Local Government: Municipal Finance Management Act, 2003 (Act No. 56 of 2003)Chapter 12 : Financial Reporting and Auditing122. Preparation of financial statements |
| (1) | Every municipality and every municipal entity must for each financial year prepare annual financial statements which— |
| (a) | fairly presents the state of affairs of the municipality or entity, its performance against its budget, its management of revenue, expenditure, assets and liabilities, its business activities, its financial results, and its financial position as at the end of the financial year; and |
| (b) | disclose the information required in terms of sections 123, 124 and 125. |
| (2) | A municipality which has sole control of a municipal entity, or which has effective control within the meaning of the Municipal Systems Act of a municipal entity which is a private company, must in addition to complying with subsection (1), prepare consolidated annual financial statements incorporating the annual financial statements of the municipality and of such entity. Such consolidated annual financial statements must comply with any requirements as may be prescribed. |
| (3) | Both annual financial statements and consolidated annual financial statements must be prepared in accordance with generally recognised accounting practice prescribed in terms of section 91(1)(b) of the Public Finance Management Act. |