President’s Fund Annual Report for 2010/11 - Justice … President’s Fund Annual Report We are...

ISBN: 978-0-621-40357-2

RP 222/2011

Issued by: The Department of Justice and Constitutional Development

P/Bag X81, Pretoria, 0001

Tel: (012) 315 1111

President’s Fund Annual Reportfor 2010/11The Department of Justice and Constitutional Development

2010/11 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 16

statement of financial position 16

statement of changes in equity 17

cash flow statement 17

accounting Policies 18

notes to the financial statements 21

Risk management statement 24

DePaRTMenT of JUsTIce anD consTITUTIonal DeVeloPMenTPResIDenT’s fUnD

PaRT 1

Report of the accounting officer

President’sFundAnnualReport4

GeneRal ReVIeWThe President’s Fund was established in termsofsection42ofthePromotionofNationalUnityandReconciliationAct,1995(ActNo34of1995).

Parliament approved the following measurestovictimsontherecommendationoftheStatePresident and the subsequent considerationand recommendation of the ad hoc JointCommitteeofbothHousesofParliamentonthetablingofthefinaltwovolumesoftheTruthandReconciliationCommission(TRC)reports:

• A once-off individual grant of R30 000 tothoseindividualsorsurvivorsdesignatedbytheTRC.

• Systematicprogrammestoprojectacademicand formal records of history, cultural andart forms, as well as erecting symbols andmonumentsthatexaltthefreedomstruggle,includingnewgeographicandplacenames.

• MedicalandotherformsofSocialAssistanceprogrammestoprovideformedicalbenefits,education assistance and the provision ofhousing, as well as other social benefits toaddresstheneedsofvictimsidentifiedbytheTRC.

• Whole communities, other than individualslinked to the TRC process, which sufferedand are still in distress; therefore, the needfor such communities to be rehabilitatedthrough various programmes initiated andsupportedbyGovernment.

Subsection 42(2) of the Act states that “there shall be paid from the fund all amounts payable to victims by way of reparation in terms of regulations made by the President”.

To give effect to the payment of the once-offindividual grant of R30 000, regulations weregazettedon12November2003.

Asattheendofthefinancialyearunderreview,15 962ofthe16837applicationsforreparationapprovedbytheTRChavebeenpaidtheonce-off individual grant. Payments to beneficiariestotal R479 million. There are 875 outstandingbeneficiaries who could not be traced via thedatabaseofaprofessionaltracingagency.DetailsoftheunpaidbeneficiariesweresuppliedtotheDepartment of Home Affairs and the ElectoralCommission (IEC) to assist in providing thewhereabouts of the unpaid beneficiaries. TheDepartmentofHomeAffairshasconfirmedthat500oftheunpaidbeneficiariesaredeceased,butwas unable to provide information of contactpersonswhoregisteredthedeaths.

The Department of Justice and ConstitutionalDevelopmentisattemptingtolocatetherightfulnextofkinentitledtothebenefit.TheIECwasabletosupplycurrentaddressesof302beneficiariesfromitsdatabase.Lettershavebeenwrittentothe affected beneficiaries, requesting them tocontact the President’s Fund so that they canbecorrectlyidentifiedandtheirbankingdetailsobtained.Theremaining73beneficiariesdidnothavecorrectidentitynumbersandcouldnotbetrackedbytheagenciesconcerned.

symbols and monuments

This aspect of the reparation measure is beingaddressed by the Department of Arts andCulture via the Freedom Park Trust, the SouthAfrican Heritage Resources Agency and theprovincialandlocalgovernmentsthroughtheirownprogrammes.NofundshavebeenutilisedfromthePresident’sFundtodate.

Medical and other forms of social assistance

Regulations on the exhumation of missingpersons and reburial were gazetted on7 May 2010. As at the date of this report, 37

RePoRT of THe accoUnTInG offIceR on THe annUal fInancIal sTaTeMenTs of THe PResIDenT’s fUnD foR THe YeaR enDeD 31 MaRcH 2011

2010/11 5

familiesofpersonswhohavebeenexhumedandreburied,andwhoapplied for socialassistancewerepaidatotalamountofR629000(R17 000perfamilyintermsoftheregulation).

Draft regulations relating to medical benefits,andbasicandhighereducationassistancewerepublished in Government Gazette No 34279(Notice No 282) on 11 May 2011 for publiccomment, with the closing date for commentsbeing8June2011.

The department is consulting with theNational Department of Housing to finalise amemorandum of understanding regarding theprovision of housing, which will form the basisfordevelopingtheregulationsfortheprovisionofhousing.

Rehabilitation of communities

ApproachplanningsessionswereheldwiththeIndependentDevelopmentTrust(IDT),whichwillperform this aspect of the reparation measureonbehalfofthedepartment.Needsassessmentquestionnaires have been developed and thedepartment is in the process of finalising amemorandumofunderstandingwiththeIDT.

DonoR fUnDsNo significant donations were received, exceptforanamountofR287,beingproceedsfromthesaleofbooksbythepublishersonTRCmatters.

coRPoRaTe GoVeRnance aRRanGeMenTsThefundutilisestheservicesoftheDepartmentof Justice and Constitutional Developmentfor its risk management approach, fraudprevention policies, effectiveness of internalaudit and Audit Committee services. It alsoutilisesthegovernancestructures,systemsandmanagementprocessesofthedepartment.

oTHeRWe shall continue to utilise the funds availablein the President’s Fund, as well as any furthercontributions for the purposes for which thefund was established in terms of the foundinglegislation and by direction of regulationsenactedbytheStatePresident.

Myappreciationandthanksareaccordedtotherelateddepartments,agenciesandstakeholders,who have assisted in attaining the reparationgoalsofthePresident’sFund.

________________________________

Ms nonkululeko sindaneaccounting offi cer: President’s fund31May2011


PaRT 2

Report of the audit committee


Wearepleasedtopresentourreportforthefinancialyearended31March2011.

aUDIT coMMITTee MeMbeRs anD aTTenDanceThe Audit Committee consists of the memberslisted below and is required to meet at leastfour times per annum in accordance with itsapprovedtermsofreference.Duringthecurrentyear, eight meetings were held.These includedspecialmeetingsheldtoaddressauditconcernsand qualification matters in the Department ofJusticeandConstitutionalDevelopment.

names of members

number of meetings attended

status

MrMotsamaiKaredi(Chairperson)

8 Reappointed15December2009

MrCedricBoltman

8 Reappointed15December2009

MsBajabulileLuthuli

7 Appointed15December2009

MsMatshegoRamagaga


MsZodwaManase


MrWilsonRamabulana


ResPonsIbIlITY of THe aUDIT coMMITTeeWe report that we have adopted appropriateformal terms of reference in our charter in linewith the requirement of section 38(l)(a) of thePublicFinanceManagementAct,1999(ActNo1of1999)(PFMA)andTreasuryRegulation3.1.

THe effecTIVeness of InTeRnal conTRolThere were no significant control weaknessesand risks reported to the Audit Committee andwe are satisfied that key controls remained inplacethroughouttheyear.Wheredeficienciesininternal controls were identified, managementdemonstratedcommitmentinaddressingthem.

We took note of management’s initiativesin tracing beneficiaries of the Truth andReconciliationCommission (TRC),aswellas theprocessonthefinalisationofregulationsrelatingtotheallocationoffundingforeducation,healthand housing for the beneficiaries. However, weexpressconcernontheslowprogress,asthefundhasbeengrowingsignificantlyovertheyears.

InTeRnal aUDITThe department’s Internal Audit Unit isresponsible for auditing the President’s Fund.The unit has discharged its responsibilities inaccordancewiththeInternalAuditPlan.

aUDIToR-GeneRal soUTH afRIcaWe have met with the Auditor-General SouthAfrica to ensure that there are no unresolvedissues.

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

Although there are areas of improvement, ashighlightedbythedepartment,wearesatisfiedwith the content and quality of monthly andquarterly reports prepared and issued by theaccountingofficerduringtheyearunderreview.However, we have noted the Auditor-General’sconcernsrelatingtothedepartment’sreportingon performance information in terms of therequiredauditingstandards.

RePoRT of THe aUDIT coMMITTee

2010/11 9

Management has undertaken to effect therecommended improvements, and the AuditCommitteewillcontinuouslymonitorprogressinthisregard.

evaluation of financial statements

Wehavedonethefollowing:

• Reviewed and discussed the audited annualfinancial statements to be included in theannual report with the Auditor-General ofSouthAfricaandtheaccountingofficer.

• ReviewedtheAuditor-GeneralofSouthAfrica’smanagement report and management’sresponsetoit.

• Reviewedthedepartment’scompliancewithlegalandregulatoryprovisions.

• Reviewed significant adjustments resultingfromtheaudit.

We concur and accept the conclusions of theAuditor-General of South Africa’s report onthe annual financial statements and are ofthe opinion that the audited annual financialstatements should be accepted, read togetherwiththereportoftheAuditor-GeneralofSouthAfrica.

________________________________

MKaredi chairperson of the audit committee29July2011


PaRT 3

Report of the auditor-General of south africa


InTRoDUcTIon 1. I have audited the accompanying financial

statements of the President’s Fund, whichcomprisethestatementoffinancialpositionasat31March2011,thestatementoffinancialperformance, the statement of changes innet assets and the cash flow statement fortheyearthenended,aswellasasummaryofsignificantaccountingpolicies,assetoutonpages16to25.

accoUnTInG offIceR’s ResPonsIbIlITY foR THe fInancIal sTaTeMenTs 2. The accounting officer is responsible for

the preparation and fair presentation ofthese financial statements in accordancewith the South African Standards ofGenerally Recognised Accounting Practice(SA Standards of GRAP) and in the mannerrequiredbythePublicFinanceManagementAct, 1999 (Act No 1 of 1999) (PFMA) andfor such internal control as managementdetermines necessary to enable thepreparation of financial statements that arefree from material misstatement, whetherduetofraudorerror.

aUDIToR-GeneRal’s ResPonsIbIlITY 3. Asrequiredbysection188oftheConstitution

of the Republic of South Africa, 1996 (ActNo108of1996),section4ofthePublicAuditActofSouthAfrica,2004(ActNo25of2004)(PAA) and section 42(7) of the Promotionof National Unity and Reconciliation Actof South Africa, 1995 (Act No 34 of 1995),my responsibility is to express an opinionon these financial statements based on myaudit.

4. I conducted my audit in accordance withInternational Standards on Auditing and

General Notice 1111 of 2010, issued inGovernment Gazette 33872 of 15 December2010. Those standards require that Icomply with ethical requirements andplan and perform the audit to obtainreasonable assurance about whether thefinancial statements are free from materialmisstatement.

5. Anaudit involvesperformingprocedurestoobtain audit evidence about the amountsand disclosures in the financial statements.The procedures selected depend on theauditor’sjudgment,includingtheassessmentof the risks of material misstatement of thefinancial statements, whether due to fraudor error. In making those risk assessments,the auditor considers internal controlrelevant to the entity’s preparation and fairpresentation of the financial statements inorder to design audit procedures that areappropriate in the circumstances, but notfor the purpose of expressing an opinionon the effectiveness of the entity’s internalcontrol. An audit also includes evaluatingthe appropriateness of accounting policiesused and the reasonableness ofaccountingestimatesmadebymanagement,aswellasevaluating the overall presentation of thefinancialstatements.

6. I believe that the audit evidence I haveobtained is sufficient and appropriate toprovideabasisformyauditopinion.

oPInIon 7. In my opinion, the financial statements

present fairly, in all material respects, thefinancialpositionofthePresident’sFundasat31March2011,anditsfinancialperformanceand cash flows for the year then ended, inaccordance with the SA Standards of GRAPandinthemannerrequiredbythePFMA.

RePoRT of THe aUDIToR-GeneRal To PaRlIaMenT on THe fInancIal sTaTeMenTs of THe PResIDenT’s fUnD foR THe YeaR enDeD 31 MaRcH 2011

2010/11 13

RePoRT on oTHeR leGal anD ReGUlaToRY ReQUIReMenTs 8. In accordance with the PAA and in terms

of General Notice 1111 of 2010, issued inGovernment Gazette 33872 of 15 December 2010, Iincludebelowmyfindingsonmaterialnon-compliance with laws and regulationsapplicabletotheentity.

coMPlIance WITH laWs anD ReGUlaTIons9. There are no findings concerning material

non-compliance with laws and regulationsapplicabletothefund.

InTeRnal conTRol10. In accordance with the PAA and in terms

of General Notice 1111 of 2010, issued inGovernment Gazette 33872 of 15 December 2010, I have considered internal controlrelevanttomyaudit,butnotforthepurposeofexpressinganopinionontheeffectivenessof internal control. There are no significantdeficiencies in internal control that resultedinaqualificationoftheauditor’sopiniononthe financial statements and material non-compliancewithlawsandregulations.

Pretoria

31July2011


PaRT 4

financial statements


sTaTeMenT of fInancIal PeRfoRMancefor the year ended 31 March 2011

Note 2011 2010R R

RevenueNon-exchangetransactions–donations 287 823No-exchangetransactions–royalties 6131 4787Investmentrevenue 3 66813011 72734646

66819429 72740256Less:Expenditure 1372376 1105158

Surplusfortheyear 4 65447053 71635098

sTaTeMenT of fInancIal PosITIonas at 31 March 2011

Note 2011 2010R R

ASSETSNon-currentassets 1037414761 973102942Financialinvestmentsavailable-for-sale 6 1037414761 973102942

Currentassets 148471 231169Cashandcashequivalents 8 148471 231169Tradeandotherreceivables–non-exchangetransactions

5 0 0

Totalassets 1037563232 973334111

LIABILITIESTotalliabilities 27369236 27666725Tradeandotherpayables–non-exchangetransactions

7 27369236 27666725

CAPITALANDRESERVESTotalnetassets 1010193996 945667386Accumulatedsurplus 9 1010193996 944746943Accumulatedothercomprehensiveincome 10 0 920443

Totalnetassetsandliabilities 1037563232 973334111

2010/11 17

sTaTeMenT of cHanGes In eQUITYas at 31 March 2011

Note 2011 2010

R RAccumulatedsurplusOpeningbalance 944746943 873119345Plus:Surplusfortheyear 65447053 71635098

1010193996 944754443less:Prioryearerror 14 0 7500Closingbalance 9 1010193996 944746943

AccumulatedothercomprehensiveincomeOpeningbalance 920443 316569Plus:Unrealisedgain/lossfortheyear 6.1 0 603874less: Revaluationdecreaseininvestments 10 -920443 0Closingbalance 10 0 920443

Totalnetassets 1010193996 945667386

casH floW sTaTeMenT

as at 31 March 2011Note 2011 2010

R RCASHFLOWSFROMOPERATINGACTIVITIESCashreceiptsonbehalfofbeneficiaries -2738334 -2204706Cashpaidtobeneficiariesandcreditors 1372376 1105158Cashgeneratedfrom/(utilisedin)operations 11 -1365958 -1099548Investmentincomereceived 66513011 72734646 Netcashinflows/(outflows)fromoperatingactivities 65447053 71635098

CASHFLOWSFROMINVESTMENTACTIVITIESNetcashflowsfrominvestmentactivities -65232262 -76178853Netinvestments* 1580749 -6444207

CASHFLOWSFROMFINANCINGACTIVITIESNetcashflowfromfinancingactivities -297489 -1182647Increase/(decrease)inbeneficiaryliability -297489 -1184311Decrease/(increase)inaccountsreceivable 0 1664

Netincrease/(decrease)incashandcashequivalents -82698 -8726402Cashandcashequivalentsatthebeginningoftheyear

231169 8957571

Cashandcashequivalentsattheendoftheyear 148471 231169


accoUnTInG PolIcIes for the year ended 31 March 2011

1. GeneRal InfoRMaTIonThePresident’sFundwasestablishedintermsofsection42ofthePromotionofNationalUnityandReconciliationAct,1995(ActNo34of1995),anddomiciledintheRepublicofSouthAfrica.

2. PRIncIPal accoUnTInG PolIcIesTheprincipalaccountingpoliciesappliedinthepreparationofthesefinancialstatementsaresetoutbelow.Thesepolicieshavebeenconsistentlyappliedtoalltheyearspresented,unlessotherwisestated.

2.1 basis of preparationThe financial statements have been prepared on the historical cost basis, except foravailable-for-sale investments that have been measured at fair value. The financialstatementsarepresentedinrand.

StatementofcomplianceThefinancialstatementsofthePresident’sFundhavebeenpreparedinaccordancewithSouth African Standards of Generally Recognised Accounting Practice (SA Standards ofGRAP),asrequiredbythePublicFinanceManagementAct,1999(ActNo1of1999)(PFMA).

2.2 summary of significant accounting policies

2.2.1 Revenuerecognition

The President’s Fund recognises revenue when the amount of revenue can be reliablymeasured.ItisprobablethatfutureeconomicbenefitswillflowtotheentityandspecificcriteriahavebeenmetforeachofthePresident’sFund’sactivitiesasdescribedbelow.

(i)GrantsreceivedGrantsfromtheDepartmentofJusticeandConstitutionalDevelopmentareaccountedforintheperiodtowhichtheallocationsrelate.

(ii)DonationsreceivedDonationsareaccountedforonreceipt.

(ii)RoyaltiesRoyalties are recognised on an accrual basis in accordance with the substance of therelevantagreement.

(iv)InterestincomeInterestrevenueisaccruedonatimebasis,byreferencetotheprincipaloutstanding,andattheeffectiveinterestrateapplicable,whichistheratethatexactlydiscountsestimatedfuture cash receipts through the expected life of the financial asset to that asset’s netcarryingamount.

2010/11 19

2.2.2 Expenditure

(i)ReparationsReparationsareaccruedonapprovalbytheCommitteeonReparationandRehabilitationCommission.

(ii)AdministrationexpenditureAdministration expenses do not form part of grants as stated in subparagraph 2.2.1.Disbursements in respect of administrative expenses are borne by the Department ofJusticeandConstitutionalDevelopment,exceptforbankchargesandserviceproviderfeesthatarebornebythefunditself.

(iii)ExhumationandreburialsFinancialassistanceprovidedtotherelativeofamissingpersonreportedtotheTruthandReconciliationCommission(TRC)asadeceasedvictim,whoseremainshavebeenexhumedandhandedtothefamilyforreburialorsymbolicburialofpersonswhosephysicalremainscannotbefound.

2.2.3 Financialinstruments

Initialrecognitionandsubsequentmeasurement–continuedateofrecognitionoffinancialinstrumentPurchasesorsalesoffinancialassetsthatrequiredeliveryofassetswithinthetimeframegenerallyestablishedbyregulationsorconventioninthemarketplacearerecognisedonthedatethatthePresident’sFundcommitstopurchaseorselltheasset.

InitialrecognitionoffinancialinstrumentThe classification of financial instruments at initial recognition depends on the purposefor which the financial instruments were acquired and their characteristics. All financialinstruments are measured initially at their fair value plus, in the case of financial assets,not at fair value through profit or loss, of any directly attributable incremental cost ofacquisitionorissue.

i)TradeandotherreceivablesTradeandotherreceivablesoriginatedbythefundarestatedatfairvaluelessprovisionfordoubtfuldebts.

ii)TradeandotherpayablesTradeandotherpayablesincurredbythefundarestatedatpresentliability.

iii)CashandcashequivalentsDemand deposits and other short-term highly liquid investments that are readilyconvertibletoaknownamountofcashandaresubjecttoaninsignificantriskofchangesinvaluearedisclosedunderanothercategoryoffinancialinstrument,dependingontheirnature.

Cashandcashequivalentsthatdonothavefixedanddeterminedpaymentswillbeclassifiedasavailable-for-salefinancialassets.


Cashandcashequivalentsandbankborrowingsarerecordedatfacevalue.

Financialinstruments–initialrecognitionandsubsequentmeasurement

Available-for-salefinancialinvestmentsAvailable-for-sale financial investments are those that are designated as such or do notqualify tobeclassifiedat fairvaluethroughprofitor loss,held-to-maturityor loansandadvances.Theyincludeequityinstruments,investmentsinmoneymarketsandotherdebitinstruments.

After initial measurement, available-for-sale financial investments are subsequentlymeasured at fair value. Unrealised gains and losses are recognised directly in equity as“accumulated other comprehensive income”.Whenthesecurityisdisposedof,thecumulativegainorlosspreviouslyrecognisedinequityisrecognisedintheincomestatementin“other operating income”or“other operating expenses”.Interestearnedwhileholdingavailable-for-salefinancialinvestmentsisreportedasinterestincomeusingtheeffectiveinterestrate.Dividendsearnedwhileholdingavailable-for-salefinancialinvestmentsarerecognisedintheincomestatementas“other operating income”whentherightofthepaymenthasbeenestablished.Thelossesarisingfromimpairmentofsuchinvestmentsarerecognisedintheincome statement in“impairment losses on financial investments” and removed from theavailable-for-salereserve.

2.3 contingent liabilities Contingentliabilityisapossibleobligationthatarisesfrompasteventsandwhoseexistencewill be confirmed only by the occurrence or non-occurrence of one or more uncertainfutureeventsnotwhollywithinthecontrolofthePresident’sFund.Thefundclassifiesitscontingent liability as people who were declared victims by theTRC and who have notapplied for reparation. It is uncertain whether these people will apply for reparation.Contingentliabilitiesareincludedinthedisclosurenotes.

2.4 cash flow statementThecashflowstatementispreparedaccordingtotheindirectmethod.

2010/11 21

noTes To THe annUal fInancIal sTaTeMenTsfor the year ended 31 March 2011

2011 2010R R

1. InvestmentrevenueInterestreceived(available-for-saleinvestments)–PublicInvestmentCorporation

66813011 72734646

Interestreceived(fixedandcalldeposits)–StandardBank

0 0

66813011 72734646

2. Surplus/(deficit)fortheyearOperatingprofithasbeendeterminedaftertakingintoaccountthefollowingincomeandexpenses:

Revenue 66819429 72740256Non-exchangetransactions–donations 287 823Non-exchangetransactions–royalties 6131 4787Investmentrevenue–See Note 1 66813011 72734646

Less:Expenditure 1372376 1105158Interimreparations 18680 50000Managementfees–PublicInvestmentCorporation(Prior year for two months only)

580748 532803

Finalreparations 150000 510000Exhumationandreburials 612000 0Serviceprovider–BDBDataBureau 8199 7827Bankcharges 2749 2864Provisionforbaddebts–See Note 3 0 1664

Surplus/(deficit)fortheyear 65447053 71635098

3. Tradeandotherreceivables–non-exchangetransactions

Reparationpaymentsrecoverable: 0 0Accountsreceivable 273264 273264Less:Provisionforbaddebts -273264 -273264

0 0

4. Financialinvestmentsavailable-for-sale4.1 PublicInvestmentCorporation

Openingbalanceasoriginallystated 973102942 893320215Cost 972182499 893003646Unrealisedprofit/(loss) 920443 316569


2011 2010R R

Investmentincomereceivedduringthefinancialyear

66813011 72734646

Additionsduringtheyear 0 8957010Disposalsduringtheyear -1920444 -1980000Unrealisedprofit/(loss) 0 603874Managementexpenses -580748 -532803Closingbalance 1037414761 973102942Fairvalueatacquisitiondate 1037414761 972182499Unrealisedprofit/(loss) 0 920443

Unrealisedprofit/(loss)isthedifferencebetween“all-in market values”andthe“clean book value”plus“market-value interest”.Aprovisionagainst“accumulated other comprehensive income”wasmadefortheseunrealisedprofits/(losses).

PublicInvestmentCorporationinvestmentsMoneymarket0–3months 427820625 422146400Moneymarket3–6months 381209504 272404553Moneymarket6–9months 0 25849931Moneymarket9–12months 157893707 162103631PublicInvestmentCorporationmanagementfeecorrection

0 4732791

PublicInvestmentCorporationinterestreceivedcorrection

0 203107

Tradingcash 70490924 856625291037414760 973102942

4.2 Totalfinancialinvestmentsavailable-for-sale 1037414760 973102942

5. Tradeandotherpayables–non-exchangetransactions

Reparationpaymentsapproved 27369099 27666599Accruals 137 126

27369236 27666725

6. CashandcashequivalentsStandardBankaccount 148471 231169

148471 231169

Thecarryingamountofcashandcashequivalentsapproximatestheirfairvalueduetotheirshort-termmaturity.

2010/11 23

2011 2010R R

7. Accumulatedsurplus/(deficit)Openingbalanceatthebeginningoftheyear 944746943 873119345less:Prioryearerror–See Note 12 0 7500Restatedopeningbalanceatthebeginningoftheyear

944746943 873111845

Surplus/(deficit)fortheyear 65447053 71635098Balanceattheendoftheyear 1010193996 944746943

8. Accumulatedothercomprehensiveincome

Openingbalanceatthebeginningoftheyear 920443 316569Unrealisedprofit/(loss)fortheyear 0 603874Revaluationincrease/(decrease)ininvestments -920443 0

Balanceattheendoftheyear 0 920443

9. Cashgeneratedfrom/(utilisedin)operationsSurplus/(deficit)beforeinterest 65447053 71635098Less:Investmentincomereceived -66813011 -72734646Netcashflowsfromoperatingactivities -1365958 -1099548

10. RelatedpartytransactionsAlladministrationcostsforthePresident’sFundarepaidbytheDepartmentofJusticeandConstitutionalDevelopment.

11. ContingentliabilitiesVictims identified by theTRC need to apply for reparation before they are recognised ascreditors.Uncertaintyexistsastohowmanyvictimsmayapplyinthefuture.At31March2011,theestimatedamountwasR77 142500inrespectof2342beneficiaries.

12. PrioryearerrorPrioryearerrorduetounderprovisionofcreditorsforthe2009/10financialyear.Openingbalanceasat1April2010

Increaseincreditors 7500

Decreaseinaccumulatedsurplus 7500


RISKMANAGEMENTSTATEMENTfortheyearended31March2011

1. RIsK assessMenT1.1 Introduction

As a client of the Public Investment Corporation (PIC), the President’s Fund specifies itsdesirableriskparametersinaccordancewithitsownriskappetite.ThisriskappetiteinformstheformalinvestmentmandategiventothePIC.TheultimateresponsibilityforinvestmentriskmanagementoversightlieswiththePICandnotwiththePresident’sFund.

1.2 Market riskMarketriskisthepotentiallossduetoadversemovementinthemarketvalueofassets.

Theentity’sactivitiesexposeitprimarilytotheriskoffluctuationsininterestraterisk.

Interestrateriskreferstotheriskthatthefairvalueofthefuturecashflowsofafinancialinstrumentwillfluctuatebecauseofchangesinmarketinterestrates.

Marketriskexposuresaremeasuredusingasensitivityanalysis.Asensitivityanalysisshowshownetsurplusand/ornetassetswouldhavebeenaffectedbychangesintherelevantriskvariablethatwerereasonablypossibleatthereportingdate.

InterestrateriskmanagementThe President’s Fund interest rate profile consists of money market accounts and bankbalancesthatexposetheentitytofairvalueinterestrateriskandcashflowinterestraterisk,andcanbesummarisedasfollows:

FinancialassetsBankbalanceslinkedtoSouthAfricanprimerateMoneymarketlinkedtoSouthAfricanprimerate

ThemanagementoftheMoneyMarketinterestrateriskisdonebythePIC.

1.3 Interest rate riskThis risk is the potential financial loss as a result of adverse movements in interest ratesthataffectthevalueofmoneymarketinstruments.AsaPICclient,thePresident’sFundisexposedtointerestrateriskthroughinvestmentsinmoneymarketaccounts.

Sensitivity to interest rate movements is measured by the duration of the fixed interestexposure.SuchdurationisdictatedinthePresident’sFundclientinvestmentmandatetoPIC,relativetotheappropriatebenchmark.

Furthermore,theseinvestmentmandatesprescribehowtheassetsshouldbemanagedbyPIC,inlinewiththePresident’sFundliquidityneedsanditsliabilityprofile.

1.4 Credit riskThePresident’sFund’sinvestmentportfoliosareexposedtothepotentialforcredit-relatedlossesthatcanresultduetoanindividual,counterpartyorissuerbeingunableorunwillingtohonourcontractualobligations.

2010/11 25

To mitigate this risk and minimise excessive credit exposure to one single counterparty,the President’s Fund mandate to the PIC states that the PIC will only invest with localcommercial banks or institutions that have a credit rating of at least“A” from one of therecogniseddomesticand/orinternationalcredit-ratingagencies.

1.5 Liquidity riskLiquidity risk arises when there are insufficient liquid assets available to enable thePresident’sFundtomeetitsobligationswhendue.

The President’s Fund’s current liquid asset holdings of less than three months’ maturityamounttoR507millionofthetotalportfolio,whichensuressufficientliquiditytopayoutmoniesduetobeneficiaries.

1.6 Concentration riskConcentrationriskistheriskoflossesarisingduetopoordiversificationwithinfunds,whichcanresultinundesirableriskexposures.

ThePresident’sFundmanagesthisriskthroughthePICinvestmentmandate,whichdictatesthelevelofconcentration.Moneymarketinvestmentsarespreadacrossbankstoreduceanddiversifytheclient’sconcentrationrisk.

acknowledgements Ourappreciationtowardstheloyalsupportandvaluablecontributionsofthevariousstakeholdersisherebyacknowledged.

Thefinancialstatementssetoutonpages16to25havebeenapprovedbytheaccountingofficer.

_________________________

Ms n sindane accounting officerDepartment of Justice and constitutional Development31 May 2011

ISBN: 978-0-621-40357-2

RP 222/2011

Issued by: The Department of Justice and Constitutional Development

P/Bag X81, Pretoria, 0001

Tel: (012) 315 1111

President’s Fund Annual Reportfor 2010/11The Department of Justice and Constitutional Development

President’s Fund Annual Report for 2010/11 - Justice … President’s Fund Annual Report We are...

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