I am responsible for the preparation of these annual accounts, which are included on pages 5 to 59 within the meaning of Article 126, first paragraph, of the Municipal Financial Management Act and which I have signed on behalf of the municipality. I declare that the salaries, allowances and fringe benefits of councillors, as stated in note 28 of these annual accounts, fall within the upper limits of the framework envisaged in Article 219 of the Constitution, read in conjunction with the Civil Service Remuneration Act bearer and the Minister of Enactment of Provincial and Local Governments in accordance with this Act.
Presentation of Unaudited Annual Financial Statements
Investment property
According to the fair value model, investment properties are carried at fair value on the reporting date. Any gain or loss arising from a change in the fair value of the property is included in surplus or deficit in the period in which it arises.
Property, plant and equipment Property, plant and equipment
Revaluations are made every 5 years so that the book value does not materially differ from what would be determined using the fair value at the end of the reporting period. When an item of property, plant and equipment is revalued, any impairment accumulated at the revaluation date is eliminated against the gross carrying amount of the asset and the net amount revalued to the revalued amount of the asset. The increase is recognized in surplus or deficit to the extent that it reverses a revaluation decrease of the same asset previously recognized in surplus or deficit.
The revaluation surplus in equity related to a specific item of property, plant and equipment is transferred directly to retained earnings when the asset is derecognised. The revaluation surplus in equity related to a specific item of property, plant and equipment is transferred directly to retained earnings as the asset is used. The amount transferred is equal to the difference between depreciation based on the revalued carrying amount and depreciation based on the original cost of the asset.
Property, plant and equipment are depreciated on the straight-line basis over their expected useful lives to their estimated residual value. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is written off separately.
Intangible assets
Revising the useful life of an asset on an annual basis does not require the entity to amend the previous estimate unless expectations differ from the previous estimate. An intangible asset is considered to have an indefinite useful life when, based on all relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows or service potential. Amortization is not provided for these intangible assets, but they are tested for impairment annually and whenever there is an indication that the asset may be impaired.
All other intangible fixed assets are amortized on a straight-line basis over their useful life. The amortization period and amortization method for intangible assets are reviewed at each reporting date. Reassessing the useful life of an intangible asset with a finite useful life after it has been classified as indefinite is an indicator 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. Internally generated brands, mastheads, publication titles, customer lists and similar items are not generally recognized as intangible assets.
Financial instruments
Leases
Inventories
Impairment of assets
Derecognition of assets and liabilities
Employee costs
Employee benefits Short-term employee benefits
Provisions and contingencies Provisions are recognised when
Revenue from exchange transactions
The company retains neither continuing managerial involvement to the degree normally associated with ownership nor effective control over the goods sold. It is probable that the economic benefits or service potential associated with the transaction will flow to the entity and the costs incurred or to be incurred in connection with the transaction can be measured reliably. Income from foreign exchange transactions is measured at the fair value of the consideration received or receivable, taking into account the amount of any discounts and rebates allowed by the company.
Fair value is the amount for which an asset could be traded, or a liability, between knowledgeable, willing parties in a business transaction. Adjustments to provisional consumption estimates take place in the billing period in which meter readings are included. Revenue from the sale of prepaid electricity meter cards is recognized at the point of sale.
Garbage removal service costs are recognized on a monthly retroactive basis using an approved rate for each property that has improvements. Tariffs are determined according to the category of use of the property and are charged monthly based on the recorded number of garbage containers per property. Revenue from the use of the approved tariff is recognized when the relevant service is provided using the relevant official tariff.
Revenue from the sale of goods is recognized when substantially all the risks and rewards in those goods are transferred to the consumer. Income arising from situations where the municipality acts as an agent on behalf of another entity (the principal) is limited to the amount of any fee or commission payable to the municipality as compensation for the performance of the agreed services.
Revenue from non-exchange transactions
Unauthorised expenditure Unauthorised expenditure means
Fruitless and wasteful expenditure
Irregular expenditure
Change in Accounting Policies, Estimates and Errors
Prepayments
Accumulated Surplus
Budget information
Related parties
Commitments
Housing development fund / Housing operating account
Revaluation reserve
Inventories
Other receivables from non-exchange transactions
VAT receivable from exchange transactions
Prepayments
Trade receivables (continued) Net balance
Trade receivables (continued)
Trade receivables (continued) Consumer debtors impaired
Cash and cash equivalents Cash and cash equivalents consist of
Cash and cash equivalents (continued) The municipality had the following bank accounts
Investment property
Property, plant and equipment
Property, plant and equipment (continued)
Property, plant and equipment (continued) Reconciliation of Work-in-Progress 2015
Intangible assets
Payables from exchange transactions
Payables from exchange transactions (continued)
Consumer deposits
Unspent conditional grants and receipts
Provisions
Provisions (continued)
Employee benefit obligations
Employee benefit obligations (continued) Key assumptions used
Revaluation reserve
Revenue
Revenue (continued)
Rental of facilities and equipment
Licenses and permits
Other income
Investment revenue Interest revenue
Property rates Rates received
Government grants and subsidies Operating grants
Government grants and subsidies (continued) National: DoE Electrification grant
Government grants and subsidies (continued) Spatial Development
Government grants and subsidies (continued) Nature Reserve / Greenest Town
Public contributions and donations
Fine receipts
Employee related costs
Employee related costs (continued) Remuneration of Corporate Services Manager
Employee related costs (continued) Staff leave benefits
Remuneration of traditional leaders
Depreciation and amortisation
Debt impairment
Repairs and maintenance
Contracted services
Conditional grants - Operating expenditure Grants paid for projects and IDP
General expenses
Unauthorised expenditure
Fruitless and wasteful expenditure
Irregular expenditure
Section 32 procurement 2016
Additional disclosure in terms of Municipal Finance Management Act Contributions to organised local government
Additional disclosure in terms of Municipal Finance Management Act (continued) Supply chain management regulations - Deviations
Contingencies LIABILITIES
- Contingencies (continued)
- Related parties
- In-kind donations and assistance
- Events after the reporting date
- Risk management Liquidity risk
- Risk management (continued) Credit and Interest risk
- Financial instruments disclosure Categories of financial instruments
- Operating lease
- Key Sources of Estimation Uncertainty and Judgements The following areas involve a significant degree of estimation uncertainty
- Change in accounting policy
- Budget differences
- Prior period errors (continued) Statement of Financial Performance
A lawyer was assigned to represent the municipality in claiming Mr. Mzozoyana regarding non-payment of municipal services and tariffs for 4 properties. Xolani Faniso, wife of the community liaison officer of the municipality, who is also a member of Bathokozeleni Trading CC, was appointed on January 13, 2015 to provide services related to lawn mowing. Xolani Faniso is also a member of Shakes and Xolanis Construction, who were appointed to carry out stadium renovations at Thandanani.
Taelo Letseka, wife of the accountant - Municipal payroll (1 November 2012 - Current), is a member of Sweet Dreams Trading who was appointed to mow and clean grass on various municipal properties, the cost incurred was R1 205 000 As far as the management is aware, councilors and/or management of the municipality had no relationship with companies. During the year under review, the municipality did not have any transactions or events involving donations in kind.
The municipality's liquidity risk is the result of the funds available to cover future obligations. The municipality manages liquidity risk through a continuous review of future commitments and credit facilities. Credit and Interest 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. The management of the municipality is of the opinion that the carrying value of Financial Assets and Financial Liabilities recorded at amortized cost in the Annual Financial Statements approximates their fair values. The fair value of Financial Assets and Financial Liabilities was determined after considering the standard terms and conditions of agreements entered into between the municipality and other parties as well as the current payment relationships of the municipality's debtors.
Provisions for landfill rehabilitation (discount rate used, number of years, amount of cash flows) Present value of defined benefit obligations. Interest on investments - Cost-cutting measures brought more funds for investments Interest on interest rates - Maluta debt write-off. Contingent Grants - Operating Expenditure - Unspent portion of election grant to be spent in the next financial period, service provider for FBS to be appointed.
