South African Local Government Association
Schedule 3A public entity i. t. o. the Public Finance Management Act, 1999 and recognised i. t. o. the Organised Local Government Act, 1997
Annual Financial Statements for the year ended 31 March 2017
Accounting Policies
1. Presentation of financial statements- basis of preparation
Statement of compliance
The annual financial statements have been prepared in accordance with the Standards of Generally Recognised Accounting Practice( GRAP), issued by the Accounting Standards Board in accordance with Section 91( 1) of the PFMA.
Basis of measurement
These annual financial statements have been prepared on an accrual basis of accounting and are in accordance with historical cost convention as the basis of measurement, unless specified otherwise. They are presented in South African Rand.
In the absence of an issued and effective Standard of GRAP, accounting policies for material transactions, events or conditions were developed in accordance with paragraphs 8, 10 and 11 of GRAP 3 as read with Directive 5.
A summary of the significant accounting policies, which have been consistently applied in the preparation of these annual financial statements, are disclosed below.
1.1 Presentation currency
These annual financial statements are presented in South African Rand, which is the functional currency of SALGA.
1.2 Going concern assumption
These annual financial statements have been prepared based on the expectation that SALGA will continue to operate as a going concern for at least the next 12 months.
1.3 Significant judgments and sources of estimation uncertainty in the annual financial statements and related disclosures. Use of available information and the application of judgement is inherent in the formation of estimates. Estimates and underlying assumptions are reviewed on an on-going basis. Revision to accounting estimates are recognised in the period in which the estimates are revised and in any future period affected. Actual results in the future could differ from these estimates which may be material to the annual financial statements. Significant judgements include:
Trade receivables and other receivables
SALGA assesses its trade receivables for impairment at the end of each reporting period. In determining whether an impairment loss should be recorded in surplus or deficit, management makes judgments as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset.
Fair value estimation
The carrying value less impairment losses of trade receivables and the carrying value of trade payables are deemed to approximate their fair values.
The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to SALGA for similar financial instruments.
Post-retirement medical benefits
The present value of the post-employment medical obligation depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost include the discount rate. Any changes in these assumptions will impact on the carrying amount of post-employment medical obligations.
In preparing the annual financial statements, management is required to make estimates and assumptions that affect the amounts presented
175 SALGA ANNUAL REPORT 2016 / 17