The accounting officer is of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the financial statements. Although the accounting officer is primarily responsible for the financial affairs of the municipality, he is supported by the municipality's senior managers. The municipality did not complied with the requirements of section 126 of the Municipal Finance Management Act.
The accounting policies on pages 14 to 36 and the notes on pages 36 to 76 form an integral part of the financial statements.
Presentation of Financial Statements
Presentation currency
Going concern assumption
Mergers Definitions
Mergers (continued)
Significant judgements and sources of estimation uncertainty
Significant judgements and sources of estimation uncertainty (continued) Allowance for doubtful debts
Investment property
Property, plant and equipment
Property, plant and equipment (continued)
The depreciation charge for each period is recognised in surplus or deficit unless it is included in the carrying amount of another asset. Items of property, plant and equipment are derecognised when the asset is disposed of or when there are no further economic benefits or service potential expected from the use of the asset. The gain or loss arising from the derecognition of an item of property, plant and equipment is included in surplus or deficit when the item is derecognised.
The gain or loss arising from the derecognition of an item of property, plant and equipment is.
Intangible assets
Assets which the municipality holds for rentals to others and subsequently routinely sell as part of the ordinary course of activities, are transferred to inventories when the rentals end and the assets are available-for-sale. All cash flows on these assets are included in cash flows from operating activities in the cash flow statement.
Intangible assets (continued)
Heritage assets
Heritage assets (continued) Subsequent measurement
Financial instruments Classification
Financial instruments (continued) Receivables from exchange transactions
Financial instruments (continued) Gains and losses
Leases
Inventories
Impairment of cash-generating assets
Impairment of cash-generating assets (continued) Recognition and measurement (individual asset)
Impairment of non-cash-generating assets
Impairment of non-cash-generating assets (continued)
Impairment of non-cash-generating assets (continued) Reversal of an impairment loss
Accumulated surplus / (deficit)
Employee benefits
Employee benefits (continued) Short-term employee benefits
Employee benefits (continued)
The entity determine the present value of defined benefit obligations and the fair value of any plan assets with sufficient regularity such that the amounts recognised in the financial statements do not differ materially from the amounts that would be determined at the reporting date. The entity uses the Projected Unit Credit Method to determine the present value of its defined benefit obligations and the related current service cost and, where applicable, past service cost. The Projected Unit Credit Method (sometimes known as the accrued benefit method pro-rated on service or as the benefit/years of service method) sees each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation.
In determining the present value of its defined benefit obligations and the related current service cost and, where applicable, past service cost, an entity shall attribute benefit to periods of service under the plan’s benefit formula. The results of the valuation are updated for any material transactions and other material changes in circumstances (including changes in market prices and interest rates) up to the reporting date. The entity recognises gains or losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs.
Before determining the effect of a curtailment or settlement, the entity re-measure the obligation (and the related plan assets, if any) using current actuarial assumptions (including current market interest rates and other current market prices). When it is virtually certain that another party will reimburse some or all of the expenditure required to settle a defined benefit obligation, the right to reimbursement is recognised as a separate asset. In all other respects, the asset is treated in the same way as plan assets.
In surplus or deficit, the expense relating to a defined benefit plan is presented as the net of the amount recognised for a reimbursement. The entity offsets an asset relating to one plan against a liability relating to another plan when the entity has a legally enforceable right to use a surplus in one plan to settle obligations under the other plan and intends either to settle the obligations on a net basis, or to realise the surplus in one plan and settle its obligation under the other plan simultaneously.
Employee benefits (continued) Actuarial assumptions
Commitments
Provisions and contingencies Provisions are recognised when
Revenue from exchange transactions
Revenue from exchange transactions (continued) Interest, royalties and dividends
Revenue from non-exchange transactions
Revenue from non-exchange transactions (continued)
Borrowing costs
Comparative figures
Unauthorised expenditure Unauthorised expenditure means
Unauthorised expenditure (continued)
Fruitless and wasteful expenditure
Irregular expenditure
Housing development fund
Investments
Conditional grants and receipts
Budget information
Related parties
Events after reporting date
Notes to the Financial Statements
New standards and interpretations
- Standards and interpretations effective and adopted in the current period
- Standards and interpretations issued, but not yet effective
The municipality has not applied the following standards and interpretations, which have been published and are mandatory for the municipality’s accounting periods beginning on or after 01 July 2017 or later periods:.
Segment Reporting
- New standards and interpretations (continued)
This Standard has been approved by the Board but its effective date has not yet been determined by the Minister of Finance. The effective date indicated is a provisional date and could change depending on the decision of the Minister of Finance. Where items have no been recognised as a result of transitional provisions under the Standard of GRAP on Property, Plant and Equipment, recognition requirements of this Standard would not apply to such items until the transitional provision in that Standard expires.
Where items have not been recognised as a result of transitional provisions un the Standard of GRAP on Property, Plant and Equipment and the Standard of GRAP on. Agriculture, the recognition requirements of the Standard would not apply to such items until the transitional provision in that standard expires. The effective date of the standard is not yet set by the Minister of Finance.
The municipality expects to adopt the standard for the first time when the Minister sets the effective date for the standard. It is unlikely that the standard will have a material impact on the municipality's financial statements.
Related parties
If the reporting entity is itself such a plan, the sponsoring employers are related to the entity;. The standard furthermore states that 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.
Service Concession Arrangements: Grantor
Service Concession Arrangements where a Grantor Controls a Significant Residual Interest in an Asset This Interpretation of the Standards of GRAP provides guidance to the grantor where it has entered into a service
- Investment property
- Property, plant and equipment
- Property, plant and equipment (continued) Reconciliation of property, plant and equipment - 2017
- Intangible assets
- Heritage assets
- Prepayments
- Investments
- Other Receivables
- Cash and cash equivalents Cash and cash equivalents consist of
- Receivables from exchange transactions
- Receivables from non-exchange transactions
- VAT receivable
- Housing Development Reserve
- Employee benefit obligations Defined benefit plan
- Finance lease obligation Minimum lease payments due
- Consumer deposits
- Actuarial (gain)/loss
- Finance costs
- Investment earned - external investments Interest revenue
- Contracted services
- Bulk purchases
- Going concern
- Fruitless and wasteful expenditure
- Irregular expenditure
- Additional disclosure in terms of Municipal Finance Management Act Contributions to organised local government
- Commitments Description
A register containing the information required by section 63 of the Municipal Finance Management Act is available for inspection at the registered office of the municipality. As a result of the verification process, new assets were identified that was not accounted for on the Fixed Asset Register. The Finance Lease agreement for Photocopiers, previous in the name of the Modimolle Municipality expired in the previous financial year.
Property, plant and equipment (continued). As per the standards of GRAP Useful life must be reviewed annually. During the verification of assets a condition assessment was performed and based on the conditions of assets, the Useful Life was reviewed and adjusted where necessary, by either reducing or increasing the Remaining Useful Life's of the assets. This resulted in the Useful Life of 250 assets to increase. Reconciliation of Work-in-Progress - 2017. inspection at the registered office of the municipality. After assessing the relevant factors, LIM368 determined that there is no foreseeable limit to the period over which the intangible assets are expected to generate a service potential for the entity, and therefore the useful life will be indefinite. Where an intangible asset arises from contractual rights or legal rights, the useful life of the intangible asset should not exceed the period of the contractual or legal rights, but may be shorter. If there is a specified term that the contract or legal right can be renewed without incurring significant cost, then the useful life should include the renewal period. The Historical objects consist of two mayoral chains and a statue in Mookgopong town. Heitage Assets are accounted for as per the Standards of GRAP 103 on Heritage Assets. Due to the nature of Heritage Assets, i.e. they are held for an indefinite period, Heritage Assets are not depreciated, as they do not have a limited useful life. Any diminution in value may also be immaterial. The Municipality pays its Insurance Policy with an annual payment in July of every year. The Investment is renewable annually. The shares held in NTK are for the purposes of holding an account with the entity. NTK shares earn dividends that are payable to the Municipality every 15 years. Currently the investments amount to R9 358. The deposit is held by Eskom for bulk services rendered to the municipality. There are two stores within the municipality, one in Modimolle and the other in Mookgophong. The store consists mainly of maintenance items for the Water, Sanitation and Electricity Departments as well as stationary and protective clothing for the Municipality. Cash and cash equivalentsCash and cash equivalents consist of: Cash and cash equivalents consist of The overdraft disclosed is as a result of investigating items on the bank reconciliation due to the. The municipality provides certain post-retirement health care benefits by funding the medical aid contributions of qualifying retired members of the municipality. The Principal assumptions used for the purposes of the actuarial valuations were as follows: 30 June 2017.
902,777 Reconciliation of the present value of defined benefit obligation to fair value of liability: 30 June 2017. The results of the merger will be included in the 2017 financial statements of the combined entities. NS Bambo vs LIM 368 Local Municipality - Seeking a legal opinion on the transfer of the employment conditions of the erstwhile Municipal Manager of the erstwhile Modimolle Local Municipality.
Makgoba Kgomo Makgaleng Inc representing Makgoleng Trading CC vs Erstwhile Mookgophong Local Municipality - For alleged non-payment of supply, installation and/or replacement of a traffic light at the intersection of the main road and Pick n Pay. JF de Beer vs Erstwhile Mookgophong Local Municipality - Court rules in favour of the Municipality with cost. The municipality’s risk to liquidity is a result of the funds available to cover future commitments.
The financial liabilities of the municipality are backed by appropriate assets and it has adequate liquid resources.
