It is the accounting officer's responsibility to ensure that the annual financial statements present fairly the state of affairs of the municipality at the end of the financial year and the results of its operations and cash flows for the period then ended. The accounting officer recognizes that he is ultimately responsible for the internal financial control system established by the municipality and places considerable importance on maintaining a strong control environment. These controls are monitored throughout the municipality and all employees are required to maintain the highest ethical standards to ensure that the business of the municipality is conducted in a reasonable manner.
The focus of risk management in the municipality is on the identification, assessment, management and monitoring of all known forms of risk throughout the municipality. The accounting officer has reviewed the cash flow forecast of the municipality for the year to 30 June 2017 and, in light of this review and the current financial position, he is satisfied that the municipality has or has access to adequate resources to continue its operational existence for the foreseeable future. The annual financial statements are prepared based on the fact that the municipality is a going concern and that the municipality has neither the intention nor the need to liquidate or materially reduce the scale of the municipality.
The external auditors are responsible for independent auditing and reporting of the municipality's annual accounts. The annual accounts have been audited by the municipality's external auditors and their report is presented on page 4.
Appropriation Statement
Presentation of Annual Financial Statements
- Presentation currency
- Grap Standards Summary Applicable Standards
- Going Concern Assumption Basis
- Significant judgements and sources of estimation uncertainty
The Annual Financial Statements have been prepared on the basis of accrual accounting and are in accordance with the historical cost convention, unless otherwise specified. These Annual Financial Statements have been prepared in accordance with Generally Recognized Accounting Practice (GAAP) issued by the Accounting Standards Board pursuant to section 122(3) of the Municipal Finance Management Act, (Act No. 56 of 2003). Accounting policies for material transactions, events or conditions that are not covered by the above Grap standards have been developed in accordance with paragraphs 7,11 and 12 of GRAP 3. These accounting policies and the provision of the applicable information are based on statements of general accounting practices of South Africa (how many GAAPs) including any interpretation of these interpretation.
These financial statements are presented in South African rand, the functional currency of the municipality. Effective Date Not Approved GRAP 20 Related Party Disclosures Effective Date Not Approved GRAP 109 Accounting By Principals And Agents Effective Date Not Approved. In preparing these annual accounts, it has been assumed that the municipality will continue its activities in continuity for at least the next 12 months.
In preparing the annual financial statements, management must make estimates and assumptions that affect the amounts presented in the annual financial statements and related disclosures. Actual results in the future may differ from these estimates, which may be material to the annual financial statements.
Accounting Policies
- Significant judgements and sources of estimation uncertainty (continued) Trade receivables / Held to maturity investments and/or loans and receivables
- Significant judgements and sources of estimation uncertainty (continued) Allowance for doubtful debts
- Property, plant and equipment
- Property, plant and equipment (continued)
- Intangible assets
- Financial instruments
- Financial instruments (continued)
- Leases
- Leases (continued) Operating leases - lessee
- Employee benefits
- Employee benefits (continued) Short-term employee benefits
- Provisions and contingencies
- Revenue from exchange transactions
- Revenue from exchange transactions (continued) Measurement
- Revenue from non-exchange transactions
- Revenue from non-exchange transactions (continued) Fines
- Investment income
- Retirement Benefits Post Retirement
- Comparative figures
- Unauthorised expenditure
- Fruitless and wasteful expenditure
- Irregular expenditure
- Conditional grants and receipts
- Budget information
- Related parties
- Cash and cash equivalents
- Property, plant and equipment
The impairment of trade receivables is accounted for by reducing the book value of trade receivables using a value adjustment account, and the amount of the loss is recognized in the income statement under operating expenses. If the fair value of the acquired object could not be determined, the book value of the given asset is considered as the purchase value. When the municipality replaces parts of the asset, it derecognizes the part of the asset that is replaced and capitalizes the new component.
Items of 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 municipality recognizes an intangible asset in its Statement of Financial Position only when it is probable that the expected future economic benefits or service potential attributable to the asset will flow to the municipality and the cost or fair value of the asset can be reliably measured. Intangible assets 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 entity recognizes a financial asset or a financial liability in its statement of financial position when the entity becomes a party to the contractual terms of the instrument. The entity initially measures a financial asset and financial liability at its fair value plus transaction costs that are directly attributable to the acquisition or issuance of the financial asset or financial liability. Finance leases are recognized as assets and liabilities in the statement of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments.
The discount rate used to calculate the present value of the minimum lease payments is the interest rate implicit in the lease. Initial direct costs incurred in negotiating and arranging operating leases are added to the carrying amount of the leased asset and recognized as an expense over the lease term on the same basis as the lease income. Short-term employee benefits are employee benefits (other than termination benefits) that must be settled within twelve months of the end of the period in which the employees provide the related service.
Income from the rental of facilities and equipment is recognized using the straight-line method over the duration of the rental agreement. Revenue is measured at the fair value of the consideration received or receivable, less trade discounts and volume rebates. If the outcome of a transaction involving the provision of services can be reliably estimated, revenue related to the transaction is recognized based on the stage of completion of the transaction at the reporting date.
When the outcome of the transaction involving the provision of services cannot be reliably estimated, revenue is recognized only to the extent of recognized expenses that are recoverable. Service revenue is recognized by reference to the stage of completion of the transaction at the reporting date.
Notes to the Annual Financial Statements
- Property, plant and equipment (continued) Reconciliation of property, plant and equipment - 2016
- Intangible assets
- Receivables from Non-Exchange Transactions
- Summary of Receivables (continued) Rates
- Cash and cash equivalents Cash and cash equivalents consist of
- Employee benefit obligations 10. Finance lease obligation
- Unspent conditional grants and receipts
- Provisions
- Payables from exchange transactions
- Property rates Rates received
- Service charges
- Government grants and subsidies (continued)
- Employee related costs
- Remuneration of councillors
- Depreciation and amortisation
- Finance costs
- Auditors' remuneration
- Contracted services
- Risk management Credit risk
- Events after the reporting date
- Unauthorised expenditure
- Fruitless and wasteful expenditure
- Irregular expenditure
- Additional disclosure in terms of Municipal Finance Management Act Councillors' arrear consumer accounts
The municipality's obligations under the financial lease are secured by the lessor's charge on the object of the lease. The type and extent of state aid recognized in the annual financial statements, and an indication of other forms of state aid from which the municipality directly benefited; and. According to the constitution, this grant is used to subsidize the provision of basic services to poor members of the community.
This grant was used to accelerate basic infrastructure backlogs to the benefit of poor households. The grant was used to promote and support financial management reform through financial management internship and reform programs. The recognized income met the conditions of the subsidy. The grant was used to address the electrification backlog of occupied residential homes and build bulk infrastructure, as well as renovate and refurbish electricity infrastructure to improve the quality of supply.
The grant was used to implement the revenue growth strategy, strengthen administrative systems for the effective implementation of the neighborhood participation system, support financial systems and improve municipal audit results. The grant was used to expand efforts to create employment as a national priority through the use of labor intensive delivery methods within the municipality. Credit risk mainly consists of cash deposits, cash equivalents, derivative financial instruments and trade debtors.
The municipality deposits cash only in major banks with high credit standing and limits exposure to any single party. Otherwise, if there is no independent assessment, the risk control assesses the credit quality of the client, taking into account his financial position, past experience and other factors. Events after the reporting date are those events, both favorable and unfavorable, that occur between the reporting date and the date the financial statements are authorized for issue.
Two types of events can be identified. a) Those that provide evidence of conditions that existed on the reporting date (corrective events after the reporting date); and. b) These indicate conditions that occurred after the reporting date (non-corrective events after the reporting date). Corrective events are recognized in the annual financial statement on the reporting date, while non-corrective events are recognized. These are non-correcting events as they indicate events occurring after the reporting date.
Additional disclosure in terms of the Municipal Finance Management Act. Delinquent consumer council bills. Delinquent consumer council bills. Pursuant to Section 36 of the Municipal Regulations on Supply Chain Management, any deviation from the Supply Chain Management Policy must be approved/permitted by the Municipal Manager and complied with by the Council.
Analysis of property, plant and equipment as at 30 June 2016
Analysis of property, plant and equipment as at 30 June 2015
Prior Year Current Year
