The financial statements have been prepared as required in terms of Section 122 of the Municipal Financial Management Act (Act 56 of 2003) and in accordance with Standards of Generally Accepted Accounting Practice (GAAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board. Although the accounting officer is primarily responsible for the financial affairs of the municipality, they are supported by the municipality's external auditors. The operating results and state of affairs of the municipality are detailed in full in the attached financial statements.
Accounting Officer
Auditors
Presentation of Financial Statements
Presentation currency
Significant judgements and sources of estimation uncertainty
Significant judgements and sources of estimation uncertainty (continued) Impairment testing
Significant judgements and sources of estimation uncertainty (continued) GRAP 24: Presentation of budget information
Investment property
Investment property (continued)
Property, plant and equipment
Property, plant and equipment (continued)
Intangible assets
Heritage assets
Heritage assets (continued) Subsequent measurement
Financial instruments
Financial instruments (continued)
Financial instruments (continued) Loans to (from) municipal entities
Financial instruments (continued) Fixed and Negotiable Deposits
Leases
Leases (continued) Operating leases - lessee
Inventories
Housing development fund
Investments
Conditional grants and receipts
Related parties
Commitments
Impairment of cash-generating assets
Impairment of non-cash-generating assets
Impairment of non-cash-generating assets (continued) Value in use
Employee benefits
Employee benefits (continued)
Employee benefits (continued) Post-employment benefits
Current service costs are the increase in the present value of defined benefit obligations resulting from the employee's service in the current period. In measuring its defined benefit obligation, the company recognizes past service costs as an expense in the reporting period in which the plan changes. The Company uses the projected credit unit method to determine the present value of its defined benefit obligations and related current service cost and, where applicable, past service cost.
Employee benefits (continued) Actuarial assumptions
Employee benefits (continued) Termination benefits
Provisions and contingencies Provisions are recognised when
Provisions and contingencies (continued)
Revenue from exchange transactions
Revenue from exchange transactions (continued) Rendering of services
Revenue from non-exchange transactions
Revenue from non-exchange transactions (continued)
Revenue from non-exchange transactions (continued) Assessment Rates
Borrowing costs
Comparative figures
Unauthorised expenditure Unauthorised expenditure means
Fruitless and wasteful expenditure
Irregular expenditure
Irregular expenditure (continued)
Use of estimates
Value Added Tax (VAT)
Budget information
Events after the reporting date
Standards and interpretations issued, but not yet effective
Obsolete, surplus and slow moving inventory has been identified and written down to estimated economic or recoverable amount for the relevant service through the statement of financial performance at an amount of R 192 507.
Other financial assets Designated at fair value
For financial assets recognized at fair value, disclosure of the fair value hierarchy is required to reflect the significance of the inputs used for measurement.
Consumer debtors disclosure Gross balances
When determining a consumer debtor's ability to recover, the municipality takes into account any change in the consumer debtor's credit quality from the date the credit was originally granted until the reporting date. In addition, the municipality has also placed great emphasis on verifying the poor status of consumers. The concentration of credit risk is limited as a result of the fact that the customer base is spread over a large number of consumers and is not concentrated in any particular sector or geographical area.
Accordingly, management believes that no additional credit provisions beyond impairment provisions are necessary. When determining the collectability of debtors, the municipality placed great emphasis on checking the poor condition of consumers. Provisions for impairment of consumer debtors are made for all outstanding consumer balances based on the payment ratio in 12 months by type of service.
Receivables from non-exchange transactions
Cash and cash equivalents Cash and cash equivalents consist of
Investment property
Property, plant and equipment
Property, plant and equipment (continued) Reconciliation of property, plant and equipment - 2017
Property, plant and equipment (continued) Reconciliation of property, plant and equipment - 2016
Expenditures incurred due to the repair and maintenance of tangible fixed assets, included in the statement of financial performance. Services under the contract - repairs and maintenance Repairs and maintenance of tangible fixed assets created in the categories Buildings &. The progress of projects depends on the availability of funds from the relevant national department.
With the physical verification process undertaken to correct the infrastructure register and movable property register during the current financial year, new classifications were used and therefore certain figures changed from the previous year to the current year. Assets were also found which had been omitted from last year's asset register and these were subsequently added, which also resulted in a change to the previous period's figures. A register containing the information required in accordance with Section 63 of the Act on Municipal Financial Management is available for inspection at the municipality's registered office.
Intangible assets
Heritage assets
Other financial liabilities At amortised cost
Finance leases and new lease agreements were entered into during the current financial year. All rental contracts have a fixed repayment and no agreements have been made about conditional rent.
Payables from exchange transactions
Consumer deposits
An actuarial valuation of the liability in respect of the long service awards was carried out by an independent company. The primary purpose of this valuation is to enable the Municipality to meet the requirements of GRAP 25. The liability amounts are calculated in accordance with AERP 25 and can therefore be used in the preparation of the Annual Financial Statements of the Municipality.
A Jubilee Award is awarded to municipal employees upon completion of fixed periods of continuous service with the municipality. The provision is an estimate of the allowances to which employees employed by the municipality may be entitled in the future. The difference between the assumptions determines the valuation and it is very important to monitor how this difference changes from one valuation to the next.
The two most important financial variables used in our estimation are the discount rate and wage inflation. In this duration, the discount rate determined using the zero-coupon yield curve of the bond swap on June 30, 2017 is 8.72% per annum, and the yield on inflation-linked bonds of a similar maturity was about 2.56% per year. However, it is the relative levels of the discount rate and wage inflation to each other that are important, not the nominal values.
Our assumed rate of salary inflation is set as the assumed value of CPI plus 1%.
Environmental Rehabilitation (Landfill Sites)
The assets of each fund are held in a single portfolio and are not ostensibly allocated to each of the participating employers. One set of financial statements is prepared for all funds and not for each participating employer; and - the same rate of contribution applies to all participating employers and differences in the distribution of membership of participating employers are not taken into account. The estimated liabilities of the fund are R1 308 million, which is adequately funded by assets of R1 531 million.
It is the relative levels of the discount rate and health care cost inflation to each other that are important, rather than the nominal values. The assumption regarding the relative levels of these two rates is our expectation of the long-term average. GRAP25 defines the determination of the investment return assumption to be used as the rate that can be determined by reference to market yields (at the balance sheet date) on government bonds.
The currency and maturity of the government bonds should be consistent with the currency and estimated maturity of the obligation. This is 1.00% above expected inflation over the expected life of the obligation, consistent with the previous actuary. However, it is the relative levels of the discount rate and health inflation relative to each other that are important, rather than the nominal values.
If there is no deep government bond market with sufficiently long maturities to match the estimated maturity of all benefit payments, the company uses current market interest rates of the appropriate term to discount short-term payments and estimates the discount rate for longer maturities by extrapolating current market interest rates along the yield curve."
Service charges
Where necessary, it was assumed that female spouses would be five years younger than their male spouses at retirement and vice versa.
Other income
Interest and Dividends received - investment Dividend revenue
Interim valuations are processed annually and take into account changes in the value of individual properties due to conversions and subdivisions. According to the constitution, this grant is used to subsidize the provision of basic services to poor members of the community. In accordance with MFMA circular no. 48, all conditional allocations (other than interest earned) which have not been spent at the end of the year must be returned to the National Revenue Fund, unless the receiving officer concerned can demonstrate to the satisfaction of the Treasury that the unused allocation is for identifiable projects.
The grant is used to supplement municipal capital budgets to clear backlogs in municipal infrastructure used to provide basic services for the benefit of poor households. The grants were used to build roads and sewage infrastructure as part of upgrading informal settlement areas. Above the grant received, the Council contributes an additional amount of R471 583 to the mentioned project from its own income.
The purpose of the grant is to help municipalities build internal capacity to carry out their functions and stabilize institutional and governance systems as required by the Local Government and Municipal Systems Act. The purpose of the grant is to promote and support financial management reforms and implementation of the MFMA. This grant was used to mitigate water loss and help with water shortages in Clocolan, Marquard and Senekal during droughts.
SETA will ensure that the sector for qualification requirements is identified and that sufficient and appropriate skills are easily provided to the municipality's staff.
Revenue
Based on the allocations set out in the Division of Revenue Act, (Act 10 of 2014), no significant changes are expected in the level of government grant funding over the next 3 financial years. Each is provided with an office and secretarial support at the Council's expense.
Depreciation and amortisation
Bulk purchases
Contracted services
Assets write-off
These committed expenses relate to property and will be funded by available bank facilities, retained earnings, rights issue of shares, issue of debentures, mortgage facilities, existing cash reserves, internally generated funds etc. The IT specialist has close family ties to the management of ERB Marketing who maintain the Council's website . The owner of Itumeleng Building and Training has close relations with: Manager Human Resources.
The owner of Lira Transport has close family relations with the Asset Clerk stationed in Marquand. The owner of Selane Transport is employed by the Traffic Department in the Municipality. No transactions have taken place between the company and senior employees or their close family members during the reporting period, apart from paid salaries.
Detailed information on remuneration appears in note 28 for key management and note 29 for councillors.
Comparative figures
Unauthorised expenditure
Fruitless and wasteful expenditure
Irregular expenditure
Irregular expenditure (continued) Details of irregular expenditure – current year
Additional disclosure in terms of Municipal Finance Management Act Contributions to organised local government (SALGA)
Additional disclosure in terms of Municipal Finance Management Act (continued) Audit fees
Additional disclosure in terms of Municipal Finance Management Act (continued) Councillors' arrear consumer accounts
Additional disclosure in terms of Municipal Finance Management Act (continued)
Deviation from supply chain management regulations
In-kind donations and assistance Assets donated
In-kind donations and assistance (continued)
Events after the reporting date
Risk management Financial risk management
Risk management (continued) Credit risk
Going concern
Prior period errors Asset Register
Prior period errors (continued)
Contingencies
Operating lease
Accumulated surplus Changes to Accumulated Surplus
Cost/Revaluation Accumulated depreciation
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