Municipal finance services
GRAP annual financial statements
We prepare and independently review GRAP compliant annual financial statements for municipalities and municipal entities. Statements are drafted in CaseWare, supported by a referenced working paper file, and ready for submission to the Auditor-General within the section 126 deadline.
The statement is only as good as the file behind it
Most municipalities can produce a set of annual financial statements. Fewer can produce the evidence that supports them. That is what the Auditor-General tests, and it is the reason a municipality can submit on time and still pick up a qualification.
The 2024-25 audit outcomes put numbers to it. Of the municipalities audited, 76 percent submitted financial statements containing material misstatements, and the Auditor-General noted that without the corrections permitted during the audit, only 24 percent would have received unmodified opinions rather than the 61 percent that eventually did. In other words, most unqualified opinions were earned during the audit, not before it.
We work the other way round. The working paper file gets built first, covering reconciliations, asset register agreement, the debtors impairment model, commitments, contingent liabilities and related party disclosures. The statements then come out of that file. Every figure in the AFS references a working paper, and every working paper references source data from your ledger.
What the engagement covers
- Full AFS preparation in CaseWare, covering the statement of financial position, financial performance, changes in net assets, cash flow statement, comparison of budget and actual amounts, and the full note set.
- A working paper file cross referenced to each note and disclosure, in the format an audit team expects to receive.
- Prior period errors identified, quantified and disclosed under GRAP 3, with comparatives restated and a third statement of financial position where that is required.
- Disclosure checklist completed against the current Standards of GRAP and National Treasury AFS preparation guidance.
- Budget to actual comparison reconciled to the approved and adjusted budget on the same basis, with variance explanations that answer the question rather than repeat the number.
- Consolidation of municipal entities where it applies, including elimination of intra group transactions and balances.
Independent pre-issuance review
Where your own team prepares the statements, we review them before they go to the Auditor-General. It is the cheapest useful intervention available to a municipality. A finding picked up in review gets corrected. The same finding picked up in the audit gets reported.
A review covers technical GRAP compliance, consistency between the primary statements and the notes, agreement of the notes to the underlying registers and reconciliations, completeness of disclosure, and whether the significant judgements hold up. Those judgements are usually impairment, useful lives, provisions and contingent liabilities. You get a findings report with each issue rated, the standard referenced, and the specific correction needed.
A municipality that submits statements nobody has reviewed is effectively using the Auditor-General as its reviewer, and paying for it with a public finding instead of a private one.
The standards behind most findings
| Standard | What it covers | Where municipalities commonly go wrong |
|---|---|---|
| GRAP 17 | Property, plant and equipment | No componentisation, useful lives never reassessed, work in progress left in WIP after commissioning, impairment indicators not considered. |
| GRAP 104 (revised) | Financial instruments | Expected credit loss not properly modelled, forward looking information with no evidence behind it, transition adjustment not disclosed. See our GRAP 104 service. |
| GRAP 108 | Statutory receivables | Rates and statutory debtors measured on the same basis as consumer debtors when the standard calls for a different model. |
| GRAP 3 | Accounting policies, estimates and errors | Prior period errors put through opening accumulated surplus without the disclosure the standard requires. |
| GRAP 24 | Budget information | Comparison prepared on a different basis to the approved budget, with no reconciliation of the difference in basis. |
| GRAP 19 | Provisions and contingencies | Landfill rehabilitation provisions not remeasured, litigation disclosed inconsistently with the legal register. |
Swipe sideways to see the rest of the table.
Timing that works
For a 30 June year end, section 126 of the MFMA requires submission to the Auditor-General by 31 August, and by 30 September for consolidated statements. Working back from there is uncomfortable. A first draft in mid August leaves no room for review, and the inputs that take longest, being asset verification, impairment modelling and the reconciliation of debtors and creditors, cannot be produced in the same six weeks.
What works is interim work from February, a substantially complete draft by late July, and August kept clear for review. Municipalities on that cycle submit statements that have been checked. Municipalities that start in August submit statements that have been typed.
Frequently asked questions
Can you prepare our AFS in CaseWare?
Yes. CaseWare is our main statement and working paper environment. The completed file is handed back to the municipality at the end of the engagement so it stays with you and can be rolled forward next year.
What if our prior year figures were wrong?
They are corrected as prior period errors under GRAP 3. That means quantifying the error, restating the comparatives, disclosing the nature of the error and the correction for each line item affected, and presenting a third statement of financial position at the start of the earliest comparative period where the restatement is material.
Do you prepare interim or mid-year financial statements?
Yes, and they are one of the better audit readiness tools available. Preparing them forces reconciliations, asset movements and impairment assumptions to be dealt with at a point in the year when there is still time to fix whatever they expose.
How long does an AFS engagement take?
For a municipality with a reasonably clean ledger and a current asset register, about four to six weeks for preparation and one to two weeks for review. Where there is a backlog, an incomplete asset register or open prior year findings, the timeline depends on the remediation rather than the drafting, and we scope that separately after a diagnostic review.
Can you help if we received a disclaimer or adverse opinion?
Yes. A disclaimer usually means the records did not exist or could not be produced, rather than that they were wrong. The work is reconstruction: rebuilding the asset register, re-performing reconciliations and establishing the evidence base before any statement gets drafted. Our audit readiness service covers this.
Discuss your municipality’s requirements
Ambition Partners Advisory is a Chartered Accountant (SA) led practice working with municipalities, municipal entities, government departments and public entities across South Africa. Tell us where you are in the reporting cycle and we will send you a scope, timeline and fee.