Entire Document - Chris Hani District Municipality

20.CONTINGENT ASSETS AND CONTINGENT LIABILITIESContingent Liabilities represent a possible obligation that arises from past eventsand whose existence will be confirmed only by an occurrence or non-occurrence ofone or more uncertain future events not wholly within the control of the municipality.A contingent liability can also arise as a result of a present obligation that arises frompast events but which is not recognised as a liability either because it is not probablethat an outflow of resources embodying economic benefits will be required to settlethe obligation or the amount of the obligation cannot be measured with sufficientreliability.Contingent Assets represent possible assets that arise from past events and whoseexistence will be confirmed only by an occurrence or non-occurrence of one or moreuncertain future events not wholly within the control of the municipality.Contingent Assets and Contingent Liabilities are not recognised. Contingencies aredisclosed in Notes to the Annual Financial Statements.Chapter 421.COMMITMENTSCommitments are future expenditure to which the municipality committed and thatwill result in the outflow of resources. Commitments are not recognised in theStatement of Financial Position as a liability or as expenditure in the Statement ofFinancial Performance, but are included in the disclosure Notes. A distinction ismade between capital and current commitments.Commitments are disclosed for:♦♦♦♦♦Approved and contracted commitments, where the expenditure has beenapproved and the contract has been awarded at the reporting date, wheredisclosure is required by a specific standard of GRAP.Approved but not yet contracted commitments, where the expenditurehas been approved and the contract has yet to be awarded or is awaitingfinalisation at the reporting date.Items are classified as commitments where the municipality commits itself tofuture transactions that will normally result in the outflow of resources.Contracts that are entered into before the reporting date, but goods andservices have not yet been received are disclosed in the disclosure Notes tothe Annual Financial Statements.Other commitments for contracts that are non-cancellable or only cancellableat significant cost, should relate to something other than the business of themunicipality.275