 

Income from agency services 113 025 70 910 

Receipts 9 720 473 - 

10 637 403 1 869 332 

The amount included in revenue arising from non-exchange transactions is as 

follows: 

Taxation revenue 

Property rates 3 402 286 1 617 990 

Fines 1 256 813 667 617 

Transfer revenue 

Grants and Subsidies Received 99 032 765 81 044 468 

Interest earned - outstanding receivables 522 832 90 896 

Interest earned - external investments 692 938 1 056 695 

11. Property rates 

Rates received 

104 907 634 84 477 666 

Rates and taxes 3 402 286 1 617 990 

12. Service charges 

Refuse removal 376 339 459 713 

Sale of water - 843 023 

376 339 1 302 736 

29





13. Government grants and subsidies 

Equitable share 69 276 411 56 857 916 

MIG 17 564 000 17 032 518 

MSIG 750 000 500 000 

FMG 1 250 000 1 000 000 

LG-SETA 154 077 - 

CHDM Grant 5 705 049 4 828 898 

Mass-FP LED 2 703 228 736 408 

Local Government (IEC) 1 630 000 - 

EPWP Grant - 161 100 

99 032 765 81 116 840 

Equitable share 69 276 411 56 857 916 

MIG Grant 17 564 000 17 032 518 

MSIG Grant 750 000 500 000 

FMG 1 250 000 1 000 000 

Local Government Grants (IEC Projects) 1 630 000 - 

Chris Hani DM Grants 5 705 049 4 828 898 

LED Grants 2 703 228 736 408 

LG Seta 154 077 - 

Equitable Share 

99 032 765 81 116 840 

Current-year receipts 69 276 411 56 857 916 

No conditions as per DORA (69 276 411) (56 857 916) 

MIG Grant 

- - 


Conditions met - transferred to revenue (17 564 000) (17 032 518) 

MSIG Grant 

- - 

Current-year receipts 750 000 500 000 

Conditions met - transferred to revenue (750 000) (500 000) 

FMG Grant 

- - 



Local Government Grant (St Marks and IEC Grant) 

- - 

Current-year receipts 1 630 000 - 

Conditions met - transferred to revenue (1 630 000) - 

Chris Hani District Municipality Grant 

- - 

30





13. Government grants and subsidies (continued) 



Local Economic Development (LED) Grant 

- - 

Current-year receipts 2 703 228 736 408 

Conditions met - transferred to revenue (2 703 228) (736 408) 

EPWP Grant 

- - 

Current-year receipts - 161 100 

Conditions met - transferred to revenue - (161 100) 

Changes in level of government grants 

Based on the allocations set out in the Division of Revenue Act, (Act 1 of 2010), no significant changes in the level of 

government grant funding are expected over the forthcoming 3 financial years. 

14. Other income 

- - 

Cemetry 6 842 5 000 

Agency fees - 270 368 

Service charges 14 255 7 806 

Pound Fees 106 090 100 500 

Pound Auction Charges 349 791 54 556 

Toilet fees 50 666 22 451 

Sports field 8 904 581 

Tender receipts 74 549 88 924 

Business Licences 4 120 - 

Other income - Political Party 12 203 - 

Equipment here 3 435 - 

Chair hire 4 747 - 

635 602 550 186 

31





15. General expenses 

Advertising 224 722 165 362 

Auditors remuneration 1 371 936 1 276 749 

Bank charges 208 149 184 242 

Cleaning 156 546 14 158 

Consulting and professional fees 3 622 137 615 397 

Legal expenses 1 106 239 1 242 276 

Conferences and delegations 648 578 149 179 

Entertainment 8 708 134 950 

Insurance 723 929 253 555 

Lease rentals on operating lease 121 975 325 032 

Levies 617 798 23 193 

Subscription and publication 53 618 1 060 

Fuel and oil 1 244 848 1 153 367 

Postage and courier 3 537 5 114 

Printing and stationery 435 115 364 662 

Telephone and fax 1 404 098 1 012 444 

Training 1 053 054 1 158 016 

Travel - local 27 830 55 601 

Uniforms and overalls 247 830 124 445 

Membership fees 39 637 154 

Other rentals 323 083 286 810 

Stocks and material 35 692 68 324 

Other expenses 19 283 498 14 806 262 

32 962 557 23 420 352 

32





16. Employee related costs 

Employee related costs - Salaries and Wages 24 777 110 20 610 713 

Performance and other Bonuses 1 433 672 1 165 939 

Employee related costs - Contributions for UIF, Pensions and Medical aids 2 399 219 1 487 522 

UIF 22 487 - 

SDL 285 591 218 449 

Other payroll levies 69 650 8 051 

Leave pay provision charge 909 199 119 155 

Post-employment benefits - Pension - Defined contribution plan 3 526 128 2 875 009 

Travel, motor car, accommodation, subsistence and other allowances 535 910 - 

Overtime payments 967 863 384 141 

Acting allowances 2 618 599 367 440 

Car allowance 1 341 254 1 601 572 

Housing benefits and allowances 24 468 326 756 

Night shift allowance 322 097 1 122 481 

Cell phone allowance 310 390 395 602 

Payments for Casual Workers 2 746 780 - 

Remuneration of municipal manager 

42 290 417 30 682 830 

Annual Remuneration 596 202 497 083 

Performance Bonuses 68 687 43 512 

Travel,motor car, accommodation, subsistence and other allowances 192 880 244 881 

Remuneration of Chief Finance Officer 

857 769 785 476 


Performance Bonuses 43 283 - 


Remuneration of Community Services Director 

692 126 600 364 


Performance Bonus 43 283 27 979 


Remuneration of Corporate Service Director 

719 601 650 642 




Remuneration of Technical Service Director 

726 865 670 746 




Remuneration for Local Economic Development Director 

33 

760 472 683 707





16. Employee related costs (continued) 


Performance Bonuses 45 541 - 


17. Remuneration of councillors 

744 371 534 830 

Executive Council 8 561 691 7 819 192 

Councillors 2 315 676 2 438 049 

18. Debt impairment 

10 877 367 10 257 241 

Debt impairment - 1 148 260 

Debts impaired 3 406 059 2 819 204 

19. Investment revenue 

20. Finance costs 

3 406 059 3 967 464 

Current borrowings 4 197 185 388 

21. Auditors' remuneration 

Fees 1 371 936 1 276 749 

22. Contracted services 

Red Guard Security 218 255 113 229 

23. Grants and subsidies paid 

24. Bulk purchases 

Electricity 352 225 420 077 

Water - 83 574 

352 225 503 651 

34





25. Cash generated from operations 

Surplus 13 966 795 16 039 738 

Adjustments for: 

Loss on sale of assets and liabilities (23 233) (87 307) 

Debt impairment 7 062 239 - 

Movements in provisions 936 783 1 402 264 

Other non-cash items - 105 895 

Changes in working capital: 

Other receivables from non-exchange transactions (6 623 095) 402 315 

Consumer debtors (6 958 646) (1 550 060) 

Trade and other payables from exchange transactions 5 749 765 2 968 325 

VAT 821 644 8 097 317 

Unspent conditional grants and receipts - 18 274 

26. Related parties 

14 932 252 27 396 761 

` 

Relationships 

Councilor - Mr. WN Mdwayingana 

Previous Mayor - Mr. S. Plata 

Councilor - Mr M. Yamile 

Mr Z. Shasha - Municipal Manager 

Ms K. Vimbayo - Executive Mayor 

Mr. T. Totongwana - Assistant Manager Supply Chain Manager 

Ms Bekebu - Office Manager for the Office of the Municipal Manager 

Mrs N Nkuhlu - Corporate Service Manager 

Ms NF Kopman - Councilor 

The Municipality bought 10 sheeps to the amount of 

R10,000 

The Municipality sold the car that was used by the 

previous Mayor to Mr S. Plata at a price of R75,000 

(which was less than a market price of R120,000) 

after the Mayor's term in office had expired. Council 

resolution was obtained and the council approved the 

sale. 

The Municipality bought 10 sheeps to the amount of 

R10,000 

The following personnel share the same surname 

with the Municipal Manager: 

1. Mr M. Shasha - Councilor 

2. Mrs Shasha - Store controller 

Ms M Vimbayo - sister to the Mayor works as a 

security officer within the Municipality 

Mrs S. Totongwana, Assistant Supply Chain 

Manager's wife works as a SCM officer within the 

Municipality 

Ms S. Bekebu daugter to Ms Bekebu works as an 

Intern for the Finance department at the Municipality 

Mr S Mahlati a son to Mrs Nkuhlu works within the 


Ms Vuyokazi Kopman works within the Municipality 

Compensation to accounting officer and other key management 

Short-term employee benefits 4 501 205 - 

Post-employment benefits - Pension - Defined contribution plan 2 505 117 367 440 

27. Irregular expenditure 

7 006 322 367 440 

Add: Irregular Expenditure - current year 1 031 617 15 600 000 

Less: Amounts condoned (1 031 617) (15 600 000) 

- - 

Details of irregular expenditure condoned 

Condoned by (condoning authority) 

Ntlakotlaza Travel Agency Council Resolution dated 30 June 2011 1 031 617 

35





28. Deviation from supply chain management regulations 

Paragraph 12(1)(d)(i) of Government gazette No. 27636 issued on 30 May 2005 states that a supply chain management policy 

must provide for the procurement of goods and services by way of a competitive bidding process. 

Paragraph 36 of the same gazette states that the accounting officer may dispense with the official procurement process in 

certain circumstances, provided that he records the reasons for any deviations and reports them to the next meeting of the and 

includes a note to the annual financial statements. 

29. Commitments 

Authorised capital expenditure 

Approved and contracted for 

Infrastructure 11 521 067 32 951 205 

Community - 4 216 533 

Buildings - 4 237 074 

Other - 3 201 360 

11 521 067 44 606 172 

Approved but not yet contracted for 

Infrastructure 7 819 700 1 444 181 

Operating leases - as lessee (expense) 

Minimum lease payments due 

- within one year 178 828 162 571 

- in second to fifth year inclusive 256 133 232 848 

434 961 395 419 

Operating lease payments represent rentals payable by the municipality for certain of its office properties. Leases are 

negotiated for an average term of seven years and rentals are fixed for an average of three years. No contingent rent is 

payable. 

Operating leases - as lessor (income) 

Minimum lease payments due 

- within one year 148 830 135 300 

Operating Leases consists of the following: 

Certain of the municipality's land and building are held to generate rental income. Lease agreements are non-cancellable and 

have terms of 5 years. There are no contigent rents receivable. 

30. Contingencies 

Contingent Liability 

Claim for default 2 121 174 2 121 174 

The Municipality is being sued by the Municipal Councilors Pension Fund for the default of contribution payment. Should 

Council be unsuccessful in defending the claim, there is a possibility that the claim will be settled from Equitable share. 

36





31. Risk management 

Financial risk management 

The municipality’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate 

risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. 

Liquidity risk 

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 information below analyses the municipality’s financial liabilities and net-settled derivative 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. 

Later than one month and not later than one year (2011: R349,092) and Later than one year and not later than twenty years 

(2011: R9 343 428) 

Later than one month and not later than one year (2010: R121,795) and Later than one year and not later than twenty years 

(2010: R3,524,429) 

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. 

The municipality's interest rate risk arises from long term borrowings. Borrowings issued at fixed rates exposes the municipality 

to fair value interest rate risk. 

At year end, financial instruments exposed to interest rate risk were as follows: 

` 

Financial instrument 2011 2010 

Call deposits 2 405 299 2 399 860 

Development Bank of South Africa - Interest on a Loan 349 092 121 795 

32. Going concern 

We draw attention to the fact that at 30 June 2011, the municipality had accumulated surplus of R 14 014 134 and that the 

municipality's total liabilities exceed its assets by R 66 452 219. 

The annual financial statements have been prepared on the basis of accounting policies applicable to a going concern. This 

basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of 

liabilities, contingent obligations and commitments will occur in the ordinary course of business. 

33. Additional disclosure in terms of Municipal Finance Management Act 

Contributions to organised local government 

Current year subscription / fee 617 798 212 435 

Amount paid - current year (617 798) (130 834) 

Audit fees 

- 81 601 

Amount paid - current year 1 371 936 1 276 749 

37





33. Additional disclosure in terms of Municipal Finance Management Act (continued) 

PAYE and UIF 

Opening balance - 276 681 

Current year subscription / fee 2 222 905 4 273 147 

Amount paid - current year - (4 332 816) 

2 222 905 217 012 

The balance represents PAYE and UIF deducted from the June 2011 and June 2010 payroll. These amounts were paid during 

July 2011 and July 2010 respectively. 

Pension and Medical Aid Deductions 

Current year subscription / fee - (8 838 036) 

Amount paid - current year - 8 838 036 

VAT 

- - 

VAT receivable 1 390 023 2 211 667 

VAT output payables and VAT input receivables are shown in note . 

All VAT returns have been submitted by the due date throughout the year. 

34. Utilisation of Long-term liabilities reconciliation 

Long-term liabilities raised 349 092 - 

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. 

35. Intangible assets 

Computer software, internally 

generated 

Cost / 

Valuation 


Accumulated Carrying value Cost / 

amortisation 

Valuation 

and 

accumulated 

impairment 

Accumulated Carrying value 

amortisation 

and 

accumulated 

impairment 

58 037 - 58 037 - - - 

36. Current portion of borrowings 

At fair value through surplus or deficit 

DBSA Loan - Current portion transferred to current liability 

Terms and conditions 

349 092 121 795 

349 092 121 795 

- - 

Current liabilities 

Fair value through surplus or deficit 349 092 121 795 

38





36. Current portion of borrowings (continued) 

- - 

349 092 121 795 

37. Other revenue 

Other income 635 602 550 186 

38. Reconciliation between budget and statement of financial performance 

Reconciliation of budget surplus/deficit with the surplus/deficit in the statement of financial performance: 

Adjusted for: 

Gain on the sale of assets 23 233 87 307 

Deficit / surplus of actual revenue and expenditure in comparison to budget (20 367 392) (11 327 778) 

Other (specify) 34 358 293 27 280 205 

Net surplus per approved budget 14 014 134 16 039 734 

39



40 

The supplementary information presented does not form part of the annual financial statements and is unaudited

Development Bank of South Africa 3 646 224 6 046 296 - 9 692 520 - - 

3 646 224 6 046 296 - 9 692 520 - - 


Appendix A 


Schedule of external loans as at 30 June 2010 

Loan 

Number 

Redeemable Balance at 

30 June 

2010 

Received 

during the 

period 

Redeemed 

written off 

during the 

period 

Balance at 

30 June 


Carrying 

Value of 

Property, 

Plant & 

Equip 

Other Costs 

in 

accordance 

with the 

MFMA 

Rand Rand Rand Rand Rand Rand 

Loan Stock 

Structured loans 

Funding facility 

Development Bank of South 

Africa 

DBSA Loan EC102527 30 Sep 2028 3 646 224 6 046 296 - 9 692 520 - - 

Bonds 

Other loans 

Lease liability 

Annuity loans 

Government loans 

Total external loans 

3 646 224 6 046 296 - 9 692 520 - - 

Page 41

Analysis of property, plant and equipment as at 30 June 2010 

Cost/Revaluation Accumulated depreciation 



Appendix B 


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 


Community Assets 

Page 42

Computers - software & programming - 58 - - - - 58 - - - - - - 58 

- 58 - - - - 58 - - - - - - 58 

Intangible assets - 58 - - - - 58 - - - - - - 58 

- 58 - - - - 58 - - - - - - 58 



Appendix B 


Analysis of property, plant and equipment as at 30 June 2010 

Cost/Revaluation Accumulated depreciation 

Opening Additions Disposals Transfers Revaluations Other changes, Closing Opening Disposals Transfers Depreciation Impairment loss Closing Carrying 

Balance 


Balance value 


Heritage assets 

Specialised vehicles 

Other assets 

Total property plant and equipment 

Agricultural/Biological assets 

Intangible assets 

Investment properties 

Total 

Page 43

Segmental analysis of property, plant and equipment as at 30 June 2010 

Cost/Revaluation Accumulated Depreciation 

- - - - - - - - - - - - - - 

- - - - - - - - - - - - - - 

- - - - - - - - - - - - - - 

- - - - - - - - - - - - - - 

- - - - - - - - - - - - - - 

- - - - - - - - - - - - - - 

- - - - - - - - - - - - - - 

- - - - - - - - - - - - - - 

- - - - - - - - - - - - - - 

- - - - - - - - - - - - - - 

- - - - - - - - - - - - - - 

- - - - - - - - - - - - - - 

- - - - - - - - - - - - - - 

- - - - - - - - - - - - - - 

- - - - - - - - - - - - - - 

- - - - - - - - - - - - - - 

- - - - - - - - - - - - - - 

Municipality - - - - - - - - - - - - - - 

Municipal Owned Entities - - - - - - - - - - - - - - 

- - - - - - - - - - - - - - 

- - - - - - - - - - - - - - 

- - - - - - - - - - - - - - 

- - - - - - - - - - - - - - 

- - - - - - - - - - - - - - 

- - - - - - - - - - - - - - 

- - - - - - - - - - - - - - 

- - - - - - - - - - - - - - 

- - - - - - - - - - - - - - 

Page 44 


Appendix C 


Opening Additions Disposals Transfers Revaluations Other changes, Closing Opening Disposals Transfers Depreciation Impairment deficit Closing Carrying 

Balance 


Balance value 



Executive & Council/Mayor and 

- - - - - - - - - - - - - - 

Council 

Finance & Admin/Finance - - - - - - - - - - - - - - 

Planning and Development/Economic 

- - - - - - - - - - - - - - 

Development/Plan 

Health/Clinics - - - - - - - - - - - - - - 

Comm. & Social/Libraries and archives - - - - - - - - - - - - - - 

Housing - - - - - - - - - - - - - - 

Public Safety/Police - - - - - - - - - - - - - - 

Sport and Recreation - - - - - - - - - - - - - - 

Environmental Protection/Pollution 

- - - - - - - - - - - - - - 

Control 

Waste Water Management/Sewerage - - - - - - - - - - - - - - 

Road Transport/Roads - - - - - - - - - - - - - - 

Water/Water Distribution - - - - - - - - - - - - - - 

Electricity /Electricity Distribution - - - - - - - - - - - - - - 

Other/Air Transport - - - - - - - - - - - - - - 

Municipal Owned Entities 

- - - - - - - - - - - - - - 

Total

- - - - - - - - - - - - - - 

- - - - - - - - - - - - - - 

- - - - - - - - - - - - - - 


Appendix C 


Segmental analysis of property, plant and equipment as at 30 June 2010 

Cost/Revaluation Accumulated Depreciation 

Opening Additions Disposals Transfers Revaluations Other changes, Closing Opening Disposals Transfers Depreciation Impairment deficit Closing Carrying 

Balance 


Balance value 


Page 45


Appendix D 


Segmental Statement of Financial Performance for the year ended 

Prior Year 

Current Year 

Actual Actual Surplus 


Income Expenditure /(Deficit) 


Rand Rand Rand Rand Rand Rand 


- - - Executive & Council/Mayor and Council - - - 

- - - Finance & Admin/Finance - - - 

- - - Planning and Development/Economic 

- - - 


- - - Health/Clinics - - - 

- - - Comm. & Social/Libraries and archives - - - 

- - - Housing - - - 

- - - Public Safety/Police - - - 

- - - Sport and Recreation - - - 

- - - Environmental Protection/Pollution 

- - - 

Control 

- - - Waste Water Management/Sewerage - - - 

- - - Road Transport/Roads - - - 

- - - Water/Water Distribution - - - 

- - - Electricity /Electricity Distribution - - - 

- - - Other/Air Transport - - - 

- - - - - - 

- - - - - - 

- - - - - - 

- - - - - - 

- - - - - - 

- - - - - - 

- - - - - - 

- - - - - - 

- - - - - - 

- - - - - - 

- - - - - - 

- - - - - - 

- - - - - - 

- - - - - - 

- - - - - - 

- - - - - - 

- - - - - - 

- - - - - - 


- - - - - - 

- - - - - - 

- - - - - - 

- - - - - - 

Other charges 

- - - - - - 

- - - - - - 

- - - - - - 

- - - - - - 

- - - Municipality - - - 

- - - Municipal Owned Entities - - - 

- - - Other charges - - - 

- - - - - - 

- - - - - - 

- - - - - - 

Page 46


Appendix D 


Segmental Statement of Financial Performance for the year ended 

Prior Year 

Current Year 





Rand Rand Rand Rand Rand Rand Rand 

- - - - - - 

- - - - - - 

- - - - - - 

- - - - - - 

- - - - - - 

- - - - - - 

- - - - - - 

- - - Total - - - 

Page 47


Appendix E(1) 


Actual versus Budget(Revenue and Expenditure) for the year ended 30 June 


Current year Current year 


Act. Bal. Adjusted 

budget 

Variance 

Rand Rand Rand Var 

Explanation of Significant Variances 

greater than 10% versus Budget 

Revenue 

Sale of goods - - - - (Explanations to be recorded) 

Sale of goods in 

- - - - 

agricultural activities 

Rendering of services - - - - 

Rendering of services in 

- - - - 

agricultural activities 

Property rates 3 402 286 - 3 402 286 - 

Service charges 376 339 - 376 339 - 

Levies - - - - 

Property rates - penalties 

- - - - 

imposed and collection 

charges 

Sales of housing - - - - 

Construction contracts - - - - 

Royalty income - - - - 

Rental of facilities and 427 566 - 427 566 - 

equipment 

Interest received (trading) - - - - 

Dividends received - - - - 

Income from agency 113 025 - 113 025 - 

services 

Public contributions and 

- - - - 

donations 

Fines 1 256 813 - 1 256 813 - 

Licences and permits - - - - 

Government grants & 99 032 765 - 99 032 765 - 

subsidies 

Municipal Revenue UD1 9 720 473 - 9 720 473 - 

Municipal Revenue UD2 - - - - 

Revenue 1 522 832 - 522 832 - 

Revenue 2 692 938 - 692 938 - 

Miscellaneous other 

- - - - 

revenue 

Administration and 

- - - - 

management fees 

received 

Fees earned - - - - 

Commissions received - - - - 

Royalties received - - - - 

Rental income - - - - 

Discount received - - - - 

Recoveries - - - - 

Other income 1 - - - - 



Other income 635 601 - 635 601 - 

Other farming income 1 - - - - 




Other farming income - - - - 

Government grants - - - - 

Interest received - 

investment 

- - - - 

Page 48


Appendix E(1) 







budget 

Variance 



Interest received - other - - - - 

Dividends received - - - - 

Expenses 

116 180 638 - 116 180 638 - 

Personnel (42 290 416) - (42 290 416) - 

Manufacturing - 

- - - - 

Employee costs 

Remuneration of (10 877 366) - (10 877 366) - 

councillors 

Administration - - - - 

Transfer payments - - - - 

Depreciation - - - - 

Impairment - - - - 

Amortisation - - - - 

Impairments - - - - 

Reversal of impairments - - - - 

Finance costs (4 197) - (4 197) - 

Debt impairment (7 062 239) - (7 062 239) - 

Collection costs - - - - 

Repairs and maintenance 

- - - - 

- Manufacturing expenses 

Repairs and maintenance (8 422 481) - (8 422 481) - 

- General 

Repairs and maintenance 

- - - - 

- General 

Bulk purchases (352 225) - (352 225) - 

Contracted Services (218 255) - (218 255) - 

Grants and subsidies paid - - - - 

Cost of housing sold - - - - 

General Expenses (32 962 560) - (32 962 560) - 

Other (taken out of 

- - - - 

General expenses) 


- - - - 



- - - - 



- - - - 




- - - - 

Other revenue and costs 

(102 189 739) - (102 189 739) - 

Gain or loss on disposal 23 233 - 23 233 - 

of assets and liabilities 

Gain or loss on exchange 

- - - - 

differences 

Fair value adjustments - - - - 

Gains or losses on 

- - - - 

biological assets and 

agricultural produce 

Income from equity 

accounted investments 

- - - - 

Page 49


Appendix E(1) 







budget 

Variance 



Gain or loss on disposal 

- - - - 

of non-current assets held 

for sale or disposal 

groups 

Taxation - - - - 

Discontinued operations - - - - 

23 233 - 23 233 - 

Net surplus/ (deficit) for 

the year 

14 014 132 - 14 014 132 - 

Page 50


Appendix E(2) 


Budget Analysis of Capital Expenditure as at 30 June 


Additions Revised Variance Variance 

Budget 

Rand Rand Rand % 

Explanation of significant 

variances from budget 


Executive & Council/Mayor and 

- - - - 

Council 

Finance & Admin/Finance - - - - 

Planning and 

- - - - 

Development/Economic 


Health/Clinics - - - - 

Comm. & Social/Libraries and 

- - - - 

archives 

Housing - - - - 

Public Safety/Police - - - - 

Sport and Recreation - - - - 

Environmental Protection/Pollution - - - - 

Control 

Waste Water 

- - - - 

Management/Sewerage 

Road Transport/Roads - - - - 

Water/Water Distribution - - - - 

Electricity /Electricity Distribution - - - - 

Other/Air Transport - - - - 

- - - - 

- - - - 

- - - - 


- - - - 

Other charges 

- - - - 

- - - - 

- - - - 

- - - - 

- - - - 

- - - - 

- - - - 

- - - - 

- - - - 

- - - - 

- - - - 

- - - - 

- - - - 

- - - - 

61 159 - (61 159) - 

- - - - 

- - - - 

- - - - 

- - - - 

Page 51

Reason for 

delay/withholdi 

ng of funds 

Did your 

municipa 

lity comp 

ly with 

the grant 

condition 

s in 

terms of 

grant 

framewor 

k in the 

latest 

Division 

of 

Revenue 

Reason for 

noncompliance 


Appendix F 

Disclosures of Grants and Subsidies in terms of Section 123 MFMA, 56 of 2003 


Name of 

Grants 

Name of 

organ of 

state or 

municipal 

entity 

Quarterly Receipts Quarterly Expenditure Grants and Subsidies delayed / 

withheld 

Act 

Mar Jun Sep Dec Mar Mar Jun Sep Dec Mar Mar Jun Sep Dec Mar Yes/ No 

- - - - - - - - - - - - - - - No 

- - - - - - - - - - - - - - - 

- - - - - - - - - - - - - - - 

- - - - - - - - - - - - - - - 

- - - - - - - - - - - - - - - 

- - - - - - - - - - - - - - - 

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 52 - 17 June 2012 - 02:49 PM

Reason for 


ng of funds 

Did your 

municipa 

lity comp 

ly with 

the grant 

condition 

s in 

terms of 

grant 

framewor 

k in the 

latest 

Division 

of 

Revenue 

Reason for 

noncompliance 


Appendix F 



Name of 

Grants 

Name of 

organ of 

state or 

municipal 

entity 


withheld 

Act 


- - - - - - - - - - - - - - - No 

- - - - - - - - - - - - - - - 

- - - - - - - - - - - - - - - 

- - - - - - - - - - - - - - - 

- - - - - - - - - - - - - - - 

- - - - - - - - - - - - - - - 



Reason for 


ng of funds 

Did your 

municipa 

lity comp 

ly with 

the grant 

condition 

s in 

terms of 

grant 

framewor 

k in the 

latest 

Division 

of 

Revenue 

Reason for 

noncompliance 


Appendix F 



Name of 

Grants 

Name of 

organ of 

state or 

municipal 

entity 


withheld 

Act 


- - - - - - - - - - - - - - - No 

- - - - - - - - - - - - - - - 

- - - - - - - - - - - - - - - 

- - - - - - - - - - - - - - - 

- - - - - - - - - - - - - - - 

- - - - - - - - - - - - - - - 



NOTES

NOTES


Privave Bag X 1251 Cofimvaba 5380 

201 Main Street Cofimvaba 

Tel: 047 874 8700 

Fax: 047 874 0010 

Email:info@intsikayethu.gov.za 

Customer Care line: 0860 042281

annual report 2010 - 2011 - Intsika Yethu Municipality

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