Notes to the Annual Financial Statements
34. Contingencies (continued) 28. Afriforum
Afriforum has taken the Municipality to court for lack of services. The municipality is defending the case. Technical Services has been alerted of this case and they have in turn written a report in that regard.
29. Sebata Sebatana
Sebata Sebatana are litigating against the Municipality in that they want to interdict the Municipality to pay into the account of the joint venture. The Municipality is defending the matter.
30. Mathuba Shonisani Esther
Mathuba Shonisani Esther is claiming pension benefits from the Municipality in that she claims that her husband was working for the Municipality and she should therefore benefit. The municipality is defending the matter.
31. Raduvha Joseph Thinavhuyo (VDM Driver)
Mr Raduvha Joseph Thinavhuyo was involved in a motor vehicle accident. The vehicle that he was driving does not belong to him but the Municipal Council. The owner of the other car is litigating against Mr Raduvha abd the Municipality
32. Nkuna Jan Wisani
The applicant has instituted a notice of motion for an order to rescind a judgment made in 2013. The judgment was about the application for claiming a portion of land in the Malamulele Township which is already proclaimed as such.
33. Victorious Chartered Accountants
The VCA has written letters to the Municipality requesting the Municipality that the Vat recovery Bid be halted as the Bid has prescribed.
34. Maluleke Gift
The Vhembe District Municipality has received a Notice of Motion from Maluleke Gift that he must be paid Pension and Interest from Municipal Gratuity Fund. The Municipality has so far issued a notice to abide as the notice is not directed to the
Municipality but joined as the interested party.
35. Risk management Financial risk management
The municipality's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk.
Liquidity risk
Liquidity risk is the risk that the municipality will encounter in raising funds to cover future commitments. The municipality manages the liquidity risk through an ongoing review of future commitments and credit facilities.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, municipality treasury maintains flexibility in funding by maintaining availability under committed credit lines.
The municipality's risk to liquidity is a result of the funds available to cover future commitments. The municipality manages liquidity risk through an ongoing review of future commitments and credit facilities.
Annual Financial Statements for the year ended 30 June 2019
Notes to the Annual Financial Statements
Figures in Rand 2019 2018
35. Risk management (continued) Credit risk
Credit risk consists mainly of cash deposits, cash equivalents, derivative financial instruments and trade debtors. The
municipality only deposits cash with major banks with high quality credit standing and limits exposure to any one counter-party. Trade receivables comprise a widespread customer base. Management evaluated credit risk relating to customers on an ongoing basis. If customers are independently rated, these ratings are used. Otherwise, if there is no independent rating, risk control assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the board. The utilisation of credit limits is regularly monitored. Sales to retail customers are settled in cash or using major credit cards. Credit guarantee insurance is purchased when deemed appropriate.
No credit limits were exceeded during the reporting period, and management does not expect any surplus from non- performance by these counterparties.
36. Unauthorised expenditure Opening balance
Incurred during the year Condonement
67 4 194 388 1 053 400 509 571 150 588 674 194 388
-[1 053 400 509)
1 245 344 976 67 4 194 388 During the current year and the prior year the municipality incurred unauthorised expenditures. In terms of Section 32 of the MFMA the council must appoint a committee to investigate these. Council has appointed the Municipal Public Accounts Committe (MPAC) to carry out these investigations. The investigations are still underway.
37. Fruitless and wasteful expenditure Opening balance as previously reported Correction of Prior Period Errors
Add: Fruitless and Wasteful Expenditure - Current Less: Amount Written Off (Condoned)
1 219118 54 729 211 (15 751 807) 861 450 1219118
(38 977 404) 2 080 568 1 219118 During the year and the prior year the municipality incurred unauthorised, irregular and fruitless expenditures. In terms of Section 32 of the MFMA the council must appoint a committee to investigate these. Council has appointed the Municipal Public Accounts Committee (MPAC) to carry out the investigations. The investigations are still underway.
38. Irregular expenditure Opening balance
Correction of Prior Period Error
Add: Irregular Expenditure -Current Year
Less: Amounts Written of and Condoned (Prior year)
Incidents/cases reported in the current year include those listed below Preference Point System incorrectly applied
Three written quotations not invited No valid contracts for services
Contracts awarded to suppliers in the service of the state Bid not publicly advertised/competitive bidding not invited
52 793 393 882 090 784 - (237 844 818) 30 231 714 52 793 393
- (644 245 966) 83 025 107
30 231 714 30 231 714
52 793 393
4 216 385 18 509 12 564 047 1419519 34 574 932 52 793 392
Annual Financial Statements for the year ended 30 June 2019
Notes to the Annual Financial Statements
Figures in Rand 2019 2018
38. Irregular expenditure (continued) Details of irregular expenditure - current year
During the current year and the prior year the municipality incurred irregular expenditures. In terms of section 32 of the MFMA, the council must appoint a committee to investigate these. Council has appointed the Municipal Public Accounts Committee (MPAC) to investigate. Investigations are still underway.
39. Additional disclosure in terms of Municipal Finance Management Act SAL GA
Current year subscription I fee Amount paid - current year
Material losses Water losses Water
5 522 680 (5 522 680)
204 153 887
4 942 786 (4 942 786)
68 761 977
Water losses are caused by leakage on transmission and distribution mains, leakage on service connections up to the point of customer meter.
Water loss percentages are 39.3% (2018/2019) and 14.8% (2017/2018).
Audit fees
Current year subscription I fee Amount paid -current year
PAYE and UIF Opening balance
Current year subscription I fee Amount paid - current year Amount paid -previous years
7 130 225 (7 130 225)
6 753 483 73 993 271 (67 892 145)
(6 753 483) 6 101 126
3 625 685 (3 625 685)
65 789 238 (59 035 755)
6 753 483 The balance represents PAYE and UIF deducted from the June 2019 payroll. These amounts were paid during July 2019.
Pension and Medical Aid Deductions Current year subscription I fee
Amount paid - current year
35 163 283 (35 163 283)
94 205 155 (94 205 155)
The balance represents Pension and Medical aid contributions deducted from employees in the June 2019 payroll as well as councillors' contributions to Pension and Medical Aid Funds.These amounts were paid in July 2019.
VAT
Annual Financial Statements for the year ended 30 June 2019
Notes to the Annual Financial Statements
Figures in Rand 2019
39. Additional disclosure in terms of Municipal Finance Management Act (continued)