monies in trust kept in the guardian’s fund annual report ... · annual report 2010/11 annual...

Monies in trust kept in the Guardian’s Fund

2010/11

ISBN: 978-0-621-40359-6

RP: 224/2011

Issued by: The Department of Justice and Constitutional Development

P/Bag X81, Pretoria, 0001

Tel: 012 315 1111

www.justice.gov.za

Monies in trust kept in the Guardian’s FundAnnual Report

2010/11

Annual Report

Table of Contents Page

Part1:Reportoftheaccountingofficer 4

Part2:ReportoftheAuditCommittee 10

Part3:ReportoftheAuditor-GeneraltoParliament 14

Part4:Annualfinancialstatements 18

4.1 Statementofcomprehensiveincome 18

4.2 Statementoffinancialposition 19

4.3 Statementofchangesinequity 20

4.4 Cashflowstatement 21

4.5 Notestothefinancialstatements 22

Part5:Riskmanagementstatement 54


PART 1Report of the accounting officer


4

Introduction

TheGuardian’sFundisastatutorytrustestablishedintermsofChapterVof theAdministrationofEstatesAct, 1965 (ActNo66of 1965).The fundconsistsofallmoniesreceivedbytheMasterof theHighCourtundertheAdministrationofEstatesActoranyother law,orpursuant toanorderofcourtoranymoneyacceptedbytheMasterintrustforanyknownorunknownperson.WheneveranymoneyisreceivedoracceptedbytheMaster,heorshemustopenanaccountinthebooksoftheGuardian’sFundinthenameofthepersontowhomthemoneybelongsorinthenameoftheestateofwhichthemoneyformspart.TheMastermust,onapplicationofanypersonwhohasbecomeentitledtoreceivemoneyfromthefund,paythatmoneytotheapplicant.

The purpose of theGuardian’s Fund is therefore to protect andmanagemoniesofpersonsdeemedtobelegallyincapableorlackingthecapacitytomanagetheirownaffairs,aswellasundetermined,unknownorabsentheirsanduntraceablepersons.TheGuardian’sFundisheldundermanagementoftheMasteroftheHighCourtofSouthAfrica.

SomeofthefunctionsoftheGuardian’sFund,performedwiththeprescriptsofthesaidAct,are,inter alia,todothefollowing:• InvesttrustmoniesheldwiththePublicInvestmentCorporation(PIC).

• CalculateinterestaccruinginrespectofmoniesreceivedonbehalfofbeneficiariesattheinterestrateasdeterminedbytheMinisterforJusticeandConstitutionalDevelopmentannually.

• Processinheritanceapplicationsandmakethepaymentstopersonsentitledthereto.

TheGuardian’s Fund has representation in sixmasters’ offices: Pretoria,CapeTown,Pietermaritzburg,Grahamstown,BloemfonteinandKimberley.

Coreservicedeliveryenvironment

TheoperationalfunctionalityoftheGuardian’sFundSystem(GFS)hasbeenimprovedandstrictercontrolprocessesarebeingenforced.ThedevelopmentoftheGFShasprogressedtothestagewhereitentailsoneunifiedelectronicapplication thatcanprocessandcontrolallbeneficiary information. In theGuardian’sFundservicedeliveryarena, theGFS roll-outprogrammehasresulted in the implementationofanelectronicplatformforoperation.Themanagement and administration of the Guardian’s Fund is automated inallsixmasters’officeswhereservicesof theGuardian’sFundareoffered.Thecomputerisationoftheadministrationofthefundhasfacilitatedgreateraccuracyinreportingonitsactivities.

TheGFShas reached the extent of its possible development.Significantdevelopmentworkisstillrequiredtoupgradeandintegratethecurrentfundinto a full financial platform. This should be achieved with the minimumimpactonthecurrentoperationofthefund.TheintegrationtothefinancialsystemwilldeliverfunctionalitytofurthersupportthedepartmentinmanagingthefinancialaffairsoftheGuardian’sFundandimproveservicedeliverytobeneficiaries.The fullfinancial integrationof theGuardian’sFund is tobeincludedwiththedepartment’soverallsystemobjectives.Thedepartmentisconsideringseveralall-encompassingoptions,whichinclude,amongothers,theIntegratedCaseManagementSystem(ICMS)financials.

TheGuardian’sFundhasimplementedtheAbsabi-onlinesystemtoeffectelectronic payments to Guardian’s Fund beneficiaries. TheAbsa systemhas been implemented at the following offices:Grahamstown, Kimberley,Cape Town and Bloemfontein. The new electronic payment process hasimprovedservicedeliveryattheseofficesbyreducingpaymentturnaroundtimes,aswellaseffectinganincreaseinthenumberofpaymentsmadetobeneficiaries.

ThePretoriaandPietermaritzburgGuardian’sFundofficeswillalsoimplementtheAbsasysteminthenewfinancialyear.

RePoRtoftheACCountinGoffiCeRontheAnnuALfinAnCiALStAteMentSoftheGuARDiAn’SfunDfoRtheYeARenDeD31MARCh2011

GuARdIAn’s Fund 5

Growthofbeneficiaryliability

Ashasbeendisclosedinmoredetailinthefinancialsonpages18to51,itisobviousthatthefundcontinuestoshowpositivegrowthinthevolumeoftransactionshandled,aswellasinthetotalfundsunderitsmanagement.

46%

16%

-13%

46%

2% 37%

40%

-1%

17%

14%

18% 19%13%

16% 10%11%

11%13%

14%

15%

6

14%

9%

-2%

-23%

-26%

11%

2%

0%

9%

2%

GuARdIAn’s Fund 7

Financial management and other reporting issues

investmentmanagement

TheOfficeoftheChiefFinancialOfficer,withassistancefromtheOfficeoftheChiefMaster,isresponsiblefortheformulationandsupervisionofthemandategiventotheinvestmentmanager(PIC).

WithabalancesheetofoverR6billionininvestableassetsandgrowing,thestewardship of theGuardian’s Fund’s assets is a challenging and complexendeavour.IwouldliketotakethisopportunitytoextendmysinceregratitudetoourexpertadvisorsandalsotocolleaguesatNationalTreasurywhohaveensured that the department is able to discharge its obligations andmatchthe expectations in safeguarding the department’s assets and growing itsinvestments.

TheGuardian’sFundgeneratedmorethanR468millionininvestmentincomeinthe2010/11financialyear.

Managementoftheinterestratepayabletobeneficiaries

In light of the current global economic challenges, it has become moreimperative tokeepafingeron thepulseofdevelopments in the investmentarena.Tothisend,wehaveresolvedtoperformmoreregularreviewsontheinterestratesforthebenefitofbeneficiaries.

Thefundcontinuallyreassessesinvestmentreturns,afterwhichthedepartmentadjusts the rates payable to beneficiaries accordingly. Rates in operationareadjusted,shouldthefundlagbehindandbeplacedinasituationwherethereisamismatchbetweenincomereceivableanddistributionviainteresttobeneficiaries.

Acknowledgement

Iextendmyappreciationtowardsvariousstakeholdersfortheirloyalsupportandvaluablecontributions.

Approval

Theannualstatements,assetoutonpages18to51,havebeenapprovedbytheaccountingofficer.

___________________

MsnSindaneAccountingofficerDepartmentofJusticeandConstitutionalDevelopmentDate:31May2011

______________________________________

PART 2Report of the Audit Committee


10

AudIT COMMITTEE TheAuditCommitteeconsistsofthememberslistedbelowandisrequiredtomeetatleastfourtimesperannuminaccordancewithitsapprovedtermsofreference.Eightmeetingswereheldduringthecurrentyear.Theseincludedaspecialmeetingheldtoaddresstheauditconcernsandqualificationmattersinthedepartment.

namesofmembers numberofmeetingsattended

Status

MrMotsamaiKaredi(Chairperson) 8 Reappointed15December2009

MrCedricBoltman 8 Reappointed15December2009

MsBajabulileLuthuli 7 Appointed15December2009

MsMatshegoRamagaga 4 Appointed15December2009

MsZodwaManase 3 Appointed15December2009

MrWilsonRamabulana 7 Appointed15December2009

AudIT COMMITTEE REsPOnsIBILITY

Wereportthatwehaveadoptedappropriateformaltermsofreferenceinourcharter, in linewith therequirementofsection38(l)(a)of thePublicFinanceManagementAct,1999(ActNo1of1999)andTreasuryRegulation3.1.

THE EFFECTIVEnEss OF InTERnAL COnTROL

No significant control weaknesses and risks were reported to the AuditCommitteeandwearesatisfiedthatkeycontrolsremainedinplacethroughouttheyear.Wheredeficienciesininternalcontrolswereidentified,managementhasdemonstratedcommitmentinaddressingthem.

Management was also able to obtain approval for the Guardian’s FundaccountingsystemfromNationalTreasury.ThiswillimprovefinancialreportingandoversightprovidedbytheAuditCommittee.

InTERnAL AudIT

The Internal Audit Unit of the Department of Justice and ConstitutionalDevelopment is also responsible for auditing theGuardian’sFund.TheunithasdischargeditsresponsibilitiesinaccordancewiththeInternalAuditPlan.

AudITOR-GEnERAL OF sOuTH AFRICA

WemetwiththeAuditor-GeneralofSouthAfricatoensurethattherearenounresolvedissues.

RePoRtoftheAuDitCoMMittee

Wearepleasedtopresentourreportforthefinancialyearended31March2011.

GuARdIAn’s Fund 11

the quality of in-year management and monthly/quarterly reportssubmittedintermsofthePfMA

Althoughthereareareasofimprovement,ashighlightedbytheDepartmentofJusticeandConstitutionalDevelopment,wearesatisfiedwiththecontentandqualityofmonthlyandquarterlyreportspreparedandissuedbytheaccountingofficer during the year under review. However, we have noted theAuditor-General’s concerns related to the department’s reporting on performanceinformationintermsoftherequiredauditingstandards.

Managementhasundertakentoeffect therecommended improvementsandtheAuditCommitteewillcontinuouslymonitorprogressinthatregard.

evaluationoffinancialstatements

Wehavedonethefollowing:• Reviewed and discussed the audited annual financial statements to be

includedintheannualreportwiththeAuditor-GeneralofSouthAfricaandtheaccountingofficer.

• Reviewed theAuditor-General of SouthAfrica’s management letter andmanagement’sresponsetoit.

• Reviewedthedepartment’scompliancewithlegalandregulatoryprovisions.

• Reviewedsignificantadjustmentsresultingfromtheaudit.

WeconcurandaccepttheconclusionsoftheAuditor-GeneralofSouthAfrica’sreportontheannualfinancialstatementsandareoftheopinionthattheauditedannualfinancialstatementsshouldbeaccepted,readtogetherwiththereportoftheAuditor-GeneralofSouthAfrica.

___________________

MKarediChairpersonoftheAuditCommitteeDate:8August2011

______________________________________

PART 3Report of the Auditor-General to Parliament


14

InTROduCTIOn

1. IhaveauditedtheaccompanyingfinancialstatementsoftheGuardian’sFund, which comprise the statement of financial position as at31March2011,thestatementofcomprehensiveincome,thestatementofchangesinequityandthecashflowstatementfortheyearthenended,aswellasasummaryofsignificantaccountingpoliciesandotherexplanatoryinformation,andtheaccountingofficer’sreport,assetout intheannualreport.

ACCOunTInG OFFICER’s REsPOnsIBILITY

2. TheaccountingofficerisresponsibleforthepreparationandfairpresentationofthesefinancialstatementsinaccordancewithSouthAfricanStatementsof Generally Accepted Accounting Practice (SA Statements of GAAP)and for such internal control asmanagement determines necessary toenablethepreparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.

AudITOR-GEnERAL’s REsPOnsIBILITY

3. As requiredbysection188of theConstitutionof theRepublicofSouthAfrica,1996(ActNo108of1996),section4ofthePublicAuditActofSouthAfrica,2004(ActNo25of2004)(PAA),myresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonmyaudit.

4. I conducted my audit in accordance with International Standards onAuditing and General Notice 1111 of 2010, in Government Gazette33872 of15December2010.ThosestandardsrequirethatIcomplywith

ethicalrequirementsandplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreefrommaterialmisstatement.

5. Anaudit involvesperformingprocedures toobtainauditevidenceabouttheamountsanddisclosuresinthefinancialstatements.Theproceduresselecteddependontheauditor’sjudgment,includingtheassessmentoftherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,theauditorconsidersinternal control relevant to theentity’spreparationand fair presentationof thefinancial statements inorder todesignaudit procedures thatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity’sinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthe reasonablenessof accountingestimatesmadebymanagement, aswellasevaluatingtheoverallpresentationofthefinancialstatements.

6. IbelievethattheauditevidenceIhaveobtainedissufficientandappropriatetoprovideabasisformyauditopinion.

OPInIOn

7. In my opinion, the financial statements present fairly, in all materialrespects,thefinancialpositionoftheGuardian’sFundasat31March2011,anditsfinancialperformanceandcashflowsfor theyearthenendedinaccordancewiththeSAStatementsofGAAP.

RePoRtoftheAuDitoR-GeneRALtoPARLiAMentonthefinAnCiALStAteMentSoftheGuARDiAn’SfunDfoRtheYeARenDeD31MARCh2011


REPORT On OTHER LEGAL And REGuLATORY REQuIREMEnTs

8. InaccordancewiththePAAandintermsofGeneralNotice1111of2010,inGovernment Gazette33872 of15December2010,Iincludebelowmyfindingsontheannualperformancereportassetoutonpages18to51andmaterialnon-compliancewithlawsandregulationsapplicabletotheGuardian’sFund.

Predeterminedobjectives

9. TheperformanceinformationrelatingtotheGuardian’sFundisreportedin the annual report of the Department of Justice and ConstitutionalDevelopment,Programme3:StateLegalServices.

Compliancewithlawsandregulations

10. Therearenofindingsconcerningmaterialnon-compliancewithlawsandregulationsapplicabletotheGuardian’sFund.

InTERnAL COnTROL

11. InaccordancewiththePAAandintermsofGeneralNotice1111of2010,in Government Gazette 33872 of15December2010,Iconsideredinternal

control relevant to my audit, but not for the purpose of expressing anopinionon theeffectivenessof internalcontrol.Therearenosignificantdeficienciesininternalcontrolthatresultedinaqualificationoftheauditor’sopiniononthefinancialstatementsandmaterialnon-compliancewithlawsandregulations.

Pretoria31July2011PretoriaPretoria

PART 4Annual financial statements


18

StAteMentofCoMPRehenSiVeinCoMefortheyearended31March2011

Notes Total2011 Total2010

R R

Revenue

Investmentrevenue 3 468418994 472535202

Less:Expenditure

Managementfees 13 1823656 1587037

Increase/(decrease)provisionforbaddebts 51407410 2070283

415187928 468877882

Otheroperatingexpenses/(income) 0 0

Surplus/(deficit)fortheyearbeforedistributiontobeneficiaries 415187928 468877882

Distributiontobeneficiaries–interestpaidonbeneficiarymonies 4 389427626 347243144

Surplus/(deficit)fortheyear 25760302 121634738

AnnuALfinAnCiALStAteMentS


StAteMentoffinAnCiALPoSitionasat31March2011

Notes total2011 total2010

R R

ASSetS 6888188955 6070248974

Otherreceivables 7 0 41306936

Financialinvestmentsavailable-for-sale 5 6834984459 5955918183

Cashandcashequivalents 6 53134496 73023855

totalassets 6888118955 6070248974

LiABiLitieS 6343947594 5547383604

Beneficiaryliability 8 6339826724 5547383604

Otherpayables 9 4120870 0

totalliabilities 6343947594 5547383604

CAPitALAnDReSeRVeS 544171361 522865370

Accumulatedsurplus/(deficit) 12 534101867 508341565

Accumulatedothercomprehensiveincome 10 0 4454311

Moniesintrustreserve 11 10069494 10069494

totalnetassets 544171361 522865370

totalnetassetsandliabilities 6888118955 6070248974

20

StAteMentofChAnGeSineQuitYfortheyearended31March2011

notes Accumulatedsurplus/(deficit)

Mitreserve Accumulatedothercomprehensiveincome

totalequity

Balanceasat1April2010 508341565 10069494 4454312 522865371

Surplus/(deficit)fortheyear 25760302 0 0 25760302

Unrealisedprofit/(loss)fortheyear 0 0 -4454312 -4454312

Balanceasat31March2011 534101867 10069494 0 544171361

fortheyearending31March2010

Balanceasat1April2009 377868980 10069494 3872905 391811379Less:Priorperioderrors -770965 -770965Plus:Restatement 18.1 9608812 9608812

Restatedopeningbalanceasat1April2009 386706827 10069494 3872905 400649226Prioryearsurplusbeforerestatement: 119102867 119102867Restatedadjustment 18.2 2531870 2531870Unrealisedprofit/(loss)fortheyear 0 0 581406 581406

Balanceasat31March2010 508341565 10069494 4454311 522865370


CAShfLoWStAteMentfortheyearended31March2011

Notes 2011 2010

R R

CAShfLoWSfRoMoPeRAtinGACtiVitieS

Cashreceiptsonbehalfofbeneficiaries -466928479 -472535202

Cashpaidtobeneficiariesandcreditors 393483641 351553379

Cashgeneratedfrom/(utilisedin)operations 15 -73444838 -120981823

Investmentincomereceived 467789945 472535201

Interestpaidtobeneficiaries -389427626 -347243143

SARSpayments -4056014 -4240513

netcashinflows/(outflows)fromoperatingactivities 861466 69723

CAShfLoWSfRoMinVeStMentACtiVitieS

netcashflowsfrominvestmentactivities -425400000 -304800000

NetinvestmentsofbeneficiarymoniesinPIC -425400000 -304800000

CAShfLoWSfRoMfinAnCinGACtiVitieS

netcashflowfinancingactivities 404649177 317249912

Increase/(decrease)inbeneficiaryliability 404649177 317249912

netincrease/(decrease)incashandcashequivalents -19889357 12519635

Cashandcashequivalentsatthebeginningoftheyear 73023855 60504220

Cashandcashequivalentsattheendoftheyear 6 53134498 73023855

22

nOTEs TO THE FInAnCIAL sTATEMEnTsfortheyearended31March2011

1. Generalinformation

TheGuardian’sFundisastatutorytrustestablishedintermsofChapterVoftheAdministrationofEstatesAct,1965(Act66of1965).

ThepurposeoftheGuardian’sFundistoprotectandmanagemoniesofpersonsdeemedtobe legally incapableor lackingthecapacity tomanagetheirownaffairs,aswellasundetermined,unknownorabsentheirsanduntraceablepersons. TheGuardian’sFundisheldundermanagementoftheMasteroftheHighCourtofSouthAfrica.

2. Principalaccountingpolicies

Theprincipal accountingpoliciesapplied in thepreparationof thesefinancial statements are set out below. These policies have beenconsistentlyappliedtoalltheyearspresented,unlessotherwisestated.

2.1 Basisofpreparation

Thefinancialstatementshavebeenpreparedonthehistoricalcostbasis,exceptforavailable-for-saleinvestmentsthathavebeenmeasuredatfairvalue.Thefinancialstatementsarepresentedinrand.

Statementofcompliance

ThefinancialstatementsoftheGuardian’sFundhavebeenpreparedinaccordancewithSouthAfricanStatementsofGAAP,asrequiredbythePublicFinanceManagementAct,1999(ActNo1of1999)(PFMA),andasapplicabletoagoingconcern.

2.2 Summaryofsignificantaccountingpolicies

2.2.1 financialinstruments

(i) Dateofrecognition

Purchasesorsalesoffinancialassets that requiredeliveryofassetswithinthetimeframegenerallyestablishedbyregulationsor convention in themarketplace are recognised on the datethattheGuardian’sFundcommitstopurchaseorselltheasset.

(ii) initialrecognitionoffinancialinstruments

The classification of financial instruments at initial recognitiondependsonthepurposeforwhichthefinancialinstrumentswereacquiredandtheircharacteristics.Allfinancial instrumentsaremeasuredinitiallyattheirfairvalueplus,inthecaseoffinancialassets, not at fair value through profit or loss, any directlyattributableincrementalcostofacquisitionorissue.

(iii) Available-for-salefinancialinvestments

Available-for-sale financial investments are those that aredesignatedassuchordonotqualifytobeclassifiedatfairvaluethroughprofitor loss,held-to-maturityor loansandadvances.Theyincludeequityinstruments,investmentsinmoneymarketaccountsandotherdebitinstruments.Afterinitialmeasurement,available-for-salefinancialinvestmentsaresubsequentlymeasuredatfairvalue.Unrealisedgainsandlosses are recognised directly in equity in the “accumulated other comprehensive income”.When the security is disposedof,thecumulativegainorlosspreviouslyrecognisedinequityis


recognisedinthestatementofcomprehensiveincomein“other operating income”or“other operating expenses”.Interestearnedwhileholdingavailable-for-salefinancialinvestmentsisreportedas interest incomeusing theeffective interest rate.Dividendsearned while holding available-for-sale financial investmentsare recognised in the statement of comprehensive incomeas “other operating income” when the right of the paymenthas been established. The losses arising from impairment ofsuch investments are recognised in the income statement in“impairment losses on financial investments”andremovedfromthe“accumulated other comprehensive income”. Financial assets, other than those at fair value through profitor loss (FVTPL),areassessed for indicatorsof impairmentattheendofeachreportingperiod.Financialassetsareimpairedwhenthereisobjectiveevidencethat,asaresultofoneormoreeventsthatoccurredaftertheinitialrecognitionofthefinancialasset, theestimated futurecashflowsof the investmenthavebeenaffected.

2.2.2 Cashandcashequivalents

Demanddepositsandothershort-termhighly liquid investments thatarereadilyconvertibletoaknownamountofcashandaresubjecttoan insignificant riskofchanges invaluearedisclosedunderanothercategoryoffinancialinstrument,dependingonthenature.

Cash and cash equivalents that do not have fixed and determinedpaymentswillbeclassifiedasavailable-for-salefinancialassets. Cashandcashequivalentsandbankborrowingsarerecordedatfacevalue.

2.2.3 Revenuerecognition

TheGuardian’sFundrecognisesrevenuewhentheamountofrevenuecan be reliably measured and it is probable that future economic

benefitswillflowtotheentityandspecificcriteriaintermsoftheEstatesAct,1965(ActNo66of1965),havebeenmet.

interestincome

Interestrevenueisaccruedonatimebasis,byreferencetotheprincipaloutstanding and the effective interest rate applicable, which is theratethatexactlydiscountsestimatedfuturecashreceiptsthroughtheexpectedlifeofthefinancialassettothatasset’snetcarryingamount.

2.2.4 financialliability

(i) initialrecognition

Thefinancial liability is initially recognisedathistoricalcostatthedateofreceiptofthemoniesduetothebeneficiary.

(ii) Subsequentrecognition

Afterinitialrecognition,theliabilityismeasuredatvalueoftheamountowingtothebeneficiariesofthefund,aftertakingintoaccount theprovisionsof theEstatesAct,1965(ActNo66of1965).

(iii) Derecognition

ThefinancialliabilityisderecognisedwhentheobligationoftheGuardian’sFundtothebeneficiaryhasbeenextinguished.

24

noteStothefinAnCiALStAteMentS31March2011

total Pretoria Pietermaritz-burg

Grahamstown Capetown Bloemfontein Kimberley nationaloffice

3. R R R R R R R R

investmentrevenue–31March2011

Available-for-saleinvestment:

Interestrevenue–PIC -459939617 -210032523 -117452331 -51708891 -33747415 -38012527 -8985930 0

Cashandcashequivalents:

Interestrevenue–PIC -866092 0 0 0 0 0 0 -866092Interestrevenue–Absa -4056014 -624423 -1646709 -545057 -301435 -738705 -199685 0

otherdebtors:

Interestrevenue–Mmabatho -2024665 -2024665 0 0 0 0 0 0Interestrevenue–Thohoyandou

-55787 -55787 0 0 0 0 0 0

Interestrevenue–Bisho -560715 0 0 -560715 0 0 0 0Interestrevenue–Umtata -916104 0 0 -916104 0 0 0 0

-468418994 -212737398 -119099041 -53730767 -34048850 -38751232 -9185615 -866092


total Pretoria Pietermaritz-burg

Grahamstown Capetown Bloemfontein Kimberley nationaloffice

R R R R R R R R3.cont.

investmentrevenue–31March2010

Available-for-saleinvestment:

Interestrevenue–PIC -464949360 -208242342 -123675467 -50593612 -34811072 -37739197 -9019752 -867918

Cashandcashequivalents:

Interestrevenue–PIC -69723 0 0 0 0 0 0 -69723Interestrevenue–Absa -4240513 -813337 -1507077 -474366 -438524 -766005 -241204 0

otherdebtors:

Interestrevenue–Mmabatho -1854089 -1854089 0 0 0 0 0 0Interestrevenue–Thohoyandou

-51087 -51087 0 0 0 0 0 0

Interestrevenue–Bisho -520321 0 0 -520321 0 0 0 0Interestrevenue–Umtata -850108 0 0 -850108 0 0 0 0

-472535201 -210960855 -125182544 -52438407 -35249596 -38505202 -9260956 -937641

26

total Pretoria Pietermaritzburg Grahamstown Capetown Bloemfontein Kimberley nationaloffice

4. R R R R R R R Rinterestpaid–31March2011Interestpaidtointerest-bearingbeneficiaries:.

389427626 165227548 105842051 49055240 22694251 37575049 9033487 0

Interestiscalculatedatthegazettedrateandcapitalisedatmonthend.Interestisaccruedfromthenextcalendarmonthafterreceiptdateuptofiveyearsafterithasbecomeclaimable,unlessitislegallyclaimedbeforesuchexpiration.

389427626 165227548 105842051 49055240 22694251 37575049 9033487 0

interestpaid–31March2010Interestpaidtointerest-bearingbeneficiaries:

347243144 146885604 97164687 42123297 21395875 32026332 7647349 0

Interestiscalculatedatthegazettedrateandcapitalisedatmonthend.Interestisaccruedfromthenextcalendarmonthafterreceiptdateuptofiveyearsafterithasbecomeclaimable,unlessitislegallyclaimedbeforesuchexpiration.

347243144 146885604 97164687 42123297 21395875 32026332 7647349 0



R R R R R R R R5.

financialinvestmentsavailable-for-sale–31March2011PICinvestmentopeningbalanceasoriginallystated

5955918182 2681307736 1556401129 659162692 446151922 493367266 119527437 0

Fairvalueatacquisitiondate

5951463871 2679146233 1555692164 658335903 445823561 493091189 119374821 0

Unrealisedprofit/(loss) 4454311 2161503 708965 826789 328361 276077 152616 0

Investmentincomereceivedduringfinancialyear

459939618 210032524 117452331 51708891 33747415 38012527 8985930 0

Additionsduringtheyear 480400000 265000000 75000000 62000000 9000000 51400000 18000000 0Disposalsduringtheyear -55000000 -20000000 -35000000 0 0 0 0 0Realisedprofit -4454311 -2161503 -708965 -826789 -328361 -276077 -152616 0Managementexpenses -1819029 -827745 -464528 -204736 -133369 -151456 -37195 0Closingbalance 6834984458 3133351011 1712679967 771840059 488437606 582352259 146323556 0Fairvalueatacquisitiondate

6834984459 3133351011 1712679967 771840059 488437606 582352260 146323556 0

Unrealisedprofit/(loss) 0 0 0 0 0 0 0 0

Intermsofsection87oftheAdministrationofEstatesAct,1965(ActNo66of1965),beneficiarymoniesreceivedintheGuardian’sFundshouldbeinvestedwiththePIC.Allmonies,exceptforthoserequiredforimmediatedisbursements,areinvestedwiththePIC.Unrealisedprofit/(loss)isthedifferencebetween“all-in market values”andthe“clean book value”plus“market value interest”.

28


5.cont. R R R R R R R RAprovisionagainst“accumulated other comprehensive income”wasmadeforthisunrealisedprofit/(loss).Thecarryingamountoffinancialinvestmentsavailable-for-saleapproximatestheirfairvalue.

PiCinvestments 6834984459 3133351011 1712679967 771840059 488437606 582352260 146323556 0Moneymarket:0–3months 1109039148 472844732 267435695 165694005 62135190 120334512 20595014 0Moneymarket:3–6months 1592848145 791195701 424936107 100356158 165789524 90130607 20440048 0Moneymarket:6–9months 476034246 227244692 112609048 30642986 30705534 54695141 20136844 0Moneymarket:9–12months

3383137983 1558785158 858593478 428213515 213860921 264246481 59438430 0

Moniesearmarkedforinvestments

273924938 83280727 49105639 46933395 15946438 52945518 25713220 0



5.cont. R R R R R R R Rfinancialinvestmentsavailable-for-sale–31March2010PICinvestmentopeningbalanceasoriginallystated

5188038422 2278174064 1438530483 559241966 395394375 414206176 102491358 0

Fairvalueatacquisitiondate

5184165517 2276611967 1437436879 558917047 395032117 413781254 102386253 0

Unrealisedprofit/(loss) 3872905 1562097 1093604 324919 362258 424922 105105 0Investmentincomereceivedduringfinancialyear

464081442 208242342 123675467 50593612 34811072 37739197 9019752 0

Additionsduringtheyear 381200000 195000000 50000000 57000000 29500000 41700000 8000000 0Disposalsduringtheyear -76400000 0 -55000000 -8000000 -13400000 0 0 0Unrealisedprofit/(loss) 581406 599406 -384639 501870 -33897 -148845 47511 0Managementexpenses -1583088 -708076 -420182 -174756 -119628 -129262 -31184 0Closingbalance 5955918182 2681307736 1556401129 659162692 446151922 493367266 119527437 0Fairvalueatacquisitiondate

5951463871 2679146233 1555692164 658335903 445823561 493091189 119374821 0

Unrealisedprofit/(loss) 4454311 2161503 708965 826789 328361 276077 152616 0Intermsofsection87oftheAdministrationofEstatesAct,1965(ActNo66of1965),beneficiarymoniesreceivedintheGuardian’sFundshouldbeinvestedwiththePIC.Allmonies,exceptforthoserequiredforimmediatedisbursements,areinvestedwiththePIC.Unrealisedprofit/(loss)isthedifferencebetween“all-in market values”andthe“clean book value”plus“market value interest”.

30


5.cont. R R R R R R R RAprovisionagainst“accumulated other comprehensive income”wasmadeforthisunrealisedprofit/(loss).Thecarryingamountoffinancialinvestmentsavailable-for-saleapproximatestheirfairvalue.

PiCinvestments 5955918182 2681307736 1556401129 659162692 446151922 493367266 119527437 0Moneymarket:0–3months 865497726 362565097 236671764 128129094 26800308 95691014 15640449 0Moneymarket:3–6months 609259440 304977525 185323520 35777631 25650691 41933413 15596660 0Moneymarket:6–9months 337033084 131459823 97160111 25875294 25896095 41030717 15611044 0Moneymarket:9–12months

3883163295 1831582537 986682470 432950594 322883794 259055023 50008877 0

Moniesearmarkedforinvestments

260964637 50722754 50563264 36430079 44921034 55657099 22670407 0



R R R R R R R R6.

Cashandcashequivalents–31March2011Absabankaccount 37967208 -27985134 37575485 8072754 9425474 7009647 3868982 0PICmainaccount 1205639 0 0 0 0 0 0 1205639PICreserveaccount 13961649 13961649

53134496 -27985134 37575485 8072754 9425474 7009647 3868982 15167288

forthepurposesofthecashflowstatement:Disclosedas:Cashandcashequivalents 53134496 -27985134 37575485 8072754 9425474 7009647 3868982 15167288Bankoverdraft 0 0 0 0 0 0 0 0totalcashandcashequivalents

53134496 -27985134 37575485 8072754 9425474 7009647 3868982 15167288

Thecarryingamountofcashandcashequivalentsapproximatestheirfairvalueduetotheirshort-termmaturity.

32


6.cont. R R R R R R R RCashandcashequivalents–31March2010Absabankaccount 58718033 8528352 22244390 10102050 5931862 9260878 2650501 0PICmainaccount 1068276 0 0 0 0 0 0 1068276PICreserveaccount 13237546 13237546

73023855 8528352 22244390 10102050 5931862 9260878 2650501 14305822

forthepurposesofthecashflowstatement:Disclosedas:Cashandcashequivalents 73023855 8528352 22244390 10102050 5931862 9260878 2650501 14305822Bankoverdraft 0 0 0 0 0 0 0 0totalcashandcashequivalents

73023855 8528352 22244390 10102050 5931862 9260878 2650501 14305822

Thecarryingamountofcashandcashequivalentsapproximatestheirfairvalueduetotheirshort-termmaturity.



R R R R R R R R7.

otherreceivables–31March20117.1 tBVCshortfall 49379253 28879211 0 20500042 0 0 0 0

-Mmabatho 28104816 28104816 0 0 0 0 0 0-Thohoyandou 774395 774395 0 0 0 0 0 0-Bisho 7783407 0 0 7783407 0 0 0 0-Umtata 12716635 0 0 12716635 0 0 0 0

7.2unreconciledvariance–Priorto1April2005Theseamountsrelatetothedifferencebetweenthemoneyinvestedandamountsattributabletobeneficiariesasat1April2005.

6691365 0 0 5630874 0 604176 456316 0

Aspecialreconciliationeffortexaminingmanualrecordsdatingbackthreetofouryearsisinprogress.Correctiveentrieswillbeeffected.

7.3SARSdebtor–seenote9 47850141 14569958 10795043 6477010 9775530 5006838 1225762 0Balanceasat31March2011

47521691 14530414 10661018 6431590 9747371 4940579 1210718 0

AccrualforMarch2011Interest

328449 39543 134025 45420 28159 66259 15044

34


7.cont. R R R R R R R RTheseamountsrelatetotheinterestreceivedonthecurrentaccountsoftheGuardian’sFundregionalofficebeingsweptandpaidovertothestate.ThesemoniesareGuardian’sFundmoniesandneedtoberecoupedovertotheGuardian’sFund.TheGuardian’sFundhasprovided(seebelow)tobeconservative,howevereveryeffortwillbemadetorecoupandreversetheprovision.

7.4Provisionforbaddebt -103920759 -43449169 -10795043 -32607926 -9775530 -5611014 -1682078 0

tBVClossesasat31March2011

-49379253 -28879211 0 -20500042 0 0 0 0

Openingbalanceasat1April2010

-45821983 -26798759 0 -19023224 0 0 0 0

Increaseinprovision -3557270 -2080452 -1476818

unreconciledvariances -6691365 0 0 -5630874 0 -604176 -456316 0Openingbalanceasat1April2010

-6691366 -5630874 -604176 -456316

Restatedadjustmenttoprovision–31March2005

0 0 0 0 0 0 0



7.cont. R R R R R R R RSARSdebtor -47850141 -14569958 -10795043 -6477010 -9775530 -5006838 -1225762 0Openingbalanceasat1April2010

0 0 0 0 0 0 0

Increaseinprovision -47850141 -14569958 -10795043 -6477010 -9775530 -5006838 -1225762 0

0 0 0 0 0 0 0 0

otherreceivables–31March2010tBVCshortfall 45821983 26798759 0 19023224 0 0 0 0-Mmabatho 26080151 26080151 0 0 0 0 0 0-Thohoyandou 718608 718608 0 0 0 0 0 0-Bisho 7222692 0 0 7222692 0 0 0 0-Umtata 11800532 0 0 11800532 0 0 0 0

unreconciledvariance–Priorto1April2005Theseamountsrelatetothedifferencebetweenthemoneyinvestedandamountsattributabletobeneficiariesasat1April2005.

6691366 0 0 5630874 0 604176 456316 0

Aspecialreconciliationeffortexaminingmanualrecordsdatingbackthreetofouryearsisinprogress.Correctiveentrieswillbeeffected.

36


7.cont. R R R R R R R RSARSdebtor–seenote9 41306935 9794665 11933443 5893719 8935427 3797949 951732 0

Provisionforbaddebt -52513349 -26798759 0 -24654098 0 -604176 -456316 0

TBVClossesasat31March2010

-45821983 -26798759 0 -19023224 0 0 0 0

Openingbalanceasat1April2009

-42546378 -24893583 -17652795

Provision -3275605 -1905176 -1370429

Unreconciledvariancesasat31March2010

-6691366 0 0 -5630874 0 -604176 -456316 0

Openingbalanceasat1April2009.

-6996757 -5726214 -834906 -435637

Provisionduetochangeinliability–31March2005

-899931 -585319 -292347 -22265

Restatedadjustmenttoprovision–31March2005–seeNote18.1

1205323 680658 523078 1587

41306935 9794665 11933443 5893719 8935427 3797949 951732 0



R R R R R R R R8.

Beneficiaryliability–31March2011DuetobeneficiariesOpeningbalanceasat1April2010

5547383603 2396403726 1480253622 665741510 403411121 483838453 117735171 0

Moniesreceivedduringfinancialyear

1269109335 572851346 314421797 163184992 69363938 111683371 37603891 0

Paymentstobeneficiaries -864460158 -364364832 -259090702 -103214287 -56870326 -62534600 -18385411 0TransfertoSARS30year -1536757 -741882 -527634 -24082 -216305 -11744 -15109 05%commissionpayabletoSARS

-96925 -56564 -297 -285 -39779 0 0 0

Interestpaidtobeneficiaries 389427626 165227548 105842051 49055240 22694251 37575049 9033487 0Closingbalance 6339826726 2769319342 1640898837 774743088 438342900 570550529 145972029 0

BeneficiaryliabilityInterest-bearingbeneficiarymonies

5657646012 2417090348 1522755118 715199871 318151727 546111129 138337820 0

Non-interest-bearingbeneficiarymonies(nocommission)

470334894 223632008 102738026 49444217 70531800 18007548 5981295 0

Non-interest-bearingbeneficiarymonies(commission)

199372137 126983612 13263667 7403183 46853070 3633403 1235202 0

UnallocatedbeneficiaryMonies(suspenseaccount)

14636671 862666 5105801 3403423 1209243 3966814 88724 0

Beneficiarymonies–allocationaccount-seeNote17

-2162990 750709 -2963775 -707607 1597060 -1168366 328989 0

6339826725 2769319342 1640898837 774743088 438342900 570550529 145972029 0

38


8.cont. R R R R R R R RBeneficiaryliability–31March2010DuetobeneficiariesOpeningbalanceasat1April2009

4880793971 2057444467 1378660574 568156906 361541400 412830103 102160521 0

Moniesreceivedduringfinancialyear

1076036087 475297385 241629191 152711784 78681360 99368955 28347412 0

Paymentstobeneficiaries -758437541 -283837811 -237422696 -97772708 -58493785 -60467280 -20443261 0TransfertoSARS30year 1688022 580825 220817 521468 262013 80091 22808 05%commissionpayabletoSARS

59921 33256 1049 764 24258 252 342 0

Interestpaidtobeneficiaries 347243144 146885604 97164687 42123297 21395875 32026332 7647349 0Closingbalance 5547383604 2396403726 1480253622 665741511 403411121 483838453 117735171 0

BeneficiaryliabilityInterest-bearingbeneficiarymonies

4930641620 2066784207 1373239087 613019027 298005000 467761277 111833022 0

Non-interest-bearingbeneficiarymonies(nocommission)

429390265 212337219 88380491 44252256 65692236 13744150 4983913 0

Non-interest-bearingbeneficiarymonies(commission)

183747022 121547277 11093641 7297995 39439757 3380642 987710 0

Unallocatedbeneficiarymonies(suspenseaccount)

17842050 1498572 11702877 1193540 125411 3274175 47475 0

Beneficiarymonies-allocationaccount-seeNote17

-14237353 -5763549 -4162474 -21307 148717 -4321791 -116949 0

5547383604 2396403726 1480253622 665741511 403411121 483838453 117735171 0



R R R R R R R R9.

tradeandotherpayables–31March2011SARSpayableOpeningbalance-MoniesduetoSARSfrompreviousyears

2487189 4150870 -2785111 38235 538668 470183 74345 0

5%commission 96925 56564 297 285 39779 0 0 030year–beneficiarymonies

1536757 741882 527634 24082 216305 11744 15109 0

4120871 4949316 -2257180 62602 794752 481927 89454 0

tradeandotherpayables–31March2010SARSpayable5%commission 50104 23000 1049 784 24500 429 342 030year–beneficiarymonies

1616659 510883 222212 521667 259726 80091 22080 0

1666763 533883 223261 522451 284226 80520 22422 0Less:SARSliabilitypaidduringfinancialyear

-1666763 -533883 -223261 -522451 -284226 -80520 -22422

0 0 0 0 0 0 0 0PreviouslysurplusinvestmentincomewasallocatedasaSARSliability.Asthereisnolegislationthatprescribesthispractice,itwascapitalisedasaccumulatedsurplus.

40


R R R R R R R R10.

Accumulatedothercomprehensiveincome–31March2011Openingbalanceasat1April2010

-4454311 -2161503 -708965 -826789 -328361 -276077 -152616 0

Unrealisedprofit/(loss)fortheyear

4454311 2161503 708965 826789 328361 276077 152616 0

Revaluationincrease/(decrease)oninvestments

0 0 0 0 0 0 0 0

Balanceattheendoftheyear

0 0 0 0 0 0 0 0

Accumulatedothercomprehensiveincome–31March2010Openingbalanceasat1April

0 0 0 0 0 0 0 0

Unrealisedprofit/(loss)fortheyear

4454311 2161503 708965 826789 328361 276077 152616 0

Revaluationincrease/(decrease)oninvestments

0 0 0 0 0 0 0 0


4454311 2161503 708965 826789 328361 276077 152616 0



R R R R R R R R11.

Moniesintrustreserve–31March2011Openingbalanceasat1April2010

-10069494 0 0 0 0 0 0 -10069494

Transfersto/(from)reservesRevaluationincrease/(decrease)oninvestments


-10069494 0 0 0 0 0 0 -10069494

Moniesintrustreserve–31March2010Openingbalanceasat1April

10069494 0 0 0 0 0 0 10069494

Transfersto/(from)reservesRevaluationincrease/(decrease)oninvestments


10069494 0 0 0 0 0 0 10069494

42


R R R R R R R R12. Accumulatedsurplus/(deficit)–

31March2011Openingbalanceasat1April2010

-508341565 -301065524 -109616375 -8590162 -57279729 -22311563 -5241884 -4236328

Surplus/(deficit)fortheyear -25760302 -30031695 -1997419 3483038 -1445701 3982111 1110829 -861465Balanceattheendofyear -534101868 -331097219 -111613794 -5107124 -58725430 -18329452 -4131055 -5097793

Accumulatedsurplus/(deficit)–31March2010Openingbalanceasat1April

-386706825 -239603525 -82018700 860423 -43545635 -15438878 -3657874 -3302636

Surplus/(deficit)fortheyear -121634740 -61461999 -27597675 -9450585 -13734094 -6872685 -1584010 -933692Balanceattheendofyear -508341565 -301065524 -109616375 -8590162 -57279729 -22311563 -5241884 -4236328



R R R R R R R R13.

Managementfees–31March2011Investmentmanagementfees–PICinvestment

1823656 827745 464528 204736 133369 151456 37195 4627

1823656 827745 464528 204736 133369 151456 37195 4627

FeesarepayabletoPICformanagingtheGuardian’sFundinvestmentsintermsoftheinvestmentmanagementagreement.

Managementfees–31March2010Investmentmanagementfees–PICinvestment

1587037 708076 420182 174756 119628 129262 31184 3949

1587037 708076 420182 174756 119628 129262 31184 3949FeesarepayabletoPICformanagingtheGuardian’sFundinvestmentsintermsoftheinvestmentmanagementagreement.

44


R R R R R R R R14.

Related-partytransactions–31March2011nameofrelatedparty:DepartmentofJusticeandConstitutionalDevelopment.

Relationship:Departmentundercommonministry.AlladministrationcostsoftheGuardian’sFundarepaidforbytheDepartmentofJusticeandConstitutionalDevelopment.

nameofrelatedparty:ThePublicInvestmentCorporationLimited

Relationship:Intermsofsection87oftheAdministrationofEstatesAct,1965(ActNo66of1965),beneficiarymoniesreceivedintheGuardian’sFundshouldbeinvestedwiththePIC.Detailsoftransactionvaluesasstatedinnotes3,5,13.



R R R R R R R R15.

Cashgeneratedfrom/(utilisedin)operations–31March2011Surplus/(deficit)beforeinterest

0 0 0 0 0 0 0 0

Plus:SARSpaid 3972974 624423 1646709 462017 301435 738705 199685 0Less:Investmentincomereceived

-466845440 -212112975 -119099041 -53647727 -34048850 -38751232 -9185615 0

Plus:Interestpaid 389427626 165227548 105842051 49055240 22694251 37575049 9033487 0netcashflowsfromoperatingactivities

-73444841 -46261005 -11610281 -4130470 -11053164 -437478 47557 0

Cashgeneratedfrom/(utilisedin)operations–31March2010Surplus/(deficit)beforeinterest

69723 0 0 0 0 0 0 69723

Plus:SARSpaid 4240513 813337 1507077 474366 438524 766005 241204 0Less:Investmentincomereceived

-472535201 -210960855 -125182544 -52438407 -35249596 -38505202 -9260956 -937641

Plus:Interestpaid 347243144 146885604 97164687 42123297 21395875 32026332 7647349 0netcashflowsfromoperatingactivities

-120981821 -63261914 -26510780 -9840744 -13415197 -5712865 -1372403 -867918

46


R R R R R R R R16.

Disallowanceaccount(fraudandlosses)–31March2011Openingbalance 4041008 3748557 227451 65000 0 0 0 0Newcasesregistered 2032304 1571000 350662 0 110642 0 0 0Losses 1556715 1469129 0 0 10353 58159 19073Finalisedcases-Investigationfinalised

-753303 -753303 0 0 0 0 0 0

Casesstillunderinvestigation

6876724 6035383 578113 65000 120996 58159 19073 0

Disallowanceaccount(fraudandlosses)–31March2010Totalfraudcasesunderinvestigation

4722406 3748557 908849 65000 0 0 0 0

Finalisedcases-Investigationfinalised

-681398 0 -681398 0 0 0 0 0

Casesstillunderinvestigation

4041008 3748557 227451 65000 0 0 0 0



R R R R R R R R17.

Beneficiarymonies–Allocationaccount–31March2011

-2162991 750709 -2963776 -707607 1597060 -1168366 328989 0

ThenettransactionstotallingR2.1millionoriginatefromtheperiodofmigrationofbalancesandtransactionsfromthemanualenvironmenttothesystem.Thisdifferencecomprisesentriesthatarecurrentlyallocatedonanongoingbasis.

Beneficiarymonies–Allocationaccount–31March2010

-14237353 -5763549 -4162474 -21307 148717 -4321791 -116949 0

ThenettransactionstotallingR14.2millionoriginatefromtheperiodofmigrationofbalancesandtransactionsfromthemanualenvironmenttothesystem.Thisdifferencecomprisesentriesthatarecurrentlyallocatedonanongoingbasis.

48

2010/03/31Asdisclosedin2010

Asrestatedin2011

Priorperioderrorsforthefinancialyearsending31March2010

Pre-priorperioderrorsforthefinancialyearsending31March2006to31March2009

Pre-priorperioderrorsforthefinancialyearsbefore31March2005

natureofrestatement

R R R R R18. Restatementofcomparatives

Thefinancialstatementsfor31March2010wererestatedduetomoreaccuratefinancialinformationbecomingavailableandashistoricalissuesareaddressed.

18.1 StatementoffinancialpositionASSetSFinancialinvestmentsavailable-for-sale(PICinvestments)

5969155728 5969155730 0 0 0

Cashandcashequivalents 59437675 59786309 348634 0 0 Cashbookrestated–PMB.

Otherreceivables–SARSdebtor 39610052 41306936 -80450 352250 1425085 SARSdebtorrestated.

-Unreconciledvariances 7896687 6691366Beneficiaryliability 0 0 -1160185 Primarilyduetomore

accuratebeneficiaryinformationavailable.

TransfertoSARS30years 0 0 -45138 Primarilyduetomoreaccuratebeneficiaryinformationavailable.

-Provisionforbaddebts -7896687 -6691366 1205321 0 0 Provisionforbaddebtsdecreasedduetodecreaseinunreconciledvariance.

totalassets 6068203455 6070248975 1473505 352250 219762


Asdisclosedin2010

Asrestatedin2011




natureofrestatement

18.cont. R R R R RLiABiLitieStotalliabilities 5556707803 5547383603 -1058365 1123216 -9389050Beneficiaryliability 5556707803 5547383603 -Openingbalanceasat1April2005

0 0 -9389050 FinalisationofautomationandverificationprocessinPretoriaresultinginmoreaccuratebeneficiaryliabilityinformation.

-Restatementof:

Interestpaid -1326548 770967 0 Primarilyduetoreductionofinterestpayableduetorestatementofbeneficiaryliabilityat1April2005.

Beneficiaryliability 1338126 744949 0 Primarilyduetoresolvingofallocationaccount.

TransferstoSARS30year 408860 -906204 0 Primarilyduetomoreaccuratebeneficiaryinformationavailable.

Netallocationaccountadjustment -1478803 513504 0 Primarilyduetoresolvingofallocationaccount.

50

Asdisclosedin2010

Asrestatedin2011




natureofrestatement

18.cont. R R R R RCAPitALAnDReSeRVeStotalliabilities 5556707803 5547383603 -1058365 1123216 -9389050totalnetassets 511495652 522865370 2531870 -770965 9608812Accumulatedsurplus/(deficit)–restatementofSARS

496971847 508341565 0 0 9608812 RestatementofSARSliabilityasat31March2005.

-Provisionforbaddebt 1205322 0 0 Provisionforbaddebtsdecreasedduetomoreaccuratedata.

-Interestpaid 1326548 -770965 0 Interestadjustmentspayabletobeneficiariesduetochangesinbeneficiaryliabilitythroughmoreaccuratedata.

-Interestreceived(Absa) 0 0 0 Accumulatedothercomprehensiveincome

4454311 4454311 0 0 0

MITreserve 10069494 10069494 0 0 0

totalnetassetsandliabilities 6068203455 6070248973 1473505 352251 219762


Asdisclosedin2010

Asrestatedin2011




natureofrestatement

R R R R R18.2 Statementofperformance

RevenueInvestmentrevenue 472535201 472535202 0 0 0Less:expenditure 353432334 350900464 -2531870 0 0Managementfees 1587037 1587037 0 0 0 Provisionfordoubtfuldebts 3275605 2070283 -1205322 0 0 Provisionforbad

debtsdecreased.Interestpaidtobeneficiaries 348569692 347243144 -1326548 0 0 Reductionin

interestpayabletobeneficiariesduetoreductionofbeneficiaryliabilityat31March2010.

Surplus/(deficit)fortheyear 119102867 121634738 2531870 0 0

PART 5Risk management statement


54

Introduction

AsaclientofthePIC,theGuardian’sFundspecifiesitsdesirableriskparametersinaccordancewithitsownriskappetite.ThisriskappetiteinformstheformalinvestmentmandategiventothePIC.TheultimateresponsibilityforinvestmentriskmanagementoversightlieswiththePICandnotwiththeGuardian’sFund. Market risk

Marketriskisthepotentiallossduetoadversemovementinthemarketvalueofassets.Theentity’sactivitiesexposeitprimarilytotherisksoffluctuationsininterestrates.Interestrateriskreferstotheriskthatthefairvalueoffuturecashflowsofafinancialinstrumentwillfluctuatebecauseofchangesinmarketinterestrates.Marketriskexposuresaremeasuredusingasensitivityanalysis.Thisshowshownetsurplus,and/ornetassetswouldhavebeenaffectedbychanges in the relevant risk variable that were reasonably possible at thereportingdate.

Interest rate risk

This risk is thepotential financial lossasa resultofadversemovements ininterest rates that affect the value ofmoneymarket instruments.As a PICclient,theGuardian’sFundisexposedtointerestrateriskthroughinvestmentsin money markets. Sensitivity to interest rate movements is measured bythe duration of the fixed interest exposure. Such duration is dictated in theGuardian’sFundclientinvestmentmandatetoPIC,relativetotheappropriatebenchmark.These investmentmandatesprescribehowPICshouldmanagetheassets,inlinewiththeGuardian’sFund’sliquidityneedsandliabilityprofile.

Interest rate risk sensitivity analysis

Thefollowingsensitivityanalysisisbasedonfinancialinstruments’exposureto interestratesat thestatementoffinancialpositiondate.Thebasispoints’increaseordecrease,asdetailed in the following table,wasdeterminedbymanagement and represent management’s assessment of a reasonable

change in interest rates. The positive number indicates an increase in netsurplus,whileanegativenumberindicatesadecreaseinnetsurplus.Thereisnochangeinthemethodsandassumptionsusedinpreparingthesensitivityanalysisfromoneyeartothenext.Inthegraph,thezerointerestraterepresentsthebase,asdisclosedintheauditedfinancialstatements.

Thesensitivityanalysisaboveshowsthatevenwitha2%change(bothways)in the interest rate, theGuardian’s Fundwould have had sufficient interestinvestment income to cover the interest paid to fund beneficiaries at thegazettedrateofinterest. Credit risk

TheGuardian’s Fund investment portfolios are exposed to the potential forcredit-relatedlossesthatcanresultduetoanindividual,counterpartyorissuerbeing unable or unwilling to honour contractual obligations.Tomitigate thisriskandminimiseexcessivecredit exposure toonesinglecounterparty, theGuardian’sFund’smandate toPICstates thatPICwillonly investwith localcommercialbanksorinstitutionsthathaveacreditratingofatleast“A”fromoneoftherecogniseddomesticand/orinternationalcreditratingagencies.

RiSKMAnAGeMentStAteMent

InterestReceived

InterestPaid


Concentration risk

Concentrationriskistheriskoflossesarisingduetopoordiversificationwithinfunds,whichcan result inundesirable riskexposures.TheGuardian’sFundmanages this risk through the PIC investmentmandate, which dictates thelevelofconcentration.Moneymarketinvestmentsarespreadacrossbankstoreduceanddiversifytheclient’sconcentrationrisk.

Liquidity risk

Liquidity risk is the potential that there will not be adequate liquid assetsavailabletomeettheneedsof theGuardian’sFundwhentheyfalldue.TheGuardian’s Fundmanages this risk through the investmentmandate that issigned with PIC. The mandate is in line with the fund’s liquidity need andits liability profile. Currently, the Guardian’s Fund’s liquid assets holding isR5.9million.


2010/11

ISBN: 978-0-621-40359-6

RP: 224/2011

Issued by: The Department of Justice and Constitutional Development

P/Bag X81, Pretoria, 0001

Tel: 012 315 1111

www.justice.gov.za

Monies in trust kept in the Guardian’s FundAnnual Report

2010/11

Annual Report

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