The accountant is required by the Municipal Financial Management Act (Act 56 of 2003) to keep adequate accounts and is responsible for the content and integrity of the annual accounts and associated financial information included in this report. The Audit Committee reports that it has fulfilled its obligations under section 166(2)(a) of the MFMA. Pursuant to section 166 of the Municipal Financial Management Act, Thabazimbi Local Municipality must appoint members of the audit committee.
Presentation of Annual Financial Statements
Presentation currency
Going concern assumption
Significant judgements and sources of estimation uncertainty
Significant judgements and sources of estimation uncertainty (continued) Useful lives of waste and water network and other assets
Biological assets that form part of an agricultural activity
Property, plant and equipment
Property, plant and equipment (continued)
Any part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the asset is depreciated separately. The gain or loss resulting from derecognition of an item of property, plant and equipment is included in surplus or deficit when the item is derecognised.
Intangible assets
Property, plant and equipment are derecognised when the asset is disposed of or when no further economic benefits or service potential are expected from the use of the asset. 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.
Intangible assets (continued)
Heritage assets
Financial instruments
Financial instruments (continued)
An entity initially measures a financial asset and a financial liability at fair value plus transaction costs that are directly attributable to the acquisition or issuance of the financial asset or financial liability. An entity initially measures a financial asset and a financial liability at fair value [if subsequently measured at fair value]. If the market for the financial instrument is not active, the entity determines the fair value using a valuation technique.
If fair value can no longer be measured reliably for an investment in a residual interest measured at fair value, the entity reclassifies the investment from fair value to cost. The carrying amount at the date when the fair value is no longer available becomes cost. When a reliable valuation becomes available for an investment in a residual interest for which no valuation was previously available, and the instrument should have been measured at fair value, the entity reclassifies the instrument from cost to fair value.
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. If there is objective evidence that an impairment loss has occurred in an investment in the remaining 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 estimated future cash flows discounted at the current market rate of return for a similar financial asset.
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 waived, discharged or assumed by another entity 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 in respect of a financial instrument or component that is a financial liability are recognized as income or expense in a surplus or deficit. Losses and gains related to a financial instrument or component that is a financial liability are recognized as income or expense in a surplus or deficit. Distributions to holders of residual interests are recognized directly in net assets by the entity.
Income tax [where applicable] in respect of distributions to holders of residual interests and transaction costs incurred by residual interests is calculated in accordance with International Accounting Standard on Income Taxes. 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
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.
Inventories
Inventories (continued)
Impairment of cash-generating assets
Impairment of non-cash-generating assets
Impairment of non-cash-generating assets (continued)
Employee benefits
Employee benefits (continued) Short-term employee benefits
Employee benefits (continued)
The company determines the present value of defined benefit obligations and the fair value of any pension assets with sufficient regularity so that the amounts recognized in the financial statements do not differ significantly from the amounts that would be determined on the balance sheet date. The Company uses the Projected Unit Credit method to determine the present value of its defined benefit obligations and the related ongoing service costs and, where applicable, past service costs. In determining the present value of its defined benefit obligations and the associated current service costs and, where applicable, past service costs, an entity shall attribute benefits to periods of service according to the plan's benefit formula.
Valuation results are updated for any material transactions and other material changes in circumstances (including changes in market prices and interest rates) up to the reporting date. The entity recognizes gain or loss on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs. Before determining the effect of a curtailment or settlement, the entity remeasures the liability (and related plan assets, if any) using current actuarial assumptions (including current market interest rates and other current market prices).
When it is almost certain that the other party will reimburse some or all of the expenditures necessary to settle the defined benefit obligation, the right to reimbursement is recognized as a separate asset. In surplus or deficit, the expense related to the defined benefit plan [OR is not] presented as a net amount recognized for reimbursement.
Employee benefits (continued) Actuarial assumptions
Provisions and contingencies Provisions are recognised when
Provisions and contingencies (continued)
Provisions and contingencies (continued) Decommissioning, restoration and similar liability
Commitments
Revenue from exchange transactions
Revenue from exchange transactions (continued)
Revenue from exchange transactions (continued) Interest, royalties and dividends
Revenue from non-exchange transactions 1.18 Turnover
Investment income
Borrowing costs
Comparative figures
Unauthorised expenditure Unauthorised expenditure means
Fruitless and wasteful expenditure
Irregular expenditure
Related parties
New standards and interpretations
Standards and interpretations issued, but not yet effective
The Selection of an Appropriate Reporting Framework by Public Entities
New standards and interpretations (continued)
The municipality expects to adopt the standard for the first time in the 2019 annual financial statements. It is unlikely that the standard will have a material impact on the municipality's annual financial statements.
Biological assets that form part of an agricultural activity
Property, plant and equipment
- Property, plant and equipment (continued) Reconciliation of property, plant and equipment - 2015
- Other financial assets At amortised cost
- Employee benefit obligations
- Employee benefit obligations (continued)
- Inventories
- VAT receivable
- Consumer debtors Gross balances
- Consumer debtors (continued) Less: Allowance for impairment
- Consumer debtors (continued) Refuse
- Finance lease obligation Minimum lease payments due
- Unspent conditional grants and receipts
- Revenue
- Service charges
- Government grants and subsidies Operating grants
- Government grants and subsidies (continued)
- Other income
- General expenses
- Employee related costs
- Employee related costs (continued)
- Investment revenue Interest revenue
- Finance costs
- Auditors' remuneration
- Bulk purchases
- Cash generated from operations
- Contingencies
- Related parties
VAT is recorded on an accrual basis but is paid in cash to the South African tax authorities. Solomon Nkiwe Ramane and Paul Ramane are claiming payment from the Municipality in the amount of R which is an amount owed by the Defendant to the Plaintiff in respect of professional advisory and advisory services rendered by the Plaintiff to the Defendant for the period March 2014 to March 2015, which amount is now due and payable to the Plaintiff. On or about April 25, 2014 on Thabazimbi Road - on the Crocodile River, damage was incurred to Sunel Eloff's vehicle due to the Plantiff's vehicle colliding with a pothole in the road within the jurisdiction and maintenance of the suspect.
The aforesaid collision was caused solely by the negligence of the defendant's employees, who at all times up to this point were employed by the defendant and acted, or failed to act, within the scope and scope of their employment with the defendant. 3. Legal proceedings are pending against the municipality in relation to non-payment of the sum of R200 520 due and payable in respect of equipment hired and delivered to the defendant by Blue Sands Trading. The claim was forwarded to the defendant, the defendant refused to pay the amount of R 200 520 despite the claim.
4. The municipality is subject to legal proceedings due to the fact that on or about October 11 and 12, 2010, the municipality entered into a written contract with Immoral Building Construction and Mosiwa Building, according to which the municipality awarded the plaintiff an offer to participate in the construction of the road against the payment of the sum of R. The plaintiff, in accordance with the above-mentioned agreement, the plaintiff continued construction and completed the construction of the road in June 2014, the defendant since then paid the plaintiff the sum of R4 000 000 of which the last payment was in March 2015, to date the balance of R is still outstanding, the balance of which the defendant has refused to pay to the plaintiff despite the request. The estimated contingent liability is R. 5 In the process, legal proceedings are pending against the municipality due to the fact that on July 25, 2014, near the Warmbadveg Thabazimbi road, the defendant's employees caused damage to the cable of the plaintiff (Telkom SOC), mentioned. Legal proceedings are pending against the municipality in relation to Polokwane Surfacing who supplied supplies and properly completed the works in April 2014 as stated in the payment progress certificate dated 22 April 2014 and for which the defendant received a tax invoice dated 26 May 2014 in the sum of R, as the defendant is indebted to the plaintiff and the company. the intiff notified the defendant of the intended court proceedings, which was dated September 30, 2014.
7. A court case is pending against the municipality in relation to the service provider Hendrik Johanness Badenhorst who is suing the defendant for which a claim for the payment of the sum of R which the defendant has neglected and or refuses to pay the plaintiff.
- Prior period errors
- Comparative figures (continued) Statement of financial position - extract
- Risk management Liquidity risk
- Going concern
- Events after the reporting date Attachment of movable assets by a Creditor
- Unauthorised expenditure
- Irregular expenditure
- Additional disclosure in terms of Municipal Finance Management Act Material losses through distribution of water losses
- Additional disclosure in terms of Municipal Finance Management Act (continued) VAT
- Additional disclosure in terms of Municipal Finance Management Act (continued) Supply chain management regulations
- Budget differences
- Receivables from non-exchange transactions
- Accumulated surplus
- Accumulated surplus (continued) Reserves within accumulated surplus - 2016
- Rental of facilities and equipment Premises
- Deviation from supply chain management regulations
1. Property and equipment are undervalued by R due to non-reconciliation of the fixed assets register. Service charges - The municipality has not managed to achieve in accordance with the initial revenue forecasts due to the bad state of both electricity and water measurements. Fines - The municipality has not been able to achieve in accordance with the initial revenue forecasts due to the bad state of both electricity and water measurements.
Personnel - Personnel costs have increased due to additional travel allowances and employee-related expenses caused by the use of vehicles and overtime. Impairment loss/ Reversal of impairments - The impairment was due to an impairment assessment carried out during the year. Bulk purchases - Bulk purchases have increased due to increased distribution losses for both electricity and water.
General expenses - General expenses savings are due to cash flow challenges and could not be spent as budgeted due to low collections. VAT payable - VAT increased due to the portion of creditors as indicated on Creditors above.
Schedule of external loans as at 30 June 2015
