It is the responsibility of the accounting officer to ensure that the annual financial statements fairly reflect the state of affairs of the municipality as at the end of the financial year and the results of its operations and cash flow for the period then ended. The accounting officer recognizes that he is ultimately responsible for the system of internal financial control established by the municipality and places great importance on maintaining a strong control environment. The municipality is entirely dependent on the equity share and water sales for continued funding of operations.
The annual financial statements are prepared based on the fact that the municipality is a going concern and that the municipality has neither the intention nor the need to liquidate or materially reduce the scale of the municipality. refer to note 47 for further disclosure in continuity). Although the accounting officer is primarily responsible for the municipality's financial affairs, he is supported by the municipality's internal auditors. The municipality, however, received the statements dated June 30, 2019 from DWS at the end of the year and a provision was made for raw water purchases.
Umgeni Water also invoiced the Municipality for purified water for the period January 2019 to June 2019.
Presentation of Annual Financial Statements
- Presentation currency
- Significant judgements and sources of estimation uncertainty
- Property, plant and equipment
- Property, plant and equipment (continued) Property, plant and equipment is initially measured at cost
- Property, plant and equipment (continued)
- Intangible assets
- Intangible assets (continued)
- Financial instruments
- Financial instruments (continued)
- Financial instruments (continued) Initial recognition
- Leases
- Leases (continued) Operating leases - lessee
- Inventories
- Impairment of cash-generating assets
- Impairment of cash-generating assets (continued) Useful life is either
- Impairment of cash-generating assets (continued) Reversal of impairment loss
- Impairment of non-cash-generating assets
- Impairment of non-cash-generating assets (continued) Useful life is either
- Share capital / contributed capital
- Employee benefits Defined contribution plans
- Provisions and contingencies
- Provisions and contingencies (continued)
- Commitments
- Commitments (continued)
- Revenue from exchange transactions
- Revenue from non-exchange transactions
- Revenue from non-exchange transactions (continued) Government grants
- Investment income
- Borrowing costs
- Comparative figures
- Fruitless and wasteful expenditure
- Irregular expenditure
- Budget information
- Budget information (continued)
- Related parties
- Events after reporting date
- Going concern assumption
If the fair value of the acquired object could not be determined, its purchase value is the book value of the given asset(s). If the cost of replacement is recognized in the book value of the tangible fixed asset, the recognition of the book value of the replaced part is eliminated. The asset's book value is reduced directly OR using an impairment account.
Depreciation (Amortization) is the systematic allocation of an asset's depreciable amount over its useful life. When the estimated amount of an impairment loss is greater than the accounting value of the cash-generating asset to which it relates, the municipality only recognizes a liability to the extent that this is a requirement in the standard for GRAP. The amount of a provision is the best estimate of the expenditure expected to be necessary to settle the current obligation at the reporting date.
Revenue from services is recognized based on the degree of completion of the transaction at the reporting date.
Changes in accounting policy
New standards and interpretations
Standards and Interpretations early adopted
Property, plant and equipment
Property, plant and equipment (continued) Reconciliation of property, plant and equipment - 2019
Property, plant and equipment (continued) Reconciliation of property, plant and equipment - 2018
Property, plant and equipment (continued)
Property, plant and equipment (continued) Reconciliation of Work-in-Progress 2018
Intangible assets
Intangible assets (continued) Reconciliation of intangible assets - 2019
Operating lease liability
Employee benefit obligation
Employee benefit obligation (continued) Key assumptions used
Employee benefit obligation (continued)
Prepayments
Receivables from non-exchange transactions
Receivables from non-exchange transactions (continued)
Consumer debtors Gross balances
Consumer debtors (continued)
Consumer debtors (continued) Reconciliation of allowance for impairment
Consumer debtors disclosure
Consumer debtors disclosure (continued)
Cash and cash equivalents (continued) The municipality had the following bank accounts
Unspent conditional grants and receipts
Unspent conditional grants and receipts (continued) Movement during the year
Provisions
Other liabilites - Consumer debtors
Payables from exchange transactions
Consumer deposits
Revenue
Revenue (continued)
Lease rentals on operating lease Equipment
Investment revenue Interest revenue
Government grants and subsidies Operating grants
Government grants and subsidies (continued)
The purpose of the District Growth and Development grant is to mobilize and synchronize strategic plans and investment priorities in all spheres of Government, state entities, businesses, higher education institutions, workers, civil society and all other social partners in order to achieve the goals, objectives and desired results of growth and development. Development of clearly defined institutional arrangements that ensure decisive leadership, strong management, through the implementation and continuous review of the growth and development plan. The purpose of the grant is the social transformation of emerging farmers who will provide food for government schools and hospitals.
The grant for the NODAL plan covers a development strategy for the economic upliftment of Estcourt, Weenen and Muden. Shared services are the joint provision, performance or delivery of a service, facility or activity by two or more local government entities, each of which may be separate. To achieve this, local government agencies can either enter into joint agreements or transfer the services to another entity.
The main purpose of the RRAM grant is to assist county municipalities in establishing their road asset management system and road and traffic data collection in line with the Road Infrastructure Strategic Framework for South Africa (RISFSA) and to improve the road sector to make it more efficient and internationally competitive. The claim for the recovery of the amount of R which was rejected was not offset by the equity allocation for the financial year 2018/201, nor was the National Treasury claiming a refund. The purpose of the grant is capacity building, which should be understood as an attempt to build individual, organizational, institutional and environmental processes to strengthen the mandate of municipalities to provide services.
Adequate systems and processes are the basis of the transformation of public funding into support of service delivery by competent officials. The Municipal Finance Management Internship Program (MFMIP) is a further attempt to build capacity to fulfill their financial management responsibilities and thus their constitutional obligations. The Expanded Public Works Program (EPWP) is one of a series of government strategies aimed at tackling unemployment.
The purpose of the EPWP Incentive Grant is to enhance provincial and municipal job creation efforts by providing a financial reward for performance. The incentive is designed to reward provinces and municipalities that create EPWP work by reimbursing them for a portion of their salary costs.
Public contributions and donations
Employee related costs
Employee related costs (continued)
Depreciation and amortisation
Finance costs
Debt impairment
Bulk purchases
Contracted services Outsourced Services
Contracted services (continued)
General expenses
General expenses (continued)
Auditors' remuneration
Lease rentals on operating leases Agreement of leases - Lessor
Cash generated from operating activities
Commitments
Commitments (continued)
Contingent Liabilities Contingent liabilities
Contingent Liabilities (continued)
To date, the plaintiffs' lawyers have not taken any further steps to bring the case to a successful conclusion. Shepstone & Wylie wrote to the council about this and sought advice on whether to close their file and issue final account statements. Shepstone & Wylie were instructed by the council to settle the case on the grounds that the council had no valid defense to the claim.
Keswa - Thuk3974.22 - Amount of claim R This is a case in which the previous lawyers of the Municipality in work-related matters had submitted to the Municipality their bill of costs in the amount of R1,853,170 in relation to the matter related to legal work, had submitted to the Municipality their bill of costs in the amount of R1,1708 for the amount of legal services. The municipality considered that the amount claimed in the bill of costs was quite excessive and instructed Shepstone & Wylie to submit the bill of costs to the Law Society for taxation. However, the Municipality then directed that the case be suspended as the parties were attempting to resolve the matter amicably.
The claim relates to an alleged oral agreement where the plaintiff claims she entered into a contract with the municipality to supply meals to Uthukela Winter Disaster Awareness, the plaintiff claims she honored the contract but the municipality failed to make payment. The pleadings were closed, but the plaintiff did nothing to bring the matter to finality. Before the case was set down for trial, the court required the plaintiff to file an application for full joinder to join the proceedings by a certain Vuyani Mthi, and joining Vuyani Mthi would require the plaintiff to serve summons on Mr.
Shepstone & Wylie wrote to the plaintiffs' solicitor asking them to do so, after they received a notice of withdrawal from the solicitors of record. Shepstone & Wylie wrote to the plaintiff and requested that he withdraw the action against the Municipality and the costs of the tender, but no further action was taken by the plaintiff. Namandla Roads And Civils - Thuk3974.21 - This is a matter in which the Municipality has instructed Shepstone & Wylie to bring a claim against Mutual and Federal Risk Finance Limited (MFRFL) to claim the sum of R7,770,981 in respect of a performance bond issued by MFRFF issued by the Municipal Civil MFRund itself in relation to its performance. The latter's contract with the Municipality.
The case will probably not go to court, since MFRFL has already indicated in principle that it wants to settle the case by paying the guarantee amount to the municipality. Following a proposal from MFRFL to transfer the guarantee amount to the trust account of the company, the guarantee amount would either be paid to the municipality or reimbursed to MFRFL, depending on the outcome of an application for intervention made by Namandla to the Supreme Court of PMB to be included as a party in the main proceedings.
Related parties
Prior period errors and restatements
Prior period error and restatements - detailed
Prior period error and restatements - detailed (continued)
Prior period error and restatements - detailed (continued) Statement of finanical performance
In terms of GRAP 1 and GRAP 3, grant operating expenses must be disclosed according to the nature of the expenses and therefore there is no item in the financial performance statement for the disclosure of grant expenses.
Prior period error and restatements - detailed (continued) Statment of changes in net assets
GRAP 108
- Risk management Liquidity risk
- Going concern
- Going concern (continued)
- Events after the reporting date
- Bad debt written off Irrecoverable debt written off
- Unauthorised expenditure
- Fruitless and wasteful expenditure
- Fruitless and wasteful expenditure (continued)
- Fruitless and wasteful expenditure (continued) Amounts written-off
- Irregular expenditure
- Irregular expenditure (continued) Amounts written-off
- Additional disclosure in terms of Municipal Finance Management Act Contributions to organised local government
- Additional disclosure in terms of Municipal Finance Management Act (continued) Audit fees
- Actual operating expenditure versus budgeted operating expenditure
- Deviation from supply chain management regulations
- Water Losses (continued) Water losses (units)
- Fraudulant activities Heading
The municipality's liquidity risk is a result of the funds available to cover future obligations. The municipality manages the liquidity risk through an ongoing evaluation of future commitments and credit facilities. The municipality's financial position is improving and unspent conditional grants are repaid at the end of the year.
In the financial year, two service providers (collectors) have been appointed to assist the municipality with the recovery of outstanding debts. Weekly cash flow projections are carried out and management will reassess the municipality's financial position after the first six months of the year. The municipality has entered into an agreement with Umgeni Water to carry out the bulk water function on behalf of the municipality.
Umgeni Water currently bills the municipality for purified water and this has put further strain on the municipality's cash flow. This has put a further strain on the Municipality's budget and to be sustainable, the Municipality will have to drastically improve debt collection. This was reported to the Borough's insurers and they have since appointed an assessor to investigate the matter.
Unauthorized expenses are the result of overspending of the total amounts allocated in the municipal budget for the financial year. The Municipality has not been able to determine the source of R8,602,484 and it remains a liability on June 30, 2018. All avenues have been exhausted and the Municipality has not been able to determine the source of R8,602,484 and therefore has transferred the money from the liability account to the surplus accumulated during the financial year 2092/2012.
The municipality's application for refund was rejected and the National Treasury informed the municipality that the amount will be recovered as follows. To ensure this, the municipality designated the National Treasury as a creditor at the end of the year, June 30, 2018.
Analysis of property, plant and equipment as at 30 June 2019
Analysis of property, plant and equipment as at 30 June 2018
Segmental Statement of Financial Performance for the year ended
