The accountant is required by the Municipal Financial Management Act (Act 56 of 2003) to keep adequate accounts and is responsible for the content and integrity of the audited annual accounts and associated financial information included in this report. It is the accountant's responsibility to ensure that the audited annual accounts give a true and fair view of the municipality's affairs as of the end of the financial year and the results of its operations and cash flows for the period then ended. The external and internal auditors are engaged to express an independent conclusion on the audited financial statements and were given unrestricted access to all financial records and related data.
The audited annual financial statements have been prepared in accordance with Generally Accepted Accounting Standards (GAS) including any interpretations, guidelines and directives issued by the Accounting Standards Board. The audited annual financial statements are based on appropriate accounting policies that are consistently applied and supported by reasonable and prudent judgments and estimates. The accounting officer recognizes that he is ultimately responsible for the system of internal financial control established by the municipality and places great importance on maintaining a strong control environment.
The focus of risk management in the municipality is the identification, assessment, control and monitoring of all known forms of risk in the municipality. Based on information and explanations from management, the accountant believes that the system of internal controls provides reasonable assurance that the accounting records can be relied upon in the preparation of the audited annual financial statements.
Presentation of Audited Annual Financial Statements
- Going concern assumption
- Significant judgements and sources of estimation uncertainty
- Significant judgements and sources of estimation uncertainty (continued) Impairment testing
- Investment property
- Property, plant and equipment
- Property, plant and equipment (continued)
- Intangible assets
- Heritage assets
- Heritage assets (continued) Initial measurement
- Investments in controlled entities
- Financial instruments Classification
- Financial instruments (continued)
- Financial instruments (continued) Derecognition
- Leases
- Inventories
- Impairment of cash-generating assets
- Impairment of cash-generating assets (continued) Identification
- Impairment of cash-generating assets (continued) Cash-generating units
- Impairment of cash-generating assets (continued) Redesignation
- Impairment of non-cash-generating assets
- Impairment of non-cash-generating assets (continued) Reversal of an impairment loss
- Employee benefits
- Employee benefits (continued) Short-term employee benefits
- Employee benefits (continued)
- Provisions and contingencies Provisions are recognised when
- Provisions and contingencies (continued)
- Commitments
- Revenue from exchange transactions Measurement
- Revenue from non-exchange transactions
- Borrowing costs
- Conditional grants and receipts
- Comparative figures
- Unauthorised expenditure Unauthorised expenditure means
- Fruitless and wasteful expenditure
- Irregular expenditure
- Offsetting
- Budget information
- Related parties
- Events after reporting date
- Value Added Tax (VAT)
If a replacement cost is included in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is no longer recognised. The carrying amount of the asset is reduced directly OR through the use of a provision. Depreciation (amortization) is the systematic allocation of the depreciable amount of an asset over its useful life.
If the recoverable amount of a cash-generating asset is less than its book value, the book value of the asset is reduced to its recoverable amount. An impairment loss of a cash-generating unit is recognized if the unit's recoverable amount is less than the unit's book value. The present value of the remaining useful potential of a non-monetary asset is determined as the depreciated replacement value of the asset.
The amount of a provision is the best estimate of the expenditure expected to be necessary to settle the current obligation at the reporting date. Service revenue is recognized in relation to the stage of completion of the transaction at the reporting date. Income from a non-exchange transaction is measured at the increase in net assets recognized by the municipality.
Revenue from fines is recognized when it is probable that the economic benefits or service potential will flow to the municipality and the amount of the revenue can be measured reliably.
New standards and interpretations
Standards Amendments and interpretations to GRAP standards issued, but not yet effective
Segment Reporting
Related parties
Service Concession Arrangements: Grantor
Service Concession Arrangements where a Grantor Controls a Significant Residual Interest in an Asset
New standards and interpretations (continued)
This interpretation of the GRAP standards provides guidance to the grantor when it has entered into a service concession arrangement but only controls, through ownership, vested interests or otherwise, a significant remaining interest in the service concession asset at the end of the arrangement where the arrangement does not constitute a lease. This interpretation of the GRAP standards does not apply by analogy to other types of transactions or arrangements. A service concession agreement is a contractual arrangement between a grantor and an operator in which the operator uses the asset of the service concession to provide an authorized function on behalf of the grantor for a specified period of time.
The operator receives compensation for its services during the term of the service concession agreement either through payments or by obtaining the right to earn from third parties who use the service concession asset, or the operator is given access to another revenue-generating asset of the grantor for its use.
It further covers definitions, Identifying whether an entity is a principal or agent, Accounting by a principal or agent, Presentation, Disclosure, Transitional provisions and Effective date.
Inventories
This refers to all stands occupied by members of the community but still registered in the municipality's name according to deed search. In an attempt to get documents from the residents, the Municipality wrote a letter on 27 August 2015 to request the affected people to bring documents that can prove how their properties were acquired from the municipality and it was very successful. In the midst of all these, it is important to note that booths were stolen and sold illegally and they were investigated in the past, resulting in little if any success.
The council will issue a final warning letter to all remaining households that have not come to present their case, asking them to come to the council to submit their proof of acquisition and present their case. If the residents confess to having made an unlawful acquisition, the municipality will make them sign the new deed of sale and pay the agreed amount, which will not be less than the appraisal amount or the amount agreed by the municipality. In the meantime, the municipality will treat these stands as objects under investigation and place a footnote under the inventory note.
The municipality has received separation letters from human settlements in relation to the separation letters for the free inventory land.
Receivables from exchange transactions
Consumer receivables Gross balances
Consumer receivables (continued) Net balance
Consumer receivables (continued) Sewerage
Cash and cash equivalents Cash and cash equivalents consist of
Investment property
Property, plant and equipment
Property, plant and equipment (continued)
Intangible assets
Heritage assets
Investments in controlled entities
Long and short term liabilities At amortised cost
VAT payable
Consumer deposits
Consumer deposits (continued) No interest is paid on consumer deposits
Employee benefit obligations Post retirement health care benefit
Employee benefit obligations (continued) Key assumptions used
Unspent conditional grants and receipts
Provisions
Provisions (continued)
Service charges
Property rates Rates received
Government grants and subsidies Operating grants
Government grants and subsidies (continued) Municipal Infrastructure Grant (MIG)
Government grants and subsidies (continued) Expanded Public Works Incentive Grant (EPWP)
Employee related costs
Employee related costs (continued) Remuneration of Director Civil
Remuneration of Councillors
Remuneration of Councillors (continued) In-kind benefits
Depreciation and amortisation
Finance costs
Contracted services
General expenses
Net cash flows from operating activities
Related parties
Correction of prior period errors Receivables from exchange transactions
Correction of prior period errors (continued) Trade and other payable from exchange transactions
Correction of prior period errors (continued) Statement of financial position
Risk management Capital risk management
Risk management (continued) Financial risk management
Risk management (continued) Credit risk
Risk management (continued)
Events after the reporting date Non- adjusting events after the reporting date
Unauthorised expenditure
Fruitless and wasteful expenditure (continued)
Irregular expenditure
Additional disclosure in terms of Municipal Finance Management Act Contributions to SALGA
Additional disclosure in terms of Municipal Finance Management Act (continued) Pension and medical aid deductions
Additional disclosure in terms of Municipal Finance Management Act (continued) Distribution losses in terms of MFMA 125(2)(d)(i)
Deviation from supply chain management regulations
Deviation from supply chain management regulations (continued)
Change in estimate Property, Plant and Equipment
Budget differences
Budget differences (continued) REVENUE
Budget differences (continued) 15 Impairment of assets
Budget differences (continued) STATEMENT OF FINANCIAL POSITION
Deposits - Eskom
Unaudited schedule of external loans as at 30 June 2016
Unaudited analysis of property, plant and equipment as at 30 June 2016
Unaudited analysis of property, plant and equipment as at 30 June 2015
Unaudited Segmental Statement of Financial Performance for the year ended 30 June 2016
