Skip to main content

Full text of "NC085 Tsantsabane AFS 2019-20 unaudited"

See other formats


TSANTSABANE LOCAL MUNICIPALITY 
Parameters to be completed for Current Year 


Name of Authority 
Financial Year-end 
End of Next Year 
End of Current Year 
End of Previous Year 
End of Base Year 
Current Year 
Previous Year 

Base Year 

Next Financial Year 
Current Financial Year 


Previous Financial Year 


Comparative Financial Year 


Start of Current Year 


Start of Previous Year 


Current Month Number 





TSANTSABANE LOCAL MUNICIPALITY 











30 June 2020 








30 June 2021 
30 June 2020 
30 June 2019 
30 June 2018 
2020 

2019 

2018 

2020/21 
2019/20 
2018/19 
2019/20 / 2018/19 
01 July 2019 


01 July 2018 


Colour Legend 
Headers 
Required in terms of GRAP - Check 
No Activity for Municipality 
Alternative Statement 
Not Applicable at Municipality 
Need more information 
Collection of Data to include 
Not Required for Interim FS 


MSCOA specific 












































Dates (Upper Case) 


30 JUNE 2021 
30 JUNE 2020 
30 JUNE 2019 


30 JUNE 2018 





TSANTSABANE 
LOCAL MUNICIPALITY 





te 


[These financial statements have not been audited] 


ANNUAL FINANCIAL STATEMENTS 
FOR THE YEAR ENDED 
30 JUNE 2020 


TSANTSABANE LOCAL MUNICIPALITY 
Annual Financial Statements for the year ended 30 June 2020 


Index 


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


Index 
General information 1-2 
Approval of Annual Financial Statements 3 


Report of the Auditor General 


Statement of Financial Position 4 
Statement of Financial Performance 5 
Statement of Changes In Net Assets 6 
Cash Flow Statement 7 


Statement of comparison of budget and actual amounts - Statement 
of financial position 8-9 


Statement of comparison of budget and actual amounts - Statement 
of financial performance 10-11 


Statement of comparison of budget and actual amounts - Capital 12 
Expenditure 


Statement of comparison of budget and actual amounts - Cash 13-14 
flow statement 


Accounting Policies 15 -35 


Notes to the Financial Statements 36 - 95 


APPENDICES - Unaudited 
A Schedule of External Loans 96 


F Disclosure of Grants and Subsidies In Terms of Section 123 of 97 
MFMA, 56 of 2003 


G Statement of Remuneration of Management 98 - 99 


TSANTSABANE LOCAL MUNICIPALITY 


Annual Financial Statements for the year ended 30 June 2020 


General information 


Legal form 


Jurisdiction 


Nature of business 


Capacity of local authority 
Municipal demarcation code 


Management structure 


Municipal manager 


Chief Financial Officer 


Other heads of departments 


Registered office 


External auditors 


NC085 - Local Municipality. The municipality's operations are 
governed by the Municipal Finance Management Act 56 of 
2003, Municipal Structures Act 117 of 1998, Municipal Systems 
Act 32 of 2000, and various other acts and regulations. 


Tsantsabane Local municipality is located in the north-eastern 
part of the Northern Cape Province in the ZF Mgcawu District. 
Cities/Towns: 


Postmasburg 
Beeshoek 


Tsantsabane Local Municipality is a South African Category B 
Local Municipality as defined in the Municipal Structures Act. 
The municipality performs functions as set out in the 
Constitution. This means that the Municipality provides services 
such as electricity, water, sewerage and refuse to the 
Community. 


Low capacity (grade 2) 
NC085 


The municipality’s senior management structure consists of the 
Municipal Manager and heads of the four main departments. 
The Office of the Municipal Manager includes management 
functions pertaining to municipal systems improvement and 
integrated development planning functions. 


H Mathobela 


LR Coakley 


IC Nkadimang 
BLK Botha 
JJ Theys 


Director Corporate Services 
Acting Director Technical Services 
Director Community Development 


13 Springbok Street 
Postmasburg 
8420 


Telephone: 053 313 7300 
Website: www.tsantsabane.gov.za 


Auditor-General of South Africa 


Private Bag X5013 
Kimberley 


TSANTSABANE LOCAL MUNICIPALITY 


Annual Financial Statements for the year ended 30 June 2020 


General information 


Principle banker 


Relevant legislation 


Executive Mayor 


Councillors 


Standard Bank 
32 Main Street 
Po Box 24 
Postmasburg 
8420 


Municipal Finance Management Act 
Division of Revenue Act 

The Income Tax Amendment Act 

Value Added Tax Amendment Act 
Municipal Structures Act 

Municipal Systems Act 

Municipal Planning and Performance Management Regulations 
Housing Act 

Skills Development Levies Amendment Act 
Employment Equity Act 

Unemployment Insurance Act 

Basic Conditions of Employment Act 
Supply Chain Management Regulations 


M Mashila Ward 6 
EE Poto Ward 1 
M Daniels Ward 2 
EEJ Phete Ward 3 
KD Modise Ward 4 
IK Tshabane Ward 5 
M Mashila Ward 6 
TJ Saulus Ward 7 
AR Davids Proportional 
AJ Ruiters Proportional 
WC Julies Proportional 
D Esau Proportional 
JJ Swart Proportional 
OM Mabilo Proportional 


TSANTSABANE LOCAL MUNICIPALITY 


Annual Financial Statements for the year ended 30 June 2020 
Approval of Annual Financial Statements 


| am responsible for the preparation of these annual financial statements for the year ended 
30 June 2020 which are set out on pages 1 to 99 in terms of section 126 (1) of the Municipal 
Finance Management Act and which | have signed on behalf of the municipality. The annual 
financial statements have been prepared in accordance with Generally Recognised 
Accounting Practice. 


| acknowledge that | am ultimately responsible for the system of internal financial control and 
that the system of internal control provides reasonable assurance that the financial records 
can be relied on. 


| have reviewed the municipality’s cash flow forecast for the year to 30 June 2020 and am 
satisfied that the municipality can continue in operational existence for the foreseeable 
future. 


The external auditors are responsible for independently reviewing and reporting on the 
municipality's financial statements. 


| certify that the remuneration of Councillors and in-kind benefits are within the upper limits of 
the framework envisaged in section 219 of the Constitution, read with the Remuneration of 
Public Officer Bearers Act and the Minister of Provincial and Local Government's 
determination in accordance with this Act. 


Management has concluded that the financial statements present fairly the municipality's 
financial position, financial performance and cash flows for the year ended 30 June 2020. 


The annual financial statements set out on pages 1 to 99, which have been prepared on the 
going concern basis, were approved by the accounting officer and were signed by: 


31 October 2020 
H Mathobela Date 
Municipal Manager 


TSANTSABANE LOCAL MUNICIPALITY 
STATEMENT OF FINANCIAL POSITION AT 30 JUNE 2020 




















ASSETS 


Current Assets 

Inventories 

Receivables from Exchange Transactions 
Receivables from Non-exchange Transactions 
VAT Receivable 

Cash and Cash Equivalents 

Operating Lease Receivables 


Non-Current Assets 
Property, Plant and Equipment 
Intangible Assets 

Investment Property 

Heritage Assets 


Total Assets 


LIABILITIES 


Current Liabilities 

Consumer Deposits 

Provisions 

Payables from Exchange Transactions 
Unspent Conditional Grants and Receipts 
Bank Overdraft 

Current Portion of Long-term Liabilities 


Non-Current Liabilities 
Long-term Liabilities 
Employee Benefit Liabilities 
Non-current Provisions 
Total Liabilities 


Total Assets and Liabilities 


NET ASSETS 
Accumulated Surplus / (Deficit) 


Total Net Assets 


Note 


NOnh whd 


10 
11 


12 
13 
14 
15 


16 


16 
17 
18 


19 











Actual 


2019 
Restated 
R 


44,500,023 








7,105,094 
9,544,151 
7,912,934 
7,484,652 
12,430,393 
22,798 








744,390,717 








686,570,672 
1,190,069 
56,235,300 
394,675 








788,890,739 


288,055,062 





2,293,914 
1,161,328 
269,977,104 
7,710,376 


6,912,339 





43,151,437 








9,672,831 
14,371,728 
19,106,878 








331,206,499 


457,684,241 


457,684,240 








457,684,240 








457,684,240 


0.00 


0.00 


15,366,991.80 


0.04 






-15,366,991.40 


TSANTSABANE LOCAL MUNICIPALITY 
STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30 JUNE 2020 








REVENUE 

Revenue from Non-exchange Transactions 
Property Rates 

Fines, Penalties and Forfeits 

Licences and Permits 

Transfers and Subsidies 


Revenue from Exchange Transactions 
Service Charges 

Sales of Goods and Rendering of Services 
Rental from Fixed Assets 

Interest, Dividends and Rent on Land Earned 
Operational Revenue 


Total Revenue 


EXPENDITURE 

Employee Related Costs 
Remuneration of Councillors 
Depreciation and Amortisation 
Impairment Losses 

Interest, Dividends and Rent on Land 
Bulk Purchases 

Contracted Services 

Inventory Consumed 

Operating Leases 

Operational Costs 

Loss on Disposal of Property, Plant and Equipment 


Total Expenditure 


DEFICIT FOR THE YEAR 


Refer to Budget Statement for explanation of budget variances 


58,570,538 
124,738 
842,075 

60,083,375 


103,996,172 
298,855 
337,813 
886,753 
233,709 


2019 
Restated 
R 


27,695,225 
416,780 
1,287,056 
62,423,559 


96,735,935 
210,231 
410,380 

1,130,716 
188,730 





225,374,028 


190,498,612 





73,261,235 
5,477,125 
32,324,301 
71,086,465 
17,814,335 
58,474,459 
19,860,765 
1,993,432 
2,299,211 
19,287,159 
4,501,026 


306,379,513 


72,890,576 

5,517,384 
31,198,705 
37,447,089 
16,358,795 
60,336,121 
24,586,106 

1,905,168 

3,158,550 
18,616,224 
27,204,633 


299,219,350 





(81,005,485) 


(108,720,739) 








TSANTSABANE LOCAL MUNICIPALITY 
STATEMENT OF CHANGES IN NET ASSETS FOR THE YEAR ENDED 30 JUNE 2020 


Accumulated 


Surplus/(Deficit) Total Net Assets 


R R 


Balance at 30 June 2018 569,049,008 569,049,008 
Correction of Error (Note 40) (2,704,286) (2,704,286) 
Restated Balance 566,344,722 566,344,722 





Correction of Error (Note 40) 60,257 


Deficit for the year 

Deficit for the year: Previously Reported (115,188,974) (115,188,974) 
Correction of Error (Note 40) 6,468,236 6,468,236 
Balance at 30 June 2019 457,684,240 457,684,240 








2020 
Appropriations in 2020 1,625,770 1,625,770 
Deficit for the year 81,005,485 81,005,485 


Balance at 30 June 2020 378,304,525 378,304,525 





TSANTSABANE LOCAL MUNICIPALITY 
CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2020 











CASH FLOWS FROM OPERATING ACTIVITIES 


Receipts 

Property Rates 

Transfers and Subsidies 

External Interest and Dividends Received 
Service charges 

Other Receipts 

VAT Receivable / Payable 


Payments 

Employee Related Costs 
Remuneration of Councillors 
External Interest and Dividends Paid 
Suppliers Paid 


NET CASH FLOWS FROM OPERATING ACTIVITIES 
CASH FLOWS FROM INVESTING ACTIVITIES 
Purchase of Property, Plant and Equipment 

Purchase of Intangible Assets 

Purchase of Investment Property 

Proceeds on Disposal of Investment Property 
Proceeds on Disposal of Intangible Assets 

NET CASH FLOWS FROM INVESTING ACTIVITIES 


CASH FLOWS FROM FINANCING ACTIVITIES 


Proceeds/(Repayment) of Borrowings 
NET CASH FLOWS FROM FINANCING ACTIVITIES 


NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS 


Cash and Cash Equivalents at Beginning of Period 
Cash and Cash Equivalents at End of Period 


Actual 
2020 2019 
Note Restated 
R R 
15,377,396 27,272,214 
57,976,732 54,755,683 
886,753 1,130,716 
66,304,351 95,207,519 
6,469,445 (2,668,282) 
2,149,167 120,309 
(71,901,644) (71,468,639) 
(5,477,125) (5,517,384) 
(14,922,406) (14,067,986) 
(37,061,680) (78,170,304) 
42 19,800,989 6,593,846 
8 (12,024,136) (17,052,303) 
9 - (25,205) 
10 2,286,000 - 
(4,312,894) 1,900,647 
406,567 - 
(13,644,463) (15,176,861) 
(6,436,910) 7,463,579 
(6,436,910) 7,463,579 
(280,384) (1,119,436) 














12,430,393 13,549,829 
6 12,150,009 12,430,393 














TSANTSABANE LOCAL MUNICIPALITY 
STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS FOR THE YEAR ENDED 30 JUNE 2020 


30 June 2020 


Description 





FINANCIAL POSITION 

Current Assets 

Inventories 

Receivables from Exchange Transactions 
Receivables from Non-exchange Transactions 
VAT Receivable 

Cash and Cash Equivalents 

Operating Lease Receivables 


Non-Current Assets 
Property, Plant and Equipment 
Intangible Assets 

Investment Property 

Heritage Assets 


Total Assets 


Current Liabilities 

Consumer Deposits 

Provisions 

Payables from Exchange Transactions 
Unspent Conditional Grants and Receipts 
Current Portion of Long-term Liabilities 


Non-Current Liabilities 
Long-term Liabilities 
Employee Benefit Liabilities 
Non-current Provisions 


Total Liabilities 


Total Assets and Liabilities 


Net Assets (Equity) 
Accumulated Surplus / (Deficit) 


Total Net Assets 
































Original Budget Adjustment r Actual ; 
Budget Adjustments Budget Final Budget Outcome Variance 
R 

535,000 - 535,000 535,000 389,392 (145,608) 
61,960,000 - 61,960,000 61,960,000 12,736,927 (49,223,073) 
34,040,000 - 34,040,000 34,040,000 14,743,555 (19,296,445) 
- - - - 5,335,485 5,335,485 
7,052,000 - 7,052,000 7,052,000 15,292,314 8,240,314 
- - - - 10,213 10,213 
702,349,000 - 702,349,000 702,349,000 667,432,587 (34,916,413) 
967,000 - 967,000 967,000 370,023 (596,977) 
79,116,000 - 79,116,000 79,116,000 53,949,300 (25,166,700) 
355,000 - 355,000 355,000 394,675 39,675 
886,374,000 - 886,374,000 886,374,000 770,654,471 (115,719,529) 
2,379,000 - 2,379,000 2,379,000 2,412,558 33,558 
2,149,000 - 2,149,000 2,149,000 924,000 (1,225,000) 
212,985,000 - 212,985,000 212,985,000 332,291,650 119,306,650 
- - - - 6,765,366 6,765,366 
- - - - 9,708,574 9,708,574 
- 2,551,881 2,551,881 
- - - - 14,667,000 14,667,000 
21,671,000 - 21,671,000 21,671,000 19,886,610 (1,784,390) 
239,184,000 - 239,184,000 239,184,000 392,349,945 153,165,945 
647,190,000 - 647,190,000 647,190,000 378,304,526 | (268,885,474) 
647,190,000 (350,000) 646,840,000 646,840,000 378,304,525 (268,535,475) 
647,190,000 (350,000) 646,840,000 646,840,000 378,304,525 | (268,535,475) 

















Financial Position: Explanation of Variances between Approved Budget and Actual 
Reasons for Variances greater than 10% between Approved Budget and Actual Amount on the various items disclosed in the Statement of Financial Position are | 


30 June 2020 







Description 


FINANCIAL PERFORMANCE 
Revenue from Non-exchange Transactions 
Property Rates 

Fines, Penalties and Forfeits 

Licences and Permits 

Transfers and Subsidies 









Revenue from Exchange Transactions 
Service Charges 

Sales of Goods and Rendering of Services 

Rental from Fixed Assets 

Interest, Dividends and Rent on Land Earned 
Operational Revenue 

Gains on Disposal of Property, Plant and Equipment 








Total Revenue 









































Original Budget Adjustment x Actual $ 

Budget Adjustments Budget Final Budget Outcome Variance 
80,000,000 - 80,000,000 80,000,000 58,570,538 (21,429,462) 
631,000 - 631,000 631,000 124,738 (506,262) 
547,000 - 547,000 547,000 842,075 295,075 
48,090,000 - 48,090,000 48,090,000 60,083,375 11,993,375 
109,756,000 7,963,000 117,719,000 117,719,000 103,996,172 (13,722,828) 
- - - - 298,855 298,855 
258,000 170,000 428,000 428,000 337,813 (90,187) 
693,000 - 693,000 693,000 886,753 193,753 
422,000 728,000 1,150,000 1,150,000 233,709 (916,291) 
25,000,000 - 25,000,000 25,000,000 - (25,000,000) 
265,397,000 8,861,000 274,258,000 274,258,000 225,374,028 48,883,972 





























TSANTSABANE LOCAL MUNICIPALITY 
STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS FOR THE YEAR ENDED 30 JUNE 2020 


Expenditure 

Employee Related Costs 
Remuneration of Councillors 
Depreciation and Amortisation 
Impairment Losses 

Interest, Dividends and Rent on Land 
Bulk Purchases 

Contracted Services 

Inventory Consumed 

Operating Leases 

Operational Costs 

Loss on Disposal of Property, Plant and Equipment 


Total Expenditure 


Surplus/(Deficit for the Year 














92,351,000 (12,323,000) 80,028,000 80,028,000 73,261,235 (6,766,765) 
5,756,000 - 5,756,000 5,756,000 5,477,125 (278,875) 
17,877,000 - 17,877,000 17,877,000 32,324,301 14,447,301 
30,000,000 - 30,000,000 30,000,000 71,086,465 41,086,465 
7,365,000 (5,000,000) 2,365,000 2,365,000 17,814,335 15,449,335 
64,338,000 (4,000,000) 60,338,000 60,338,000 58,474,459 (1,863,541) 
10,150,000 - 10,150,000 10,150,000 19,860,765 9,710,765 
2,630,000 - 2,630,000 2,630,000 1,993,432 (636,568) 
- 2,299,211 2,299,211 
20,910,000 - 20,910,000 20,910,000 19,287,159 (1,622,841) 
- - 4,501,026 4,501,026 

251,377,000 (21,323,000) 230,054,000 230,054,000 306,379,513 76,325,513 
14,020,000 30,184,000 44,204,000 44,204,000 (81,005,485)| (125,209,485) 














Financial Performance: Explanation of Variances between Approved Budget and Actual 
Reasons for Variances greater than 10% between Approved Budget and Actual Amount on the various items disclosed in the Statement of Financial Performance are | 


30 June 2020 


Description 


CAPITAL EXPENDITURE PER FUNCTION 
Finance and Administration 
Water Management 


Total Capital Expenditure 




















qama | Butt | Aumont | rassuagt | iit, | vane 
R R R R R R 

500,000 (350,000) 150,000 150,000 3,696,774 3,546,774 
14,299,000 - 14,299,000 14,299,000 9,488,995 (4,810,005) 
14,799,000 (350,000) 14,449,000 14,449,000 13,185,769 (1,263,231) 














Capital Expenditure per Function: Explanation of Variances between Approved Budget and Actual 
Reasons for Variances greater than 10% between Approved Budget and Actual Amount on the various items for Capital Expenditure per Function are explained below: | 


30 June 2020 


Description 





CASH FLOW 

Cash Flows from/(used in) Operating Activities 
Property Rates 

Transfers and Subsidies 


External Interest and Dividends Received 
Service charges 

Other Receipts 

VAT Receivable / Payable 

Employee Related Costs 

Remuneration of Councillors 

External Interest and Dividends Paid 
Suppliers Paid 


Cash Flows from/(used in) Investing Activities 
Purchase of Property, Plant and Equipment 

Proceeds on Disposal of Property, Plant and Equipment 
Decrease / (Increase) in Non-current Investments 
Decrease / (Increase) in Long-term Receivables 


Cash Flows from/(used in) Financing Activities 
Proceeds from Borrowings 


Increase / (Decrease) in consumer deposits 


Net increase/(decrease) in cash held 


Original 


Budget 


Adjustment 











Actual 











Budget Adjustments Budget Final Budget Outcome Variance 
R 

68,000,000 - 68,000,000 68,000,000 15,377,396 (52,622,604) 
62,389,000 - 62,389,000 62,389,000 57,976,732 (4,412,268) 
693,000 - 693,000 693,000 886,753 193,753 
93,293,000 - 93,293,000 93,293,000 66,304,351 (26,988,649) 
1,859,000 - 1,859,000 1,859,000 6,469,445 4,610,445 
- - 2,149,167 2,149,167 
(196,136,000) - (196,136,000)} (196,136,000) (71,901,644) 124,234,356 
- - - (5,477,125) (5,477,125) 
(7,365,000) - (7,365,000) (7,365,000) (14,922,406) (7,557,406) 
- (37,061,680) (37,061,680) 
(14,299,000) - (14,299,000) (14,299,000) (12,024,136) 2,274,864 
25,000,000 - 25,000,000 25,000,000 (4,312,894) (29,312,894) 
2,000,000 - 2,000,000 2,000,000 - (2,000,000) 
(18,286,000) - (18,286,000) (18,286,000) - 18,286,000 
- - - - (6,436,910) (6,436,910) 
342,000 - 342,000 342,000 - (342,000) 
17,490,000 17,490,000 17,490,000 (280,384) (17,770,384) 

















TSANTSABANE LOCAL MUNICIPALITY 


STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS FOR THE YEAR ENDED 30 JUNE 2020 
Cash and Cash Equivalents at the year begin | (18,472,000) | (18,472,000)| (18,472,000) 12,430,393 30,902,393 
Cash and Cash Equivalents at the year end (982,000) - (982,000) (982,000) 12,150,009 13,132,009 

































Cash Flow: Explanation of Variances between Approved Budget and Actual 
Reasons for Variances greater than 10% between Approved Budget and Actual Amount on the various items disclosed in the Cash Flow Statement are explained 


TSANTSABANE LOCAL MUNICIPALITY 


ACCOUNTING POLICIES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


BASIS OF PRESENTATION 


The Annual Financial Statements have been prepared on an Accrual Basis of accounting and are in accordance with the 
historical cost convention, except where indicated otherwise. 


The Statement of Financial Performance has been prepared to classify expenses by nature, whilst revenue is classified in a 
manner appropriate to the municipality’s operations. The Cash Flow Statement has been prepared using the Direct Method. 


The Annual Financial Statements have been prepared in accordance with Standards of Generally Recognised Accounting 
Practices (GRAP), as approved by the Minister of Finance, including any interpretations, guidelines and directives issued by the 
Accounting Standards Board and in accordance with the requirements of the Municipal Finance Management Act, 2003 (Act No. 
56 of 2003). 


1.1 Presentation Currency 


The Annual Financial Statements are presented in South African Rand, rounded off to the nearest Rand which is the 
municipality's functional currency. 


1.2 Changes in Accounting Policy and Comparability 
Accounting Policies have been consistently applied, except where otherwise indicated below. 


For the years ended 30 June 2019 and 30 June 2020 the municipality has adopted the accounting framework as set out in 
paragraph 1 above. The details of any resulting changes in Accounting Policy and comparative restatements are set out below 
and in the relevant Notes to the Annual Financial Statements. 


1.3 Critical Judgements, Estimations and Assumptions 


In the application of the municipality's Accounting Policies, which are described below, management is required to make 
judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from 
other sources. The estimates and associated assumptions are based on historical experience and other factors that are 
considered to be reasonable under the circumstances, the results of which form the basis of making the judgements about 
carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these 
estimates. 


These estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are 
recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and 
future periods if the revision affects both current and future periods. 


The following are the critical judgements and estimations that management have made in the process of applying the 
municipality's Accounting Policies and that have the most significant effect on the amounts recognised in Annual Financial 
Statements: 


1.3.1 Revenue Recognition 


Accounting Policy 10.2 on Revenue from Exchange Transactions and Accounting Policy 10.3 on Revenue from Non-exchange 
Transactions describes the conditions under which revenue will be recorded by the management of the municipality. 


In making their judgement, the management considered the detailed criteria for the recognition of revenue as set out in GRAP 9 
(Revenue from Exchange Transactions) and GRAP 23 (Revenue from Non-exchange Transactions). As far as Revenue from 
Non-exchange Transactions is concerned (see Basis of Preparation above), and, in particular, whether the municipality, when 
goods are sold, had transferred to the buyer the significant risks and rewards of ownership of the goods and when services is 
rendered, whether the service has been rendered. Also of importance is the estimation process involved in initially measuring 
revenue at the fair value thereof. Management of the municipality is satisfied that recognition of the revenue in the current year 
is appropriate. 


1.3.2 Impairment of Financial Assets 


TSANTSABANE LOCAL MUNICIPALITY 


ACCOUNTING POLICIES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


Accounting Policy 7.4 on Impairment of Financial Assets describes the process followed to determine the value at which 
Financial Assets should be impaired. In making the estimation of the impairment, the management of the municipality 
considered the detailed criteria of impairment and used its judgement to select a variety of methods and make assumptions that 
are mainly based on market conditions existing at the end of the reporting period. The management of the municipality is 
satisfied that impairment of Financial Assets recorded during the year is appropriate. 


e Impairment of Trade Receivables: 
The calculation in respect of the impairment of Debtors is based on an assessment of the extent to which Debtors have 
defaulted on payments already due, and an assessment of their ability to make payments based on their 
creditworthiness. This is performed per service-identifiable categories across all classes of debtors. 


1.3.3 Fair Value Estimations 


As described in Accounting Policies 5.2 the municipality subsequently measures its Investment Property in terms of the Fair 
Value Model. 


The valuation of assets are based on management’s estimation. Management considered the impact of valuation techniques 
and market information in order to determine the current valuations, and more specific as follows: 


e Investment Property is measured at fair value amounts based on valuation techniques and market information. The 
actual value of these items could differ from those estimated. 


1.3.4 Useful lives of Property, Plant and Equipment, Intangible Assets and Investment Property 


As described in Accounting Policies 2.3, and 4.2, the municipality depreciates its Property, Plant & Equipment and amortises its 
Intangible Assets, over the estimated useful lives of the assets, taking into account the residual values of the assets at the end 
of their useful lives, which is determined when the assets are available for use. 


The estimation of residual values of assets is based on management’s judgement as to whether the assets will be sold or used 
to the end of their useful lives, and in what condition they will be at that time. 


1.3.5 Impairment: Write-down of Property, Plant & Equipment, Intangible Assets, and Inventories 


Accounting Policy 6 on Impairment of Assets, Accounting Policy 4.2 on Intangible Assets - Subsequent Measurement, 
Amortisation and Impairment describe the conditions under which non-financial assets are tested for potential impairment losses 
by the management of the municipality. Significant estimates and judgements are made relating to impairment testing of 
Property, Plant and Equipment and impairment testing of Intangible Assets. 


In making the above-mentioned estimates and judgement, management considered the subsequent measurement criteria and 
indicators of potential impairment losses. In particular, the calculation of the recoverable service amount for PPE and Intangible 
Assets and the Net Realisable Value for Inventories involves significant judgment by management. 


1.3.6 Water Inventory 


The estimation of the Water Inventory in reservoirs is based on actual dip readings, which determines the depth of water in the 
reservoirs, which is then converted into volumes based on the total capacity of the reservoir. Furthermore, the length and width 
of all pipes are also taken into account in determining the volume of water on hand at year-end. Refer to Accounting Policy 9.2.. 


1.3.7 Defined Benefit Plan Liabilities 


As described in Accounting Policy 12.2, Employee Benefits — Post-employment Benefits, the municipality obtains actuarial 
valuations of its Defined Benefit Plan Liabilities. The defined benefit obligations of the municipality that were identified are Post- 
retirement Health Benefit Obligations and Long-service Awards. The estimated liabilities are recorded in accordance with the 
requirements of GRAP 25. Details of the liabilities and the key assumptions made by the actuaries in estimating the liabilities 
are provided in the relevant Notes to the Annual Financial Statements. 


1.3.8 Provisions and Contingent Liabilities 


TSANTSABANE LOCAL MUNICIPALITY 


ACCOUNTING POLICIES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 
Management judgement is required when recognising and measuring Provisions and when measuring Contingent Liabilities. 
Provisions are discounted where the effect of discounting is material using actuarial valuations. 


1.3.9 Budget Information 


Deviations between budget and actual amounts are regarded as material differences when a 10% deviation exists. All material 
differences are explained in the relevant Notes to the Annual Financial Statements. 


1.4 Going Concern Assumption 
The Annual Financial Statements have been prepared on a Going Concern Assumption. 


The recent COVID-19 pandemic and its effect on the Municipality's current and expected performance has been considered by 
management in the Going Concern Assumption. 


PROPERTY, PLANT AND EQUIPMENT 


2.1 Initial Recognition 
Property, Plant and Equipment are initially recognised at cost. 


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. 


Repairs and Maintenance are expenses incurred through servicing equipment or repairing of existing assets. These expenses 
are not recognised in the carrying value of the asset, but directly recognised in Surplus or Deficit and measured at cost against 
the attributing segments of the Municipal Standard Chart of Accounts (nSCOA). 


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. 


The cost of an item of property, plant and equipment is recognized as an asset if, and only if it is probable that future economic 
benefits or service potential associated with the item will flow to the Municipality, and if the cost or fair value of the item can be 
measured reliably. 


2.2 Subsequent Measurement 


Plant and Equipment 
Subsequently all Property Plant and Equipment are measured at cost, less accumulated depreciation and accumulated 
impairment losses. 


2.3 Depreciation 


Depreciation on assets other than land is calculated on cost, using the Straight-line Method, to allocate their cost or revalued 
amounts to their residual values over the estimated useful lives of the assets. Each part of an item of Property, Plant and 
Equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. 


The depreciation rates are based on the following estimated useful lives: 








Asset Class Years Asset Class Years 





Land and Buildings Infrastructure 

Roads and Paving 5 - 80 
Land Indefinite Roads & Paving 10 - 60 
Buildings 15 - 50 Electricity 10-70 


Water 15-60 


TSANTSABANE LOCAL MUNICIPALITY 


ACCOUNTING POLICIES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 
Other 


Computer Equipment 3-7 Community 

Furniture and Fittings 7-8 Graveyard site 15 - 50 
Motor Vehicles 5-6 Recreational & Sport Facilities 15-50 
Office Equipment 3-7 Landfill sitets 10 - 30 
Plant and Machinery 3-7 








2.4 Land 


Land is stated at historical cost and is not depreciated as it is deemed to have an indefinite useful life. 


2.5 Infrastructure Assets 


Infrastructure Assets are any assets that are part of a network of similar assets. Infrastructure assets are shown at cost less 
accumulated depreciation and accumulated impairment. Infrastructure assets are treated similarly to all other assets of the 
municipality in terms of the asset management policy. 


2.6 Finance Leases 


Assets capitalised under finance leases are depreciated over their expected useful lives on the same basis as Property, Plant 
and Equipment controlled by the municipality or, where shorter, the term of the relevant lease if there is no reasonable certainty 
that the municipality will obtain ownership by the end of the lease term. 


2.7 Derecognition 


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. 


HERITAGE ASSETS 


Heritage Assets are not depreciated owing to uncertainty regarding to their estimated useful lives. The municipality assess at 
each reporting date if there is an indication of impairment. 


3.1 Initial Recognition 
Heritage Assets are initially recognised at cost. 


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. 


Repairs and Maintenance are expenses incurred through servicing equipment or repairing of existing assets. These expenses 
are not recognised in the carrying value of the asset, but directly recognised in Surplus or Deficit and measured at cost against 
the attributing segments of the Municipal Standard Chart of Accounts (nSCOA). 


3.2 Subsequent Measurement 


Subsequently all Heritage Assets are measured at cost, less accumulated impairment losses. 


3.3 Derecognition 


The gain or loss arising from the derecognition of an item of Heritage Assets is included in Surplus or Deficit when the item is 
derecognised. 


INTANGIBLE ASSETS 


4.1 Initial Recognition 


TSANTSABANE LOCAL MUNICIPALITY 


ACCOUNTING POLICIES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 
Identifiable non-monetary assets without physical substance are classified and recognised as Intangible Assets. 


For internally generated Intangible Assets, all research expenditure is recognised as an expense as it is incurred and costs 
incurred on development projects are recognised as Intangible Assets in accordance with GRAP 31 (/ntangible Assets). 
Development costs previously recognised as an expense are not recognised as an asset in a subsequent period. Capitalised 
development costs are recorded as Intangible Assets and amortised from the point at which the asset is available for use. 
Development assets are tested for impairment annually. 


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. 


The cost of an Intangible Asset acquired in exchange for non-monetary assets or monetary assets, or a combination of 
monetary and non-monetary assets, is measured at the fair value of the asset given up, unless the fair value of the asset 
received is more clearly evident. If the acquired item could not be measured at its fair value, its cost is measured at the carrying 
amount of the asset given up. If the acquired item's fair value was not determinable, it's deemed cost is the carrying amount of 
the asset(s) given up. 


Repairs and Maintenance are expenses incurred through servicing equipment or repairing of existing assets. These expenses 
are not recognised in the carrying value of the asset, but directly recognised in Surplus or Deficit and measured at cost against 
the attributing segments of the Municipal Standard Chart of Accounts (nSCOA). 


4.2 Subsequent Measurement, Amortisation and Impairment 


After initial recognition, Intangible Assets are carried at cost less any accumulated amortisation and any accumulated 
impairment losses. 


Amortisation is charged on a Straight-line Method over the Intangible Assets’ useful lives. The residual value of Intangible 
Assets with finite useful lives is zero, unless an active market exists. Where Intangible Assets are deemed to have indefinite 
useful lives, such Intangible Assets are not amortised. However, such Intangible Assets are subject to an annual impairment 
test. 


The amortisation rates are based on the following estimated useful lives: 


Asset Class Years 


Computer Software 3-7 


























4.3 Derecognition 


The gain or loss arising from the derecognition of an item of Intangible Asset is included in Surplus or Deficit when the item is 
derecognised. 


INVESTMENT PROPERTY 


5.1 Initial Recognition 


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


TSANTSABANE LOCAL MUNICIPALITY 


ACCOUNTING POLICIES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 
The Municipality recognises Investment property as an asset when, and only when: 

(a) it is probable that the future economic benefits or service potential that are associated with the investment property will flow 
to the entity; and 

(b) the cost or fair value of the investment property can be measured reliably. 


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. 


Repairs and Maintenance are expenses incurred through servicing equipment or repairing of existing assets. These expenses 
are not recognised in the carrying value of the asset, but directly recognised in Surplus or Deficit and measured at cost against 
the attributing segments of the Municipal Standard Chart of Accounts (nSCOA). 


Where the classification of an investment property is based on management's Judgement, the following criteria have been 
applied to distinguish investment properties from owner-occupied property or property held for resale: 


* All properties held to earn market-related rentals or for capital appreciation or both and that are not used for administrative 
purposes and that will not be sold within the next 12 months are classified as Investment Properties. 

e Land held for a currently undetermined future use; 

* A building owned (or held by under a finance lease) and leased out under one or more operating leases; 

e Leased properties that are held to provide a social (community) service or that are necessary for employees to perform their 
job functions, but which also generates rental revenue are not seen as investment properties. The rental revenue generated is 
incidental to the purposes for which the property is held; 

e A building that is vacant but is held to be leased out under one or more operating leases; 

e Property that is being constructed or developed for future use as investment property. 


5.2 Subsequent Measurement 


Fair Value Model: 

Investment Property is measured using the Fair Value Model. Investment Property is carried at fair value, representing open 
market value determined by external valuers at the date of the last general valuation. Fair value is based on active market 
prices, adjusted for any difference in the nature, location or condition of the specific asset, if necessary. A gain or loss arising 
from a change in the fair value of Investment Property is included in Surplus or Deficit for the period in which it arises. 


If the municipality determines that the fair value of an Investment Property under construction is not reliably measurable but 
expects the fair value to be reliably measurable when construction is completed, it measures that Investment Property at cost 
until the fair value can be reliably determined or construction has been completed. 


5.3 Derecognition 


The gain or loss arising from the derecognition of an item of Investment Property is included in Surplus or Deficit when the item 
is derecognised. 


IMPAIRMENT OF ASSETS 


The municipality classifies all assets held with the primary objective of generating a commercial return as Cash Generating 
Assets. All other assets are classified as Non-cash Generating Assets. 


6.1 Impairment of Cash Generating Assets 


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


If there is any indication that an asset may be impaired, the recoverable amount is estimated for the individual asset. If it is not 
possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash generating unit to which 
the asset belongs is determined. 


TSANTSABANE LOCAL MUNICIPALITY 


ACCOUNTING POLICIES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


The recoverable 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 amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its 
recoverable amount. That reduction is an impairment loss. 


An impairment of assets measured per the revaluation method reduces the Revaluation Surplus for that asset. The decrease 
shall be debited directly to a Revaluation Surplus to the extent of any credit balance existing in the Revaluation Surplus in 
respect of that asset. 


An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is recognised immediately in 
Surplus or Deficit. 


An impairment loss is recognised for cash generating units if the recoverable 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 pro rata on the basis of the 
carrying amount of each asset in the unit. 


The 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 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. 


Any reversal of an impairment loss of a revalued asset is treated as a revaluation increase and would be credited directly 
against the Revaluation Surplus to the extent of any previous impairments recognised against said reserve in respect of that 
asset. 


A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortisation is recognised 
immediately in Surplus or Deficit. 


6.2 Impairment of Non-cash Generating Assets 


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


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 non- 
cash generating unit to which the asset belongs is determined. 


The recoverable service amount of a non-cash generating asset 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. 


An impairment loss is recognised for non-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 pro rata on 
the basis of the carrying amount of each asset in the unit. 


The 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. 


TSANTSABANE LOCAL MUNICIPALITY 


ACCOUNTING POLICIES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


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. 


FINANCIAL INSTRUMENTS 


The municipality has various types of Financial Instruments and these can be broadly categorised as Financial Assets, Financial 
Liabilities or Residual Interests in accordance with the substance of the contractual agreement. 


Initial Recognition 
Financial Assets and Financial Liabilities are recognised when it becomes party to the contractual provisions of the instrument. 


The municipality does not offset a Financial Asset and a Financial Liability unless a legally enforceable right to set off the 
recognised amounts currently exist and the municipality intends either to settle on a net basis, or to realise the asset and settle 
the liability simultaneously. 


Fair Value Methods and Assumptions 
The fair values of Financial Instruments are determined as follows: 


The fair values of quoted investments are based on current bid prices. 


If the market for a Financial Asset is not active (and for unlisted securities), the municipality establishes fair value by using 
valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are 
substantially the same, discounted cash flow analysis, and option pricing models making maximum use of market inputs 
and relying as little as possible on entity-specific inputs. 


7.1 Financial Assets — Classification 


The municipality has the following types of Financial Assets: 














Type of Financial Asset Classification in terms of GRAP 104 
Receivables from Exchange Transactions Financial Assets at Amortised Cost 
Receivables from Non-exchange Transactions Financial Assets at Amortised Cost 
Bank, Cash and Cash Equivalents — Call Deposits Financial Assets at Amortised Cost 
Bank, Cash and Cash Equivalents — Bank Financial Assets at Amortised Cost 
Bank, Cash and Cash Equivalents — Cash Financial Assets at Fair Vaule 





Cash includes cash-on-hand (including petty cash) and cash with banks (including call deposits). For the purposes of the Cash 
Flow Statement, Cash and Cash Equivalents comprise cash-on-hand and deposits held on call with banks, net of bank 
overdrafts. 


7.2 Financial Liabilities — Classification 


The municipality has the following types of Financial Liabilities: 





Type of Financial Liability Classification in terms of GRAP 104 
Long-term Liabilities Financial Liabilities at Amortised Cost 
Payables from Exchange Transactions Financial Liabilities at Amortised Cost 


Taxes and Transfers Payable Financial Liabilities at Amortised Cost 
Current Portion of Long-term Liabilities Financial Liabilities at Amortised Cost 





7.3 Initial and Subsequent Measurement 


7.3.1 Financial Assets: 


TSANTSABANE LOCAL MUNICIPALITY 


ACCOUNTING POLICIES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


Financial Assets measured at Amortised Cost 

Financial Assets at Amortised Cost are initially measured at fair value plus transaction costs that are directly attributable to the 
acquisition or issue of the Financial Asset. Subsequently, these assets are measured at amortised cost using the Effective 
Interest Method less any impairment, with interest recognised on an Effective Yield Basis. 


Financial Assets measured at Cost 
Financial Assets at Cost are initially measured at the transaction amount and transaction costs that are directly attributable to 
the acquisition or issue of the Financial Asset. Subsequently, these assets are measured at cost less any impairment. 


Financial Assets measured at Fair Value 
Financial Assets at Fair Value are initially measured at fair value, excluding directly attributable transaction costs. They are 
subsequently measured at fair value with unrealised gains or losses recognised directly in Surplus or Deficit. 


7.3.2 Financial Liabilities: 


Financial Liabilities measured at Fair Value 
Financial Liabilities at Fair Value are stated at fair value, with any resulted gain or loss recognised in Surplus or Deficit. 


Financial Liabilities held at Amortised Cost 

Any other Financial Liabilities are classified as Other Financial Liabilities (All Payables, Loans and Borrowings are classified as 
Other Liabilities) and are initially measured at fair value, net of transaction costs. Trade and Other Payables, Interest-bearing 
Debt including Finance Lease Liabilities, Non-interest-bearing Debt and Bank Borrowings are subsequently measured at 
amortised cost using the Effective Interest Rate Method. Interest expense is recognised in Surplus or Deficit by applying the 
effective interest rate. 


Prepayments are carried at cost less any accumulated impairment losses. 


7.4 Impairment of Financial Assets 


Financial Assets, other than those at fair value, are assessed for indicators of impairment at the end of each reporting period. 
Financial Assets are impaired where there is objective evidence of impairment of Financial Assets (such as the probability of 

insolvency or significant financial difficulties of the debtor). If there is such evidence the recoverable amount is estimated and 
an impairment loss is recognised through the use of an allowance account. 


7.4.1 Financial Assets at Amortised Cost 


A provision for impairment of Accounts Receivables is established when there is objective evidence that the municipality will not 
be able to collect all amounts due according to the original terms of receivables. The provision is made whereby the 
recoverability of accounts receivable is assessed individually and then collectively after grouping the assets in financial assets 
with similar credit risk characteristics. The amount of the provision is the difference between the Financial Asset’s carrying 
amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Future cash flows 
in a group of Financial Assets that are collectively evaluated for impairment are estimated on the basis of historical loss 
experience for assets with credit risk characteristics similar to those in the group. Cash flows relating to short-term receivables 
are not discounted where the effect of discounting is immaterial. 


Government accounts are not provided for as such accounts are regarded as receivable for the following reasons: 
e Itis management's judgement that the accounts are not "lost events" in terms of GRAP 104.58. 
e State Departments and Entities have to pay their creditors within 30 days in terms of the PFMA. 
e There is an urge from National Treasury that State Departments and Entities should start paying their outstanding debt. 


The carrying amount of the Financial Asset is reduced by the impairment loss directly for all Financial Assets carried at 
Amortised Cost with the exception of Consumer Debtors, where the carrying amount is reduced through the use of an allowance 
account. When a Consumer Debtor is considered uncollectible, it is written off against the allowance account. Subsequent 
recoveries of amounts previously written off are credited against revenue. Changes in the carrying amount of the allowance 
account are recognised in Surplus or Deficit. 


7.4.2 Financial Assets at Cost 


TSANTSABANE LOCAL MUNICIPALITY 


ACCOUNTING POLICIES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


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


7.5 Derecognition of Financial Assets 


The municipality derecognises Financial Assets only when the contractual rights to the cash flows from the asset expires or it 
transfers the Financial Asset and substantially all the risks and rewards of ownership of the asset to another entity, except when 
Council approves the write-off of Financial Assets due to non-recoverability. 


If the municipality neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the 
transferred asset, the municipality recognises its retained interest in the asset and an associated liability for amounts it may 
have to pay. If the municipality retains substantially all the risks and rewards of ownership of a transferred Financial Asset, the 
municipality continues to recognise the Financial Asset and also recognises a collateralised borrowing for the proceeds 
received. 


7.6 Derecognition of Financial Liabilities 


The municipality derecognises Financial Liabilities when, and only when, the municipality's obligations are discharged, cancelled 
or they expire. 


The municipality recognises the difference between the carrying amount of the Financial Liability (or part of a Financial Liability) 
extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities 
assumed, in Surplus or Deficit. 


STATUTORY RECEIVABLES 


8.1 Transitional Provisions 


GRAP 108 Statutory Receivables became effective on 1 April 2019 and, in accordance with the transitional provisions for the 
Standard provided in Directive 3, entities are not required to change their accounting policies in respect of the classification and 
measurement of statutory receivables for reporting periods beginning on a date within three years following the date of first 
adoption of GRAP 108. Entities shall comply with the disclosure requirements of GRAP 108 as and when statutory receivables 
are classified and measured in accordance with the Standard of GRAP. 


The municipality is taking advantage of the transitional provisions by not classifying or measuring its Statutory Receivables in 
accordance with GRAP 108, and, therefore, no disclosures required by GRAP 108 has been made. 


The Statutory Receivables that exists in the municipality’s books at year-end are those relating to Property Rates and Fines. 


The municipality intends to fully apply the requirements of GRAP 108 by 30 June 2021. 


INVENTORIES 


9.1 Initial Recognition 


Inventories comprise current assets held-for-sale, current assets for consumption or distribution during the ordinary course of 
business. Inventories are initially recognised at cost. Cost generally refers to the purchase price, plus taxes, transport costs 
and any other costs in bringing the Inventories to their current location and condition. Where Inventory is manufactured, 
constructed or produced, the cost includes the cost of labour, materials and overheads used during the manufacturing process. 


Where Inventory 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 the item on the date acquired. 


10. 


TSANTSABANE LOCAL MUNICIPALITY 


ACCOUNTING POLICIES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 
Direct costs relating to properties that will be sold as Inventory are accumulated for each separately identifiable development. 
Costs also include a proportion of overhead costs. 


9.2 Subsequent Measurement 


9.2.1 Consumable Stores, Raw Materials, Work-in-Progress and Finished Goods 


Consumable stores, raw materials, work-in-progress, inventories distributed at no charge or for a nominal charge and finished 
goods are valued at the lower of cost and current replacement cost (the cost the municipality would incur to acquire the asset on 
the reporting date). The cost is determined using the weighted average Method. 


9.2.2 Water Inventory 


Water is regarded as Inventory when the municipality purchases water in bulk with the intention to resell it to the consumers or 
to use it internally, or where the municipality has incurred purification costs on water obtained from natural resources (rain, 
rivers, springs, boreholes, etc). However, water in dams, that are filled by natural resources and that has not yet been treated, 
that is under the control of the municipality but cannot be measured reliably as there is no cost attached to the water, is 
therefore not recognised in the Statement of Financial Position. 


The basis of determining the cost of water purchased and not yet sold at reporting date comprises all costs of purchase, cost of 
conversion and other costs incurred in bringing the Inventory to its present location and condition, net of trade discounts and 
rebates. 


Water and purified effluent are valued by using the FIFO Method, at the lowest of purified cost and net realisable value, insofar 
as it is stored and controlled in reservoirs at year-end. 


9.2.3 Unsold Properties 


Unsold properties are valued at the lower of cost and net realisable value on a FIFO. Direct costs are accumulated for each 
separately identifiable development. Cost also includes a portion of overhead costs, if this relates to development. 


9.2.4 Other Arrangements 


Redundant and slow-moving Inventories are identified and written down from cost to net realisable value with regard to their 
estimated economic or realisable values and sold by public auction. Net realisable value is the estimated selling price in the 
ordinary course of business, less applicable variable selling expenses. Differences arising on the measurement of such 
Inventory at the lower of cost and net realisable value are recognised in Surplus or Deficit in the year in which they arise. The 
amount of any reversal of any write-down of Inventories arising from an increase in net realisable value or current replacement 
cost is recognised as a reduction in the amount of Inventories recognised as an expense in the period in which the reversal 
occurs. 


The carrying amount of Inventories is recognised as an expense in the period that the Inventory was sold, distributed, written off 
or consumed, unless that cost qualifies for capitalisation to the cost of another asset. 


REVENUE RECOGNITION 
10.1 General 


Revenue is derived from a variety of sources which include rates levied, grants from other tiers of government and revenue from 
trading activities and other services provided. 


Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary 
course of the municipality's activities. Revenue is shown net of value-added tax, returns, rebates and discounts. 


10.2 Revenue from Exchange Transactions 


TSANTSABANE LOCAL MUNICIPALITY 


ACCOUNTING POLICIES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 
10.2.1 Service Charges 


Service Charges are levied in terms of approved tariffs. 


Service Charges relating to electricity and water are based on consumption. Meters are read on a monthly basis and are 
recognised as revenue when invoiced. Provisional estimates of consumption, based on the consumption history, are made 
monthly when meter readings have not been performed. The provisional estimates of consumption are recognised as revenue 
when invoiced, except at year-end when estimates of consumption up to year-end are recorded as revenue without it being 
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. In respect of estimates of consumption between 
the last reading date and the reporting date, an accrual is made based on the average monthly consumption of consumers. 


Service charges relating to refuse removal are recognised on a monthly basis in arrears by applying the approved tariff to all 
properties that have improvements. Tariffs are determined per category of property usage, and are levied based on the extent 
of each property. 


Service charges relating to sewerage and sanitation are recognised on a monthly basis in arrears by applying the approved tariff 
to all properties. Tariffs are determined per category of property usage, and are levied based on the extent of each property. 


In circumstances where services cannot readily be measured and quantified, a flat rate service charge is levied monthly on such 
properties. 
10.2.2 Prepaid Electricity 


Revenue from the sale of electricity prepaid meter cards are recognised at the point of sale. Revenue from the sale of electricity 
prepaid meter cards are recognised based on an estimate of the prepaid electricity consumed as at the reporting date. 


10.2.3 Rentals Received 


Revenue from the rental of facilities and equipment is recognised on a Straight-line Basis over the term of the lease agreement. 


10.2.4 Finance Income 


Interest earned on investments is recognised in Surplus or Deficit on the Time-proportionate Basis that takes into account the 
effective yield on the investment. 


10.2.5 Tariff Charges 
Revenue arising from the application of the approved tariff of charges is recognised when the relevant service is rendered by 


applying the relevant authorised tariff. This includes the issuing of licences and permits. 


10.2.6 Sale of Goods (including Houses) 
Revenue from the sale of goods is recognised when all the following conditions have been met: 


(a) | The municipality has transferred to the buyer the significant risks and rewards of ownership of the goods; 


(b) | The municipality retains neither continuing managerial involvement to the degree usually associated with ownership nor 
effective control over the goods sold; 


(c) The amount of revenue can be measured reliably; 
(d) Itis probable that the economic benefits or service potential associated with the transaction will flow to the municipality; 
and 


(e) The costs incurred or to be incurred in respect of the transaction can be measured reliably. 


10.3 Revenue from Non-exchange Transactions 


TSANTSABANE LOCAL MUNICIPALITY 


ACCOUNTING POLICIES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


10.3.1 Rates and Taxes 


Revenue from property rates is recognised when the legal entitlement to this revenue arises. Collection charges are recognised 
when such amounts are legally enforceable. Penalty interest on unpaid rates is recognised on a Time-proportionate Basis with 

reference to the principal amount receivable and effective interest rate applicable. A composite rating system charging different 
rate tariffs is employed. Rebates are granted to certain categories of ratepayers and are deducted from revenue. 


10.3.2 Fines 
Fines constitute both spot fines and summonses 


Revenue for fines is recognised when the fine is issued at the full amount of the receivable. The municipality uses estimates to 
determine the amount of revenue that the municipality is entitled to collect that is subject to further legal proceedings. 


10.3.3 Public Contributions 


Revenue from public contributions 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 are brought into 
use. 


10.3.4 Government Grants and Receipts 
Equitable share allocations are recognised in revenue at the start of the financial year if no time-based restrictions exist. 


Conditional grants, donations and funding are recognised as revenue to the extent that the municipality has complied with any of 
the criteria, conditions or obligations embodied in the agreement. 


Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving 
immediate financial support to the municipality with no future related costs, are recognised in Surplus or Deficit in the period in 
which they become receivable. 


Unspent conditional grants are financial liabilities that are separately reflected on the statement of financial 
position. They represent unspent government grants, subsidies and contributions from government organs. 


This liability always has to be cash-backed. The following provisions are set for the creation and utilisation of this 
creditor: 


Unspent conditional grants are recognised as a liability when the grant is received. 


When grant conditions are met an amount equal to the conditions met are transferred to revenue in the 
statement of financial performance. 


e The cash which backs up the creditor is invested as individual investment or part of the general 
investments of the Municipality until it is utilised. 


e Interest earned on the investment is treated in accordance with grant conditions. If it is payable to the 
funder it is recorded as part of the creditor. If it is the Municipality’s interest, it is recognised as interest 
earned in the statement of financial performance. 


Unpaid conditional grants are assets in terms of the Framework that are separately reflected on the statement of 
financial position. The asset is recognised when the Municipality has an enforceable right to receive the grant or 
if it is virtually certain that it will be received based on that grant conditions have been met. They represent 
unpaid government grants, subsidies and contributions from the public. 


Interest earned on investments is treated in accordance with grant conditions. If it is payable to the funder it is recorded as part 
of the creditor and if it is the municipality’s interest, it is recognised as interest earned in Surplus or Deficit. 


10.3.5 Revenue from Recovery of Unauthorised, Irregular, Fruitless and Wasteful Expenditure 


11. 


12. 


TSANTSABANE LOCAL MUNICIPALITY 


ACCOUNTING POLICIES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 
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 as revenue when the recovery thereof from 
the responsible councillors or officials became virtually certain in a financial period subsequent to the period when the actual 
unauthorised, irregular, fruitless and wasteful expenditure was incurred. 


PROVISIONS 


The best estimate of the expenditure required to settle the present obligation is the amount that the municipality would rationally 
pay to settle the obligation at the reporting date or to transfer it to a third party at that time and are determined by the judgment 
of the management of the municipality, supplemented by experience of similar transactions and, in some cases, reports from 
independent experts. The evidence considered includes any additional evidence provided by events after the reporting date. 
Uncertainties surrounding the amount to be recognised as a provision are dealt with by various means according to the 
circumstances. Where the provision being measured involves a large population of items, the obligation is estimated by 
weighting all possible outcomes by their associated probabilities. 


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. An onerous contract is a contract in which the unavoidable costs of 
meeting the obligations under the contract exceed the economic benefits expected to be received under it. The unavoidable 
costs under a contract reflect the least net cost of exiting from the contract, which is the lower of the cost of fulfilling it and any 
compensation or penalties arising from failure to fulfil it — this unavoidable cost resulting from the contract is the amount of the 
provision to be recognised. 


Provisions are reviewed at reporting date and the amount of a provision is the present value of the expenditure expected to be 
required to settle the obligation. When the effect of discounting is material, provisions are determined by discounting the 
expected future cash flows that reflect current market assessments of the time value of money. The impact of the periodic 
unwinding of the discount is recognised in Surplus or Deficit as a finance cost as it occurs. 


11.1 Provision for Environmental Rehabilitation 


Estimated long-term environmental provisions, comprising rehabilitation and landfill site closure, are based on the municipality’s 
policy, taking into account current technological, environmental and regulatory requirements. The provision for rehabilitation is 
recognised as and when the environmental liability arises. To the extent that the obligations relate to the asset, they are 
capitalised as part of the cost of those assets. Any subsequent changes to an obligation that did not relate to the initial related 
asset are charged to Surplus or Deficit. 


EMPLOYEE BENEFIT LIABILITIES 
12.1 Short-term Employee Benefits 


The costs of all short-term employee benefits such as leave pay, are recognised during the period in which the employee 
renders the related service. The liability for leave pay is based on the total accrued leave days at year end and is shown as a 
creditor in the Statement of Financial Position. The municipality recognises 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. 


12.1.1 Provision for Staff Leave 


Liabilities for annual leave are recognised as they accrue to employees. The liability is based on the total amount 
of leave days due to employees at year-end and also on the total remuneration package of the employee. 


Accumulating leave is carried forward and can be used in future periods if the current period’s entitlement is not 
used in full. All unused leave will be paid out to the specific employee at the end of that employee’s employment 
term. 


TSANTSABANE LOCAL MUNICIPALITY 


ACCOUNTING POLICIES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


Accumulated leave is vesting. 


12.1.2 Staff Bonuses Accrued 


Liabilities for staff bonuses are recognised as they accrue to employees. The liability at year end is based on 
bonus accrued at year-end for each employee. 


12.1.3 Provision for Performance Bonuses 


A provision, in respect of the liability relating to the anticipated costs of performance bonuses payable to Section 
57 employees, is recognised as it accrue to Section 57 employees. Municipal entities’ performance bonus 
provisions are based on the employment contract stipulations as well as previous performance bonus payment 
trends. 


12.2 Post-employment Benefits 


The municipality provides retirement benefits for its employees and councillors, and has both defined benefit and defined 
contribution post-employment plans. 


12.2.1 Defined Contribution Plans 


The municipality’s contributions to the defined contribution funds are established in terms of the rules governing those plans. 
Contributions are recognised in Surplus or Deficit in the period in which the service is rendered by the relevant employees. The 
municipality has no further payment obligations once the contributions have been paid. The contributions are recognised as 
employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash 
refund or a reduction in the future payments is available. 


12.2.2 Defined Benefit Plans 


Post-retirement Health Care Benefits 

The municipality has an obligation to provide Post-retirement Health Care Benefits to certain of its retirees. According to the 
rules of the Medical Aid Funds with which the municipality is associated, a member (who is on the current Conditions of 
Service), on retirement, is entitled to remain a continued member of the Medical Aid Fund, in which case the municipality is 
liable for a certain portion of the medical aid membership fee. Not all Medical Aid Funds with which the municipality is 
associated, provide for continued membership. 


The defined benefit liability is the aggregate of the present value of the defined benefit obligation and unrecognised actuarial 
gains and losses, reduced by unrecognised past service costs. The plan is unfunded. The present value of the defined benefit 
obligation is calculated using the Projected Unit Credit Method, incorporating actuarial assumptions and a discount rate based 
on the government bond rate. Valuations of these obligations are carried out annually by independent qualified actuaries. 


Actuarial gains or losses are recognised immediately in Surplus or Deficit. 


Past-service costs are recognised immediately in Surplus or Deficit. 


Long-service Allowance 

The municipality has an obligation to provide Long-service Allowance Benefits to all of its employees. According to the rules of 
the Long-service Allowance Scheme, which the municipality instituted and operates, an employee (who is on the current 
Conditions of Service), is entitled to a cash allowance, calculated in terms of the rules of the scheme, after 10, 15, 20, 25 and 30 
years of continued service. The municipality’s liability is based on an actuarial valuation. The Projected Unit Credit Method is 
used to value the liabilities. Actuarial gains and losses on the long-term incentives are accounted for through Surplus or Deficit. 


Provincially-administered Defined Benefit Plans 


13. 


TSANTSABANE LOCAL MUNICIPALITY 


ACCOUNTING POLICIES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 
The municipality contributes to various National- and Provincial-administered Defined Benefit Plans on behalf of its qualifying 
employees. These funds are multi-employer funds. The contributions to fund obligations for the payment of retirement benefits 
are charged against revenue in the year they become payable. These defined benefit funds are actuarially valued triennially on 
the Projected Unit Credit Method basis. Deficits are recovered through lump sum payments or increased future contributions on 
a proportional basis from all participating municipalities. 


Defined Benefit Pension Plans 

The municipality has an obligation to provide Post-retirement Pension Benefits to certain of its retirees. Pension contributions in 
respect of employees who were not members of a pension fund are recognised as an expense when incurred. Staff provident 
funds are maintained to accommodate personnel who, due to age, cannot join or be part of the various pension funds. The 
municipality contributes monthly to the funds. 


The liability recognised in the Statement of Financial Position in respect of defined benefit pension plans is the present value of the defined 
benefit obligation at the end of the reporting period less the fair value of plan assets, together with adjustments for unrecognised past-service 
costs. The defined benefit obligation is calculated annually by independent actuaries using the Projected Unit Credit Method. The present 
value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality 
corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the 
terms of the related pension liability. 


Actuarial gains or losses are recognised immediately in Surplus or Deficit. 


Past-service costs are recognised immediately in Surplus or Deficit. 


LEASES 
13.1 The Municipality as Lessee 


13.1.1 Finance Leases 


Property, plant and equipment or intangible assets subject to finance lease agreements are capitalised at amounts equal to the 

fair value of the leased asset or, if lower, the present value of the minimum lease payments, each determined at the inception of 
the lease. Corresponding liabilities are recognised at equal amounts. In discounting the lease payments, the municipality uses 

the interest rate that exactly discounts the lease payments 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 and equipment or intangible assets. The lease liability is reduced by the lease payments, which are 
allocated between the finance cost and the capital repayment using the Effective Interest Rate Method. 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. 


13.1.2 Operating Leases 


The municipality recognises operating lease rentals as an expense in Surplus or Deficit on a Straight-line Basis over the term of 
the relevant lease. The difference between the amounts recognised as an expense and the contractual payments are 
recognised as an operating lease asset or liability. Any lease incentives are included as part of the net consideration agreed. 


13.2 The Municipality as Lessor 


Amounts due from lessees under Finance Leases or instalment sale agreements are recorded as receivables at the amount of 
the municipality's net investment in the leases. Finance lease or instalment sale revenue is allocated to accounting periods so 
as to reflect a constant periodic rate of return on the municipality's net investment outstanding in respect of the leases or 
instalment sale agreements. 


Rental revenue from Operating Leases is recognised on a Straight-line Basis over the term of the relevant lease. 


14. 


15. 


16. 


17. 


18. 


19. 


20. 


TSANTSABANE LOCAL MUNICIPALITY 


ACCOUNTING POLICIES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 
GRANTS-IN-AID 


The municipality transfers money to individuals, organisations and other sectors of government from time to time. When making 
these transfers, the municipality does not: 


(a) | Receive any goods or services directly in return, as would be expected in a purchase or sale transaction; 
(b) | Expect to be repaid in future; or 
(c) Expect a financial return, as would be expected from an investment. 


These transfers are recognised in Surplus or Deficit as expenses in the period that the events giving rise to the transfer 
occurred. 


VALUE ADDED TAX 


The municipality accounts for Value Added Tax on the Payments Basis in accordance with section15(2)(a) of the Value-Added 
Tax Act (Act No 89 of 1991). 


UNAUTHORISED EXPENDITURE 


Unauthorised Expenditure is expenditure that has not been budgeted for, 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). All expenditure relating to 
Unauthorised Expenditure is accounted for as an expense in Surplus or Deficit 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 Surplus or Deficit. 


IRREGULAR EXPENDITURE 


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 or Municipal Entities’ Supply Chain Management Policies. Irregular Expenditure excludes Unauthorised 
Expenditure. Irregular Expenditure is accounted for as an expense in Surplus or Deficit in the period it occurred and where 
recovered, it is subsequently accounted for as revenue in Surplus or Deficit. 


FRUITLESS AND WASTEFUL EXPENDITURE 


Fruitless and Wasteful Expenditure is expenditure that was made in vain and would have been avoided had reasonable care 
been exercised. All expenditure relating to Fruitless and wasteful expenditure is accounted for as expenditure in Surplus or 
Deficit 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 Surplus or Deficit. 


MATERIAL LOSSES 


The MFMA requires the disclosure of material losses incurred during the year under review. The disclosure is provided in order 
to comply to the legislative requirements governing Municipalities and Municipal Entities. 


Due to their significance, the complete calculation of water and electricity losses is provided, including the opening balance, 
purchases, sales and closing balance where applicable. The unit rate is the rate per the last purchase as inventory is measured 
based on the First-/n-First-Out Method as defined by GRAP 12 (Inventories). 


CONTINGENT ASSETS AND CONTINGENT LIABILITIES 


21. 


22. 


23. 


24. 


25. 


26. 


TSANTSABANE LOCAL MUNICIPALITY 


ACCOUNTING POLICIES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 
Contingent Assets and Contingent Liabilities are not recognised. Contingencies are disclosed in note 48 to the Annual Financial 
Statements. 


COMMITMENTS 


Commitments are future expenditure to which the municipality committed and that will result in the outflow of resources. 
Commitments are not recognised in the Statement of Financial Position as a liability or as expenditure in Surplus or Deficit, but 
are included in the disclosure Notes. A distinction is made between capital and current commitments. 


RELATED PARTIES 


Individuals as well as their close family members, and/or entities are related parties if one party has the ability, directly or 
indirectly, to control or jointly control the other party or exercise significant influence over the other party in making financial 
and/or operating decisions. Management is regarded as a related party and comprises the Councillors, Mayor, Executive 
Committee Members, Municipal Manager, Chief Financial Officer and all other managers reporting directly to the Municipal 
Manager or as designated by the Municipal Manager. 


EVENTS AFTER THE REPORTING DATE 


Events after the reporting date that are classified as adjusting events have been accounted for in the Annual Financial 
Statements. The events after the reporting date that are classified as Non-adjusting Events after the Reporting Date have been 
disclosed in Notes to the Annual Financial Statements. 


SEGMENT REPORTING 


The mandate of the municipality is to provide basic services to the community over which it governs. In order to properly 
execute its mandate and achieve its strategic goals, internal management reporting is based on each service objective. The 
following components have been identified as individually significant segments for purposes of reporting in terms of GRAP 18 
(Segment Reporting): 


The sole mandate of the entity is the provision of library services. While there are separate units in the organisation responsible 
for aspects of this service, management relies and uses the financial information of the business as a whole to assess 
performance and make decisions concerning inter alia the allocation of resources. Consequently, for purposes of GRAP 18 the 
businesses is considered to have one segment. There is therefore, no requirement for additional notes to the financial 
statements in this regard. 


The municipality only operates in a single geographical location and accordingly does not report separately on each location 
within its jurisdction. 


BUDGET INFORMATION 


The annual budget figures have been prepared in accordance with the GRAP standard and are consistent with the Accounting 
Policies adopted by the Council for the preparation of these Annual Financial Statements. The amounts are scheduled as a 
separate additional financial statement, called the Statement of Comparison of Budget and Actual amounts. Explanatory 
comment is provided in the statement giving reasons for overall growth or decline in the budget and motivations for over- or 
under spending on line items. The annual budget figures included in the Annual Financial Statements are for the municipality 
and do not include budget information relating to subsidiaries or associates. These figures are those approved by the Council at 
the beginning and during the year following a period of consultation with the public as part of the Integrated Development Plan. 
The budget is approved on an accrual basis by nature classification. 


The approved budget covers the period from 1 July 2019 to 30 June 2020. 


CHANGES IN ACCOUNTING POLICIES, ESTIMATES AND ERRORS 


27. 


TSANTSABANE LOCAL MUNICIPALITY 


ACCOUNTING POLICIES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


Changes in accounting policies that are effected by management have been applied retrospectively in accordance with GRAP 3 
requirements, except to the extent that it is impracticable to determine the period-specific effects or the cumulative effect of the 
change in policy. 


In such cases the municipality shall restate the opening balances of assets, liabilities and net assets for the earliest period for 
which retrospective restatement is practicable. 


Changes in accounting estimates are applied prospectively in accordance with GRAP 3 requirements. 


Correction of errors is applied retrospectively in the period in which the error has occurred in accordance with GRAP 3 
requirements, except to the extent that it is impracticable to determine the period-specific effects or the cumulative effect of the 
error. In such cases the municipality shall restate the opening balances of assets, liabilities and net assets for the earliest 
period for which retrospective restatement is practicable. 


Refer to Note 40 to the Annual Financial Statements for details of corrections of errors recorded during the period under review. 


CONSUMER DEPOSITS 


Consumer Deposits are paid by consumers on application for new water and electricity connections. The deposits are repaid 
when the water and electricity connections are terminated. In cases where consumers default on their accounts, the 
municipality can utilise the deposit as payment for the outstanding account. No interest is paid on Consumer Deposits held. 
Consumer deposits are held in the municipality's primary bank account and available for immediate release. 

Classification in terms of GRAP 104: Financial liability at fair value 


Financial Liabilities measured at fair value 


Financial liabilities measured at fair value are stated at fair value, with any resulted gain or loss recognised in the Statement of 
Financial Performance. 


Derecognition of Financial Liabilities 


The municipality derecognises Financial Liabilities when, and only when, the municipality's obligations are discharged, cancelled 
or they expire. 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


GENERAL INFORMATION 


Tsantsabane Local Municipality (the municipality) is a local government institution in Postmasburg, and is located within the north-eastern part 
of the Northern Cape Province, and is one of five local municipalities under the jurisdiction of the ZF Mgcawu District Municipality. The 
addresses of its registered office and principal place of business are disclosed under "General Information" included in the Annual Financial 
Statements and in the introduction of the Annual Report. The principal activities of the municipality are disclosed in the Annual Report and are 


prescribed by the Municipal Finance Management Act (MFMA). 


INVENTORIES 
Consumables 
Property Stock 
Water 


Total Inventories 


The cost of water for the year amounted to R8.59 (2019: R8.59) per kilolitre. 


Consumables per stock take 
Less provision for obsolete stock 


No Inventories have been pledged as collateral for Liabilities of the municipality. 


The Inventory Land has been restated to account for the Transfer of properties from Investment Property to 
Inventory - Land. The Inventory Consumables have also been restated. Refer to Note 41 on "Correction of Error" 


for details of the restatement. 


RECEIVABLES FROM EXCHANGE TRANSACTIONS 


As at 30 June 2020 


Service Debtors: 

Electricity 

Refuse 

Sewerage 

Water 

Other Receivables 

Property Rental Debtors 

Other Debtors: Control accounts 


Total Receivables from Exchange Transactions 


As at 30 June 2019 


Service Debtors: 

Electricity 

Refuse 

Sewerage 

Water 

Other Receivables 

Property Rental Debtors 

Other Debtors: Land Sale Debtors 


Total Receivables from Exchange Transactions 




































































2020 2019 
R R 
287,047 422,731 
- 6,584,673 
102,345 97,689 
389,392 7,105,094 
366,832 422,731 
(79,786) (88,997) 
287,046 333,734 
Gross Provision for Net 
Balances Impairment Balances 
R R R 
234,682,917 222,562,854 12,120,063 
8,978,572 5,272,018 3,706,555 
54,370,361 52,945,717 1,424,644 
90,600,544 87,148,400 3,452,144 
80,733,440 77,196,718 3,536,721 
5,077,816 4,460,952 616,864 
5,059,310 4,460,952 598,358 
18,506 - 18,506 
239,760,733 227,023,806 12,736,927 
Gross Provision for Net 
Balances Impairment Balances 
R R R 
196,797,667 188,230,183 8,567,485 
8,314,709 6,026,234 2,288,475 
43,307,013 42,265,581 1,041,432 
71,836,828 69,244,099 2,592,729 
73,339,117 70,694,268 2,644,849 
5,271,245 4,294,579 976,666 
5,255,862 4,294,579 961,284 
15,382 - 15,382 
202,068,912 192,524,761 9,544,151 








The municipality did not pledge any of its Receivables as security for borrowing purposes. 
The management of the municipality is of the opinion that the carrying value of Receivables approximate their fair values. 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


The fair value of Receivables was determined after considering the standard terms and conditions of agreements entered into between the 
municipality and Receivables as well as the current payment ratios of the municipality's Receivables. 


3.1 Ageing of Receivables from Exchange Transactions 


As at 30 June 2020 


Electricity: 
Gross Balances 
Less: Provision for Impairment 


Net Balances 

Refuse: 

Gross Balances 

Less: Provision for Impairment 
Net Balances 

Sewerage: 

Gross Balances 

Less: Provision for Impairment 
Net Balances 

Property Rental: 

Gross Balances 

Less: Provision for Impairment 
Net Balances 

Water: 

Gross Balances 

Less: Provision for Impairment 
Net Balances 

Other: Control accounts 
Gross Balances 


Less: Provision for Impairment 


Net Balances 























































































































Current Past Due Total 
0 - 30 days 31 - 60 Days 61 - 90 Days + 90 Days 

969,762 551,740 325,443 7,131,628 8,978,572 
412,407 334,786 197,474 4,327,351 5,272,018 
557,355 216,953 127,970 2,804,276 3,706,554 
1,384,095 1,303,370 1,271,253 50,411,644 54,370,361 
1,347,828 1,269,218 1,237,942 49,090,729 52,945,717 
36,267 34,152 33,310 1,320,915 1,424,644 
2,455,175 2,285,115 2,215,647 83,644,607 90,600,544 
2,361,625 2,198,045 2,131,224 80,457,505 87,148,400 
93,549 87,070 84,423 3,187,103 3,452,144 
347,031 46,658 38,592 4,627,029 5,059,310 
305,988 41,140 34,028 4,079,796 4,460,952 
41,043 5,518 4,564 547,233 598,358 
1,864,367 1,120,812 661,643 77,086,617 80,733,440 
1,339,611 1,078,009 636,375 74,142,723 77,196,718 
524,756 42,803 25,268 2,943,894 3,536,722 
18,506 - - - 18,506 
18,506 - - - 18,506 








As at 30 June Receivables of R12,736,928 were past due but not impaired. The age analysis of these Receivables are as follows: 


All Receivables: 
Gross Balances 
Less: Provision for Impairment 


Net Balances 


As at 30 June 2019 


Electricity: 
Gross Balances 
Less: Provision for Impairment 


Net Balances 


Refuse: 






























































Current Past Due 
Total Past Due 
0 - 30 days 31 - 60 Days 61 - 90 Days + 90 Days 
7,038,935 5,307,695 4,512,578 222,901,525 239,760,733 
5,767,459 4,921,199 4,237,043 212,098,104 227,023,805 
1,271,476 386,496 275,535 10,803,421 12,736,928 
Current Past Due 
Total 
0 - 30 days 31 - 60 Days 61 - 90 Days + 90 Days 
1,372,313 528,037 691,140 5,723,219 8,314,709 
763,082 368,394 482,186 4,412,572 6,026,234 
609,231 159,643 208,954 1,310,648 2,288,475 











Gross Balances 
Less: Provision for Impairment 


Net Balances 

Sewerage: 

Gross Balances 

Less: Provision for Impairment 
Net Balances 

Property Rental: 

Gross Balances 

Less: Provision for Impairment 
Net Balances 

Water: 

Gross Balances 

Less: Provision for Impairment 


Net Balances 


Other: Control accounts 
Gross Balances 
Less: Provision for Impairment 


Net Balances 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 







































































1,221,773 1,145,613 1,113,398 39,826,230 43,307,014 
1,185,319 1,111,432 1,080,178 38,888,653 42,265,581 
36,454 34,181 33,220 937,577 1,041,432 
1,949,037 1,833,000 1,766,949 66,287,842 71,836,829 
1,869,924 1,758,597 1,695,228 63,920,351 69,244,099 
79,113 74,403 71,722 2,367,492 2,592,729 
95,144 35,489 32,794 5,092,435 5,255,863 
87,857 32,771 30,282 4,143,668 4,294,579 
7,287 2,718 2,512 948,767 961,284 
1,498,982 987,671 1,241,823 69,610,642 73,339,117 
1,019,617 956,715 1,202,902 67,515,033 70,694,268 
479,365 30,955 38,921 2,095,608 2,644,849 
15,382 - - - 15,382 
15,382 - - - 15,382 

















As at 30 June Receivables of R8,317,320 were past due but not impaired. The age analysis of these Receivables are as follows: 


All Receivables: 
Gross Balances 
Less: Provision for Impairment 


Net Balances 


3.2 Summary of Service Debtors by Customer Classification 


As at 30 June 2020 


Current: 

0 - 30 days 
Past Due: 

31 - 60 Days 
61 - 90 Days 
+ 90 Days 
Sub-total 


Less: Provision for Impairment 









































Total Trade Receivables by Customer Classification 


As at 30 June 2019 


Current: 
0 - 30 days 
Past Due: 














Current Past Due 
Total Past Due 
0 - 30 days 31 - 60 Days 61 - 90 Days + 90 Days 
6,137,248 4,529,809 4,846,105 186,540,368 195,916,283 
4,925,799 4,227,909 4,490,776 178,880,277 187,598,962 
1,211,449 301,900 355,328 7,660,092 8,317,320 
Household Industrial/ National and 
& & Provincial Total 
Other Commercial Government 
R R R R 
5,685,504 1,209,133 125,792 7,020,429 
4,275,472 894,545 137,678 5,307,695 
3,767,962 653,665 90,950 4,512,578 
205,067,472 12,890,172 4,943,881 222,901,525 
218,796,411 15,647,515 5,298,302 239,742,227 
213,798,473 13,225,333 - 227,023,805 
4,997,938 2,422,182 5,298,302 12,718,422 
Household Industrial/ National and 
& & Provincial Total 
Other Commercial Government 
R R R R 
4,555,418 819,066 762,765 6,137,249 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


31 - 60 Days 

61 - 90 Days 

+ 90 Days 

Sub-total 

Less: Provision for Impairment 

Total Trade Receivables by Customer Classification 


3.3 Reconciliation of the Provision for Impairment 


Balance at beginning of year 
Impairment Losses recognised 


Balance at end of year 














In determining the recoverability of Receivables, the municipality has placed strong emphasis on 

verifying the indigent status of consumers. Provision for impairment of Receivables has been made 
for all consumer balances outstanding based on the payment ratio over 12 months per service type. 
No further credit provision is required in excess of the Provision for Impairment. 


No provision has been made in respect of government debt as these amounts are considered to be 
fully recoverable. The municipality holds collateral over these balances in the form of Consumer 
Deposits / Guarantees, which are not covering the total outstanding debt and vacant property 


respectively. 


3.4 Ageing of impaired Receivables from Exchange Transactions 


Current: 

0 - 30 Days 
Past Due: 

31 - 60 Days 
61 - 90 Days 
+ 90 Days 


Total 


3.5 Derecognition of Financial Assets 


No Financial Assets have been transferred to other parties during the year. 


RECEIVABLES FROM NON-EXCHANGE TRANSACTIONS 


As at 30 June 2020 
Property Rates 
Fines 


Deposits Held and Payments made in advance 


Total Receivables from Non-exchange Transactions 


As at 30 June 2019 
Property Rates 
Fines 


Deposits Held and Payments made in advance 


Total Receivables from Non-exchange Transactions 


3,493,112 869,307 167,390 4,529,809 
3,625,119 1,040,670 180,316 4,846,105 
169,222,088 10,178,925 7,139,355 186,540,368 
180,895,737 12,907,968 8,249,826 202,053,531 
179,939,148 12,585,614 - 192,524,762 
956,589 322,354 8,249,826 9,528,769 
2020 2019 
R R 
192,524,761 166,998,581 
34,499,044 25,526,180 
227,023,806 192,524,761 
5,767,459 4,925,799 
4,921,199 4,227,909 
4,237,043 4,490,776 
212,098,104 178,880,277 
227,023,805 192,524,761 
Gross Provision for Net 
Balances Impairment Balances 
R R R 
81,750,584 72,025,834 9,724,750 
613,040 466,914 146,126 
4,872,679 - 4,872,679 
87,236,302 72,492,748 14,743,555 
Gross Provision for Net 
Balances Impairment Balances 
R R R 
37,423,263 35,803,721 1,619,542 
518,140 326,506 191,634 
6,101,758 - 6,101,758 
44,043,161 36,130,227 7,912,934 
0.00 0.00 0.00 























TSANTSABANE LOCAL MUNICIPALITY 


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


The municipality does not hold deposits or other security for its Receivables. 


None of the Receivables have been pledged as security for the municipality's financial liabilities. 


The management of the municipality is of the opinion that the carrying value of Receivables approximate their fair values. 


The fair value of Receivables was determined after considering the standard terms and conditions of agreements entered into between the 
municipality and National / Provincial Departments as well as Other Debtors. The current payment ratios of Other Debtors were also taken into 


account for fair value determination. 


4.1 Ageing of Receivables from Non-exchange Transactions 


As at 30 June 2020 


Property Rates: 
Gross Balances 
Less: Provision for Impairment 


Net Balances 
Deposits Held: 
Gross Balances 


Less: Provision for Impairment 


Net Balances 























937,536 177,609 


169,424 


8,440,181 


Current Past Due Total 
0 - 30 days 31 - 60 Days 61 - 90 Days + 90 Days 
7,881,343 1,493,059 1,424,258 70,951,924 81,750,584 
6,943,807 1,315,450 1,254,833 62,511,743 72,025,834 





9,724,750 








4,872,679 


4,872,679 











4,872,679 








4,872,679 





As at 30 June Receivables of R14,743,554 were past due but not impaired. The age analysis of these Receivables are as follows: 


All Receivables: 
Gross Balances 
Less: Provision for Impairment 


Net Balances 


As at 30 June 2019 


Property Rates: 
Gross Balances 
Less: Provision for Impairment 


Net Balances 
Deposits Held: 
Gross Balances 


Less: Provision for Impairment 


Net Balances 


As at 30 June Receivables of R7,912,934 were past due but not 


All Receivables: 
Gross Balances 
Less: Provision for Impairment 


Net Balances 































































































Current Past Due Total 
0 - 30 days 31-60Days || 61-90Days || +90 Days 
8,494,383 1,493,059 1,424,258 75,824,602 87,236,302 
7,410,722 1,315,450 1,254,833 62,511,743 72,492,748 
1,083,662 177,609 169,424 13,312,859 14,743,554 
Current Past Due 
Total 
0 - 30 days 31 - 60 Days | 61 - 90 Days + 90 Days 
848,921 801,261 751,471 35,021,610 37,423,263 
818,169 772,236 724,250 33,489,066 35,803,721 
30,752 29,025 27,221 1,532,544 1,619,542 
5,456,408 - - 645,350 6,101,758 
5,456,408 - - 645,350 6,101,758 
impaired. The age analysis of these Receivables are as follows: 
Current Past Due 
Total 
0 - 30 days 31 - 60 Days 61 - 90 Days + 90 Days 
6,823,469 801,261 751,471 35,666,960 44,043,161 
1,144,675 772,236 724,250 33,489,066 36,130,227 
5,678,794 29,025 27,221 2,177,894 7,912,934 








4.2 Summary of Assessment Rates Debtors by Customer Classification 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 



































Household Industrial/ National and 
& & Provincial Total 
Other Commercial Government 
R R R R 
As at 30 June 2020 
Current: 
0 - 30 days 5,498,328 2,137,375 245,640 7,881,343 
Past Due: 
31 - 60 Days 1,143,621 325,486 23,952 1,493,059 
61 - 90 Days 1,104,499 295,807 23,952 1,424,258 
+ 90 Days 18,354,109 46,578,977 6,018,837 70,951,924 
Sub-total 26,100,558 49,337,645 6,312,380 81,750,584 
Less: Provision for Impairment 23,619,441 48,406,393 - 72,025,834 
Total Rates Debtors by Customer Classification 2,481,117 931,252 6,312,380 9,724,750 
Household Industrial/ National and 
& & Provincial Total 
Other Commercial Government 
R R R R 
As at 30 June 2019 
Current: 
0 - 30 days 583,924 253,557 11,439 848,921 
Past Due: 
31 - 60 Days 542,248 248,273 10,740 801,261 
61 - 90 Days 514,480 231,271 5,720 751,471 
+ 90 Days 14,634,127 19,342,890 1,044,593 35,021,610 
Sub-total 16,274,780 20,075,991 1,072,492 37,423,264 
Less: Provision for Impairment 15,808,392 19,995,329 - 35,803,721 
Total Rates Debtors by Customer Classification 466,388 80,662 1,072,492 1,619,543 
2020 2019 
4.3 Reconciliation of Provision for Impairment R R 
Balance at beginning of year 36,130,227 29,539,376 
Impairment Losses recognised 36,362,521 6,590,851 
Balance at end of year 72,492,748 36,130,227 
0.00 0.00 


The Provision for Impairment on Receivables exists predominantly due to the possibility that these 
debts will not be recovered. The Provision for Impairment was calculated after grouping all the 
financial assets of similar nature and risk ratings and assessing the recoverability. 


In determining the recoverability of a Rates Assessment Debtor and Receivables from Non-exchange 
Transactions, the municipality considers any change in the credit quality of the Rates Assessment 
Debtor from the date credit was initially granted up to the reporting date. The concentration of credit 
risk is limited due to the customer base being large and unrelated. Accordingly, the management 
believe that there is no further credit provision required in excess of the Provision for Impairment. 


No Provision for Impairment has been made in respect of government debt as these amounts are 
considered to be fully recoverable. The municipality holds collateral over these balances in the form of 
Rates Assessment Deposits / Guarantees, which are not covering the total outstanding debt and 
vacant property respectively. 


Furthermore, no Provision for Impairment was calculated on Receivables other than Assessment 
Rates Debtors as the management is of the opinion that all Receivables are recoverable within normal 
credit terms. 


2020 2019 
VAT RECEIVABLE R R 


Vat Receivable. 5,335,485 7,484,652 








TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 





The prior year amount for VAT receivable has been restated. Refer to Note 41 on "Correction of 
errors" for details of the restatement. 


VAT Payable is the Net Payable from all VAT Control Accounts and agree to the VAT201 Returns. 


The municipality accounts for VAT on the payment basis. Only once payment is received from 
debtors, VAT is paid over to SARS. 


No interest is payable to SARS if the VAT is paid over timeously, but interest for late payments is 
charged according to SARS policies. The municipality has financial risk policies in place to ensure 
that payments are affected before the due date. 


CASH AND CASH EQUIVALENTS 
































Current Investments 15,265,012 10,493,716 

Bank Accounts 25,302 1,934,677 

Cash on hand 2,000 2,000 

Total Bank, Cash and Cash Equivalents 15,292,314 12,430,393 

Bank Overdraft (3,142,305) - 

Net Bank, Cash and Cash Equivalents 12,150,009 12,430,393 

For the purposes of the Statement of Financial Position and the Cash Flow Statement, Cash and Cash 

Equivalents include Cash-on-Hand, Cash in Banks and Investments in Money Market Instruments, net 

of outstanding Bank Overdrafts. 

6.1 Current Investment Deposits 

Call Deposits 15,265,012 10,493,716 

Total Current Investment Deposits 15,265,012 10,493,716 

Call Deposits are investments with a maturity period of less than 3 months and earn interest at rates 

varying from 2.75% to 5.2% (2019: 2.6% to 5.9%) 

Fixed Deposits are investments with a maturity periods 30 to 365 days and earn interest at rates 

varying from 6.5% to 6.8% (2019: 3.8% to 8.03%) 

Standard Bank: Call account - Acc nr 54 852 911 6 - 011 4,688,274 19,433 

First National Bank: Fixed deposit (6 months) - Acc nr 62798446160 686,458 654,337 

ABSA: Fixed Deposit (365 days) - Acc nr 20 8031 7223 8,260,055 8,270,651 

First National Bank: Fixed deposit (30 days) - Acc nr 74753890167 49,492 736,897 

Standard Bank: Call Deposit - Acc nr 048459976-002 - 812,398 

Total Deposits attributable to Commitments of the Municipality 15,265,012 10,493,716 

Deposits attributable to Unspent Conditional Grants 6,269,006 1,549,296 

Deposits attributable to Payables 735,950 673,770 

Deposits pledged as guarantees for ESKOM 8,260,055 8,270,651 

Total Deposits attributable to Commitments of the Municipality 15,265,012 10,493,716 
2020 2019 

6.2 Bank Accounts R R 

Cash in Bank 25,302 1,934,677 

Bank Overdraft (3,142,305) - 

Total Bank Accounts (3,117,003) 1,934,677 








The Municipality has the following bank accounts: 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


Primary Bank Account 
ABSA Bank - Postmasburg Branch - Primary Account: 21-3000-0021 












































Cash book balance at beginning of year 1,326,518 58,485 
Cash book balance at end of year 25,302 1,326,518 
Bank statement balance at beginning of year 1,326,518 58,485 
Bank statement balance at end of year 25,302 1,326,518 
Standard Bank - Postmasburg Branch - Primary Account: 040552861 
Cash book balance at beginning of year 376 7,027 
Cash book balance at end of year ž 376 
Bank statement balance at beginning of year 376 7,027 
Bank statement balance at end of year z 376 
Standard Bank - Postmasburg Branch - Primary Account: 230035868 
Cash book balance at beginning of year 607,783 1,936,783 
Cash book balance at end of year (3,142,305) 607,783 
Bank statement balance at beginning of year 685,989 2,749,787 
Bank statement balance at end of year 1,275,252 685,989 
The municipality does not have any overdrawn current account facilities with its banker and therefore 
does not incur interest on overdrawn current accounts. Interest is earned at different rates per annum 
on favourable balances. 

2020 2019 
6.3 Cash and Cash Equivalents R R 
Cash Floats and Advances 2,000 2,000 
Total Cash on hand in Cash Floats, Advances and Equivalents 2,000 2,000 
The municipality did not pledge any of its Cash and Cash Equivalents as collateral for its financial 
liabilities. 
No restrictions have been imposed on the municipality in terms of the utilisation of its Cash and Cash 
Equivalents. 
OPERATING LEASE RECEIVABLES R R 
Operating Leases are recognised on the straight-line basis as per the requirement of GRAP 13. In 
respect of Non-cancellable Operating Leases the following assets have been recognised: 
Balance at beginning of year 22,798 29,569 
Operating Lease - Straight lining 72,514 72,514 
Operating Lease Revenue effected (85,100) (79,285) 
Total Operating Lease Receivables 10,213 22,798 





7.1 Leasing Arrangements 


The Municipality as Lessor: 

Operating Leases relate to Property owned by the municipality with lease terms of 1 to 10 years 
(2018/19: 1 to 10 years), with an option to extend. The lessee does not have an option to purchase the 
property at the expiry of the lease period. 


All operating lease contracts contain market review clauses in the event that the lessee exercises its 
option to renew. The lessee does not have an option to purchase the property at the expiry of the 
lease period. 


7.2 Amounts receivable under Operating Leases 


At the Reporting Date the following minimum lease payments were receivable under Non-cancellable 
Operating Leases for Property, Plant and Equipment, which are receivable as follows: 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


Up to 1 year 49,091 85,100 
2 to 5 years - 49,091 
More than 5 years - - 





Total Operating Lease Arrangements 49,091 134,191 








The impact of charging the escalations in Operating Leases on a straight-line basis over the term of 
the lease has been a decrease of R 12,586 (2019: increase of R 6,771) in current year income. The 
escalation on the two rentals is 6.9% and 8%. 


The following restrictions have been imposed by the municipality in terms of the lease agreements: 


(i) The lessee shall not have the right to sublet, cede or assign the whole or any portion of the 
premises let. 


(ii) The lessor or its duly authorised agent, representative or servant shall have the right at all 
reasonable times to inspect the premises let. 


(iii) The lessee shall use the premises let for the sole purpose prescribed in the agreement. 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


8. PROPERTY, PLANT AND EQUIPMENT 
30 June 2020 


Reconciliation of Carrying Value 


Community Infra- 


Description Assets structure 


Buildings Landfill sites |Other Assets 


R R R R R R R 


Carrying values at 01 July 2019 14,542,704 | 558,097,815 | 57,563,720 | 46,663,561 | 1,265,373 | 8,437,500 686,570,672 
Cost 24,878,509 | 773,326,888 | 95,875,414 | 46,663,561 | 2,630,479 | 30,613,872 973,988,723 
Accumulated Impairment Losses (162,381)|  (4,243,187)| (808,475) - | (4,717,413) (6,931,456) 
Accumulated Depreciation: (10,173,424)| (210,985,886)| (37,503,219) -| (1,365,106)| (20,458,960)| (280,486,595) 








Acquisition of Assets 
- Cost 9,488,995 3,696,774 13,185,769 


Depreciation: (1,055,738) (23,428,843)| (3,778,069) (151,889)| (3,512,596) (31,927,135) 


Carrying value of Disposals: (9,676) (171,819) 
- Cost (167,964) (171,819) 
- Accumulated Impairment Losses - - 
- Accumulated Depreciation 158,288 - 








Impairment Losses (224,900) (224,900) 








Carrying values at 30 June 2020 13,486,966 | 544,157,967 | 53,785,650 | 46,659,706 | 1,113,484 | 8,228,814 667,432,587 
Cost 24,878,509 | 782,815,883 | 95,875,414 | 46,659,706 | 2,630,479 | 34,142,682 987,002,673 
Accumulated Impairment Losses (162,381)|  (4,243,187)| (808,475) A - | (1,942,313) (7,156,356) 
Accumulated Depreciation: (11,229,162)| (234,414,729) | (41,281,288) - | (1,516,995)| (23,971,556) (312,413,730) 


























30 June 2019 


Reconciliation of Carrying Value 


Community Infra- 


Description Assets structure 


Buildings Landfill sites |Other Assets 
R R R R R R R 


Carrying values at 01 July 2018 16,059,361 | 566,038,339 | 62,158,625 | 46,667,416 1,417,262 6,317,151 698,658,154 
Cost 25,503,033 | 755,879,049 | 95,896,314 | 46,667,416 2,630,479 | 25,959,870 952,536,161 

Accumulated Impairment Losses - - - - - (1,601,399) (1,601,399) 
Accumulated Depreciation: (9,443,673)| (189,840,710)| (33,737,689) (1,213,217)| (18,041,320) (252,276,608) 








Acquisition of Assets 
- Cost 24,023,086 4,654,002 28,677,088 


Depreciation: (1,093,190)} (23,252,045)| (3,779,459) (151,889)| (2,417,640) (30,694,223) 


Carrying value of Disposals: (261,086) (4,468,378) (6,971) (4,740,290) 
- Cost (624,524) (6,575,247) (20,900) (7,224,526) 
- Accumulated Impairment Losses - - - - 
- Accumulated Depreciation 363,438 2,106,869 13,929 2,484,236 








Impairment Losses (162,381)|  (4,243,187)| (808,475) (116,014) (5,330,057) 





Carrying values at 30 June 2019 14,542,704 | 558,097,815 | 57,563,720 | 46,663,561 | 1,265,373 | 8,437,500 686,570,672 
Cost 24,878,509 | 773,326,888 | 95,875,414 | 46,663,561 | 2,630,479 | 30,613,872 973,988,723 
Accumulated Impairment Losses (162,381)|  (4,243,187)| (808,475) a - | (4,717,413) (6,931,456) 
Accumulated Depreciation: (10,173,424)| (210,985,886)| (37,503,219) - | (1,365,106)| (20,458,960)| (280,486,595) 





























Acquisition of Property, Plant and Equipment include Assets to the amount of R1,161,633 (2019: R11,624,785) donated to the municipality as 
indicated below (Refer to Note 53): 


Donor Description of Project 2020 2019 
Assmang Iron Ore (Beeshoek) Security Installations at Pump Stations (Work-in-Progress) - 1,597,531 
Kolomela Mine Corrective Maintenance Wastewater Treatment Plant 986,239 - 
Kolomela Mine Upgrading of Infrastructure at Show Grounds 175,394 
Kolomela Mine Repairs to Sewer Pump Stations - 2,452,511 
Kolomela Mine Upgrade Maremane Boreholes - 1,280,168 
Kuma Iron Ore Construction of New Road - 6,294,574 


Total for Donated Assets 1,161,633 11,624,785 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


TSANTSABANE LOCAL MUNICIPALITY 


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


8.1 Assets pledged as security 


2020 2019 
R R 


8. PROPERTY, PLANT AND EQUIPMENT (Continued) 


The municipality did not pledge any of its assets as security. 


8.2 Work-in-Progress 


The municipality has incurred expenditure on capital projects which were not completed at year-end. 
The details of the carrying amounts of expenditure included in each class of assets are listed below: 


Included within 


























Reconciliation of Work-in-Progress 2020 Total 
Opening Balance 46,703,688 46,703,688 
Additions/Capital Expenditure 8,327,362 8,327,362 
Transferred to Completed Items - - 
55,031,050 55,031,050 
Reconciliation of Work-in-Progress 2019 
Opening Balance 38,539,171 38,539,171 
Additions/Capital Expenditure 8,164,516 8,164,516 
Transferred to Completed Items - - 
46,703,688 46,703,688 
8.3 Delayed Projects 
The Work- In-Progress was restated due to an prior year invoice that was supposed to capitalised in 
2019. 
The municipality has projects that are currently experiencing delays or were halted. For each project, 
the reason for the delay or halting of the project are noted below: 
Project Details Reason 
Construction of End Street The project has been delayed due to the contractual 
disputes which has resulted in court case between the 
Municipality and the contractor over the payments. 
Skeifontein Access Road COGHSTA delaying to avail the funding for this projects. 
High Mast Light The delays in the completion were caused by the non- 
delivery of outstanding high mast lights. 
Construction of Sewer Pipeline in COGHSTA waiting a report from a former Director on the 
Maranteng spending of this project before the completion certificates 
can be issued by the Engineers. 
Construction of Budgie Street Delivery of incorrect specifications for this project 
resulted in some delays in completing the project and as 
a result the project had to be halted. 
Maremane Water Supply Delays have been due to the contractor not doing the 
required pipe testing and final inspection for the snags. 
2020 2019 
9. INTANGIBLE ASSETS R R 
At Cost less Accumulated Amortisation and Accumulated Impairment Losses 370,023 1,190,069 
The movement in Intangible Assets is reconciled as follows: 
Software 
Total 


Purchased 


10. 


TSANTSABANE LOCAL MUNICIPALITY 


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


Carrying values at 01 July 2019 
Cost 
Accumulated Amortisation 


Acquisitions: 
Purchased 


Amortisation: 
Purchased 
Internally Developed 


Disposals: 
At Cost 
At Accumulated Amortisation 


Carrying values at 30 June 2020 
Cost 
Accumulated Amortisation 


Carrying values at 01 July 2018 
Cost 
Accumulated Amortisation 


Acquisitions: 


Amortisation: 
Carrying values at 30 June 2019 


Cost 
Accumulated Amortisation 


The amortisation expense has been included in the line item "Depreciation and Amortisation" in the 


Statement of Financial Performance (see Note 31). 


All of the municipality's Intangible Assets are held under freehold interests and no Intangible Assets 


had been pledged as security for any liabilities of the municipality. 


No restrictions apply to any of the Intangible Assets of the municipality. 


INVESTMENT PROPERTY 


At Fair Value 


The movement in Investment Property is reconciled as follows: 


Carrying values at 1 July 
Fair Value 


Fair Value Adjustments 


Disposals during the Year: 
At Fair Value 


Transfers during the Year: 


At Fair Value 


Carrying values at 30 June 
Fair Value 














1,186,562 1,186,562 
2,676,087 2,676,087 
(1,489,525) (1,489,525) 
6,911 6,911 
6,911 | 6,911 | 
(397,166) (397,166) 





ee 


ne 










































































(101,591) (101,591) 
85,279 85,279 
779,994 779,994 
2,581,406 2,581,406 
(1,801,412) (1,801,412) 
Software Total 
Purchased 
1,669,346 1,669,346 
2,654,388 2,654,388 
985,042 985,042 
21,699 21,699 
(504,483) (504,483) 
1,186,562 1,186,562 
2,676,087 2,676,087 
(1,489,525) (1,489,525) 
2020 2019 
R R 
53,949,300 56,235,300 
56,235,300 80,445,521 
56,235,300 | 80,445,521 | 
: (21,784,842) 
(2,286,000) (1,095,715) 
(2,286,000)| (1,095,715)| 
z (1,329,664) 
| (1,329,664)| 
53,949,300 56,235,300 
53,949,300 56,235,300 








TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 
The prior year amount for Investment Property has been restated due to the transfer of properties from 
Investment Property to Inventory as at 30 June 2019, the transfer of properties from the Investment 
Property to Inventory. Refer to Note 41 on "Correction of Error" for details of the restatement. 


Revenue and Expenditure disclosed in the Statement of Financial Performance include the following: 


Rental Revenue earned from Investment Property 337,813 410,380 


All of the municipality’s Investment Property is held under freehold interests and no Investment 
Property had been pledged as security for any liabilities of the municipality. 


There are no restrictions on the realisability of Investment Property or the remittance of revenue and 
proceeds of disposal. 


There are no contractual obligations on Investment Property. 


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


11. HERITAGE ASSETS 
30 June 2020 


Reconciliation of Carrying Value 


TSANTSABANE LOCAL MUNICIPALITY 





Carrying values at 01 July 2019 
Cost 
Accumulated Impairment Losses 


Acquisitions 


Carrying values at 30 June 2020 
Cost 
Accumulated Impairment Losses 
11. HERITAGE ASSETS (Continued) 
30 June 2019 


Reconciliation of Carrying Value 


R 


319,675 


Sculptures Municipal 
and Teneis Total 
Monuments ry 


R 


394,675 





319,675 


394,675 





319,675 


394,675 





319,675 











394,675 








Carrying values at 01 July 2018 
Cost 
Accumulated Impairment Losses 


Acquisitions 


Carrying values at 30 June 2019 
Cost 
Accumulated Impairment Losses 


Sculptures 
and 
Monuments 


Municipal 
Jewellery 








R 


319,675 
319,675 


R 


394,675 
394,675 





319,675 


394,675 





319,675 











394,675 


All of the municipality’s Heritage Assets are held under freehold interests and no Heritage Assets had been pledged as 


security for any liabilities of the municipality. 


No restrictions apply to any of the Heritage Assets of the municipality. 


11.1 Impairment of Heritage Assets 


No impairment losses have been recognised on Heritage Assets of the municipality at the reporting 
date. 


11.2 Heritage Assets measured after recognition using the Revaluation Model 


The municipality's Heritage Assets are accounted for according to the cost model and therefore no fair 
value has been determined. 


12. 


13. 


14. 


TSANTSABANE LOCAL MUNICIPALITY 


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


CONSUMER DEPOSITS 
Water & Electricity 
Other Deposits 


Rental Properties 


Total Consumer Deposits 


Other deposits comprise deposits for properties rented out by the municipality. 


Consumer Deposits are paid by consumers on application for new water and electricity connections. 
The deposits are repaid when the water and electricity connections are terminated. 
consumers default on their accounts, the municipality can utilise the deposit as payment for the 


outstanding account. 


No interest is paid on Consumer Deposits held. 


The management of the municipality is of the opinion that the carrying value of Consumer Deposits 


approximates their fair values. 


The fair value of Consumer Deposits was determined after considering the standard terms and 
conditions of agreements entered into between the municipality and its consumers. 


PROVISIONS 


Current Portion of Employee Benefit Liabilities (See Note 17): 
Post-retirement Medical Aid Benefits Liability 
Long-term Service Liability 


Total Provisions 


PAYABLES FROM EXCHANGE TRANSACTIONS 


Advance Payments - Consumer debtors with credit balances 

Bonus 

Leave Accrual 

Other Payables 

Control, Clearing and Interface Accounts 

Unallocated Deposits 

- Unallocated Deposits 

- Department of Community Safety & Transport Management - Licence fees 


Retentions 
Trade Creditors 


Payables and Accruals 


Total Payables 


The prior year amount for Payables from Exchange Transactions has been restated. Refer to Note 


41 on "Correction of errors" for details of the restatement. 


Staff Bonuses accrue to the staff of the municipality on an annual basis, subject to certain conditions. 


The provision is an estimate of the amount due at the reporting date. 


Staff Leave accrues to the staff of the municipality on an annual basis, subject to certain conditions. 


The provision is an estimate of the amount due at the reporting date. 


The average credit period on purchases is 30 days from the receipt of the invoice, as determined by 
the MFMA. No interest is charged for the first 30 days from the date of receipt of the invoice. 

Thereafter interest is charged in accordance with the credit policies of the various individual creditors 
that the municipality deals with. The municipality has financial risk policies in place to ensure that all 


payables are paid within the credit timeframe. 























In cases where 









































2020 2019 
R R 

2,370,251 2,246,548 
42,308 47,365 
42,308 47,365 
2,412,558 2,293,914 
924,000 1,161,328 
675,000 560,379 
249,000 600,949 
924,000 1,161,328 
18,461,923 18,397,663 
2,022,911 1,925,093 
8,080,919 6,877,090 
37,077,017 32,515,610 
361,412 2,506,393 
36,715,605 30,009,216 
18,131,330 12,880,433 
18,584,276 17,128,783 
2,336,801 1,566,382 
264,312,080 208,695,267 

264,312,080 | | 208,695,267 | 
332,291,650 269,977,104 





15. 


16. 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


The management of the municipality is of the opinion that the carrying value of Creditors approximates 
their fair values. 


UNSPENT CONDITIONAL GRANTS AND RECEIPTS 

















15.1 Conditional Grants from Government 6,765,366 7,710,376 
National Government 6,354,043 7,167,305 
Private Enterprises 411,323 411,323 
Provincial Government 131,748 
Total Conditional Grants and Receipts 6,765,366 7,710,376 








The Unspent Conditional Grants and Receipts are invested in investment accounts until utilised. 


See Note 23 for the reconciliation of Grants from Government. The municipality complied with the 
conditions attached to all grants received to the extent of revenue recognised. 


The allocation of equitable share in the 2019/20 financial year, has been reduced by R 7,167,000 due 
to non-spending of grants by the municipality. 




















LONG-TERM LIABILITIES 2020 2019 
R R 
Long-Term Liabilities 12,260,455 16,585,171 
Finance Lease Liability 12,260,455 | 16,585,171 | 
Less: Current Portion transferred to Current Liabilities:- 9,708,574 6,912,339 
Finance Lease Liability (9,708,574) (6,912,339) 
Non-Current Portion of Long-term Liabilities 2,551,881 9,672,831 





16.1 Summary of Arrangements 


The fair value of Long-term Liabilities was determined after considering the standard terms and conditions of agreements entered into between 
the municipality and the relevant financing institutions. 


Refer to Appendix "A" for more detail on Long-term Liabilities. 


16.2 Obligations under Borrowings 


Finance Leases relate to Property, Plant and Equipment with lease terms not more than 5 years (2018: 4 years). The effective interest rate on 
Finance Leases is between 7.96% and 24% (2018: 7.96% and 24%). 


The municipality does not have an option to purchase the leased Property, Plant and Equipment at the conclusion of the lease agreements. 
The municipality's obligations under Finance Leases are secured by the lessors'’ title to the leased assets. 


The municipality's obligations under Finance Leases are secured by the lessors'’ title to the leased assets. 


+g Present Value of Minimum Lease 
Minimum Lease Payments 





Payments 
2020 2019 2020 2019 
R R R R 

Amounts payable under borrowings: 
Within one year 9,765,952 8,910,840 9,708,574 6,912,340 
In the second to fifth years, inclusive 3,315,587 10,538,659 2,551,881 9,672,833 
Over five years - - - - 

13,081,539 19,449,499 12,260,455 16,585,173 


Less: Future Finance Obligations (821,084) (2,864,326) 





Present Value of Minimum Lease Obligations 12,260,455 16,585,173 12,260,455 16,585,173 





17. 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 








Less: Amounts due for settlement within 12 months (Current Portion) (9,708,574) (6,912,341) 
Borrowings due for settlement after 12 months (Non-current Portion) 2,551,881 9,672,831 
0.00 


The municipality has finance lease agreements for the following significant classes of assets: 
- Office Equipment 
- Vehicles 


- Electricity and water meters 
Included in these classes are the following significant leases: 


(i) Electrical and Water meters 


- Average period outstanding 63 months 63 months 

- Average effective interest rate, based on prime 24% 24% 
30% on monthly 30% on monthly 
vending vending 


- Average monthly instalment 


(ii) Vehicles - Sanpaul Trading Enterprise and Labour (Pty) Ltd 
- Instalments are payable monthly in arrears 


- Average period outstanding 36 months 36 months 
- Average effective interest rate, based on prime 0% 12% 
- Average monthly instalment R 0.00 R 251,223.22 


16.3 Operating Lease: Tsantsabane Local Municiaplity as Lessee 


Operating Leases relate to rental of office space (PMU offices) from Henque 4038 CC T/A PMG 
Elektries. The Municipality does not have an option to purchase the leased asset at the expiry of the 
lease period. This rental is classified as a contingent rentals due to an uncertain lease period. The 
operating lease payments are therefore not subject to straight-lining and it is impracticable to disclose 
the future minimum lease payments expected to be received for each of the following periods as 
required by GRAP 13: 


- no later than one year 
- later than one year and not later than five years 
- later than five years. 


The municipality has operating lease agreements for the following classes of assets: 
- Buildings 


The following restrictions have been imposed on the Municipality in terms of the lease agreements on 
Rental of Office Space: 

(i) The building shall remain the property of the lessor. 

(ii) The lessee shall not sell, sublet, cede, assign or delegate any of its rights or obligations on the 
building. 

(iii) The building shall be returned in good order and condition to the lessor upon termination of the 
agreement. 


(iv) The lessor or its duly authorised agent, representative or servant shall have the right at all 
reasonable times to inspect the premises let. 


























2020 2019 

EMPLOYEE BENEFIT LIABILITIES R R 
Employee Benefit Liabilities 15,591,000 15,533,056 
Post-retirement Health Care Benefits Liability 11,963,000 11,826,366 
Long Service Awards Liability 3,628,000 3,706,690 
Less: Current Portion of Employee Benefit Liabilities (924,000) (1,161,328) 

Post-retirement Health Care Benefits Liability (675,000) (560,379) 

Long Service Awards Liability (249,000) (600,949) 
Non-Current Portion of Employee Benefit Liabilities 14,667,000 14,371,728 
17.1 Post-retirement Health Care Benefits Liability 
Opening balance 11,826,366 10,715,000 
Interest cost 1,065,127 1,059,000 


Current service cost 472,046 427,000 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 





Actual employer benefit payments (560,379) (534,000) 
Actuarial loss/ (gain) recognised in the year (840,160) 159,366 
Balance at end of Year 11,963,000 11,826,366 
Transfer to Current Provisions 675,000 560,379 
Total Post-retirement Health Care Benefits Liability 11,288,000 11,265,987 








The municipality provides certain post-retirement health care benefits by funding the medical aid 
contributions of qualifying retired members of the municipality. According to the rules of the Medical 
Aid Funds, with which the municipality is associated, a member (who is on the current Conditions of 
Service) is entitled to remain a continued member of such medical aid fund on retirement, in which 
case the municipality is liable for a certain portion of the medical aid membership fee. The 
municipality operates an unfunded defined benefit plan for these qualifying employees. No other 
post-retirement benefits are provided to these employees. 


The most recent actuarial valuations of the present value of the defined benefit obligation were carried 
out at 30 June 2020 by Mr. Chanan Weiss, a member of the Actuarial Society of South Africa (ASSA) 
and managing member of ARCH Actuarial Consulting CC. The present value of the defined benefit 
obligations, and the related current service costs and past service costs, were measured using the 
Projected Unit Credit Method. 


The members of the Post-employment Health Care Benefit Plan are made up as follows: 


In-service Members (Employees) 91 77 
Continuation Members (Retirees, widowers and orphans) 15 13 
Total Members 106 90 








The liability in respect of past service has been estimated as follows: 





In-service Members 5,828,000 6,332,440 
Continuation Members 6,135,000 5,493,926 
Total Liability 11,963,000 11,826,366 








The municipality makes monthly 
contributions for health care arrangements 


2-4 fol a it ata A. 


- Bonitas 

- Keyhealth 

- LA Health 

- Samwumed 


The Current-service Cost for the year ending 30 June 2020 is estimated to be R472,046, whereas the 
cost for the ensuing year is estimated to be R 438 000 (30 June 2019: R427,000). 


The principal assumptions used for the purposes of the actuarial valuations were as follows: 


Discount Rate 10.06% 
Health care cost inflation rate 6.18% 
Net Effective Discount Rate 3.65% 
Mortality Tables SA 85-90 

PA(90) -1 with a 1% mortality 
Mortality tables post retirement improvement p.a. from 2010 
Average retirement age for active employees 62 
Normal retirement age for active employees 65 

2020 2019 
R R 

Movements in the present value of the Defined Benefit Obligation were as follows: 
Opening balance 11,826,366 10,715,000 
Interest cost 1,065,127 1,059,000 


Current service cost 472,046 427,000 


TSANTSABANE LOCAL MUNICIPALITY 


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 



































Actual employer benefit payments (560,379) (534,000) 
Actuarial loss/ (gain) recognised in the year (840,160) 159,366 
Total Recognised Benefit Liability 11,963,000 11,826,366 
2020 2019 
R R 
The amounts recognised in the Statement of Financial Position are as follows: 
Present value of fund obligations 11,963,000 11,826,366 
Fair value of plan assets - - 
Total Benefit Liability 11,963,000 11,826,366 
The amounts recognised in the Statement of Financial Performance are as follows: 
Current service cost 1,065,127 1,059,000 
Interest cost 472,046 427,000 
Actuarial losses / (gains) (840,160) 159,366 
Total Post-retirement Benefit included in Employee Related Costs (Note 29) 697,013 1,645,366 
The history of fair values are as follows: 
2020 2019 2018 
R R R 
Present Value of Defined Benefit Obligation 11,963,000 11,826,366 10,715,000 
Deficit 11,963,000 11,826,366 10,715,000 
Experienced adjustments on Plan Liabilities 
The effect of a 1% movement in the assumed rate of health care cost inflation is as follows: 2019 2018 
R R 
Increase: 
Effect on the aggregate of the current service cost and the interest cost 1,684,800 1,544,000 
Effect on the defined benefit obligation 12,996,000 12,854,000 
Decrease: 
Effect on the aggregate of the current service cost and the interest cost 1,350,700 1,416,000 
Effect on the defined benefit obligation 10,747,000 10,588,000 
The effect of a 20% adjustments of mortality rates, is as follows: 
Increase: 
Effect on the aggregate of the current service cost and the interest cost 1,438,200 1,385,000 
Effect on the defined benefit obligation 11,223,000 11,024,036 
Decrease: 
Effect on the aggregate of the current service cost and the interest cost 1,659,100 1,605,000 
Effect on the defined benefit obligation 12,869,000 12,823,130 
Refer to Note 46, "Multi-employer Retirement Benefit Information", to the Annual Financial Statements 
for more information regarding the municipality's other retirement funds that is Provincially and 
Nationally administered. 
2020 2019 
17.2 Long Service Awards Liability R R 
Opening Balance 3,706,690 3,872,000 
Interest cost 276,377 393,000 
Current service cost 382,394 378,000 
Actual employer benefit payments (600,949) (659,000) 
Actuarial loss/ (gain) recognised in the year (136,512) (277,310) 
Balance at end of Year 3,628,000 3,706,690 





TSANTSABANE LOCAL MUNICIPALITY 


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


Transfer to Current Provisions 


Total Long Service Awards Liability 











The municipality operates an unfunded defined benefit plan for all its employees. Under the plan, a 
Long-service Leave Award (working days) is received after 10 years of continuous service, and every 
5 years of continuous service thereafter to 45 years, to employees. The provision is an estimate of the 
long-service based on historical staff turnover. No other long-service benefits are provided to 


employees. 


The most recent actuarial valuations of the present value of the defined benefit obligation were carried 
out at 30 June 2020 by Mr. Chanan Weiss, a member of the Actuarial Society of South Africa (ASSA) 
and managing member of ARCH Actuarial Consulting CC. The present value of the defined benefit 
obligations, and the related current service costs and past service costs, were measured using the 


Projected Unit Credit Method. 


At year end, 234 (2019: 241) employees were eligible for Long-service Awards. 


The Current-service Cost for the year ending 30 June 2020 is estimated to be R 382 394, whereas the 


cost for the ensuing year is estimated to be R 381 000 (30 June 2019: R378 000). 


The principal assumptions used for the purposes of the actuarial valuations were as follows: 


Discount Rate 

General earnings inflation rate (long-term) 
Net Effective Discount Rate 

Mortality Tables 

Average retirement age for active employees 
Normal retirement age for active employees 
Expected Rate of Salary Increase 


Movements in the present value of the Defined Benefit Obligation were as follows: 
Opening Balance 

Interest cost 

Current service cost 

Actual employer benefit payments 

Actuarial loss/ (gain) recognised in the year 


Total Recognised Benefit Liability 


The amounts recognised in the Statement of Financial Position are as follows: 
Present value of fund obligations 

Fair value of plan assets 

Total Benefit Liability 

The amounts recognised in the Statement of Financial Performance are as follows: 
Current service cost 


Interest cost 
Actuarial losses / (gains) 


Total Post-retirement Benefit included in Employee Related Costs (Note 29) 


The history of experienced adjustments is as follows: 


Present Value of Defined Benefit Obligation 


























Deficit 


249,000 600,949 
3,379,000 3,105,741 
7.31% 
3.96% 
3.22% 
SA 85-90 
6.25% 6.50% 
2020 2019 
R R 
3,706,690 3,872,000 
276,377 393,000 
382,304 378,000 
(600,949) (659,000) 
(136,512) (277,310) 
3,628,000 3,706,690 
2020 2019 
R R 
3,628,000 3,706,690 
3,628,000 3,706,690 
382,304 378,000 
276,377 393,000 
(136,512) (277,310) 
522,259 493,690 
2020 2019 2018 
R R R 
3,628,000 3,706,690 3,872,000 
3,628,000 3,706,690 3,872,000 





18. 


TSANTSABANE LOCAL MUNICIPALITY 


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 




















The effect of a 1% movement in the Normal Salary cost inflation is as follows: 2020 2019 
R R 
Increase: 
Effect on the aggregate of the current service cost and the interest cost 706,900 828,000 
Effect on the defined benefit obligation 3,857,000 3,938,000 
Decrease: 
Effect on the aggregate of the current service cost and the interest cost 615,400 721,000 
Effect on the defined benefit obligation 3,420,000 3,497,000 
The effect of a 20% movement in the assumed level of withdrawal rates, is as follows: 
Increase: 
Effect on the aggregate of the current service cost and the interest cost 619,300 727,000 
Effect on the defined benefit obligation 3,452,000 3,522,387 
Decrease: 
Effect on the aggregate of the current service cost and the interest cost 702,300 821,000 
Effect on the defined benefit obligation 3,820,000 3,908,432 
2020 2019 
R R 
NON-CURRENT PROVISIONS 
Decommissioning, Restoration and Similar Liabilities: Landfill Sites 19,886,610 19,106,878 
Total Non-current Provisions 19,886,610 19,106,878 
The movement in Non-current Provisions are reconciled as follows: 
Decommissioning of Landfill Sites 
Opening Balance 19,106,878 18,817,361 
Increases (Passage of Time/Discounted Rate) 779,732 289,517 
Balance at end of year 19,886,611 19,106,878 
18.1 Rehabilitation of Land-fill Sites 
In terms of the licencing of the landfill refuse sites, the municipality will incur licensing and 
rehabilitation costs of R19,886,611 (2019: R19,106,878) to restore the sites at the end of their useful 
lives. Provision has been made for the net present value of the future cost, using the average cost of 
borrowing interest rate. 
The municipality will incur rehabilitation cost on its two dumping/landfill sites in 2025/26. Provision has 
been made for the net present value of this cost. 
Proposed 
Rehabilitation 
Jenn Haven Landfill 2025/26 5,585,611 5,350,551 
Boichoko Landfill 2025/26 14,301,000 13,756,328 
19,886,611 





19,106,878 





TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


2020 2019 
R R 
19. ACCUMULATED SURPLUS 
Accumulated Surplus / (Deficit) due to the results of Operations 378,304,525 457,684,240 
Total Accumulated Surplus 378,304,525 457,684,240 


Refer to Statement of Changes in Net Assets for more detail and the movement on Accumulated 
Surplus. 


TSANTSABANE LOCAL MUNICIPALITY 


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


20. PROPERTY RATES 


21. 


Church 

Commercial 

Industrial 

Mines 

Municipal 

Agriculture 

Residential 

Small holdings and farms 
State 

Total 


Total Property Rates 


Property Rates are levied on the value of land and improvements, which valuation is performed every 
four years. The last valuation came into effect in the current financial year i.e. 2019/20 


Interim valuations are processed on a continuous basis to take into account changes in individual 
property values due to alterations and subdivisions and also to accommodate growth in the rate base 
due mostly to private development. 


The following rates in Rand were charged on the following properties: 
Church 

Commercial 

Industrial 

Mines 

Municipal 

Agriculture 

Residential 

Small holdings and farms 

State 


The first R 30,000 of the market value of all residential properties and indigents with a gross income of 
less than R 3 000 are exempt from the payment of rates. An additional rebate of 20% on property 
rates for pensioners applies subject to certain conditions. 


No interest that is charged on arrear accounts. 


FINES, PENALTIES AND FORFEITS 


Traffic Fines 
Municipal 

Other Fines 
Illegal Connections 
Overdue Books Fine 


Total Fines, Penalties and Forfeits 


22. LICENCES AND PERMITS 





2020 2019 
R R 
Restated 
Property Property 
Valuation as Valuation as 
30/06/2020 30/06/2019 
R R 
14,117,100 44,063,200 
2,705,615,500 303,461,680 
111,205,000 82,440,000 
447,822,300 370,605,000 
240,430,700 139,766,753 
5,051 ,086,460 3,769,118,175 
2,817 ,830,601 1,448,672,501 
30,730,000 18,921,000 
415,932,100 292,167,000 
11,834,769,761 6,469,215,309 








Actual Levies 




















2020 2019 

R R 
58,570,538 27,695,225 
0.007494 0.007070 
0.011236 0.010600 
0.011236 0.010600 
0.005677 0.028290 
0.007494 0.007070 
0.000449 0.000424 
0.007494 0.007070 
0.007494 0.007070 
0.007494 0.007070 

2020 2019 

R R 
124,600 206,300 
124,600 206,300 
138 210,480 
- 210,000 
138 480 
124,738 416,780 








23. 


TSANTSABANE LOCAL MUNICIPALITY 


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


Road and Transport 
Activities on Public Roads 
Motor Vehicle Licence 


Total Licences and Permits 


TRANSFERS AND SUBSIDIES RECEIVED 


Capital Grants 
Allocations In-kind 
Monetary Allocations 
Operational Grants 
Allocations In-kind 
Monetary Allocations 


Total Government Grants and Subsidies 


23.1 Capital Grants 


National Governments MIG, WSIG & INEP 
Provincial Government Disaster Grant 
Public contribution Mines - note 52 


Total Capital Grants Received 


23.2 Operational Grants 


Departmental Agencies and Accounts LG SETA 

National Governments EPWP & FMG 
National Revenue Fund Equitable share 
Public contribution Kolomela, Sishen 
Provincial Government PT & Library 


Public contribution 


Total Operational Grants Received 


23.3 Reconciliation per Grant Source 


23.3.1 Integrated National Electrification Programme Grant (INEP) 


Balance unspent at beginning of year 

Current year receipts 

Conditions met - transferred to Revenue 

Other Adjustments/Refunds 

Conditions still to be met - transferred to Current Liabilities (see Note 15) 


The grant is used to address the electrification backlog of permanently occupied residential dwellings, 
the installation of infrastructure and rehabilitation of electricity infrastructure. The amount received 
hasn't been used as at 30 June 2020. 


23.3.2 Water Services Infrastructure Grant (WSIG) 


Balance unspent at beginning of year 

Current year receipts 

Conditions met - transferred to Revenue 

Other Adjustments/Refunds 

Conditions still to be met - transferred to Current Liabilities (see Note 15) 


Non-Exchange 
Transactions 


Non-Exchange 
Transactions 









































2020 2019 
R R 
842,075 1,287,056 
385 736 
841,305 1,286,320 
842,075 1,287,056 
12,438,895 20,179,876 
1,161,633 11,624,785 
11,277,262 8,555,091 
47,644,480 42,243,683 
47,644,480 42,243,683 
60,083,375 62,423,559 








Monetary Allocations 





2020 2019 
11,188,262 8,555,091 
89,000 - 
1,161,633 11,624,785 
12,438,895 20,179,876 








Monetary Allocations 














2020 2019 
139,074 - 
4,010,000 3,291,000 
39,037,000 35,374,000 
3,132,658 2,384,683 
1,325,748 1,194,000 
47,644,480 42,243,683 
2020 2019 
R R 
2,000,000 $ 
2,000,000 - 
2 676,773 
- 4,000,000 
- (3,276,773) 
è (1,400,000) 











TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 
This grant has been provided by department of Water Affairs to try to get water to areas where it was 
recognised that full services would not become available. The Municipality did not receive the WSIG 
during the 2020 Annual Financial period. 








23.3.3 National Revenue Fund - Equitable Share 


Current year receipts 39,037,000 35,374,000 


Conditions met - transferred to Revenue (39,037,000) (35,374,000) 


Conditions still to be met - transferred to Current Liabilities (see Note 15) - 








This grant has been used to fund operational expenses within the municipality. 


























2020 2019 
23.3.4 Sishen Iron Ore Financial Support Grant R R 
Balance unspent at beginning of year 411,323 411,323 
Current year receipts - - 
Conditions met - transferred to Revenue - - 
Other Adjustments/Refunds - - 
Conditions still to be met - transferred to Current Liabilities (see Note 15) 411,323 411,323 
23.3.5 Provincial Government - Department of Arts & Culture (Library Grant) 
Balance unspent at beginning of year 131,748 131,748 
Current year receipts 1,194,000 1,194,000 
Conditions met - transferred to Revenue (1,325,748) (1,194,000) 
Other Adjustments/Refunds - 
Conditions still to be met - transferred to Current Liabilities (see Note 15) - 131,748 
The grant is to be utilised for programme costs of the library and other costs as per library proposal. 
No funds have been withheld. 
23.3.6 National: Municipal Infrastructure Grant (MIG) 
Balance unspent at beginning of year 7,167,305 2,533,623 
Current year receipts 15,542,000 15,312,000 
Conditions met - transferred to Revenue: Operating Expenses (596,241) (744,460) 
Conditions met - transferred to Revenue: Capital Expenses (9,879,021) (3,533,858) 
Other Adjustments/Refunds (7,167,000) (6,400,000) 
Conditions met - transferred to Revenue: Covid19 Expenses (713,000) - 
Conditions still to be met - transferred to Current Liabilities (see Note 15) 4,354,042 7,167,305 
The Municipal Infrastructure Grant (MIG) was allocated for the construction of roads, basic sewerage 
and water infrastructure as part of the upgrading of poor households, micro enterprises and social 
institutions; to provide for new, rehabilitation and upgrading of municipal infrastructure. The prior year 
Unspent of R7 167 305 was withheld and the Equitable share for this financial year has been reduced 
by this amount of R7 167 305. The Municipality used R713 000 of the MIG as part of the Covid19 
response related expenditures. 
23.3.7 National: Municipal Finance Management Grant (FMG) 
Balance unspent at beginning of year - - 
Current year receipts 2,880,000 2,415,000 
Conditions met - transferred to Revenue (2,880,000) (2,291,000) 
Other Adjustments/Refunds - (124,000) 





Conditions still to be met - transferred to Current Liabilities (see Note 15) = 5 








The Financial Management Grant is paid by National Treasury to municipalities to help implement the 
financial management reforms required by the Municipal Finance Management Act (MFMA), 2003. 


23.3.8 National: Department of Public Works - Expanded Public Works Program Grant (EPWP) 


Balance unspent at beginning of year - - 
Current year receipts 1,130,000 1,000,000 
Conditions met - transferred to Revenue (1,130,000) (1,000,000) 


24. 


25. 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


Other Adjustments/Refunds - 





Conditions still to be met - transferred to Current Liabilities (see Note 15) z 








The grant is to be utilised for salary expenses for the expended Public Works Program in accordance 
with the national cleaning campaign. 



































2020 2019 
R R 
24.3.9 Public contribution: Kolomela Mine 
Balance unspent at beginning of year - - 
Current year receipts 3,132,658 2,384,683 
Conditions met - transferred to Revenue (3,132,658) (2,384,683) 
Other Adjustments/Refunds - - 
Conditions still to be met - transferred to Current Liabilities (see Note 15) - - 
The grant was paid to the municipality for general operations, and was not earmarked for specific 
purposes. The municipality utilised the funds for normal operational expenses. 
24.3.10 Disaster Grant 
Balance unspent at beginning of year G = 
Current year receipts 89,000 - 
Conditions met - transferred to Revenue (89,000) - 
Other Adjustments/Refunds E 3 
Conditions still to be met - transferred to Current Liabilities (see Note 15) Š x 
This grant is to be utilised to assist the Municipality in the response to Covid-19. 
24.3.11 LG SETA Mandatory Grant 
Balance unspent at beginning of year È $ 
Current year receipts 139,074 - 
Conditions met - transferred to Revenue (139,074) E 
Other Adjustments/Refunds 2 = 
Conditions still to be met - transferred to Current Liabilities (see Note 15) = = 
This grant is to be utilised by the Municipality for training. 
SERVICE CHARGES 
Sale of Electricity 48,252,120 46,628,335 
Sale of Water 15,268,252 14,701,107 
Refuse Removal 13,940,832 13,133,062 
Sewerage and Sanitation Charges 26,534,967 22,273,431 
Total Service Charges 103,996,172 96,735,935 
The amounts disclosed above for revenue from Service Charges are in respect of services rendered 
which are billed to the consumers on a monthly basis according to approved tariffs. 
2020 2019 
R R 
SALES OF GOODS AND RENDERING OF SERVICES 
Building Plan Approval 195,016 19,484 
Cemetery and Burial 31,297 31,257 
Library Fees 1,769 3,616 
Photocopies and Faxes 63,751 75,566 
Sale of Goods 1,378 68,165 
Scrap, Waste & Other Goods 5,643 12,143 
210,231 


Total Sales of Goods and Rendering of Services 298,855 





26. 


27. 


28. 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


RENTAL FROM FIXED ASSETS 


Other Fixed Assets 320,616 410,380 


Property Plant and Equipment 320,616 410,380 








Total Rental of Facilities and Equipment 337,813 410,380 








Rental income generated are at market related premiums. All rental income recognised is therefore 
market related. 


INTEREST, DIVIDENDS AND RENT ON LAND EARNED 











Bank Account 14,889 24,800 
Investments 871,863 1,105,915 
886,753 1,130,716 
OPERATIONAL REVENUE 
Administrative Handling Fees 162,655 140,055 
Collection Charges 42,157 - 
Incidental Cash Surpluses 2,429 12,110 
Inspection Fees 26,468 17,701 
Insurance Refund - 18,864 
Total Operational Revenue 233,709 188,730 








The amounts disclosed above for Other Revenue are in respect of services, other than described in 
Notes 20 to 26, rendered which are billed to or paid for by the users as the services are required 
according to approved tariffs. 


TSANTSABANE LOCAL MUNICIPALITY 


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


29. EMPLOYEE RELATED COSTS 


Salaries and Wages 
Basic 


Bonusses 
Leave Payments 
Overtime 


Allowances 
Housing Benefits 
Standby Allowance 
Travel or Motor Vehicle 


Social Contributions 
Bargaining Council 
Group Life Insurance 
Medical 
Pension 
Unemployment Insurance 


Post-retirement Benefit 
Current Service Cost 
Interest Cost 
Actuarial Gains and Losses 


Total Employee Related Costs 
No advances were made to employees. 


Remuneration of Section 57 Employees: 
Remuneration of the Municipal Manager - H Mathobela 


Annual Remuneration 
Car and Other Allowances 
Total 


Remuneration of the Chief Financial Officer - A Kooverjee 
Annual Remuneration 

Bonus 

Leave 

Car and Other Allowances 

Total 


A Kooverjee resigned in July 2018. The post was vacant as from 01 August 2018 to the end of July 
2019 while JB Moselelane acted as the Chief Financial Officer. 


Remuneration of the Acting Chief Financial Officer - JB Moselelane 
Annual Remuneration 

Car and Other Allowances 

Total 


JB Moselelane acted in this position from 1 August 2018 till the end of July 2019. 


Remuneration of the Chief Financial Officer - LR Coakley 
Annual Remuneration 

Car and Other Allowances 

Company Contributions to UIF, Medical and Pension Funds 
Total 


LR Coakley was appointed as the CFO from the 1st of August 2019. 

































































2020 2019 
R R 
44,814,228 41,587,493 
3,582,892 3,423,091 
1,511,983 874,683 
4,809,664 9,042,088 
2,850,801 2,360,359 
1,071,526 991,494 
4,151,186 4,129,494 
28,724 26,583 
90,600 98,200 
1,254,524 1,195,389 
7,170,639 6,606,552 
425,414 416,095 
854,440 805,000 
1,341,504 1,452,000 
(696,891) (117,944) 
73,261,235 72,890,576 
737,457 784,069 
363,252 360,487 
1,100,709 1,144,556 
3 57,010 
- 28,505 
: 80,139 
- 28,369 
- 194,023 
2020 2019 
R R 
170,221 897,563 
18,767 113,800 
188,987 1,011,363 
446,279 = 
321,964 - 
768,243 








30. 


31. 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


Remuneration of the Director Corporate Services - IC Nkadimang 


















































Annual Remuneration 719,953 779,587 
Car and Other Allowances 370,185 370,191 
Total 1,090,138 1,149,778 
Remuneration of the Director: Technical Services - MC Links 
Annual Remuneration - 42,387 
Leave - 36,097 
Car and Other Allowances - 74,384 
Total - 152,868 
MC Links resigned in August 2018. The post was vacant as from September 2018 to the end of the 
reporting period. 
Remuneration of the Acting Director: Technical Services - BLK Botha 
Annual Remuneration 1,001,556 581,140 
Car and Other Allowances 119,159 79,396 
Total 1,150,351 660,536 
BLK Botha has acted in this position from December 2018 till the end of the reporting period. 
Remuneration of the Director: Community Services - LL Theys 
Annual Remuneration 635,253 635,650 
Car and Other Allowances 447,231 447 828 
Total 1,082,484 1,083,478 
Summary of Remuneration of Section 57 Employees: 
All Managers 5,380,912 5,396,601 
Total Remuneration of Section 57 Employees 5,380,912 5,396,601 
Refer to Appendix G for more detail. 

2020 2019 
REMUNERATION OF COUNCILLORS R R 
Executive Mayor 825,631 846,637 
Speaker 685,414 702,542 
Chief Whip 289,680 289,680 
Total for All Other Councillors 3,676,400 3,678,525 
Total Councillors' Remuneration 5,477,125 5,517,384 
Remuneration of Councillors: 
In-kind Benefits 
The Executive Mayor, Speaker and all the Mayoral committee members are full-time. The Mayor is 
provided with secretarial support and an office at the cost of the municipality. 
The Executive Mayor has use of a Council owned vehicle for official duties. 
Refer to Appendix G for more detail. 
DEPRECIATION AND AMORTISATION 
Depreciation: Property, Plant and Equipment 31,927,135 30,694,223 
Amortisation: Intangible Assets 397,166 504,483 
Total Depreciation and Amortisation 32,324,301 31,198,705 
31.1 Depreciation: Property, Plant and Equipment 
Community Assets 1,055,738 1,093,190 
Infrastructure 23,428,843 23,252,045 
Buildings 3,778,069 3,779,459 
Landfill site 151,889 151,889 
Other Assets 3,512,596 2,417,640 


32. 


33. 


34. 


35. 


TSANTSABANE LOCAL MUNICIPALITY 


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


The prior year amount for depreciation on Property, Plant and Equipment has been restated to agree 
with the Asset Register. Refer to note 41 on " Correction of Error" for details of the restatement. 


IMPAIRMENT LOSSES 


Impairment Losses on Fixed and Current Assets 
Impairment Losses on Financial Assets 


Total Impairment Losses 
32.1 Impairment Losses on Fixed & Current Asset 
Impairment Losses 


Consumables - Provision for obsolete stock 
Property, Plant and Equipment 


32.2 Impairment Losses on Financial Assets 
Impairment Losses 


Trade and Other Receivables from Exchange Transactions 
Trade and Other Receivables from Non-exchange Transactions 


INTEREST, DIVIDENDS AND RENT ON LAND PAID 
Interest Paid 

Finance Leases 

Interest costs non-current Provisions 


Overdue Accounts 


Total Interest, Dividends and Rent on Land 


The prior year amount for Interest paid has been restated to account for interest on overdue 
accounts. Refer to note 41 on " Correction of Error" for details of the restatement. 
BULK PURCHASES 


Electricity 
Water 


Total Bulk Purchases 


CONTRACTED SERVICES 


Outsourced Services 
Consultants and Professional Services 
Contractors 


Total Contracted Services 
35.1 Outsourced Services 


Business and Advisory 
Medical Services [Medical Health Services & Support] 




































































31,927,135 30,694,223 
224,900 5,330,057 
70,861,565 32,117,032 
71,086,465 37,447,089 
224,900 5,330,057 
224,900 5,330,057 
2020 2019 
R R 
34,499,044 25,526,181 
36,362,521 6,590,851 
70,861,565 32,117,032 
17,814,335 16,358,795 
2,112,197 2,001,291 
779,732 289,517 
14,922,406 14,067,987 
17,814,335 16,358,795 
38,613,402 42,619,846 
19,861,058 17,716,275 
58,474,459 60,336,121 
7,093,930 6,985,401 
6,085,570 3,517,172 
6,681,265 14,083,533 
19,860,765 24,586,106 
4,941,786 6,985,401 
7,093,930 6,985,401 
2020 2019 


36. 


37. 


38. 


TSANTSABANE LOCAL MUNICIPALITY 


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


35.2 Consultants and Professional Services 
Business and Advisory 

Laboratory Services 

Legal Cost 


35.3 Contractors 

Maintenance of Buildings and Facilities 
Maintenance of Equipment 
Maintenance of Computer Software 
Safeguard and Security 

Tracing Agents and Debt Collectors 


The prior year amount for has been restated for the allocation correction of Remuneration of Ward 
Committees which was accounted for under Contracted services instead of Operational Costs. Refer 
to Note 41 on "Correction of errors" for details of the restatement. 


INVENTORY CONSUMED 


Consumables 
Materials and Supplies 


OPERATING LEASES 


Machinery and Equipment 
Other Assets 


Machinery, vehicles and equipment 


OPERATIONAL COSTS 


Included in General Expenses are the following: 


Advertising, Publicity and Marketing 
Bank Charges, Facility and Card Fees 
Communication 

Entertainment 

External Audit Fees 

External Computer Service 

Indigent Relief 

Insurance Underwriting 

Licences 

Municipal Services 

Printing, Publications and Books 
Professional Bodies, Membership and Subscription 
Registration Fees 

Remuneration to Ward Committees 
Skills Development Fund Levy 

Travel and Subsistence 

Uniform and Protective Clothing 
Workmen's Compensation Fund 


Total Operational Costs 


No other extra-ordinary expenses were incurred. 
































R R 
5,477,050 3,256,198 
170,840 260,800 
437,680 175 
6,085,570 3,517,172 
935,314 953,219 
120,955 1,305,095 
1,305,234 3,467,295 
- 3,717 
4,319,763 8,354,207 
6,681,265 14,083,533 
1,777,450 1,903,651 
215,981 1,517 
1,993,432 1,905,168 
- 505 
2,299,211 3,158,045 
2,299,211 3,158,550 

2020 2019 

R R 
406,446 736,639 
223,498 306,948 
744,156 648,910 
117,615 72,938 
2,909,387 3,553,369 
1,896,388 1,611,594 
7,759,633 6,544,358 
395,002 531,794 
56,722 532,858 
1,503,284 1,120,884 
89,452 227,313 
1,250,298 1,302,871 
- 1,000 
459,500 403,423 
623,622 637,200 
442,988 370,982 
408,117 12,603 
1,050 540 
19,287,159 18,616,224 





39. 


TSANTSABANE LOCAL MUNICIPALITY 


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


The prior year amount for has been restated for the allocation correction of Remuneration of Ward 
Committees which was accounted for under Contracted services instead of Operational Costs. Refer 
to Note 41 on "Correction of errors" for details of the restatement. 


GAINS / LOSSES ON DISPOSAL OF CAPITAL ASSETS 
Fair Value adjustment Investment Property 

Inventory 

Investment Property 

Property, Plant and Equipment 

Total Gains / (Losses) on Disposal of Capital Assets 


Total Gains on Disposal of Capital Assets 


Total Losses on Disposal of Capital Assets 




















(21,784,842) 
(154,770) 

- (524,732) 
(4,501,026) (4,740,290) 
(4,501,026) (27,204,633) 
4,501,026 27,204,633 








TSANTSABANE LOCAL MUNICIPALITY 


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


48. FINANCIAL INSTRUMENTS (Continued) 


46.8 Liquidity Risk Management 


Ultimate responsibility for liquidity risk management rests with the Council, which has built an appropriate liquidity risk management framework for the management of the 
municipality’s short, medium and long-term funding and liquidity management requirements. The municipality manages liquidity risk by maintaining adequate reserves, banking 
facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Included 
in Note N/A C67is a listing of additional undrawn facilities that the municipality has at its disposal to further reduce liquidity risk (cash). 


Liquidity and Interest Risk Tables 


The municipality ensures that it has sufficient cash on demand or access to facilities to meet expected operational expenses through the use of cash flow forecasts. 


The following tables detail the municipality's remaining contractual maturity for its non-derivative financial liabilities. The tables have been drawn up based on the undiscounted 
cash flows of financial liabilities based on the earliest date on which the municipality can be required to pay. The table includes both interest and principal cash flows. 


Description 







30 June 2020 






Non-interest Bearing 
- Payables from Exchange transactions 





Fixed Interest Rate Instruments 
- Current Portion of Long-term Liabilities 

- Non-Current Portion of Long-term Liabilities 
Bank Overdraft 


30 June 2019 
Restated: 
Non-interest Bearing 
- Payables from Exchange transactions 


Fixed Interest Rate Instruments 
- Current Portion of Long-term Liabilities 
- Non-Current Portion of Long-term Liabilities 





The following table details the municipality's expected maturity for its non-derivative financial assets. The tables below have 









14 


16 
16 


14 


16 
16 


332,291,650 
332,291,650 


17,899,482 


6 Months 


or less 


332,291,650 
332,291,650 





5,872,766 


6-12 


Months 





5,950,065 





More than 


5 Years 








4,103,511 1,973,141 






























8,680,526 4,301,613 4,378,912 - - - 
6,076,652 4,103,511 1,973,141 
3,142,305 1,571,152 1,571,152 
350,191,132 338,164,416 5,950,065 4,103,511 1,973,141 - 
2,496,722.65 
269,977,104 269,977,104 - - - - 
269,977,104 269,977,104 - - - - 
16,585,171 3,517,443 3,394,897 7,691,940 1,980,891 - 
6,912,340 3,517,443 3,394,897 - - - 
9,672,831 7,691,940 1,980,891 
286,562,275 273,494,547 3,394,897 7,691,940 1,980,891 : 














(0.00) 

















been drawn up based on the undiscounted 





contractual maturities of the financial assets including interest that will be earned on those assets except where the municipality anticipates that the cash flow will occur in a 


different period. 


Description 






30 June 2020 






Non-interest Bearing 
- Trade Receivables from Exchange Transactions 

- Trade Receivables from Non-exchange Transactions 
- Cash and Cash Equivalents 


Variable Interest Rate Instruments 
- Call Deposits 
- Bank Account 





30 June 2019 


Non-interest Bearing 
- Trade Receivables from Exchange Transactions 
- Trade Receivables from Non-exchange Transactions 
- Cash and Cash Equivalents 


Variable Interest Rate Instruments 
- Call Deposits 
- Bank Account 













A 





AO 


27,482,482 
12,736,927 
14,743,555 

2,000 


15,290,313 
15,265,012 
25,302 


6 Months 


or less 


27,482,482 
12,736,927 
14,743,555 

2,000 





15,290,313 
15,265,012 
25,302 


6-12 


Months 


More than 


5 Years 





















42,772,796 


42,772,796 








17,459,085 
9,544,151 
7,912,934 

2,000 


12,428,393 
10,493,716 
1,934,677 


17,459,085 
9,544,151 
7,912,934 

2,000 


12,428,393 
10,493,716 
1,934,677 





29,887,478 


29,887,478 


























40. 


41. 


42. 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


DISCONTINUED OPERATIONS 


No operations have been discontinued. 


CHANGE IN ACCOUNTING POLICY 


The municipality adopted no Accounting Standards for the first time during the financial year 2019/20 in order to comply with the basis of 
preparation of the Annual Financial Statements as disclosed in Accounting Policy 1. 


CORRECTION OF ERROR 


A split between reclassifications and prior period errors are provided to ensure that a clear distinction is made between reclassification of items 
previously incorrectly disclosed within the Annual Financial Statements, whilst items classified as errors are those items which were factual 
errors in the prior year, affecting the measurement of such items. The title reclassification does not exclude previous judgement errors, but is 
rather presented separately in order to allow users to understand that these changes were identified as a consequence of continuously 
reviewing the accurate disclosure of the nature of transactions. 


42.1 Reclassification of Accumulated Surplus 


The prior year figures of Accumulated Surplus has been restated to correctly disclose the monies held by the municipality in terms of the 
disclosure notes indicated below. 


The effect of the changes are as follows: 


Accumulated 





Surplus 
Balances published as at 30 June 2018 569,049,008 
Correction of Error:- 

Adustment for VAT Receivable not recorded in Base Year 298,249 

Adustment for Donated Assets not recorded in Base Year 1,737,577 

Adustment for Exchange Payables not recorded in Base Year (3,079,953) 

Reversal of GRID Control Software accounted for as Movable Assets instead of Intangible Assets (1,547,406) 

Correction of Heritage & Intangible Assets included in Other Assets as at 30 June 2018 (196,707) 

Reverse accumulated depreciation that was incorrectly raised on Heritage Assets (Canon) included 
as part of Other Assets as at 30 June 2018 15,870 

Recognition of GRID Control Software accounted for as Movable Assets instead of Intangible 
Assets 1,547,639 

Adjust Exchange Payables - Account for Unknown Deposits (1,479,559) 

Rounding Errors 3 (2,704,286) 
Restated Balances as at 30 June 2018 566,344,722 
Correction of Error as per Vote: 60,257 
Transactions incurred for the Year 2018/19 : Previously Reported (115,188,973) 


Correction of Error:- 
Correction of Error as per Vote: 


Adustment for Service Charges not recorded in Prior Year (1,303,683) 
Adustment for Property Rates not recorded in Prior Year 273,824 
Adustment for VAT Receivable not recorded in Prior Year 427,012 
Adustment for Donated Assets not recorded in Prior Year 11,450,664 
Adustment for PPE not recorded in Prior Year 21,498 
Adustment for Intangible Assets not recorded in Prior Year 3,505 
Adustment for Exchange Payables not recorded in Prior Year (3,964,630) 
Adjust Service Charges - Billing for Sewerage Dumping 623,078 
Adjust Service Charges - Correction of VAT on Pre-paid Electricity Sales (29,584) 
Adjust Interest & Rent on Land - Accounting for Penalty for late submission of VAT201 Returns (71,989) 
Adjust Inventory - Correction of Stock Balance to agree with Stock Count as at 30 June 2019 10,220 
Adjust Inventory - Correction of Disposals of Land-for-Sale not recorded (154,768) 
Adjust VAT Receivable - Correction of Prior Year Retention 1,828 


Adjust VAT Receivable - Correction of 2019 WIP Invoice 140,430 


TSANTSABANE LOCAL MUNICIPALITY 


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 








Adjust PPE - Correction of 2019 WIP Invoice 936,200 
Adjust PPE - Correction of 2019 Depreciation on Heritage Assets included in Other Assets 63,766 
Adjust PPE - Correction of 2019 depreciation on a Heritage asset (Canon) included in Other Assets 7,935 
Adjust PPE - Reversal of Depreciation on GRID Control Software previously accounted for as 
Movable Assets 440,619 
Adjust Intangible Assets - Recognition of Amortisation on GRID Control Software not previously 
accounted for as Intangible Assets (440,717) 
Adjust Exchange Payables - Correction of 2019 WIP Invoice (1,076,630) 
Adjust Exchange Payables - Account for Unknown Deposits (876,130) 
Adjust Exchange Payables - Account for Interest on Telephone Account (12,382) 
Adjust Exchange Payables - Account for Retentions (1,828) 
Rounding Errors 2 6,468,239 
Restated Balances as at 30 June 2019 457,684,245 
4.59 
The prior year figures of Revenue Classes have been restated to correctly classify the nature of Revenue of the municipality. 
43.2 Reclassification of Revenue 
The effect of the Correction of Error is as follows: 
Prior Year os . Restated 
2018/19 Reclassification Recassnied ce of Amount 
Audited 2018/19 
Property Rates 27,421,401 - 27,421,401 273,824 27,695,225 
Fines, Penalties and Forfeits 416,780 - 416,780 - 416,780 
Licences and Permits - Non-exchange 1,287,056 - 1,287,056 - 1,287,056 
Transfers and Subsidies 50,798,774 - 50,798,774 11,624,785 62,423,559 
Service Charges 97,428,124 - 97,428,124 (692,189) 96,735,935 
Sales of Goods and Rendering of Services 210,231 - 210,231 - 210,231 
Rental from Fixed Assets 428,380 - 428,380 (18,000) 410,380 
Interest Earned - External Investments 1,130,716 - 1,130,716 - 1,130,716 
Operational Revenue 1,064,860 - 1,064,860 (876,130) 188,730 
Fair Value adjustment Investment Property - - - - 
180,186,322 - 180,186,322 10,312,290 190,498,612 








Prior year amounts of items in Revenue included in the Statement of Financial Performance have been restated as indicated below: 


Balance previously reported 


Adjustment of Property Rates raised in Error 
Adjustment of Electricity Sales raised in Error 
Adjustment of Refuse Removal raised in Error 
Adjustment of Sewerage Charges raised in Error 
Adjustment of Water Sales raised in Error 
Adjust Billing for Sewerage Dumping 

Adjust VAT on Pre-paid Electricity Sales 


Restated Balance now reported 


Transfers and 


Subsidies 
Balance previously reported 50,798,774 
Adustment for Donated Assets not recorded in Prior Year 11,624,785 
Adjustment of Rental Charges raised in Error 
Collection charges - unknown deposits accounted for as unallocated deposits 
Restated Balance now reported 62,423,559 











Service 
Property Rates Charges 
27,421,401 97,428,124 
273,824 
(601,527) 
(258,420) 
(336,858) 
(88,878) 
623,078 
(29,584) 
27,695,225 96,735,935 
Rental from Operational 
Fixed Assets Revenue 
428,380 1,064,860 
(18,000) 
(876,130) 
410,380 188,730 








TSANTSABANE LOCAL MUNICIPALITY 


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


Property Rates: 


The prior year amounts for Property Rates and Receivables from Non-exchange Transactions have been restated to correctly disclose the 
revenue for Property Rates, previously incorrectly raised through Billing System. 


Transfers and Subsidies Received: 


The prior year amounts for Transfers & Subsidies Received and Property, Plant & Equipment have been restated to correctly disclose the 
revenue for donated assets, previously not recognised. 


Service Charges: 


The prior year amounts for Service Charges and Receivables from Exchange Transactions have been restated to correctly disclose the 
revenue for Electricity Sales, Refuse Removal, Sewerage Charges and Water Sales, previously incorrectly raised through Billing System. 


Furthermore, the prior year amounts for Service Charges has been restated due to the recognition of billing for sewerage dumping for the 
year 2018/19 which was raised in the current financial year. 


Furthermore, the prior year amounts for Service Charges has been restated to correct VAT on pre-paid electricity sales from VETA 


investments. 


Rental of Fixed Assets: 


The prior year amounts for Rental of Fixed Assets and Receivables from Exchange Transaction have been restated to correctly disclose the 
revenue for Rentals, previously incorrectly raised through Billing System. 


Operational Revenue: 


The prior year amount for Operational Revenue has been restated to account for unknown deposits included in Collection Charges against 
Payables from Exchange Transactions - Unallocated Deposits. 


43.3 Reclassification of Expenditure 


The prior year figures of Expenditure Classes have been restated to correctly classify the nature of Expenditure of the municipality. 


The effect of the Correction of Error is as follows: 


Employee Related Costs 
Remuneration of Councillors 
Depreciation and Amortisation 
Impairment Losses 

Interest, Dividends and Rent on Land 
Bulk Purchases 

Contracted Services 
Inventory Consumed 
Operating Leases 
Operational Costs 

Loss on Disposal of PPE 





Prior Year Bee te Reclassified Correction of Restated 
2018/19 Reclassification Amount Error Amount 
Audited 2018/19 

72,890,576 - 72,890,576 - 72,890,576 

5,517,384 - 5,517,384 - 5,517,384 
31,096,188 - 31,096,188 102,518 31,198,705 
37,447,087 - 37,447,087 2 37,447,089 
16,270,761 - 16,270,761 88,035 16,358,795 
60,336,121 - 60,336,121 (0) 60,336,121 
22,569,376 106,236 22,675,612 1,910,493 24,586,106 

2,018,965 (106,236) 1,912,729 (7,561) 1,905,168 

2,759,665 - 2,759,665 398,885 3,158,550 
17,419,309 - 17,419,309 1,196,915 18,616,224 
27,049,865 - 27,049,865 154,768 27,204,633 
295,375,296 0 295,375,296 3,844,054 299,219,350 








Prior year amounts of items in Expenditure included in the Statement of Financial Performance have been restated as indicated below: 


Balance previously reported 


Adustment for Interest not recorded in Prior Year 


Adjust Interest, Dividends and Rent on Land - Accounting for interest on telephone 


account in the correct financial year. 


Adjust Interest, Dividends and Rent on Land - Recognition of prior year VAT 


penalty for late submission of VAT 201 returns. 


Restated Balance now reported 


Interest, Dividends and Rent on Land: 


Interest, 











Rewiovee, — Remunerationof Dividends and 
Rent on Land 

72,890,576 5,517,384 16,270,761 
3,663 

12,382 

71,989 

72,890,576 5,517,384 16,358,795 
0.00 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 
The prior year amounts for /nterest, Dividends and Rent on Land and Payables from Exchange Transactions have been restated to correctly 
account for interest on late payments made by the municipality, previously not recorded. 


Furthermore, the prior year amounts for /nterest, Dividends and Rent on Land have been restated to correctly account for interest on the 
municipality's telephone account in the correct financial year. 


Depreciation 








Impairment Bulk 
ang Losses Purchases 
Amortisation 

Balance previously reported 31,096,188 37,447,087 60,336,121 
Correction of 2019 depreciation on Heritage & Intangible Assets included in Other 
Assets (63,766) 
Correction of amortization on GRID control software not previously accounted for 411,531 
as intangible Assets 
Correction of 2019 depreciation on a Heritage asset (Canon) previously included (7,935) 
in Other Assets 
Reversal of 2019 depreciation on GRID contrl software included in Movebale (411,433) 
Assets insted of Intangible Assets 
Recording of Depreciation on Donated Assets not previously recognised 174,121 
Rounding Errors 2 
Restated Balance now reported 31,198,705 37,447,089 60,336,121 

0.00- 


Depreciation and Amortisation: 
The prior year amounts for Depreciation & Amortisation and Property, Plant & Equipment have been restated to reverse deprecion on 
Heritage & Intangible Assets included in Other Assets. 


Furthermore, the prior year amounts for Depreciation & Amortisation and Property, Plant & Equipment have been restated to correctly 
disclose the depreciation for Infrastructure Assets from WIP, previously not capitalised. 


Furthermore, the prior year amounts for Depreciation & Amortisation and Property, Plant & Equipment have been restated to correctly 
disclose the depreciation for donated assets, previously not capitalised. 











Contracted Inventory Operational 
Services Consumed Costs 

Balance previously reported 22,569,376 2,018,965 17,419,309 
Adustment for Expenditure not recorded in Prior Year 2,313,916 2,659 793,492 
Allocation correction of Vote 0521/3849/0000 (Public Woks & Streets) 106,236 (106,236) 
Allocation correction of Vote 0101/4491/0000 (Remuneration to ward committes) (403,423) 403,423 
Correction of Inventory stock balance to agree with stock count as at 30 June (10,220) 
Restated Balance now reported 24,586,106 1,905,168 18,616,224 

(0.00) 0.00 (0.00) 


Contracted Services: 
The prior year amounts for Contracted Services and Payables from Exchange Transactions have been restated to correctly account for 
contractors paid, previously not recorded. 


Furthermore, the prior year amount for Contracted Services and Inventory Consumed have been restated due to an allocation correction of 
Vote 0521/3849/0000 (Public Woks & Streets), that relates to repairs and maintenance expenditure incurred by contractors and therefore 
allocated to contracted services instead of inventory consumed. 


Furthermore, the prior year amount for Contracted Services and Operational Costs have been restated due to an allocation correction of Vote 
0101/4491/0000 that relates to remuneration of ward committees previously allocated to contracted services. 


Inventory Consumed: 
The prior year amounts for Inventory Consumed and Payables from Exchange Transactions have been restated to correctly account for 
inventories utilised in operations, previously not recorded. 


Furthermore, the prior year amount for Inventory consumed has been restated due to an allocation correction of Vote 0521/3849/0000 (Public 
Woks & Streets), that relates to repairs and maintenance expenditure incurred by contractors and therefore allocated to contracted services 
instead of inventory consumed. 


Furthermore, the prior year amounts for /nventory Consumed and Inventories have been restated to correctly account for inventories utilised 
in operations, adjusting stock balances to stocktaking sheets. 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 
Operational Costs: 


The prior year amounts for Operational Costs and Payables from Exchange Transactions have been restated to correctly account for costs 
incurred in operations, previously not recorded. 


Furthermore, the prior year amount for Operational Costs and Contracted Services have been restated due to an allocation correction of Vote 
0101/4491/0000 that relates to remuneration of ward committees previously allocated to contracted services. 











Operating Loss on 
leases Disposal of 
PPE 

Balance previously reported 2,759,665 27,049,865 
Adustment for Lease Payments not recorded in Prior Year 398,885 
Adjust Inventory - Land-for-Sale disposed during 2018/19 154,768 
Rounding Errors 
Restated Balance now reported 3,158,550 27,204,633 

0.00 


Operating Leases: 
The prior year amounts for Operating Leases and Payables from Exchange Transactions have been restated to correctly account for lease 
charges, previously not recorded. 


Losses on Disposal of Capital Assets: 
The prior year amounts for Losses on Disposal of Capital Assets and Inventories have been restated to correctly disclose land held-for-sale, 
disposals previously not recorded. 


43.4 Reclassification of Statement of Financial Position 


The prior year figures of Classes in the Statement of Financial Position have been restated to correctly classify the nature of Assets, Liabilities 
and Net Assets of the municipality. 


The effect of the Correction of Error is as follows: 


Prior Year Restated 

2018/19 Reclassified Correction of Amount 

Audited Reclassification Amount Error 2018/19 
Current Assets 
Inventories 5,919,977 - 5,919,977 1,185,117 7,105,094 
Receivables from Exchange Transactions 10,224,756 - 10,224,756 (680,605) 9,544,151 
Receivables from Non-exchange Transactior 7,639,110 - 7,639,110 273,824 7,912,934 
VAT Receivable 6,718,706 - 6,718,706 765,946 7,484,652 
Cash and Cash Equivalents 12,430,393 - 12,430,393 - 12,430,393 
Operating Lease Receivables 22,798 - 22,798 - 22,798 
Non-Current Assets 
Property, Plant and Equipment 673,702,031 - 673,702,031 12,868,642 686,570,672 
Intangible Assets 57,943 - 57,943 1,132,126 1,190,069 
Investment Property 57,564,963 - 57,564,963 (1,329,663) 56,235,300 
Heritage Assets 355,000 - 355,000 39,675 394,675 
Current Liabilities 
Consumer Deposits (2,293,914) - (2,293,914) - (2,293,914) 
Payables from Exchange Transactions (259,485,992) - (259,485,992) (10,491,112) (269,977,104) 
Current employee benefits (1,161,328) - (1,161,328) - (1,161,328) 
Unspent Conditional Grants and Receipts (7,710,376) - (7,710,376) - (7,710,376) 
Current Portion of long term liability (6,912,339) - (6,912,339) - (6,912,339) 
Non-Current Liabilities 
Long-term Liabilities (9,672,831) - -9,672,831 - (9,672,831) 
Non-current Provisions (19,106,878) - -19,106,878 - (19,106,878) 
Employee Benefit Liabilities (14,371,728) - -14,371,728 - (14,371,728) 


Net Assets 
Accumulated Surplus / (Deficit) (453,920,291) - (453,920,291) (3,763,949) (457,684,240) 





TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 








Opening balances and prior year amounts of items in the Statement of Financial Position have been restated as indicated below: 


Exchange Non- exchange 











Inventories Receivables Receivables VAT 
Balances previously published per AFS as at 30 June 
2018 5,818,938 8,015,735 2,268,982 7,306,712 
Adustment for VAT Receivable not recorded in Base Year 298,249 
Balances now published per AFS as at 30 June 2018 5,818,938 8,015,735 2,268,982 7,604,961 
Transactions incurred for the Year 2018/19 101,040 2,209,021 5,370,128 (588,006) 
Adustment for Service Charges not recorded in Prior Year (1,303,683) 
Adustment for Property Rates not recorded in Prior Year 273,824 
Adustment for VAT Receivable not recorded in Prior Year 427,012 
Adjust Receivables from Exchange trasnactions - billing for 
sewerage dumping 623,078 
Adjust VAT for correction of prior year retention 1,828 
Adjust VAT due to the capitalisation of a 2019 WIP invoice 140,430 
Adjust Service charges - correction of VAT on pre-paid 
electricity sales (29,584) 
Adjust VAT - Accounting for penalty for late submission of 
VAT 201 returns. (71,989) 
Adjust Inventory stock balance to agree with stock count as at 10,220 
30 June 2019 
Adjust Inventory - Investment Property transferred to Land-for- 1,329,664 
Sale 
Adjust Inventory - Land-for-Sale disposed during 2018/19 (154,768) 
Balances now published per AFS as at 30 June 2019 7,105,094 9,544,151 7,912,934 7,484,652 

(0.00) (0.00) 0.00- 0.00 

Inventories: 


The prior year amounts of Inventories and Inventory Consumed have been restated to correctly disclose inventories held, adjusting stock 
balances to stocktaking sheets. 


Furthermore, the prior year amounts of Inventories and Investment Property have been restated to correctly disclose land held-for-sale, 
previously recorded as Investment Property. 


Furthermore, the prior year amounts of Inventories and Losses on Disposal of Capital Assets have been restated to correctly disclose land 
held-for-sale, disposals previously not recorded. 


Receivables from Exchange Transactions: 
The prior year amounts of Receivables from Exchange Transactions and Service Charges have been restated to correctly disclose the 
debtors for Electricity Sales, Refuse Removal, Sewerage Charges and Water Sales, previously incorrectly raised through Billing System. 


Futhermore, the prior year amounts of Receivables from Exchange Transactions and Service Charges have been restated due to the 
recognition of billing for sewerage dumping for the year 2018/19 which was raised in the current financial year. 


Receivables from Non-exchange Transactions: 
The prior year amounts of Receivables from Non-exchange Transactions and Property Rate have been restated to correctly disclose the 
debtors for Property Rates, previously incorrectly raised through Billing System. 


VAT Receivable / Payable: 
The opening balances of VAT Reivable / Payable and Payables from Exchange Transactions have been restated to correctly disclose the 
amount for VAT accrued on Payables, expenditure previously not recorded in 2018. 


The prior year amounts for VAT Reivable / Payable and Receivables from Exchange Transactions have been restated to correctly disclose 
the amount for VAT, Electricity Sales, Refuse Removal, Sewerage Charges and Water Sales previously incorrectly raised through Billing 
System. 


Furthermore, the prior year amounts of VAT Reivable has been restated due to the capitalisation of a 2019 WIP invoice that was captured in 
the current financial year and also to correct the VAT portion on prior year retentions. 


Furthermore, the prior year amounts of VAT has been restated to correct VAT on pre-paid electricity sales from VETA. 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 
Furthermore, the prior year amounts of VAT has been restated to correct VAT for penalties raised on late submission of VAT201 returns. 














PPE Intangible Investment Heritage 
Assets Property Assets 
Balances previously published per AFS as at 30 June 
2018 698,688,494 121,708 80,445,521 355,000 
Adustment for Donated Assets not recorded in Base Year 1,737,577 
Reversal of GRID Control Software accounted for as Movable (1,547,406) 
Assets instead of Intangible Assets 
Recognition of GRID Control Software accounted for as 1,547,639 
Movable Assets insted of Intangible Assets 
Correction of Heritage & Intangible Assets included in Other (196,707) 
Assets as at 30 June 2018 
Correction of Heritage Assets included in Other Assets: (39,675) 39,675 
Canon as at 30 June 2018 
Reverse accumulated depreciation that was incorrectly raised 15,870 
on Heritage Assets (Canon) included as part of Other Assets 
as at 30 June 2018 
Balances now published per AFS as at 30 June 2018 698,658,152 1,669,347 80,445,521 394,675 
Transactions incurred for the Year 2018/19 (24,986,463) (63,765) (22,880,559) - 
Adustment for Donated Assets not recorded in Prior Year 11,450,664 
Adustment for PPE not recorded in Prior Year 21,498 
Adustment for Intangible Assets not recorded in Prior Year 3,505 
Adjust PPE due to the capitalisation of a 2019 WIP invoice 936,200 
Correction of 2019 depreciation on Heritage & Intangible 
Assets included in Other Assets 63,766 
Allocation correction of Intangible assets additions previously 
included in Movable Assets (21,699) 21,699 
Reverse depreciation that was incorrectly raised on Heritage 
Assets included as part of Other Assets: Canon 7,935 
Reversal of 2019 depreciation on GRID Control Software 440,619 
included in Movebale Assets insted of Intangible Assets 
Recognition of 2019 depreciation on GRID Control Software (440,717) 
included in Movebale Assets insted of Intangible Assets 
Adjust Inventory - Investment Property transferred to Land-for- (1,329,664) 
Sale 
Rounding Errors 2 
Balances now published per AFS as at 30 June 2019 686,570,672 1,190,069 56,235,300 394,675 
(0.00) 0.00- 0.00- 0.00- 


Property, Plant and Equipment: 
The opening balances for Property, Plant & Equipment and Accumulated Surplus have been restated to correctly disclose the amount for 
Donated Assets, previously not recognised. 


Furthermore, the opening balances for Property, Plant & Equipment, Intangible Assets and Accumulated Surplus have been restated to 
correctly disclose the amount for GRID Control Software, previously recognised as Propert, Plant and Equipment. 


Furthermore, the opening balances for Property, Plant & Equipment, Heritage Assets and Accumulated Surplus have been restated due to 
the correction of Heritage & Intangible Assets included in Other Assets as at 30 June 2018. 


The prior year amounts for Property, Plant & Equipment, Amortisation & Depreciation and Transfers & Subsidies Received have been 
restated to correctly record donated assets, previously not recognised. 


Furthermore, the prior year amounts for Property, Plant & Equipment and Payables from Exchange Transactions have been restated to 
correctly record movable assets, previously not recognised. 


Furthermore, the prior year amounts for Property, Plant & Equipment and Payables from Exchange Transactions have been restated due to 
the capitalisation of a 2019 WIP invoice that was captured in the current financial year and also to correct the VAT portion on prior year 
retentions. 


Furthermore, the prior year amounts for Property, Plant & Equipment, Intangible Assets, Heritage Assets and Payables from Exchange 
Transactions have been restated to correctly disclose the amount for assets previously incorrectly recognised as Property, Plant & Equipment. 


Furthermore, the prior year amounts for Property, Plant & Equipment and Amortisation & Depreciation have been restated due to the 
correction of 2019 depreciation on Heritage & Intangible Assets included in Other Assets 


Intangible Assets: 
The opening balances for /ntangible Assets, Property, Plant & Equipment and Accumulated Surplus have been restated to correctly disclose 
the amount for GRID Control Software, previously recognised as Propert, Plant and Equipment. 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


The prior year amounts for /ntangible Assets and Payables from Exchange Transactions have been restated to correctly record intangible 
assets, previously not recognised. 


Furthermore, the prior year amounts for /ntangible Assets, Property, Plant & Equipment, Heritage Assets and Payables from Exchange 
Transactions have been restated to correctly disclose the amount for assets previously incorrectly recognised as Property, Plant & Equipment. 


Heritage Assets: 
The opening balances for Heritage Assets, Property, Plant & Equipment and Accumulated Surplus have been restated due to the correction 
of Heritage & Intangible Assets included in Other Assets as at 30 June 2018. 











Consumer Exchange eee Unspent 
‘ mployee 
Deposits Payables benefits Grants 

Balances previously published per AFS as at 30 June 
2018 (2,261,202) (201,012,154) (1,193,000) (3,753,467) 
Adustment for Payables not recorded in Base Year (3,079,953) 
Adjust Exchange Payables transactions to account for 
unknown deposits as unallocated deposits. (1,479,559) 
Balances now published per AFS as at 30 June 2018 (2,261,202) (205,571,666) (1,193,000) (3,753,467) 
Transactions incurred for the Year 2018/19 (32,712) (58,473,838) 31,672 (3,956,909) 
Adustment for Payables not recorded in Prior Year (3,964,630) 
Adjust Payables from Exchange Transactions due to the (1,076,630) 
capitalisation of a 2019 Property Plant and Equipment invoice 
for Work-In-Progress. 
Adjust Payables from Exchange transactions to account for (876,130) 
unknown deposits as unallocated deposits. 
Adjust Payables from Exchange transactions to account for (12,382) 
interest on telephone account. 
Adjust VAT for correction of prior year retention (1,828) 
Balances now published per AFS as at 30 June 2019 (2,293,914) (269,977,104) (1,161,328) (7,710,376) 

0.00- 0.00 0.00- 0.00- 


Payables from Exchange Transactions: 
The opening balances of Payables from Exchange Transactions and Accumulated Surplus have been restated to correctly disclose the 
liability for payables, expenditure incurred previously not accrued for. 


Furthermore, the opening balance for Payables from Exchange Transactions and Accumulated Surplus have been restated to account for 
unknown deposits previously included in Operational Revenue as Unallocated Deposits. 


The opening balances of Payables from Exchange Transactions and Payables from Non-exchange Transactions have been restated to 
correctly disclose the amount for a payment made reversed, previously not recorded. 


Furthermore, the opening balances of Payables from Exchange Transactions and General Expenses have been restated to correctly disclose 
the liability for Workmen's Compensation Insurance, previously not assessed and accrued for. 


The prior year amounts of Payables from Exchange Transactions and Accumulated Surplus have been restated to correctly disclose the 
liability for payables, expenditure previously not accrued for. 


Furthermore, the prior year amounts of Payables from Exchange Transactions and Property, Plant & Equipment have been restated due to 
the capitalization of a 2019 Property Plant and Equipment invoice for work-in-progress invoice that was captured in the current financial year. 


Furthermore, the prior year amounts for Payables from Exchange Transactions and Operational Revenue have been restated to account for 
unknown deposits included in Operational Revenue as Unallocated Deposits. 


Furthermore, the prior year amounts for Payables from Exchange Transactions and Interest Paid have been restated to account for interest 
on telephone account, previously not recognised. 


Furthermore, the prior year amounts for Payables from Exchange Transactions and VAT Receivable have been restated to account for 
retentions, previously incorrectly recognised. 


43. CHANGE IN ACCOUNTING ESTIMATES 


44. 


45. 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 
The municipality did not receive any new information or notice of new developments during the financial year that need to be disclosed in 
terms of GRAP 3. 



































2020 2019 
CASH GENERATED BY OPERATIONS R R 
Surplus / (Deficit) for the Year (81,005,485) (108,720,739) 
Adjustment for: 
Correction of Prior Year Errors 1,625,770 60,257 
Impairment loss Inventory - 154,770 
Depreciation and Amortisation 32,324,301 31,198,705 
Impairment Losses on Property, Plant and Equipment 224,900 5,330,057 
Losses / (Gains) on Disposal of Property, Plant and Equipment 4,501,026 5,265,022 
Contribution to Post-retirement Employee Benefits - Non-current (349,341) (356,328) 
Contribution to Post-retirement Employee Benefits - Current (237,328) (31,672) 
Provision for staff leave & bonus 1,301,646 475,882 
Debt impairment - Provision for dountful debts (Exchange) 34,499,044 25,526,180 
Debt impairment - Provision for dountful debts (Non-exchange - Rates) 36,222,113 6,536,398 
Debt impairment - Provision for dountful debts (Non-exchange - Fines) 140,408 54,453 
Finance costs - Discounting of provision for rehabilitation of landfill site 779,732 289,517 
Employee related cost - actuarial interest 1,341,504 1,452,000 
Finance costs - finance leases 2,112,197 2,001,291 
Fair value adjustment Investment Property - 21,784,842 
Employee related cost - Actuarial gains (696,891) (117,944) 
Donation received from mine (1,161,633) (11,624,785) 
Operating surplus before working capital changes 31,621,964 (20,722,093) 
Decrease/(Increase) in Inventories 6,715,702 (1,440,927) 
Decrease/(Increase) in Receivables from Exchange Transactions (37,691,821) (27,054,597) 
Decrease/(Increase) in Receivables from Non-exchange Transactions - Rates (44,327,321) (6,959,408) 
Decrease/(Increase) in Receivables from Non-exchange Transactions - Fines 1,134,179 (5,275,394) 
Decrease/(Increase) in VAT Receivable 2,149,167 120,309 
Decrease/(Increase) in Operating Lease Receivables 12,586 6,771 
Increase/(Decrease) in Consumer Deposits 118,645 32,711 
Increase/(Decrease) in Payables from Exchange Transactions 61,012,899 63,929,565 
Increase/(Decrease) in Conditional Grants and Receipts (945,010) 3,956,909 
Cash generated by / (utilised in) Operations 19,800,989 6,593,846 
0.00 -0.00 
UNAUTHORISED, IRREGULAR, FRUITLESS AND WASTEFUL EXPENDITURE DISALLOWED 
2020 2019 
45.1 Unauthorised Expenditure R R 
Reconciliation of Unauthorised Expenditure: 
Opening balance 527,862,567 462,427,392 
Unauthorised Expenditure current year 83,164,727 65,435,175 
Approved by Council or condoned - - 
To be recovered — contingent asset (see Note 59) - - 
Transfer to receivables for recovery (see Note 4) - - 
Unauthorised Expenditure awaiting authorisation 611,027,294 527,862,567 
45.2 Fruitless and Wasteful Expenditure 2020 2019 
R R 
Reconciliation of Fruitless and Wasteful expenditure: 
Opening balance 56,591,278 42,451,302 
Fruitless and Wasteful Expenditure current year 14,881,989 13,979,952 
Fruitless and Wasteful Expenditure identified in current year relating to prior years - 160,024 
Expenditure investigated and approved by Council - - 
To be recovered - - 
Fruitless and Wasteful Expenditure awaiting condonement 71,473,267 56,591,278 
Incident Disciplinary Steps / Criminal Proceedings 
Interest on late payment - Various Creditors - R 14,881,989 Under Investigation. To be submitted to Council for condonement. 
(2019: R14,139,976) 











46. 


TSANTSABANE LOCAL MUNICIPALITY 


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


Interest on late payment - SARS - (2020: R 641 455) Under Investigation. To be submitted to Council for condonement. 


45.3 Irregular Expenditure 


To management's best of knowledge instances of note indicating that Irregular Expenditure was 


incurred during the year under review were not revealed. 


Reconciliation of Irregular Expenditure: 
Opening balance 
Irregular Expenditure current year & previously reported 
Irregular Expenditure prior year, but identified in current year 
Condoned or written off by Council 
To be recovered — contingent asset (see Note 59) 
Transfer to receivables for recovery (see Note 4) 
Irregular Expenditure awaiting condonement 


ADDITIONAL DISCLOSURES IN TERMS OF MUNICIPAL FINANCE MANAGEMENT ACT 


46.1 Contributions to organised local government - SALGA 
Opening Balance 

Council Subscriptions 

Amount Paid - current year 

Amount Paid - previous years 


Balance Unpaid (included in Creditors) 
46.2 Audit Fees 

Opening Balance 

Current year Audit Fee 

Amount Paid - current year 

Amount Paid - previous years 


Balance Unpaid (included in Creditors) 


46.3 VAT 


The net of VAT input payables and VAT output receivables are shown in Note 5. Not all VAT returns 


have been submitted by the due date throughout the year. 


46.4 Pension and Medical Aid Deductions 

Opening Balance 

Current year Payroll Deductions and Council Contributions 
Amount Paid - current year 

Amount Paid - previous years 


Balance Unpaid (included in Creditors) 


46.5 Councillor's arrear Consumer Accounts 


The following Councillors had arrear accounts outstanding for more than 90 days as at: 


30 June 2020 Total 

Daniels M 8,240 
Davids AR 85,252 
Ruiters AJ (5,297) 
Julies WC 1,507 
Esau D 50,725 
Swart JJ 5,595 
Mabilo OM 2,686 
Poto EE 629 
Phete EEJ 42,724 
Modise KD 775 
Tshabane IK 54,052 





























2020 2019 
R R 
38,420,068 30,979,320 
6,460,875 - 
2 7,440,748 
44,880,943 38,420,068 
2020 2019 
R R 
2,628,745 2,038,660 
1,120,215 988,385 
(78,590) (398,300) 
3,670,370 2,628,745 
2,983,567 2,264,264 
3,644,099 3,543,069 
- (622,391) 
(1,233,500) (2,201,375) 
5,394,166 2,983,567 
1,249,809 1,176,030 
16,278,531 14,806,228 
(14,882,445) (13,556,420) 
(1,249,809) (1,176,030) 
1,396,086 1,249,809 








Outstanding 


up to 
90 days 


2,973 
5,369 

546 
1,507 
1,398 
5,595 
2,471 

629 
1,813 

752 
2,453 


Outstanding 
more than 
90 days 


5,267 
79,884 
(5,843) 


49,327 


214 
40,911 
23 
51,599 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 








Mashila M 1,800 1,800 - 
Saulus TJ 4,224 2,854 1,370 
Total Councillor Arrear Consumer Accounts 252,912 30,161 222,751 
Outstanding Outstanding 
30 June 2019 Total up to more than 
90 days 90 days 

Daniels M 8,091 1,151 6,940 
Davids AR 66,888 2,438 64,450 
Ruiters AJ (1,380) 464 (1,844) 
Julies WC 15,652 852 14,800 
Esau D 59,930 1,448 58,482 
Swart JJ 3,223 3,223 - 
Mabilo OM 1,859 1,856 3 
Poto EE 1,464 825 639 
Phete EEJ 60,462 1,684 58,778 
Modise KD 464 538 (75) 
Tshabane IK 46,250 4,681 41,570 
Mashila M 239 502 (263) 
Saulus TJ 5,063 1,683 3,380 
Total Councillor Arrear Consumer Accounts 268,204 21,346 246,859 








46.6 Deviation from, and ratification of minor breaches of, the Procurement Processes 

In terms of section 36(2) of the Municipal Supply Chain Management Regulations approved by the council, any deviation from the Supply 
Chain Management Policy needs to be approved / condoned by the Municipal Manager, noted by Council and bids where the formal 
procurement processes could not be followed must be noted in the Annual Financial Statements. 


The following deviations from the tender stipulations in terms of the municipality's Supply Chain Management Policy were ratified by the 
Municipal Manager and reported to Council: 


30 JUNE 2020 


Payee Reference Date Deviation type | Amount | 


Media 24 Beperk Ltd 15023958 29/07/2019 Impractical to obtain 3 quotes 
Kathu Gazzette 15024291 08/07/2019 Impractical to obtain 3 quotes 
Die Ghaap 15023933 29/07/2019 Impractical to obtain 3 quotes 
Diamond Field Advertiser 15024147 29/07/2019 Impractical to obtain 3 quotes 
Grid Control Technologies 15024497 06/08/2019 
AC Security 15024742 12/09/2019 23,199 
Autozone 15024750 12/09/2019 12,474 
Hi-Q 15024753 12/09/2019 41,515 
Visual Projects 15024918 10/10/2019 161,965 
Kathu Gazette 15024953 25/10/2019 Impractical to obtain 3 quotes 10,074 
AC Security 15024954 25/10/2019 6,800 
Microchip Security Solution 15025036 31/10/2019 110,170 
Road Lodge 15024913 10/10/2019 2,190 
Bishops Lodge Kimberley 15024928 14/10/2019 9,600 
Devereux Lodge And Villas 15024938 18/10/2019 11,760 
The Hampton 15024934 18/10/2019 
Media 24 Beperk/Limited 15025112 22/11/2019 Impractical to obtain 3 quotes 
Media 24 Beperk/Limited 15025382 01/11/2019 Impractical to obtain 3 quotes 
The Hampton 15025384 01/11/2019 
Kathu Gazette 15025389 14/11/2019 Impractical to obtain 3 quotes 
Red Sands Country Lodge 15025110 22/11/2019 Impractical to obtain 3 quotes 
Devereux Lodge and Villas 15025041 01/11/2019 
Microchip Security Solution 15025138 28/11/2019 
Robust Road Repair Pty Ltd 15025422 06/12/2019 Availability of service 

AC Security 15025685 08/01/2020 Availablity of service 

Die Ghaap 15025695 08/01/2020 Impractical to obtain 3 quotes 

Visual Projects 15025720 22/01/2020 Availablity of service 

Bell 15025727 30/01/2020 Availablity of service 

Thusano Contractors 15025685 14/02/2020 Availablity of service 7,000 
KIk Landbou Beperk 15026420 02/04/2020 Availablity of service 5,960 































































































Dragon Loo 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


15026519 


03/04/2020 


Covid-19 response 


54,602 





Dragon Loo 


15026524 


30/04/2020 


Covid-19 response 


102,419 





Kathu Gazette 
Diamond Field Advertiser 


15026674 
15026684 


15/05/2020 
26/05/2020 


Impractical to obtain 3 quotes 
Impractical to obtain 3 quotes 


8,059 





Pat & Sons Welding and Project 


15026701 


29/05/2020 





30 JUNE 2019 








Total: 





1,186,005 


Date Deviation type | Amount | 





Media 24 Daily Sun ,Beeld,City Vision 


15018646 


09/07/2018 


Possible Irregular Expenditure 





Die Ghaap 


15018723 
15018723 


09/07/2018 
19/07/2018 


Possible Irregular Expenditure 
Possible Irregular Expenditure 





15018700 


19/07/2018 


Possible Irregular Expenditure 





Die Ghaap 


15018700 
15018700 


19/07/2018 
19/07/2018 


Possible Irregular Expenditure 
Possible Irregular Expenditure 





Kathu Gazzette 


15018722 


19/07/2018 


Possible Irregular Expenditure 





Kathu Gazzette 


15018721 


09/07/2018 


Possible Irregular Expenditure 





Kathu Gazzette 


15018722 


19/07/2018 


Possible Irregular Expenditure 





Kathu Gazzette 


15018722 


19/07/2018 


Possible Irregular Expenditure 





Grid Control 


15018719 


17/07/2018 


Possible Irregular Expenditure 





Media 24 Daily Sun ,Beeld,City Vision 
Media 24 Beperk Ltd 


15020148 
15019464 


14/11/2018 
25/09/2018 


Possible Irregular Expenditure 
Possible Irregular Expenditure 





Die Ghaap 


15020000 


15/10/2018 


Possible Irregular Expenditure 





Kathu Gazzette 
Media 24 Beperk Ltd 


15020152 
15023518 


14/11/2018 
22/03/2019 


Possible Irregular Expenditure 
Possible Irregular Expenditure 





Die Ghaap 


15023437 


01/12/2018 


Possible Irregular Expenditure 





Kathu Gazzete 


15023802 


02/05/2019 


Possible Irregular Expenditure 





Kathu Gazzette 


15023689 


14/05/2018 


Possible Irregular Expenditure 





Kathu Gazzette 


15023689 


14/05/2019 


Possible Irregular Expenditure 





Kathu Gazzette 


15023689 


14/05/2019 


Possible Irregular Expenditure 





Kathu Gazzette 


15023689 


14/05/2019 


Possible Irregular Expenditure 





Kathu Gazzette 


15023689 


14/05/2018 


Possible Irregular Expenditure 





Kathu Gazzette 


15023689 


14/05/2018 


Possible Irregular Expenditure 





Kathu Gazzette 
Kathu Gazzette 


15023689 
15023689 


14/05/2018 
14/05/2018 


Possible Irregular Expenditure 
Possible Irregular Expenditure 





Kathu Gazzette 


15023689 


14/05/2018 


Possible Irregular Expenditure 





Die Ghaap 


15023802 
15023802 


18/06/2019 
18/06/2019 


Possible Irregular Expenditure 
Possible Irregular Expenditure 





15023802 


18/06/2019 





Possible Irregular Expenditure 











46.7 Bulk Electricity and Water Losses in terms of Section 125 (2)(d)(i) of the MFMA 


Material Electricity and Water Losses were as follows and are not recoverable: 


Electricity: 


30 June 2020 


30 June 2019 


Unaccounted Electricity Losses 


Unaccounted Electricity Losses 


Total: 

Lost Units Tariff 
8,091,573 1.2204 
9,809,024 1.0527 





281,056 


Value 


9,875,163 


10,325,589 


Electricity Losses occur due to inter alia, technical and non-technical losses (Technical losses - inherent resistance of conductors, transformers 
and other electrical equipment; Non-technical losses - the tampering of meters, the incorrect ratios used on bulk meters, faulty meters and 
illegal electricity connections). The problem with tampered meters and illegal connections is an ongoing process, with regular action being 


taken against defaulters. Faulty meters are replaced as soon as they are reported. 


Volumes in kWhlyear: 
System Input Volume 
Billed Consumption 
Distribution Loss 


2020 
R 


31,636,752 


23,545,179 


8,091,573 


2019 
R 


33,435,146 


23,626,121 


9,809,024 








47. 


48. 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


Percentage Distribution Loss 25.58% 29.34% 
The Electricity distribution losses have been restated to include all the Units of electricity that were sold during the 2019 financial year. 
Water: 

Lost Units Tariff Value 
30 June 2020 Unaccounted Water Losses 8.15 12,863,727 
30 June 2019 Unaccounted Water Losses 7.31 12,698,185 

















Water Losses occur due to inter alia, leakages, the tampering of meters, the incorrect ratios used on bulk meters, faulty meters and illegal 
water connections. The problem with tampered meters and illegal connections is an ongoing process, with regular action being taken against 


defaulters. Faulty meters and leakages are replaced/repaired as soon as they are reported. 


Volumes in Kl/year: 
System Input Volume 
Billed Consumption 
Inventory water stock level 
Distribution Loss 


Percentage Distribution Loss 


COMMITMENTS FOR EXPENDITURE 

47.1 Capital Commitments 

Commitments in respect of Capital Expenditure: 
- Approved and Contracted for:- 


Property Plant and Equipment - Infrastructure assets 


This expenditure will be financed from: 
Government Grants 


47.2 Lease Commitments 


Finance Lease Liabilities and Non-cancellable Operating Lease Commitments are disclosed in Notes 16. 


47.3 
FINANCIAL INSTRUMENTS 


48.1 Classification 


FINANCIAL ASSETS: 


In accordance with GRAP 104.13 the Financial Assets of the municipality are classified as follows: 


Financial Assets 


Receivables from Exchange Transactions 
Electricity 

Refuse 

Sewerage 

Water 

Property Rental Debtors 

Other Debtors 


Receivables from Non-exchange Transactions 
Property Rates 

Fines 

Over Payment of Contractors 


Cash and Cash Equivalents 


Classification 


Amortised cost 
Amortised cost 
Amortised cost 
Amortised cost 
Amortised cost 
Amortised cost 


Amortised cost 
Amortised cost 
Amortised cost 



































2020 2019 
R R 
2,384,640 2,962,324 
794,967 813,369 
11,141 11,371 
1,578,532 1,737,584 
66.20% 67.81% 
2020 2019 
R R 
36,040,740 44,368,102 
36,040,740 44,368,102 
36,040,740 44,368,102 
36,040,740 44,368,102 
2020 2019 
R R 
3,706,555 2,288,475 
1,424,644 1,041,432 
3,452,144 2,992,729 
3,536,721 2,644,849 
598,358 961,284 
18,506 15,382 
9,724,750 1,619,542 
146,126 191,634 
4,872,679 6,101,758 


TSANTSABANE LOCAL MUNICIPALITY 


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


Call Deposits 
Bank Balances 
Cash Floats and Advances 


SUMMARY OF FINANCIAL ASSETS 
Financial Assets at Amortised Cost: 


Receivables from Exchange Transactions 
Receivables from Exchange Transactions 
Receivables from Exchange Transactions 
Receivables from Exchange Transactions 
Receivables from Exchange Transactions 
Receivables from Exchange Transactions 


Receivables from Non-exchange Transactions 
Receivables from Non-exchange Transactions 
Receivables from Non-exchange Transactions 


Cash and Cash Equivalents 
Cash and Cash Equivalents 


Financial Assets at Fair Value: 
Cash and Cash Equivalents 


Total Financial Assets 


FINANCIAL LIABILITIES: 


In accordance with GRAP 104.13 the Financial Liabilities of the municipality are classified as follows: 


Financial Liabilities 


Long-term Liabilities 
Finance Lease Liability 


Payables from Exchange Transactions 
Advance Payments 

Bonus 

Leave Accrual 

Other Payables 

Retentions 

Trade Creditors 


Current Portion of Long-term Liabilities 
Finance Lease Liability 


SUMMARY OF FINANCIAL LIABILITIES 


Financial Liabilities at Amortised Cost: 
Long-term Liabilities 


Payables from Exchange Transactions 
Payables from Exchange Transactions 
Payables from Exchange Transactions 
Payables from Exchange Transactions 
Payables from Exchange Transactions 
Payables from Exchange Transactions 
Bank Overdraft 


Amortised cost 
Amortised cost 
Fair value 


Electricity 

Refuse 

Sewerage 

Water 

Property Rental Debtors 
Other Debtors 


Property Rates 
Fines 


Deposits held & Payments in advance 


Call Deposits 
Bank Balances 


Cash Floats and Advances 


Classification 


Amortised cost 


Amortised cost 
Amortised cost 
Amortised cost 
Amortised cost 
Amortised cost 
Amortised cost 


Amortised cost 


Finance Lease Liability 


Advance Payments 
Bonus 

Leave Accrual 
Other Payables 
Retentions 

Trade Creditors 
Bank Overdraft 
































3,142,305 


15,265,012 10,493,716 
25,302 1,934,677 
2,000 2,000 
3,706,555 2,288,475 
1,424,644 1,041,432 
3,452,144 2,992,729 
3,536,721 2,644,849 
598,358 961,284 
18,506 15,382 
9,724,750 1,619,542 
146,126 191,634 
4,872,679 6,101,758 
15,265,012 10,493,716 
25,302 1,934,677 
42,770,795 29,885,478 
2,000 2,000 
2,000 2,000 
42,772,796 29,887,478 
2020 2019 
R R 
2,551,881 9,672,831 
18,461,923 18,397,663 
2,022,911 1,925,093 
8,080,919 6,877,090 
37,077,017 32,515,610 
2,336,801 1,566,382 
264,312,080 208,695,267 
9,708,574 6,912,339 
347,694,410 286,562,275 
2,551,881 9,672,831 
18,461,923 18,397,663 
2,022,911 1,925,093 
8,080,919 6,877,090 
37,077,017 32,515,610 
2,336,801 1,566,382 
264,312,080 208,695,267 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 











Current Portion of Long-term Liabilities Finance Lease Liability 9,708,574 6,912,339 
Total Financial Liabilities 347,694,410 286,562,275 
48.2 Fair Value 


The following methods and assumptions were used to estimate the Fair Value of each class of Financial Instrument for which it is practical to 
estimate such value: 


Cash 
The carrying amount approximates the Fair Value because of the short maturity of these instruments. 


Trade and Other Receivables/Payables 
The Fair Value of Trade and Other Payables is estimated at the present value of future cash flows. 


The management of the municipality is of the opinion that the carrying value of Trade and Other Receivables recorded at amortised cost in the 
Annual Financial Statements approximate their fair values. The Fair Value of Trade Receivables were determined after considering the 
standard terms and conditions of agreements entered into between the municipality and other parties as well as the current payment ratios of 
the municipality's debtors. 


Other Financial Assets and Liabilities 

The Fair Value of Other Financial Assets and Financial Liabilities (excluding Derivative Instruments) is determined in accordance with 
generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions and 
dealer quotes for similar instruments. 


Long-term Liabilities 
The Fair Value of Long-term Liabilities was determined after considering the standard terms and conditions of agreements entered into 
between the municipality and the relevant financing institutions. 


Management considers the carrying amounts of Financial Assets and Financial Liabilities recorded at amortised cost in the Annual Financial 
Statements to approximate their Fair Values on 30 June 2020, as a result of the short-term maturity of these assets and liabilities. 


The Fair Values of Financial Assets and Financial Liabilities, together with the carrying amounts shown in the Statement of Financial Position, 
are as follows: 















































30 June 2020 30 June 2019 
Carrying Fair Carrying Fair 
Amount Value Amount Value 
R R R R 
FINANCIAL ASSETS 
Measured at Amortised Cost: 42,770,795 42,770,795 29,885,478 29,885,478 
Receivables from Exchange Transactions 12,736,927 12,736,927 9,544,151 9,544,151 
Receivables from Non-exchange Transactions 14,743,555 14,743,555 7,912,934 7,912,934 
Call Deposits 15,265,012 15,265,012 10,493,716 10,493,716 
Bank Balances 25,302 25,302 1,934,677 1,934,677 
Measured at Fair Value 2,000 2,000 2,000 2,000 
Cash and Cash Equivalents 2,000 2,000 2,000 2,000 
Total Financial Assets 42,772,796 42,772,796 29,887,478 29,887,478 
FINANCIAL LIABILITIES 
Measured at Amortised Cost: 347,694,410 347,694,410 286,562,275 286,562,275 
Finance Lease Liability 2,551,881 2,551,881 9,672,831 9,672,831 
Trade and Other Payables: 
-Payables from Exchange Transactions 332,291,650 332,291,650 269,977,104 269,977,104 
-Current Portion of Long-term Liabilities 9,708,574 9,708,574 6,912,339 6,912,339 
Bank Overdraft 3,142,305 3,142,305 - - 
Total Financial Liabilities 347,694,410 347,694,410 286,562,275 286,562,275 
Total Financial Instruments (304,921,614) (304,921,614) (256,674,796) (256,674,796) 





Unrecognised Gain / (Loss) z Ieo 


No Financial Instruments of the municipality have been reclassified during the year. 


Assumptions used in determining Fair Value of Financial Assets and Financial Liabilities 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


The table below analyses Financial Instruments carried at Fair Value at the end of the reporting period by the level of fair-value hierarchy as 
required by GRAP 104. The different levels are based on the extent to which quoted prices are used in the calculation of the Fair Value of the 
Financial Instruments. The levels have been defined as follows: 


Level 1:- 
Fair Values are based on quoted market prices (unadjusted) in active markets for an identical instrument. 


Level 2:- 


Fair Values are calculated using valuation techniques based on observable inputs, either directly (i.e. as prices) or indirectly (i.e. derived from 
prices). This category includes instruments valued using quoted market prices in active markets for similar instruments, quoted prices for 
identical or similar instruments in markets that are considered less than active, or other valuation techniques where all significant inputs are 
directly or indirectly observable from market data. 


Level 3:- 

Fair Values are based on valuation techniques using significant unobservable inputs. This category includes all instruments where the 
valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument's 
valuation. Also, this category includes instruments that are valued based on quoted prices for similar instruments where significant 
unobservable adjustments or assumptions are required to reflect differences between the instruments. 


30 June 2020 


























Level 1 Level 2 Level 3 Total 
R R R R 
FINANCIAL ASSETS 
Financial Instruments at Fair Value: 
Cash and Cash Equivalents - 2,000 - 2,000 
Total Financial Assets - 2,000 - 2,000 
Total Financial Instruments - 2,000 - 2,000 
30 June 2019 
Level 1 Level 2 Level 3 Total 
R R R R 
FINANCIAL ASSETS 
Financial Instruments at Fair Value: 
Cash and Cash Equivalents - 2,000 - 2,000 
Total Financial Assets - 2,000 - 2,000 
Total Financial Instruments - 2,000 - 2,000 








48.3 Capital Risk Management 


The municipality manages its capital to ensure that the municipality will be able to continue as a going concern while delivering sustainable 
services to consumers through the optimisation of the debt and equity balance. The municipality’s overall strategy remains unchanged from 
2019. 


The capital structure of the municipality consists of debt, which includes Cash and Cash Equivalents and Equity, comprising Funds, Reserves 
and Accumulated Surplus as disclosed in Note 19 and the Statement of Changes in Net Assets. 


Gearing Ratio 





2020 2019 
R R 
The gearing ratio at the year-end was as follows: 
Debt 15,402,760 16,585,171 
Cash and Cash Equivalents (15,292,314) (12,430,393) 
Net Debt 110,446 4,154,777 





Equity 378,304,525 457,684,240 








TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 











Net debt to equity ratio 0.03% 0.91% 








Debt is defined as Long-term Liabilities, together with its Short-term Portion. 


Equity includes all Funds and Reserves of the municipality, disclosed as Net Assets in the Statement of Financial Performance and Net Debt 
as described above. 


48.4 Financial Risk Management Objectives 


The Accounting Officer has overall responsibility for the establishment and oversight of the municipality's risk management framework. The 
municipality's risk management policies are established to identify and analyse the risks faced by the municipality, to set appropriate risk limits 
and controls and to monitor risks and adherence to limits. 


Due to the largely non-trading nature of activities and the way in which they are financed, municipalities are not exposed to the degree of 
financial risk faced by business entities. Financial Instruments play a much more limited role in creating or changing risks that would be typical 
of listed companies to which the IAS's mainly apply. Generally, Financial Assets and Liabilities are generated by day-to-day operational 
activities and are not held to manage the risks facing the municipality in undertaking its activities. 


The Department Financial Services monitors and manages the financial risks relating to the operations through internal policies and 
procedures. These risks include interest rate risk, credit risk and liquidity risk. Compliance with policies and procedures is reviewed by the 
internal auditors on a continuous basis, and annually by external auditors. The municipality does not enter into or trade financial instruments 
for speculative purposes. 


Internal audit, responsible for initiating a control framework and monitoring and responding to potential risk, reports periodically to the 
municipality's audit committee, an independent body that monitors the effectiveness of the internal audit function. 


Further quantitative disclosures are included throughout these Annual Financial Statements. 


48.5 Significant Risks 


It is the policy of the municipality to disclose information that enables the user of its Annual Financial Statements to evaluate the nature and 
extent of risks arising from Financial Instruments to which the municipality is exposed on the reporting date. 


The municipality has exposure to the following risks from its operations in Financial Instruments: 
- Credit Risk; 
- Liquidity Risk; and 
- Market Risk. 


Risks and exposures are disclosed as follows: 


Market Risk 

Market Risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the 
municipality's income or the value of its holdings in Financial Instruments. The objective of market risk management is to manage and control 
market risk exposures within acceptable parameters, while optimising the return. 


Credit Risk 
Credit Risk is the risk of financial loss to the municipality if a customer or counterparty to a Financial Instrument fails to meet its contractual 
obligations and arises principally from the municipality's receivables from customers and investment securities. 


Liquidity Risk 

Liquidity Risk is the risk that the municipality will encounter difficulty in meeting the obligations associated with its Financial Liabilities that are 
settled by delivering cash or another financial asset. The municipality’s approach to managing liquidity is to ensure, as far as possible, that it 
will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable 
losses or risking damage to the municipality’s reputation. 


Liquidity Risk is managed by ensuring that all assets are reinvested at maturity at competitive interest rates in relation to cash flow 
requirements. Liabilities are managed by ensuring that all contractual payments are met on a timeous basis and, if required, additional new 
arrangements are established at competitive rates to ensure that cash flow requirements are met. 


A maturity analysis for Financial Liabilities (where applicable) that shows the remaining undiscounted contractual maturities is disclosed in 
Note 45.8 to the Annual Financial Statements. 


48.6 Market Risk 


The municipality's activities expose it primarily to the financial risks of changes in interest rates (see Note 45.7 below). No formal policy exists 
to hedge volatilities in the interest rate market. 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 
There has been no change to the municipality’s exposure to market risks or the manner in which it manages and measures the risk. 


48.6.1 Foreign Currency Risk Management 


The municipality's activities do not expose it to the financial risks of foreign currency and therefore has no formal policy to hedge volatilities in 
the interest rate market. 


48.6.2 Interest Rate Risk Management 


Interest Rate Risk is defined as the risk that the fair value or future cash flows associated with a financial instrument will fluctuate in amount as 
a result of market interest changes. 


Potential concentrations of interest rate risk consist mainly of variable rate deposit investments, long-term receivables, consumer debtors, 
other debtors, bank and cash balances. 


The municipality limits its counterparty exposures from its money market investment operations by only dealing with Absa Bank, First National 
Bank and Standard Bank. No investments with a tenure exceeding twelve months are made. 


In the case of debtors whose accounts become in arrears, it is endeavoured to collect such accounts by "levying of penalty charges", "demand 
for payment", "restriction of services" and, as a last resort, "handed over for collection", whichever procedure is applicable in terms of Council's 
Credit Control and Debt Collection Policy. Consumer Deposits are increased accordingly. 


The municipality's exposures to interest rates on Financial Assets and Financial Liabilities are detailed in the Credit Risk Management section 
of this note. 


48.7 Credit Risk Management 


Credit Risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the municipality. The 
municipality has a sound credit control and debt collection policy and obtains sufficient collateral, where appropriate, as a means of mitigating 
the risk of financial loss from defaults. The municipality uses its own trading records to assess its major customers. The municipality's 
exposure of its counterparties are monitored regularly. 


Potential concentrations of credit rate risk consist mainly of variable rate deposit investments, consumer debtors, other debtors, bank and cash 
balances. 


Investments/Bank, Cash and Cash Equivalents 

The municipality limits its counterparty exposures from its money market investment operations (financial assets that are neither past due nor 
impaired) by only dealing with Absa Bank, First National Bank and Standard Bank. No investments with a tenure exceeding twelve months are 
made. 


Trade and Other Receivables 

Trade and Other Receivables are amounts owed by consumers and are presented net of impairment losses. The municipality has a credit risk 
policy in place and the exposure to credit risk is monitored on an ongoing basis. The municipality is compelled in terms of its constitutional 
mandate to provide all its residents with basic minimum services without recourse to an assessment of creditworthiness. Subsequently, the 
municipality has no control over the approval of new customers who acquire properties in the designated municipal area and consequently 
incur debt for rates, water and electricity services rendered to them. 


The municipality limits this risk exposure in the following ways, in addition to its normal credit control and debt management procedures: 

* The application of section 118(3) of the Municipal Systems Act (MSA), which permits the municipality to refuse connection of services whilst 
any amount remains outstanding from a previous debtor on the same property; 

+ A new owner is advised, prior to the issue of a revenue clearance certificate, that any debt remaining from the previous owner will be 
transferred to the new owner, if the previous owner does not settle the outstanding amount; 

* The consolidation of rates and service accounts, enabling the disconnecting services for the non-payment of any of the individual debts, in 
terms of section 102 of the MSA; 

* The requirement of a deposit for new service connections, serving as guarantee and are reviewed annually; 

+ Encouraging residents to install water management devices that control water flow to households, and/or prepaid electricity meters. 


There were no material changes in the exposure to credit risk and its objectives, policies and processes for managing and measuring the risk 
during the year under review. The municipality’s maximum exposure to credit risk is represented by the carrying value of each financial asset 
in the Statement of Financial Position, without taking into account the value of any collateral obtained. The municipality has no significant 
concentration of credit risk, with exposure spread over a large number of consumers, and is not concentrated in any particular sector or 
geographical area. 


The municipality establishes an allowance for impairment that represents its estimate of anticipated losses in respect of trade and other 
receivables. 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


Payment of accounts of consumer debtors, who are unable to pay, are renegotiated as an ongoing customer relationship in response to an 


adverse change in the circumstances of the customer in terms of the Credit Control and Debt Collection Policy. 


The municipality does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar 
characteristics. The municipality defines counterparties as having similar characteristics if they are related entities. The credit risk on liquid 


funds is limited because the counterparties are banks with high credit-ratings. 











2020 2019 
R R 
The maximum credit and interest risk exposure in respect of the relevant financial instruments is as 
follows: 
Receivables from Exchange Transactions 239,760,733 202,068,912 
Receivables from Non-exchange Transactions 87,236,302 44,043,161 
Bank, Cash and Cash Equivalents 15,290,313 12,428,393 
Maximum Credit and Interest Risk Exposure 342,287,349 258,540,466 
2020 2019 
R R 
Bank and Cash Balances 
ABSA Bank Ltd 8,285,357 9,597,169 
First National Bank 735,950 1,391,234 
Standard Bank 1,545,969 1,439,989 
Total Bank and Cash Balances 10,567,276 12,428,393 





TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


49. MULTI-EMPLOYER RETIREMENT BENEFIT INFORMATION 


The municipality makes provision for post-retirement benefits to eligible councillors and employees, who belong to different pension schemes. 


Employees belong to a variety of approved Pension and Provident Funds as described below. 
These funds are governed by the Pension Funds Act and include both defined benefit and defined contribution schemes. 


All of these afore-mentioned funds are multi-employer plans and are subject to either a tri-annual, bi-annual or annual actuarial valuation, 
details which are provided below. 


Sufficient information is not available to use defined benefit accounting for the pension and retirement funds, due to the following reasons:- 
(i) The assets of each fund are held in one portfolio and are not notionally allocated to each of the participating employers. 
(ii) | One set of financial statements are compiled for each fund and financial statements are not drafted for each participating employer. 


(iii) | The same rate of contribution applies to all participating employers and no regard is paid to differences in the membership distribution of 
the participating employers. 


It is therefore seen that each fund operates as a single entity and is not divided into sub-funds for each participating employer. 
The only obligation of the municipality with respect to the retirement benefit plans is to make the specified contributions. Where councillors / 


employees leave the plans prior to full vesting of the contributions, the contributions payable by the municipality are reduced by the amount of 
forfeited contributions. 


DEFINED CONTRIBUTION SCHEMES 


Municipal Councillors Pension Fund: 
The scheme is subject to a tri-annual actuarial valuation. The last statutory valuation was performed as at 30 June 2015. 


The statutory valuation performed as at 30 June 2015 revealed that the net assets of the fund were R 2,551.9 (30 June 2012: R 1,371.3) 
million, with a funding level of 101.08% (30 June 2012: 100,45% (as per revised data reconstruction)). The contribution rate paid by the 
members (9%) and Council (18,00%) is sufficient to fund the benefits accruing from the fund in the future. 


The actuaries certified that the Fund was in a sound financial condition as at 30 June 2015, in that the assets of the fund were sufficient to 
cover the accrued service liabilities including the recommended contingency reserves in full. 


National Fund for Municipal Workers 
The last statutory valuation was performed as at 30 June 2015. 


The net assets available for benefits were R 10,050 (2014: R 9,032 ) million. 


The statutory valuation performed as at 30 June 2015 revealed that the assets of the fund amounted to R 10,050,029,000 and the fund had a 
surplus of R 41.8 (30 June 2014: R 9.3) million, with a funding levels of R 100.42% ( 30 June 2014: (100,10%). The contribution rate paid by 
the members (9%) and the municipalities (18%) is sufficient to fund the benefits accruing from the fund in the future. The fund was certified to 
be financially sound. 


SALA Pension Fund: 
The last statutory valuation was performed as at 1 July 2018. 


The statutory valuation performed as at 1 July 2018 revealed that the assets of the fund amounted to R14,298.6 (1 July 2015: R 13,231.2) 
million, with funding levels of 96% (1 July 2015: 100%). The contribution rate paid by the members (9%) and Council (18%). The drop in the 
funding level could be regarded as the result of short term fluctuations and therefore they do not consider it necessary at that stage to reduce 
benefits and/or to increase contribution rates in order to restore the funding level. 


It is the actuary's opinion that : 

- They are satisfied with the investment strategy of the Fund; 

- the nature of the assets is, in their opinion, suitable for the nature of the liabilities of the Fund as defined in the Rules of the Fund; 

- the matching of assets with the liabilities of the Fund is adequate; and 

- the insurance arrangements are appropriate compared to the cover provided can be regarded as financially sound at the valuation date. 


LA Retirement Fund (previously Cape Joint Pension Fund): 


The scheme is subject to an annual actuarial valuation. The last statutory valuation was performed as at 30 June 2018. 


The statutory valuation performed as at 30 June 2018 revealed that the DC section has a funding level of 100% (2017: 100%) and is ina 
sound financial position. The pensioners account was 103.7% funded (30 June 2017: 102.6%) and also is in a sound financial condition at the 
valuation date with a surplus of R 63.4 million. Overall the Fund is in a sound financial condition with a surplus of R 63.0 million and an overall 
funding level of 101.7%. The contribution rate paid by the members is 9,00% and the municipality is 18,00%. 


Consolidated Retirement Fund 


50. 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 
The last statutory valuation was performed as at 30 June 2017. The fund provides defined contribution benefits to its active members and 
deferred members. 


For Contract Employees and Councillors, the Participating Employer contribution rate is 18% of salary. The member contribution rate is 9% of 
salary. 

The statutory valuation performed as at 30 June 2017 revealed the following: 

Members Share Account: The largest of the accounts is the Member's Share Account representing the total Member's Share of the Fund of R 


20.6 billion (30 June 2016: R 20.075). The Member's Share Account of the Fund was in a sound financial condition as at 30 June 2017 with a 
funding level of 100.3% (30 June 2016: 100.5%). 


Reserve Account: The fund maintained R 58 million as at 30 June 2017 in reserve accounts to meet the special death after retirement benefit 
and unforeseen contingencies. 


Pension Account: The Pension Account represents assets of R 653 million set aside to meet pension payments, increases on those payments 
and any bonuses granted to pensioners. The pensioner liability was R 513 million as at 30 June 2017. The Pension Account was in a sound 
financial condition and the funding level increased from 118% as at 30 June 2016 to 127.3% as at 30 June 2017. 

The fund was certified to be in sound financial position as at 30 June 2017. All accounts of the Fund had a funding level (assets divided by 
liabilities) of at least 100%. 

Municipal Workers Retirement Fund (Previously SAMWU National Provident Fund) 

The valuation performed as at 30 June 2008 revealed that the assets of the fund amounted to R 2,455,947 million (30 June 2005: R 1,511,461 


million) with funding levels of 100% ( 30 June 2005: 100%). The contribution rate paid by the members (9%) and the municipalities (18%) is 
sufficient to fund the benefits accruing from the fund in the future. The fund is certified to be financially sound as at 30 June 2008. 


None of the above mentioned plans are State Plans. 


RELATED PARTY TRANSACTIONS 


All Related Party Transactions are conducted at arm's length, unless stated otherwise. 


50.1 Related Party relationships 


Councillors: 
Ward Surname Initials 
1 Poto EE 
2 Daniels M 
3 Phete EEJ 
4 Modise KD 
5 Tshabane IK 
6 Mashila M 
7 Saulus TJ 
Proportional Davids AR 
Proportional Ruiters AJ 
Proportional Julies WC 
Proportional Esau D 
Proportional Swart JJ 
Proportional Mabilo OM 
Directors: 

Surname Initials 
Municipal Manager Mathobela H 
Chief Financial Officer Coakley LR 
Director Corporate Services Nkadimang IC 
Acting Director Technical Services Botha BLK 
Director Community Development Theys JJ 


50.2 Services rendered to Related Parties 
During the year the Municipality rendered services to the following related parties that are related to the Municipality as indicated: 
Rates Service Sundry Outstanding 


Charges Charges Charges Balances 
R R R R 


Year ended 30 June 2020 


Councillors 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


Municipal Manager and Section 57 Personnel 


Total Services 


Executive Mayor (Ward 6) 
Councillor: Proportional 
Councillor: Proportional 
Councillor: Proportional 
Councillor: Proportional 
Councillor: Proportional 
Councillor: Proportional 
Councillor: Ward 1 
Councillor: Ward 2 
Councillor: Ward 3 
Councillor: Ward 4 
Councillor: Ward 5 
Councillor: Ward 7 


Section 57 Personnel: 


Municipal Manager 

Chief Financial Officer 

Acting Chief Financial Officer 
Director Corporate Services 
Director Technical Services 
Acting Directo Corporate Services 
Director Community Development 


Year ended 30 June 2019 


Councillors 


Mashila M 
Davids AR 
Ruiters AJ 
Julies WC 
Esau D 
Swart JJ 
Mabilo OM 
Poto EE 
Daniels M 
Phete EEJ 
Modise KD 
Tshabane IK 
Saulus TJ 


Mathobela H 
Coakley LR 
Moselelane JB 
Nkadimang IC 
Links MC 
Botha BLK 
Theys JJ 


Municipal Manager and Section 57 Personnel 


Total Services 


Executive Mayor (Ward 6) 
Councillor: Proportional 
Councillor: Proportional 
Councillor: Proportional 
Councillor: Proportional 
Councillor: Proportional 
Councillor: Proportional 
Councillor: Ward 1 
Councillor: Ward 2 
Councillor: Ward 3 
Councillor: Ward 4 
Councillor: Ward 5 
Councillor: Ward 7 


Section 57 Personnel: 


Municipal Manager 

Director Corporate Services 
Director Technical Services 
Director Community Development 


Mashila M 
Davids AR 
Ruiters AJ 
Julies WC 
Esau D 
Swart JJ 
Mabilo OM 
Poto EE 
Daniels M 
Phete EEJ 
Modise KD 
Tshabane IK 
Saulus TJ 


Mathobela H 
Nkadimang IC 
Links MC 
Theys JJ 























19,859 128,917 - 252,912 
118 80,987 87,853 29,692 
19,977 209,903 87,853 282,604 
- 9,472 - 1,800 
2,866 14,543 - 85,252 
281 6,185 - -5,297 
3,876 6,185 - 1,507 
3,747 7,874 - 50,725 
6,295 18,086 - 5,595 
z 11,916 - 2,686 

- 7,549 - 629 
551 13,310 - 8,240 
1,613 6,235 - 42,724 
354 6,185 - 775 
118 13,778 - 54,052 
157 7,597 j 4,224 

- 6,185 40,547 5,789 

- 30,113 6,758 9,425 
118 10,665 - 5,036 

- 34,023 40,547 9,442 
19,977 209,903 87,853 282,604 

Rates Service Sundry Outstanding 
Charges Charges Charges Balances 
R R R R 

717 8,376 - 268,205 

- 3,066 6,375 9,895 

717 11,442 6,375 278,100 

- 464 - 239 

139 1,374 - 66,887 
- 1,036 - (1,380) 

- 464 - 15,652 

- 556 - 59,930 

577 464 - 3,223 

- 610 - 1,859 

- 577 - 1,464 

- 782 - 8,091 

- 515 - 60,462 

- 464 - 464 

- 1,073 - 46,251 

- 479 - 5,063 

- 464 3,188 -201 

- 464 - 2,172 

- 2,139 3,188 7,924 
717 11,921 6,375 278,100 





The services rendered to Related Parties are charged at approved tariffs that were advertised to the public. No Bad Debts were written off or 
recognised in respect of amounts owed by Related Parties. 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


The related party note has been restated to reflect the values of the levies for the year for the Property Rates, Service Charges and Other 
Receivables for the year and not the closing balances at year end. 


50.3 Loans granted to Related Parties 


In terms of the MFMA, the Municipality may not grant loans to its Councillors, Management, Staff and Public with effect from 1 July 2004. No 
loans were granted to Councillors, Management, Staff and Public by Frances Baard District Municipality. 


50.4 Compensation of Related Parties 


Compensation of Key Management Personnel and Councillors is set out in Appendix G, to the Annual Financial Statements. 
2020: 


Remuneration of the family of key management personnel and councillors that are employed at the municipality: 


Directors Names Family Member Department Relationship Remuneration 

Director Corporate Services Nkadimang IC Nkadimang, KB Community Wife 323,697.03 
Councillors Names Family Member Department Relationship Remuneration 

Executive Mayor (Ward 2) Daniels M Daniels S Technical Husband 141,829.58 
Councillors Names Family Member Department Relationship Remuneration 

Councillor (Proportional) Davids AR Williams SF Finance Cousin 443,836.73 


2019: 


Remuneration of the family of key management personnel and councillors that are employed at the municipality: 


Directors Names Family Member Department Relationship Remuneration 

Director Corporate Services Nkadimang IC Nkadimang, KB Community Wife 288,377.52 
Councillors Names Family Member Department Relationship Remuneration 

Executive Mayor (Ward 2) Daniels M Daniels S Technical Husband 125,824.92 
Councillors Names Family Member Department Relationship Remuneration 

Councillor (Proportional) Davids AR Williams SF Finance Cousin 362,788.20 


50.5 Transactions with key management personnel or close family members of persons in the service of the state 


The municipality traded with the following companies and individuals, which are considered to be Related Parties: 


2020: 
Company/Individual Tsantsabane Department Relation of Designation Amount of award 
employee Tsantsabane employee R 
to company owner/(s) 

M Suez Trading Trading Susan Moetsi Mayor's Office Owner is a Cleaner/Gener - 

Municipal al Worker 

Employee 
Molema M Caterings Karabo Molema Corperate Owner is a Archieve Clerk - 

Services Municipal 

Employee 

Reakopa General Trading Lesego Morwe Executive and Owner is a Speaker's - 
& Gladys Council Municipal Drive and 
Witbooi Employee Secretary of 
Caren Jo Couture (Pty)Ltd Theys JJ Community Husband Director 20,010.00 
Services Community 
Services 

Green Tag Recycling Waste M Daniels Mayor's Office Owner is a Councillor - 
Management Municipality 

Councillor 
Tsantsabane Recycling Waste M Daniels Mayor's Office Owner is a Councillor - 
Management and Civil (Pty) Ltd Municipality 


Councillor 


51. 


Janline General Trading t/a Hi-Q 
Postmasburg 


2019: 
Company/Individual 


M Suez Trading Trading 


Molema M Caterings 


Reakopa General Trading 


Caren Jo Couture (Pty)Ltd 


Green Tag Recycling Waste 
Management 


Tsantsabane Recycling Waste 
Management and Civil (Pty) Ltd 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 


M Daniels 


Tsantsabane 
employee 


Susan Moetsi 


Karabo Molema 


Lesego Morwe 
& Gladys 
Witbooi 


Theys JJ 


M Daniels 


M Daniels 


Mayor's Office Owner is a Councillor 148,356.79 
Municipality 
Councillor 
Department Relation of Designation Amount of award 
Tsantsabane employee R 


Mayor's Office 


Corperate 
Services 


Executive and 
Council 


Community 
Services 


Mayor's Office 


Mayor's Office 


to company owner/(s) 


Owner is a Cleaner/Gener 4,600.00 
Municipal al Worker 
Employee 
Owner is a Archieve Clerk - 
Municipal 
Employee 
Owner is a Speaker's - 
Municipal Drive and 
Employee Secretary of 

Municipal 
Husband Director 

Community 

Development 
Owner is a Councillor 25 950.00 
Municipality 
Councillor 
Owner is a Councillor 1,270,087.00 
Municipality 
Councillor 


The transactions were concluded in full compliance with the municipality's Supply Chain Management Policy and the transactions are 


considered to be at arm's length. 


50.6 Entities under the control of management or councillors 


Designation 


Chief Financial Officer 
Councillor 

Councillor 
Cleaner/General Worker 
Archieve Clerk 
Councillor 

Councillor 

Driver 

Secretary 

Director (wife) 
Director (wife) 
Councillor 

Councillor 

Municipal Manager 
Municipal Manager 
Councillor 

Councillor 

Councillor 

Councillor 


CONTINGENT LIABILITIES 


Official 
Surname Initials 
Coakley L 
Maria D 
Davids AR 
Moetsi S 
Molema K 
Daniels M 
Daniels M 
Morwe L 
Witbooi G 
Theys J 
Theys J 
Phete EEJ 
Esau D 
Mathobela H 
Mathobela H 
Mabilo OM 
Mabilo OM 
Mabilo OM 
Mabilo OM 


Entity 

C2M Investments (Pty) Ltd 

Jayline General Trading t/a Hi-Q 

ARD Mining Services, ARD Advisory Services & Postm 
Molema M Caterings 

Reakopa General Trading 

Tsantsabane Recycling Waste Management and Civil ( 
Greentag Recycling 

Caren Jo Couture (Pty)Ltd 

Caren Jo Couture (Pty)Ltd 

Caren Jo Couture (Pty)Ltd 

Rose Gold Projects and Events 

Keorapetsi Avenue & Gaoba Consultants and General 
Tsantsa Test Pty Ltd 

Africa Daiz CC 

MNN Resources CC 

Bopelo Jwa Ga Mabilo 

TCF Funeral 

Olemima (Pty) Ltd 

Mabamosa (Pty Ltd 


Contingent Liabilities arose due to various claims brought against the Municipality. All the 
claims are being contested based on legal advice. The likelihood of successfully defending 
the claims, as well as the timing and possible costs thereof are uncertain and cannot be 


determined at this time. 


51.1 Court Proceedings: 


21,858,405 21,858,405 





52. 


53. 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 

(i) | Breach of Contract: 
The municipality is involved in litigation with AXSYS Infrastructure (Pty) Ltd / 20Twenty 
Projects (Pty) Ltd relating to service agreement termination and non payment by the 
municipality. Both claims emanates from a contract concluded with the Municipality and 
Axys/20Twenty on 1 December 2014 for construction work to the value of 30 million rand. 
The tender was awarded to Axsys who subsequently changed its name to 20 Twenty 
Projects. The claim for 20Twenty is for request for issue of payment certificates other than for 
construction services rendered under the name of Axys. These matters are still pending in the 
Northern Cape High Court and the outcomes are still uncertain. 














The claim from AXSYS Infrastructure (Pty) Ltd is for approximately R 9,000,000 (2019: R 9,320,000 9,320,000 

9,000,000) plus cost of R 320,000. 

The claim from 20 Twenty Projects (Pty) Ltd is for approximately R 1,100,000 plus cost of R 1,350,000.00 1,350,000.00 

250,000. 

(ii) | Breach of Contract: 

The municipality and the Minister of Water & Sanitation is involved in litigation with Sedibeng 11,188,405 11,188,405 

Water relating to non payment by the municipality with regards to water supplied to 

Olifantshoek which now falls under municipal boundaries of Gamagara municipality after the 

demarcation process. The Demarcation board amalgamated Olifantshoek into the Gamagara 

Municipality as from May 2006 (Election date). 

The case is pending and till date no judgement has been handed down. The municipality's 

lawyers indicated that the prospects on the merits favour the municipality. The claim is for R 

10,788,404.75 with additional costs and disbursements of +- R 400,000 which might arise in 

relation to the case. The outcome of the matter is still uncertain. 

CONTINGENT ASSETS 

The municipality was not engaged in any transaction or event during the year under review involving 

Contingent Assets. 

IN-KIND DONATIONS AND ASSISTANCE 

Various donations in a variety of formats were made to the municipality during the year under review: 

Description / Donor Reference / Nature / Project Value Value 

Cash Contributions: Note 24.3.9 

Kolomela Mine Donations in Cash 3,132,658 2,384,683 

Capital Contributions: Note 8 

Assmang Iron Ore (Beeshoek) Security Installations at Pump Stations - 1,597,531 

Kolomela Mine Corrective Maintenance Wastewater Treatment Plant 986,239 - 

Kolomela Mine Upgrading of Infrastructure at Show Grounds 175,394 - 

Kolomela Mine Repairs to Sewer Pump Stations - 2,452,511 

Kolomela Mine Upgrade Maremane Boreholes - 1,280,168 

Kuma Iron Ore Construction of New Road - 6,294,574 
1,161,633 11,624,785 

In-kind Contributions (Operational Expenses): 

Assmang Iron Ore (Beeshoek) Covid-19 Public Areas Sanitising 468,342 - 

Assmang Iron Ore (Beeshoek) Operational Assistance Landfill Sites - 1,265,687 

Kolomela Mine Corrective Maintenance Wastewater Treatment Plant 918,408 - 

Kolomela Mine Maintenance of Landfill Sites 2,116,500 - 

Kolomela Mine Upgrading of Infrastructure at Show Grounds 227 669 31,000 

Kolomela Mine Repairs to Sewer Pump Stations - 355,184 

Kolomela Mine Rental of Water Truck 1,304,049 - 

Lesedi Power Project Covid-19 Infection Control 14,452 - 

PMG Mining (Pty) Ltd Covid-19 Awareness Campaign 232,800 - 

PMG Mining (Pty) Ltd Madiba Month Drive 2019 88,347 - 

PMG Mining (Pty) Ltd Madiba Month Drive 2020 232,348 - 

PMG Mining (Pty) Ltd Materials - Hand Sanitisers 217,391 - 

PMG Mining (Pty) Ltd Rehabilitation of Roads 350,000 - 

PMG Mining (Pty) Ltd School Campaign 29,559 - 
6,199,865 1,651,871 

Total Donations and In-kind Assistnace Received 10,494,156 15,661,339 

















54. 


55. 


56. 


57. 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 








PRIVATE PUBLIC PARTNERSHIPS 


The municipality was not a party to any Private Public Partnerships during the year under review. 


COMPARATIVE FIGURES 


The comparative figures were restated as a result of the effect of Prior Period Errors (Note 40). 


EVENTS AFTER THE REPORTING DATE 
56.1 National State of Disaster issued for the COVID-19 Pandemic: 


A national state of disaster was declared on 15 March 2020 under the Disaster Management Act (Act No 57 of 2002) as result of the COVID- 
19 pandemic. 


56.2 Submission of Annual Financial Statements: 


Sections 126(1) and (2), 127(1) and (2), 129(1) and 133(2) of the Local Government Municipal Finance Management Act, 2003 (Act No 56 of 
2003) states that the Accounting Officers for municipalities and municipal entities must submit financial statements within two months after the 
end of the financial year to the Auditor-General for auditing. 


An exemption from the sections included the MFMA was issued in Government Gazette number 43582. This stated that the institution must 
comply with two months after the deadline in the applicable section. 


This resulted in the date of submission of the financial statements being moved to 31 October 2020 (the previous statutory submission date 
being 31 August 2020). GRAP 14 on Events after the Reporting Date are all events, both favourable and unfavourable, that occur between the 
reporting date (30 June 2020) and the date when the financial statements are authorised for issue (two months after the financial statements 
were issued to the auditors). The period between the reporting date and the date on which the financial statements are authorised for issue, is 
thus extended due to the exemption provided above. 


56.3 2020/21 Adjustments Budget: 


The 2020 National Supplementary Budget was delivered by the Minister of Finance in Parliament on the 24th of June 2020. The 2020 
Supplementary Budget responds to the Covid-19 pandemic and its impact on the economy. This include the R20 billion allocation for local 
government announced by the President to assist in funding COVID-19 expenditure. This allocation consists of R11 billion added to the local 
government equitable share and just over R9 billion that was repurposed for the provision of water and sanitation and for sanitising public 
transport facilities within existing grant allocations to local government. In terms of Section 28(2)(b) of the Municipal Finance Management Act, 
2003 (Act No. 56 of 2003) (MFMA) and Section 23(3) of the municipal Budget and Reporting Requirements (MBRR), municipalities must adjust 
their 2020/21 MTREF budgets to account for revised funding allocations that were made available. 


The municipality used this adjustments budget to reprioritise the 2020/21 budget to respond to the impact of the COVID-19 pandemic on the 
budget. 


The following adjustments to Grant Funding were received: 


i 2020/21 
se coe Adjustments Adjusted 
ocation Allocation 
R R R 
Equitable Share 42,497,000 6,028,000 48,525,000 
Integrated National Electrification Programme Grant 1,800,000 (1,800,000) - 
Municipal Systems Improvement Grant 1,600,000 (265,000) 1,335,000 
Northern Cape Arts and Cultural Council 1,395,000 (127,000) 1,268,000 
Total Adjustments to Grant Funding 3,836,000 


GOING CONCERN ASSESSMENT 


The COVID-19 pandemic continues to have a devastating impact on the macro economy and a significant component of the institutions which 
operate therein. The municipality has not been immune to the impact of the pandemic. The impact and duration of the COVID-19 pandemic in 
the Province and Tsantsabane’s jurisdiction is uncertain at the date of this submission. Management of the municipality is however of the 
opinion that regardless of the possible effect of the COVID-19 pandemic, the municipality will continue to operate for the foreseeable future, 
which is usually regarded as at least the next 12 months from the reporting date, however not limited to this timeframe. 


Management also considered the following matters in relation to the Going Concern position of Tsantabane Local Municipality: 


58. 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 
(i) On 23 June 2020 Council adopted the 2020/21 to 2022/23 budget. This three-year Medium Term Revenue and Expenditure Framework 
(MTREF), fund the elementary operations of the Municipality to support the ongoing delivery of municipal services to residents, reflected that 
the Budget was cash-backed over the three-year period. 


(ii) |The municipality's Budget is subjected to a very rigorous independent assessment process to assess its cash-backing status before it is 
ultimately approved by Council. 


(iii) Strict daily cash management processes are embedded in the municipality's operations to manage and monitor all actual cash inflows and 
cash outflows in terms of the cash-flow forecast supporting the budget. The cash management processes is complemented by monthly 
reporting, highlighting the actual cash position, including the associated risks and remedial actions to be instituted. 


(iv) As the municipality has the power to levy fees, tariffs and charges, this will result in an on-going inflow of revenue to support the on- 
going delivery of municipal services. Certain key financial ratios, such as liquidity, cost coverage, debtors’ collection rates and creditors’ 
payment terms are closely monitored and the necessary corrective actions instituted. 


Taking the aforementioned into account, Management has prepared the Annual Financial Statements on the Going Concern Basis. 


COVID-19 EXPENDITURE 


Background Information 

On 31st December 2019 the government in Wuhan, China, confirmed that health authorities were treating dozens of pneumonia cases of 
unknown cause. A few days later, Chinese researchers identified a new virus which had infected many people in Asia, but at that point in time 
there was no evidence that the virus was readily spread by humans. The first death in China as a result of the virus was reported on 11th 
January 2020, shortly before one of China’s biggest holidays whereby millions of people travelled across the country. According to the first 
situation report by World Health Organisation (W.H.O), the first confirmed cases outside China had occurred in Japan, South Korea and 
Thailand by 20th January 2020. The next day the USA reported their first confirmed case where a man in his 30s developed symptoms after 
returning from his trip to Wuhan, China. 


A “public health emergency of international concern” was officially declared by the W.H.O. on 30th January 2020. On 11th February 2020 the 
W.H.O. proposed that ‘Covid-19’ be the official name for the disease that the coronavirus causes, an acronym that stands for coronavirus 
disease 2019. On 14th February 2020 France announced a death by from coronavirus. This was the fourth death from the virus outside of 
mainland China. On 23rd February 2020 Italian officials locked down 10 towns after a cluster of cases emerged near Milan. The World Health 
Organisation declared the COVID-19 outbreak as a global pandemic on 11th March 2020. 


COVID-19 in South Africa 

Although the coronavirus was international news since December 2019, it was only on 5th March 2020 that the South African National Institute 
for Communicable Diseases confirmed that a suspected case of COVID-19 had tested positive. On 23rd March 2020 President Cyril 
Ramaphosa announced the nationwide lockdown. On 30th March 2020 the Minister of Finance issued a conditional Exemption Notice in terms 
of section 177(1)(b) of the Municipal Finance Management Act, 2003 (Act No. 56 of 2003) (MFMA), in order to facilitate and enable the 
performance of legislative responsibilities by municipalities and municipal entities during the national state of disaster. 


Thus, there will not be any prior year information regarding expenditure in lieu of COVID-19. 
The table below indicates the total COVID-19 response expenditure (excluding VAT) for the period ending 30 June 2020: 


COVID-19 EXPENDITURE 




















2020 2019 
R R 

Capital Expenditure 

Machinery and Equipment 20,160 - 
Total Capital Expenditure 20,160 E 
Operating Expenditure 

Employee Related Costs - Protective Clothing 17,400 - 
Contracted Services - Outsourced: Hygiene Services 468,342 - 
Inventory Consumed - Consumables 282,172 - 
Operating Leases - Machinery an Equipment 94,960 - 
Total Operating Expenditure 862,874 $ 
Total COVID-19 Expenditure 883,034 5 








The table below indicates the Funding Sources for the total COVID-19 response expenditure (excluding VAT) for the period ending 30 June 
2020: 


COVID-19 FUNDING 
2020 2019 


Funding Sources for COVID-19 Expenditure 
Disaster Management Grant 89,000 - 
Public Contributions 750,514 - 


TSANTSABANE LOCAL MUNICIPALITY 
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 
Own Revenue 43,520 





Total Funding for COVID-19 Expenditure 883,034 











APPENDIX A 
TSANTSABANE LOCAL MUNICIPALITY 
SCHEDULE OF EXTERNAL LOANS AS AT 30 JUNE 2020 





















































Original | Interest | __Loan Balance at Received | Redeemed) | Balance at 
Details Loan during Written Off 
Amount Rate | Number 30 June 2019 | the Period | during Period | 30 June 2020 
R R R R R 

CAPITAL LEASE LIABILITIES 
Kwane Capital (Pty) Ltd (Kwane Fleet) 8,886,996 | 9.25% 28/02/2018 293,160 š à 293,160 
VETA investments (smart meters) 14,168,685 | 24.00% Not fixed 8,773,222 1,521,451 3,349,444 | 6,945,229 
Sanpaul Trading Enterprise (fleet) 9,426,420 | 12.00% 28/02/2022 7,518,790 2,496,723 | 5,022,067 
Total Capital Lease Liabilities 34,611,795 16,585,172 1,521,451 5,846,167 | 12,260,456 
TOTAL EXTERNAL LOANS 37,312,205 16,585,172 1,521,451 5,846,167 | 12,260,456 








Grants and Subsidies Received 


APPENDIX F 


TSANTSABANE LOCAL MUNICIPALITY 
DISCLOSURE OF GRANTS AND SUBSIDIES IN TERMS OF SECTION 123 OF MFMA, 56 OF 2003 




















Name of Organ Compliance | Reason for 
Name of Grant of State or Quarterly Receipts Quarterly Expenditure Grants and Subsidies Delayed / Withheld Reason for Delay | to Revenue Non- 
Municipal Entity ! Withholding of | Act (*) compliance 
Funds See below 
Sept Dec March June Sept Dec March June Sept Dec March June Yes / No 
Underspending of 
Equitable Share Nat Treasury 16,265,000 | 1,067,000 | 14,538,000} - 16,265,000 | 1,067,000 | 14,538,000} - - 7,167,000 - - conditional grants Yes N/A 
FMG Nat Treasury 2,880,000 = - - 2,132,285 151,911 73,827 521,977 - = - - N/A Yes N/A 
MIG Projects MIG 818,000 | 5,479,000 | 9,245,000 - 2,007,373 | 5,413,068 | 2,689,726 | 1,078,094 = - - = N/A Yes N/A 
INEP Nat Treasury - 2,000,000 - - - - - - - - - - NIA Yes NIA 
WSIG Nat Treasury - - - - - - - - - - - - NIA Yes NIA 
EPWP Incentive Grant Province 283,000 509,000 338,000 - 344,727 627,133 158,139 - - - - - N/A Yes N/A 
Disaster Relief Grant Nat Treasury - - - 89,000 - - - 89,000 - - - - N/A Yes N/A 
LG SETA Mandatory Grant Province - 49,469 60,179 29,425 - 139,074 - - - = - - N/A Yes N/A 
Library Province - 597,000 597,000 - 331,437 331,437 331,437 331,437 - - - - N/A Yes N/A 
Total Grants and Subsidies Received 20,246,000 | 9,701,469 | 24,778,179| 118,425.08| 21,080,822 | 7,729,623 | 17,791,129| 2,020,508 = 7,167,000 ~ E 










































































0 





APPENDIX G 
TSANTSABANE LOCAL MUNICIPALITY 
STATEMENT OF REMUNERATION OF MANAGEMENT 


























30 June 2020 
Incumbent Basic Annual Other Transport | Cellphone Housing An Total 
R R R R R R R R 
Mayor 
M Mashila (Ward 6) 581,297 9,768 193,766 40,800 825,631 
Councillors 
EE Poto (Ward 1) 440,128 3,600 146,708 40,800 631,236 
M Daniels (Ward 2) 183,960 3,600 61,320 40,800 289,680 
EEJ Phete (Ward 3) 465,038 24,563 155,013 40,800 685,414 
KD Modise (Ward 4) 183,960 3,600 61,320 40,800 289,680 
IK Tshabane (Ward 5) 236,082 3,600 78,694 40,800 359,176 
TJ Saulus (Ward 7) 183,960 7,661 61,320 40,800 293,741 
AR Davids (Proportional) 183,960 3,600 61,320 40,800 289,680 
AJ Ruiters (Proportional) 183,960 3,600 61,320 40,800 289,680 
WC Julies (Proportional) 183,960 3,600 61,320 40,800 289,680 
D Esau (Proportional) 183,960 26,531 61,320 40,800 312,611 
JJ Swart (Proportional) 183,960 3,600 61,320 40,800 289,680 
OM Mabilo (Proportional) 440,128 3,600 146,708 40,800 631,236 
Total for Councillors 3,634,353 - 100,923 | 1,211,449 530,400 - - 5,477,125 
Municipal Manager 
H Mathobela 737,457 3,600 301,647 26,400 31,605 1,100,709 
Acting Chief Financial Officer 
JB Moselelane (Acting from 1 August 2018 
to July 2019) 
140,585 | 29,636 15,951 1,000 1,816 188,987 
Chief Financial Officer 
LR Coakley (Appointed from August 2019) 446,279 3,300 226,685 17,600 74,380 768,243 
Director: Corporate Services 
IC Nkadimang 719,953 3,600 326,209 19,200 21,175 1,090,138 
Acting Director: Technical Services 
BLK Botha (Acting from December 2018) 1,001,556 | 29,636 98,666 9,600 10,893 1,150,351 
Director: Community Services 
JJ Theys 635,253 3,600 | 403,256 19,200 21,175 1,082,484 
3,681,082 | 59,272 14,100 | 1,372,414 93,000 161,044 - 5,380,912 
Total for Management 7.315.435 | 59.272 115.023 | 2.583.863 623.400 161,044 - 10,858,037 | 
30 June 2019 
x š Any 
Basic Annual Other Travel Cellphone Housing Total 
Incumbent i Other 5 
Salaries Bonuses |Allowance |Allowances |Allowances | Allowances Benefits Remuneration 
R 
Mayor 
M Daniels (Ward 2) (From July 2018 to 403,058 6,370 134,352 27,200 570,980 
M Mashila (Ward 6) (From March 2019 till 193,766 3,704 64,589 13,600 275,658 
Councillors 
EE Poto (Ward 1) 440,126 3,600 146,708 40,800 631,234 
M Daniels (Ward 2) 61,320 4,762 20,440 13,600 100,122 
EEJ Phete (Ward 3) 477,459 18,191 166,092 40,800 702,542 
KD Modise (Ward 4) 183,960 3,600 61,320 40,800 289,680 
IK Tshabane (Ward 5) 223,553 11,662 74,518 40,800 350,532 
M Mashila (Ward 6) 122,640 2,400 40,880 27,200 193,120 
TJ Saulus (Ward 7) 183,960 11,143 61,320 40,800 297,223 
AR Davids (Proportional) 183,960 3,600 61,320 40,800 289,680 
AJ Ruiters (Proportional) 183,960 11,143 66,158 40,800 302,061 
WC Julies (Proportional) 183,960 3,600 61,320 40,800 289,680 
D Esau (Proportional) 183,960 21,288 63,384 40,800 309,431 























JJ Swart (Proportional) 
OM Mabilo (Proportional) 


Total for Councillors 


Municipal Manager 
H Mathobela 


Acting Chief Financial Officer 
A Kooverjee (July 2018) 
JB Moselelane (Acting from 1 August 2018 


Director: Corporate Services 
IC Nkadimang 


Director: Technical Services 

MC Links 

BLK Botha (Acting from December 2018) 
Ditrector: Community Services 


JJ Theys 


Total for Senior Managers 


Total for Management 


TSANTSABANE LOCAL MUNICIPALITY 


APPENDIX G 


STATEMENT OF REMUNERATION OF MANAGEMENT 




















183,960 3,600 61,320 40,800 289,680 
436,021 3,600 145,340 40,800 625,760 
3,645,663 - | 112,263 | 1,229,061 530,400 z z 5,517,384 
784,069 3,600 297,688 26,400 32,799 1,144,556 
57,010 | 28,505 300 24,704 1,600 1,765 80,139 194,023 
897,563 98,868 5,500 9,432 1,011,363 
779,587 3,600 326,216 19,200 21,175 1,149,778 
42,387 600 67,054 3,200 3,529 36,097 152,867 
581,140 67,829 5,600 5,967 660,536 
635,650 3,600 | 403,853 19,200 21,175 1,083,478 
3,777,406 | 28,505 11,700 | 1,286,212 80,700 95,842 | 116,236 5,396,601 

7.423.069 | 28.505 | 123.963 | 2.515.273 611.100 95.842 | 116.236 | 10.913.985 |