Members of the Executive Committee NN Baloi (Health and Social Development) MP Malola (Corporate and Shared Services). The accountant is required under the Municipal Financial Management Act (Act 56 of 2003) to keep adequate accounts and is responsible for the content and integrity of the accounts and associated financial information included in this report. It is the responsibility of the accountant to ensure that the annual accounts give a true and fair view of the municipality's situation at the end of the financial year and the results of its operations and cash flows for the period ended at that time.
The financial statements have been prepared in accordance with Generally Accepted Accounting Practice (GAAP) standards including any interpretations, guidance and directives issued by the Accounting Standards Board. The accounting officer is of the opinion, based on the information and explanations provided by management, that the internal control system provides reasonable assurance that the financial data can be relied upon for the preparation of the financial statements. The financial statements have been prepared on the basis of accounting policies applicable to a continuum.
The accounting officer is not aware of any matter or circumstance that has arisen since the end of the financial year that could have a material impact on the unaudited financial statements. The financial statements prepared in accordance with the South African Statements of General Recognized Accounting Practice (GRAP), including all interpretations and guidance issued by the Accounting Standards Board and in accordance with section 122(3) of the Municipal Finance Management Act, (Act No. 56 of 2003).
Basis of preparation
- Presentation currency
- Going concern assumption
- Significant judgements and sources of estimation uncertainty
- Significant judgements and sources of estimation uncertainty (continued)
- Investment property
- Investment property (continued) Cost model
- Property, plant and equipment
- Property, plant and equipment (continued)
- Intangible assets
- Heritage assets
- Heritage assets (continued) Initial measurement
- Financial instruments 1.9 Cash and cash equivalents
- Leases
- Inventories
- Inventories (continued)
- Related parties
- Events after the reporting date
- Value added tax
- Impairment of cash-generating assets
- Impairment of cash-generating assets (continued) Useful life is either
- Impairment of cash-generating assets (continued) Recognition and measurement (individual asset)
- Impairment of cash-generating assets (continued) Reversal of impairment loss
- Impairment of non-cash-generating assets
- Impairment of non-cash-generating assets (continued)
- Impairment of non-cash-generating assets (continued) Reversal of an impairment loss
- Employee benefits
- Employee benefits (continued) Retirement benefits
- Employee benefits (continued) Actuarial assumptions
- Provisions and contingencies Provisions are recognised when
- Commitments
- Revenue from exchange transactions
- Revenue from exchange transactions (continued) Agency Services
- Revenue from non-exchange transactions
- Revenue from non-exchange transactions (continued) Fines
- Borrowing costs
- Comparative information
- Unauthorised expenditure
- Fruitless and wasteful expenditure
- Irregular expenditure
- Investments
- Conditional grants and receipts
- Budget information
If a replacement part is recognized in the book value of the tangible fixed asset invested, the book value of the replaced part is derecognised. If the fair value of the item acquired was not determinable, the assumed cost is the book value of the asset(s) disposed of. If a replacement cost is recognized in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised.
Depreciation (Amortization) is the systematic allocation of an asset's depreciable amount over its useful life. If the recoverable amount of a cash-generating asset is less than its carrying amount, the asset's carrying amount is reduced to its recoverable amount. When the estimated amount of an impairment loss is greater than the accounting value of the cash-generating asset to which it relates, the municipality only recognizes a liability to the extent that this is a requirement in the standard for GRAP.
If the replaceable value of an individual asset cannot be estimated, the municipality determines the replaceable value of the cash-generating unit to which the asset belongs (cash-generating unit of the asset). The book value of the cash-generating unit is determined on a basis that is consistent with the method of determining the recoverable amount of the cash-generating unit. 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 amount of the impairment loss that would otherwise have been allocated to the asset is allocated proportionately to the entity's other cash-generating assets. A reversal of an impairment loss for a cash-generating unit is allocated to the unit's cash-generating assets in proportion to the carrying amounts of those assets. No portion of the amount of such write-off is allocated to a non-cash-generating asset that contributes to the service potential of a cash-generating unit.
The value in use of non-cash-generating assets is the present value of the non-cash-generating assets' remaining service potential. The present value of the remaining service potential of a non-cash-generating asset is calculated as the depreciated one. If the recoverable amount of a non-cash-generating asset is less than its carrying amount, the asset's carrying amount is reduced to its recoverable amount.
When the amount estimated for an impairment loss is greater than the book value of the non-cash-generating asset to which it is related, the municipality recognizes a liability only to the extent that it is a requirement in the GRAP Standards. Assets derived from fines are measured according to the best estimate of the input of resources to the municipality.
New standards and interpretations
Standards and interpretations issued, but not yet effective
Related parties
- Standards and interpretations not yet effective or relevant
- Inventories
- Receivables from exchange transactions
- Receivables from non-exchange transactions
- Consumer debtors Gross balances
- Consumer debtors (continued)
- Consumer debtors (continued) Reconciliation of allowance for impairment
- Cash and cash equivalents Cash and cash equivalents consist of
- Investment property
- Investment property (continued) Reconciliation of investment property - 2015
- Property, plant and equipment
- Property, plant and equipment (continued)
- Intangible assets
- Heritage assets
- Heritage assets (continued)
- Payables from exchange transactions
- Unspent conditional grants and receipts
- Unspent conditional grants and receipts (continued) Movement during the year
- Employee benefit obligations Defined benefit plans
- Employee benefit obligations (continued) Calculation of actuarial gains and losses
- Employee benefit obligations (continued) 17.2 Long service awards obligation
- Employee benefit obligations (continued)
- Provisions (continued) Landfill rehabilitation provision
- Service charges
- Government grants and subsidies Operating grants
- Government grants and subsidies (continued) Extended Public Works Grant
- Revenue
- Employee related costs (continued) Remuneration of Municipal Manager
- Depreciation and amortisation
- Contracted services
- General expenses
- Auditor's remuneration
- Cash generated from operations
- Contingencies Contigent Liabilities
None of the swap receivables have been pledged as security for any financial liability. The residual value and useful life of investment property was recovered and possible impairment was assessed at the reporting date. A register containing the information required by section 63 of the Municipal Financial Management Act is available for inspection at the registered office of the municipality.
Where there is not a deep market in government bonds with a sufficiently long maturity to match the estimated duration of all the benefit payments, an entity uses current market rates of the applicable term to discount shorter-term payments, and estimates the discount rate for longer terms by extrapolating current market rates along the yield curve''. We have changed this methodology from a point estimate to present a more accurate depiction of the liability. An actuarial valuation of the obligation was carried out by ZAQ Consultants and Actuaries on all 203 employees entitled to long service awards as at 30 June.
On the valuation date, the municipality's long-term allocation obligation was unfunded, i.e. where there is not a deep market for government bonds with a sufficiently long maturity to match the estimated maturity of all the benefit payments, a company uses current market rates at the appropriate maturity to discount shorter payments, and estimates the discount rate along the longer current market curve by extrapolating the cost curve for longer maturities. depending on the increase in the annual salary paid to the employees.
It is the policy of the municipality to provide retirement benefits to some of its employees. In terms of the Mineral and Petroleum Resources Development Act, 2002 (Act No 28 of 2002), the municipality is required to carry out the environmental management program to rehabilitate landfills and quarries. In terms of the Constitution, this grant is used to subsidize the provision of basic services to needy community members.
This grant was used to promote and support reforms to municipal financial management and the implementation of the MFMA, 2003. In the 2014/2015 financial year, the conditions of the grant were partially met and resulted in unspent grant. Operating lease payments represent rent payable by the municipality for certain of its office equipment.
The plaintiff is suing the municipality due to allegations that the municipality sold one piece of land that was originally allocated to it to another person. The plaintiff is suing the municipality for a specific service that requires the municipality to commit to the original agreement to purchase the plaintiff's land RR.
CC vs Greater Letaba Municipality
P Marx vs Greater Letaba Municipality
- Unauthorised expenditure
- Fruitless and wasteful expenditure
- Irregular expenditure
- Irregular expenditure (continued)
- Related parties
- Related parties (continued) Remuneration per councillor
- Related parties (continued)
- Prior period adjustments Annual Bonus Provision
- Prior period adjustments (continued)
- Deviation from supply chain management regulations
- Financial instruments disclosure Categories of financial instruments
- Risk management Financial risk management
- Risk management (continued)
- Budget information
- Budget information (continued) Interest: Outstanding receivables
- Material losses
- VAT receivable
- Other revenue
- Debt impairment
The plantiff sues the municipality for specific performance forcing the municipality to commit to the original agreement to purchase the plantiff's land R R R52 000 000). The municipality has not had any other transactions or balances with related parties in the financial year outside the contractual remuneration of the senior management. Provision for doubtful debts per 30 June 2015 was overstated by R4 929 715. The accounts have been corrected in the current year by adjusting opening balances and costs.
Investments at 30 June 2015 were overstated by R74 496 in respect of contingent assets which were incorrectly disclosed. The financial statements were corrected in the current year by restating the initial balances. The municipality's activities are exposed to various financial risks: market risk (including fair value interest rate risk and cash flow interest rate risk), credit risk and liquidity risk. The general municipal risk management program focuses on the unpredictability of financial markets and tries to minimize possible negative effects on the financial performance of the municipality.
The municipality's liquidity risk is the result of available funds to cover future obligations. The municipality manages liquidity risk by constantly reviewing future liabilities and loans. Transfers are transfers from one operating cost element or capital project to another and are carried out in accordance with the municipality's approved transfer policy.
The municipality had no budget for barter receivables The barter receivables continue to increase in 2015/2016 due to the mopani loan account. The negative difference is R144 056. The municipality cannot rent out machines due to prioritization of the service. The negative difference is influenced by the electricity consumption related to the purchases amounting to R8 728 768. The difference is related to the decrease in electricity sales.
The estimated impairment was too low. The municipality was optimistic that the debts will be settled. The municipality depends on the grants awarded and provided by National Treasury to operate as a going concern. Management believes that the government will continue to subsidize the municipality through grants to fund operating and capital expenditures.
Analysis of property, plant and equipment as at 30 June 2015
Analysis of property, plant and equipment as at 30 June 2014
