The Accounting Officer recognizes that he is ultimately responsible for the system of internal financial control set up by the municipality and attaches great importance to maintaining a strong control environment. While primarily responsible for the council's financial affairs, he is supported by the council's internal auditors. The external auditors are responsible for independently auditing and reporting the annual accounts of the municipality.
The annual accounts have been audited by the external auditor of the municipality and their report is included on page 5.
Presentation of Financial Statements
- Presentation currency
- Significant judgements and sources of estimation uncertainity
- Investment property
- Investment property (continued)
- Property, plant and equipment
- Property, plant and equipment (continued)
- Intangible assets
- Heritage assets
- Heritage assets (continued)
- Financial instruments Classification and derecognition
- Financial instruments (continued)
- Leases
- Inventories
- Inventories (continued)
- Impairment of cash-generating assets
- Impairment of cash-generating assets (continued)
- Impairment of non-cash-generating assets
- Employee benefits Short-term employee benefits
- Employee benefits (continued) Defined benefit plans
- Provisions and contingencies Provisions are recognised when
- Provisions and contingencies (continued)
- Revenue from exchange transactions
- Revenue from non-exchange transactions
- Revenue from non-exchange transactions (continued)
- Interest and rental income
- Borrowing costs
- Comparative figures
- Unauthorised expenditure Unauthorised expenditure means
- Fruitless and wasteful expenditure
- Irregular expenditure
- Irregular expenditure (continued)
- Use of estimates
- Budget information
- Related parties
- Commitments
- Going concern assumption
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 value in use of a non-cash generating asset is the present value of the asset's remaining service potential.
The carrying amount of the asset is reduced by using a provision, and the amount of the shortfall is recorded as surplus or shortfall within. Depreciation (amortization) is the systematic allocation of the depreciable amount of an asset over its useful life. Service revenue is recognized based on the stage of completion of the transaction at the reporting date.
New standards and interpretations
Standards and interpretations effective and adopted in the current year
Standards and interpretations issued, but not yet effective
Standards and interpretations not yet effective or relevant
Investment property
The financial statements have been prepared in accordance with generally accepted accounting principles on a basis consistent with the previous year, except for the adoption of the following new or revised standards. A register containing the information required under Section 63 of the Act on Municipal Financial Management is available for inspection at the municipality's registered office. Investment properties are depreciated on a straight-line basis over the applicable useful life as specified in the accounting practices for Investment Properties.
With regard to these Investment Properties, rental income amounting to R R 268 474) was booked as a surplus or deficit during the current financial year. Direct operating costs (repairs and maintenance) recognized as surplus or deficit, arising from the Investment properties amount to R 0., of which R 0 comes from Investment properties that generated rental income and R 0 comes from Investment properties that did not generate rental income. There are no restrictions on the recoverability of investment properties or the transfer of income and proceeds of disposal, as well as no contractual obligations to purchase, construct or develop investment properties or for repairs, maintenance or improvements.:.
Property, plant and equipment
Notes to the Financial Statements
Property, plant and equipment (continued) Reconciliation of property, plant and equipment - 2015
Intangible assets
Heritage assets
Employee benefit obligations Defined benefit plan
A comprehensive register of fixed assets containing the information required by Article 63 of the MFMA is available for inspection at the municipality's headquarters. Discount rate: specifies that the selection of this rate must be derived from government bond yields consistent with the estimated term of the employee benefit obligation. However, when there is no deep government bond market with sufficiently long maturities to match the estimated term of all benefit payments, current market interest rates of the appropriate term should be used to discount short-term payments, and the discount rate for longer maturities should be estimated by extrapolating current market interest rates along the yield curve.
The first step in deriving this return is to calculate the liability-weighted average of the returns corresponding to the actual terms to payment of long service awards for each employee. Salary Inflation Rate: This assumption is required to reflect the estimated growth in salaries of the eligible employees until retirement. This is important in that the LSA is based on an employee's salary on the date of award.
The assumption is traditionally divided into two components, namely general wage inflation and promotional wage escalation. General wage inflation: This assumption is more stable relative to consumer price index (CPI) growth than in absolute terms. In most industries, experience has shown that long-term wage inflation is between 1.0% and 1.5%.
The expected inflation assumption of 6.30% was obtained from the difference between market yields on index-linked bonds (1.74%) corresponding to the estimated terms of the liabilities and those of nominal bonds (8.65%) with a risk premium adjustment for the uncertainty implicit in guaranteeing real increases (0.50%). Thus, a general wage inflation rate of 7.30% per annum over the expected term of the burden has been assumed, which is 1.00% higher than the estimate of CPI inflation over the same term.
Inventories
These rates were derived from the yield curve obtained from the South African Bond Exchange after the market closed on 30 June 2016. Although the donation has been signed by the two parties, the actual transfers have not materialized and as such rates and waste charges are still being razed to the relevant department. The donation agreement and the list of all affected properties are available for inspection at the municipality's offices.
VAT receivable
Trade and other receivables Less: Allowance for impairment
Funds that are not immediately available are deposited with commercial banks in accordance with the cash and investment policy. Some other conditional grant agreements require that a separate investment (call account) be opened for them so that interest can be easily identified and attributed to the grant. These are the individual investments listed above, and the rest of the investments consist of own cash reserves and those supports that do not require a separate investment account.
Other grants require a separate investment account to be opened and this has been respected. The municipality is required to ensure the rehabilitation of the landfill after the end of its useful life. The cost to rehabilitate the landfill is estimated by engineers to be R500 000 and the remaining life is 10-12 years.
However, in November 2012, the landfill was closed permanently and no future use was allowed due to environmental regulations. The holiday pay provision is based on the number of days each employee has accrued at the end of the year in accordance with the South African Local Government Bargaining Agreement.
Long-term loan
Payables from exchange transactions
Provisional assessments are processed on an annual basis to account for changes in individual property values as a result of changes and.
Service charges
All residents with electricity receive a basic monthly electricity payment of 50 kWh (2015: 50 kWh), which is financed by Equitable Share. Provincial local government grants are used to implement the administrative and financial framework and improve governance. Provincial local government grants are used to implement the administrative and financial framework and to provide a municipal infrastructure framework.
The municipal system improvement grant is used to help municipalities carry out their functions and stabilize institutional and governance systems as required by the Municipal Systems Act and related legislation. An unused amount in previous years of R 76 000 was withheld from the current year's Deductible. This is the provincial government grant from the Co-operative Government and Traditional Affairs department to fund the electrification of households in Wards 3, 10 and 13.
These are provincial government grants from the Co-operative Government and Traditional Affairs department to finance the construction of the business incubator. This is the Provincial Government grant from the Department of Sports and Recreation to fund the renovation of Isilonjane Stadium. An unused amount in previous years of R 699 000 was withheld from the current year Deductible.
These are grants from the provincial government from the Department of Sport and Recreation to finance the operation and maintenance of the sports field. This is a provincial government grant from the Department of Sport and Recreation to fund the renovation of Nquthu Stadium, which has been completed.
Commissions received
Based on the grants that appear in the Revenue Distribution Act (Act 1 of 2015), no significant changes are expected in the level of state subsidy grants over the next 3 financial years. The Mayor, Deputy Mayor were appointed by the MEC to be full-time from October 2014, the Speaker is part-time. Each is equipped with an office and the mayor is provided with secretarial support at the council's expense.
The mayor uses a vehicle owned by the municipality for official duties, the mayor has one full-time driver. R 1271 of 21 December 2015 approved by the MEC for CoGTA at 100% of the caps applicable to Class 3 for full-time and part-time councillors.
Debt impairment
Investment revenue Interest revenue
Depreciation and amortisation
Finance costs
Auditors' remuneration
Bulk purchases
Cash generated from operations
A developer of middle income housing leased by the municipality is suing the municipality for alleged breach of contract, the municipality is defending itself and awaiting legal advice from senior counsel (there are also various cases related to this case that may be treated as those brought by prospective buyers), exact amounts cannot be determined because the builder has refused to release all information to the municipality. There are - R accounts from Umzinyathi District for water that are being challenged by the municipality due to issues relating to them and the matter is currently being resolved through Intergovernmental Relations (IGR).
Related parties
Change in estimate
Prior period errors
Comparative figures
Risk management Financial risk management
This basis assumes that funds will be available to finance future operations and that the realization of assets and the settlement of liabilities, contingent liabilities and commitments will occur in the ordinary course of business.
Events after the reporting date
Unauthorised expenditure
Fruitless and wasteful expenditure
Additional disclosure in terms of Municipal Finance Management Act Contributions to organised local government
The financial statements have been prepared on the basis of accounting policies applicable to a going concern. There were no Councilors who had overdue accounts outstanding for more than 90 days on 30 June 2016 or who had accounts outstanding for more than 90 days during a financial year.
Actual operating expenditure versus budgeted operating expenditure
- Statement of financial performance .1 REVENUE
Actual capital expenditure versus budgeted capital expenditure
27636 issued on 30 May 2005 stipulates that a supply chain management policy must provide for the procurement of goods and services through a competitive bidding process.
Assets subject to restrictions
Budget differences
Material Losses - Electricity kWh value
Indigent support
Unaudited Schedule of external loans as at 30 June 2016
Analysis of property, plant and equipment as at 30 June 2016
Unaudited Segmental analysis of property, plant and equipment as at 30 June 2016
Unaudited Actual versus Budget(Revenue and Expenditure) for the year ended 30 June 2016
Budget Analysis of Capital Expenditure as at 30 June 2016
Rand Rand Rand Rand Rand Rand Rand Rand Rand Rand Rand Rand Rand.
