The accounting officer is required by the Municipal Finance Management Act (Act 56 of 2003) to maintain adequate accounting records and is responsible for the content and integrity of the annual financial statements and related financial information included in this report. It is the accounting officer's responsibility to ensure that the annual financial statements present fairly the state of affairs of the municipality at the end of the financial year and the results of its operations and cash flows for the period then ended. Although the management is primarily responsible for the municipality's financial affairs, they are supported by the municipality's external auditors.
The operating results and state of affairs of the municipality are fully detailed in the attached annual financial statements and in our opinion require no further comment. The ability of the municipality to continue as a going concern is dependent on a number of factors. The most important of these is that the accounting officer continues to obtain funding for the ongoing operations for the municipality. The entity will continue to receive funding from the government as evidenced by the equitable share allocation in terms of the Revenue Sharing Act.
The accounting officer is not aware of any matter or circumstance that has arisen since the end of the financial year. The accounting policy on pages 13 to 33 and the notes on pages 34 to 56 form an integral part of the annual financial statements.
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) Impairment testing
Property, plant and equipment
Property, plant and equipment (continued)
Each part of a tangible fixed asset, the purchase value of which is significant in relation to the total purchase value of the asset, is depreciated separately. The depreciation method used reflects the pattern in which the municipality is expected to consume the future economic benefits or service potential of the asset. At each reporting date, the municipality assesses whether there are indications that the municipality's expectations regarding the residual value and useful life of the asset have changed since the previous reporting date.
If any such indication exists, the municipality revises the expected useful life and/or residual value accordingly. Items of 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 gain or loss arising from the derecognition of an item of property, plant and equipment is included in surplus or deficit when the item is derecognised.
The gain or loss resulting from derecognition of an item of property, plant and equipment is determined as the difference between the net sales proceeds, if any, and the carrying amount of the asset. The municipality discloses expenditure for the repair and maintenance of tangible fixed assets separately in the notes to the annual accounts (see note.
Intangible assets
The depreciable amount of the asset is systematically distributed over its useful life. The depreciation method used for the asset is reviewed at least at each reporting date and, if there has been a significant change in the expected consumption pattern of the future economic benefits or service potential embodied in the asset, the method is changed to reflect the changed pattern. Depreciation for each period is recognized in surplus or deficit, unless it is included in the carrying amount of another asset.
The municipality discloses relevant information regarding assets under construction or development, in the notes to the financial statements (see note.
Intangible assets (continued)
Financial instruments
Financial instruments (continued)
The entity initially measures a financial asset and financial liability at fair value plus transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability. The entity initially measures a financial asset and a financial liability at fair value [if subsequently measured at fair value]. If the market for a financial instrument is not active, the entity determines fair value using a valuation technique.
If the 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 on the date the fair value is no longer available becomes cost. If a reliable measurement becomes available for an investment in a residual interest for which a measurement was not 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.
Leases
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 asset's book value is reduced directly OR 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. 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. 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 associated liability.
If the amount already paid in respect of the current and previous periods exceeds the amount due for those periods, the excess is recognized as an asset. Current tax liabilities (receivables) for current and prior periods are measured at the amount expected to be paid (collected from) tax authorities, using tax rates (and tax laws) enacted or substantially enacted by the end of the reporting period.
Leases (continued) Finance leases - lessee
Inventories
Inventories (continued)
Impairment of cash-generating assets
Employee benefits
Employee benefits (continued)
When measuring defined benefit obligations, the company recognizes actuarial gains and losses in surplus or deficit in the reporting period in which they occur. Current service costs are the increase in the present value of defined benefit obligations resulting from the employee's service in the current period. Interest expense is the increase in the present value of the defined benefit obligation in the period that occurs 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 employee service in prior periods resulting in the current period from the introduction of, or changes in, post-retirement benefits or other long-term employee benefits. When measuring its defined benefit obligation, the company recognizes previous seniority costs as a cost in the accounting period in which the scheme is changed. The present value of a defined benefit obligation is the present value, net of any pension assets, of expected future payments necessary to settle the obligation as a result of employee service in the current and past periods.
The company accounts not only for its legal obligation under the formal terms of a defined benefit plan, but also for any actual obligation arising from the company's informal practices. An example of an actual liability is where a change in the company's informal practices would cause unacceptable damage to its relationship with employees. The present value of these economic benefits is determined using a discount rate, which reflects the time value of money.
The entity determines the present value of the defined benefit obligations and the fair value of each plan asset 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. An entity uses the projected entity credit method to determine the present value of its defined benefit obligations and the related current service cost and, when applicable, past service cost. In determining the present value of its defined benefit obligations and the related actual service cost and, where applicable, past service cost, an entity shall attribute the benefits to the service periods according to the plan 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 the event of a surplus or deficit, the expense related to a defined benefit plan [OR is not] presented as the net amount of the amount drawn for a benefit.
Employee benefits (continued) Actuarial assumptions
Provisions and contingencies Provisions are recognised when
Provisions and contingencies (continued)
Commitments
Commitments (continued)
Revenue from exchange transactions
Revenue from non-exchange transactions
Revenue from non-exchange transactions (continued)
Revenue from non-exchange transactions (continued) Transfers
Investment income
Borrowing costs
Comparative figures
Unauthorised expenditure Unauthorised expenditure means
Fruitless and wasteful expenditure
Irregular expenditure
Irregular expenditure (continued)
Revaluation reserve
Budget information
Related parties
Related parties (continued)
Events after reporting date
Investment
New standards and interpretations
Standards and Interpretations early adopted
Standard/ Interpretation: Effective date: Expected impact
Standards and interpretations not yet effective or relevant
Property, plant and equipment
Property, plant and equipment (continued) Reconciliation of property, plant and equipment - 2018
Intangible assets
Employee benefit obligations Defined benefit plan
Employee benefit obligations (continued) Key assumptions used
Receivables from exchange transactions
Cash and cash equivalents Cash and cash equivalents consist of
Cash and cash equivalents (continued) The municipality had the following bank accounts
Finance lease obligation Minimum lease payments due
Other employee benefits
Other employee benefits (continued) Heading
Payables from exchange transactions
Government grants and subsidies Operating grants
Employee related costs
Employee related costs (continued)
Remuneration of councillors (continued) In-kind benefits
Depreciation and amortisation
Inventory Consumed
Contracted services
Operational cost
Financial instruments disclosure (continued)
Contingencies Contingent Liabilities
Prior period errors
Prior period errors (continued)
Prior-year adjustments
Prior-year adjustments (continued) 2017
Risk management Liquidity risk
Going concern
Unauthorised expenditure
Fruitless and wasteful expenditure
Irregular expenditure
Irregular expenditure (continued) Details of irregular expenditure- Prior year
Additional disclosure in terms of Municipal Finance Management Act Contributions to organised local government ( SALGA)
Additional disclosure in terms of Municipal Finance Management Act (continued) Supply chain management regulations
Segmental Statement of Financial Performance for the year ended
Prior Year Current Year
Actual versus Budget(Revenue and Expenditure) for the year ended 30 June 2010
Gain or loss on the sale of non-current assets held for sale or disposal groups. Jun Sep Dec Mar Jun Jun Sep Dec Mar Jun Jun Sep Dec Mar Jun Yes/No Edge Edge Edge Edge Edge Edge Edge Edge Edge Edge Edge Edge Edge.
