The financial statements of the controlling entity and its subsidiaries used in the preparation of the consolidated financial statements are usually drawn up on the same date. Minority shares in the surplus or deficit of the economic entity are also particularly evident.
Disclosure
A venturer discontinues using proportionate consolidation from the date it ceases to have control over a jointly controlled entity. This may occur, for example, when the venturer disposes of its interest, or when external constraints are imposed on the jointly controlled entity so that it can no longer achieve its objectives.
SECTION THREE: PRACTICAL CONSIDERATIONS 1 INTRODUCTION
2 DETERMINING CONTROL
The following decision tree will assist municipalities in determining control for purposes of consolidation:- (a) Consolidation of a controlled entity. b) Consolidation of jointly controlled business. Instead, MJSU will be consolidated as a jointly controlled entity in each of the controlling municipalities.
15 (c) Consolidation of an internal service district
Unfulfilled conditional capital support and conditional grants are obligations of the municipality and must be recorded as such in the accounting records of the respective municipality. e) Consolidation of a significant minority stake in the company. If the minority share of the municipality is significant and the municipality can influence the organization, such a person can be consolidated as an associated company of the municipality.
3 THE RESPONSIBILITIES OF CONTROL FROM A FINANCIAL REPORTING PERSPECTIVE
4 ACCOUNTING POLICIES
Regarding option one, the group's accounting policy will be to recognize financial instruments at fair value. Regarding option two, the group's accounting policy will be to recognize financial instruments at cost.
5 ELIMINATION OF INTER-GROUP TRANSACTIONS AND ACCOUNT BALANCES
Suppose a municipal body has certain financial instruments that are measured at fair value in its financial statements. Suppose that only part of the assessment rates has been paid by the municipality.
Consolidation Extract from… Municipality Municipal
In consolidation, the assessment rates must be removed from the revenues of the municipality, and the assessment rates paid by the municipal unit must be removed from its expenses. Assume that a municipality had levied assessment rates of R120 000 on its municipal unit during the financial year.
Entity Debit Credit
Consolidated
SECTION FOUR: SUMMARY INFORMATION USED TO PREPARE THE SPECIMEN CONSOLIDATED ANNUAL FINANCIAL STATEMENTS
1 SUMMARY OF GROUP STRUCTURE
PROTEA LOCAL MUNICIPALITY
ELECTRO (PTY) LTD
INVESTO (PTY) LTD
LANDFILL SERVICES
PRO DEVELOPER (PTY) LTD
2 OUTSIDE SHAREHOLDERS’ INTEREST IN INVESTO (PTY) LTD The outside shareholders’ interest in Investo as at 1 July 2004 is as follows: -
3 INTER-GROUP TRANSACTIONS
2006 Rates
RSC - Turnover
RSC-
Services Electricity Water Total
2005 Rates
4 INTER-GROUP BALANCES
ELECTRO (PTY) LTD: STATEMENT OF FINANCIAL POSITION
INVESTO (PTY) LTD: STATEMENT OF FINANCIAL POSITION
LANDFILL SERVICES: STATEMENT OF FINANCIAL POSITION
PRO-DEVELOPER (PTY) LTD: STATEMENT OF FINANCIAL POSITION
ELECTRO (PTY) LTD : STATEMENT OF FINANCIAL PERFORMANCE
INVESTO (PTY) LTD : STATEMENT OF FINANCIAL PERFORMANCE
LANDFILL SERVICES : STATEMENT OF FINANCIAL PERFORMANCE
PRO-DEVELOPER (PTY) LTD : STATEMENT OF FINANCIAL PERFORMANCE
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS for the year ended
31 INDEX
Page
When the associate's reporting date differs from the municipality's reporting date, adjustments must be made for transactions and balances between the associate's reporting date and the municipality's reporting date (GAMAP 7.25). Summary of financial information relating to the assets, liabilities and results of operations of significant associates, presented individually or collectively (GAMAP 7.31(d)); The gross amount of loans made to or received from an affiliate by the investor (GAMAP 7.31(f));
Accounting periods for which the associate's financial statements are prepared where they are different from those of the investor (GAMAP 7.31(g); and. In terms of GAMAP 6.43, a list of significant controlled entities including name, jurisdiction in which it operates when it is different from that of the controlling economic entity, explanatory information must be given about the proportion of the ownership interest and, when this interest is in the form of shares, and the proportion of voting power held when this is different from the interest proportional ownership.
STATEMENT OF FINANCIAL POSITION AT 30 JUNE 2006
The minorities' interest in the net surplus for the year is transferred to the minority interest which is reflected in the statement of net assets. If a municipality disposes of shares in a controlled entity, an associate or in an incorporated joint venture, an additional line item on the statement of financial performance entitled "gains or losses on the sale or dilution of shares" will should appear. . As required by GAMAP 12.43(a) and (b), the statement of financial performance must also require the disclosure of either the cost of inventory recognized as an expense during the period, or the operating cost applicable to revenue, recognized as an expense during the period. the period, classified according to their nature.
PROTEA LOCAL MUNICIPALITY STATEMENT OF FINANCIAL PERFORMANCE
BASIS OF PRESENTATION
In accordance with Article 122(3) of the Municipal Finance Management Act (Act No. 56 of 2003), the Group has adopted GAMAP and GRAP Standards issued by the Accounting Standards Board during the financial year, with the exception of. Differences between GAMAP and GRAP and the Generally Accepted Accounting Practice issued by the South African Accounting Practice Board and the South African Institute of Chartered Accountants, which was used by the municipal entities of the Municipality consolidated in these financial statements annual, were minimal. The Group may have transactions, events or balances that are outside the scope of GAMAP and GRAP, but which are included in the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants – Public Sector Committee, Standards International Accounting Standards (IAS). ) issued by the International Accounting Standards Board or Generally Accepted Accounting Practice issued by the South African Accounting Practice Board and the South African Institute of Chartered Accountants.
These financial statements have been prepared in accordance with Generally Accepted Municipal Accounting Practices (GAMAP) and Generally Recognized Accounting Practices (GRAP), except for ………, issued by the Accounting Standards Board in accordance with Section 122(3) of the Management Act of municipal finances (Law No. 56 of 2003). The Group may have transactions, events or balances that fall outside the scope of the accounting standards mentioned above, but are included in the Standards of International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants – Public Sector Committee, International Accounting Standards (IAS) issued by the International Accounting Standards Board of Generally Accepted Accounting Practices issued by the South African Accounting Practices Board and the South African Institute of Chartered Accountants' Accounting Practices Committee.
BASIS OF CONSOLIDATION
The GAMAP and GRAP standards differ significantly from the fund accounting policies adopted by the Protea Local Municipality in previous financial years. The effect of the change in accounting policies resulting from the introduction of GAMAP and GRAP is shown in Note 30. The Group did not meet the requirements regarding the measurement, recognition and disclosure of these accounting standards.
Assets, liabilities, income and expenses have not been offset, unless offset is required or permitted by the GAMAP or GRAP standard. Assets, liabilities, income and expenses have not been offset, unless offset is required or permitted by the GAMAP or GRAP standard.
PRESENTATION CURRENCY
The annual financial statements have been prepared on an accrual basis of accounting and are in accordance with historical cost conventions, except for the revaluation of land and buildings, which are carried at fair value. Furthermore, the Municipality has changed its accounting policy in respect of Regional Council levies as detailed in Note 31. The main accounting policy adopted in the preparation of these annual financial statements is detailed below.
These accounting policies are consistent with those of the previous financial year, except as shown in Note 31. MANDATORY ACCOUNTING POLICIES OF THE GROUP IN THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2006 (continued).
GOING CONCERN ASSUMPTION
HOUSING DEVELOPMENT FUND
RESERVES
RESERVES (continued)
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT (continued)
REVALUATION OF LAND AND BUILDINGS
- Investment in Associate Municipality and Group
- Investment in Municipal Entities Municipality
INVESTMENTS (continued)
- Investment in Municipal Entities (continued)
- Interests in Joint Ventures Municipality
INVENTORIES
ACCOUNTS RECEIVABLE
TRADE CREDITORS
REVENUE RECOGNITION 1 Revenue from Exchange Transactions
REVENUE RECOGNITION (continued) 1 Revenue from Exchange Transactions (continued)
CONDITIONAL GRANTS AND RECEIPTS
PROVISIONS
CASH AND CASH EQUIVALENTS
UNAUTHORISED EXPENDITURE
IRREGULAR EXPENDITURE
FRUITLESS AND WASTEFUL EXPENDITURE
FOREIGN CURRENCIES
COMPARATIVE INFORMATION 1 Current year comparatives
Municipalities may need to increase the scope of GAMAP and GRAP standards in the development of group accounting practices. The reason is that it is likely that the municipal units will use accounting standards, such as SA GAAP, which are more comprehensive than GAMAP and GRAP standards.
INVESTMENT PROPERTY
INVESTMENTS
LEASES The Group as Lessee
RETIREMENT BENEFITS
BORROWING COSTS
Each page must have the name of the municipality, the heading of this part of the annual accounts and indicate the end of the year. A list of significant controlled entities, including the name, the jurisdiction in which it operates when different from that of the controlling entity, the proportion of the ownership interest and, where this proportion is in the form of shares, the proportion of the voting rights where this is different from the proportional ownership share. The reconciliation should also allow for the inclusion of exchange rate differences in the carrying amount of an asset as required by GAMAP 4.15(b).
In terms of licensing the landfill site, the council will incur rehabilitation costs of R1.5 million to restore the site at the end of its useful life, which is estimated to be in 2008. The balance of the performance bonus provisions relates to amounts not paid to certain employees due to disputes over the assessment process.
PROPERTY, PLANT AND EQUIPMENT
- Net exchange differences
- Material losses
- Unauthorised expenditure
- Fruitless and wasteful expenditure
- Irregular expenditure
- Contributions to organized local government
- Audit fees
- PAYE, SDL and UIF
- Pension and Medical Aid Deductions
- Councillor’s arrear consumer accounts
- Non-Compliance with Chapter 11 of the Municipal Finance Management Act
Home loans are provided to qualified individuals under the provincial administrations housing program. According to the constitution, this grant is used to subsidize the provision of basic services to poor members of society. The municipality provides health services on behalf of the provincial government and is reimbursed approx. 80% of the total expenses incurred.
Each is provided with an office and secretarial support at the expense of the Council. The effect of the system change at the beginning of the year on. Following the disciplinary hearing in respect of the fruitless and wasteful expenditures referred to in Note 38.2, civil proceedings have been initiated against the employee concerned to recover the sum of R96 089.
The comparison of the actual financial performance of the Municipality and the Group with the budgeted one is presented in Appendices E(1) to E(2).
The sum of Appendix D must agree with the sum included in the statement of financial results. These are included in the various functions or segments, but are deducted to reconcile with the totals shown on the face of the statement of financial performance. This appendix is a summary of budget deviations and an explanation of major deviations and is based on the statement of financial results for income and Appendix D for expenditure.
PROTEA LOCAL MUNICIPALITY: ACTUAL BUDGET (INCOME AND EXPENDITURE) FOR THE YEAR ENDED 30 JUNE 2006: MUNICIPALITY. PROTEA LOCAL MUNICIPALITY: ACTUAL TO BUDGET (ACQUISITION OF PROPERTY, PLANT AND EQUIPMENT) FOR THE YEAR ENDED 30 JUNE 2006: MUNICIPALITY Explanation of significant variances Actual under total budget variance Variance greater than 5% against budget.
