annual report 2010 - 2011 - Intsika Yethu Municipality

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Intsika Yethu Municipality Annual Financial Statements for the year ended 30 June 2011 Notes to the Annual Financial Statements 3. New standards and interpretations (continued) The transaction price usually equals the fair value at initial recognition, except in certain circumstances, for example, where interest free credit is granted or where credit is granted at a below market rate of interest. Concessionary loans are loans either received by or granted to another municipality on concessionary terms, e.g. at low interest rates and flexible repayment terms. On initial recognition, the fair value of a concessionary loan is the present value of the agreed contractual cash flows, discounted using a market related rate of interest for a similar transaction. The difference between the proceeds either received or paid and the present value of the contractual cash flows is accounted for as non-exchange revenue by the recipient of a concessionary loan in accordance with Standard of GRAP on Revenue from Non-exchange Revenue Transactions (Taxes and Transfers), and using the Framework for the Preparation and Presentation of Financial Statements (usually as an expense) by the grantor of the loan. Financial assets and financial liabilities are subsequently measured either at fair value or, amortised cost or cost. An municipality measures a financial instrument at fair value if it is: a derivative; a combined instrument designated at fair value, i.e. an instrument that includes a derivative and a non-derivative host contract; held-for-trading; a non-derivative instrument with fixed or determinable payments that is designated at initial recognition to be measured at fair value; an investment in a residual interest for which fair value can be measured reliably; and other instruments that do not meet the definition of financial instruments at amortised cost or cost. Derivatives are measured at fair value. Combined instruments that include a derivative and non-derivative host contract are accounted for as follows: Where an embedded derivative is included in a host contract which is a financial instrument within the scope of this Standard, an entity can designate the entire contract to be measured at fair value or, it can account for the host contract and embedded derivative separately using GRAP 104. An municipality is however required to measure the entire instrument at fair value if the fair value of the derivative cannot be measured reliably. Where the host contract is not a financial instrument within the scope of this Standard, the host contract and embedded derivative are accounted for separately using GRAP 104 and the relevant Standard of GRAP. Financial assets and financial liabilities that are non-derivative instruments with fixed or determinable payments, for example deposits with banks, receivables and payables, are measured at amortised cost. At initial recognition, an municipality can however designate such an instrument to be measured at fair value. An municipality can only measure investments in residual interests at cost where the fair value of the interest cannot be determined reliably. Once an municipality has classified a financial asset or a financial liability either at fair value or amortised cost or cost, it is only allowed to reclassify such instruments in limited instances. An entity derecognises a financial asset, or the specifically identified cash flows of an asset, when: the cash flows from the asset expire, are settled or waived; significant risks and rewards are transferred to another party; or despite having retained significant risks and rewards, an municipality has transferred control of the asset to another municipality. An municipality derecognises a financial liability when the obligation is extinguished. Exchanges of debt instruments between a borrower and a lender are treated as the extinguishment of an existing liability and the recognition of a new financial liability. Where an municipality modifies the term of an existing financial liability, it is also treated as the extinguishment of an existing liability and the recognition of a new liability. An municipality cannot offset financial assets and financial liabilities in the statement of financial position unless a legal right of set-off exists, and the parties intend to settle on a net basis. GRAP 104 requires extensive disclosures on the significance of financial instruments for an municipality’s statement of financial position and statement of financial performance, as well as the nature and extent of the risks that an municipality is exposed to as a result of its annual financial statements. Some disclosures, for example the disclosure of fair values for instruments measured at amortised cost or cost and the preparation of a sensitivity analysis, are encouraged rather than required. 25
Intsika Yethu Municipality Annual Financial Statements for the year ended 30 June 2011 Notes to the Annual Financial Statements 3. New standards and interpretations (continued) GRAP 104 does not prescribe principles for hedge accounting. An municipality is permitted to apply hedge accounting, as long as the principles in IAS 39 are applied. This Standard has been approved by the Board but its effective date has not yet been determined by the Minister of Finance. The effective date indicated is a provisional date and could change depending on the decision of the Minister of Finance. The effective date of the standard is for years beginning on or after 01 April 2011. The municipality expects to adopt the standard for the first time in the 2012 annual financial statements. It is unlikely that the amendment will have a material impact on the municipality's annual financial statements. 4. Property, plant and equipment Cost / Valuation 2011 2010 Accumulated Carrying value Cost / depreciation Valuation and accumulated impairment Accumulated Carrying value depreciation and accumulated impairment Land 537 739 - 537 739 537 739 - 537 739 Buildings 11 145 324 - 11 145 324 8 365 712 - 8 365 712 Motor vehicles 1 289 749 - 1 289 749 - - - Office equipment 926 267 - 926 267 - - - IT equipment 185 299 - 185 299 - - - Infrastructure 39 423 816 - 39 423 816 13 396 091 - 13 396 091 Community 8 130 303 - 8 130 303 3 150 214 - 3 150 214 Other property, plant and equipment - - - 1 830 448 - 1 830 448 Total 61 638 497 - 61 638 497 27 280 204 - 27 280 204 Reconciliation of property, plant and equipment - 2011 Opening Additions Total balance Land 537 739 - 537 739 Buildings 8 365 712 2 779 612 11 145 324 Motor vehicles - 1 289 749 1 289 749 Office equipment - 926 267 926 267 IT equipment - 185 299 185 299 Infrastructure 13 396 091 26 027 725 39 423 816 Community 3 150 214 4 980 089 8 130 303 Other property, plant and equipment 1 830 448 (1 830 448) - 27 280 204 34 358 293 61 638 497 26
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INTSIKA YETHU LOCAL MUNICIPALITY |
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FOREWORD BY THE MUNICIPAL MANAGER I
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Lokishini - C 3 Mtwaku - B Mtwaku -
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MEMBERS OF EXECUTIVE COMMITTEE Hon
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4. Trends on total personnel expend
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Chapter TWO Basic Service delivery
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• Implementation of current legis
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CHAPTER THREE MUNICIPAL LOCAL ECONO
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The key issues relating to IYM spat
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Intensify Enterprise support and bu
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In order to come out with spatial d
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• Strategic Development Zones •
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However, this study has identified
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Number Property Application Applica
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Basic service delivery area 30 June
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Reporting Level Detail Total Cost -
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ROLE PLAYERS Roles RESPONSIBILITIES
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1.27 SPATIAL PLANNING PREPARATION A
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A vast number of cases are identifi
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Intsika Yethu Municipality STATEMEN
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Intsika Yethu Municipality STATEMEN
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Intsika Yethu Municipality SUMMARY
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Application of all of the above GRA
Page 52 and 53: 3 INTANGIBLE ASSETS 3.1 INITIAL REC
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Page 56 and 57: 5.3.1 INVESTMENTS Investments, whic
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Page 60 and 61: 13.2 DEFINED CONTRIBUTION PLANS A d
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Page 64 and 65: 3 TRADE RECEIVABLES FROM EXCHANGE T
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Page 76 and 77: Planning by Reviewed Performed by F
Page 78 and 79: Intsika Yethu Municipality Annual F
Page 84 and 85: Report of the Auditor General To th
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Page 120 and 121: Computers - software & programming
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Page 124 and 125: Intsika Yethu Municipality Appendix
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Page 148 and 149: NOTES
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annual report 2010 - 2011 - Intsika Yethu Municipality

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