The municipality's mandate is in accordance with section 152 of the South African constitution. The accountant is required by the Municipal Financial Management Act (Act 56 of 2003) to keep adequate accounts and is responsible for the content and integrity of the annual accounts and associated financial information included in this report.
Presentation currency
The annual financial statements have been prepared in accordance with the Standards of Generally Accepted Accounting Practice (GAAP), issued by the Accounting Standards Board in accordance with Section 122(3) of the Municipal Financial Management Act (Act 56 of 2003). These annual financial statements have been prepared on an accrual basis of accounting and are in accordance with historical cost convention as the basis of measurement, unless otherwise specified.
Going concern assumption
Below is a summary of the significant accounting policies that have been consistently applied in preparing these financial statements.
Significant judgements and sources of estimation uncertainty
Property, plant and equipment
Property, plant and equipment (continued)
Revaluation of the useful life of an intangible asset with a finite useful life after it has been classified as indefinite is an indication that the asset may be impaired. As a result the asset is tested for impairment and the remaining carrying amount is amortized over its useful life.
Financial instruments
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates. Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices.
Financial instruments (continued)
Any difference between the amount received and the amounts recognized and derecognized is recognized in surplus or deficit in the period of the transfer. Upon derecognition of a financial asset in its entirety, the difference between the book value and the amount received is recognized as surplus or deficit.
Leases
Distributions to holders of residual interests are recognized directly in net assets by the entity. Income tax [if applicable] in respect of distributions to holders of residual interests and transaction costs incurred on residual interests is accounted for in accordance with the International Accounting Standard on Income Taxes.
Impairment of cash-generating assets
A financial asset and a financial liability are only offset, and the net amount is presented in the statement of financial position, when the company currently has a legally enforceable right to offset the recognized amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. In the accounting treatment of a transfer of a financial asset that does not meet the conditions for derecognition, the company does not set off the transferred asset and the associated liability.
Impairment of cash-generating assets (continued)
If the recoverable amount of a cash-generating asset is less than its book value, the book value of the asset is reduced to its recoverable amount. The book value of the cash-generating unit is determined on a basis that is consistent with the method of determining the recoverable amount of the cash-generating unit. An impairment loss of a cash-generating unit is recognized if the unit's recoverable amount is less than the unit's book value.
Impairment of non-cash-generating assets
When the estimated amount for an impairment loss is greater than the carrying amount of the cash-generating asset to which it relates, the municipality recognizes a liability only to the extent that is a requirement in the Standard of GRAP. If it is not possible to estimate the recoverable amount of the individual asset, the municipality determines the recoverable amount of the cash-generating unit to which the asset belongs (the asset's cash-generating unit). The amount of the impairment loss that would otherwise be allocated to the asset is allocated pro rata to the other cash generating assets of the unit.
Impairment of non-cash-generating assets (continued)
If the recoverable service amount of a non-cash generating asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable service amount. When the estimated amount for an impairment loss is greater than the carrying amount of the non-cash generating asset to which it relates, the municipality recognizes a liability only to the extent that is a requirement in the Standards of GRAP. After the recognition of an impairment loss, the depreciation (amortization) charge for the non-cash-generating asset is adjusted in future periods to allocate the non-cash-generating asset's revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life.
Employee benefits
Employee benefits (continued) Short-term employee benefits
In measuring its defined benefit liability, the entity recognizes actuarial gains and losses in surplus or deficit in the reporting period in which they occur. Current service cost is the increase in the present value of the defined benefit obligation resulting from employee service in the current period. In measuring its defined benefit liability, the entity recognizes past service costs as an expense in the reporting period in which the plan is modified.
Employee benefits (continued)
When it is virtually certain that another party will reimburse some or all of the expenses necessary to settle a defined benefit obligation, the right to reimbursement is recognized as a separate asset. In surplus or deficit, the expense related to a defined benefit plan [OR is not presented as the net of the amount recognized for a refund. The currency and term of the financial instrument chosen to reflect the time value of money are consistent with the currency and estimated term of the post-employment benefit obligations.
Provisions and contingencies Provisions are recognised when
In all other respects the asset is treated in the same way as the assets of the scheme. The rate used to discount pension liabilities (both funded and unfunded) reflects the time value of money. Medical cost assumptions take into account estimated future changes in the cost of medical services, as a result of both inflation and specific changes in medical costs.
Provisions and contingencies (continued)
The landfill remediation provision is designed for the remediation of currently operating locations at the anticipated time of closure in the future. The value of the provision is based on the expected future costs of rehabilitating the various sites, discounted back to the balance sheet at the current cost of capital. The cost of such property includes the initial assessment of the cost of remediation of the land and restoration of the location on which it is located, an obligation that the municipality has due to the use of the property for a specified period of time for landfill purposes.
Commitments
The municipality estimates the useful life and makes assumptions about the useful life of these assets, which affects the provision for future costs.
Revenue from exchange transactions
Revenue from exchange transactions (continued) Rendering of services
Revenue from non-exchange transactions
An inflow of funds from a non-exchange transaction recognized as an asset is recognized as revenue, except to the extent that a liability is also recognized in connection with the same inflow. Income from non-exchange business is measured in the amount of the increase in net assets recognized by the municipality. Assets from fines are measured according to the best estimate of the inflow of funds to the municipality.
Investment income
When a municipality fulfills a present obligation recognized as a liability in connection with an inflow of funds from a non-exchange transaction recognized as an asset, it reduces the book value of the recognized liability and recognizes an amount of revenue equal to this reduction. When a liability is required to be recognized, it will be measured as the best estimate of the amount required to settle the liability at the reporting date and the amount of the increase in net assets, if any, recognized as revenue. When the liability is subsequently reduced because a taxable event occurs or a condition is met, the amount of the reduction in the liability is recognized as revenue.
Borrowing costs
Tax allowances are preferential provisions of the tax law that provide certain taxpayers with concessions that are not available to others. When, as a result of a non-exchange transaction, the municipality recognizes an asset, it also recognizes income equal to the amount of the asset measured at its fair value as at the date of acquisition, unless it is also required to recognize a liability. Where the municipality collects fines in the capacity of an agent, the fine shall not be the income of the collecting entity.
Comparative figures
Unauthorised expenditure Unauthorised expenditure means
Fruitless and wasteful expenditure
Irregular expenditure
Budget information
Related parties
Management are those persons responsible for planning, directing and controlling the activities of the municipality, including those charged with the governance of the municipality in accordance with legislation, in cases where they are required to perform such functions. Close family members of a person are considered those family members who can be expected to influence or be influenced by that management in their relations with the municipality.
Events after reporting date
New standards and interpretations
Standards and interpretations issued, but not yet effective
Segment Reporting
Related parties
New standards and interpretations (continued)
Disclosure of related party transactions, outstanding balances, including commitments, and related party relationships may affect users' assessments of the reporting entity's financial position and performance and its ability to provide agreed services, including assessments of the risks and opportunities the entity faces. If the reporting entity itself is such a plan, the sponsoring employers are associated with the entity. The effective date of the standard has not yet been set by the Minister of Finance.
The definition of cash-generating assets has been amended to be consistent with changes to clarify the purpose of cash-generating assets and cash-generating assets. Added additional commentary to clarify the purpose of cash generating assets and cash generating assets. The disclosure requirement for criteria developed to distinguish cash-generating non-cash assets from cash-generating assets has been amended to be consistent with changes to clarify the purpose of non-cash and cash-generating assets.
New standards and interpretations (continued) Disclosures
The disclosure requirement for the criteria developed to distinguish cash-generating assets from cash-generating assets has been amended to be consistent with changes to clarify the purpose of cash-generating assets and cash-generating assets. The municipality expects to adopt the standard for the first time in the financial statements for 2018. It is unlikely that the standard will significantly affect the annual financial statements of the municipality.
The Selection of an Appropriate Reporting Framework by Public Entities
Standards and interpretations not yet effective or relevant
Property, plant and equipment
Property, plant and equipment (continued) Reconciliation of property, plant and equipment - 2016
Property, plant and equipment (continued) Reconciliation of property, plant and equipment - 2015
Property, plant and equipment (continued) Deemed cost
Intangible assets
Employee benefit obligations Defined benefit plan
Employee benefit obligations (continued)
Receivables from non-exchange transactions (continued)
Consumer debtors (continued) Refuse
Cash and cash equivalents Cash and cash equivalents consist of
Cash and cash equivalents (continued) The municipality had the following bank accounts
Finance lease obligation Minimum lease payments due
Unspent conditional grants and receipts
Payables from exchange transactions
Property rates Rates received
Property rates (continued)
Service charges
Government grants and subsidies Operating grants
Government grants and subsidies (continued) Art and Culture Subsidy
Government grants and subsidies (continued) Municipal infrastructure grant (MIG)
Government grants and subsidies (continued) Small town rehabilitation grant
Government grants and subsidies (continued) Housing projects
Public contributions and donations
Other income
General expenses
Employee related costs
Employee related costs (continued) Remuneration of Director Corporate Services
Remuneration of councillors (continued) In-kind benefits
Debt impairment
Impairment loss/reversal of impairment assets Impairments
Finance costs
Auditors' remuneration
Operating lease
Cash generated from operations
Commitments
Contingent liabilities
Prior period errors
Prior period errors (continued)
Risk management Financial risk management
Risk management (continued) Market risk
Events after the reporting date Events after the reporting date is as follows;
Fruitless and wasteful expenditure
Irregular expenditure
Additional disclosure in terms of Municipal Finance Management Act Audit fees
