Annual Financial Statements

The Accounting Officer is required by the Municipal Financial Management Act (Act 56 of 2003) to maintain adequate accounting records and is responsible for the content and integrity of the annual financial statements and related financial information included in this report. It is the responsibility of the accounting officer to ensure that the annual financial statements fairly reflect the state of affairs of the municipality as at the end of the financial year and the results of its operations and cash flow for the period then ended. 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.

To enable the Accounting Officer to fulfill these responsibilities, the Accounting Officer sets internal control standards to reduce the risk of error or shortfall in a cost-effective manner. These controls are monitored throughout the municipality and all employees are required to maintain the highest ethical standards to ensure that the affairs of the municipality are conducted in a manner that is beyond reproach in all reasonable circumstances. The focus of risk management in the municipality is on identifying, assessing, controlling and monitoring all known forms of risk in the municipality.

While operational risk cannot be completely eliminated, the municipality strives to minimize it by ensuring that infrastructure, controls, systems and ethical behavior are implemented and managed within predetermined procedures and constraints. 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 annual financial statements. The accounting officer has reviewed the cash flow forecast of the municipality for the year to 30 June 2015 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 accounting officer is not aware of any matter or circumstance that has arisen since the end of the financial year.

Statement of Comparison of Budget and Actual Amounts

Revenue

Expenditure

Capital Expenditure

Accounting Policies

Presentation of Annual Financial Statements

Significant judgements and sources of estimation uncertainty
Investment property
Property, plant and equipment
Property, plant and equipment (continued)
Intangible assets
Financial instruments
Leases
Leases (continued)
Impairment of non-cash-generating assets
Impairment of non-cash-generating assets (continued) Value in use
Impairment of non-cash-generating assets (continued) Redesignation
Employee benefits
Provisions and contingencies Provisions are recognised when
Revenue Recognition
Comparative information
Unauthorised expenditure Unauthorised expenditure means
Unauthorised expenditure (continued)
Fruitless and wasteful expenditure
Irregular expenditure
Revaluation reserve
Conditional grants and receipts
Presentation of budget information
Related parties

If the acquired item's fair value could not be determined, its estimated cost price is the accounting value of the given asset(s). Revaluations are made with sufficient regularity so that the accounting value does not deviate significantly from that which would be calculated using the fair value at the end of the accounting period. Financial instruments are recognized for the first time when the municipality becomes a party to the instruments' contractual provisions.

For financial instruments that are not valued at fair value through surplus or deficit, transaction costs are included in the initial measurement of the instrument. Any difference between the proceeds (excluding transaction costs) and the settlement or redemption of the loans is recognized during the term of the loans in accordance with the municipality's accounting policy for borrowing costs. Impairment is the loss of future economic benefits or service potential of an asset, in addition to the systematic recognition of a loss of future economic benefits or service potential due to depreciation (amortization).

Depreciation (Depreciation) is the systematic distribution of the depreciable amount of an asset over its useful life. If there is any such indicator, the municipality estimates the recoverable amount of the service of the asset. Value in use of non-cash-generating assets is the present value of the remaining service potential of non-cash-generating assets.

The present value of the remaining service potential of a non-cash-generating asset is determined as the depreciated replacement cost of the asset. An asset can be replaced either through the reproduction (replication) of the existing asset or through the replacement of its gross service potential. Determining the replacement cost or replacement cost of an asset on an optimized basis thus reflects the service potential required by the asset.

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 estimated amount of an impairment loss is greater than the accounting value of the non-cash-generating asset to which it relates, the municipality only recognizes a liability to the extent that this is a requirement in the standards for GRAP. Net revenue is measured at the fair value of the consideration received or receivable less trade discounts and volume discounts.

The expense is classified in accordance with the nature of the expense, and if they are recovered, they are subsequently booked as income in the income statement. Income received from conditional grants, donations and funds is recognized as income to the extent that the municipality has fulfilled some of the criteria, conditions or obligations contained in the agreement.

Notes to the Annual Financial Statements

New standards and interpretations

Standards and interpretations issued but not yet effective in the current year
Standards and interpretations effective and Adopted in the Current Year

Investment property
Investment property (continued) Reconciliation of investment property - 2013
Property, plant and equipment
Property, plant and equipment (continued) Reconciliation of property, plant and equipment - 2014
Property, plant and equipment (continued)
Intangible assets
Receivables from exchange transactions
VAT receivable
Consumer debtors Gross balances
Consumer debtors (continued) Less: Allowance for impairment
Revaluation reserve
Unspent conditional grants and receipts
Unspent conditional grants and receipts (continued) Movement during the year
Unspent conditional grants and receipts (continued) Sport grant
Provisions
Provisions (continued)
Payables from exchange transactions
Property rates Rates received
Other income
General expenses
Employee related costs
Employee related costs (continued)
Auditors' remuneration
Operating lease
Cash generated from operations

Committed in respect of Capital Expenditure Approved and contracted for

Contingent Liability
Prior period errors
Prior period errors (continued) Impairment Adjustment
Risk management Liquidity risk
Going concern
Irregular expenditure
Related Parties
Deviation from procurement processes

A register containing the data required under Article 63 of the Municipal Financial Management Act is available for inspection at the registered office of the municipality. The software is expected to be used by the municipality for five years and due to rapid technological changes, the residual value at the end of its useful life is estimated to be nil. The nature and size of government contributions recognized in the annual accounts are indicative of other forms of government support from which the municipality has benefited directly; And.

The leave provision represents the management's best estimate of the municipality's liability for one period based on previous experience. According to section 227 of the Constitution, this grant is used to enable the municipality to provide basic services and perform functions assigned to it. Equitable share provides funds for the municipality to provide free basic services to poor households and subsidies for administration and other core services to the municipality.

Operating lease payment represents rent payable by the municipality for certain of its office photocopiers. Leases are negotiated for an average term of five years. In terms of AERP 19, the municipality is expected to disclose a contingency liability in the financial statements. Due to the fact that not all the positions on the municipality's organogram were evaluated, this made it impractical for the municipality to reliably measure the cost of the liability.

The municipality is currently involved in the litigation with the following entities and individuals, represented by the following lawyers. Spar Development - Action was taken against the developers of Spar to enforce compliance with various violations of the town planning scheme. The developers called on the municipality to give it time to regulate the violation. The expected cost is unknown at this stage. The following adjustment was made to amounts previously reported in the Annual Financial Statements of the Municipality resulting from compliance with GRAP standards.

During the year, the municipality discovered differences in the asset register that had been disclosed in the previous period. The municipality's liquidity risk is a result of the funds available to cover future obligations. The municipality manages the liquidity risk through an ongoing review of future engagements and credit facilities.

Since the municipality has no significant interest-bearing assets, the income and operating cash flows of the municipality are essentially independent of changes in market interest rates. During the year the council traded with Sya Matiwane Trading who provided decoration services to the council worth R4500.

Budgeted Financial Performance (revenue and expenditure) for the year ended 30 June 2014