ETHEKWINI METROPOLITAN MUNICIPALITY - TMM - Availability of Annual Financial Statements

TMM - Availability of Annual Financial Statements

ETHEKWINI METROPOLITAN MUNICIPALITY
JSE alpha code: TMM
(“eThekwini” or the “Municipality”)

AVAILABILITY OF ANNUAL FINANCIAL STATEMENTS

eThekwini hereby advises that it has publicly released its audited annual financial statements for the
year ended 30 June 2022 ("AFS"). The auditors of eThekwini, Auditor-General South Africa(“AGSA”),
have issued an unqualified audit report relating to the AFS.

The AFS contain various restatements for the year ended 30 June 2021 (“Prior Period”) relating to:

1. Stale cheques written back in cash and bank balances;
2. Rates valuation, electricity adjustments as well as interest and penalty reversals;
3. Reversal of items incorrectly accrued for, write-off of retentions no longer payable and raising of
    accruals erroneously omitted in the Prior Period;
4. Capitalisation of assets received in the Prior Period but not accrued for, depreciation adjustments
    due to changes in useful lives and derecognition of assets;
5. Cost/amortisation adjustments and work-in-progress corrections;
6. Accruals previously not accounted for in Receivables from exchange transactions as well as
    Department of Human Settlements debtors and bad debts provision adjustments;
7. Adjustments for VAT apportionment relating to prior year adjustments;
8. Adjustments to Heritage Assets;
9. Adjustments for writing back of valuation deposits that have prescribed;
10. Adjustments relating to unmatched receipts for prior periods for goods received vouchers, stock and
    material taken on from completed work-in-progress projects;
11. Investment properties cost adjustments relating to prior periods;
12. Recognition of revenue relating to prior periods of unused portion of grants which was also not
    required to be paid back;
13. Several items have been re-classified within the Income Statement in order to bring the disclosure in
    line with the correct MSCOA categorisations; and
14. The Cashflow Statement has been restated for the above adjustments.

Full details of the restatements are disclosed in Note 45 to the AFS.

In addition, the audit report contains emphasis of matters in relation to:

1. Recognition of a provision for debt impairments on consumer debtors, the recoverability of these
   amounts was doubtful.
2. Material water losses were incurred by the Municipality. The losses arose from ageing and
   deteriorating infrastructure as well as illegal connections.
3. Material water losses were incurred by the Municipality. The losses arose as a result of transmission
   and distribution losses as well as illegal connections.
4. Various legal claims were lodged against the Municipality. The ultimate outcome of the claims could
   not be determined and no provision for any liability was made in the consolidated and separate
   financial statements.

The AGSA audit opinion is not modified in respect of these matters.

The AGSA further identified material irregularities and is in the process of evaluating further actions to
be taken to ensure resolution of the material irregularities:

1. Procurement of surgical face masks at with tie-on at prices higher that the limits in National
   Treasury circular;
2. Procurement of N95 masks at prices higher that the limits in National Treasury circular;
3. Suspected Material Irregularity – payments made to supplier for services not rendered; and
4. Outstanding invoices not paid within 30 days.

The AFS of eThekwini are available on the Municipality’s website at

https://www.durban.gov.za/storage/Documents/Performance%20Monitoring%20and%20Evaluation/An
nual%20Reports/2122%20Group%20AFS.pdf

and for inspection at 263 Dr Pixley Ka Seme Street, Durban, 4001.

31 January 2023

JSE Debt Sponsor
Absa Corporate and Investment Bank (a division of Absa Bank Limited)

Date: 31-01-2023 05:35:00
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