It is the accounting officer's responsibility to ensure that the annual financial statements present fairly the state of affairs of the municipality at the end of the financial year and the results of its operations and cash flows for the period then ended. The accounting officer recognizes that he is ultimately responsible for the internal financial control system established by the municipality and places considerable importance on maintaining a strong control environment. Although the accounting officer is primarily responsible for the municipality's financial affairs, he is supported by the municipality's external auditors.
The external auditors are responsible for the independent review and reporting of the municipality's annual financial statements. The annual financial statements have been examined by the external auditors of the municipality and will be presented based on their review. The accounting officer discusses management's responsibilities in this regard, at Council meetings and regularly monitors the municipality's compliance with the code.
Chairmen of departmental committees have access to all members of the management (head of department 56) of the municipality. The municipality has a joint internal audit function based in the district municipality (as highlighted above).
Presentation of Annual Financial Statements
Presentation currency
Going concern assumption
Statements and Interpretations Not Yet Effective GRAP Standards
Significant judgements and sources of estimation uncertainty (continued) Available-for-sale financial assets
Significant judgements and sources of estimation uncertainty (continued) Depreciation and the Carrying Value of Items of Property, Plant and Equipment
Investment Property
Investment Property (continued) Fair value
Property Plant and Equipment
Property Plant and Equipment (continued)
The gain or loss arising from the derecognition of an item of property, plant and equipment is included in surplus or deficit when the asset is derecognised. The profit or loss arising from the derecognition of a tangible fixed asset is determined as the difference between any net proceeds from disposal and the book value of the asset. Assets that the municipality has for lease to others and later regularly sells as part of regular operations are transferred to inventories when the leases end and the assets are available for sale.
All cash flows from these assets are included in cash flows from operations in the statement of cash flows.
Site restoration and dismantling cost
Intangible assets
Intangible assets (continued)
Heritage assets
Heritage assets (continued) Initial measurement
Investments in controlled entities
Financial instruments
Financial instruments (continued)
Financial instruments (continued) Classification
All financial assets measured at cost or amortized cost are subject to an impairment review. If the market for a financial instrument is not active, the municipality determines the fair value using a valuation technique. A gain or loss arising from a change in the fair value of a financial asset or financial liability measured at fair value is recognized in surplus or deficit.
For financial assets and financial liabilities measured at amortized cost or cost, a gain or loss is recognized in surplus or deficit when the financial asset or financial liability is derecognised or impaired, or through the amortization process. The municipality assesses at the end of each reporting period whether there is any objective evidence that a financial asset or group of financial assets has declined. Financial assets measured at amortized cost: If there is objective evidence that an impairment loss has been incurred on financial assets measured at amortized cost, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's original effective interest rate.
The carrying amount of the asset is reduced directly OR through the use of an allowance account. Financial assets measured at cost: If there is objective evidence that an impairment loss has been incurred in an investment in a residual interest that is not measured at fair value because its fair value cannot be reliably measured, the amount of the impairment loss is measured as the difference between the carrying amount of the financial asset and the present value of the asset estimated in the future at the current market cash flow discount rate.
Financial instruments (continued) Derecognition
The difference between the carrying amount of a financial liability (or portion of a financial liability) that has matured or been transferred to another party and the consideration paid, including noncash assets transferred or liabilities assumed, is recognized as a surplus or deficit. All liabilities that are forgiven, forgiven or assumed by another municipality through a non-exchange transaction are accounted for in accordance with the GRAP standard for income from non-exchange transactions (taxes and transfers). Interest relating to a financial instrument or component that is a financial liability is recognized as income or expense in surplus or deficit.
Dividends or similar distributions related to a financial instrument or a component that is a financial liability are recognized as income or expense in surplus or deficit. Losses and gains related to a financial instrument or a component that is a financial liability are recognized as income or expense in surplus or deficit. A financial asset and a financial liability are only offset and the net amount presented in the statement of financial position when the entity currently has a legally enforceable right to offset the recognized amounts and intends to either settle on a net basis, or to realize the asset and settle the liability simultaneously.
In accounting for a transfer of a financial asset that does not qualify for derecognition, the entity does not offset the transferred asset and the related liability.
Leases
Leases (continued) Operating leases - lessor
Inventories
Inventories (continued)
Going Concern Assumptions
Going Concern Assumptions (continued)
Impairment of Property, Plant and Equipment
Impairment of Property, Plant and Equipment (continued) Basis for estimates of future cash flows
Impairment of Property, Plant and Equipment (continued) Cash-generating units
Impairment of non-cash-generating assets
Impairment of non-cash-generating assets (continued) Value in use
Impairment of non-cash-generating assets (continued) Reversal of an impairment loss
Incomplete Construction Work (Work In Progress)
Employee benefits
Employee benefits (continued) Short-term employee benefits
Employee benefits (continued)
When measuring its defined benefit liability, the municipality recognizes actuarial gains and losses in surplus or deficit in the reporting period in which they occur. Current service cost is the increase in the present value of the defined benefit obligation resulting from employee service in the current period. Interest expense is the increase during a period in the present value of a defined benefit obligation that arises because the benefits are one period closer to settlement.
Past service cost is the change in the present value of the defined benefit obligation for employee service in prior periods, which results in the current period from the introduction of, or changes to, post-employment benefits or other long-term employee benefits. In measuring its defined benefit liability, the entity recognizes past service costs as an expense in the reporting period in which the plan is modified. The present value of a defined benefit obligation is the present value, without deduction of any plan assets, of expected future payments required to settle the obligation arising from employee service in the current and prior periods.
The entity not only observes its legal obligations in accordance with the formal conditions of the defined benefit program, but also all indirect obligations arising from the informal practices of the municipality. An example of a constructive obligation is if a change in the municipality's informal practices would cause unacceptable damage to its relationship with its employees. The present value of these economic benefits is determined using a discount rate that reflects the time value of money.
The municipality determines the current value of defined benefit obligations and the fair value of any plan assets with sufficient regularity so that the amounts recognized in the annual financial statements do not materially differ from the amounts that would be determined at the reporting date. The municipality uses the Projected Unit Credit Method to determine the present value of its defined benefit obligations and the related current service costs and, where applicable, past service costs. In determining the present value of its defined benefit obligations and the related current service costs and, where applicable, past service costs, a municipality will attribute benefit to periods of service in terms of the plan's benefit formula.
The municipality recognizes gains or losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement takes place. When it is virtually certain that another party will reimburse some or all of the expenses necessary to settle a defined benefit obligation, the right to reimbursement is recognized as a separate asset. In surplus or deficit, the expense related to a defined benefit plan [OR is not presented as the net of the amount recognized for a refund.
Employee benefits (continued) Actuarial assumptions
Provisions and contingencies Provisions are recognised when
Provisions and contingencies (continued)
Revenue from exchange transactions
Revenue from exchange transactions (continued) Sale of goods
Revenue from non-exchange transactions
Revenue from non-exchange transactions (continued)
Revenue from non-exchange transactions (continued) Taxes
Revenue from non-exchange transactions (continued) Services in-kind
Value Added Tax
Pre-paid electricty
Finance income and expenses
Borrowing costs
Comparative figures
Unauthorised expenditure Unauthorised expenditure means
Fruitless and wasteful expenditure
Irregular expenditure
Use of estimates
Internal reserves 1.32 Gratuities
Budget information
Related parties
Donations and contributions
Consumer Deposits
Changes in accounting policy
Investment Property
Property Plant and Equipment
Property Plant and Equipment (continued) Reconciliation of property plant and equipment - 2015
Heritage Assets
Heritage Assets (continued) Reconciliation of heritage assets - 2015
Intangible assets
Other financial assets Designated at fair value
Other financial assets (continued)
Traffic Fines Receivable
Employee benefit obligations Defined benefit plan
Employee benefit obligations (continued)
Employee benefit obligations (continued) Other assumptions - Sensitivity Analysis
Money Market Investments
Trade and other receivables (exchange transactions)
Receivables from non-exchange transactions
VAT receivable
Consumer debtors (exchange transactions) Gross balances
Consumer debtors (exchange transactions) (continued) Less: Allowance for impairment
Consumer debtors (exchange transactions) (continued) Other Debtors
Cash and cash equivalents Cash and cash equivalents consist of
Other financial liabilities At amortised cost
Other financial liabilities (continued) Current liabilities
Finance lease obligation Minimum lease payments due
Unspent conditional grants
Unspent conditional grants (continued) Movement during the year
Provisions
Provisions (continued) Long Service Award Provision
Trade and other payables (exchange transaction)
Financial instruments disclosure Categories of financial instruments
Revenue
Property rates Rates received
Service charges
Government grants and subsidies (continued) Department of Sports, Arts and Culture
Government grants and subsidies (continued) Municipal Systems Improvement Grant (MSIG)
Other revenue
General expenses
Employee related costs
Employee related costs (continued) Remuneration of Municipal Manager
Debt impairment
Investment revenue Interest revenue
Finance costs
Auditors remuneration
Contracted services
Bulk purchases
Commitments
Contingencies
Related parties
Change in estimate Property Plant and Equipment
Prior Year Errors (continued)
Overhead: The adjustment relates to prior year advertising expenses calculated in the wrong accounting period Depreciation: The adjustment relates to the restatement of Property and Equipment.
Risk management
Risk management (continued) Liquidity risk
Going concern
Going concern (continued)
Events after the reporting date
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 Distribution losses
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
Utilisation of Long-term liabilities reconciliation
Deviation from supply chain management regulations
Assets subject to restrictions
Budget differences
Key Assumptions and Estimates Used
Fraud Cases
