The Accounting Officer is required by the Municipal Finance Management Act (Law 56 of 2003) to keep adequate records and is responsible for the content and integrity of the annual accounts and related financial information included in this report. It is the responsibility of the Accounting Officer to ensure that the financial statements give a true and fair view of 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 financial statements have been prepared in accordance with the Standards of General Recognized Accounting Practice (GRAP), including any interpretations, guidelines and guidelines of the Accounting Standards Board.
Based on information and explanations from management, the accountant believes that the system of internal controls provides reasonable assurance that the accounting records can be relied upon when preparing the annual financial statements. Although accountants are primarily responsible for the municipality's financial operations, they are assisted in this by the municipality's external auditors. The accountant is not aware of any matter or circumstance that has arisen since the end of the year.
The annual financial statements prepared in accordance with the South African Statements of Generally Accepted Accounting Practice (GAAP), including any interpretations of such Statements issued by the Accounting Practices Council, and in. The accounting officer is committed to business integrity, transparency and professionalism in all his activities.
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) Post retirement benefits
- Property, plant and equipment
- Property, plant and equipment (continued)
- Investment property
- Intangible assets
- Heritage assets
- Financial instruments
- Financial instruments (continued)
- Financial instruments (continued) Initial recognition
- Financial instruments (continued) Derecognition
- Leases
- Inventories
- Impairment of cash-generating assets
- Impairment of cash-generating assets (continued) Recognition and measurement (individual asset)
- Share capital / contributed capital
- Employee benefits
- Employee benefits (continued)
- Employee benefits (continued) Actuarial assumptions
- Provisions and contingencies Provisions are recognised when
- Provisions and contingencies (continued)
- Site restoration and dismantling cost
- Site restoration and dismantling cost (continued) If the related asset is measured using the cost model
- Commitments
- Revenue from exchange transactions
- Revenue from exchange transactions (continued) Rendering of services
- Revenue from non-exchange transactions
- Revenue from non-exchange transactions (continued) Measurement
- Investment income
- Borrowing costs
- Comparative figures
- Unauthorised expenditure Unauthorised expenditure means
- Fruitless and wasteful expenditure
- Irregular expenditure
- Irregular expenditure (continued)
- Budget information
- Related parties
- Events after reporting date
If the fair value of the acquired item could not be determined, the deemed cost is the carrying amount of the asset or assets given up. If a replacement cost is included in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is no longer recognised. If a replacement part is included in the carrying amount of the investment property, the carrying amount of the replaced part is no longer included.
A municipality recognizes a heritage asset as an asset if it is likely that future economic benefits or service potential related to the asset will flow to the municipality, and the purchase or fair value of the asset can be reliably measured. The asset's book value is reduced directly OR using an impairment account. Any difference between the consideration received and the recognitions and derecognitions is recognized in surplus or deficit in the period of the transfer.
The amount of the provision is the best estimate of the expenditure expected to be required to settle the present obligation at the reporting date. If the reduction of the liability exceeds the carrying amount of the asset, the excess is immediately recognized in surplus or deficit. Income from non-exchange business is measured in the amount of the increase in net assets recognized by the municipality.
Assets resulting from fines are valued at the best estimate of the inflow of funds to the municipality.
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
Consumer debtors (continued) Less: Allowance for impairment
Consumer debtors (continued) Refuse
Cash and cash equivalents Cash and cash equivalents consist of
Cash and cash equivalents (continued)
Investment property
Property, plant and equipment
Property, plant and equipment (continued) Reconciliation of Work-in-Progress 2019
Intangible assets
Heritage assets
Heritage assets (continued) Reconciliation of heritage assets 2019
Other financial assets Designated at fair value
Other financial liabilities At amortised cost
Finance lease obligation Minimum lease payments due
Payables from exchange transactions
Payables from non-exchange transactions
Payables from non-exchange transactions (continued)
Consumer deposits
Employee benefit obligations
Employee benefit obligations (continued) Key assumptions used
1% decrease (R's) 30 June 2019 Valuation basis
1% increase (R's)
Medical Inflation Rate
Discount Rate
Employee benefit obligations (continued)
The assumed normal retirement age is 65 and the fully accrued age (to take into account sickness deductions and early retirement) is 63 for active medical aid workers. The assumed age difference between spouses is 5 years for active medical aid workers and current years are used for retirees. The assumed mortality used is based on mortality table SA85/90 for active duty members and table PA(90)-1 for retirees.
It was assumed that 50% of the in-service members will remain on the municipality's health scheme if they stay until retirement. Under the plan, a long-term employment award is paid to employees after 10 years of continuous service, and every 5 years of continuous service thereafter. The most recent actuarial assessments of the benefit-based obligation were carried out as of 30 June 2019 by One Pangea Expertise & Solutions.
The present value of the defined benefit obligation, and the related current service cost and past service cost, was measured using the projected unit credit method. The valuation was made with reference to Actuarial Association of South Africa (ASSA) guidelines, especially the Advisory Practice Note 207, and is in accordance with the requirements of GRAP25. The methodology for setting up the financial assumptions has been updated to be more time period specific.
For this duration, the discount rate is determined using the bond exchange's zero coupon rate curve per 27 June 2019 8.02% per However, it is the relative levels of the discount rate and wage inflation relative to each other that are important, rather than the nominal values.
Employee benefit obligations (continued) Sensitivity Analysis
Salary Increase Rate
Unspent conditional grants and receipts
Provisions
Revenue
Rental of facilities and equipment Facilities and equipment
Investment revenue Dividend revenue
Government grants and subsidies Operating grants
Government grants and subsidies (continued) National: Regional Bulk Infrastructure Grant (RBIG)
Government grants and subsidies (continued) Lotto: Tshwaraganang
Government grants and subsidies (continued) LED - City Branding
Public contributions and donations
Employee related costs
Employee related costs (continued) Remuneration of Chief Finance Officer
Employee related costs (continued)
Employee related costs (continued) Remuneration of Director: Infrastructure
Employee related costs (continued) Remuneration of director: community services
Remuneration of councillors
Remuneration of councillors (continued) In-kind benefits
Remuneration of councillors (continued)
Impairment of assets Impairments
Finance costs
Repairs and maintenance
Bulk purchases
Contracted services
General expenses
Cash generated from operations
Contingencies
Contingencies (continued)
Kgomotso Segone vs JB Marks; The employee served a claim seeking R400 000.00 due to emotional distress as a result of harassment by co-workers. This case relates to the appointment of the service provider, SO Matshidiso Construction, to supply paraffin lamps, stoves and oil. The designation of the service provider was not in accordance with the applicable law and is therefore invalid.
The sums paid to the service provider must also be repaid to the municipality with deduction of the reasonable costs incurred by the service provider. FUTURE PHAMBILI // JB MARKS - Matters arising from damages allegedly suffered by the plaintiff due to the alleged failure of the municipality to order the monthly quantity of paraffin according to the signed service level agreement. False and defamatory statements were published in the Herald Newspaper about the former Municipal Manager, the Executive Mayor, the Speaker and officials on 21 February 2018.
Financial exposure in favor of the municipality is minimal to none and the lawyers will not pursue the case further. Readira Refuge Services CC has filed a lawsuit against the council for unpaid balance of a contract with the Supreme Court. Community Development Program and Rhythm of the Nation to finalize agreements with surface rights owners.
This matter relates to the rental agreements in terms of which an amount of R 4.5 million was paid to INCA. New evidence has come to light during the current year which suggests that part of the municipality's claim has lapsed. This matter relates to the breach of municipal by-laws by JD Viljoen, a taxpayer in the Ventersdorp region.
This matter relates to the breach of municipal by-laws by SP Selani, a taxpayer in the Ventersdorp region. This matter relates to the breach of municipal by-laws by Shalom Trust, a taxpayer in the Ventersdorp region. This matter relates to the breach of municipal by-laws by MM Saaiman, a taxpayer in the Ventersdorp region.
Financial instruments disclosure Categories of financial instruments
Financial instruments disclosure (continued) Fair Value
Risk management Financial risk management
Risk management (continued) Credit Risk
Risk management (continued)
Irregular expenditure
Unauthorised expenditure
Related parties
Related parties (continued)
Notes to the Annual Financial Statements
- Additional disclosure in terms of Municipal Finance Management Act Contributions to organised local government
- Prior period errors
- Prior period errors (continued)
- Distribution losses Electricity Distribution
- Change in estimate Property, plant and equipment
- Going concern
- Events after the reporting date
- Comparative figures
- In-kind donations and assistance
The new calculation resulted in debt impairment in the 2017/18 financial year being underestimated by R with accumulated surplus being overestimated by R11 704 146 for the previous financial years. In the 2017/18 financial year, traffic fines deleted from the roll were wrongly omitted as part of income, resulting in the overstating of both Fines income and Debtors from non-exchange transactions by R633 900. Cash and cash equivalents - Outstanding deposits interim account with an expense of R90 to general cash and equivalent of 114 was not cash in general. 7/18 financial year.
Cash and cash equivalents reissuance of checks suspense account with a balance of R was not cleared to the main bank account in the previous financial year. An award on the RBIG grant of R2 916 057 received in the 2017/18 financial year but related to the 2018/19 financial year was incorrectly classified as Debt from foreign exchange transactions instead of Debt from non-exchange transactions. Consumer deposits received of R606 969 were incorrectly classified under Foreign Exchange Liabilities in the previous financial year, thereby overstating Foreign Exchange Liabilities and correspondingly understating Consumer Deposits.
Other financial liabilities were undervalued in previous financial years with R and Overvalued respectively. Electricity service charges were overstated at R2 743 975 in FY 2017/18 due to the year-end prepaid electricity estimation journal being incorrectly posted. Facilities Rentals and Miscellaneous other income were undervalued in FY 2017/18 by R871 626.28 and R30 735 respectively due to unsettled suspense accounts that were in Payable from bill of exchange transactions, which.
Cash and cash equivalents check account with a balance of R11 007.62 has not been deposited into the main bank account in the previous financial year. Other accounts receivable amounting to R54 927.33 were wrongly classified in Receivables from non-exchange transactions in the previous fiscal year, resulting in Receivables from non-exchange transactions being overstated and accordingly. Income from traffic fines was incompletely recorded in the previous financial year, resulting in an understatement of fines, fines and forfeitures by R8 435 765, while trade receivables were undervalued accordingly.
The unauthorized expenditure incurred in the 2017/18 financial year changed from R as previously reported to R as a result of change in the actual expenditure due to previous period adjustments identified above. Irregular expenditure (irregular expenditure and deviations not submitted to the council) was overestimated by R in the 2017/18 financial year as the registers included items that did not meet the definition of Irregular expenditure. Contingent liabilities were overstated in the 2017/18 financial year as an ongoing case between the former Ventersdorp Municipality and INCA was wrongly included in contingent liabilities.
