It is the responsibility of the Accounting Officer to ensure that the annual financial statements present fairly the state of affairs of the municipality at the end of the financial year and the results of its operations and cash flows for the period then ended. The Accounting Officer recognizes that he is ultimately responsible for the internal financial control system established by the municipality and attaches considerable importance to maintaining a strong control environment. The audit committee is satisfied with the content and quality of the monthly and quarterly reports prepared and issued by the Accounting Officer of the Municipality during the year under review.
The audit committee is satisfied that the internal audit function is working effectively and that it has addressed the risks associated with the municipality and its audits. The external audit used internal audit reports for risk identification purposes but did not rely on the internal audit reports. The municipality is engaged in the provision of municipal services under the Municipal Systems Act No. 32 of 2000 (MSA) and the Municipal Financial Management Act No. 56 of 2003 and operates mainly in South Africa. The accountant discusses management's responsibilities in this regard, at management meetings, and continuously monitors the municipality's compliance with the code.
The municipality has its own internal audit function. This is in accordance with the Municipal Financial Management Act, 2003. The Auditor-General of South Africa (AGSA) will continue to audit the municipality's financial affairs for the foreseeable future.
Statement of Financial Performance
Statement of Changes in Net Assets
Cash Flow Statement
Statement of Comparison of Budget and Actual Amounts
The deviation is the result of an increase in the number of registrations and renewals of motor vehicles. The deviation was mainly the result of maintaining positive balances on bank accounts. Inventory : Variance is due to high inventory utilization during the year and adjustment of obsolete inventory.
Consumer debtors: The deviation was due to data cleaning and write-off of debtors in the financial year. This is due to the revision of the useful life of the landfills and thus increased provisions. The difference is due to Equitable Share and the MIG subsidy, which was withheld during the year.
This is due to the upward adjustment of the salaries of all employees in the year under review. The difference is caused by the slow spending of MIG subsidies in the year under review.
Accounting Policies
Presentation of Annual Financial Statements
- Presentation currency
- Going concern assumption
- Significant judgements and sources of estimation uncertainty
- Significant judgements and sources of estimation uncertainty (continued) Useful lives of waste water and water network assets and other assets
- Property, plant and equipment
- Property, plant and equipment (continued)
- Intangible assets
- Intangible assets (continued) An intangible asset is recognised when
- Financial instruments
- Financial instruments (continued)
- Financial instruments (continued) Derecognition
- Leases
- Inventories
- Impairment of cash-generating assets
- Impairment of cash-generating assets (continued)
- Impairment of non-cash-generating assets
- Impairment of non-cash-generating assets (continued) Value in use
- Employee benefits
- Employee benefits (continued) Short-term employee benefits
- Provisions and contingencies Provisions are recognised when
- Provisions and contingencies (continued) Provisions are not recognised for future operating deficits
- Commitments
- Revenue from exchange transactions
- Revenue from exchange transactions (continued) Rendering of services
- Revenue from non-exchange transactions
- Revenue from non-exchange transactions (continued)
- Revenue from non-exchange transactions (continued) Government grants
- Borrowing costs
- Comparative figures
- Unauthorised expenditure Unauthorised expenditure means
- Fruitless and wasteful expenditure
- Distribution losses
- Budget information
- Related parties
- Events after reporting date
- Expenditure
- Expenditure (continued)
- Value Added Tax
If the fair value of the item acquired was not determinable, the assumed cost is the book value of the asset(s) disposed of. If a replacement cost is recognized in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised. No impairment loss was recognized in the municipality's intangible assets at the reporting date.
The carrying amount of the asset is reduced directly OR using an allowance account. Upon derecognition of a financial asset in its entirety, the difference between the accounting value and the sum of the consideration received is recognized in profit or loss. Depreciation (amortization) is the systematic allocation of the depreciable value of an asset over its useful life.
Depreciation (amortization) is the systematic distribution of the depreciable amount of an asset over its useful life. If there is any such indicator, the municipality estimates the recoverable amount of the service of the asset. Value in use of non-cash-generating assets is the present value of the remaining service potential of non-cash-generating assets.
The present value of the remaining service potential of a non-cash-generating asset is determined as the depreciated replacement cost of the asset. The amount of a provision is the best estimate of the expenditure expected to be required to settle the current liability at the reporting date. Revenue from a non-exchange transaction is measured by the amount of the increase in net assets recognized by the municipality.
When a liability is subsequently reduced because the taxable event occurs or a condition is met, the amount of the reduction of the liability is recognized as revenue. Assets arising from fines are measured at the best estimate of the supply of resources to the municipality. Where the municipality collects fines as an agent, the fine will not be income for the collecting entity.
Revenue from unconditional grants is recognized when it is probable that economic benefits or service potential will flow to the municipality and the amount of revenue can be measured reliably. Gifts and donations, including goods in kind, are recognized as assets and income when it is probable that future economic benefits or service potential will flow to the municipality and the fair value of the assets can be measured reliably.
Notes to the Annual Financial Statements
NEW STANDARDS AND INTERPRETATIONS
- STANDARDS AND INTERPRETATIONS EFFECTIVE AND ADOPTED IN THE CURRENT YEAR
- STANDARDS AND INTERPRETATIONS ISSUED, BUT NOT YET EFFECTIVE
INVENTORIES
RECEIVABLES FROM NON-EXCHANGE TRANSACTIONS
RECEIVABLES FROM NON-EXCHANGE TRANSACTIONS (continued) RECEIVABLES TRANSACTIONS PAST DUE BUT NOT IMPAIRED
RECEIVABLES FROM EXCHANGE TRANSACTIONS GROSS BALANCES
RECEIVABLES FROM EXCHANGE TRANSACTIONS (continued)
CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT (continued)
INTANGIBLE ASSETS
PAYABLES FROM EXCHANGE TRANSACTIONS
UNSPENT CONDITIONAL GRANTS AND RECEIPTS
PROVISIONS
PROVISIONS (continued) LONG SERVICE AWARDS
REVENUE (continued)
LICENCES AND PERMITS
Other income
PROPERTY RATES RATES RECEIVED
REALISATION OF GRANTS Operating grants
REALISATION OF GRANTS (continued)
The purpose of the grant is to assist in the reticulation of water for the community through increased water storage capacity. 4 540 565 The purpose of the grant is to facilitate the planning, acceleration and implementation of various projects that will ensure water supply to communities identified as not receiving basic water supplies. Based on the allocations in the Income Distribution Act, no significant changes in the level of government contributions are expected over the next 3 financial years.
EMPLOYEE RELATED COSTS
EMPLOYEE RELATED COSTS (continued) REMUNERATION OF MUNICIPAL MANAGER
EMPLOYEE RELATED COSTS (continued)
REMUNERATION OF COUNCILLORS
DEPRECIATION AND AMORTISATION
FINANCE COSTS
DEBT IMPAIRMENT
REPAIRS AND MAINTENANCE
BULK PURCHASES
CONTRACTED SERVICES
GRANTS FUNDED EXPENDITURE OTHER SUBSIDIES
GENERAL EXPENSES
Cash generated from operations
PRIOR PERIOD ERRORS
PRIOR PERIOD ERRORS (continued)
RISK MANAGEMENT (continued) CREDIT RISK
EVENTS AFTER THE REPORTING DATE
UNAUTHORISED EXPENDITURE
FRUITLESS AND WASTEFUL EXPENDITURE
IRREGULAR EXPENDITURE
ADDITIONAL DISCLOSURE IN TERMS OF MUNICIPAL FINANCE MANAGEMENT ACT CONTRIBUTIONS TO ORGANISED LOCAL GOVERNMENT
ADDITIONAL DISCLOSURE IN TERMS OF MUNICIPAL FINANCE MANAGEMENT ACT (continued) COUNCILLORS' ARREAR CONSUMER ACCOUNTS
CONTINGENCIES
CONTINGENCIES (continued)
RELATED PARTIES RELATED PARTY BALANCES