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 ending 30 June 2016 and the results of its operations and cash flows for the period then ended. The accounting officer accepts ultimate responsibility for the internal financial control system established by the municipality and places significant importance on maintaining a strong control environment.
These controls are monitored throughout the municipality and all employees are required to maintain the highest ethical standards to ensure that the business of the municipality is conducted in a manner that is, in all reasonable circumstances, above reproach. The focus of risk management in the municipality is to identify, assess, manage and monitor all known forms of risk across the municipality. The accountant has reviewed the municipality's cash flow forecast for the year up to 30 June 2017 and, based on this review and the current financial position, is convinced that the municipality has or has access to sufficient resources to continue operations for the foreseeable future.
For the further financing of activities, the municipality is entirely dependent on interstate grants and transfers, as well as service costs. The annual financial statements are prepared on the basis of the assumption that the municipality is an operating company and that the municipality has neither the intention nor the need to liquidate or significantly reduce the scope of its operations.
Statements of Comparison of Budget and Actual Amounts
Notes
Statement of Comparison of Budget and Actual Amounts - Explanatory Notes
Presentation of Annual Financial Statements
- Presentation currency
- Going concern assumption
- Comperative Information
- Current year comparative budget
- Prior year comperatives
- Standards, Ammendments to Standards and Interpretations issued but not yet effective
The annual accounts have been prepared in accordance with the Standards of Generally Recognized Accounting Practice (GRAP), issued by the Accounting Standards Board in accordance with section 122(3) of the Municipal Financial Management Act (Act 56 of 2003). The annual accounts give a true picture of the municipality's financial position, results and cash flows. When the presentation or classification of items in the financial statements is changed, comparative amounts are also reclassified and adjusted to previous financial years, unless such comparative reclassification and/or adjustment is not required by a standard for GRAP.
When material accounting errors relating to prior periods are identified in the current year, correction is made retrospectively to the extent possible and prior year comparisons are restated accordingly. Where there has been a change in accounting policy in the current year, the adjustment is made retrospectively as far as possible and prior year comparisons restated accordingly. The presentation and classification of items in the current year is consistent with previous periods.
When the presentation or classification of items in the annual financial statements is modified, comparative amounts from previous periods are restated. Where there has been a change in accounting policy in the current year, the adjustment is made.
Accounting Policies
- Standards, Ammendments to Standards and Interpretations issued but not yet effective (continued) New GRAP standards effective for financial years beginning on or after 1 April 2015
- Property, plant and equipment Initial recognition
- Property, plant and equipment (continued)
- Intangible assets Initial recognition
- Heritage assets
- Heritage assets (continued) Subsequent measurement
- Investment property Initial recognition
- Inventory Initial recognition
- Financial instruments Initial recognition
- Financial instruments (continued)
- Provisions and contingent liabilities
- Leases
- Revenue from exchange transactions
- Revenue from exchange transactions (continued) Interest
- Revenue from non-exchange transactions
- Employee benefits Short-term employee benefits
- Employee benefits (continued) Post employment benefits
- Offsetting
- Borrowing
- Accumulated surplus
- Related parties
- Changes in accounting policies and estimates and prior year errors Accounting policies
- Significant judgements and estimates Use of estimates
- Significant judgements and estimates (continued) Other provisions
- Commitments
- Presentation of budget policy
- Unauthorised expenditure
- Irregular expenditure
- Fruitless and wasteful expenditure
- Value Added Tax
- Events after reporting date
- Inventory
- Movement for inventories
- Receivables
- Receivables
Depreciation is calculated over the depreciable amount of the asset, using the straight-line method over the useful life of the asset. 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. If the fair value of the acquired item could not be determined, the deemed cost is the carrying amount of the asset or assets given up.
Intangible assets 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. 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 entity, and the cost or fair value of the investment property can be measured reliably. If a replacement part is recognized in the carrying amount of the investment property, the carrying amount of the replaced part is derecognised.
Impairments are calculated as the difference between the book value and the present value of the expected future cash flows derived from the financial asset. Property, plant and equipment or intangible assets subject to finance lease agreements are initially recognized at the lower of the fair value of the asset and the present value of the minimum lease payments. In discounting the lease payments, the municipality uses the interest rate that exactly discounts the lease payments and the unsecured residual value to the fair value of the asset plus any direct costs incurred.
A leased asset is depreciated over the shorter of the asset's useful life or the lease term. It is likely that the economic benefits or service potential associated with the transaction will flow to the municipality; and - the amount of revenue can be reliably measured. Revenues from the sale of goods are recognized when all the following conditions are met: a) the company has transferred the significant risks and benefits of ownership of the goods to the buyer;.
Revenue from the rental of facilities and equipment is recognized on a straight-line basis over the term of the rental agreement. Unconditional grants, donations and funding are recognized as income in the Statement of Financial Position on the earlier of the date of receipt or when the amount is receivable. A statement of changes in net assets is included in the Annual Financial Statements which discloses the following:. the effect of changes in accounting policy and correction of errors;. the balance of retained earnings at the beginning of the period and at the balance sheet date and the changes during the period; and. a reconciliation between the carrying amount of each class of reserves at the beginning and the end of the period.
Irregular expenditure is expenditure that contravenes the Municipal Financing Act (Act 56 of 2003), the Municipal Systems Act (Act 32 of 2000), the Public Office Holders Act (Act 20 of 1998) or is contrary to the municipality's supply chain management policy. The impairment of trade receivables is accounted for by reducing the book value of trade receivables using a value adjustment account, and the amount of the loss is recognized in the income statement under operating expenses.
Notes to the Annual Financial Statements
Receivables (continued) Debtors for rates and traffic fines
Receivables (continued) Rates, traffic fines, refuse & other
Cash
Cash (continued)
Property, plant and equipment
Property, plant and equipment (continued) Reconciliation of property, plant and equipment - 2016
Property, plant and equipment (continued) Reconciliation of property, plant and equipment - 2015
Intangible assets
Heritage assets
Heritage assets (continued) Pledged as security
Investment property
Trade and other payables
Short-term obligations to employees
Long-term obligations to employees
Long-term obligations to employees (continued)
Finance lease liability
Service charges
Finance income
Licences and permits
Agency fees
Other revenue
Traffic fines
Fair valuing of assets Gains
Fair valuing of assets (continued) Losses
Government grants and subsidies - operating Operating grants
Government grants and subsidies - operating (continued) (See note 14)
Government grants and subsidies - capital
Employee related costs
Remuneration of councillors
Depreciation and amortisation
General expenses
Correction of prior year errors Statement of financial position
Correction of prior year errors (continued) Decrease in accumulated surplus
Correction of prior year errors (continued) Increase in non-current assets
Cash generated from operations
Councillor's arrears consumer accounts
Commitments
Contingent liabilities
Unauthorised, irregular, fruitless and wasteful expenditure Irregular expenditure
Related party disclosures
Change in accounting estimates
Change in accounting policies
Risk management Interest rate risk
Risk management (continued) Credit risk
Deviation from supply chain management regulations
Deviation from supply chain management regulations (continued)
Annexures on commitments Current commitments
Annexures on commitments (continued) Capital commitments
Annexures on commitments (continued) Bochabelo Hall (Consultant) Ryntex Consulting
