Govan Mbeki Municipality

The annual financial statements have been prepared in accordance with Generally Accepted Accounting Practice (GAAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board. Our opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records can be relied upon for the preparation of the annual financial statements The municipality's cash flow forecast for the year ending 1 July 2015 begins. to 30 June 2016 and, in light of this review and the current financial position and revenue improvement activities, the municipality has or has access to sufficient resources to continue in operational existence for the foreseeable future. The Accounting Officer certifies that the salaries, allowances and benefits of council members as disclosed in the notes to this Annual Financial Statement are within the upper limit of the framework envisaged in section 219 of the Constitution, read together with the Public Office Holders Remuneration Act. No.20 of 1998.

The financial statements included on pages 5 to 89, which have been prepared on a going concern basis, were approved by the accounting officer on August 31, 2016. The operating results and course of affairs of the municipality are fully reflected in the accompanying financial statements and, in our opinion, need no further explanation. The financial statements have been prepared on the basis of accounting principles applicable to going concern.

The ability of the municipality to continue as a going concern is dependent on a number of factors. The accounting officer is aware of circumstances that have arisen since the end of the financial year.

Statement of Comparison of Budget and Actual Amounts

Presentation of Annual Financial Statements

Presentation currency
Significant judgements and sources of estimation uncertainty
Significant judgements and sources of estimation uncertainty (continued) Useful lives of property, plant and equipment
Investment property
Investment property (continued) Fair value
Property, plant and equipment
Site restoration and dismantling cost
Site restoration and dismantling cost (continued) If the related asset is measured using the cost model
Intangible assets
Heritage assets
Financial instruments
Financial instruments (continued)
Leases
Leases (continued) Finance leases - lessee
Inventories
Impairment of cash-generating assets
Impairment of cash-generating assets (continued) Recognition and measurement (individual asset)
Impairment of non-cash-generating assets
Impairment of non-cash-generating assets (continued) Value in use
Employee benefits
Employee benefits (continued)
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) Rates including collection charges and penalties
Comparative figures
Unauthorised expenditure Unauthorised expenditure means
Fruitless and wasteful expenditure
Irregular expenditure
Budget information
Related parties
Events after reporting date
Commitments

If a replacement part is recognized in the book value of the tangible fixed asset invested, the book value of the replaced part is derecognised. If a replacement cost is recognized in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised. The carrying amount of the asset is reduced through the use of an allowance account.

If any such indication exists, the municipality estimates the recoverable service value of the asset. The present value of the remaining service potential of a non-cash generating asset is determined as the depreciated replacement value of the asset. Ÿ the benefits set forth in the terms of the plan (or arising from a constructive obligation that go beyond those terms) at the reporting date; And.

Ÿ the amount deducted from the asset's cost price does not exceed its accounting value. If a decrease in the liability exceeds the accounting value of the asset, the profit is immediately recognized in profit or loss. Income from a non-exchange transaction is measured at the increase in net assets recognized by the municipality.

Assets resulting from fines are valued at the best estimate of the inflow of funds to the municipality.

Change in accounting policy Investment Property

Change in accounting policy (continued) Retention Write Off

New standards and interpretations

Standards and interpretations issued, but not yet effective

Investment property

The municipality's obligations under financial leasing are secured by the lessor's tax on the leased assets. 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

When the entity owns heritage assets, but has not accounted for such assets under GRAP 17 or under an accounting policy based on GRAP 103, consider whether disclosure, including a description of the nature and extent, of those assets is useful to the users of the financial statements.

Other financial assets Designated at fair value

Employee benefit obligations Defined benefit plan

Employee benefit obligations (continued)

In the case of long-term receivables from exchange transactions, which are either overdue or impaired, it is possible to assess indicators of impairment. The Municipality considers the above financial assets, which are not impaired at each of the reviewed reporting dates, to be of good credit quality. The municipality continuously monitors consumers and identified groups based on average payment history and includes this information in its credit risk control. Long-term receivables include debtors with signed debt agreements and/or committed attorneys.

The municipality enforces its approved credit policy to ensure recovery of long-term receivables.

Inventories

Receivables from non-exchange transactions

Receivables from non-exchange transactions (continued)

Consumer debtors Gross balances

Consumer debtors (continued)

The credit quality of customer receivables from exchange transactions, which are neither past due nor impaired, may be evaluated for indicators of impairment. The municipality considers that the above financial assets that have not been devalued on each of the reporting dates under review are of a good credit quality. The municipality continuously monitors the customers and identified groups with reference to the average payment history and incorporates this information into the credit risk control.

No interest is charged on consumer claims until the 7th day of the following month. Thereafter, interest is charged at a rate set by the municipality on the outstanding capital amount excluding interest. No interest will be charged on these receivables until the 7th of the following month.

The municipality applies its approved credit control policy to ensure the recovery of customer receivables. Deposits must be paid for all open water accounts. None of the financial assets that are fully performing have been renegotiated during the last year.

Cash and cash equivalents Cash and cash equivalents consist of

Unspent conditional grants and receipts
Other financial liabilities At amortised cost
Provisions for landfill site
Long service award liability (continued)
VAT payable
Consumer deposits
Revenue
Revenue (continued)
Property rates Rates received
Grants and subsidies paid Other subsidies
Government grants and subsidies Operating grants
Government grants and subsidies (continued)
Public contributions and donations
Employee related costs
Employee related costs (continued)
Employee related costs (continued) Regional Manager: Michele ME
Remuneration of councillors
Depreciation and amortisation
Finance costs
Bulk purchases
General expenses
Fair value adjustments
Cash generated from operations Deficit
Commitments
Contingencies Contingent liabilities
Contingencies (continued)
Related parties
Related parties (continued) Related party transactions
Change in estimate Property, plant and equipment
Prior period errors 1. Investment Property
Consumer debtors
Payables exchange transactions
Trade receivables from exchange transactions
Prior period errors (continued) 5. Property, plant and equipment
Cellphone Allowance
Prior period errors (continued) Statement of Financial Performance
Risk management Financial risk management
Risk management (continued) Interest rate risk
Going concern
Events after the reporting date
Events after the reporting date (continued)
Events after the reporting date (continued) Irregular expenditure
Unauthorised expenditure
Fruitless and wasteful expenditure
Irregular expenditure
Additional disclosure in terms of Municipal Finance Management Act Contributions to organised local government
Additional disclosure in terms of Municipal Finance Management Act (continued)
Budget differences (continued) Incidental income
Budget differences (continued) Property rates
Budget differences (continued) Unspent conditional grants

The subsidy obligation indicates the nature and size of the government contributions accounted for in the annual accounts and an indication of other forms of government support from which the municipality has benefited directly. Conditions fulfilled and other contingencies related to government assistance recognized as revenue and disclosed in the notes to the grant income of the financial statements. In the current year, the waste management team has accurately accounted for waste disposal at the landfills.

Price quotes used to quantify renovation costs and closure costs increased during the financial year. It is further assumed that the current policy of awarding awards for jubilee work will remain unchanged in the future. If the actual extraction rates turn out to be higher than the rates predicted in the valuation basis, the costs to the municipality in the form of benefits will be reduced and vice versa.

The cost of long service bonuses depends on the increase in annual salaries paid to employees. All registered poor receive a monthly subsidy, which is funded by the grant. The subsidy is determined annually by the council. PPE was overstated in the previous year due to duplicate and false number of assets, therefore the items were written off against the accumulated surplus in the current year.

Properties with duplicate LPI codes were also identified, resulting in an overvaluation of investment properties in the previous year. The depreciation also includes 118 properties that were sold and contracts/agreements were signed. This debtor stems from the notification of audit results from the Auditor General in 2013, and it is still in the municipality's accounts.

Fruitless and wasteful expenditure of R30 553 483 incurred as a result of late payments from service providers due to cash flow constraints has been written off in the current year. The municipality is investigating possible cases of irregular expenses that are not included in the amount disclosed above. The reduction in fines is mainly due to the fact that in the year under review, fewer fines were levied on offenders compared to what was expected.

The decrease is mainly the result of depreciation for the year not included in the budget and the correction of errors from the previous year in the preparation of financial statements. The current part of the obligation for the employee's earnings is included in 84 million rana of long-term liabilities.