The municipality is established in accordance with Chapter 7 of the Constitution of the Republic of South Africa. I am responsible for the preparation of these annual accounts, which appear on pages 17 to 94 in accordance with § 126, subsection 1, in the Act on municipal financial management, and which I have signed on behalf of the municipality. Details of operating results for 2017/18 and classification of income and expenditure are included in the statement of financial results.
Dihlabeng Local Municipality
GOVERNMENT GRANTS & SUBSIDIES
Dihlabeng Local Municipality
GOING CONCERN ISSUES
The ratio is still too high due to the depreciation of debt and the municipality should make all possible efforts to reduce it to at least 28.62% in the next financial year excluding debt depreciation to ensure that the municipality is able to meet all its financial obligations. The municipality is unable to collect outstanding amounts from consumer debtors in time and this leads to the inability to pay their suppliers within the 30 day period. These conditions, together with other matters as detailed in the financial statements, indicate the existence of a material uncertainty about the municipality's ability to function as a going concern.
IMPLEMENTATION OF ACCOUNTING STANDARDS
The collectability of our debtors still remains a problem, hence the large provision for bad debts.
APPRECIATION
Statement of Financial Position as at 30 June 2018
Statement of Financial Performance
Statement of Changes in Net Assets
Cash Flow Statement
Statement of Comparison of Budget and Actual Amounts
Accounting Policies
Presentation of Annual Financial Statements
- Presentation currency
- Going concern assumption
- Significant judgements and sources of estimation uncertainty
- Significant judgements and sources of estimation uncertainty (continued) Impairment testing
- Biological assets that form part of an agricultural activity
The municipality reviews and tests the book value of assets when events or changes in circumstances indicate that the book value may not be recoverable. The management of the municipality determines the estimated useful life and related depreciation for waste water and water supply networks. When determining the appropriate discount rate, the municipality takes into account the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and have a maturity date that approximates the terms of the related pension obligation.
Accounting Policies
- Property, plant and equipment
- Intangible assets An asset is identifiable if it either
- Heritage assets (continued)
- Heritage assets (conti nued) Transfers
- Financial instruments
- Financial instruments (continued}
- Financial instruments (continued)
- Financial instruments (continued) Gains and losses
- Leases
- Leases (continued) Finance leases - lessee
- Inventories
- Inventories (continued)
- lmpainnent of cash-generating assets
- Impairment of cash-generating assets (continued) Composition of estimates of future cash flows
- Impairment of non-cash-generating assets
- lmpainnent of non-cash-generating assets (continued)
- lmpainnent of non-cash-generating assets (continued) Recognition and measl!rement '·
- Employee benefits
- Employee benefi~ (co ntinued)
If the acquired item's fair value could not be determined, its estimated cost price is the accounting value of the given asset(s). If a replacement cost is recognized in the accounting value of a tangible fixed asset, the accounting value of the replaced part is deducted. Depreciation is the systematic allocation of an asset's depreciable amount over its useful life.
The value in use of a cash-generating asset is the present value of the future cash flows expected to flow from an asset or a cash-generating unit. The value in use of a non-cash generating asset is the present value of the asset's remaining service potential. Depreciation (Depreciation) is the systematic distribution of the depreciable amount of an asset over its useful life.
If any such indication exists, the municipality estimates the recoverable amount of the asset. 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. If any such indication exists, the municipality estimates the recoverable service amount of the asset.
The present value of the remaining service potential of a non-cash generating asset is determined as the depreciated replacement cost of the asset.
Dih labeng Local Municipality
- Employee benefits (continued)
- Provisions and contingencies Provisions are recognised when
- Provisions and contingencies (continued)
- Commitments
- Revenue from exchange transactions
- Revenue from non~xchange transactions (continued)
- Revenue from non-exchange transactions (continued) Fines
- lnvestmentincome
- Borrowing costs
- Comparative figures
- Unauthorised expenditure Unauthorised expenditure means
- Fruitless and wasteful expenditure
- Irregular expenditure
- Irregular expenditure (continued)
- Budget infonnation
- Related parties
- Related parties (continued)
The amount of the provision is the best estimate of the expenditure expected to be required to settle the present obligation at the reporting date. When the effect of the time value of money is significant, the amount of the provision is the present value of the expenditure expected to be required to settle the liability. If the outcome of a transaction involving the provision of services can be reliably estimated, revenue related to the transaction is recognized based on the stage of completion of the transaction at the reporting date.
Service revenue is recognized in relation to the stage of completion of the transaction at the reporting date. Royalties are recognized as they are earned in accordance with the content of the relevant agreements. Income from a non-exchange transaction is measured at the increase in net assets recognized by the municipality.
When a liability is subsequently reduced because the taxable event occurs or a condition is met, the amount of the reduction of the liability is recognized as revenue. Assets arising from fines are measured at the best estimate of the supply of resources to the municipality. Where the municipality collects fines as an agent, the fine will not be income for the collecting entity.
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.
Notes to the Annual Financial Statements
Notes to the Annual Financial Statements
Investment property (continued)
On initial recognition, the municipality measures investment properties at fair value to determine a cost price, and the fair value model is applied to investment properties for subsequent measurement. Under the fair value model, investment properties are recognized at the fair value on the balance sheet date.
Property, plant and equipment (continued) Reconciliation of property, plant and equipment - 2018
Dihlabeng Local Municipality
- Heritage assets (continued)
- Other financial liabilities At amortised cost
- Payables from exchange transactions
- VAT receivable
- Consumer deposits Water and electricity
- Unspent conditional grants and receipts
- Provisions
- Other income Advertising income
- Investment revenue Dividend revenue
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. The nature and extent of government grants recognized in the annual financial statements and an indication of other forms of government assistance from which the municipality directly benefited; and unfulfilled conditions and others. The landfill was assessed by Metsi Metseng Geological and Environmental Services and based on the.
Adequate site management will increase the number of years of operation and ensure environmental compliance is met. The assessment was carried out on 22 June 2018 by EnviroMatrix (Ply) Ltd to estimate the total cost of closing the current landfill site under the license agreement. This method is based on the assumption that post-retirement benefits are ostensibly accumulated over the employees' working lives.
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 for longer maturities by extrapolating current market rates along the yield curve. It is the municipality's policy to provide pension benefits to all its employees. The last actuarial assessment per 30 June 2005 is being finalized and will be submitted to the municipality once it has been approved by the foundation's executive committee.
This method is based on the expected long-service pay value of each employee and is projected to the next interval by taking into account future salary growth.
Notes to the Annual Financial Statements
- Government grants and subsidies Operating grants
- Government grants and subsidies (continued) Conditions met - transferred to revenue
- Government grants and subsidies (continued) National Development Electrification Grant
- Employee costs Basic
- Bulk purchases Electricity
- Contracted services
- Fair value adjustments Other financial assets / liabilities
- Risk management (continued) Price risk
The municipality's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The municipality's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the municipality's financial performance. Municipality's treasury identifies, evaluates and hedges financial risks in close collaboration with the municipality's operating units.
The municipality's liquidity risk is the result of funds available to cover future commitments. The Municipality manages liquidity risk through a continuous review of future commitments and credit facilities. The following table analyzes the municipality's financial liabilities and net settled derivative financial liabilities in the respective maturity groups based on the remaining period in the statement of financial position until the contractual maturity date.
The municipality only deposits cash with large banks with a high credit rating and limits exposure to a single counterparty. Consumer debt is levied at variable rates and exposes the municipality to cash flow interest rate risk. Long-term loans were taken out at a fixed interest rate and the interest rate risk has no impact on the municipality's financial position.
The municipality's investments in shares in other entities that are listed on the JSE, but do not have a significant impact on the municipality's income.
Notes to the A~nual Financial Statements
- Commitments
- Commitments (continued)
- Change in estimate Provisions
- Deviation from supply chain management regulations
This case is handled by Niemann Grobbelaar Solicitors and concerns a claim brought by Telkom against Dihlabeng Local Municipality in the amount of R141 514. This case is handled by Niemann Grobbelaar Solicitors and concerns a child who was in an open shaft and died. This case is handled by Niemann Grobbelaar solicitors and concerns a claim made by Telkom against the Dihlabeng Local Municipality for a total of R211 669.
This case is handled by Niemann Grobbelaar Solicitors and concerns a claim for water damage after a municipal pump burst in their home. This case is handled by Niemann Grobbelaar Prokureurs and concerns an outstanding payment of the water services infrastructure grant. This case is handled by Niemann Grobbelaar Ing and concerns an outstanding payment for professional services rendered to the municipality.
This case is handled by Niemann Grobbelaar Attorneys and deals with a claim filed by Telkom against the Dihlabeng Local Municipality in the amount of R25 486. This case is handled by Niemann Grobbelaar Attorneys and deals with an outstanding payment for services rendered by N and C Maintenance and Parts (Ply) Ltd. ed at TMT Services &.
This case is being handled by Niemann Grobbelaar Advocaten and concerns a claim for goods and services supplied.
Dihlabeng Local Municipality Appendix A
Schedule of external loans as at 30 June 2018
Dihlabeng Local Municipality Dihlabeng Local Municipality
Dihlabeng Local Municipality Dihlabeng Local Municipality
Dihlabeng Local Municipality Dihlabeng Local Municipality
Analysis of property, plant and equipment as at 30 June 2018
Analysis of property, plant and equipment as at 30 June 2017
Other assets Motor vehicles Office equipment Bins and containers Emergency equipment Sect.Crty equipment Plant and equipment Furniture and fixtures.
