It is the accountant's responsibility to ensure that the annual accounts give a true and fair view of the municipality's situation as of the end of the financial year and the results of its operations and cash flows for the period then ended. The accountant recognizes that he is ultimately responsible for the internal financial control system established by the municipality and places great emphasis on maintaining a strong control environment. The focus of risk management in the municipality is to identify, assess, manage and monitor all known forms of risk across the municipality.
While operational risk cannot be fully eliminated, the municipality seeks to minimize it by ensuring that appropriate infrastructure, controls, systems and ethical behavior are applied and managed within. The accounting officer has reviewed the municipality's cash flow forecast for the year to 30 June 2015 and, in the light of this review and the current financial position, he is satisfied that the municipality has sufficient resources or has access to sufficient resources to be in operational existence. for the foreseeable future. The annual financial statements are drawn up on the basis that the municipality is a going concern and that the municipality has neither the intention nor the need to liquidate or substantially reduce the scale of the municipality.
The external accountants are responsible for independently assessing and reporting on the municipality's annual accounts. The annual accounts have been audited by the municipality's external accountant and their report can be found on page.
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) Impairment testing
- Investment property
- Investment property (continued) Fair value
- Property, plant and equipment
- Property, plant and equipment (continued)
- Site restoration and dismantling cost
- Intangible assets
- Intangible assets (continued)
- Financial instruments
- Financial instruments (continued)
- Financial instruments (continued) Derecognition
- Leases
- Impairment of cash-generating assets
- Impairment of cash-generating assets (continued)
- Impairment of non-cash-generating assets
- Employee benefits
- Employee benefits (continued)
- Employee benefits (continued) Other employee benefits
- Provisions and contingencies Provisions are recognised when
- Revenue from exchange transactions
- Revenue from exchange transactions (continued)
- Service charges
- Revenue from non-exchange transactions
- Revenue from non-exchange transactions (continued) Measurement
- Revenue from non-exchange transactions (continued) Gifts and donations, including goods in-kind
- Investment income
- Borrowing costs
- Comparative figures
- Unauthorised expenditure Unauthorised expenditure means
- Fruitless and wasteful expenditure
- Irregular expenditure
- Use of estimates
- Conditional grants and receipts
- Events after reporting date
- Budget information
- Related parties
- Commitments
- Value added tax
Investment properties are recognized as an asset when it is probable that the future economic benefits or service potential associated with the investment property will flow to the municipality, and the cost price or fair value of the investment property can be reliably measured. The company uses the cost price model (in accordance with accounting practices for property, plant and equipment) until disposal of the investment property. If the acquired item's fair value could not be determined, its estimated cost price is the accounting value of the given asset(s).
If a replacement cost is recognized in the accounting value of a tangible fixed asset, the accounting value of the replaced part is deducted. The municipality recognizes a financial asset or a financial liability in its statement of financial position when the municipality becomes a party to the contractual provisions of the instrument. 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.
Service revenue is recognized by reference to the stage of completion of the transaction 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. Assets derived from fines are measured according to the best estimate of the input of resources to the municipality.
Gifts and donations, including in kind, are recognized as assets and revenue when it is probable that the future financial benefits or service potential will flow to the municipality and the fair value of the assets can be measured reliably.
Receivables from non-exchange transactions
VAT receivable
Receivables from exchange and non-exchange transactions Gross balances
Receivables from exchange and non-exchange transactions (continued)
Receivables from exchange and non-exchange transactions (continued) Summary of debtors by customer classification
Cash and cash equivalents (continued)
Investment property
Property, plant and equipment
Property, plant and equipment (continued) Reconciliation of property, plant and equipment - 2014
Property, plant and equipment (continued) Reconciliation of property, plant and equipment - 2013
Intangible assets
Finance lease obligation Minimum lease payments due
Payables from exchange transactions
Provisions
Provisions (continued)
The future service costs for the following year are estimated at R160 728, while the interest costs for the year after that are estimated at R221 479.
Property rates Rates received
Government grants and subsidies Operating grants
Government grants and subsidies (continued)
This grant was used to subsidize the costs of improving sound financial management and to pay salaries for financial management trainees. This grant was used to provide training in basic accounting to finance staff. There was no delay or withholding of the subsidy. The grant will be used for employment creation in the areas of environment, culture, infrastructure and social poverty eradication and capacity building and skills programmes. Certain conditions of the grant have been met.
This grant was used to subsidize the cost of building low cost housing in Donnybrooke.
Other revenue
Employee related costs
Remuneration of Councillors
Depreciation and amortisation
General expenses
Auditors' remuneration
Cash generated from operations
Unauthorised expenditure (continued)
Irregular expenditure
Employee benefit obligations Defined contribution plan
Additional disclosure in terms of Municipal Finance Management Act Contributions to organised local government
Additional disclosure in terms of Municipal Finance Management Act (continued) Pension and Medical Aid Deductions
Risk management Financial risk management
- Risk management (continued) Credit risk
- Unspent Conditional Grants
- Trade payables from exchange transactions Trade payables
- Prior period errors (continued)
- Trade debtors
- Accumulated surplus
- Revenue
- Related parties
Credit risk mainly consists of cash deposits, cash equivalents, derivative financial instruments and trade receivables. The municipality only deposits cash with large banks with high quality credit and limits exposure to any one counterparty. Otherwise, if there is no independent rating, risk control assesses the credit quality of the customer, taking into account his financial position, previous experience and other factors.
This resulted in previous year's figures of accumulated surplus and other statement of financial position components being restated. During the year, the municipality discovered that it had not implemented AERP 23 Income from non-barter transactions in relation to accounting for government grants. The Standard was applicable for the reporting periods on or after 30 April 2012, ie GRAP 23 was applicable for the reporting period 30 June 2013.
Previous year's accounts payable and accumulated profit figures have been adjusted to correctly reflect the creditors in the municipality and thus eliminate creditors that have been incorrectly recognized. Long outstanding Macro debit balances were offset as this balance was erroneously recognized as part of other debtors. The changes in accounting practices and the correction of errors in previous periods have affected the accumulated profit according to the above 34.5 Back pay.
During the year, the municipality implemented the South African Local Government Bargaining Council's collective agreement that obliges the municipality to provide post-health care to the retired members of the municipality. It is a general practice to consider a 10% deviation on operating expenses from the final budget as material. The following revenue and operating expenditure items showed material differences for the financial year June 30, 2014.
The increase is due to an increase in the capital budget, which leads to more tenders (tender documents revenue.). Due to contractors not completing the projects on time, inadequate supply of electricity in the area has caused delays in the completion of the projects. For the first time in the 2013-2014 financial year, the municipality has adopted the following accounting standards and interpretation of standards in GRAP in order to comply with the basis for preparing accounts as stated in accounting practice 1.
Intangible Assets
Applying the probability test on initial recognition of revenue
Revenue from non-exchange transactions - Traffic fines Receivables from non-exchange transactions
New standards and interpretations
- Standards and interpretations not yet effective
The following standards and interpretations have been issued, but are not yet in force and have not yet been adopted early by the municipality. Where a GRAP standard has been issued but is not yet in force and gazetted.
Segment Reporting
New standards and interpretations (continued)
It further includes Definitions, Identifying a transfer of functions between entities not under common control, The. The municipality is only considering introducing the standard when it becomes applicable to the municipality's business operations. The municipality cannot reliably estimate the impact of the change on the annual accounts.
The objective of this standard is to establish accounting principles for the acquirer in a transfer of functions between entities that are not under common control. It requires an entity that prepares and presents financial statements under the accrual basis of accounting to apply this Standard to a transaction or other event that meets the definition of a transfer of functions. It includes a diagram and requires entities to consider the diagram in determining whether this Standard should be applied in accounting for a transaction or event involving a transfer of functions or a merger.
The municipality is unable to reliably assess the impact of the change on the annual accounts.
Related parties
- Financial instruments disclosure Categories of financial instruments
- Contingencies
- Comparative figures
- In-kind donations and assistance
- Events after the reporting date
If the reporting entity is itself such a plan, the sponsoring employers are related to the entity. The standard further states that a related party transaction is a transfer of resources, services or obligations between the reporting entity and a related party, regardless of whether a price is charged. The introduction of this standard is not expected to have an impact on the municipality's results, but may result in more information than is currently provided in the annual accounts.
The purpose of this standard is to prescribe the administrative processing of service concession agreements by the grantor, a public sector entity. The effective date of the standard has not yet been determined by the Minister of Finance. It is unlikely that the standard will have a material impact on the municipality's annual accounts.
The objective of this standard is to: describe the accounting requirements for recognition, measurement, presentation and. In addition, it covers: Definitions, recognition, non-recognition, measurement, presentation and disclosure, transitional provisions, and effective date. The municipality is not able to reliably assess the impact of the standard on the annual financial statements.
The municipality is being taken to the labor court by the former employee for unlawful dismissal. In the event that the court finds an adverse order against the municipality, the municipality may be liable to reimburse the applicant in an amount of. Previous year figures on the long-term and short-term portions of retention and trade payables have been reclassified to properly comply with GRAP 1 requirements regarding the presentation of financial statements.
Previous year's trade payables figures have been reclassified as a result of retention figures taken to trade creditors to correctly meet GRAP 1 requirements. The annual financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis assumes that funds will be available to finance future operations and that the realization of assets and settlement of liabilities, contingent liabilities and obligations will occur in the ordinary course of business.
