Appendix E(2): Actual vs. Budget (acquisition of property, plant and equipment) 111 Appendix F: Disclosure of grants and subsidies from a municipal finance perspective.
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) Provisions
- Investment property
- Investment property (continued) Fair value
- Property, plant and equipment
- Property, plant and equipment (continued)
- Intangible assets
- Intangible assets (continued)
- Financial instruments
- Financial instruments (continued)
- Leases
- Inventories
- Impairment of cash-generating assets
- Impairment of cash-generating assets (continued) Value in use
- Impairment of cash-generating assets (continued)
- Employee benefits
- Employee benefits (continued) Leave pay
- Provisions and contingencies Provisions are recognised when
- Provisions and contingencies (continued)
- Revenue from exchange transactions
- Revenue from exchange transactions (continued)
- Revenue from non-exchange transactions
- Revenue from non-exchange transactions (continued) Fines
- Revenue from non-exchange transactions (continued) Recovery of unauthorised, fruitless and wasteful expenditure
- Investment income
- Borrowing costs
- Comparative figures
- Unauthorised expenditure Unauthorised expenditure means
- Fruitless and wasteful expenditure
- Irregular expenditure
- Irregular expenditure (continued)
- Conditional Grants and Receipts
- Change in accounting policy, estimate and errors
- Budget information
- Related parties
- Share capital / contributed capital
- Events after reporting date
- Events after reporting date (continued)
- Commitments
- Heritage assets (continued)
- Statutory receivables Identification
- Statutory receivables (continued)
- Accounting by principals and agents Identification
- Accounting by principals and agents (continued) Binding arrangement
- Contingent assets and contingent liabilities
- Standards and interpretations effective and adopted in the current year
- Standards and interpretations issued, but not yet effective
- Standards and interpretations not yet effective or relevant
If a replacement part is included in the carrying amount of the investment property, the carrying amount of the replaced part is no longer included. The municipality applies the cost model (according to the principles for the valuation of tangible fixed assets) to the disposal of the investment property. If the fair value of the acquired item could not be determined, the deemed cost is the carrying amount of the asset or assets given up.
If a replacement cost is recognized in the accounting value of a tangible fixed asset, the accounting value of the replaced part is deducted. The accounting value of the asset is reduced directly or through the use of a provision account. Depreciation (Amortization) is the systematic allocation of an asset's depreciable amount over its useful life.
Service income is recognized with reference to the stage of completion of the transaction at the reporting date. Details of the changes in accounting policy are disclosed in the notes to the annual financial statements where applicable. Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life.
The value in use of an unprofitable asset is the present value of the remaining useful potential of the asset.
New standards and interpretations (continued)
Investment property
Investment property (continued) Details of valuation
Property, plant and equipment
Property, plant and equipment (continued) Reconciliation of property, plant and equipment - 2019
Property, plant and equipment (continued) Capitalised expenditure (excluding borrowing costs)
Property, plant and equipment (continued)
Property, plant and equipment (continued) Reconciliation of Work-in-Progress 2019
Property, plant and equipment (continued) Funding of property, plant and equipment acquisitions
Heritage assets
Intangible assets
Operating lease asset
Prepayments
Inventories
Other receivables from exchange transactions
Other receivables from barter transactions (continued) Trade and other receivables overdue but not impaired.
Other receivables from exchange transactions (continued) Trade and other receivables past due but not impaired
Receivables from non-exchange transactions
Statutory receivables
Statutory receivables (continued)
Provision for impairment is determined according to the past payment patterns of the different consumers within the different categories. An impairment calculation is forward-looking and one must therefore use the number of days the relevant financial asset is expected to be outstanding based on the best information available at year-end. For this estimate, it would be best to use a combination of key indicators that would provide a list of receivables most likely to be impaired.
Debtors are valued at each reporting date and written down according to the Debtor Impairment and Debt Write-Off Policy in accordance with national treasury guidelines. During the month of March 2020, a national state of emergency was declared due to the outbreak of the global Covid-19 pandemic which was then followed by the implementation of a national lockdown. The lockdown had a negative impact on people's affordability levels to service their municipal debt as they were unable to earn an income.
Data to determine the full and actual impact of these restrictions on both movement and revenue generation is limited, but an assessment of the municipality's debt collectability showed a significant increase in our receivables at the end of the year. This was estimated to be due to affected levels of affordability and restricted movement of consumers who were then unable to visit the municipality to settle their debts and/or make arrangements. During this time, the municipality was also unable to fully implement its credit control and collection measures, which included limiting access to municipal services due to national directives urging government institutions not to implement these measures during this difficult period.
VAT receivable
Receivables from exchange transactions Gross balances
Receivables from exchange transactions (continued)
Receivables from exchange transactions (continued) Consumer debtors past due but not impaired
Cash and cash equivalents (continued) The municipality had the following bank accounts
Unspent conditional grants and receipts
Provisions
Provisions (continued) Staff leave provision
Payables from exchange transactions
Consumer deposits
Financial instruments disclosure Categories of financial instruments
Financial instruments disclosure (continued)
Revenue
Property rates Rates income
Service charges
Government grants and subsidies Operating grants
Government grants and subsidies (continued) EPWP Grant
Government grants and subsidies (continued) Disaster Relief Grant
Investment revenue Interest received
Other income
Agency services
Licences and permits (non-exchange)
Fines, Penalties and Forfeits
Fines, Penalties and Forfeits (continued)
Lease rentals on operating lease Equipment
General expenses
Employee related costs
Remuneration of councillors
Depreciation and amortisation
Auditors' remuneration
Transfers and subsidies Other subsidies
Transfers and subsidies (continued) The municipality does not offer financial support
Bulk purchases
Cash generated from operations
Commitments
Commitments (continued)
Vuyokazi Tobo vs Mbizana Local Municipality
Hlongwe vs Mbizana Local Municipality
Gift Fynn VS Mbizana Local Municipality
- Related parties
- Related parties (continued) Remuneration of management
- Related parties (continued)
- Prior Period Errors
- Prior-year adjustments
- Change in estimate (continued) Intangible assets
- Risk management Financial risk management
- Risk management (continued) Credit risk
- Unauthorised expenditure
- Fruitless and wasteful expenditure
- Fruitless and wasteful expenditure (continued)
- Irregular expenditure (continued) Amounts written-off
- Additional disclosure in terms of Municipal Finance Management Act Contributions to organised local government
- Additional disclosure in terms of Municipal Finance Management Act (continued)
- Deviation from supply chain management regulations
- Events after the reporting date
- Fair value adjustments
- Other income
- Impairment of assets Impairments
- Contracted services Presented previously
- Accounting by principals and agents
- Accounting by principals and agents (continued) Details of the arrangment(s) is|are as follows
- Budget differences
- Budget differences (continued) Debt Impairment
- Budget differences (continued) Property, plant and equipment
During the year it was discovered that R239 274 for accrued income was wrongly classified as Receivables from barter transaction, this was then reclassified to Other receivables from barter transactions. The correction resulted in an increase of R239 274 on Other receivables from barter transactions and a decrease on Debtors from barter transactions overwritten by the other receivable transactions overwritten. 9,923, a remittance net to a Supplier. The correction of the error resulted in an increase in Creditors from barter transactions of R125 382. The overall impact of the transactions mentioned above resulted in a decrease of R22 854 738 in debtors from non-barter transaction.
The amount of the effect in future periods is not disclosed because its estimation is impracticable due to the amount and nature of the assets it affects. The municipality's liquidity risk is the result of available funds to cover future obligations. The municipality does not have insurance and/or credit enhancements that would help reduce liquidity risk.
Mbizana LM incurred costs by not following Supply Chain Management policies during the onset of the COVID_19 pandemic. The survival of the municipality depends on a number of other factors. The municipality is registered as a registration authority in accordance with section 3(1) of the Road Traffic Act of 1996 (Act No. 93 of 1996), subject to the conditions imposed by the member of the Executive Council (MEC) responsible for transport.
Resources held on behalf of the principal(s), but recognized in the company's own accounts. The municipality disposes of resources on behalf of the principal(s), which are not included in the municipality's accounts, but are included in the main accounts. The municipality has no obligations incurred on behalf of the principal, which is recognized by the municipality.
The country has been placed on lockdown since the outbreak of the Covid-19 pandemic which resulted in the municipality's testing station being closed from March 2020 to July 2020, during which no income could be generated. The surplus of actual expenditure over the budget is due to the increase in consumer debtors.f During March 2020, a state of national disaster was declared due to the outbreak of the Covid-19 global pandemic which was then followed by the enforcement of the national lockdown. The municipality does not budget for unspent grants, as they are intended to be fully spent by the end of the year.
Analysis of property, plant and equipment as at 30 June 2020
Analysis of property, plant and equipment as at 30 June 2019
Prior Year Current Year
Rand Rand Rand Rand Rand Rand Rand Rand Rand Rand Rand Rand Rand. Rand Rand Rand Rand Rand Rand Rand Rand Rand Rand Rand Rand Rand.
