This conference issue definitely does not disappoint as it covers a number of crucial issues which municipalities continue to struggle with in some areas. I am almost sure that reading through this issue one will enjoy at least two articles that will be beneficial to you or your colleagues.
IMFO is 85 and very much alive! Here we are at the 85th Annual Conference of the Institute of Municipal Finance Officers - 6-8 October in Cape Town. With the theme of "Good Governance - the Long Walk" we hope to bring honour to the first 20 years of our South African democracy and the great leader that started this long walk it took to get to the freedom we all enjoy at this time. I trust you will be joining in what promises to be an amazing event where best practices can be shared, networking can take place and where the sharing of ideas will enable us all to walk those paths that will ensure a stronger local government, better able to deal with the service delivery challenges we all face. Transformation takes time, and the more we transform, the more we see how much needs to still be transformed.
It is my pleasure once again to have a privilege to write to you our readers of the IMFO Journal. The year 2014 has been moving very fast for us at IMFO as it filled with lots of challenges and excitement. As one of the fastest growing professional bodies in existence, our stakeholders' expectation increased immensely and we keep on looking for ways to respond to the needs of our members in particular and the sector in general.
In writing this piece I wrote the conclusion first, thus if you don't want to read through this jabber, skip to the last paragraph.
More than two years ago the amendments to iGRAP 1 (Applying the Probability Test on Initial Recognition of Revenue ) was approved and issued by the Accounting Standards Board. The change in iGRAP 1 was so small, most people did not even give any thought to it - because what impact will the change of a few words have on the way we have been applying GRAP from non-exchange transactions? - well let me tell you that the change has had horrific consequences.
From limited research undertaken and experience gained in the development of an in-house municipal Chart of Account (COA), it is clear that the COA serves as the foundation for a municipality's financial record keeping and reporting systems. The code should therefore provide a logical structure that is flexible and facilitates the addition of new accounts and deletion of old accounts.
The Surveyor General's Office goes to great lengths to source and manage spatial, aerial and topographic data. This data is made available to all at nominal cost. This information is crucial for planning, and improving service delivery.
Browsing through the Auditor Generals (AG) "Consolidated General Report on Audit Outcomes of Local Government", for the 2012/2013 financial year, I came across a section dealing with Irregular Expenditure.
GRAP 17 requires municipalities to recognise and measure Property, Plant and Equipment (PPE) at the component level, and to depreciate assets over their useful lives. PPE may be measured on either the historic cost or fair value basis. When assets are measured on the historic cost basis, value is determined by the original purchase price of the asset. The most popular method for assessing the fair value of PPE is the Depreciated Replacement Cost (DRC) method. DRC is the replacement cost of an existing asset after deducting an allowance for wear or consumption to reflect the remaining economic life of the existing asset. GR AP states that once a municipality has adopted the revaluation model, it may not revert back to the cost model in accounting for assets.