Unless indicated otherwise, the financial statements have been prepared in accordance with policies described below, which have been applied consistently in all material respects.
However, where appropriate and meaningful, additional information has been disclosed to enhance the usefulness of the financial statements and to comply with the statutory requirements of the Public Finance Management Act, No 1of 1999 (as amended by Act 29 of 1999), the Treasury Regulations for Departments and Constitutional Institutions issued in terms of the PFMA and the Division of Revenue Act, No 1 of 2001.
1. Basis of preparation
The financial statements have been prepared on the cash basis of accounting except where stated otherwise. Under the cash basis of accounting, transactions and other events are recognised when cash is received or paid.
Financial results for a period are measured as the difference between cash receipts and cash payments.
2. Revenue
Voted funds are the amounts appropriated to a department in accordance with the final budget, known as the adjustment estimate. Interest received is recognised upon receipt of the funds and no accrual is made for interest receivable from the last receipt date to the end of the reporting period. Unexpended voted funds are surrendered to the National/Provincial Revenue Fund.
3. Expenditure
Capital and current expenditure is recognised in the income statement when the payment is made. Interest paid is also recognised when paid and no accrual of interest is made between the payment date and the reporting date.
4. Unauthorised, irregular and fruitless and wasteful expenditure
Unauthorised expenditure means:
Unauthorised expenditure is treated as a current asset in the balance sheet until such expenditure is recovered from a third party, authorised by Parliament or funded from future voted funds.
Irregular expenditure means expenditure, other than unauthorised expenditure, incurred in contravention of or not in accordance with a requirement of any applicable legislation, including:
Irregular expenditure is treated as expenditure in the income statement until such expenditure is either not condoned by National/Provincial Treasury or the Tender Board. At this point it is treated as a current asset until it is recovered from a third party.
Fruitless and wasteful expenditure means expenditure that was made in vain and would have been avoided had reasonable care been exercised. Fruitless and wasteful expenditure is treated as a current asset in the balance sheet until such expenditure is recovered from a third party.
5. Debts written off
Debts are written off when identified as irrecoverable. No provision is made for irrecoverable amounts.
6. Assets
Physical assets (fixed assets, moveable assets and inventories) are written off in full when they are paid for and are accounted for as expenditure in the income statement.
7. Receivables
Receivables are not normally recognised under the cash basis of accounting. However, receivables included in the balance sheet arise from cash payments that are recoverable from another party.
8. Payables
Payables are not normally recognised under the cash basis of accounting. However, payables included in the balance sheet arise from cash receipts that are due to either the National/Provincial Revenue Fund or another party.
9. Lease commitments
Lease commitments for the period remaining from the accounting date until the end of the lease contract are disclosed as a note to the financial statements. These commitments are not recognised in the balance sheet as a liability or as expenditure in the income statement as the financial statements are prepared on the cash basis of accounting.
10.Subsequent payments
Payments made after the accounting date that relate to goods and services received before or on the accounting date are disclosed as a note to the financial statements. These payments are not recognised in the balance sheet as a liability or as expenditure in the income statement as the financial statements are prepared on the cash basis of accounting.
11.Employee benefits
Short-term employee benefits
The cost of short-term employee benefits is expensed in the income statement in the reporting period that the payment is made.
Short-term employee benefits, that give rise to a present legal or constructive obligation, are deferred until they can be reliably measured and then expensed. Details of these benefits and the potential liabilities are disclosed as a note to the financial statements and are not recognised in the income statement.
Termination benefits
Termination benefits are recognised and expensed only when the payment is made.
Retirement benefits
The department provides retirement benefits for its employees through a defined benefit plan for government employees. These benefits are funded by both employer and employee contributions. Employer contributions to the fund are expensed when money is paid to the fund. No provision is made for retirement benefits in the financial statements of the department. Any potential liabilities are disclosed in the financial statements of the National Revenue Fund and not in the financial statements of the employer department.
Medical benefits
The department provides medical benefits for (certain/all) its employees through defined benefit plans. These benefits are funded by employer and/or employee contributions.
Employer contributions to the fund are expensed when money is paid to the fund. No provision is made for medical benefits in the financial statements of the department.
Retirement medical benefits for retired members are expensed when the payment is made to the fund.
12.Recoverable revenue
Recoverable revenue represents payments made and recognised in the income statement as an expense in previous years, which have now become recoverable from a debtor due to nonperformance in accordance with an agreement.
Repayments are transferred to the Revenue Fund as and when the repayment is received.
13.Comparative figures
Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current year. The comparative figures shown in these financial statements are limited to the figures shown in the previous year's audited financial statements and such other comparative figures that the department may reasonably have available for reporting. Where there is a change in comparative figures, it resulted from figures being rounded off.