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NELSON MANDELA BAY METROPOLITAN MUNICIPALITY CONSOLIDATED FINANCIAL STATEMENTS AS AT 30 JUNE 2016 INDEX Page General Information 1 Statement of Financial Position 3 Statement of Financial Performance 4 Statement of Changes in Net Assets 6 The Statement of Cash Flows 7 Accounting Policies 8 Notes to the Financial Statements 38 Appendix A: Segmental Statement of Financial Performance - Unaudited 98 Appendix B: Disclosures of Conditional Grants and Subsidies in terms of 99 section. 123 of the MFMA, 56 of 2003 - Unaudited Appendix C: Analysis of Total Accumulated Surplus - Unaudited 100 Appendix D: Appropriation Statement of Budget vs Actual - Unaudited 101 - 106 1 NELSON MANDELA BAY METROPOLITAN MUNICIPALITY CONSOLIDATED FINANCIAL STATEMENTS AS AT 30 JUNE 2016 General Information Legal form of entity It is a Metropolitan Municipality established in terms of section 155 of the Constitution of the Republic of South Africa (Act 108 of 1996) Nature of business and principal Local Government activities The principal activities are: - To provide democratic and accountable government to the local communities; - To ensure sustainable service delivery to communities; - To promote social and economic development; - To promote a safe and healthy environment; and - Encourage the involvement of communities and community organisations in the matters of local government. The Municipality’s operations are governed by the Municipal Finance Management Act (Act 56 of 2003), the Municipal Structures Act (Act 117 of 1998), the Municipal Systems Act (Act 32 of 2000) and various other acts and regulations. Executive Mayor Cllr D.A Jordaan Deputy Executive Mayor Cllr P.S Ndoni Speaker Cllr M.E Hermans Chief Whip Cllr L Suka Members of the Mayoral Committee Cllr A.C.G Mfunda (Infrastructure and Engineering and Electricity and Energy) Cllr B Lobishe (Roads and Transport) Cllr F Sibeko (Corporate Services) Cllr F Desi (Safety and Security) Cllr Z Jodwana (Economic Development, Tourism and Agriculture) Cllr A Mama (Sports, Recreation Arts and Culture) Cllr J Seale (Public Health) Cllr N Tontsi (Human Settlements) Cllr R Riordan (Budget and Treasury) Accounting Officer (Acting City Manager) J Mettler Chief Financial Officer (CFO) J.T Harper Chief Operating Officer (COO) M Clay 2 Chief of Staff M Ncame Metro Police Chief P Mathabathe Executive Directors V Zitumane (Acting - Corporate Services) A Qaba (Economic Development, Tourism and Agriculture) N Nqwazi (Sports, Recreation, Arts and Culture) A Tolom (Public Health) M George (Acting - Human Settlements) P Nielson (Acting - Electricity and Energy) EW Shaidi (Infrastructure and Engineering) L Mti (Safety and Security) Members of the Audit Committee Mr G Billson (Chairperson) Ms T Cumming Mr J Neves Dr M Nicholls Ms L Smith Registered Office 1st Floor City Hall Govan Mbeki Avenue Port Elizabeth 6001 Business Address 1st Floor City Hall Govan Mbeki Avenue Port Elizabeth 6001 Postal Address P O Box 116 Port Elizabeth 6000 Bankers ABSA Auditors Auditor-General (SA) Physical Address of Auditors 69 Frere Road Vincent East London 5247 Postal Address of Auditors P O Box 13252 East London 5217 NELSON MANDELA BAY METROPOLITAN MUNICIPALITY 8 ACCOUNTING POLICIES OF THE ECONOMIC ENTITY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 1. BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE These Consolidated Financial Statements have been prepared in accordance with Generally Recognised Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board (ASB) in accordance with Section 122(3) of the Municipal Finance Management Act (Act No 56 of 2003). In addition, these Consolidated Financial Statements include mandatory disclosures in accordance with the Municipal Finance Management Act (Act No 56 of 2003) and related regulations. The Consolidated Financial Statements are prepared on the accrual basis of accounting and the transactions, assets and liabilities included in the financial statements are measured at historical cost unless otherwise stated. With respect to accounting standards for material transactions, events or conditions not covered by Directive 5, the Economic Entity has developed accounting policies in accordance with paragraphs 8, 10 and 11 of GRAP 3. Assets, liabilities, revenues and expenses have not been offset except when offsetting is required or permitted by a Standard of GRAP. The accounting policies applied are consistent with those used to present the previous year's Consolidated Financial Statements, unless explicitly stated. New standards now effective but not yet implemented: Standard Standard name Effective date from number (if applicable) GRAP 18 Segment Reporting 01 April 2016 Note: Municipalities, municipal entities, trading entities, Parliament and the Provincial Legislatures are not required to apply or early adopt GRAP 18 Segment Reporting as the Minister of Finance has not yet determined the effective date for application by these entities. 1.1 CONSOLIDATED FINANCIAL STATEMENTS The Economic Entity’s financial statements incorporate the financial statements of the parent entity, Nelson Mandela Bay Municipality and all its municipal entities, presented as a single entity and consolidated at the same reporting date as the parent entity. The controlled entities have the same reporting date and reporting period as the controlling entity. All inter-entity transactions and balances, unrealised gains and losses within the Economic Entity are eliminated upon consolidation. Where appropriate, the accounting policies of controlled entities conform to the policies adopted by the Economic Entity. 1.2 MUNICIPAL ENTITIES Municipal entities are all controlled entities over which the Economic Entity has ownership control or effective control to govern the financial and operating policies of such controlled entities to benefit from its activities. 2. PRESENTATION AND FUNCTIONAL CURRENCY These Consolidated Financial Statements are presented in South African Rand. The functional currency of the Economic Entity is South African Rand. Financial values are rounded to the nearest one Rand.