The accountant is obliged to ensure that the financial statements fairly show the state of the municipality at the end of the financial year and the results of its operations and cash flows for the period ended at that time. The financial statements are prepared based on the fact that the municipality is a going concern and that the council has neither the intention nor the need to liquidate or significantly reduce the size of the municipality. External auditors are responsible for the independent review and reporting of the municipality's financial statements.
The financial statements were reviewed by the municipality's external auditors and their report is presented on the page.
Presentation of Financial Statements
- Significant judgements and sources of estimation uncertainty
- Significant judgements and sources of estimation uncertainty (continued) Post-retirement benefits
- Investment property
- Investment property (continued)
- Property, plant and equipment
- Property, plant and equipment (continued)
- Financial instruments
- Financial instruments (continued)
- Financial instruments (continued) Derecognition
- Leases
- Inventories
- Inventories (continued)
- Impairment of cash-generating assets
- Impairment of non-cash-generating assets
- Employee benefits Short-term employee benefits
- Employee benefits (continued)
- Provisions and contingencies
- Provisions and contingencies (continued)
- Revenue from exchange transactions
- Revenue from exchange transactions (continued) Rendering of services
- Revenue from non-exchange transactions
- Revenue from non-exchange transactions (continued) Measurement
- Revenue from non-exchange transactions (continued) Indigent subsidy
- Comparative figures and prior period errors
- Unauthorised expenditure Unauthorised expenditure means
- Fruitless and wasteful expenditure
- Irregular expenditure
- Consumer deposit
- Commitments
- Budget information
- Related parties
- Events after reporting date
- Going concern
If a replacement part is recognized in the accounting value of the investment property, the accounting value of the replaced part ceases. The municipality uses the cost model (in accordance with accounting practices for Tangible fixed assets) until disposal of the investment property. If the fair value of the acquired item could not be determined, the asset's cost price is measured at the accounting value of the given asset(s).
If a replacement cost is recognized in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised. Financial instruments are recognized when the Municipality becomes a party to the contractual provision of the instruments. The carrying amount of the asset is reduced by using an allowance account.
If such a sign exists, the municipality determines the compensable value of the service of the asset. Ÿ the municipality transferred significant risks and benefits of ownership of the goods to the buyer;. Ÿ the degree of completion of the transaction at the reporting date can be reliably measured; and.
Income from a non-exchange transaction is measured at the amount of the increase in net assets recognized by the municipality. When a liability is subsequently reduced because a condition is met, the amount of the reduction of the liability is recognized as revenue. Assets arising from fines are measured at the best estimate of the supply of resources to the municipality.
If the municipality collects fines as an agent, the fine will not be revenue of the municipality.
New standards and interpretations
Standards and interpretations issued, but not yet effective
Segment Reporting
Related parties disclosures
Service Concession Arrangement: Grantor
New standards and interpretations (continued)
The municipality expects to set the standard for the first time once the minister has set the effective date of the standard. IGRAP17: Interpretation of GRAP's Standard on Service Concession Arrangements Where a Grantor Controls a Significant Residual Interest in an Asset. This GRAP Interpretation of Standards provides guidance to the grantor when it has entered into a service concession but only has control, by ownership, beneficial law, or otherwise, of a substantial residual interest in a service concession asset at the end of the arrangement, when the arrangement does not constitute a lease.
This Interpretation of the GRAP Standards will not be applied by analogy to other types of transactions or agreements. A service concession agreement is a contractual arrangement between a grantor and an operator whereby the operator uses the service concession asset to perform a mandated function on behalf of the grantor for a specified period of time. The operator is compensated for its services during the term of the service concession agreement, either through payments or by receiving a right to receive revenue from third party users of the service concession assets, or the operator is given access to another revenue generating asset of the grantor for use.
Before the grantor can recognize a service concession asset in accordance with the GRAP Standard for Service Concession Arrangements: Contractor, both criteria mentioned in paragraph .01 of this Interpretation of GRAP Standards must be met. In some service concession agreements, the grantor controls only the residual interest in the service concession asset at the end of the agreement, and therefore cannot recognize the service concession asset within the meaning of the GRAP Standard on Service Concession Agreements: Grantor. In this Interpretation of the GRAP Standards, a consensus is reached on the recognition of the performance obligation and the right to obtain a substantial interest in a service concession asset.
Compliance with this interpretation will not affect the current financial information as the municipality currently has no service concession agreements. The effective date of this Interpretation has not yet been set by the Minister of Finance.
Property, plant and equipment
Property, plant and equipment (continued) Reconciliation of property, plant and equipment - 2015
Investment property
Inventories
Investments At amortised cost
VAT receivable
- Post retirement health care benefits
The City offers employees and continuing members the option of joining one of several medical schemes, most of which offer a range of options relating to levels of cover. On death of a member in service or death on pension, surviving dependents may continue membership of the medical scheme. Eligible employees are entitled to a post-employment subsidy, which will be 60% of the contribution payable if they are members of a retired medical scheme.
The municipality grants employees long-term seniority for every five years of seniority, from ten years of seniority to 40 years of seniority inclusive. The recognition of service is counted from the later of the date of appointment and 1 July 1986. Number of eligible members and non-members 250 261 Number of continuing (retired and widowed) members 13 14.
The discount rate used for post-retirement health benefits and long-term benefit obligations per 30 June 2016, is derived from the government bond yield curve published by the South African Bond Exchange on the same date. The municipality received three loans from the Development Bank of Southern Africa (DBSA) to finance infrastructure expenditure and one is currently being paid by Dr. KK District Municipality, and therefore the loan account is created.
Trade and other payables from exchange transactions
No interest accrues for the benefit of the consumer upon termination of service delivery by the Municipality.
Unspent conditional grants and receipts
Provision for rehabilitation of landfill sites
In terms of the Municipal Law on Real Estate Rates, Law 6 of 2004, discounts and exemptions from real estate rates are given. In terms of the Constitution, this grant is used to subsidize the provision of basic services to needy members of the community. The municipal infrastructure subsidy is in addition to the local government's equitable share subsidy, but is conditionally provided to municipalities.
One of the main objectives of the grant is to fully subsidize the capital costs of providing basic services to poor households. This means prioritizing meeting the basic infrastructure needs of poor households through the provision of suitable bulk, connector and internal infrastructure in essential services. Conditions to be fulfilled - transferred to liabilities The purpose of the grant is to maintain and operate the local library for the benefit of the community.
Conditions still to be fulfilled - transferred to commitments The main purpose of this grant is to assist in the implementation of the financial management reforms included in the MFMA by strengthening financial management capacity. Conditions still to be fulfilled - transferred to obligations This donation is received by the municipality of the district of Dr. Kenneth Kaunda as part of intergovernmental relations. The grant is based on the business plan that the municipality submits to the district municipality.
The Capacity Building and Restructuring Grants were created to help municipalities develop their planning, budgeting, financial management and technical skills. Conditions still to be fulfilled - transferred to passive The subsidy is received from Rijkswaterstaat for creating employment opportunities for the unemployed and thereby enabling economic participation and resulting in poverty reduction.
Employee related costs
Remuneration of councillors
Finance costs
Bulk purchases
All leases have fixed or variable installments, and in certain cases conditional rent must be paid in accordance with the provisions of the lease agreements. The municipality's obligation under operational leasing agreements is secured by the lessor's tax on the leased assets. The municipality has not defaulted on any of the interest or capital repayment of the operating leases.
All risks and rewards of ownership remain with the lessor upon expiration of the lease and there is no option to purchase the leased assets. All risks and rewards of ownership remain with the lessor upon expiration of the lease and there is no option to purchase the leased assets.
Contingencies Contingent liabilities
Managers
- Comparative figures
- Events after the reporting date
- Unauthorised expenditure
- Fruitless and wasteful expenditure
- In-kind donations and assistance In-kind donations and assistance
- Additional disclosure in terms of Municipal Finance Management Act Contributions to organised local government
- Distribution losses Electricity losses
The municipality's liquidity risk is the result of available funds to cover future obligations. The municipality manages liquidity risk by constantly reviewing future liabilities and loans. The table below analyzes the municipality's financial liabilities and net settled derivative financial liabilities into the appropriate maturity groups based on the remaining period in the statement of financial position until the contractual maturity date.
Credit risk is the risk of financial loss for the municipality if customers or counterparties to financial instruments do not fulfill their contractual obligations. The municipality only deposits cash in major banks with a high creditworthiness and limits exposure to a single counterparty. It is the municipality's policy to manage the interest rate risk so that fluctuations in the variable interest rates do not have a significant impact on the profit/loss.
The municipality's ability to maintain its continuity depends on a number of factors. Chief among these is that the Accounting Officer continues to raise funding for the ongoing operations for the municipality and to collect and collect revenue for services rendered. The municipality has enlisted the assistance of the collection and credit control companies to ensure that the collection rate of the municipality is brought to an acceptable level in accordance with Circular 71 of the National Treasury.
It is expected that these measures will help improve the collection rate of the municipality. Ÿ District Municipality Dr Kenneth Kaunda donated a fence to the municipality in the value of R146 466.