STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED JUNE 30, 2015 7 STATEMENT OF CHANGES IN NET ASSETS FOR THE YEAR ENDED JUNE 30, 2015 8. APPENDIX B: ASSET ANALYSIS APPENDIX: APPENDIX 30 FINANCIAL PERFORMANCE MIND REVIEW 78 APPENDIX D: STATEMENT JEN OF GRANTS AND SUBSIDIES IN THE CONDITIONS OF THE MUNICIPALITIES.
STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS FOR THE YEAR ENDED 30 JUNE 2015
PRESENTATION CURRENCY
GOING CONCERN ASSUMPTION
OFFSETTING
STANDARDS, AMENDMENTS TO STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE The following GRAP standards have been issued but are not yet effective and have not been adopted early
- Significant accounting judgements, estimates and assumptions
- Significant accounting judgements, estimates and assumptions (Continued) Operating lease commitments – Municipality as lessor
Where necessary, comparative data has been restated to conform to changes in presentation during the current year. If accounting errors were found in the current year, the correction is made retroactively, as far as it is feasible, and the comparisons from the previous year are recalculated accordingly. Planned amounts are included in the annual financial statements only for the current financial year.
- Subsequent measurement
- Depreciation
Each part of a tangible fixed asset, the purchase value of which is significant in relation to the total purchase value of the item, is depreciated separately. The gain or loss arising from the derecognition of an item of property, plant and equipment is included in surplus or deficit when the asset is derecognised. 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.
LEASES
Items of property, plant and equipment are derecognised when the asset is sold or when no further economic benefits or service potential are expected from the use of the asset. The gain or loss arising from the disposal or retirement of an item of tangible long-term assets is determined as the difference between the proceeds from the sale and the book value and is recognized in the Statement of Financial Performance. The depreciation charge for each period is recognized in surplus or deficit, unless it is included in the carrying amount of another asset.
IMPAIRMENT OF NON-FINANCIAL ASSETS
Depreciable assets are reviewed for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the book value exceeds the recoverable amount. An impairment loss is recognized for the amount by which the book value exceeds the value in use.
INTANGIBLE ASSETS
- Initial recognition
- Subsequent measurement
- amortisation and impairment
- Derecognition
The municipality recognizes an intangible asset in its balance sheet only if it is probable that the expected future economic benefits or service potential attributable to the asset will flow to the municipality and the cost or fair value of the asset can be measured reliably . An intangible asset is derecognised when it is permanently retired from use and no future economic benefit or service potential results from it. The gain or loss resulting from the sale of an intangible asset is determined as the difference between the net sales proceeds, if any, and the carrying amount of the asset.
- Initial recognition (continued)
- SUBSEQUENT MEASUREMENT
- DERECOGNITION
When an intangible asset is acquired by the municipality for free or nominal (ie a non-exchange transaction), the cost is considered to be equal to the fair value of that asset at the date of acquisition. The amortization period and amortization method for an intangible asset with a finite useful life are reviewed at each reporting date and any change is recognized as a change in accounting estimate in the Statement of Financial Performance. A long-lived property, plant and equipment is derecognised upon disposal, or when it is permanently withdrawn from use and no future economic benefits or service potential are expected from the disposal.
INVENTORIES
- Revenue from exchange transactions
- Revenue from non-exchange transactions
Revenue from the sale of goods is recognized when the risk passes to the consumer. Income from public contributions is recognized when all conditions associated with the contribution are met, or where the contribution is to finance tangible fixed assets, when such tangible fixed assets are put into use. The difference between the fair value and the nominal amount of the consideration is recognized as interest income.
PROVISIONS AND CONTINGENCIES
If public contributions have been received, but the municipality has not met the associated conditions, deferred income (liability) is recognized. Revenue from the recovery of unauthorized, irregular, fruitless and wasteful expenditure is based on statutory procedures, including those set out in the Municipal Financial Management Act (Act No. 56 of 2003) and is recognized when the recovery thereof from the responsible councilors or civil servants is substantially certain Contributed property, plant and equipment are recognized when such assets or property, plant and equipment are put into use. A provision for restructuring costs is only recognized when the following criteria, in addition to the recognition criteria for a provision, are met: a) The municipality has a detailed formal plan for the restructuring that identifies at least: the company or part of a company in question. the location, function and approximate number of employees who will be compensated for termination of their services. the expenses that will be incurred. when the plan will be implemented; and.
HOUSING DEVELOPMENT FUND
Provisions are reviewed on the balance sheet date and adjusted to reflect the current best estimate. A contingent liability is disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. Profit on the expected disposal of assets is not taken into account when calculating a provision.
RETIREMENT BENEFITS
Future events that may affect the amount required to settle a liability are reflected in the amount of a provision where there is sufficient objective evidence that they will occur.
BORROWING COSTS
It is considered inappropriate to capitalize loan costs where the connection between the borrowed funds and the acquired fixed asset cannot be sufficiently established - the municipality bears all loan costs.
FINANCIAL INSTRUMENTS CLASSIFICATION
Receivables from sales and other receivables are categorized as financial assets: loans and receivables and are initially recognized at fair value and subsequently recognized at amortized cost. The present value of Receivables is estimated as the present value of future cash flows discounted with the market interest rate on the balance sheet date. An impairment of trade receivables is recorded by reducing the carrying amount of trade receivables using an allowance account, and the amount of the loss is recognized in the income statement under operating expenses.
In the case of claims for traffic fines, historical payment trends are used to determine the assessment of doubtful claims. The fair value of creditors is estimated as the present value of future cash flows discounted at the market interest rate at the reporting date. For the purposes of the statement of cash flows, cash and cash equivalents comprise cash on hand, call deposits with banks without bank account overdrafts.
The closing balance of the bank account is representative of its fair value of the money held. Receivables relating to overdrafts are categorized as Financial liabilities: other financial liabilities recognized at amortized cost. These include setting the discount rate, future wage increases, mortality and future pension increases.
Due to the complexity of the valuation, the underlying assumptions and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions.
HERITAGE ASSETS
- Initial measurement
- Subsequent measurement
- Derecognition
- Actuarial gains and losses
The municipality's future obligations related to its defined benefit pension plans and its post-employment medical benefits plan are determined using actuarial estimates. The cost of short-term employee benefits (those payable within 12 months of service, such as paid holidays and sick leave, bonuses and non-monetary benefits such as medical care), are recognized in the period in which the service is rendered and are not deducted. The expected cost of compensated absences is recognized as an expense as employees provide services that increase their entitlement or, in the case of non-accumulating absences, when the absence occurs.
The expected costs of bonus payments are recognized as expenses if there is a legal or implied obligation to make such payments as a result of past performance. Actuarial gains and losses are fully recognized in the year in which they arise in the income statement.
BUDGET INFORMATION
UNAUTHORISED EXPENDITURE
IRREGULAR EXPENDITURE
FRUITLESS AND WASTEFUL EXPENDITURE
- Normal Tax Expense
No provision has been made for tax as the municipality is exempt from tax in terms of section 10(1)(A) of the Income Tax Act. This means that VAT is only declared as input VAT or output VAT to the South African Revenue Service when payments are made to suppliers or payments are received for goods or services. The net output VAT on debtors where money has not been received or creditors where payment has not been made is disclosed separately in the Statement of Financial Position in terms of GRAP 1.
HOUSING DEVELOPMENT FUND
Disclosure of Terms of Financial Instruments - Loans Future payments are based on balances as at 30 June 2014. i). The interest rate applicable to Standard Bank and Nedbank loans is variable and annual installments are therefore subject to interest rate risk. (ii) Lease obligation is fully settled. iii). No security has been provided against the loans. vii) Loan receipts or payments are in South African currency.
Department of Water Affairs (DWAF) Water Services Program Department of Water Affairs (DWAF) Renewal Grant Department of Water Affairs (DWAF) Water Conservation and Demand.
HERITAGE ASSETS
July 2014
June 2015
July 2013
June 2014
- Financial Management Grant
- Energy Efficiency and Demand Side Management Grant
- Municipal Water Infrastructure grant
- Provincial Department of Transport Subsidy
- uThungulu District Municipality Museum Operating Subsidy
- Department of Economic Development and Tourism
- EMPLOYEE-RELATED COSTS (continued)
- POST-EMPLOYEMENT MEDICAL BENEFITS (defined benefit obligation)
- POST-EMPLOYEMENT MEDICAL BENEFITS (defined benefit obligation) (Continued) The amounts recognised in the Statement of Financial Performance
- PROVISIONS
- Liquidity Risk
In the financial year, one supplementary assessment list and roll of objections were processed in accordance with the new law. In relation to the constitution, this allocation must ensure a fair distribution of the national income. Conditions that have not yet been met - transferred to liabilities National conditional grants are awarded in accordance with the Tax Distribution Act.
Conditions still to be met - transferred to liabilities - - National Conditional Grants are awarded in terms of the Distribution of Income Act. Conditions still to be met - transferred to liabilities National Conditional Grants are awarded in terms of the Distribution of Income Act. Conditions still to be fulfilled - transferred to liabilities National Conditional Grants are awarded in terms of the Distribution of Income Act.
The municipality provides health services on behalf of the provincial government and is reimbursed approx. 35% of the total expenses incurred. Unspent balance at the beginning of the year - - Income for the current year Conditions fulfilled - transferred to income Conditions still missing - transferred to liabilities - - The Prime Minister grants a grant to assist in the operation of the Empangeni Museum. The Department of Cooperative Governance and Traditional Affairs allocated funds to the Council for the administration of the Community Development Workers Programme.
The provision is an estimate of the amount to be paid to staff for the following year, pro rata. Exposure to interest rate, credit risk and liquidity risks arises in the normal course of the municipality's operations. The accountant has overall responsibility for establishing and supervising the municipality's risk management framework.
The debtor collection rate of the municipality also ensures that sufficient cash is available to cover working capital. The variance is due to reductions in the scope of some of the work performed under contracted services, therefore funds have been transferred to repairs and maintenance.
