Page 199 - DSD ANNUAL REPORT 2022-2

PART E: FINANCIAL INFORMATION

Notes of the Annual Financial Statements for the year ended 31 March 2022

19 Fruitless and wasteful expenditure
Fruitless and wasteful expenditure is recorded in the notes to the financial statements when confirmed. The amount recorded is
equal to the total value of the fruitless and or wasteful expenditure incurred.
Fruitless and wasteful expenditure is removed from the notes to the financial statements when it is resolved or transferred to
receivables or written-off.
Fruitless and wasteful expenditure receivables are measured at the amount that is expected to be recoverable and are de-
recognised when settled or subsequently written-off as irrecoverable.
20 Irregular expenditure
Irregular expenditure is recorded in the notes to the financial statements when confirmed after its assessment. The amount
recorded is equal to the value of the irregular expenditure incurred unless it is impracticable to determine, in which case
reasons therefore are provided in the note.
Irregular expenditure is reduced from the note when it is either condoned by the relevant authority, transferred to receivables
for recovery, not condoned and removed or written-off.
Irregular expenditure receivables are measured at the amount that is expected to be recoverable and are de-recognised when
settled or subsequently written-off as irrecoverable.
21 Changes in accounting estimates and errors
Changes in accounting estimates are applied prospectively in accordance with MCS requirements.
Correction of errors is applied retrospectively in the period in which the error has occurred in accordance with MCS
requirements, except to the extent that it is impracticable to determine the period-specific effects or the cumulative effect of
the error. In such cases, the Department shall restate the opening balances of assets, liabilities and net assets for the earliest
period for which retrospective restatement is practicable.
22 Events after the reporting date
Events after the reporting date that are classified as adjusting events have been accounted for in the financial statements. The
events after the reporting date that are classified as non-adjusting events after the reporting date have been disclosed in the
notes to the financial statements.
23 Principal-Agent arrangements
All related revenues, expenditures, assets and liabilities have been recognised or recorded in terms of the relevant policies listed
herein.
24 Capitalisation reserve
The capitalisation reserve comprises financial assets and/or liabilities originating in a prior reporting period, but which are
recognised in the statement of financial position for the first time in the current reporting period. Amounts are recognised in
the capitalisation reserves when identified in the current period and are transferred to the National/Provincial Revenue Fund
when the underlying asset is disposed of, and the related funds are received.
25 Recoverable revenue
Amounts are recognised as recoverable revenue when a payment made in a previous financial year becomes recoverable from a
debtor in the current financial year. Amounts are transferred to the National Revenue Fund when recovered or are transferred to
the statement of financial performance when written-off.
26
Related party transactions
Related party transactions within the Minister’s portfolio are recorded in the notes to the financial statements when the
transaction is not at arm’s length. The number of individuals and full compensation of key management personnel is recorded in
the notes to the financial statements.
27 Inventories
At the date of acquisition, inventories are recognised at cost in the statement of financial performance.
Where inventories are acquired as part of a non-exchange transaction, the inventories are measured at fair value as at the date
of acquisition.
Inventories are subsequently measured at the lower cost and net realisable value or were intended for distribution (or
consumed in the production of goods for distribution) at no or a nominal charge, the lower of cost and current replacement
value.
The cost of inventories is assigned by using the weighted average cost basis.
28 Public-Private Partnerships
Public-Private Partnerships (PPP) are accounted for based on the nature and/or the substance of the partnership. The transaction
is accounted for in accordance with the relevant accounting policies.
A summary of the significant terms of the PPP agreement, the parties to the agreement, and the date of commencement thereof
together with the description and nature of the concession fees received, the unitary fees paid, rights and obligations of the
Department are recorded in the notes to the financial statements.
29 Employee benefits
The value of each major class of employee benefit obligation (accruals, payables not recognised and provisions) is disclosed in
the Employee benefits note.
30 Transfers of functions
Transfers of functions are accounted for by the acquirer by recognising or recording assets acquired and liabilities assumed at
their carrying amounts at the date of transfer.
Transfers of functions are accounted for by the transferor by derecognising or removing assets and liabilities at their carrying
amounts at the date of transfer.

DEPARTMENT OF SOCIAL DEVELOPMENT ANNUAL REPORT 2021/22 199