Nature of Business and Main Activities The Municipality's primary business activities are to engage in local governance activities which include planning and promoting integrated development planning, land, economic and environmental development, collection of rates and provision of general services to the community. Assurance level These financial statements have been audited in accordance with the applicable requirements of the Companies Act 71 of 2008. The accountant is, in accordance with the Municipal Financial Management Act (Act 56 of 2003), required to keep adequate accounts and is responsible for the content and integrity of the financial statements and related financial information included in this report.
It is the responsibility of the accounting officer to ensure that the annual financial statements fairly reflect the state of affairs of the municipality as at the end of the financial year and the results of its operations and cash flow for the period then ended. 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 can be relied upon for the preparation of the annual financial statements. I am responsible for the preparation of these annual financial statements, which are set out on pages 6 to 69, in terms of Section 126(1) of the Municipal Financial Management Act and which I signed on behalf of the Municipality.
The municipality's main business activities are to engage in local governance activities, which include planning and promoting integrated development planning, land, economic and environmental development, levying rates and providing general services to the community. The accountant is not aware of conditions or conditions that have arisen since the end of the financial year.
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
Biological assets that form part of an agricultural activity
Investment property
Property,plant and equipment
Property,plant and equipment (continued)
Depreciation for each period is recognized in surplus or deficit, unless it is included in the carrying amount of another asset. Property, plant and equipment are derecognised when the asset is disposed of or when no further economic benefits or service potential are 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 asset is derecognised.
The profit or loss arising from the derecognition of a tangible fixed asset is determined as the difference between any net proceeds from disposal and the book value of the asset. Assets that the municipality has for lease to others and later regularly sells as part of regular operations are transferred to inventories when the leases end and the assets are available for sale. All cash flows from these assets are included in cash flows from operations in the statement of cash flows.
Site restoration and dismantling cost
Heritage assets
Heritage assets (continued) Transfers
Financial instruments
Financial instruments (continued) Classification
Financial instruments (continued)
Financial instruments (continued) Derecognition
Value-added Tax (VAT)
Impairment of cash-generating assets
Impairment of cash-generating assets (continued)
Impairment of cash-generating assets (continued) Reversal of impairment loss
Impairment of non-cash-generating assets
Impairment of non-cash-generating assets (continued)
Statutory receivables
Statutory receivables (continued)
Employee benefits Short-term employee benefits
Employee benefits (continued)
The municipality uses the projected unit credit method to determine the present value of its defined benefit obligations and the related pension costs and, if applicable, past service costs. The projected unit credit method (sometimes known as the accrued benefit pro-rata method based on service or as the benefit/years of service method) considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build the ultimate liability. In determining the present value of its defined benefit obligations and the related current pension costs and, if applicable, past service costs, the municipality attributes benefits to years of service according to the benefit formula of the plan.
The results of the valuation are updated for material transactions and other material changes in circumstances (including changes in market prices and interest rates) up to the reporting date. The municipality recognizes 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 municipality recalculates the obligation (and the related plan assets, if applicable) based on 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 expenses necessary to settle a defined benefit obligation, the right to reimbursement is recognized as a separate asset. In all other respects the asset is treated in the same way as the assets of the scheme. In profit or loss, the expense relating to a defined benefit scheme is presented as net of the amount recognized for a refund.
The municipality offsets an asset relating to one scheme against a liability relating to another scheme when the municipality has a legally enforceable right to use a surplus in one scheme to settle obligations under the other scheme and intends either to meet the obligations on a net basis, or to realize the surplus in one scheme and settle its obligation under the other scheme simultaneously. Financial assumptions are based on the market's expectations on the balance sheet date for the period in which the liabilities are to be settled. The rate used to discount pension liabilities (both funded and unfunded) reflects the time value of money.
The currency and term of the financial instrument chosen to reflect the time value of money are consistent with the currency and term of the estimated post-employment benefit obligations. Medical cost assumptions take into account anticipated future changes in the cost of medical services as a result of inflation and specific changes in medical costs.
Employee benefits (continued) Other long-term employee benefits
Provisions and contingencies Provisions are recognised when
Provisions and contingencies (continued)
Provisions and contingencies (continued) Decommissioning, restoration and similar liability
Revenue from exchange transactions
Revenue from exchange transactions (continued) Sale of goods
Revenue from non-exchange transactions
Revenue from non-exchange transactions (continued) Measurement
Borrowing costs
Comparative figures
Unauthorised expenditure
Fruitless and wasteful expenditure
Irregular expenditure
Accumulated surplus
Commitments
Grants in aid
Budget information
Related parties
Events after reporting date
New standards and interpretations
Standards and interpretations effective and adopted in the current year
Standards and Interpretations early adopted
Standards and interpretations issued, but not yet effective
Related parties
New standards and interpretations (continued)
The date of entry into force of the standard has not yet been set by the Minister of Finance. The municipality expects to adopt the standard for the first time when the minister sets the effective date of the standard.
Cash and cash equivalents Cash and cash equivalents consist of
Cash and cash equivalents (continued) The municipality had the following bank accounts
Cash and cash equivalents (continued) investec fixed dep
Receivables from exchange transactions
Receivables from non exchange and exchange transactions Gross balances
Receivables from non exchange and exchange transactions (continued) Summary of receivables by customer classification
Investment property
Property,plant and equipment
Property,plant and equipment (continued) Reconciliation of property,plant and equipment - 2017
Heritage assets
Payables from exchange transactions
Provisions
Employee benefit obligations Defined benefit plan
Employee benefit obligations (continued)
Employee benefit obligations (continued) Key assumptions used
Service charges
Rental income Premises
Investment revenue Interest revenue
Licences and permits Municipal licences and permits
Property rates Rates received
Government grants and subsidies Operating grants
Government grants and subsidies (continued) Expanded Public Works Program (EPWP)
Fines Fines
Revenue
Revenue (continued)
Employee related costs
Employee related costs (continued)
Remuneration of councillors
Remuneration of councillors (continued)
Remuneration of councillors (continued) 2018
Depreciation and amortisation
General expenses
General expenses (continued)
Auditors' remuneration
Cash generated from operations
Commitments
Risk management Financial risk management
Additional disclosure in terms of Municipal Finance Management Act Contributions to organised local government
Fruitless and wasteful expenditure
Awards to close family members Awards to close family members
Irregular expenditure
Going concern
Events after the reporting date
Budget differences
- Service charges – additional refuse truck was not purchased to cover additional wards. Allocation was moved to Technical Services during adjustment budget
Contingencies
Biological assets that form part of an agricultural activity
Short term loan
Other financial liabilities Long term liability
Repairs and maintenance
Gain ( loss) on disposal Gain /Loss
Financial instruments disclosure Categories of financial instruments
