Although the accountant is primarily responsible for the municipality's financial affairs, they are supported by the municipality's external auditors. The external auditors are responsible for independently reviewing and reporting on the municipality's annual accounts.
Presentation of Financial Statements
- Significant judgements and sources of estimation uncertainty
- Property, plant and equipment
- Property, plant and equipment (continued)
- Site restoration and dismantling cost
- Intangible assets
- Intangible assets (continued)
- Financial instruments Classification
- Financial instruments (continued) Held to maturity
- Leases
- Leases (continued) Operating leases - lessee
- Inventories
- Non-current assets held for sale and disposal groups
- Impairment of cash-generating assets
- Impairment of cash-generating assets (continued) Cash-generating units
- Impairment of cash-generating assets (continued) Reversal of impairment loss
- Impairment of non-cash-generating assets
- Impairment of non-cash-generating assets (continued) Value in use
- Employee benefits Short-term employee benefits
- Employee benefits (continued)
- Provisions and contingencies Provisions are recognised when
- Provisions and contingencies (continued)
- Provisions and contingencies (continued) Decommissioning, restoration and similar liability
- Revenue from exchange transactions Measurement
- Revenue from exchange transactions (continued) Interest
- Revenue from non-exchange transactions
- Revenue from non-exchange transactions (continued) Rates, including collection charges and penalties interest
- Investment income
- Borrowing costs
- Comparative figures
- Unauthorised expenditure
- Unauthorised expenditure (continued)
- Fruitless and wasteful expenditure
- Irregular expenditure
- Budget information
- Capital commitments
The carrying amount of the asset is reduced through the use of an allowance account and the amount of the deficit is recognized as a surplus or deficit within operating expenses. If the recoverable amount of a cash-generating asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognized for a cash-generating unit if the unit's recoverable amount is less than the unit's carrying amount.
If such an indication exists, the municipality estimates the recoverable service amount of the asset. The value in use of an asset is the present value of the remaining service potential of the asset. The present value of the remaining service potential of a non-cash-generating asset is determined as the depreciated value.
If the recoverable amount of service of a non-cash-generating asset is less than its carrying amount, the carrying amount of the asset is reduced to the amount of recoverable service. If a reduction in the liability exceeds the carrying amount of the asset, the excess is recognized immediately in surplus or deficit.
Changes in accounting policy
New standards and interpretations
Standards and interpretations effective and adopted in the current year
Changes in Existing Decommissioning, Restoration and Similar Liabilities
New standards and interpretations (continued)
Determining Whether an Arrangement Contains a Lease
Rights to Interests Arising from Decommissioning, Restoration and Environmental Rehabilitation Funds This Interpretation of the Standards of GRAP applies to accounting in the financial statements of a contributor for interests
Applying the Restatement Approach under the Standard of GRAP on Financial Reporting in Hyperinflationary Economies
Loyalty Programmes
The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction
Agreements for the Construction of Assets from Exchange Transactions
Agreements within the framework of this interpretation of the standards in GRAP are agreements on the construction of assets in foreign exchange transactions. In addition to the construction of assets in barter transactions, such agreements may include the provision of other goods or services. Is the agreement within the scope of the Standard of GRAP on Construction Contracts (as revised in 2010) or the Standard of GRAP on Revenue from Exchange Transactions (as revised in 2010).
Distributions of Non-cash Assets to Owners
Assets Received from Customers
New standards and interpretations (continued) IGRAP 13: Operating Leases – Incentives
In negotiating a new or renewed operating lease, the landlord may provide incentives for the tenant to enter into the agreement. Examples of such incentives are an advance payment of cash to the tenant or the reimbursement or assumption by the landlord of costs of the tenant (such as relocation costs, improvements to the lease and costs associated with a pre-existing lease commitment of the tenant). Alternatively, initial periods of the tenancy can be agreed to be rent free or at a reduced rent.
The issue is how the incentives in an operating lease should be recognized in the financial statements of both the lessee and the lessor.
Evaluating the Substance of Transactions Involving the Legal Form of a Lease
Revenue – Barter Transactions Involving Advertising Services
The question is under what circumstances a seller can reliably measure revenue at the fair value of advertising services received or delivered in a barter transaction.
A change in the accounting treatment, recognition or measurement of a transaction, event or situation within the basis of accounting is considered a change in accounting policy. The reference to SAICA's Accounting Practice Committee (APC) has been deleted from paragraph .11 on the basis that it is not a standard-setter and that entities would consider information from a number of sources, not just APC statements, when formulating accounting policy.
The guidance in the original text about substance rather than legal form has been deleted. The guidance on the classification of land and buildings has been amended to ensure that the part of the lease relating to the land is classified as a finance lease where significant risks and rewards have been transferred, despite there being no transfer of ownership, in compliance with general classification guidance.
Paragraphs .23 and .24 have been amended to clarify that the guidance applicable to determining the fair value of revalued assets also applies to the initial measurement of property, plant and equipment at fair value. An additional paragraph has been added to clarify that annually assessing the useful life of an asset does not require the municipality to adjust the previous estimate, unless expectations differ from the previous estimate. Instead, these assets must be transferred and handled in accordance with GRAP's standard for inventories.
Added to the list of encouraging disclosures is the disclosure of the fair value of assets where the cost model is used. The Company shall apply these amendments prospectively for annual periods beginning on or after April 1, 2011.
New standards and interpretations (continued) The impact of the amendment is not material
- Standards and Interpretations early adopted
GRAP 100 (as revised 2010): Non-current assets held for sale and discontinued operations The revision resulted in several terminology and definitional changes. Paragraph .07 was added to clarify the application of other GRAP standards to assets classified as non-current assets (or disposal groups) held for sale. An additional example is included regarding sales expected to be completed within one year.
Revenue from Non-exchange Transactions
Presentation of Budget Information in the Financial Statements
The adoption of this standard did not have a significant impact on the municipality's result, but it resulted in more disclosures than would previously have been in the financial statements. When determining whether a financial instrument is a financial asset, a financial liability or a residual interest, the municipality considers the content of the contract and not just the legal form. At initial recognition, the fair value of the concession loan is the present value of the agreed contractual cash flows, discounted using the market interest rate for a similar transaction.
The difference between the proceeds received or paid and the present value of the contractual cash flows is recognized by the recipient of a concessional loan as non-exchange proceeds in accordance with GRAP's standard on income from non-exchange proceeds transactions (taxes and taxes). Transfers), and the use of the framework for the preparation and. A municipality can only value investments in residual interests at cost if the fair value of the interest cannot be determined reliably. GRAP 104 requires extensive disclosures about the significance of financial instruments for the overview of a municipality's financial position and financial performance, as well as the nature and extent of the risks to which a municipality is exposed as a result of its financial statements.
Agriculture
Financial assets and financial liabilities that are non-derivative instruments with fixed or determinable payments, e.g. deposits in financial institutions, receivables and debts, are measured at amortized cost. However, upon first recognition, a municipality may designate such an instrument to be measured at fair value. When a municipality has classified a financial asset or a financial liability either at fair value or amortized cost, it is only permitted to reclassify such instruments in limited cases.
Exchange of debt instruments between a borrower and a lender is treated as extinguishment of an existing liability and recognition of a new financial liability. Where a municipality changes the term of an existing financial obligation, it is also treated as termination of an existing obligation and recognition of a new obligation. A municipality cannot set off financial assets and financial liabilities in the statement of financial position, unless there is a legal right of set-off and the parties intend to settle on a net basis.
Intangible Assets
Standards and interpretations issued, but not yet effective
The municipality did not apply the following standards and explanations that were published and are mandatory for the municipality's accounting periods beginning on or after July 1, 2012, or later periods:
Impairment of Non-cash-generating Assets
Impairment of Cash-generating Assets
If an active market exists for the output produced by an asset or group of assets, that asset or group of assets is identified as a cash-generating unit, even if some or all of the output is used internally. Cash-generating units are identified consistently from period to period for the same asset or types of assets, unless a change is justified. The impairment is allocated to reduce the carrying amount of the cash generating assets of the unit on a pro rata basis, based on the carrying amount of each asset in the unit.
When a non-cash-generating asset contributes to a cash-generating unit, the share of the book value of this non-cash-generating asset is allocated to the book value of the cash-generating unit before the assessment of the recoverable amount of the cash-generating unit. Municipal assets at each reporting date, whether there is any indication that an impairment loss recognized in prior periods for a cash-generating asset may no longer exist or may have decreased. Reversal of an impairment loss on a cash-generating asset is recognized immediately in surplus or deficit.
Employee benefits
Standards and interpretations not yet effective or relevant
Segment Reporting
In the case of a transfer of functions between municipalities under common control, the assets and liabilities must be recognized (by the acquirer) at their carrying amounts and must be derecognized (by the transferor) at their carrying amounts. Specific disclosures are required when there is a transfer of function between municipalities under common control. The purpose of this GRAP standard is to establish accounting principles for the acquirer in a transfer of functions between municipal entities that are not under common control.
In the case of a transfer of functions between municipalities that are not under common control, the assets and liabilities must be recognized (by the acquirer) at their acquisition-date fair value and must be derecognized (by the acquirer) at their carrying amounts. For the transfer of functions between municipalities that are not under common control, there are some specific recognition and measurement principles and exceptions to the recognition and measurement principles. Specific disclosures are required when there is a transfer of functions between municipalities that are not under common control.
Related Party Disclosures
- Property, plant and equipment
- Other financial assets Fair value
- Other financial assets (continued)
- Inventories
- Cash and cash equivalents Cash and cash equivalents consist of
- Unspent conditional grants and receipts
- Payables from exchange transactions
- Consumer deposits
- Revenue
- Service charges
- Government grants and subsidies
- General expenses
- Employee related costs
- Remuneration of councillors
- Administrative expenditure
- Debt impairment
- Auditors' remuneration
- Grants and subsidies paid Other subsidies
- Events after the reporting date
- Additional disclosure in terms of Municipal Finance Management Act PAYE and UIF
- Additional disclosure in terms of Municipal Finance Management Act (continued) VAT
Transfer of functions between municipalities that are not under common control is the reorganization and/or redistribution of functions between municipalities that are not ultimately controlled by the same entity, before and after the transfer of functions. In a merger, a new merged municipality begins, where the acquirer cannot be identified and the merging municipalities have no control over the municipality. The municipality expects to adopt the standard for the first time when it enters into force.
It is unlikely that the standard will significantly affect the municipality's financial statements. In the current or previous year, the municipality did not reclassify any financial assets from purchase or amortization value to fair value or from fair value to purchase or amortization value. The nature and extent of state aid recognized in the financial statements and the indication of other forms of state aid from which the municipality directly benefited; and.
