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 annual accounts and associated financial information included in this report. It is the accountant's responsibility to ensure that the 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 accountant recognizes that he is ultimately responsible for the internal financial control system established by the municipality and places great emphasis on maintaining a strong control environment.
These controls are monitored throughout the municipality and all employees are expected to maintain the highest ethical standards to ensure that the municipality's business 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 across the municipality. 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.
The accountant has reviewed the municipality's cash flow forecast for the year to 30 June 2016 and, based on this review and the current financial position, is satisfied that the municipality has or has access to adequate resources to continue its operational existence for the foreseeable future. Although accountants are primarily responsible for the municipality's financial operations, they are assisted in this by the municipality's external auditors. External auditors are responsible for the independent review and reporting of the municipality's annual financial statements.
The annual financial statements were examined by the municipality's external auditors and their report is presented separately.
Presentation of Annual Financial Statements
- Presentation currency
- Going concern assumption
- Significant judgements and sources of estimation uncertainty
- Investment property
- Property, plant and equipment
- Property, plant and equipment (continued)
- Financial instruments
- Financial instruments (continued)
- Leases
- Inventories
- Inventories (continued)
- Employee benefits
- Provisions and contingencies Provisions are recognised when
- Provisions and contingencies (continued)
- Provisions and contingencies (continued) Levies
- Revenue from exchange transactions
- Revenue from non-exchange transactions
- Revenue from non-exchange transactions (continued)
- Investment income
- Comparative figures
- Unauthorised expenditure Unauthorised expenditure means
- Fruitless and wasteful expenditure
- Irregular expenditure
- Irregular expenditure (continued)
- Budget information
- Related parties
If the fair value of the acquired object could not be determined, its purchase value is the book value of the given asset(s). If the cost of replacement is recognized in the book value of the tangible fixed asset, the recognition of the book value of the replaced part is eliminated. Higher inspection costs, which are a condition for the continued use of the tangible fixed asset and meet the above criteria for recognition, are included as compensation in the purchase value of the tangible fixed asset.
When an item of property, plant and equipment is revalued, any accumulated depreciation at the date of the revaluation is adjusted in proportion to the change in the gross carrying amount of the asset so that the carrying amount of the asset after revaluation is equal to the revalued amount. When an item of property, plant and equipment is revalued, any accumulated depreciation on the date of the revaluation is eliminated against the gross carrying amount of the asset and the net amount is adjusted to the revalued amount of the asset. The increase is included in a surplus or deficit to the extent that it offsets a decrease in revaluation of the same asset previously included in a surplus or deficit.
The amount transferred is equal to the difference between depreciation based on the revalued carrying amount and depreciation based on the original cost of the asset. Each part of a tangible fixed asset with a cost price that is significant in relation to the total cost price of the item is depreciated separately. Tangible fixed assets cease to exist when the asset is disposed of or when no further financial benefits or service potential are expected from the use or disposal of the asset.
Tangible fixed assets, which the municipality holds for the purpose of letting to others and then routinely sells as part of ordinary operations, are transferred to inventories when the letting ends and the assets are available for sale. The effective interest rate is the interest rate that accurately discounts estimated future cash payments or income over the expected life of the financial instrument or, where applicable, a shorter period, to the net carrying amount of the financial asset or financial liability. 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.
When the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the liability. The discount rate reflects current market assessments of the time value of money and the specific risks for the liability. The Municipality recognizes a provision for financial guarantees and loan commitments when it is probable that an outflow of resources involving economic benefits and service potential will be required to settle the obligation and a reliable estimate of the obligation can be made.
The expense is classified in accordance with the nature of the expense, and where it is recovered, it is subsequently accounted for as income in the statement of financial performance. Irregular expenses incurred and identified during the current financial year and condoned before year-end and/or before finalization of the financial statements must also be appropriately recorded in the irregular expenses register.
Investment property
Property, plant and equipment
Other financial assets Designated at fair value
Inventories
Other receivables from exchange transactions
Trade and other receivables from exchange transactions Gross balances
Trade and other receivables from exchange transactions (continued) Electricity
Trade and other receivables from exchange transactions (continued) Fair value of trade receivables
Unspent conditional grants and receipts
VAT payable
Consumer deposits
Revenue
Service charges
Government grants and subsidies Operating grants
Government grants and subsidies (continued)
General expenses
Operating deficit
Employee related costs
Employee related costs (continued)
Depreciation and amortisation
Finance costs
Auditors' remuneration
Contracted services
Cash generated from operations
Commitments
Contingencies
Related parties
Prior period errors
Risk management Financial risk management
Risk management (continued) Credit risk
Going concern
Events after the reporting date
Unauthorised expenditure
Schedule of external loans as at 30 June 2015
Analysis of property, plant and equipment as at 30 June 2015
Analysis of property, plant and equipment as at 30 June 2014
Cost/Revaluation Accumulated Depreciation
Segmental Statement of Financial Performance for the year ended
