annual report 2010 - 2011 - Intsika Yethu Municipality

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Intsika Yethu Municipality Annual Financial Statements for the year ended 30 June 2011 Accounting Policies 1.3 Property, plant and equipment (continued) Transitional provision According to the transitional provision, the municipality is not required to measure property, plant and equipment for reporting periods beginning on or after a date within three years following the date of initial adoption of the Standard of GRAP on Property, plant and equipment. Property, plant and equipment has accordingly been recognised at provisional amounts, as disclosed in note 4. The transitional provision expires on 30 June 2012. Until such time as the measurement period expires and property, plant and equipment is recognised and measured in accordance with the requirements of the Standard of GRAP on Property, plant and equipment, the municipality need not comply with the Standards of GRAP on: Presentation of Financial Statements (GRAP 1), The Effects of Changes in Foreign Exchange Transactions (GRAP 4), Leases (GRAP 13), Segment Reporting (GRAP 18), Non-current Assets Held for Sale and Discontinued Operations (GRAP 100) The exemption from applying the measurement requirements of the Standard of GRAP on Property, plant and equipment implies that any associated presentation and disclosure requirements need not be complied with for property, plant and equipment not measured in accordance with the requirements of the Standard of GRAP on Property, plant and equipment. 1.4 Intangible assets An asset is identified as an intangible asset when it: is capable of being separated or divided from an entity and sold, transferred, licensed, rented or exchanged, either individually or together with a related contract, assets or liability; or arises from contractual rights or other legal rights, regardless whether those rights are transferable or separate from the municipality or from other rights and obligations. An intangible asset is recognised when: it is probable that the expected future economic benefits or service potential that are attributable to the asset will flow to the municipality; and the cost or fair value of the asset can be measured reliably. Intangible assets are initially recognised at cost. An intangible asset acquired at no or nominal cost, the cost shall be its fair value as at the date of acquisition. Intangible assets are carried at cost less any accumulated amortisation and any impairment losses. The amortisation period and the amortisation method for intangible assets are reviewed at each reporting date. Reassessing the useful life of an intangible asset with a finite useful life after it was classified as indefinite is an indicator that the asset may be impaired. As a result the asset is tested for impairment and the remaining carrying amount is amortised over its useful life. Internally generated brands, mastheads, publishing titles, customer lists and items similar in substance are not recognised as intangible assets. Amortisation is provided to write down the intangible assets, on a straight line basis, to their residual values as follows: Item Computer software Useful life 3 years 17
Intsika Yethu Municipality Annual Financial Statements for the year ended 30 June 2011 Accounting Policies 1.5 Leases A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership. Operating leases - lessor Under a finance lease, the municipality recognises the lease payments to be received in terms of a lease agreement as an asset (receivable). The receivable is calculated as the sum of all the minimum lease payments to be received, plus any unguaranteed residual accruing to the municipality, discounted at the interest arte implicit in the lease. The receivable is reduced by the capital portion of the lease instalments received, with the interest portion being recognised as interest revenue on a time proportionate basis. The accounting policies relating to derecognition and impairment of financial instruments are applied to lease receivables. Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Operating leases - lessee Leases are classified as finance leases where substantially all the risks and rewards associated with ownership of an asset are transferred to the municipality. Property, plant and equipment or intangible assets subject to finance lease agreements are initially recognised at the lower of the asset's fair value and the present value of the minimum leases payments. The corresponding liabilities are initially recognised at the inception of the lease and are measured as the sum of the minimum lease payments due in the terms of the lease agreement, discounted for the effect of interest. In discounting the lease payments, the municipality uses the interest rate that exactly discounts the lease payments and unguarenteed residual value to the fair value of the asset plus any direct costs incurred. Subsequent to initial recognition, the leased assets are accounted for in accordance with the stated accounting policies applicable to property, plant, equipment or intangibles. The lease liability is reduced by the leases payments, which are allocated between the lease finance costs and the capital repayment using the effective interest rate method. Lease finance costs are expensed when incurred. The accounting policies relating to derecognition of financial instruments are applied to lease payables. The lease asset is depreciated over the shorter of the asset's useful life or the lease term. Operating leases are those leases that do not fall within the scope of the above definition. Operating leases rentals are accrued on a straight-line basis over the term of the relevant lease. 1.6 Employee benefits Short-term employee benefits Remuneration to employees is recognised in the Statement of financial performance as the services are rendered, except for non-accumulatating benefits, which are only recognised when the specific event occurs. The municility has opted to treat its provision for leave pay as a provision. The costs of all short-term employee benefits such as leave pay, are recognised during the period in which the employee renders the related services. The liability for leave pay is based on the total accrued leave days at year end and is shown as a provision. The municipality recognised the expected cost of performance bonuses only when the municipality has a present legal or constructive obligation to make such payment and a reliable estimate can be made. Defined contribution plans A defined contribution plan is a plan under which the municipality pays fixed contributions into a separate entity. The municipality has no legal or constructive obligation to pay furthuer contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to service in the current or prior period. The municipality's contributions to the defined contribution funds are established in terms of the rules governing those plans. Contributions are recognised in the Statement of financial performance in the period in which the service is rendered by the relevant employees, The municipality has not further payment obligations once the contributions have been paid. 18
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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
Page 44 and 45: Intsika Yethu Municipality STATEMEN
Page 46 and 47: Intsika Yethu Municipality STATEMEN
Page 48 and 49: Intsika Yethu Municipality SUMMARY
Page 50 and 51: Application of all of the above GRA
Page 52 and 53: 3 INTANGIBLE ASSETS 3.1 INITIAL REC
Page 54 and 55: Due to the fact that the municipali
Page 56 and 57: 5.3.1 INVESTMENTS Investments, whic
Page 58 and 59: Operating leases are those leases t
Page 60 and 61: 13.2 DEFINED CONTRIBUTION PLANS A d
Page 62 and 63: Intsika Yethu Municipality NOTES TO
Page 64 and 65: 3 TRADE RECEIVABLES FROM EXCHANGE T
Page 66 and 67: Intsika Yethu Municipality NOTES TO
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
Page 118 and 119: Development Bank of South Africa 3
Page 120 and 121: Computers - software & programming
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Page 124 and 125: Intsika Yethu Municipality Appendix
Page 130 and 131: Reason for delay/withholdi ng of fu
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NOTES
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Intsika Yethu Municipality Privave
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annual report 2010 - 2011 - Intsika Yethu Municipality

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