annual report 2010 - 2011 - Intsika Yethu Municipality

Intsika Yethu Municipality
Annual Financial Statements for the year ended 30 June 2011
Accounting Policies
1.8 Revenue from exchange transactions (continued)
Measurement
Revenue is measured at the fair value of the consideration received or receivable, net of trade discounts and volume rebates.
Rendering of services
Revenue from non-exchange transactions refers to transactions where the municipality received revenue from another entity
without directly giving approximately equal value in exchange. Revenue from non-exchange transactions is generally
recognised to the extent that the related receipt or receivable qualifies for recognition as an asset and there is no liability to
repay the amount.
Revenue from property rates is recognised when the legal entitlement to this revenue arises. Peanlty interest on unpaid rates is
recognised on a time proportionate basis.
Fines constitute both spot fines and summonses. Revenue from spot fines and summonses is recognised when payment is
received, together with an estimate of spot fines and summonses that will be received based on past experiences of amounts
collected.
Revenue from public contributions and donations is recognised when all conditions associated with the contribution have been
met or where the contribution is to finance property, plant and equipment, when such items of property, plant and equipment
qualifies for recognition and first becomes available for use by the municipality. Where public contributions have been received
but the municipality has not met the related conditions, a deferred income (liability) is recognised.
Contributed property, plant and equipment is recognised when such items of property, plant and equipment qualifies for
recognition and become available for use by the municipality.
Revenue from the recovery of unauthorised, irregular, fruitless and wasterful expenditure is based on legislated procedures,
including those set out in the Municipal Finance Management Act (Act No.56 of 2003) and is recognised when the recovery
thereof from the responsible councillors or officials is virtually certain.
Interest
Interest revenue is recognised on a time proportion basis.
1.9 Revenue from non-exchange transactions
Revenue comprises gross inflows of economic benefits or service potential received and receivable by an municipality, which
represents an increase in net assets, other than increases relating to contributions from owners.
Conditions on transferred assets are stipulations that specify that the future economic benefits or service potential embodied in
the asset is required to be consumed by the recipient as specified or future economic benefits or service potential must be
returned to the transferor.
Control of an asset arise when the municipality can use or otherwise benefit from the asset in pursuit of its objectives and can
exclude or otherwise regulate the access of others to that benefit.
Exchange transactions are transactions in which one entity receives assets or services, or has liabilities extinguished, and
directly gives approximately equal value (primarily in the form of cash, goods, services, or use of assets) to another entity in
exchange.
Expenses paid through the tax system are amounts that are available to beneficiaries regardless of whether or not they pay
taxes.
Fines are economic benefits or service potential received or receivable by entities, as determined by a court or other law
enforcement body, as a consequence of the breach of laws or regulations.
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