Notices > Auditing of Local Government

The financial statements have been prepared in accordance with the South African Statements of Generally Accepted Accounting Practice (GAAP) including any interpretations of such Statements issued by the Accounting Practices Board, with the prescribed Standards of Generally Recognised Accounting Practice (GRAP) issued by the Accounting Standards Board replacing the equivalent GAAP Statement as follows:

Standard of GRAP	Replaced Statement of GAAP
GRAP 1 : Presentation of financial statements	AC101 : Presentation of financial statements
GRAP 2: Cash flow statements	AC118 : Cash flow statements
GRAP 3: Accounting policies, changes in accounting estimates and errors	AC103: Accounting policies, changes in accounting estimates and errors

The recognition and measurement principles in the above GRAP and GAAP Statements do not differ or result in material differences in items presented and disclosed in the financial statements. The implementation of GRAP 1, 2 & 3 has resulted in the following significant changes in the presentation of the financial statements:

1)	Terminology differences

Standard of GRAP	Replaced Statement of GAAP
Statement of financial performance	Income statement
Statement of financial position	Balance sheet
Statement of changes in net assets	Statement of changes in equity
Net assets	Equity
Surplus/deficit for the period	Profit/loss for the period
Accumulated surplus/deficit	Retained earnings
Contributions from owners	Share capital
Distributions to owners	Dividends
Reporting date	Balance sheet date

2)	The cash flow statement can only be prepared in accordance with the direct method.

3)	Specific information such as:

a)	receivables from non-exchange transactions, including taxes and transfers;

b)	taxes and transfers payable;

c)	trade and other payables from non-exchange transactions;

must be presented separately on the statement of financial position.

4)	The amount and nature of any restrictions on cash balances is required to be disclosed.

Paragraph 11 - 15 of GRAP 1 has not been implemented as the budget reporting standard is in the process of being developed by the international and local standard setters. Although the inclusion of budget information would enhance the usefulness of the financial statements, non-disclosure will not affect fair presentation."

Public Audit Act, 2004 (Act No. 25 of 2004)

Notices

Auditing of Local Government in terms of the Municipal Finance Management Act (No. 56 of 2003) (MFMA)

Annexure B : "GRAP & GAAP basis of preparation