The annual financial statements have been prepared in accordance with Generally Accepted Accounting Practices (GAAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board. The annual financial statements are based on appropriate accounting policies that are consistently applied and supported by reasonable and prudent judgments and estimates. 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 from 1 July 2017 to 30 June 2018 and, in the light of this review and the current financial position and the municipality has sufficient access to the future operating activities or income improvement activities for the existing future operations.
The accountant certifies that the salary, allowances and benefits of the city council members, as stated in the note to these annual accounts, are within the upper limit of the framework provided for in § 219 of the Basic Law, compared with the remuneration of civil servants in Act No. 20 of 1998. The annual accounts are prepared on page 83, which was prepared on page 83. on 2 October 2018. The annual accounts is made on the basis of accounting practices that apply to continuing operations.
The accountant is not aware of conditions that have arisen since the end of the financial year. Applied accounting practices on pages 17 to 42 and the notes on pages 43 to 83 form an integral part of the annual accounts.
Presentation of Annual Financial Statements
Presentation currency
Significant judgements and sources of estimation uncertainty
Significant judgements and sources of estimation uncertainty (continued) Post retirement benefits
Investment property
Investment property (continued) Fair value
Property, plant and equipment
Property, plant and equipment (continued)
Site restoration and dismantling cost
Intangible assets
Intangible assets (continued)
Heritage assets
Financial instruments
Financial instruments (continued)
Financial instruments (continued) Classification
If there is objective evidence that a loss has occurred due to the impairment of financial assets measured at amortized cost, the amount of the loss is measured as the difference between the book value of the asset and the present value of estimated future cash flows (excluding future credit losses that have not yet occurred), discounted at the original effective interest rate of the financial asset. The book value of the asset is reduced using an impairment account. If in a subsequent period the amount of the impairment loss decreases and the decrease can be objectively linked to an event that occurred after the impairment was recognized, the previously recognized impairment loss is reversed directly OR by adjusting the impairment account.
The reversal does not result in a carrying amount of the financial asset that exceeds what the amortized cost would have been if the impairment had not been recognized on the date the impairment was reversed. Where financial assets are written down through the use of an allowance account, the amount of the loss is recognized as surplus or deficit within operating expenses. If there is objective evidence that an impairment loss has been incurred on an investment in a residual interest that is not measured at fair value because its fair value cannot be measured reliably, the amount of the impairment loss is measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the current market yield rate for a similar financial asset.
Any difference between the consideration received and the amounts received and paid out is recognized in profit or loss during the transfer period. Upon derecognition of a financial asset in its entirety, the difference between the accounting value and the sum of the consideration received is recognized in profit or loss.
Leases
When such financial assets are written off, the write-off is made against the relevant provision account. The accounting value of the transferred asset is allocated between the rights or obligations retained and those transferred on the basis of their relative fair value at the time of transfer. The municipality removes a financial obligation (or part of a financial obligation) from its financial position when it has ceased - i.e.
An exchange between an existing borrower and lender of debt instruments with substantially different terms is deemed to have extinguished the original financial liability and a new financial liability is recognised. Similarly, a substantial modification of the terms of an existing financial liability or part thereof is considered to have extinguished the original financial liability and recognized a new financial liability. The difference between the carrying amount of a financial liability (or part of a financial liability) settled or transferred to another party and the amount paid, including any non-monetary asset transferred or liability received, is recognized in surplus or deficit.
Any liability waived, waived or assumed by another municipality in the form of a non-exchange transaction is accounted for in accordance with the Standard of GRAP on Revenue from Non-exchange Transactions (Taxes and Transfers).
Leases (continued) Finance leases - lessee
Inventories
Inventories (continued) Water inventory
Impairment of cash-generating assets
Impairment of cash-generating assets (continued) Recognition and measurement (individual asset)
Impairment of cash-generating assets (continued) Reversal of impairment loss
Impairment of non-cash-generating assets
Impairment of non-cash-generating assets (continued) Value in use
Employee benefits
Employee benefits (continued)
In measuring its defined benefit obligation, the entity recognizes actuarial gains and losses as surplus or deficit in the reporting period in which they arise. Current service cost is the increase in the present value of the defined benefit obligation resulting from the employee's service in the current period. Interest expense is the increase over 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 employees in prior periods of service, resulting in the current period from the introduction of, or changes in, post-employment benefits or other long-term employee benefits. In measuring the defined benefit obligation, the entity recognizes past service cost as an expense in the reporting period in which the plan is amended. The present value of a defined benefit plan is the present value, net of plan assets, of expected future payments required to settle the obligation arising from the service of employees in the current and prior periods.
The present value of these economic benefits is determined using a discount rate that reflects the time value of money. The entity determines the present 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 differ materially from the amounts that would be determined at the reporting date. The entity uses the Projected Unit Credit Method to determine the present value of its defined benefit obligations and the related current service cost and, where applicable, past service cost.
In measuring the present value of its defined benefit obligations and related service cost and, if applicable, past service cost, the entity shall allocate benefits to service according to the plan's benefit formula. The entity recognizes gains or losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs. When it is virtually certain that another party will reimburse all or part of the expenditure required 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 is presented as the net amount recognized for a reimbursement. The rate used to discount post-employment benefit obligations (funded and unfunded) reflects the time value of money. The currency and term of the financial instrument chosen to reflect the time value of money is consistent with the currency and term of the estimated post-employment benefit obligations.
Provisions and contingencies Provisions are recognised when
The results of the valuation are updated for material transactions and other material changes in circumstances (including changes in market prices and interest rates) up to the reporting date. Before determining the effect of a curtailment or settlement, the entity recalculates the liability (and the related plan assets, if any) based on current actuarial assumptions (including current market interest rates and other current market prices). In all other respects, the asset is treated in the same way as plan assets.
The entity offsets an asset relating to one plan against a liability relating to another plan when the entity has a legally enforceable right to use a surplus in one plan to settle obligations under the other plan and intends to either settle the obligations on a net basis, or to realize the surplus in one plan and settle its obligation under the other plan simultaneously. Financial assumptions are based on market expectations, at the reporting date, for the period over which the obligations are to be settled. Assumptions about medical costs take into account estimated future changes in the cost of medical services, resulting from both inflation and specific changes in medical costs.
Provisions and contingencies (continued)
Provisions and contingencies (continued) Decommissioning, restoration and similar liability
Commitments
Revenue from exchange transactions
Revenue from exchange transactions (continued) Rendering of services
Revenue from non-exchange transactions
Revenue from non-exchange transactions (continued)
Revenue from non-exchange transactions (continued) Rates including collection charges and penalties
Borrowing costs
Comparative figures
Unauthorised expenditure Unauthorised expenditure means
Fruitless and wasteful expenditure
Irregular expenditure
Irregular expenditure (continued)
Segment information A segment is an activity of an entity
Budget information
Related parties
Related parties (continued)
Events after reporting date
Investment property
Property, plant and equipment
Property, plant and equipment (continued)
Intangible assets
Heritage assets
Heritage assets (continued) Pledged as security
Other financial assets Designated at fair value
Employee benefit obligations Defined benefit plan
Employee benefit obligations (continued)
Long term receivables Credit quality of long term receivables
Inventories
Receivables from non-exchange transactions (continued) Receivables from non-exchange transactions pledged as security
Receivables from non-exchange transactions (continued)
Consumer debtors Gross balances
Consumer debtors (continued) Electricity
Consumer debtors (continued)
Consumer debtors (continued) Credit quality of consumer debtors
Finance lease obligation Minimum lease payments due
Unspent conditional grants and receipts
Other financial liabilities At amortised cost
Other financial liabilities (continued)
Provisions for Landfill site
Long service award liability
Long service award liability (continued)
Revenue (continued)
Investment revenue Dividend revenue
Property rates Rates received
Grants and subsidies paid Other subsidies
Government grants and subsidies Operating grants
Government grants and subsidies (continued)
The EPWP provides incentives to municipalities to expand job creation efforts through the use of labour-intensive delivery methods in the identified focus area and in line with the EPWP guidelines. The grant is awarded to support the municipality in building long-term and sustainable capacity by training a pool of young professionals in technical and project/operations management skills. The LGSETA mission is to build the capacity of local governments to meet their development needs by engaging innovative training methods, effective capacity building frameworks and building strategic partnerships.
LGSETA creates and implements various innovative skills development interventions aimed at helping local government employees, the unemployed and other people such as ward councilors and traditional leaders working within local government structures. LG SETA awards the grants to the municipality on an annual basis to ensure that the skills development targets are met in accordance with the Workplace Skills Plan (WSP). Provision of grants to municipalities for the implementation of energy efficiency and demand management initiatives within municipal infrastructure with a view to reducing electricity consumption and improving energy efficiency.
Employee related costs
Employee related costs (continued)
Remuneration of councillors
Remuneration of councillors (continued)
Depreciation and amortisation
Finance costs
Bulk purchases
General expenses
Fair value adjustments
Cash generated from operations
Contingencies Contingent liabilities
Related parties
Related parties (continued) Consumables
Change in estimate Property, plant and equipment
Prior period errors 1. Leases
Unspent grant liability
Consumer debtors
Prior period errors (continued)
Comparative figures
Risk management (continued) Interest rate risk
Going concern
Unauthorised expenditure
Fruitless and wasteful expenditure
Irregular expenditure
Professional and special services
Additional disclosure in terms of Municipal Finance Management Act Material losses incurred
Additional disclosure in terms of Municipal Finance Management Act (continued)
