CURRENT AGAINST BUDGET STATEMENT (INCOME AND EXPENDITURE) FOR THE YEAR ENDED JUNE 30, 2014 for the year ended June 30, 2014. CURRENT AGAINST BUDGET (PROPERTY PURCHASE. FINANCIAL PLANT June 4, 2014) statements have been prepared on the basis of accrual accounting and are in accordance with the historical cost convention, except unless otherwise specified, they are presented in South African Rand.
These financial statements have been prepared in accordance with the Standards of General Recognized Accounting Practices (GRAP). The accounting policies applied are consistent with those used for the presentation of the previous year's financial statements, unless expressly stated otherwise. In the current year, the municipality used the following interpretations that are valid for the current financial year and that are relevant to its business operations.
The disclosure of this information will help users of the financial statements to better understand the entity's past performance and to identify the resources allocated to support the entity's most important activities. These annual financial statements are presented in South African Rand, which is the functional currency of the Municipality.
Significant judgments and sources of estimation uncertainty
The application of all GRAP standards below will take effect on a date to be announced by the Minister of Finance. Standards, amendments to standards and interpretation not yet effective or relevant The following GRAP standard has been adopted but an effective date has not yet been determined. The use of available information and the exercise of judgment is inherent in making estimates.
The areas where assumptions and estimates are immaterial to the accounts are indicated below. When assessing whether an impairment loss should be booked in profit or loss, the municipality assesses whether there is observable data that indicates a measurable decrease in the estimated cash flows from the financial asset. Management estimates the remaining useful life and condition of significant property, plant and equipment on an annual basis.
When determining whether the loss due to impairment should be recorded in the surplus or deficit, the municipality assesses whether there are visible data indicating a significant impairment of the individual asset. In the year under review, there was no impairment of important assets, as the municipality is currently in the process of rehabilitating most of its infrastructure assets. Provisions are recognized when the municipality has a present or indirect obligation due to past events and it is probable that an outflow of factors that enable economic benefits will be required to settle the obligation and the provision can be reliably estimated.
Long-term provisions are discounted to present value using a discount rate based on the average cost of borrowing for the municipality. The Municipality reviews and tests the carrying amount of assets when events or changes in circumstances suggest that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the carrying amount of the asset exceeds its recoverable amount.
The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. The provision for impairment is determined as the difference between the carrying amount of the asset and the present value of the estimated future cash flow discounted at the effective interest rate calculated on initial recognition. An impairment loss is recognized in the surplus and deficit when there is objective evidence that an asset has been impaired.
PROPERTY, PLANT AND EQUIPMENT 1 INITIAL RECOGNITION
SUBSEQUENT MEASUREMENT -REVALUATION MODEL (LAND, BUILDINGS, and other Infrastructure assets)
DEPRECIATION AND IMPAIRMENT
The residual value, the useful life of the asset and the depreciation method are reviewed annually and any changes are recognized as a change in the accounting estimate in the income statement. The municipality tests for impairment if there is an indication that the asset may be impaired. At each reporting date, an assessment is made as to whether there are indications of potential impairment.
If the accounting value of a property, plant and equipment is greater than the estimated salvage value (or salvage value), it is immediately written down to the salvage value (or salvage value) and an impairment loss is expensed in the income statement.
DERECOGNITION
INVESTMENT PROPERTY 1 INITIAL RECOGNITION
- SUBSEQUENT MEASUREMENT
- INVESTMENTS
- TRADE AND OTHER RECEIVABLES
- TRADE PAYABLES AND BORROWINGS
- CASH AND CASH EQUIVALENTS
Depreciation is calculated on the depreciable amount using the straight-line method over the estimated useful life of the assets. Components of assets that are important in relation to the entire asset and have different useful lives are depreciated separately. Financial assets are classified according to their nature as either financial assets at fair value through profit or loss, held to maturity, loans and receivables or available for sale.
Financial liabilities are classified either at fair value through profit or loss or financial liabilities measured at amortized cost ("other"). The subsequent measurement of financial assets and liabilities depends on this categorization and, in the absence of an approved GRAP standard on financial instruments, is in accordance with IAS 39. Investments, which include short-term deposits placed in registered commercial banks, are classified either as assets held until maturity, if the criteria for this categorization are met, or as loans and receivables and are measured at amortized cost.
When investments are impaired, the carrying amount is corrected by the impairment loss, which is recognized as an expense in the period when the impairment is identified. Impairments are calculated as the difference between the carrying amount and the present value of the expected future cash flows arising from the instrument. Upon disposal of an investment, the difference between the net disposal proceeds and the carrying amount is debited or credited to the Statement of Financial Performance.
Trade and other receivables are categorized as financial assets: loans and receivables and are initially recognized at fair value and subsequently carried at amortized cost. An assessment is made for doubtful receivables based on a review of all amounts outstanding at the end of the year. An impairment of trade receivables is accounted for by reducing the carrying amount of trade receivables through the use of an allowance account and the amount of the loss is recognized in the Statement of Financial Performance within operating expenses.
Subsequent recoveries of previously written-off amounts are credited to operating costs in the income statement. They are categorized as financial liabilities held at amortized cost, are initially recognized at fair value and are subsequently measured at amortized cost, which is the original accounting value less installments plus interest. Receivables relating to overdrafts are categorized as financial liabilities: other financial liabilities recognized at amortized cost.
UNAUTHORISED EXPENDITURE
IRREGULAR EXPENDITURE
FRUITLESS AND WASTEFUL EXPENDITURE
PROVISIONS
Future events that may affect the amount required to settle a liability are reflected in the amount of a provision where there is sufficient objective evidence that they will occur. Gains from the expected disposal of assets are not taken into account in the measurement of a provision.
LEASES
MUNICIPALITY AS LESSEE
MUNICIPALITY AS LESSOR
REVENUE
REVENUE FROM EXCHANGE TRANSACTIONS
Revenue from the sale of prepaid electricity meter cards is recognized at the point of sale. Service costs related to the collection of household waste are processed monthly in arrears by applying the approved rate per home with improvements. Rates are determined per usage category and levied monthly on the basis of the registered number of household waste containers per property.
Income from the rental of facilities and equipment is recognized using the straight-line method over the duration of the rental agreement. Revenue from the use of the approved tariff is recognized when the relevant service is provided using the relevant official tariff.
REVENUE FROM NON-EXCHANGE TRANSACTIONS
GRANTS, TRANSFERS AND DONATIONS
BORROWING COSTS
RETIREMENT BENEFITS
CONSTRUCTION CONTRACTS AND RECEIVABLES
SUPERANNUATION FUND
Some councilors and some employees belong to defined benefit pension funds administered by the Natal Joint Municipal Pension Fund. It was recommended that the allowance should remain in place as a "deficiency correction scheme" to first address the deficit and then build up sufficient solvency reserves. The actuary said the entire fund was 97.9% funded on the valuation date at the general level.
Pensioner liabilities are fully funded and liabilities for active members are 96.2%. In the Actuary's opinion, the fund is not in a financially sound position, but the supplement being paid is expected to restore the fund. The actuary is satisfied that the fund was in good financial standing at 31 March 2013.
Costs/ Appreciation Accumulated depreciation Carrying opening allowance during disposals at the end of opening allowance Disposals Final value Balance Construction Balance Balance Balance.
