Section 121(1) of the Local Government: Municipal Finance Management Act 56 of 2003 (MFMA) stipulates that every municipality and municipal entity must for each financial year prepare an annual report in accordance with its guidelines.

The purpose of the Annual Report (AR) is to provide a record of the activities for that year, to report on performance against the budget of the municipality for the financial year reported on, and to promote accountability to the local community for the decisions made throughout the year.

According to the MFMA, this report should include:

• The annual financial statements of the Municipality, and consolidated annual financial statements, submitted to the Auditor-General for audit in terms of section 126 (1) of the MFMA;
• The Auditor-General’s audit report in terms of section 126 (3) of the MFMA and in accordance with s45 (b) of the MSA; on the financial statements in (a) above;
• The annual performance report of the Municipality as prepared by the Municipality in terms of section 45(b) of the Local Government: Municipal Systems Act 32 of 2000 (MSA);
• An assessment of the arrears on municipal taxes and service charges;
• An assessment of the Municipality’s performance against the measurable performance objectives referred to in Section 17 (3)(b) of the MFMA for revenue collection from each revenue source and for each vote in the Municipality’s approved budget for the financial year;
• Corrective action taken in response to issues raised in the audit reports referred to in paragraphs (b) and (d);
• Recommendations of the Municipality’s Audit Committee.

The Action iT People subject matter experts who support this solution are uniquely equipped with practical skills and knowledge gained through decades of experience in local government. The Action iT People subject matter experts can successfully navigate between achieving advisory solution outputs and transferring skills to enable the municipality to internalise institutional development and improvements beyond the contract intervention period.

By utilising the services of the Municipal Advisory for the purposes of drafting the AR, municipalities will derive the following benefits:

• Ensure accuracy, reliability and integrity of the AR;
• Ensure compliance with recommended National Treasury AR format and best practice inclusions;
• Independent oversight of the municipal governance and compliance;
• Review of the alignment and accuracy of the AR to the approved IDP, Budget and SDBIP; and
• Review of the completeness of the AR before publication, minimising the need for additional editing.

The aim of the project is to review information compiled in the AR on behalf of the municipality. Some of the areas that will be reviewed during the process include, but are not limited to, the following:

• Mayoral Overview Review
• Governance Compliance Overview Review
• Service Delivery Performance Overview Review
• Organisational/ Departmental Development Performance Overviews Review
• Financial Performance Overview Review
• Legislative Annexures Review

In order to review the AR, the following items are included in the scope of work:

• 5 x days on-site fact finding and collation of information;
• Review of the Draft AR and amendments for the Final AR, inclusive of the Oversight Report and make recommendations for improvement, if any;
• Review of the Executive Foreword by Municipal Manager and Mayor and make recommendations for improvement, if any;
• Review of the analysis of organisational performance and make recommendations for improvement, if any;
• Review of financial performance narrative, and make recommendations for improvement, if any;
• Review of the inputs from relevant departments for inclusion in the AR;
• Review per Auditor-General recommendations and required amendments and make recommendations for improvement;
• 1 x virtual workshop to discuss AR discrepancies between the receipted information;
• Report on governance compliance risks and recommendations.

The following items are excluded from the scope of work:

• Auditing of the Draft or Final AR, AFS, POE and APR Tables;
• Submissions of the AR and POE to external stakeholders, including the Auditor-General and Council;
• Presentation of the Draft and/or final AR to the Managerial Team and Audit Committee;
• Presentation of the Draft and/or final AR to Council, the community or the Auditor-General;
• Assistance with responses to requests for information and findings from the Auditor-General on AR-related matters;
• Assistance with responses on requests for information and findings received from the Auditor-General pertaining to materiality and audit evidence;
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• Assistance with responses on requests for information and findings received from the Auditor-General for non-AR related matters; and
• Amendments to existing approved policy documentation or recommendations for future amendments.

The success of the project is contingent on the availability of information, robust turnaround time on requests for information and buy-in from all relevant members of municipal staff.

The price of the proposed services is contingent on the categorical classification of the municipality and the amount of mandated basic services provisions to the community.

The following terms and conditions will apply to the project:

• The client’s management team is responsible for ensuring stakeholder commitment and support for all initiatives.
• All relevant stakeholders will attend the allocated meetings as scheduled.
• The team will endeavour to fulfil the scope of work, as far as possible, off-site to ensure that travel and subsistence costs are kept to a minimum.
• Travel and subsistence costs will be charged separately and at actual costs incurred;
• The client is responsible for supplying source documentation to the consultant within 24 hours of request and in the format as requested by the advisor; and
• If the client cancels an agreed on-site engagement in less than 48 hours, the client will be liable for actual disbursement costs already incurred by the service provider.