MID-YEAR BUDGET & PERFORMANCE ASSESSMENT REPORT …€¦ · As the Mayor of the Municipality, I...

MID-YEAR BUDGET & PERFORMANCE ASSESSMENT REPORT FOR 2019/20 FINANCIAL YEAR 1

UMHLABUYALINGANA MUNICIPALITY

2O19- 2020 MID-YEAR BUDGET & PERFORMANCE

ASSESSMENT REPORT

UMHLABUYALINGANA LOCAL MUNICIPALITY

MID-YEAR BUDGET & PERFORMANCE ASSESSMENT REPORT

FOR 2019/20 FINANCIAL YEAR




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Table of

Contents PART 1 ................................................................................................................................................................... 3

Corporate statement ................................................................................................ Error! Bookmark not defined.

Strategic Objectives ................................................................................................. Error! Bookmark not defined.

MAYOR’S REPORT ................................................................................................................................................ 3

Council Resolution (Annexure A) ............................................................................................................................ 4

Legislative Background/Executive Summary .......................................................................................................... 5

Finance Department ............................................................................................ Error! Bookmark not defined.

COMMUNITY SERVICES DEPARTMENT ....................................................................................................... 10

TECHNICAL SERVICES .................................................................................................................................. 13

MANAGEMENT ................................................................................................................................................ 16

CORPORATE SERVICES DEPARTMENT ......................................................... Error! Bookmark not defined.

ORGANISATIONAL SCORECARD-ANNEXURE ................................................................................................. 22

RECOMMENDATIONS BY THE ACCOUNTING OFFICER ................................................................................. 26

PART B................................................................................................................................................................. 28

Monthly Budget Statement Analysis ..................................................................................................................... 28

Quality Certificate .................................................................................................................................................. 45




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PART 1

MAYOR’S REPORT Our duty as political principals of the municipality is to ensure meaningful contribution in the eradication of the three social

ills namely: Poverty, unemployment and inequality in our municipal area. This can only be achieved through playing

constructive oversight role over administration in their performance in the implementation of council approved service

delivery budget and implementation plans.

As the Mayor of the Municipality, I take pride in presenting this mid- year report which reflects on the performance, both

service delivery and budget, for the past two quarters of the 2019/2020 financial year. In terms of Local government:

municipal performance Regulations 2001 and 2006, it is a legislative requirement that we report on the institutional

performance in terms of Regulation 2001. In accordance with the Council approved organizational scorecard mid- year

targets, the municipality had set itself 74 targets. The overall performance as at 31 December 2019 depicts a good picture

which indicates 65% overall achievement of targets. This could not be achieved without cooperation between the current

political leadership and dedicated administration. I am hopeful that as we approach the end of our financial year we will

maintain this performance or even improve it for the better for the benefit of the current and future generations of

uMhlabuyalingana.

Finally, I would like to take this opportunity to thank the members of the public who are continuously supportive and

understanding in all aspects with one intention, to have a better future for all.

Councillor NS Mthethwa

Mayor: uMhlabuyalingana Municipality




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Council Resolution (Annexure A)




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Legislative Background

Section 72 of the MFMA requires the accounting officer to prepare and submit a report on the performance of the

municipality during the first half of the financial year. The report must be submitted to the Mayor, National Treasury as

well as the relevant Provincial Treasury. As with all other reports this is a crucial report for the Council to consider Mid-

Year Performance and what adjustments should be made, if necessary.

This report is part of the requisite statutory and governance compliance. Regulation 13 of Municipal Planning and

Performance Management Regulations, 2001 read together with Regulations 33 and 34 of Municipal Budget and

Reporting Regulations regulate specifically in-year reporting and Mid-Year Review Report. The report must cover both

financial information (budget & expenditure) and core-delivery programmes (service delivery) information; and present

such information in an integrated fashion. What was planned at the start of the financial year (July 2019) what has been

achieved at the close of December 2019? What can we learn from the experience of the last six months? Any challenges

that were not contemplated at the time of the compilation of SDBIP!

Municipal Performance Regulations of 2006 also requires that there must be processes of performance panning, review

of the municipality’s performance.

Sections 41and 44 of Municipal Systems ACT, 2000 (MSA) read together with section 72 of Municipal Finance

Management Act, 2003 (MFMA) lay the statutory framework for the Municipal Performance Management System (PMS)

and performance reporting in general and Mid-Year reporting in particular. This report is part of the requisite statutory

and governance compliance. Regulation 13 0f Municipal Planning and Performance Management Regulations, 2001

read together with Regulations 33 and 34 of Municipal Budget and Reporting Regulations regulate specifically in-year

reporting and Mid-Year Review Report. The report must cover both financial information (budget & expenditure) and

core-delivery programmes (service delivery) information; and present such information in an integrated fashion. What

was planned at the start of the financial year (July 2019) what has been achieved at the close of December 2019?




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Executive Summary

The Local Government: Municipal Performance Regulations 2006 requires that all Section 54 and 56 Managers

performance must be monitored on regular basis. This monitoring process provides early warning signs on issues

pertaining to performance for the purposes of establishing adequate and responsive corrective measures. This

regulation has however been extended, through the council adopted performance management policy and procedure

manual, to managers below section 56 and all other staff to ensure a cohesive and collaborative front in the achievement

of the council set targets. It must further be noted that the institutional performance is influenced by three key aspects,

namely; Leadership, Service and budget performance and governance, as they appear in the Dash board report.

Taking into cognizance the above I am pleased to report that the municipality through its different departments has

performed enormously as at 31 December 2019.

Integrated Development Planning: The municipality has prepared and adopted 2019/2020 IDP Process Plan that is also

approved by COGTA while at the same time the municipality is also implementing 2018/2019 IDP. During the month of

October 2018, we conducted 4 IDP Public Participation Meetings which involved all wards. The municipality is engaging

various stakeholders through IDP Structures such as the IDP Steering Committee and IDP Representative Forum in the

preparation of the IDP Review. Furthermore, in December, the municipality conducted a Strategic Planning Session to:

Review of the Vision, Mission, Core Values and Long Term Development Goals

Conducted an environmental analysis (SWOT Analysis) and developing initiatives to address environmental

challenges

Finance Department

Our first priority as the department of financial services is to ensure that funds are spent within the approved budget;

reasonability of value for money is our second priority. We always emphasize the importance of compliance with the

applicable legislation to avoid irregular, fruitless & wasteful expenditure in the process of implementing our budget. In

2019/2020 financial year we are working hard as the department of financial services to ensure that we reclaim our

status of obtaining clean administration after we have regressed in the prior year.

• Revenue Management




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The revenue

base of the municipality is mainly carried by grants which constitute 86% and 14% of own revenue to implement service

delivery services and projects within the area of uMhlabuyalingana municipality. The municipality intends to increase

its revenue base by collecting revenue due to the municipality through property rate, refuse removal and other

revenues to be able to sustain provision of municipal services. The department commits itself to provide accurate

information which will improve financial reporting and proper cash flow projection which will ensure sustainability of the

municipality in future. Management has developed the revenue management committee that meets on a monthly

basis to discuss issue that relate to revenue generation and collection. Further to that there is another committee that

has been established that meets on a regular basis to discuss issues of rates payers regarding the tariffs establishment

and other matters relating to payment of services.

Property Rates

Property rates is one of the main source of own revenue for the municipality. We have actually collected 63% of the

total budget but our 6 months target was to collect 50% as per (A Schedule – SA30). The target was based at the

anticipated collection from government debtors which is mainly the Department of Public Works (Provincial) that

normally pay their accounts in September, October and December. Billing of property rates has done consistently for

6 months from July to December

Traffic income

There is lower collection of traffic income based on projected collection. The collection currently is sitting at 14%. It

was projected that in 6 months we will collect 50% of the target collection as per (A Schedule –SA30). Raising traffic

debtors has been done for July and August. There are challenges in the Traffic Unit in population of data relating to

traffic fines debtors hence it has not been raised since September. The reason for low collection rate is because the

offenders don’t pay for their traffic fines and the warrant of arrests issued by the courts. The warrants of arrest are

currently served using the manual procedure. Courts sometimes reduces the traffic fines issued because offenders

will plead with the magistrate to reduce the fine stating that they do not afford to pay the whole amount fined. Those

reductions also affect the cash flows of the municipality which also affects service delivery programmes.

Business Licensing

There is a very low collection rate for this category of revenue. Collection is at 4% of the budget estimate. The basis

of the expected income through business licensing is dependent on both the Supplementary Valuation Roll (SVR);

including both the new and existing businesses that do not currently appear on the Supplementary Valuation Roll

(SVR). Non-compliance with the business licensing requirements as set on the Business Act is the main challenge

of not maximizing the collection of revenue in business licensing from a few number of applications being received and




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that gets

approved as most of them they fail to meet critical requirements. Interventions are being initiated since the

development of the business licensing by-laws, of which, public participations have been conducted to all three key

economic nodes as part of the gazette process which was finalized in the in 2016-17 financial year.

Rental of facilities

This is one of the municipal revenue enhancement structures whereby rental is specifically used as a revenue

collection to the municipality. Rental is collected from market stall and rental from office space. Target was that we

will collect 50% on rental of facilities by end of 6 months, but the actual collection is below the projected budget. None

payment by customers affect the performance of the municipality because it affect cash flows of the municipality and

it will also affect service delivery. Billing of rental debtors has been done consistently for 6 months from July to

December.

Cash Flow Projections

The below cash flow projections reflects a positive cash position of the municipality, the cash balance at mid-year is R

109, 3 million. The available cash reflect that the municipality can operate for the next 6 months considering the current

cash position

• Debtors

Current mid-year balance is R 52,3 million when compared to last year balance of R44,5 million.

Current year mid-year debtors balance is sitting at 52,3 million when compared to last year balance which was 44,5

million.

This balance is made up of the following breakdown:

Property rates debtors owes R50,448 million

Refuse removal debtors owes R671 thousand

Rental debtors owes R326 thousand

Interest on outstanding debts amounts to (R865 thousand)

Government debtors balance at mid-year is R27,406 million or 52% of the total debts, Business and commercial debtors

balance is R24,054 million or 46% of the total debt, residential debtors balance is R262 thousand which is 1% and R587

thousand is the balance for other debtors which is also 1% of total debt.

• Creditors

The municipality is adhering to section 65 of the municipality finance management act, where it is stated that creditors

should be paid within 30 day of receipt of the invoice. The municipality have two payment run on the 15th and 30th of

the month to settle the liability of submitted invoice. The municipality ensures that payment are made within 30 days




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since most

of our suppliers are within the category of SMME’s this is done to assist them to sustain their cash position since they

are still small entities.

• Investment Portfolio

Investments/ (Short term deposits) made with the various financial institutions are strictly in compliance with municipal

Financial Management Act and the investment Regulations

The balance on investment/short term deposits at mid-year was R 13,5 million. The amount is invested to generate

interest on monies not immediately needed to provide basic services and in addition the surplus funds at year-end are

also invested. The investment balance reflects slight increase when compared to the prior year balance of R 12,6

million.

Borrowings

The municipality does not have borrowings.

Fruitless and Wasteful Expenditure

As at 31 December 2019 there is an amount of R4 891 disclosed as fruitless and wasteful in the books of the

municipality, as a result of late payment of Telkom, ESKOM and NJPF invoices.

Irregular Expenditure

No irregular expenditure has been reported as incurred as at 31December 2019.

Allocation of grant received and expenditure on grants.

- The budget of the municipality is funded by grants of which they fund 86% of the budget and the remaining 14%

is funded by own revenue.

- Capital grants funding capital expenditure is 87% of the capital budget

- Conditional grants funding operating expenditure is 4% when excluding Equitable Share.

Asset Management

The municipality have asset management policy, asset disposal policy, maintenance policy and asset register to

manage the municipal asset. Currently the municipality have spent 39% of the budget for 2019-2020 financial year.

Low spending on capital expenditure is because of technical delays in the implementation of other capital projects

because council had to re-prioritize the implementation of other capital projects




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Supply Chain Management

An annual procurement plan for the 2019/2020 financial year has been approved to ensure an effective system of

acquisition for goods and services supporting the strategic goals and operations of the municipality. The plans has

improved timely planning, effective management of processes to ensure that commodities and services required by

various user departments are quantified, budgeted for and effectively delivered at the right locations within critical

delivery schedules in appropriate quantities.

Deviations

Deviations to the total rand value of R196 397, 52 were incurred in terms of section 36 of the supply chain management

regulation for the period under review. Most deviations are as a result of public notices in newspapers.

Competitive bidding

Goods and service above the transaction value of R 200,000.00 including vat are only procured through a competitive

bidding process as outlined in the municipal supply chain management policy. In an effort to enhance operational

efficiency the bid committee system for competitive bidding was established. The committees comprise the bid

specification, evaluation and adjudication to effectively manage the competitive bidding process. Competitive bids

awarded for the period under review totals to R 19 910 836.62.

Objections

There were no objections received in all tenders awarded.

MSCOA Implementation

The municipality is currently transacting using the MSCO compliant financial system. We managed to produce

Annual Financial Statements directly from the system. During the preparation of the 2019/2020 annual budget we

extracted the budget directly from the financial system although not all schedules were extracted from the system.

System vendor has managed to fix the errors that were causing some reports not being able to be extracted directly

from the system but other reports still need to be fixed by system vendor.

COMMUNITY SERVICES DEPARTMENT

Waste Management Section




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In line with

Constitution of the Republic of South Africa, 1996 read with National Waste Management Act, (Act 59 of 2008) the

municipality has three waste management sites in three towns (Manguzi, Mbazwana and Skhemelele) only two (2)

sites has been registered as a landfill sites (Manguzi and Mbazwana) and the remaining one (Skhemelele) site is in

the process of rehabilitation or decommissioning.

In our endeavors as the municipality we had initially planned to collect waste from 357 businesses and consumers

given their potential capacity to pay and accessibility as well. To date service level agreements have developed as

part of the implementation of the Integrated Waste Management plan. 31 business and four (4) have since signed the

agreements and the department is the process of achieving 100% target in this area as part of setting the cost incurred

during the provision of the service.

Waste Management By-Laws

The Waste Management By-Laws have been promulgated and the fine list has been submitted to both Ubombo and

Manguzi Magistrates for approval by respective Chief Magistrates.

Waste Disposal

The disposal of waste in all three landfill sites is in progress.

Library

There are two library access points across uMhlabuyalingana municipality, which are Manguzi and Mseleni, which

provides a range of services to the community. The main aim of both libraries is to enhance the lives of individuals and

communities through uMhlabuyalingana municipality and promote a range of high quality library services and to

provide equal access to information and resources and to support community discussions and lifelong learning.

The services are library promotions (outreach programme), Internet access, free basic computer training, book

exchange to have updated books and the circulation of books and audio.

Our target is that all schools that are at uMhlabuyalingana should have access to the library and so far we have

managed to have 60% of schools that have access to both libraries. Through the services that we promote the

membership has increased in both libraries.

There is also library income which is based on library tariffs i.e. copies, printing, scanning, laminating, bookings and

overdue items (fines).




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Traffic Section

This section encompasses traffic law enforcement drivers’ licenses and Vehicle licensing. Law enforcement section

enforces law in terms of NRTA 93 of 1996 and other legislation related to traffic matters. Licensing section offers the

services of licensing as stipulated in NRTA 93 of 1996.

Disaster Management /Fire Services Section

According to the DM Act 57 of 2002 as amended, the local authority has to provide for an integrated and coordinated

disaster management policy that focuses on preventing or reducing the risk of disasters mitigating the severity of

disasters, emergency preparedness, rapid and effective response to disasters and post-disaster recovery. Fire

services and Occupational Health and Safety fall under this Disaster management.

Youth Programs and Special Programs

UMhlabuyalingana also provides skills development programs, giving a special attention to young people. Three main

programs that are budgeted which also appears in the Municipality SDBIP.

The youth programs falls under the Department of Community services, the unity has a now appointed dedicated

person for all youth programs. The following services are rendered: Azibuye Emasisweni, reed dance, assisting youth

school registrations and working hand in hand with the NYDA to establish NYDA offices at uMhlabuyalingana Local

Municipality

Especial Programs render services as follows, HIV&AIDS, Women, Disability, Gender, Arts &Culture and Sport; all

these programs are budgeted for.

Ward Committee

UMhlabuyalingana has 18 wards, and we have so far managed to establish ward committees all 18. We have

established 180 ward committee members in 18 wards. Each ward consists of 10 members who form a ward

committee. Out of 18 wards, there is one ward that is outstanding. The ward committees are not functional until the

dispute in ward 17 has been resolved.




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TECHNICAL SERVICES

Fleet Management

uMhlabuyalingana Local Municipality has a medium diversified fleet of about 14 vehicles, ranging from light vehicles

to construction equipment; in operation to provide essential services to the community it serves. Departments within

uMhlabuyalingana municipality are very dependent on the maximum availability of vehicles in order to efficiently

execute their services. Fleet Management has its own committee that oversees the proper management of vehicles

within the municipality and major strategic decisions are recommended by that committee using the existing policy,

ranging from curbing of accidents and fuel management among other things in the municipality.

Repairs and maintenance

The annual target for maintenance of municipal access roads is 57 access roads. As at mid-year we have managed

to maintain 25 access roads. We also respond to ad hoc requests from the community.

LOCAL ECONOMIC SECTION

Local Economic Development (LED) section is one of the core municipal components which is under the Department of

Technical Services. This section is responsible for stimulating local economic development of UMhlabuyalingana area

through job creation, domestic tourism marketing, and SMME support. These are the main competencies of this section

as set by the National Development Plan, Provincial Growth and Development Plan and Strategy, District Growth and

Development Plan, and Delivery Agreement for Outcome 9. In line with the mentioned legislative framework, the council

has developed responsive programs through its LED Strategy in order to simplify implementation of the LED

competencies.

The here below summary provides some indication of the unit‘s achievements with regards to the 2019/2020 financial

cycle mid-term:

Tourism Development and Promotion

In line with the NDP, PGDS and PSEDS, The municipality is now implementing the tourism marketing campaigns aimed

with a purpose of ensuring efficient marketing of its local tourism destinations. This is in response to the national Shot’

Left tourism and we do tourism campaigns. Technically, UMhlabuyalingana Municipality will localize the campaign in

the first quarter during the Tourism month (September) and Festive (December) holidays. Furthermore, the municipality

is planning towards rehabilitating the Tourism Information Tourism office that has been recently handed over by

UMkhanyakude District Municipality where Tourism services within the area will be marketed.




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Banganek Community Campsites

The municipality in partnership with the National Department of Tourism (NDT) are in the process to rehabilitate the

two Banganek community campsites. This project is funded by NDT and the municipality is playing a coordinating role,

implementation role given to TIKZN to conduct the EIA and construction.

East 3 Route

The East3Route Legacy Project is the construction of vendor stalls that, will support informal traders and SMMEs

operating at the border post and provide for a conducive environment for trade and related activities. This project is

funded by Environmental affairs, the service provider responsible for preparation of the layout design was appointed

by the Ezemvelo and the plan is already available, was presented to council and has obtained a council resolution.

The municipality has already obtained an environmental authorisation to proceed with this project.

Kosi Bay Border

The KwaZulu-Natal (KZN) Department of Economic Development, Tourism and Environmental Affairs (EDTEA) have

the mandate of overseeing the transformation in the province, and thus produce the Provincial Spatial Economic

Development Strategy (PSEDS) framework. As such; EDTEA has funded a Kosi Bay Integrated development plan

which aims to develop an integrated economic development plan for Kosi Bay Border in a view to identify opportunities

and to optimize its locational advantage as a gateway to Mozambique. The latest is that, development proposals in a

form of a well-researched and documented plan with an implementation plan has been put in place. At its final meeting,

held on the 05th of December 2019, the Project Steering Committee endorsed the final plan after making few

amendments and the plan will serve before the special Council Meeting to be held in January 2020 for final adoption

by the Council.

SMME Support:

This programme designed to assist a startup in its development and growth phase. Also to provide opportunities to

achieve sustainability and to create an enabling environment within the community. Through this programme the

municipality supports its local business structure called UMhlabuyalingana Business chamber. Potential but struggling

entrepreneurs including cooperatives and informal traders was identified to undergo incubation. Material was procured

and delivered to 42 beneficiaries, these beneficiaries are monitored and are reported on quarterly basis, some of them

are doing well although there are some which are struggling yet the municipality continues to support them through

refresher trainings with assistance from FNB. There are one on one consultations in progress to ensure a continuous

support.




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Business

licensing and informal trading by-laws enforcement

The business licensing and enforcement of by-laws is an on-going process and these were adopted by municipal

council subsequently gazzetted in 2017. An integrated compliance regulatory forum (ICOREF) which was formulated

by EDTEA that includes various sector departments is set to conduct inspections on a quarterly basis in support of the

implementation of the by-laws. This forum which also assists with induction of businesses on the by-laws is held two

times a year for induction and two times a year for inspections. Although there are still those businesses that are not

convinced to register due to various reasons, but most of them are willing to cooperate and are with the understanding

why the business licensing is important.

Community Workers Programme-CWP

Within this programme a total number of 1739 community work job opportunities have been created and are monitored

on monthly basis and have been maintained from July to December 2019. This programme is completely funded by

the Department of Cooperative Governance and Traditional Affairs.

Extended Public Works Programme

This is the main temporal job creation program for Umhlabuyalingana Local Municipality as it provides a 12 months

duration employment. This is a grant funded programme by the department of Public Works and the municipality also

core funds through the equitable share. In line with the conditions of the grant, monthly and quarterly reports are

prepared and submitted to the department. As is, a total number of 134 job opportunities have been created and

despite the minor glitches on the recruitment of the phase 4 participants, the program is processing very well.

PLANNING AND DEVELOPMENT SECTION

Planning and Land Use Management Act No.16 of 2013 (enforcement By-Law) makes it obligatory for the municipality

to enforce should a person use the land without the prior approval from the municipality or any who doesn’t comply even

after 3 notices have been served, therefore the municipality is in the process of applying the Law Enforcement.

Challenges encountered

When assessing the building plans the municipality follows the National Building Regulations and Building Standards

Act 103 of 1977 and the challenge has been that applicants do not always submit engineering drawings. The common

observation is that the local people have limited knowledge about this Act, therefore they do not comply with it, which




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makes it

difficult to even issue them with notices and to even apply Law of enforcement. To respond to this, there are ongoing

engagements/campaigns with the locals and with the custodians of the land, the Traditional Councils.

Joint ExCo between 4 Traditional Councils

The council took a resolution to form an IGR structure in a form of a Joint ExCo to strengthen the strategic relations

between the Municipality and the four Traditional Councils. Terms of Reference have also been adopted and the

structure has to be institutionalized.

MANAGEMENT

Communication Strategy

In terms of chapter 4 of the Municipal Systems Act, the Municipalities are encouraged to strive for maximum

participation of its citizens to its various programmes. Again the Promotion of Access to Information Act of 2000 further

asserts the need for accessibility of the municipal information based on certain conditions as stipulated by the

municipality. Furthermore the white paper on local government defines developmental local government as

government that is committed in working with its citizens. Undoubtedly the central focus of the abovementioned

legislation revolves around the effective communication between the municipality and its constituencies. In June 2017,

the Council of uMhlabuyalingana adopted this communication strategy which is reviewed annually. The purpose of the

strategy is to present mechanisms and guidelines for communication between internal and external environment of

the municipality. It is further in the interest of the strategy that could be used in formulating the municipal policy on

communication. In order to ensure that the community is informed, we use national and local radio station and

municipal newsletter to disseminate the information.

Internal Audit

The Internal Audit Activity (IAA) of the munciapality is established and regualated by section 165 of the Municipal

Finance Management Act no. 56 of 2003 (as amended) MFMA, read together with the MFMA Circular no. 65 of 2012

issued by National Treasury and by the Municipal Systems Act no. 32 of 2000 (MSA). The subsection’s mission is to

provide independent objective assurance and consulting insights on the effectiveness, economy and efficiency of

Umhlabuyalingana Local Municipality’s governance, risk and controls in order to create and drive innovation,

responsiveness and sustainability of the service delivery value chain. The current establishment is on a co-sourced

relationship between Ntshidi and Associates with an Internal Audit manager internally appointed who manages and

oversees the functions of internal audit.




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Key Deliverables:

The critical success factors and deliverables for an effective Internal Audit unit are:

Three year rolling strategic and operational plans that are aligned to strategic objectives of the organisation.

Covers the strategic risk areas facing the organisation

Is risk based – addresses the key risks areas/concerns of management.

Is prepared in consultation with management, the audit committee and external auditors.

Matches assurance needs with available resources.

Trusted advisor to management

Promoting the sustenance of an effective internal audit function

Promoting accountability

Performing consulting activities in accordance to client needs

Assisting management with the enhancement of the overall governance, risk and internal control environments;

The programme includes an evaluation of the IAA’s conformance with the definition of Internal Auditing and the

Standards and an evaluation of whether the internal auditors apply the Code of Ethics.

The programme also assesses the efficiency and effectiveness of the internal audit activity and identifies

opportunities for improvement.

Audit Committee

Umhlabuyalingana Local Municipality has established an Audit Committee in accordance with section 166 of the

Municipal Finance Management Act, no.56 of 2003 (MFMA). The role of Audit Committee is to assist the Council and

the Accounting Officer in fulfilling its oversight responsibilities with regard to the integrity of internal control and

accounting function, internal auditing and external auditing and reporting practices of the municipality and other such

duties as may be directed by the Council and Accounting Officer.

MPAC

The Oversight Committee is a committee of Council established under section 79 of the Municipal Structures Act, 1998

(MSA). Section 79, allows for the co-option of advisory members to a Committee of Council, who are not members of

the Council. The function of the MPAC is to strengthen the oversight arrangements in the municipality. This is clarified

with a clear distinction between oversight and interference in the administration as defined in Section 5(b) and Section

103 of the Municipal Finance Management Act, No 56 of 2003.




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IDP/Budget Process Plan

The council adopted the 2020/202IDP process plan on the 29th August 2019. The IDP/Budget process plan sets out

the process for the planning formulation, review the IDP and budget. In terms of the process plan we are in phase 3

which includes preparation a summary document, MIG allocations, draft proposed changes and new information

sections of the IDP and SDF.

Risk Management

The municipality has established a risk management unit; through which strategic risk management documents have

been developed in order to ensure a systematic process of risk management within the municipality. The risk profile

for uMhlabuyalingana municipality remains within the medium range. The process is at its medium stage in terms of

maturity and efforts still to be strengthened to improve the culture of risk management within the municipality. The

municipality is currently at level 3.9 maturity. The target is to reach level four by the end of 2019/2020 financial year.

Management has also developed Risk Management Implementation Plan and its implementation is in progress.

Management has also established risk mitigation action plans. These plans are monitored on a monthly basis. Progress

is being made with all departments by reporting on mitigating risks in portfolio committee, ExCo and council meetings.

The Risk Management Committee has since met once as at mid-year term. The challenge is, Risk Management

Committee Chairperson has resigned due to conflict of interest with her current employer. The municipality is in the

process of appointing a new Chairperson.

Ag Action Plan

Following the receipt of the Final Management letter, findings raised by Auditor General were thoroughly scrutinised.

The Auditor General Action plan was then developed based on the 9 findings raised. Annexure H depicts the nature

of these findings, Roots causes and proposed time bound remedial actions. It must further be noted that the

municipality obtained an unqualified with other matters audit opinion.

CORPORATE SERVICES

Corporate Services Department in an endeavor to implement appropriate systems and processes has seen the first half

of 2019/2020 financial year, starting and progressing in a rather unusual manner.

Approval and Implementation of Human Resource Strategy

There has been a fair share of challenges that the department experienced, this was also coupled with achievements.

The department has for the first time successfully documented the Human Resources Strategy which will be a guiding




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document,

giving strategic direction for the municipality in ensuring that the human resources objectives are aligned to municipal

strategic document being IDP. The challenge will always be the appropriate implementation and measurable impact

of effective and successful application of the strategy. To finally have the roadmap is seen as an achievement. The

department is looking forward to turning around what is embedded in the strategy to be tangible targets which amongst

other will entail:

1. Building competent human capital for the development of UMhlabuyalingana

2. To be recognized by other departments (internally) as efficient department

3. Focused recruitment and selection with proper human resource planning

4. Build strong workforce through professional development learning opportunities

5. Cultivate culture of performance management

Filling of critical vacancies

The successful filling of critical vacancy of Director Community Services where the incumbent assumed duties on the

first day of the financial year is also seen as one of the performance highlight as often filling of critical vacancies is

often faced with challenges.

Capacity building initiatives

Corporate Services hosted two (2) successful workshops which were aimed at workshopping Councillors on municipal

policies, the first one took place on 25-26 July 2019, where Department of Cooperative Governance officials were

present and participated in the workshop and the second one took place in the second quarter on 14 -15 November

2019. These sessions have been successful in that they allow governance to fully engage and participate in policy

development and policy review.

The councilors were trained on project management, which was to equip them with skills to manage projects in their

respective wards.

The department plans to register beneficiaries to Municipal Finance Management Programme as part of compliance

to MFMA Regulations and as part of strengthening performance of the municipality.

Skills Audit Programme

The department embarked on comprehensive skills audit which was aimed at gauging and determining the skills gap

between the current skills that the municipality has and the required skills, this exercise assisted the management and

Council to plan and to have direct initiative which addresses the shortage of skills based on professional analysis.




ASSESSMENT REPORT

This is an

ongoing initiative as it rather a long process which involves prioritizing training interventions also having budget and time

factors.

Performance challenges

In the same breath that the department has seen achievements, there has been a fair share of challenges. The

following were experienced as part of the growth related challenges:

Intense Labour Relations cases

The financial year 2019/2020 saw an increase in number of labour matters and disputes referred to South African

Local Government Bargaining Council (SALGBC), CCMA and Labour Court.

The disputes have been ranging from Matters of mutual interest, Unfair Labour Practice and Unfair dismissal. In other

SALGBC disputes, settlement agreements have been reached and one CCMA Arbitration ruled in favour of the

municipality, whilst one is still at Arbitration stage.

Labour unrest

This became one of the challenging period for the department where employees raised several matters that the

management had to deal with and there has been few work stoppages, followed by negotiations which were aimed at

finding solution to matters raised by employees.

Delay in filling of vacant positions

The department has a position of IT Manager, which is currently vacant. The department has previously attempted

unsuccessfully to fill the position. In the current financial year the target was set to fill the position in the second quarter.

The decision however was taken to fill the position in the third quarter after reviewing the financial plans of the

department.

Non-Implementation of Individual Performance Management System

This has been a long standing challenge for the department; shortage of human resources hinders the implementation

of IPMS.

Non-implementation of municipal policies




ASSESSMENT REPORT

There is a

distinct non-alignment of review of policies which must align to current status of affairs and operations in local

government. This calls for review that will address the current challenges as opposed to old method of doing things.

The department will embark on this project in third and fourth quarter.

Conclusion

The department endeavors to put more effort in the remaining quarters of 2019/2020 financial year, where all targets

that were not achieved will be tackled and focus will be on weaknesses.




ASSESSMENT REPORT

ORGANISATIONAL SCORECARD-ANNEXURE

KPA Total Number of KPI’s for Q1

and Q 2

Targets

achieved

Targets Not

achieved

%

Municipal Transformation and Institutional Development

14 6 8 43%

Basic service delivery

and infrastructure development

39 27 12 69%

Financial viability and

financial management 4 1 3 25%

Cross Cutting Interventions

5 4 1 80%

Good Governance, Public Participation

10 8 2 80%

Social and Economic Development 2 2 0 100%

Total

74 48 26 65%




ASSESSMENT REPORT

Annexure B




ASSESSMENT REPORT

Notwithstanding the challenges of the structure of the SDBIP including reports from the departments, the above table reflects the performance level of 84 targets achieved against the Mid-year total targets of 121 which translates to 69%.

Acronyms

MTID Municipal Transformation & Institutional Development

BSDID Basic Service Delivery and Infrastructure Development LED Local Economic Development

GGPP Good Governance and Public Participation (ward committee system) FVFM Financial Viability and Financial Management CCI Cross-Cutting Interventions

SED Social and Economic Development




ASSESSMENT REPORT

43%25%

69%

80%

80%

100%

Targets Achieved

MTID

MFVM

BSDID

CCI

GGPP

SED




ASSESSMENT REPORT

RECOMMENDATIONS BY THE ACCOUNTING OFFICER

1. That the Mid-Year Performance Assessment submitted in terms of section 72 of Municipal Finance Management Act (Act 56 of 2003) be noted for onward submission to National and Provincial Treasury;

2. That Departments to re-align the Mid-Year Review to Monthly Projections of expenditure on

the Operational and Capital Budget based on the Mid-Year assessed SDBIP’s;

3. That the Mid-Year Budget Review (as presented by the Mayor/Manager) and the Mid-year performance assessment, and the recommendation contained therein be approved for preparation of an Adjustment budget for the 2019/20 and the review of the SDBIP’s accordingly;

4. That revision on the SDBIP’s forming part of the Mid-Year Assessments (where applicable) be

approved, and Performance Agreements of section 54/56 employees be amended accordingly.




ASSESSMENT REPORT

In-year budget statement tables (Annexure C) The statement of financial performance shown on table C1 to C 7 including supporting schedules SC1 to SC13e

is prepared on similar basis to the prescribed budget format, detailing revenue by source type and expenditure

input as follows (See Annexure C)




ASSESSMENT REPORT

PART B

Monthly Budget Statement Analysis

Debtor’s analysis

Current year mid-year debtors balance is sitting at 52,3 million when compared to last year balance which was

44,5 million.

This balance is made up of the following breakdown:

Property rates debtors owes R50,448 million

Refuse removal debtors owes R671 thousand

Rental debtors owes R326 thousand

Interest on outstanding debts amounts to (R865 thousand)

Government debtors balance at mid-year is R27,406 million or 52% of the total debts, Business and commercial

debtors balance is R24,054 million or 46% of the total debt, residential debtors balance is R262 thousand which is

1% and R587 thousand is the balance for other debtors which is also 1% of total debt.

In the prior year 2018/2019 council took a resolution to write off 60% of debts to business and commercial debtors

that will settle their account within a period of 6 months and will also waive interest for that period which was ending

in May 2019. All debts that were not settled by end of that period interest was re-calculated and charged back to

respective accounts.

Description

R thousands

NT

Code0-30 Days 31-60 Days 61-90 Days 91-120 Days 121-150 Dys 151-180 Dys 181 Dys-1 Yr Over 1Yr Total

Total

over 90

days

Actual Bad

Debts Written

Off against

Debtors

Impairment -

Bad Debts i.t.o

Council Policy

Debtors Age Analysis By Income Source

Trade and Other Receiv ables from Ex change Transactions - Water 1200 – – – – – – – – – –

Trade and Other Receiv ables from Ex change Transactions - Electricity 1300 – – – – – – – – – –

Receiv ables from Non-ex change Transactions - Property Rates 1400 1,580 (879) 1,152 1,130 (301) 1,121 3,480 43,165 50,448 48,595

Receiv ables from Ex change Transactions - Waste Water Management 1500 – – – – – – – – – –

Receiv ables from Ex change Transactions - Waste Management 1600 60 38 33 33 33 33 193 249 671 540

Receiv ables from Ex change Transactions - Property Rental Debtors 1700 35 35 26 24 23 22 99 60 326 230

Interest on Arrear Debtor Accounts 1810 82 80 78 76 74 72 403 – 865 625

Recov erable unauthorised, irregular, fruitless and w asteful ex penditure 1820 – – – – – – – – – –

Other 1900 – – – – – – – (1) (1) (1)

Total By Income Source 2000 1,757 (726) 1,289 1,263 (171) 1,247 4,176 43,473 52,308 49,988 – –

2018/19 - totals only – –

Debtors Age Analysis By Customer Group

Organs of State 2200 968 (1,354) 754 728 (702) 718 1,761 24,533 27,406 27,037

Commercial 2300 682 528 435 436 432 430 2,393 18,718 24,054 22,409

Households 2400 3 3 3 3 3 3 22 220 262 252

Other 2500 103 97 96 96 95 96 – 3 587 290

Total By Customer Group 2600 1,757 (726) 1,289 1,263 (171) 1,247 4,176 43,473 52,308 49,988 – –

KZN271 Umhlabuyalingana - Supporting Table SC3 Monthly Budget Statement - aged debtors - M06 December

Budget Year 2019/20




ASSESSMENT REPORT

Creditor’s analysis

The municipality is adhering to section 65 of the municipality finance management act, where it is stated that

creditors should be paid within 30 day of receipt of the invoice. The municipality have two payment run on the 15th

and 30th of the month to settle the liability of submitted invoice. The municipality ensures that payment are made

within 30 days since most of our suppliers are within the category of SMME’s this is done to assist them sustain

their cash position since they are still small entities.

Investment Portfolio analysis

Investments made with the various financial institutions are strictly in compliance with municipal Financial

Management Act and the investment Regulations

The balance of investments/short term deposits at mid-year is R13,5 million and the balance for prior year was

R12,6 million.

Management needs to invest excess monies to short deposit accounts in order to get more interest and to ensure

that conditional grant funds are not used for any other expenses but only for the planned projects.

Budget Year 2019/20

R thousands

Creditors Age Analysis By Customer Type

Bulk Electricity 0100 – – – – – – – – –

Bulk Water 0200 – – – – – – – – –

PAYE deductions 0300 – – – – – – – – –

VAT (output less input) 0400 – – – – – – – – –

Pensions / Retirement deductions 0500 – – – – – – – – –

Loan repay ments 0600 – – – – – – – – –

Trade Creditors 0700 398 32 (169) (40) 662 54 105 (89) 953

Auditor General 0800 – – – – – – (0) – (0)

Other 0900 37 819 (22) (5) 43 190 (52) (0) 1,009

Total By Customer Type 1000 435 851 (191) (46) 705 244 53 (90) 1,962 –

Prior y ear

totals for chart

(same period)

KZN271 Umhlabuyalingana - Supporting Table SC4 Monthly Budget Statement - aged creditors - M06 December

181 Days -

1 Year

Over 1

Year

Total61 -

90 Days

91 -

120 Days

121 -

150 Days

151 -

180 Days

Description NT

Code0 -

30 Days

31 -

60 Days




ASSESSMENT REPORT

Allocation of grant received and expenditure on grants.

- The budget of the municipality is funded by grants of which they fund 86% of the budget and the remaining 14%

is funded by own revenue.

- Capital grants funding for capital expenditure is 87% of the total capital budget

- Conditional grants funding operating expenditure is 4% when excluding Equitable Share.

The municipality has received a total of R143 650 000 for operational grants including the equitable share by 31

December 2019. This total include

R1,900 000 for Financial Management Grant,

R882 000 thousand for Expanded Public Works Programme Grant,

R124,513 000 for Equitable Share,

R3 055 000 for Provincialisation of Libraries Grant, as well as

R13 300 000 from Department of Energy for the electrification of ------- houses in ward 1 and ward 8

Expenditure for FMG is at 85% which includes payment of Financial Interns stipend trainings and workshops

attended by Finance Interns and payment of consultants appointed to do conditional assessment of assets in

the month of July and August 2019. Expenditure for EPWP is 70% and Library Grant expenditure is 56% by

31 December 2019.

Investments by maturity

Name of institution & investment ID

Period of

Investment

Capital

Guarantee

(Yes/ No)

Variable or

Fixed

interest rate

Interest

Rate ᶟ

Commissio

n Paid

(Rands)

Commissio

n Recipient

Opening

balance

Interest to be

realised

Partial /

Premature

Withdrawal

(4)

Investment

Top Up

Closing

Balance

R thousands Yrs/Months

Municipality

FNB - 74275256516 Months Call Yes Fix ed None None 31 June 2020 4,721 173 – – 4,895

Nedbank - 28702097 Months Call Yes Fix ed None None 31 June 2020 35 1 – – 36


STD Bank - 068824491 Months Call Yes Fix ed None None 31 June 2020 20 1 – – 20


FNB - 62055161146 Months Call Yes Fix ed None None 31 June 2020 0 – 0

FNB - 62055161146 Months Call Yes Fix ed None None 31 June 2020 1 – 1

Municipality sub-total 13,060 – – 13,515

Entities

–

–

–

–

–

–

–

Entities sub-total – – – –

TOTAL INVESTMENTS AND INTEREST 2 13,060 – – 13,515

KZN271 Umhlabuyalingana - Supporting Table SC5 Monthly Budget Statement - investment portfolio - M06 December

RefType of

Investment

Expiry date

of

investment




ASSESSMENT REPORT

R34 918 000 has been reserved for implementation of capital projects. This amount is from National COGTA to

implement service delivery projects which are roads and community halls. Currently expenditure is sitting at 21%

due to delays in the implementation of other capital project because council had to re-prioritize other projects to be

implemented and other project had to be stopped until adjustment budget has been approved to cater for those

adjustments made towards prioritization of capital project.




ASSESSMENT REPORT

2018/19 Budget Year 2019/20

Audited

Outcome

Original

Budget

Adjusted

Budget

Monthly

actual

YearTD

actual

YearTD

budget

YTD

variance

YTD

variance

Full Year

Forecast

R thousands %

RECEIPTS: 1,2

Operating Transfers and Grants

National Government: – 190,440 – 61,039 140,595 95,220 45,375 47.7% 190,440

Local Gov ernment Equitable Share 166,017 55,339 124,513 83,009 41,505 50.0% 166,017

Finance Management 1,900 – 1,900 950 950 100.0% 1,900

EPWP Incentiv e 3,523 – 882 1,761 (879) -49.9% 3,523

Integrated National Electrification Programme 19,000 5,700 13,300 9,500 3,800 40.0% 19,000

3 –

–

–

–

–

Other transfers and grants [insert description] –

Provincial Government: – 3,055 – – 3,055 1,527 1,125 73.6% 3,055

Prov incialisation of libraries 2,249 – 2,249 1,124 1,125 100.0% 2,249

Community Library Serv ices Grant 806 – 806 403 806

–

4 –

–


District Municipality: – – – – – – – –

[insert description] –

–

Other grant providers: – – – – – – – –


–

Total Operating Transfers and Grants 5 – 193,495 – 61,039 143,650 96,747 46,500 48.1% 193,495

Capital Transfers and Grants

National Government: – 34,918 – 19,000 28,000 17,459 10,541 60.4% 34,918

Municipal Infrastructure Grant (MIG) 34,918 19,000 28,000 17,459 10,541 60.4% 34,918

–

–

–

–

Other capital transfers [insert description] –

Provincial Government: – 5,000 – – – 2,500 (2,500) -100.0% 5,000

Massification grant 5,000 – – 2,500 (2,500) -100.0% 5,000

–



–



–

Total Capital Transfers and Grants 5 – 39,918 – 19,000 28,000 19,959 8,041 40.3% 39,918

TOTAL RECEIPTS OF TRANSFERS & GRANTS 5 – 233,413 – 80,039 171,650 116,706 54,541 46.7% 233,413

Description Ref

KZN271 Umhlabuyalingana - Supporting Table SC6 Monthly Budget Statement - transfers and grant receipts - M06 December




ASSESSMENT REPORT

2018/19 Budget Year 2019/20

Audited

Outcome

Original

Budget

Adjusted

Budget

Monthly

actual

YearTD

actual

YearTD

budget

YTD

variance

YTD

variance

Full Year

Forecast

R thousands %

EXPENDITURE

Operating expenditure of Transfers and Grants

National Government: – 190,440 – 1,427 82,707 95,220 (12,513) -13.1% 190,440

Local Gov ernment Equitable Share 166,017 – 60,859 83,009 (22,149) -26.7% 166,017

Finance Management 1,900 48 1,625 950 675 71.0% 1,900

EPWP Incentiv e 3,523 388 2,486 1,761 725 41.2% 3,523

Integrated National Electrification Programme 19,000 991 17,736 9,500 8,236 86.7% 19,000

–

–


Provincial Government: – 3,055 – 386 2,406 1,527 878 57.5% 3,055

Prov incialisation of libraries 2,249 386 1,602 1,124 478 42.5% 2,249

806 – 137 403 (266) -65.9% 806

– 666 666 #DIV/0!

–



–



–


Total operating expenditure of Transfers and Grants: – 193,495 – 1,812 85,112 96,747 (11,635) -12.0% 193,495

Capital expenditure of Transfers and Grants

National Government: – 34,918 – 202 7,503 17,459 (9,956) -57.0% 34,918

Municipal Infrastructure Grant (MIG) 34,918 202 7,503 17,459 (9,956) -57.0% 34,918

–

–

–

–

Other capital transfers [insert description] –

Provincial Government: – 5,000 – – 1,892 2,500 (608) -24.3% 5,000

5,000 – 1,410 2,500 (1,090) -43.6% 5,000

481 481 #DIV/0!


–

–


–

–

Total capital expenditure of Transfers and Grants – 39,918 – 202 9,394 19,959 (10,565) -52.9% 39,918

TOTAL EXPENDITURE OF TRANSFERS AND GRANTS – 233,413 – 2,015 94,506 116,706 (22,200) -19.0% 233,413

Description Ref

KZN271 Umhlabuyalingana - Supporting Table SC7(1) Monthly Budget Statement - transfers and grant expenditure - M06 December




ASSESSMENT REPORT

Councilor allowances and employee benefits

Councilor’s remuneration/ allowances expenditure is 47% as at 31 December 2019 because upper limits for

councilors have not yet been implemented. Upper limits are expected to be implemented in February or March

2020 after the approval of the MEC for local government.

The municipality has spent 41% paying for salaries for all municipal workers for the past 6 months. The reason

the spending is low is because the municipality also budgeted for increase on salaries due to the implementation

of new municipal grading that was anticipated to be implemented in this financial year.

2018/19 Budget Year 2019/20

Audited

Outcome

Original

Budget

Adjusted

Budget

Monthly

actual

YearTD

actual

YearTD

budget

YTD

variance

YTD

variance

Full Year

Forecast

R thousands %

1 A B C D

Councillors (Political Office Bearers plus Other)

Basic Salaries and Wages 8,203 8,893 – 689 4,137 4,447 (310) -7% 8,893

Pension and UIF Contributions – – – – – – – –

Medical Aid Contributions – – – – – – – –

Motor Vehicle Allow ance – – – – – – – –

Cellphone Allow ance 1,536 1,598 – 130 777 799 (22) -3% 1,598

Housing Allow ances – – – – – – – –

Other benefits and allow ances 2,734 2,964 – 230 1,379 1,482 (103) -7% 2,964

Sub Total - Councillors 12,472 13,456 – 1,049 6,292 6,728 (435) -6% 13,456

% increase 4 7.9% 7.9%

Senior Managers of the Municipality 3

Basic Salaries and Wages 4,059 5,377 – 405 2,432 2,689 (257) -10% 5,377

Pension and UIF Contributions 125 61 – 11 73 30 43 141% 61

Medical Aid Contributions 38 39 – 3 21 19 2 11% –

Ov ertime – – – – – – – –

Performance Bonus – – – – – – – –

Motor Vehicle Allow ance 666 1,212 – 69 414 606 (192) -32% 1,212

Cellphone Allow ance 115 254 – 11 65 127 (62) -49% 254

Housing Allow ances 400 447 – 43 256 223 33 15% 447

Other benefits and allow ances 1,267 1,034 – 5 50 517 (468) -90% 1,073

Pay ments in lieu of leav e 158 2,908 – – – 1,454 (1,454) -100% 2,908

Long serv ice aw ards 2 218 – – – 109 (109) -100% 218

Post-retirement benefit obligations 2 – – – – – – – –

Sub Total - Senior Managers of Municipality 6,830 11,549 – 547 3,311 5,775 (2,464) -43% 11,549

% increase 4 69.1% 69.1%

Other Municipal Staff

Basic Salaries and Wages 43,598 51,446 – 3,769 23,346 25,723 (2,378) -9% 51,446

Pension and UIF Contributions 4,661 5,055 – 435 2,612 2,527 84 3% 5,055

Medical Aid Contributions 1,925 2,225 – 170 1,059 1,113 (54) -5% 2,225

Ov ertime 1,535 4,955 – 83 1,088 2,478 (1,390) -56% 4,955

Performance Bonus – – – – – – – –

Motor Vehicle Allow ance 2,166 2,000 – 413 1,350 1,000 350 35% 2,000

Cellphone Allow ance 624 551 – 69 335 275 60 22% 551

Housing Allow ances – 109 – 15 77 54 23 42% 109

Other benefits and allow ances 4,528 5,720 – 2,752 2,834 2,860 (26) -1% 5,720

Pay ments in lieu of leav e 682 5,154 – 64 93 2,577 (2,484) -96% 5,154

Long serv ice aw ards 85 550 – 13 540 275 265 96% 550

Post-retirement benefit obligations 2 – – – – – – – –

Sub Total - Other Municipal Staff 59,805 77,765 – 7,782 33,334 38,883 (5,549) -14% 77,765

% increase 4 30.0% 30.0%

Total Parent Municipality 79,107 102,770 – 9,377 42,937 51,385 (8,448) -16% 102,770

Summary of Employee and Councillor remuneration Ref

KZN271 Umhlabuyalingana - Supporting Table SC8 Monthly Budget Statement - councillor and staff benefits - M06 December

TOTAL SALARY, ALLOWANCES & BENEFITS 79,107 102,770 – 9,377 42,937 51,385 (8,448) -16% 102,770

% increase 4 29.9% 29.9%

TOTAL MANAGERS AND STAFF 66,635 89,314 – 8,329 36,645 44,657 (8,013) -18% 89,314




ASSESSMENT REPORT

Municipal financial performance

Municipal financial performance as at 31 December 2019 is good as revenue recognized is at 61%. Revenue

recognized for property rates is 14% below the projected budget for 6 months. This performance is a result of

overstating budget for property rates and it will be adjusted in the adjustment budget. Interest recognized from

investments and other bank accounts is 27% above the projected budget because it also includes interest received

from other bank accounts.

Revenue recognized from service charges – refuse removal is 5% below the projected budget for this period. The

reason is that budget was overstated and it will be adjusted in the adjustment budget.

Rental of facilities revenue recognized is 10% below the projected budget for this period, this is because other

market stalls are not occupied because they need to be repaired and be in a condition to be leased out

Interest recognized from outstanding debtors is 28% more than the projected budget for this period because budget

was understated, it will be adjusted in the adjustment budget.

Fines, penalties and forfeits revenue recognized is 66% below the projected budget because there is a backlog of

4 months in the capturing of the traffic fines issued due to the technical challenges in the traffic unit regarding

populating data to enable the recognition of traffic fines income.

Licenses and permits revenue recognized is 57% below the projected budget because there is a technical

challenge in the traffic unit regarding the population of data to enable the recognition of licensing income from

traffic section.

Revenue recognized from transfers and subsidies operational is 50% more than the projected budget because of

funds received for Equitable Share in the month of July and December.

Other revenue recognized is 1579% above the projected budget because of funds received from LGSETA as a

refund that was not budgeted and more funds have been received from sale of tender documents than what was

budgeted for, since other revenue is understated it will be adjusted in the adjustment budget.

Total operating expenditure is sitting at 45% of the total budget as at 31 December 2019. In terms of performance

total operating expenditure is 9% below the projected budget of 6 months.




ASSESSMENT REPORT

Employee related costs expenditure recognized is 18% below the projected budget for this period because the

municipality budgeted for increase in salaries due to the new grading of the municipality that was anticipated to be

implemented in this financial year.

Councillors allowances expenditure recognized is 6% below the projected budget for this period because we have

not yet implemented upper limits of councilors allowances because we have not yet received the approval of the

MEC for COGTA.

Expenditure recognized for debt impairment is 0% because debt impairment will be calculated at year end.

Depreciation expenditure is 13% below the projected budget because budget was overstated and it will be adjusted

in the adjustment budget.

Finance charges expenditure is 91% below the projected budget at this period.

Other material expenditure is 63% below the projected budget because there is a low expenditure on inventory

items falling under other materials category.

Contracted services expenditure is 19% above the projected budget because other programs were implemented

in the past quarters but the budget is projected over 12 months equally.

Transfers and subsidies expenditure is 33% below the projected budget because other programs were projected

to be spent in the next quarter but budget is projected over 12 months equally.

Other expenditure is 31% above the projected budget because other programs were projected to be implemented

in the past quarter but budget is projected over 12 months equally.




ASSESSMENT REPORT

Capital Programme Performance

Total capital expenditure is 21% below the 6 months budget projections, as disclosed in table C5 below. As per

the functional classification finance and administration is 87% below the budget projections because computer

equipment was planned to be purchased in the 3rd once the assessment has been made. Furniture and equipment

will also be purchased in the 3rd quarter as per the plan of Asset Management unit.

Community and social services expenditure is 77% below the projected budget because there has been changes

than needed to re-priorities capital projects hence there is less expenditure in this category.

2018/19

Audited

Outcome

Original

Budget

Adjusted

Budget

Monthly

actual

YearTD

actual

YearTD

budget

YTD

variance

YTD

variance

Full Year

Forecast

R thousands %

Revenue By Source

Property rates 20,367 26,978 – 1,933 11,598 13,489 (1,891) -14% 26,978

Serv ice charges - electricity rev enue – – – – – – – –

Serv ice charges - w ater rev enue – – – – – – – –

Serv ice charges - sanitation rev enue – – – – – – – –

Serv ice charges - refuse rev enue 583 655 – 52 312 327 (15) -5% 655

Rental of facilities and equipment 368 413 – 31 187 207 (20) -10% 413

Interest earned - ex ternal inv estments 4,802 4,035 – 482 2,572 2,018 554 27% 4,035

Interest earned - outstanding debtors 610 721 – 82 461 360 101 28% 721

Div idends receiv ed – – – – – – –

Fines, penalties and forfeits 1,578 1,168 – – 199 584 (385) -66% 1,168

Licences and permits 3,569 3,592 – – 772 1,796 (1,025) -57% 3,592

Agency serv ices – – – – – – – –

Transfers and subsidies 154,883 174,495 – 56,195 131,030 87,248 43,782 50% 174,495

Other rev enue 630 108 – 7 908 54 854 1579% 108

Gains on disposal of PPE 1,841 – – – – – – –

Total Revenue (excluding capital transfers and

contributions)

189,231 212,166 – 58,782 148,037 106,083 41,954 40% 212,166

Expenditure By Type

Employ ee related costs 66,635 89,314 – 8,329 36,645 44,657 (8,013) -18% 89,314

Remuneration of councillors 12,472 13,456 – 1,049 6,292 6,728 (435) -6% 13,456

Debt impairment 35,733 11,400 – – – 5,700 (5,700) -100% 11,400

Depreciation & asset impairment 25,404 25,627 – 1,772 11,100 12,813 (1,714) -13% 25,627

Finance charges 3 105 – 0 5 53 (48) -91% 105

Bulk purchases – – – – – – – –

Other materials 2,084 1,768 – – 326 884 (558) -63% 1,768

Contracted serv ices 40,483 26,183 – 693 15,604 13,092 2,513 19% 26,183

Transfers and subsidies 1,907 1,700 – 26 566 850 (284) -33% 1,700

Other ex penditure 47,566 34,153 – 1,098 22,314 17,076 5,238 31% 34,153

Loss on disposal of PPE – – – – – – – –

Total Expenditure 232,287 203,706 – 12,966 92,852 101,853 (9,001) -9% 203,706

Surplus/(Deficit) (43,056) 8,460 – 45,815 55,185 4,230 50,955 0 8,460 Transfers and subsidies - capital (monetary allocations)

(National / Prov incial and District) 40,844 39,918 – 202 7,984 19,959 (11,975) (0) 34,918 Transfers and subsidies - capital (monetary allocations)

(National / Prov incial Departmental Agencies,

Households, Non-profit Institutions, Priv ate Enterprises,

Public Corporatons, Higher Educational Institutions) – – – – – – – –

Transfers and subsidies - capital (in-kind - all) – – – – – – – –

Surplus/(Deficit) after capital transfers &

contributions

(2,213) 48,378 – 46,018 63,169 24,189 43,378

Tax ation –

Surplus/(Deficit) after taxation (2,213) 48,378 – 46,018 63,169 24,189 43,378

Attributable to minorities

Surplus/(Deficit) attributable to municipality (2,213) 48,378 – 46,018 63,169 24,189 43,378

Share of surplus/ (deficit) of associate

Surplus/ (Deficit) for the year (2,213) 48,378 – 46,018 63,169 24,189 43,378

Description Ref

Budget Year 2019/20

KZN271 Umhlabuyalingana - Table C4 Monthly Budget Statement - Financial Performance (revenue and expenditure) - M06 December




ASSESSMENT REPORT

Economic and environmental services expenditure is 60% below the projected budget because planning and

development has not spent its budget to purchase vehicles, air conditioners, and other plant and equipment.

2018/19 Budget Year 2019/20

Audited

Outcome

Original

Budget

Adjusted

Budget

Monthly

actual

YearTD

actual

YearTD

budget

YTD

variance

YTD

variance

Full Year

Forecast

R thousands 1 %

KZN271 Umhlabuyalingana - Table C5 Monthly Budget Statement - Capital Expenditure (municipal vote, functional classification and funding) - M06

December

Vote Description Ref

Single Year expenditure appropriation 2

Vote 1 - Finance & Admin 5,006 1,270 – – – 635 (635) -100% 1,270

Vote 2 - Ex ecutiv e & Council – – – – – – – –

Vote 3 - Community and Social Serv ices 47,007 12,000 – – 1,366 6,000 (4,634) -77% 12,000

Vote 4 - Internal Audit – – – – – – – –

Vote 5 - Water Management – – – – – – – –

Vote 6 - [NAME OF VOTE 6] – – – – – – – –

Vote 7 - Waste Management 9,429 600 – – – 300 (300) -100% 600

Vote 8 - Energy Sources 0 24,000 – 991 19,147 12,000 7,147 60% 24,000

Vote 9 - Planning and Dev elopment 33,759 6,300 – – 1,951 3,150 (1,199) -38% 6,300

Vote 10 - Sports & Recreation 41,727 – – – – – – –

Vote 11 - Road Transport 21,728 21,918 – 193 3,955 10,959 (7,004) -64% 21,918

Vote 12 - Health 869 – – – – – – –

Vote 13 - Housing. – – – – – – – –

Vote 14 - Public Safety – – – – – – – –

Vote 15 - Finance & Admin 2 158,059 1,290 – – 87 645 (558) -86% 1,290

Total Capital single-year expenditure 4 317,584 67,378 – 1,184 26,506 33,689 (7,183) -21% 67,378

Total Capital Expenditure 317,584 67,378 – 1,184 26,506 33,689 (7,183) -21% 67,378

Capital Expenditure - Functional Classification

Governance and administration 163,065 1,360 – – 87 680 (593) -87% 1,360

Ex ecutiv e and council – – – – – – – –

Finance and administration 163,065 1,360 – – 87 680 (593) -87% 1,360

Internal audit – – – – – – – –

Community and public safety 90,006 12,000 – – 1,366 6,000 (4,634) -77% 12,000

Community and social serv ices 47,007 12,000 – – 1,366 6,000 (4,634) -77% 12,000

Sport and recreation 41,727 – – – – – – –

Public safety 404 – – – – – – –

Housing – – – – – – – –

Health 869 – – – – – – –

Economic and environmental services 55,487 29,418 – 193 5,906 14,709 (8,803) -60% 29,418

Planning and dev elopment 33,759 7,500 – – 1,951 3,750 (1,799) -48% 7,500

Road transport 21,728 21,918 – 193 3,955 10,959 (7,004) -64% 21,918

Env ironmental protection – – – – – – – –

Trading services 9,429 24,600 – 991 19,147 12,300 6,847 56% 24,600

Energy sources 0 24,000 – 991 19,147 12,000 7,147 60% 24,000

Water management – – – – – – – –

Waste w ater management – – – – – – – –

Waste management 9,429 600 – – – 300 (300) -100% 600

Other 21,080 – – – – – – –

Total Capital Expenditure - Functional Classification 3 339,068 67,378 – 1,184 26,506 33,689 (7,183) -21% 67,378

Funded by:

National Gov ernment 58,289 52,918 – 1,184 22,704 26,459 (3,755) -14% 52,918

Prov incial Gov ernment 7,779 5,000 – – 1,764 2,500 (736) -29% 5,000

District Municipality – – – – – – – –

Other transfers and grants – – – – – – – –

Transfers recognised - capital 66,068 57,918 – 1,184 24,467 28,959 (4,492) -16% 57,918

Borrowing 6 – – – – – – – –

Internally generated funds 116,690 9,460 – – 2,039 4,730 (2,691) -57% 9,460

Total Capital Funding 182,758 67,378 – 1,184 26,506 33,689 (7,183) -21% 67,378




ASSESSMENT REPORT

Material Variances on Service Delivery and Budget Implementation Plan

COMMUNITY SERVICES DEPARTMENT

Sports and recreation programme

Expenditure is 22% at mid-year but it will increase in the next quarter because there are sporting activities

planned for the 3rd quarter as per the SDBIP. Other sports projects have been committed but payments have

not yet been made like SALGA games held in December. There will be no adjustment in the adjustment budget

for this programme.

Youth programme

Expenditure is 17% at mid-year. The reason for low expenditure is because youth activities programmes are

planned for the 2nd and 3rd quarter such as Matric Awards, Carrier expo, school outreach programme, youth

commemoration, youth dialog, etc. Other projects are still under commitments because payments have not been

made yet. There will be no adjustment for this programme in the adjustment budget.

HIV & AIDS Programme

Expenditure is 72% at mid-year, the reason for spending more than 50% is because the main event for HIV &

AIDS programme was planned for the 2nd quarter, and it was achieved in December 2018. There will be no

adjustment for this programme in the adjustment budget.

Arts and Culture Programme

Expenditure is 5% at mid-year, arts and culture activities are planned for the 3rd and 4th quarter such as uMthayi

Festival and Music Tour that is why there is too little expenditure at this time but it will improve in the next quarter.

Other projects like Reed dance have already been committed but payments have not yet been made. There will

be no adjustment for this programme.

Waste Management programme

Expenditure is 7% at mid-year, because fumigation and purchase of protective clothing for the staff working town

cleaners is going to be purchase in January 2019. Cleaning material is purchased when it is needed and there

is a commitment already made for the purchase of cleaning material in the month of January 2019. There will

be no adjustment in the adjustment budget for this programme.




ASSESSMENT REPORT

Disability programme

Expenditure is 0% at mid-year because this programme will be implemented in the 3rd quarter as per the SDBIP.

There will be no adjustment for this programme in the adjustment budget.

Poverty Alleviation programme

Expenditure is 33% at mid-year, community services officials are currently busy with the implementation and

collection of data from the beneficiaries that are going to receive assistance from the municipality to implement

their project as ward level to alleviate poverty. Other projects have already been committed but not yet paid.

This project will be implemented until year end because it’s ongoing. There will be no adjustment for this

programme in the adjustment budget.

Gender programme

Expenditure is 44% at mid-year. Expenditure will improve in the next quarter because activities for this quarter

were planned for quarter 3. There will be no adjustment for this programme in the adjustment budget.

Subsistence and Travelling

Expenditure is 13% at mid-year. The reason for low expenditure is because there are commitments for

accommodation that are not yet paid because the travelling agent has not yet submitted. This item will not be

adjusted in the adjustment budget.

LED SECTION-BUDGET EXPENDITURE STATUS-QUO

SMME Programme

Expenditure is 8% at mid-year because SMME programmes will be implemented in the 3rd quarter as per the

SDBIP. There will be no adjustment for this programme in the adjustment budget.

Tourism Programme

Expenditure is 22% at mid-year. This programme was implemented in December 2018 but payments for services

used have not yet paid that is why expenditure is low at this point in time. There will be no expenditure for this

programme in the adjustment budget.



accommodation that are not yet paid because the travelling agent has not yet submitted




ASSESSMENT REPORT

MANAGEMENT

Audit fees

Expenditure is 14% at year-end. Expenditure is for both internal audit and external audit (Auditor General)

Audit committee fees

Expenditure is 16% at mid-year. Expenditure is low because there has been two sitting since the beginning of

the financial year of the audit committee hence the expenditure is low. There will be no adjustment for this item

in the adjustment budget.

Risk Management Committee fees

Expenditure is 23% at mid-year. There has been two sitting of the committee since the beginning of the financial

year hence there is low expenditure on this item. There will be no adjustment in the adjustment budget.

Marketing and communication programme

Expenditure is 4% at mid-year. A lot of commitments were done in the month of December 2018 for this

programme and it has not yet been paid hence expenditure is this low at this point in time. There will be no

adjustment in the adjustment budget.

IDP Road shows

Expenditure is 42% at mid-year. Other road shows will be held in, March and April 2019 when the municipality

is reviewing the IDP. The will be an adjustment for this programme in the adjustment budget.

COUNCIL

Burial Support

Expenditure is 34% at mid-year. Expenditure depends on the number of requested submitted by families who

needs assistance to bury their family members. This item will not be adjusted in the adjustment budget

Community wellness programme

Expenditure is 26% at mid-year. Expenditure for this item also depends on the number of requests received from

communities. This item will not be adjusted in the adjustment budget


Expenditure is 92% at mid-year. Expenditure is too high because of the mayoral vehicle hired when the vehicle

allocated to him was broken. There are other accommodation commitments done during the period but not yet




ASSESSMENT REPORT

paid as we have not yet received invoices from the travelling agent. This item will be adjusted in the adjustment

budget.

FINANCE DEPARTMENT

Debt impairment

Expenditure is 0% as at 31 December 2019, because debt impairment is calculated annually in June when we

are preparing Annual Financial Statements.

Bank charges

Expenditure is 18%, as it is R50 844 for the main bank account and all short term deposits accounts. This line

item will not be adjusted in the adjustment budget.

Minimum Competency Level trainings

Expenditure is 3%, it was a finance workshop that was attended by Finance Interns in the month of October

2019. Other trainings have been planned for 3rd quarter.

Financial System support project

Expenditure is 65%, this expenditure is for payment of the support service that is being rendered by CCGS on a

monthly basis or as and when it is needed as the system vendor to address any system challenges we encounter

as the municipality.

Interest expense

Interest expense is sitting at 4%, this expense is for payment of penalties or overdue accounts, we had also

budgeted for finance lease should the municipality take finance lease during the financial year.

Financial support project

Expenditure is 94% due to many hours worked and claimed by the consultant when supporting finance staff in

the preparation of AFS and handling audit queries. This line item will be adjusted in the adjustment budget

because the support is still needed.

Depreciation

Depreciation expenditure of Property Plant and Equipment is 43% as at 31 December 2019, expenditure looks

less because other projects have not yet been capitalized but as soon as those projects have been capitalized

expenditure will increase.




ASSESSMENT REPORT

Valuation roll implementation project

Expenditure is 8% at mid-year. Expenditure is low because most of the activities for the supplementary valuation

roll will be implemented in the 3rd quarter and 4th quarter. This line item budget will not be adjusted in the

adjustment budget.

Maintenance of computer equipment

Expenditure for maintenance of computer equipment is sitting at 0% because all those computer equipment that

have been sent for repairs have not yet been paid as we are waiting for the submission of the invoice to be paid.


Expenditure is 67% at mid-year. The reason for high expenditure is because there are more traveling and

accommodation incurred in the past 6 months. This item will be monitored closely and if there is need to adjust

in the adjustment budget it will be adjusted.

CORPORATE SERVICES

HR Policies Review

Expenditure is 105% at mid-year. Budget was understated for this line item, it will be adjusted in the adjustment

budget.

Legal Services

Expenditure is 29% at mid-year. Expenditure is based to a number of legal matters referred to legal services

(outsourced) hence expenditure is low at mid-year. This line item will not be adjusted in the adjustment budget.

Insurance services

Expenditure is 281% at mid-year. Budget was understated for this project because it should cover all the

municipal asset including movable and immovable assets. This item will be adjusted in the adjustment budget.

IT & Website project

Expenditure is 28% at mid-year. Expenditure will increase in this quarter as there are commitments made in

January regarding the IT networking which is in progress, licence renewal has been committed in January but

not yet paid and website maintenance and hosting is ongoing until end of the financial year. This item will not be

adjusted in the adjustment budget.




ASSESSMENT REPORT



accommodation that are not yet paid because the travelling agent has not yet submitted invoices. This item will

be monitored closely and if there is need to adjust in the adjustment budget it will be adjusted.




ASSESSMENT REPORT

Quality Certificate

I Nonhlanhla P. Gamede, the Municipal Manager of uMhlabuyalingana Municipality, hereby certify that the Mid-

year budget and Performance Assessment report for 2019/2020 financial year and supporting documentation have

been prepared in accordance with the Municipal Finance Management Act and the regulations made under the

Act, and that the supporting documents are consistent with the Acts and Regulations.

Print Name: Mrs Nonhlanhla P. Gamede

Municipal Manager of Local Municipality (KZ271)

Signature______________________________________

Date__________________________________________

MID-YEAR BUDGET & PERFORMANCE ASSESSMENT REPORT …€¦ · As the Mayor of the Municipality, I...

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