The Accounting Officer is required by the Municipal Financial Management Act (Act 56 of 2003) to maintain adequate accounting records and is responsible for the content and integrity of the financial statements and related financial information included in this report. It is the responsibility of the accounting officer to ensure that the financial statements fairly reflect the state of affairs of the municipality as at the end of the financial year and the results of its operations and cash flow for the period then ended. The financial statements have been prepared in accordance with the Standards of Generally Accepted Accounting Practice (GAAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board.
The Accounting Officer is of the 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 financial statements. The financial statements have been drawn up on the basis of accounting the policy that applies to a going concern. The most important of these is that the Accounting Officer continues to obtain funding for the ongoing operations of the municipality.
The Accounting Officer is not aware of any issues or circumstances arising since the end of the financial year, which may have a material impact on these financial statements. The financial statements are prepared in accordance with prescribed generally accepted accounting practice (GAAP) standards issued by the Accounting Standards Board as a framework set by the National Treasury.
Presentation of Financial Statements
- Presentation currency
- Going concern assumption
- Comparative Information
- Standards, amendments to standards and interpretations issued but not yet effective
- Use of Estimates
- Investment property
- Investment property (continued)
- Property, plant and equipment
- Property, plant and equipment (continued)
- Property, plant and equipment (continued) Community
- Intangible assets Initial Recognition
- Intangible assets (continued)
- Heritage assets
- Heritage assets (continued)
- Financial instruments
- Financial instruments (continued) Subsequent measurement
- Financial instruments (continued)
- Leases
- Leases (continued) Operating leases - lessor
- Inventories
- Inventories (continued)
- Employee benefits Short-term employee benefits
- Employee benefits (continued)
- Revenue from exchange transactions
- Revenue from non-exchange transactions
- Revenue from non-exchange transactions (continued) Government grants
- Borrowing costs
- Unauthorised expenditure Unauthorised expenditure means
- Unauthorised expenditure (continued)
- Fruitless and wasteful expenditure
- Irregular expenditure
- Provisions
- Retirement Benefits
- Impairment of Assets
Investment property is recognized as an asset when it is probable that the future economic benefits or service potential associated with the investment property will flow to the municipality and the cost or fair value of the investment property can be measured reliably. If a replacement part is included in the carrying amount of the investment property, the carrying amount of the replaced part is no longer included. Gains or losses arising from the retirement or disposal of investment property are the difference between the net sales proceeds and the carrying amount of the asset and are recognized as a surplus or deficit in the period of retirement or disposal.
If the acquired item's fair value could not be determined, its estimated cost price is the accounting value of the given asset(s). The gain or loss that occurs when a tangible fixed asset ceases to be recognized is calculated as the difference between the net sales proceeds, if any, and the accounting value of the asset. Depreciation is the systematic allocation of an asset's depreciable amount over its useful life.
The value in use of a non-cash generating asset is the present value of the asset's remaining service potential. Financial instruments are initially recognized when the municipality becomes a party to the contractual provisions of the instruments. For financial instruments that are not at fair value through surplus or deficit, transaction costs are included in the initial measurement of the instrument.
An impairment loss on trade receivables is recorded by reducing the carrying amount of trade receivables through a provision, and the amount of the loss is recognized in the statement of financial results within operating expenses. Finance leases are recognized as assets and liabilities in the balance sheet at amounts equal to the fair value of the leased asset or, if lower, the present value of the minimum lease payments. The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease.
The lease asset is depreciated over the shorter of the asset's useful life or the lease term. Income from the lease of buildings and equipment is recognized on a straight-line basis over the term of the lease agreement. Expenses are classified according to the nature of the expense and when covered, are then accounted for as income in the Statement of Financial Performance.
Expenses are classified according to the nature of the expense and when covered, are then accounted for as income in the Statement of Financial Performance. If there is any such indicator, the municipality estimates the amount of recoverable service of the asset.
Investment property
Property, plant and equipment
Property, plant and equipment (continued) Reconciliation of property, plant and equipment - 2015
Property, plant and equipment (continued) Reconciliation of property, plant and equipment - 2014
Property, plant and equipment (continued)
Intangible assets
Heritage assets
Other Debtors
Employee benefit obligations (continued)
Inventories
Receivables from exchange transactions
Receivables from non-exchange transactions
VAT receivable
Cash and cash equivalents Cash and cash equivalents consist of
Revaluation reserve
Unspent conditional grants and receipts
Provisions
Other Liabilities
Current Employee Benefits (continued) Provision for Staff Leave
Payables from exchange transactions
Financial instruments disclosure 22. Revenue
Revenue (continued)
Service charges
Government grants and subsidies (continued) Equitable Share
Government grants and subsidies (continued) CDM - Taxi Rank
Government grants and subsidies (continued) Audit Committee Facilities
Other income
General expenses
General expenses (continued)
Employee related costs
Employee related costs (continued)
Depreciation and amortisation
Finance costs
Contracted services
Bulk purchases
Cash generated from (used in) operations
Commitments
Contingencies Contingent Liability
Related parties
Related parties (continued)
Prior period errors Statement of Financial Position
Prior period errors (continued) Vat Receivable
Prior period errors (continued)
Risk management Liquidity risk
- Risk management (continued) Credit risk
- Risk management (continued)
- Unauthorised expenditure
- Fruitless and wasteful expenditure
- Irregular expenditure
- Additional disclosure in terms of Municipal Finance Management Act
- Additional disclosure in terms of Municipal Finance Management Act (continued) Supply chain management regulations
- Assets subject to restrictions
- Financial Instruments
- Events after the Reporting Date
- In-kind Donations and Assistance
- Private Public Partnerships
- Distribution Losses
Credit risk is the risk that a counterparty to a financial or non-financial asset does not fulfill an obligation and causes the municipality to suffer a financial loss. Credit risk mainly consists of cash deposits, cash and cash equivalents, receivables from sales and other receivables as well as unpaid conditional grants and subsidies. The credit risk relating to trade and other debtors is considered to be moderate due to the diversified nature of the debtors and the immaterial nature of individual balances.
In the case of consumer debtors, the municipality actually has the right to terminate services to customers, but this is difficult to apply in practice. These categories are then downgraded on a group basis based on the risk profile/credit quality of the group. Although the credit risk related to cash and cash equivalents is considered low, the maximum exposure is shown below.
Although the credit risk for long-term investments is considered to be low, the maximum exposure is given below. The banks used by the municipality for current and non-current investments are all listed on the JSE (NEDBANK). Based on all public communications, the financial stability is assessed to be of high quality and the credit risk for these institutions is assessed to be low.
The risk related to unpaid conditional grants and subsidies is considered very low. Since the municipality has significant interest-bearing liabilities, revenues and cash flows from operations are largely dependent on changes in market interest rates. Based on these scenarios, the company calculates the impact that a change in interest rates will have on the surplus/deficit for that year.
Pursuant to section 36 of the Municipal Supply Chain Management Regulations, any deviation from the Supply Chain Management Policy must be approved/condoned by the City Manager and noted by the Council. Trade receivables from currency transactions Financial instruments at amortized cost Other receivables from currency transactions Financial instruments at amortized cost. The municipality did not receive any donations or assistance in kind during the year under review.
