In accordance with the Municipal Finance Management Act (Act 56 of 2003), the accountant must keep appropriate accounting records and is responsible for the content and integrity of the annual accounts and related financial information included in this report. The accountant is obliged to ensure that the annual financial statements fairly show the state of the municipality at the end of the financial year and the results of its operations and cash flows for the period ended at that time. The annual financial statements have been prepared in accordance with the Standards of Generally Accepted Accounting Practice (GRAP), including any interpretations, guidelines and instructions issued by the Accounting Standards Board.
The accountant acknowledges that she is ultimately responsible for the internal financial control system established by the municipality and attaches great importance to maintaining a strong control environment. Based on the information and explanations of 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 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 access to adequate funds to continue its operational existence for the foreseeable future.
The annual financial statements set out on pages 4 to 44, which have been prepared on a going concern basis, have been approved by the Accounting Officer on 31 August 2016. The Accounting Officer is not aware of any matters or circumstances arising since the end of the financial year.
Statement of Comparison of Budget and Actual Amounts
Presentation of Annual Financial Statements
- Significant judgements and sources of estimation uncertainty
- Investment property
A summary of the significant accounting policies that have been consistently applied in the preparation of these annual financial statements is disclosed below. In preparing the annual financial statements, management is required to make estimates and assumptions that affect the amounts represented in the annual financial statements and disclosures. The use of available information and the application of judgment is inherent in forming estimates.
Actual results in the future may differ from these estimates, which may be material to the financial statements. Homeownership is property held for use in the production or supply of goods or services or for administrative purposes. Transaction costs are included in the initial valuation. Subsequent valuation of investment properties takes place at cost price (Cost price model).
When investment properties are acquired through a non-exchange transaction, the cost is equal to the fair value at the date of acquisition. Gains or losses arising from the retirement or disposal of investment property are the difference between the net sales proceeds and the carrying amount of the asset and are recognized as a surplus or deficit in the period of retirement or disposal.
Accounting Policies
- Investment property (continued)
- Property, plant and equipment
- Property, plant and equipment (continued)
- Intangible assets
- Intangible assets (continued)
- Financial instruments Initial recognition and measurements
- Leases
- Impairment of cash-generating assets
- Impairment of cash-generating assets (continued) Basis for estimates of future cash flows
- 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)
- Revenue Recognition
- Revenue from non-exchange transactions
- Comparative information
- Unauthorised expenditure Unauthorised expenditure means
- Fruitless and wasteful expenditure
- Irregular expenditure
- Revaluation reserve
- Conditional Grants and Reciepts
- Presentation of budget information
- Presentation of budget information (continued)
- 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). Financial instruments are recognized for the first time when the municipality becomes a party to the instrument's contractual provisions. Depreciation (Amortization) is the systematic allocation of an asset's depreciable amount over its useful life.
Value in use of a cash-generating asset is the present value of the estimated future cash flows expected to be obtained from the continued use of an asset and from its disposal at the end of its useful life. If the recoverable amount of a cash-generating asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. When the estimated amount for an impairment loss is greater than the carrying amount of the cash-generating asset to which it relates, the municipality recognizes a liability only to the extent that is a requirement in the Standard of GRAP.
Reversal of an impairment loss on a cash-generating asset is recognized immediately in surplus or deficit. The reversal of an impairment loss for a cash-generating unit is allocated to the unit's cash-generating assets in proportion to the carrying amount of those assets. No portion of the amount of such reversal shall be allocated to a non-cash-generating asset that contributes service potential to the cash-generating unit.
The amount of the impairment loss reversal that would otherwise be allocated to the asset is allocated proportionately to the unit's other assets. Depreciation (amortization) is the systematic distribution of the depreciable amount of an asset over its useful life. If such a sign exists, the municipality assesses the recoverable value of the service of the asset.
The value in use of non-performing assets is the present value of the remaining useful potential of the non-performing assets. The present value of the remaining useful potential of a non-monetary asset is determined as the depreciated replacement value of the asset. If the recoverable service value of a non-monetary asset is less than its book value, the book value of the asset is reduced to the recoverable service value.
When the estimated amount of the loss due to impairment is greater than the book value of the non-monetary asset to which it relates, the municipality recognizes the liability only to the extent required by the GRAP standards. The reversal of an impairment loss on a non-cash asset is immediately recognized in surplus or deficit.
Notes to the Annual Financial Statements
New standards and interpretations
- Standards and interpretations issued, but not yet effective current year
Investment property
Investment property (continued) Reconciliation of investment property - 2016
Property, plant and equipment (continued) Reconciliation of property, plant and equipment - 2016
Intangible assets (continued) Reconciliation of intangible assets - 2016
Operating lease asset and liabilities
VAT receivable
Consumer debtors Gross balances
Consumer debtors (continued) Councillors in Arrears
Unspent conditional grants
Unspent conditional grants (continued) Movement during the year
Unspent conditional grants (continued) Electrification
Provisions
Provisions (continued) Post retirement medical benefits
Provisions (continued)
Payables from exchange transactions
Revenue
Property rates Rates received
Government grants and subsidies Operating grants
Employee related costs
Employee related costs (continued)
Remuneration of councillors
Debt impairment
General expenses
Operating lease commitments (lessee)
Operating lease commitments (lessor) Present value of minimum lease payment due
Capital Commitments
- Committed in respect of Capital Expenditure Already contracted for but not provided for
Contingent Liability
Related parties
Change in estimate Property, plant and equipment
Prior period errors
Risk management Liquidity risk
Going concern
Events after the reporting date
Unauthorised expenditure ( Non - cash items)
Fruitless and wasteful expenditure
Irregular expenditure
In-kind donations and assistance Inkind Donations provided and gifts recieved
Additional disclosure in terms of Municipal Finance Management Act Contributions to organised local government
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