intsika yethu local municipality - Provincial Spatial Development plan

Chapter 5: Financial Plan and Budget8. Financial ViabilityIn accordance with the outcomes of the latest assessment conducted on the financial position, the IYLMremains financially sustainable and is able to meet its financial commitments.Significant reforms within the adoption of new accounting standards, being Generally recognisedAccounting Practice (GRAP), coupled with significant reforms within Municipal Budgeting and ReportingRegulations has significantly enhanced the credibility, sustainability, transparency, accuracy andreliability of financial planning, management and reporting within the IYLMIn meeting the demands associated with modernised practices towards sustaining and enhancing financialviability; and addressing the specific needs of Intsika Yethu LM within the context of limited resourcesand mounting service delivery expectations, has necessitated that a comprehensive integrated approachtowards financial sustainability be developed.In terms of the approach adopted, the report will clearly define financial risks which have been identifiedas being a financial threat to the long termed sustainability of the organisation, linked to key challenges,with a detailed focus on effective strategies employed to mitigate against financial threats and weaknesses,concluded by a detailed analysis of the service delivery package and associated financial implications onthe operations, statement of financial position and cashflows for the MTREF 2012/2013- 2014/2015which collectively aim to position Intsika Yethu LM on a sustainable approach to service delivery.8.1 Financial risksIn order to maintain and improve on the financial efficiencies and position of Intsika Yethu LM, certainrisks need to be managed, while financial management practices need to be continuously improved.The key financial risks confronting the Municipality can be summarised as follows:Limitation on Revenue Raising Capacity due to high poverty indices;Growth within Debt Composition associated with Low level Service Offerings;Financial Distress- ratio analysis- specific on Working capital elements;Containment of personnel costs within set benchmarks as established within the budget process;Governance and Administration costs as a percentage of own revenue;Increases associated with deferred maintenance and backlog eradication.8.2 Key ChallengesAchieving an unqualified audit report;Affordability of a desired Organisational Structure;The need to improve customer care;The need to ensure legal compliance through all procedures and programmes.186