I am responsible for the preparation of these annual financial statements which are set out on pages 1 to 24, and Appendix A, B, C, D, E(1), E(2) and F in terms of Section 126(1) of the Municipal Finance Management Act and which I have signed on behalf of the Municipality. I certify that the salaries, allowances and benefits of councillors as disclosed in note 21 of these annual financial statements are within the upper limits of the framework envisaged in section 219 of the Constitution, read with the Remuneration of Public Officer Bearers Act and the Minister of Provincial and Local Government's determination in accordance with this Act. The annual financial statements have been prepared in accordance with South African Statements of Generally Recognised Accounting Practice (GRAP) issued by the Accounting Standards Board in accordance with section 122(3) of the Municipal Finance Management Act, (Act No. 56 of 2003).
Depreciation is calculated on cost, using the straight - line method over the estimated useful lives of the assets. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with the entity’s accounting policy for borrowing costs. If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-generating unit to which the asset belongs is determined.
If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination. An impairment loss is recognised for cash-generating units if the recoverable amount of the unit is less than the carrying amount of the units.
1973 (Ordinance No.24 of 1973) and in accordance with the requirements of the Pension Fund Act,1956 Current contributions are charged against operating income on the basis of current service costs.
Accounting Policies
- Provisions and contingencies (continued) Provisions are recognised when
- Revenue
- Borrowing costs
- Comparative figures
- Comparative figures (continued)
- Unauthorised expenditure Unauthorised expenditure means
- Fruitless and wasteful expenditure
- Irregular expenditure
- Reserves
- Reserves (continued)
- Conditional Grants and receipts
- Going concern assumption
Where necessary, comparative figures have been reclassified to conform to changes in presentation in the current year. Budgeted amounts have been included in the annual financial statements for the current financial year only. All expenditure relating to unauthorised expenditure is recognised as an expense in the statement of financial performance in the year that the expenditure was incurred.
The expenditure is classified in accordance with the nature of the expense, and where recovered, it is subsequently accounted for as revenue in the statement of financial performance. All expenditure relating to fruitless and wasteful expenditure is recognised as an expense in the statement of financial performance in the year that the expenditure was incurred. Irregular expenditure is accounted for as expenditure in the Statement of Financial Performance and where recovered, it is subsequently accounted for as revenue in the Statement of Financial Performance.
In order to finance the provision of infrastructure and other items of property, plant and equipment from internal sources, amounts are transferred from accumulated surplus/ (deficit) to the CRR. A corresponding amount is transferred to a designated CRR bank or investment account. The cash in the designated CRR bank account can only be utilised to finance items of property, plant and equipment. The CRR is reduced and the accumulated surplus/. deficit) is credited by a corresponding amount when the amounts in the CRR are utilised. The amount transferred to the CRR is based on the municipality's need to finance future capital projects included in the Integrated Development Plan. This policy is not applicable in the current year in terms of new GRAP standards.
When such items of property, plant and equipment are depreciated, a transfer is made from the Government Grant Reserve to the accumulated surplus/ (deficit). The purpose of this policy is to promote community equity by ensuring that the future depreciation expenses that will be incurred over the useful lives of government grant funded items of property, plant and equipment are offset by transfers from this reserve to the accumulated surplus/ (deficit). When an item of property, plant and equipment financed from government grants is disposed, the balance in the Government Grant Reserve relating to such item is transferred to the accumulated surplus/ (deficit).
This policy is not applicable in the current year in terms of the GRAP standards. On disposal, the net revaluation surplus is transferred to the accumulated surplus/deficit while gains or losses on disposal, based on revalued amounts, are credited or charged to the Statement of Financial Performance. Revenue received from conditional grants, donations and funding are recognised as revenue to the extent that the entity has complied with any of the criteria, conditions or obligations embodied in the agreement.
Notes to the Annual Financial Statements
- Property, plant and equipment
- Property, plant and equipment (continued)
- Investment in subsidiary
- Long term receivables
- Investments
- Inventories
- Other debtors
- Other receivables from non-exchange transactions, including taxes and transfers
- Consumer debtors
- Consumer debtors (continued)
- Cash and cash equivalents
- Cash and cash equivalents (continued)
- Unspent conditional grants and receipts
- Provisions
- Long - term liabilities
- Long - term liabilities (continued)
- Trade and other payables
- Taxes and transfers payable
- Consumer deposits
- Service charges
- Government grants and subsidies
- General expenses
- Employee related costs
- Employee related costs (continued)
- Remuneration of councillors
- Investment revenue
- Finance costs
- Contracted Services
- Grants and subsidies paid (continued)
- Cash generated from operations
- Commitments
- Prior period errors
- Subsequent events
- Additional disclosure in terms of Municipal Finance Management Act Audit fees
- Additional disclosure in terms of Municipal Finance Management Act (continued) PAYE and UIF
The surplus arising from the revaluation of property, plant and equipment is credited to a non-distributable reserve. The revaluation surplus is realised as revalued buildings are depreciated, through a transfer from the revaluation reserve to the accumulated surplus/deficit. To the extent that the criteria, conditions or obligations have not been met a liability is recognised.
The muncipality has utilised the transitional provisions set out in Directive 4 issued by the Accounting Standards Board. In terms of the Constitution, this grant is used to subsidise the provision of basic services to indigent community members in terms of the indigent register. This expenditure relates to infrastructure assets and will be financed by Municipal Infrastructure grant funds.
The commitments which have been approved and not yet contracted for relates to infrastructure assets and will be financed by an external loan. Operating lease payments represent rentals payable by the entity for motor vehicles and photocopier machines 29. Municipal entity Umhlosinga Development Agency (Proprietary). Expenses paid on behalf of related party. Property, Plant and Equipment were depreciated at the tax rates. The useful lives and residual values were not appropriately considered. Give the nature of the error.).
Additional disclosure in terms of Municipal Finance Management Act (continued) PAYE and UIF PAYE and UIF.
