APPENDIX C(1): Actual versus Budget (Income and Expenditure) 69-70 APPENDIX C (2) : Actual versus Budget (Acquisition of Property, Plant and Equipment) 71 APPENDIX D: Disclosure of Grants and Subsidies in terms of the Municipal. The annual financial statements have been prepared in accordance with the Standards of Generally Accepted Accounting Practices (GAAP). The annual financial statements have been prepared on the historical cost basis and incorporate the main accounting policies set out below.
Entities are obliged to use the GRAP standards where the minister has set the date of entry into force. Accounting policies for significant transactions, events or conditions not covered by the above GRAP standards have been developed in accordance with Articles 7, 11 and 12 of GRAP 3. These accounting policies and related disclosures are based on South African Statements of Generally Accepted Accounting Principles practices (SA GAAP), including any interpretations of such statements issued by the Accounting Practices Committee.
ACCOUNTING POLICIES
- Basis of consolidation
- Presentation of currency
- Going concern assumption
- Standards, amendments to standards and interpretations issued but not yet effective GRAP 18: Segment Reporting – issued March 2005
- Revenue from Non-Exchange Transactions (Taxes and Transfers) – issued February 2008
- Presentation of Budget Information in Financial Statements – issued November 2007
- Housing Development Fund
- Investment properties Initial Recognition
- Property, plant and equipment Initial Recognition
- Property, plant and equipment (continued)
- Intangible assets Initial Recognition
- Intangible assets (continued) Amortisation and Impairment
- Impairment of Cash-generating and Non-cash-generating assets
- Financial instruments Initial recognition
- Financial instruments (continued) Creditors
- Investments
- Investments in municipal entities Group annual financial statements
- Investment in joint venture Group annual financial statements
- Inventories Initial Recognition
- Borrowing costs
- Provisions
- Retirement Benefits .1 Defined contribution plans
- Retirement Benefits (continued)
- Revenue
- Revenue (continued)
- Grants,transfers and donations
- Leases
- Unauthorised Expenditure
- Irregular expenditure
- Fruitless and Wasteful Expenditure
- Translation of foreign currencies Foreign currency transactions
- Comparatives Information .1 Current year comparatives
- Long Service Awards
Borrowings are subsequently recorded at amortized cost price; any difference between the proceeds (minus transaction costs) and the redemption value is recognized in the income statement over the loan period using the effective interest method. Investments in municipal units under the municipality's ownership are calculated at cost price. The contributions are based on a percentage of the salary and are debited to the income statement in the year they relate to.
Contributed property, plant and equipment is recognized when ownership of the items of property, plant and equipment is transferred to the municipality. Payments made under operating leases (net of any incentives received from the lessor) are accounted for on a straight-line basis over the period of the lease against the statement of financial performance. The Municipality is exempt from tax in terms of section 10(1)(a) of the Income Tax Act.
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
HOUSING DEVELOPMENT FUND
LONG-TERM LIABILITIES
The Landfill Rehabilitation provision is designed to rehabilitate current operating sites at the anticipated time of future closure. The value of the provision is based on the expected future cost of rehabilitating the various sites at the balance sheet date discounted by the cost of capital, which is currently 10%. The asset is measured using the cost model: a) depending on (b), the changes in liability are added or subtracted to the cost of the relevant asset in the current period;.
The above leave is granted in addition to the annual holiday entitlement and maximum savings in accordance with the national conditions of service and may be taken, converted into cash in whole or in part or accumulated. Clearing of alien vegetation is required under the Agricultural Resources Conservation Act, 1983 (Act No. 43 of 1983). The performance bonus paid to each employee is dependent on the overall score obtained in this assessment and is subject to approval by the City Manager.
RETIREMENT BENEFIT OBLIGATIONS 1. Defined benefit plan
- Post-Retirement Medical Aid Plan
Therefore, the Municipality has made a provision for its obligation, based on the estimated future costs for the next 3 years. Insurance for the control/eradication of invasive alien plants is based on reliable data on growth rate, infestation rate and density. Input from multiple field staff was obtained regarding the level of infestation of currently managed areas.
Land owned by the municipality within the municipal area: 18 000 Ha Open space owned by the municipality currently managed (prioritised): 2 200 ha. All employees who are employed in accordance with the provisions of Article 57 of the Municipal Systems Law are required, in connection with their employment contracts, to sign a performance agreement and performance plan against which their performance is evaluated every year. Employees are evaluated quarterly against these objectives and a final evaluation is made at the end of the financial year.
Retirement benefit obligations (continued)
Retirement benefit obligations (continued) 1.2. Pension benefits
Retirement benefit obligations (continued) Key assumptions used
DEPOSITS
CREDITORS
UNSPENT CONDITIONAL GRANTS AND RECEIPTS Conditional Grants from other spheres of Government
Unspent conditional grants and receipts (continued) Other Conditional Receipts
CASH AND CASH EQUIVALENTS
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment (continued)
INTANGIBLE ASSETS
INVESTMENT PROPERTIES
Investment properties (continued) Municipality
INVESTMENTS IN MUNICIPAL ENTITIES
Investments in municipal entities (continued)
INVESTMENTS
INVESTMENT IN JOINT VENTURE
LOANS TO MUNICIPAL ENTITIES Durban Marine Theme Park (Proprietary)
RECEIVABLES Long-term receivables
Senior employees are eligible for car loans that attract annual interest and are repaid over a period of up to one year. To encourage property owners to connect to the reticulation system, low interest rate loans are available to provide the necessary financial assistance. These loans bear interest at an annual interest rate of 11-14% and are repaid within a maximum period of 1 year.
Home loans are provided to qualified individuals under the provincial administration's housing program. These loans attract interest as per the government directives and guidelines and have to be repaid over 20 years.
INVENTORIES
CONSUMER DEBTORS Gross Balances
C.C. Debtors
- DEBTORS
- CALL INVESTMENT DEPOSITS
- PROPERTY RATES Rates received
- SERVICE CHARGES
- GRANTS AND SUBSIDIES
- OTHER INCOME
- EMPLOYEE RELATED COSTS
In terms of the Constitution, this grant is used to subsidize the provision of basic services to needy community members. Funding has been obtained from various sources and local industries for the implementation of the South Durban Basin Multipoint Plan. The expenditure is incurred over a multi-year period, based on the roll-out of the projects per programme.
Further funding will be spent based on the outcome of the Air Quality Management Plan which is currently underway. The focus of the grant is to stimulate and accelerate investment in poor underserved neighborhoods. The Municipality has an Area Based Management Program which focuses on key areas of the Council and improves service delivery and stimulates job and income generation in these basic areas.
This grant was used to fund the upkeep of the Lamontville homes, as well as the transfer of the R293 township homes to the beneficiaries. Funding provided to implement projects identified through the KZN Corridor Development Program and to unlock strategic economic development opportunities within the city's Northern Municipal Planning Region (NMPR). Included in the above is the funding received from Tsogo Sun for the upgrade of the Suncoast district and the Inner City Distribution System.
The grant was received for the construction of a stadium and other structures in preparation for the 2010 FIFA World Cup. The grant will be used for the development of the Shembe Area (Rural ABM) and the acquisition of land for the Bridge City (INK) project. It received these funds from Tsogo Sun to upgrade the Suncoast Precinct and distribute downtown.
The Vuna Awards are an initiative of the Department of Provincial and Local Government together with partners in coordinating development in local government, the South African Association of Local Authorities, the Development Bank of South Africa and the National Productivity Institute.
C.C.: Remuneration of the Chief Executive Officer (vacant)
C.C.: Remuneration of Executive Managers
- REMUNERATION OF COUNCILLORS
- FINANCE COSTS
- BULK PURCHASES
- GRANTS AND SUBSIDIES PAID
- GENERAL EXPENSES
- UTILISATION OF LONG-TERM LIABILITES RECONCILIATION
- COMMITMENTS
- Commitments in respect of capital expenditure Approved and contracted for
- Operating leases – as lessor (income) The future minimum lease payments
- CONTINGENCIES
- RELATED PARTIES
- PRIOR YEAR ADJUSTMENTS
- PRIOR YEAR ADJUSTMENTS (continued) Property, Plant and Equipment
- PRIOR YEAR ADJUSTMENTS (continued) Housing Development Fund
- PRIOR YEAR ADJUSTMENTS (continued) Consumer Debtors
- TRAFFIC FINES
- COMPARISON WITH THE BUDGET
- UNAUTHORISED, IRREGULAR, FRUITLESS AND WASTEFUL EXPENDITURE DISALLOWED
- ADDITIONAL DISCLOSURE IN TERMS OF MUNICIPAL FINANCE MANAGEMENT ACT
- TAXATION
- LEASES (INCOME) - LESSOR
- BIOLOGICAL ASSETS
- DISCLOSURE IN TERMS OF SUPPLY CHAIN MANAGEMENT POLICY
- FINANCIAL INSTRUMENTS
- FINANCIAL INSTRUMENTS (continued)
- FINANCIAL INSTRUMENTS (continued) Liquidity risk
- FINANCIAL INSTRUMENTS (continued) Credit risk
- EXTERNAL LOANS FOR THE YEAR ENDED 30 JUNE 2011
The deputy mayor and speaker have two full-time bodyguards which are the weighted average cost of funds generally borrowed by the municipality. Several claims submitted to the legal department of the municipality are in the process of being resolved. The comparison of the Municipality's actual financial performance with that which was budgeted is set out in Annex C(1) and C(2).
Exposure to interest, credit and liquidity risk arises during the municipality's normal operations. This report presents information on the municipality's exposure to each of the above risks and the municipality's objectives, policies and processes for measuring and managing risks. The accountant is fully responsible for establishing and overseeing the city's risk management framework.
Risk management policies and systems are regularly reviewed to reflect changes in market conditions and the municipality's activities. As part of managing the municipality's liquidity risk, promissory notes were issued, which enable timely repayment of loans. Liquidity risk is the risk that the municipality will face when collecting funds to cover future obligations.
The municipality manages the liquidity risk through an ongoing review of future engagements and credit facilities. The municipality only deposits cash in major banks with high creditworthiness and limits exposure to a single counterparty. The municipality has no control over the approval of new customers who acquire properties in the designated urban area and as a result incur rates, water and electricity debts.
In the year under review, considerable electricity losses of kWh (kWh) occurred, as a result of which the municipality missed out on material income. The damage suffered by the municipality is and will therefore be caused by a combination of transport losses and losses due to illegal connections. This debt has been written off under the statute of limitations, which prohibits the council from collecting prescribed debts as advised by our legal counsel.
Notes to the Annual Financial Statements Figures in Rand thousand
EXTERNAL LOANS FOR THE YEAR ENDED 30 JUNE 2011 (Continued)
STATEMENT OF COMPARATIVE AND ACTUAL INFORMATION FOR THE YEAR ENDED 30 JUNE 2011 - GROUP
STATEMENT OF COMPARATIVE AND ACTUAL INFORMATION FOR THE YEAR ENDED 30 JUNE 2011 - MUNICIPALITY
The decrease is mainly due to the delay in the implementation of several projects financed by the EPWP grant. The increase is mainly due to VAT refunds on the VAT correction additional tax assessment, an increase in security income and income from urban improvement rates. The increase is mainly due to the increase of the Provision for bad debts which has been adjusted to take into account the total overdue accounts of R 32.57 million in terms of the age analysis of the debtors (120 days and more).
The decrease is mainly due to the lack of major repairs and maintenance of the bus depots as a result of the planned capital increases. The increase is mainly due to an increase in the number of facilities generating rental income. The budget was reduced based on the low usage of public buses, bus usage has since increased resulting in an increase in revenue.
The decrease comes as a result of the reduction of interest rates and the use of internal funds to meet the accelerated expenses. Metro Police - Despite various initiatives to encourage payment of fines, poor economic conditions and apathy of offenders to pay has resulted in a drop in revenue. Internal control and business systems Underspends are attributed to delays in starting the upgrade of the 9th Floor building (Mkhize Building in Florence).
Internal control and business systems Underspending can be attributed to the delays in starting the upgrade of the 9th floor building (Florence Mkhize building).
