3.10 Budget information
The annual budget is prepared on a modified cash basis, that is, all planned costs
and income are presented in a single statement to determine the LGU’s needs.
As a result of the adoption of the Modified cash basis for budgeting purposes,
there are basis, timing or entity differences that would require reconciliation
between the actual comparable amounts and the amounts presented as a separate
additional financial statement in the statement of comparison of budget and
actual amounts. Explanatory comments are provided in the notes to the annual
financial statements; first, the reasons for overall growth or decline in the
budget are stated, followed by details of overspending or underspending on line
items.
3.11 Significant judgments and sources of estimation uncertainty
Judgments
In the process of applying the LGU’s accounting policies, management has
made judgments, which have the most significant effect on the amounts
recognized in the consolidated financial statements.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation
uncertainty at the reporting date, that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the
next financial year, are described below. The LGU based its assumptions and
estimates on parameters available when the consolidated financial statements
were prepared. However, existing circumstances and assumptions about future
developments may change due to market changes or circumstances arising
beyond the control of the LGU. Such changes are reflected in the assumptions
when they occur.
Useful lives and residual values
The useful lives and residual values of assets are assessed using the following
indicators to inform potential future use and value from disposal:
a) The condition of the asset based on the assessment of experts employed
by the LGU;
b) The nature of the asset, its susceptibility and adaptability to changes in
technology and processes;
c) The nature of the processes in which the asset is deployed; and
d) Changes in the market in relation to the asset
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