president’s fund annual report for 2009/10 - justice home · president’s fund annual report ......

ISBN: 978-0-621-39658-4

RP223/2010

Issued by: The Department of Justice and Constitutional Development

P/Bag X81, Pretoria, 0001

Tel: (012) 315 1111

President’s Fund Annual Reportfor 2009/10The Department of Justice and Constitutional Development

2009/10 1

Table of conTenTs

Part 1 : Report of the accounting officer 4

Part 2 : Report of the audit committee 8

Part 3 : Report of the auditor-General to Parliament 12

Part 4 : financial statements

statement of financial Performance (sPR) 16

statement of financial Position (sPo) 17

statement of changes in equity 18

cash flow statement 19

accounting Policies 20

notes to the financial statements 23

Risk Management statement 27

DePaRTMenT of JUsTIce anD consTITUTIonal DeVeloPMenTPResIDenT’s fUnD

PaRT 1

Report of the accounting officer

President’sFundAnnualReport4

RePoRT of THe accoUnTInG offIceR on THe annUal fInancIal sTaTeMenTs of PResIDenT’s fUnD foR THe YeaR enDeD 31 MaRcH 2010

1. GeneRal ReVIeW

1.1 The President’s Fund was established interms of section 42 of the Promotion ofNational Unity and Reconciliation Act,1995(ActNo.34of1995).

1.2 Parliament approved the followingmeasures to victims on therecommendations of the State PresidentandsubsequentrecommendationsoftheAdhocJointCommitteeofbothhousesofParliamentonthetablingofthefinaltwovolumes of the Truth and ReconciliationCommission(TRC)Report.

1.2.1 Once-off individualgrantofR30000tothoseindividualsorsurvivorsdesignatedbytheTRC.

1.2.2 Symbols and Monuments: Systematicprogrammes to project academic andformal records of history, cultural andart forms as well as erecting symbolsandmonumentsthatexaltthefreedomstruggle,includingnewgeographicandplacenames.

1.2.3 Medical and other forms of SocialAssistance: Programmes to provide formedical benefits, education assistanceandprovisionofhousingaswellasothersocial benefits to address the needs ofTRCidentifiedvictims.

1.2.4 Rehabilitation of Communities: Wholecommunities, other than individualslinkedtotheTRCprocess,whosufferedandarestillindistress.Thereforetheneedforsuchcommunitiestoberehabilitatedthrough various programmes initiatedandsupportedbyGovernment.

1.3 Sub-section42(2)of the saidAct statesthat “there shall be paid from the fund all amounts payable to victims by way of reparation in terms of regulations made by the President”.

1.4 Togiveeffecttothepaymentoftheonce-offindividualgrantofR30000,regulationsweregazettedon12November2003.

1.5 As at the end of the financial year underreview, of the 16 837 applicants forreparation approved by theTRC, 15 956have been paid the once-off individualgrant totalling R479 million. There are881beneficiariesstilltobepaidofwhich420couldnotbetracedbyaprofessionaltracing agency, engaged to trace theunpaid beneficiaries, 242 beneficiarieshavenotsuppliedthenecessaryregulatoryrequirements and 219 applicants whohad received interim reparations, diedbefore the payment of final reparation.The President’s Fund is consulting withfamilies of the deceased to establish therightfulnextofkinintermsofregulationsdirectingdisbursementsoftheindividualgrants.

1.6 Symbols and Monuments: This aspectof the reparation measure is beingundertakenbytheFreedomParkTrustaswellastheDepartmentofArtsandCultureand South African Heritage ResourcesAgency(SAHRA).Thisisworkinprogressand voted funds are being utilised. Norequest has so far been made by theabovementioned agencies for fundingfromthePresident’sFund.

1.7 Medical and other forms of SocialAssistance:Regulationstorenderfinancialassistancetothefamiliesofpersonswhowent missing and whose remains wereexhumedbythespecial taskteamattheNational Prosecuting Authority (NPA) for

2009/10 5

reburialorsymbolicburialwasapprovedby the State President and published intheGovernmentGazetteon7May2010.The initial draft regulations providing foreducationalassistancehadtobere-visitedin view of the Department of Educationbeingsplit intotwodepartmentsnamelybasicandhighereducation.Theamendeddraftregulationshavebeenre-submittedto the respective departments forcomments. Development of regulationsproviding for housing and medicalassistance are being pursued with therespectivedepartments.

1.8 A Community Rehabilitation modelis in the process of being developedin consultation with the respectivedepartments involved. Some of theissues being conducted are the repair/replacement or provision of healthfacilities, recreation centres, conflictresolution and healing. This aspect ofreparationistakinglongerthanexpecteddue to the large number of stakeholdersthatneedtobeconsulted.

2. DonoR fUnDs

No donations were received for thefinancialyearunderreview.

3. coRPoRaTe GoVeRnance aRRanGeMenTs

The Fund utilises the services of theDepartmentofJusticeandConstitutionalDevelopment for its risk managementapproach, fraud prevention policies,effectiveness of internal audit and auditcommittee. It also utilises governancestructures including managementprocessesofthesaidDepartment.

4. oTHeR

We shall continue to utilise theunexpendedbalanceofthemoneyintheFundforthepurposesforwhichtheFundwas established and by direction of theregulationsenacted.

Myappreciationandthanksareaccordedto the related departments, agenciesand stakeholders who have contributedtowards the administration of thePresident’sFund.

________________________

Ms nonKUlUleKo MsoMI

accoUnTInG offIceR


PaRT 2

Report of the audit committee


RePoRT of THe aUDIT coMMITTee

1. We are pleased to present our report forthefinancialyearended31March2010.

1.1 audit committee members and attendance

The Audit Committee consists of themembers listed below and is requiredto meet four times per annum as per itsapproved terms of reference. During thecurrentyear,tenmeetingswereheld.

name of member number of meetings attended

status

MrStewartPatterson(Chairperson)

5 Retired31August2010

MsCatharinaSevillano-Barredo


MrCedricBoltman 5 Reappointed15December2009

MsNtombiLanga-Royds


MrMotsamaiKaredi 6 Reappointed15December2009

MsBajabulileLuthuli

2 Appointed15December2009

MsMatshegoRamagaga


MsZodwaManase 2 Appointed15December2009

MrWilsonRamabulana


1.2 audit committee responsibility

We report that we have adoptedappropriate formal terms of reference inourcharterinlinewiththerequirementsofsection38(1)(a)ofthePublicFinanceManagementAct,1999(ActNo.1of1999)and Treasury Regulation 3.1. We furtherreport that we conducted our affairs incompliance with the charter except thatduetoachangeoftheaccountingofficerduring the year, there was a delay inthe appointment of Audit Committeemembers, resulting in a meeting nottaking place during the third quarter oftheyear.

1.3 The effectiveness of internal control

Therewerenosignificantinternalcontrolweaknesses reported to the AuditCommittee, however, the fund has beengrowing significantly over the years duetodelaysintracingbeneficiaries.

Management has assured the AuditCommittee that they will expeditethe process to trace beneficiaries andthe Audit Committee will monitormanagementactioninthisregard.

1.4 Internal audit

Internal audit discharged itsresponsibilities as per the Internal Auditplan.

1.5 auditor-General south africa

We have met with the Auditor-GeneralSouth Africa to ensure that there are nounresolvedissues.

2009/10 9

1.5.1 The quality of in-year management and monthly/quarterly reports submitted in terms of PfMa.

We are satisfied with the content andquality of monthly and quarterly reportsprepared and issued by the accountingofficerofthedepartmentduringtheyearunderreview.

1.5.2 evaluation of financial statements

Wehavedonethefollowing:

• Reviewed and discussed theaudited annual financial statementsto be included in the annualreport with the Auditor-GeneralSouth Africa and the accountingofficer;

• ReviewedtheAuditor-GeneralSouthAfrica’s management letter andmanagement’sresponsetoit;

• Reviewedthedepartment’scompliancewith legal and regulatory provisions;and

• Reviewed significant adjustmentsresultingfromtheaudit.

We concur and accept the conclusions of theAuditor-General South Africa’s report on theannual financial statements and are of theopinion that the audited annual financialstatements should be accepted, read togetherwith the report of the Auditor-General SouthAfrica.

MKarediChairpersonoftheAuditCommittee05August2010


PaRT 3

Report of the auditor-General of south africa


RePoRT of THe aUDIToR-GeneRal To PaRlIaMenT on THe fInancIal sTaTeMenTs of THe PResIDenT’s fUnD foR THe YeaR enDeD 31 MaRcH 2010

RePoRT on THe fInancIal sTaTeMenTs

Introduction

I have audited the accompanying financialstatements of the President’s Fund, whichcomprise the statement of financial position asat31March2010,andthestatementoffinancialperformance,statementofchangesinnetassetsandcashflowstatementfortheyearthenended,andasummaryofsignificantaccountingpoliciesandotherexplanatoryinformation,as setoutonpages16to26.

accounting officer’s responsibility for the financial statements

The accounting officer is responsible forthe preparation and fair presentation of thefinancial statements in accordance with SouthAfrican Standards of Generally RecognisedAccountingPractice(SAStandardsofGRAP)andin the manner required by the Public FinanceManagement Act, 1999 (Act No. 1 of 1999)(PFMA). This responsibility includes: designing,implementing and maintaining internal controlrelevanttothepreparationandfairpresentationoffinancialstatementsthatarefreefrommaterialmisstatement, whether due to fraud or error;selecting and applying appropriate accountingpolicies; and making accounting estimates thatarereasonableinthecircumstances.

auditor-General’s responsibility

As required by section 188 of the Constitution,section4ofthePublicAuditAct,2004(ActNo.25of2004)(PAA)andsection42(7)ofthePromotionofNationalUnityandReconciliationAct,1995(ActNo.34of1995),myresponsibilityistoexpressan

opinion on these financial statements based onmyaudit.

I conducted my audit in accordance withInternationalStandardsonAuditingandGeneral Notice 1570 of 2009 issuedinGovernment Gazette 32758 of 27 November 2009. Those standardsrequire that I comply with ethical requirementsand plan and perform the audit to obtainreasonableassuranceaboutwhetherthefinancialstatementsarefreefrommaterialmisstatement.

An audit involves performing procedures toobtain audit evidence about the amounts anddisclosures in the financial statements. Theprocedures selected depend on the auditor’sjudgement, including the assessment of therisks of material misstatement of the financialstatements, whether due to fraud or error. Inmaking those risk assessments, the auditorconsidersinternalcontrolrelevanttotheentity’spreparationandfairpresentationofthefinancialstatements in order to design audit proceduresthat are appropriate in the circumstances, butnot for the purpose of expressing an opinionon the effectiveness of the entity’s internalcontrol. An audit also includes evaluating theappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationofthefinancialstatements.

IbelievethattheauditevidenceIhaveobtainedissufficientandappropriatetoprovideabasisformyauditopinion

opinion

In my opinion, the financial statements presentfairly,inallmaterialrespects,thefinancialpositionofthePresident’sFundasat31March2010,anditsfinancialperformanceanditscashflowsfortheyearthenended,inaccordancewithSAStandardsofGRAPasdescribedinnote2.1tothefinancialstatements and in the manner required by thePFMA.

2009/10 13

emphasis of matter

Idrawattentiontothematterbelow.Myopinionisnotmodifiedinrespectofthismatter:

Restatement of corresponding figures

Asdisclosedinnote14tothefinancialstatements,thecorrespondingfiguresfor31March2009havebeen restated as a result of an error discoveredduring2009/10inthefinancialstatementsofthePresident’s Fund at, and for the year ended, 31March2010.

RePoRT on oTHeR leGal anD ReGUlaToRY ReQUIReMenTs

IntermsofthePAAandGeneral Notice 1570 of 2009 issuedinGovernment Gazette 32758 of 27 November 2009, I includebelowmyfindingsonthe reporton predetermined objectives, compliance withthe PFMA, and financial management (internalcontrol).

findings

Predetermined objectives

• Usefulness of reported performance information Planned and reported performance targets not specific, measurable and time bound

Forprogramme3:statelegalservicesoftheDepartmentofJusticeandConstitutionalDevelopment,100%oftheplannedandreportedtargetswerenot:

• specific in clearly identifying the natureandtherequiredlevelofperformance

• measurable in identifying the requiredperformance

• time bound in specifying the time periodordeadlinefordelivery.

• Reliability of reported performance information

For programme 3: state legal services of theDepartment of Justice and ConstitutionalDevelopment, the validity, accuracy andcompletenessof33%ofthereportedindicatorscould not be established, as sufficientappropriateauditevidenceorrelevantsourcedocumentation could not be provided forauditpurposes.

InTeRnal conTRol

Iconsideredinternalcontrolrelevanttomyauditof the financial statements and the report onpredetermined objectives and compliance withthe PFMA and the Promotion of National UnityandReconciliationAct,1995(ActNo.34of1995),butnotforthepurposesofexpressinganopinionon the effectiveness of internal control. Thematters reported are limited to the deficienciesidentifiedduringtheaudit.

financial and performance management

• Sufficient appropriate audit evidencewith regard to the reported performanceinformationofthePresident’sFundcouldnotbe obtained, as the information system usedfor generating performance information wasnot appropriate to facilitate the preparationofaccurateandcompleteactualperformanceinformation.

Pretoria

30July2010


PaRT 4

financial statements


sTaTeMenT of fInancIal PeRfoRMance (sPR)foR THe YeaR enDeD 31 MaRcH 2010

notes 2009/10 2008/09R R

RevenueNonExchangetransactions-Donations 823 0NonExchangetransactions-Royalties 4787 1864Investmentrevenue 3 72734646 92851767

72 740 256 92 853 631less:expenditure 1105158 565284surplus/(deficit) for the year 4 71 635 098 92 288 347

2009/10 17

sTaTeMenT of fInancIal PosITIon (sPo)as aT 31 MaRcH 2010

notes 2009/10 2008/09R R

asseTs

non-current assets 973 102 942 893 320 215Financialinvestmentsavailable-for-sale 6 973102942 893320215

current assets 231 169 8 959 235Cashandcashequivalents 8 231169 8957571Tradeandotherreceivables-Nonexchangetransactions 5 0 1664

Total assets 973 334 111 902 279 450

lIabIlITIes

Total liabilities 27 659 225 28 843 536Tradeandotherpayables-Nonexchangetransactions 7 27659225 28843536

caPITal anD ReseRVes

Total net assets 945 674 886 873 435 914Accumulatedsurplus 9 944754443 873119345

Accumulatedothercomprehensiveincome 10 920443 316569

Total net assets and liabilities 973 334 111 902 279 450


sTaTeMenT of cHanGes In eQUITYfoR THe YeaR enDeD 31 MaRcH 2010

notes 2009/10 2008/09

R R

accumulated surplusBalanceasat1April 873119345 780906318Plus:Surplus/(deficit)fortheyear 71635098 92288347

944 754 443 873 194 665less:Prioryearerror 14 0 75320balance as at 31 March 9 944 754 443 873 119 345

accumulated other comprehensive incomeBalanceasat1April 316569 0Plus:Unrealisedgainfortheyear 6.1 603874 316569balance as at 31 March 10 920 443 316 569

Total net assets 945 674 886 873 435 914

2009/10 19

casH floW sTaTeMenTs foR THe YeaR enDeD 31 MaRcH 2010

notes 2009/10 2008/09R R

casH floWs fRoM oPeRaTInG acTIVITIes

Cashreceiptsonbehalfofbeneficiaries -2204706 -1128704Cashpaidtobeneficiariesandcreditors 1105158 549964

cash generated from/(utilised in) operations 11 -1 099 548 -578 740

Investmentincomereceived 72734646 92851767net cash inflows/(outflows) from operating activities 71 635 098 92 273 027

casH floWs fRoM InVesTInG acTIVITIes

net cash flows from investing activities -79 178 853 -113 916 631

Netinvestments -79178853 -113916631

casH floWs fRoM fInancInG acTIVITIes

net cash flow financing activities -1 182 647 24 071 466Increase/(decrease)inbeneficiaryliability -1184311 -2240471

Decrease/(increase)inaccountsreceivable 1664 26311937

net increase/(decrease) in cash and cash equivalents -8 726 402 2 427 862

Cashandcashequivalentsatthebeginningoftheyear

8957571 6529709

cash and cash equivalents at end of the year 231 169 8 957 571


accoUnTInG PolIcIes

1. General information

The President’s Fund was established intermsofSection42ofthePromotionofNational Unity and Reconciliation Act,1995(ActNo.34of1995)anddomiciledintheRepublicofSouthAfrica.

2. Principal accounting policies

Theprincipalaccountingpoliciesappliedin the preparation of these financialstatements are set out below. Thesepolicieshavebeenconsistentlyappliedtoalltheyearspresented,unlessotherwisestated.

2.1 basis of preparation

The financial statements have beenprepared on the historical cost basis,exceptforavailable-for-saleinvestmentsthat have been measured at fair value.Thefinancialstatementsarepresentedinrands.

statement of compliance

The financial statements of thePresident’s Fund have been prepared inaccordancewithSouthAfricaStatementsofGRAPasrequiredbythePublicFinanceManagement Act, 1999 (Act No. 1 of1999)(PFMA).

2.2 summary of significant accounting policies

2.2.1 Revenue recognition

ThePresident’sFundrecognisesrevenuewhen the amount of revenue can bereliably measured, it is probable thatfutureeconomicbenefitswillflowtotheentityandspecificcriteriahavebeenmetforeachofthePresident’sFundactivitiesasdescribedbelow.

(i) Grants received

Grants from the Department of Justiceand Constitutional Development areaccountedforintheperiodtowhichtheallocationsrelate.

(ii) Donations received

Donationsareaccountedforonreceipt.

(iii) Royalties

Royalties are recognised on an accrualbasis in accordance with the substanceoftherelevantagreement.

(iv) Interest Income

Interest revenue is accrued on a timebasis, by reference to the principaloutstanding,andattheeffectiveinterestrate applicable, which is the rate thatexactly discounts estimated future cashreceiptsthroughtheexpectedlifeofthefinancialassettothatasset’snetcarryingamount.

2.2.2 expenditure

(i) Reparations

Reparations are accrued on approvalby the Committee on Reparation andRehabilitationCommission.

(ii) administration expenditure

Administration expenses do not formpartofgrantsasstatedinsubparagraph2.2.1. Disbursements in respect ofadministrativeexpensesarebornebytheDepartmentofJusticeandConstitutionalDevelopment, except for bank chargesandserviceproviderfeesthatarebornebytheFunditself.

2009/10 21

2.2.3 financial instruments

Initial recognition and subsequent measurement - continue date of recognitionof financial instrument

Purchases or sales of financial assetsthat require delivery of assets withinthe time frame generally establishedby regulations or convention in themarketplacearerecognisedonthedatethat the President’s Fund commits topurchaseorselltheasset.

Initial recognition of financial instrument

The classification of financialinstruments at initial recognitiondepends on the purpose for which thefinancial instruments were acquiredand their characteristics. All financialinstruments are measured initiallyat their fair value plus, in the case offinancialassetsnotatfairvaluethroughprofit or loss, any directly attributableincrementalcostofacquisitionorissue.

i) Trade and other receivables

Trade and other receivables originatedbytheFundarestatedatfairvaluelessprovisionfordoubtfuldebts.

ii) Trade and other payables

Trade and other payables incurred bytheFundarestatedatpresentliability.

iii) cash and cash equivalents

Demanddepositsandothershort-termhighlyliquidinvestmentsthatarereadilyconvertibletoaknownamountofcashand are subject to an insignificantrisk of changes in value are disclosedunder another category of financialinstrument,dependingontheirnature.

Cash and cash equivalents that do nothave fixed and determined paymentswill be classified as available-for-salefinancialassets.

Cash and cash equivalents and bankborrowingsarerecordedatfacevalue.

financial instruments - initial recognition and subsequent measurement

available-for-sale financial investments

Available-for-sale financial investmentsarethosewhicharedesignatedassuchordonotqualify tobeclassifiedat fairvalue through profit or loss, held-to-maturity or loans and advances. Theyincludeequityinstruments,investmentsin money markets and other debitinstruments.

After initial measurement, availability-for-sale financial investments aresubsequently measured at fairvalue. Unrealised gains and lossesare recognised directly in equity as“accumulated other comprehensive income”. When the security is disposedoff, the cumulative gain or losspreviously recognised in equity isrecognisedintheStatementofFinancialPerformancein“other operating income” or “other operating expenses”. Interestearned whilst holding available-for-sale financial investments is reportedas interest income using the effectiveinterest rate. Dividends earned whilstholding available-for-sale financialinvestments are recognised in theStatement of Financial Performance as“other operating income”whentherightof the payment has been established.The losses arising from impairment ofsuchinvestmentsarerecognisedinthe


Statement of Financial Performancein “impairment losses on financial investments” and removed from theavailable-for-salereserve.

2.4 contingent liabilities

A possible obligation that arises frompast events and whose existence willbeconfirmedonlybytheoccurrenceornon-occurrenceofoneormoreuncertainfuture events not wholly within thecontrol of the President’s Fund. ThePresident’sFundclassifiesitscontingentliability as people who were declaredvictimsbytheTRCandhavenotappliedfor reparation. It is uncertain whetherthese people will apply for reparation.Contingentliabilitiesareincludedinthedisclosurenotes.

2.5 cash flow statement

The cash flow statement is preparedaccordingtotheindirectmethod.

2009/10 23

noTes To THe fInancIal sTaTeMenTsas aT 31 MaRcH 2010

2009/10 2008/09R R

3. Investment revenueInterestreceived(Available-for-saleinvestments)-PIC 72734646 13029804

Plus:Prioryearerror-Note14.2 0 4998672734646 13079790

Interestreceived(FixedandCalldeposits)-StandardBank 0 79771977

72 734 646 92 851 767

4. surplus/(deficit) for the year

Operatingprofithasbeendeterminedaftertakingintoaccountthefollowingincomeandexpenses:

Revenue 72 740 256 92 853 631NonExchangetransactions-Donations 823 0NonExchangetransactions-Royalties 4787 1864InvestmentRevenue-See note 3 72734646 92851767

less: expenditure 1 105 158 565 284Interimreparations 50000 29360ManagementFees-PublicInvestment

Corporation(Prior year for 2 months only) 532803 76144Finalreparations 510000 345000ServiceProvider-BDBDataBureau 7827 6419BankCharges 2864 3411Provisionforbaddebts-See note 5 1664 104950

surplus/(deficit) for the year 71 635 098 92 288 347


2009/10 2008/09R R

5. Trade and other receivables - non exchange transactions

Reparationpaymentsrecoverable: 0 1664Accountsreceivable 273264 273264less:Provisionforbaddebts -273264 -271600

0 1 664

DuringthefinancialyearthePresident‘sFundtransferreditsinvestmenttothePublicInvestmentCorporation.Duetothischangeininvestmentthereisnoaccrualininterest.

6. financial investments available-for-sale6.1 Public Investment corporation

Openingbalanceasoriginallystated 893 320 215 0Cost 893003646 0Unrealisedprofit/(losses) 316569 0

Investmentincomereceivedduringfinancialyear 72734646 13029804

Additionsduringtheyear 8957010 880000000Disposalsduringtheyear -1980000 0Unrealisedprofit/(losses) 603874 316569Managementexpenses-Afterpriorperioderror-See note 14.2 -532803 -76144

closing balance 973 102 942 893 320 215Fairvalueatacquisitiondate 972182499 893003646Unrealisedprofit/(losses) 920443 316569

Unrealisedprofit/(losses)isthedifferencebetween“All-in market values”andthe“Clean book value”plus“Market value interest”.AprovisionagainstAccumulatedothercomprehensiveincomewasmadefortheseunrealisedprofit/(losses).

2009/10 25

2009/10 2008/09R R

PIc InvestmentsMoneyMarket0-3months 422146400 292300168MoneyMarket3-6months 272404553 271227788MoneyMarket6-9months 25849931 201562329MoneyMarket9-12months 162103631 107080668PICmanagementfeecorrection 4732791 591886PICinterestreceivecorrection 203107 49986TradingCash 85662529 20507390

973 102 942 893 320 215

6.2 Total financial investments available-for-sale 973 102 942 893 320 215

7. Trade and other payables - non exchange transactionsReparationpaymentsapproved-Afterprioryearerroradjustment-SeeNote 14.2 27659099 28843499Accruals 126 37

27 659 225 28 843 536

8. cash and cash equivalentsStandardBankaccount 231169 8957571

231 169 8 957 571

ThecarryingamountofCashandcashequivalentsapproximatestheirfairvalueduetotheirshort-termmaturity.

9. accumulated surplus/(deficit)Openingbalanceatthebeginningoftheyear 873119345 780906318

less:Prioryearerror-Seenote14.1 0 -75320

Restated opening balance at the beginning of the year 873119345 780830998Surplus/(deficit)fortheyear 71635098 92288347balance at the end of the year 944 754 443 873 119 345

10. accumulated other comprehensive income


2009/10 2008/09R R

Openingbalanceatthebeginningoftheyear 316569 0Unrealisedprofit/(losses)fortheyear 603874 316569Revaluationincrease/(decrease)ininvestments 0 0balance at the end of the year 920 443 316 569

11. cash generated from/(utilised in) operationsSurplus/(deficit)beforeinterest 71635098 92273027less:Investmentincomereceived -72734646 -92851767net cash flows from operating activities -1 099 548 -578 740

12. Related party transactionsAlladministrationcostsforthePresident’sFundarepaidforbytheDepartmentofJusticeandConstitutionalDevelopment.

13. contingent liabilitiesVictimsidentifiedbytheTRCneedtoapplyforreparationsbeforetheyarerecognisedascreditors.Anuncertaintyexistastohowmanyvictimsmayapplyinthefuture.At31March2010theestimatedamountwasR77192000inrespectof2344beneficiaries.

14. Prior year error14.1 Prioryearerrorduetounderprovisionof

creditorsforthe2007/08financialyear.Openingbalanceadjustedasat1April2008.

Increaseincreditors 75320

DecreaseinAccumulatedsurplus 75320

14.2 PrioryearerrorduetoincorrectmanagementfeescalculatedbyPICfor2008/09.

DecreaseinmanagementFees 591886

IncreaseinInvestmentincome 49986

2009/10 27

RIsK ManaGeMenT sTaTeMenT

1. Introduction

AsaclientofthePIC,thePresident’sFundspecifies itsdesirableriskparameters inaccordance with its own risk appetite.This risk appetite informs the formalinvestmentmandategiventothePIC.Theultimate responsibility for investmentriskmanagementoversightlieswiththePICandnotwiththePresident’sFund.

2. Market risk

Market risk is the potential loss due toadverse movement in the market valueofassets.

TheEntity’sactivitiesexposeitprimarilyto the risks of fluctuations in interestratesrisk.

Interest rate risk refers to the risk thatthe fair value of future cash flows ofa financial instrument will fluctuatebecause of changes in market interestrates.

Market risk exposures are measuredusing sensitivity analysis. A sensitivityanalysis shows how net surplus, and/ornetassetswouldhavebeenaffectedby changes in the relevant risk variablethat were reasonably possible at thereportingdate.

Interest rate risk management

ThePresident’sFundinterestrateprofileconsistsofMoneyMarketaccountsandbankbalanceswhichexposetheentitytofairvalueinterestrateriskandcashflowinterestraterisk,andcanbesummarisedasfollows:

FinancialAssetsBank balances linked to South Africanprimerate

Money Market linked to South Africanprimerate.

Themanagementof themoneymarketinterestrateriskisdonebythePIC.

3. Interest rate risk

Thisriskisthepotentialfinanciallossasaresultofadversemovementsininterestrates that affect the value of moneymarket instruments. As a PIC clientPresident’sFundhasexposuretointerestrateriskthrough investments inmoneymarkets.

Sensitivity to interest rate movementsis measured by the duration of thefixed interest exposure. Such durationisdictatedinthePresident’sFundclientinvestment mandate to PIC, relative totheappropriatebenchmark.

Furthermore, these investmentmandates prescribe how the assetsshouldbemanagedbyPIC, in linewithPresident’s Fund liquidity needs and itsliabilityprofile.

4. credit risk

President’s Fund investment portfoliosare exposed to the potential for credit-related losses that can result due to anindividual, counterparty or issuer beingunableorunwillingtohonorcontractualobligations.

To mitigate this risk and minimiseexcessive credit exposure to one singlecounterparty, the President’s Fundmandate toPICstates thatPICwillonly


invest with local commercial banks orinstitutions that have a credit rating ofat least“A” from one of the recogniseddomestic and/or international creditratingagencies.

5. liquidity riskLiquidity risk arises when there areinsufficient liquid assets available toenable the President’s Fund to meet itsobligationswhendue.

The President’s Fund current liquidasset holdings of less than 3 monthsmaturity amount to R507 million of thetotal portfolio which ensures sufficientliquidity to pay out monies due tobeneficiaries.

6. concentration riskConcentration risk is the risk of lossesarisingduetopoordiversificationwithinfunds, which can result in undesirableriskexposures.

The President’s Fund manages this riskthrough the PIC investment mandate,whichdictatesthelevelofconcentration.Money market investments are spreadacrossbankstoreduceanddiversifytheclient’sconcentrationrisk.

ISBN: 978-0-621-39658-4

RP223/2010

Issued by: The Department of Justice and Constitutional Development

P/Bag X81, Pretoria, 0001

Tel: (012) 315 1111

President’s Fund Annual Reportfor 2009/10The Department of Justice and Constitutional Development

president’s fund annual report for 2009/10 - justice home · president’s fund annual report ......

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