Page 279 - DSD ANNUAL REPORT 2022-2

PART E: FINANCIAL INFORMATION
STATE PRESIDENT FUND P AR T E: FINANCIAL INFORMA TION

Notes to the Financial Statements of the State President Fund for the year ended 31 March 2022

5.1.2 Credit Risk
Credit risk is the risk of financial loss to the State President Fund if a financial institution to a financial instrument fails to meet its
contractual obligations.
The State President Fund’s exposure to credit risk is influenced only by the individual characteristics of the financial institutions
where funds are deposited or invested. Reputable financial institutions are used for investing and cash handling purposes and
optimizes its cash return on investments.

Financial Assets 2021/22 2020/21
R’000 R’000
Cost 45,286 43,618
Additions during the year 1,705 1,668
Closing Balance 46,991 45,286

5.1.3 Liquidity Risk
Liquidity risk is the risk that the State President Fund will not be able to meet its financial obligations as they fall due. The State
President Fund’s approach to managing liquidity is to ensure that investment terms chosen will ensure that it will always have
sufficient liquidity to meet its liabilities when due. The State President Fund monitors its cash flow requirements

Cash and Cash Equivalents 2021/22 2020/21

R’000 R’000
Investment 46,981 45,276
Cash and Balances with Banks 10 10
Tota l 46,991 45,286

5.1.4 Interest Rate Risk
The State President Fund manages its interest risk by effectively investing surplus funds with different accredited financial
institutions. Any movement in interest rate will affect interest income. Interest income is capitalized and will therefore not affect the
operations of the State President Fund.

2021/22 2020/21
Change Effective Rate Effective Rate
Investment 0.05% 3.70% 3.75%

Interest risk sensitivity analysis
2021/22 2020/21
R’000 R’000
Investment 46,981 45,276
0.05% interest fluctuation impact 23.49 1317.53

5.1.5 Foreign Exchange Risk
The Fund does not hedge foreign exchange fluctuations. The Fund does not have any foreign account receivables, foreign accounts
payables or derivative market instruments.

5.1.6 Price Risk
Due to the nature and extent of the Fund, there is no exposure to price risks.
6. Cash and Cash Equivalents
2021/22 2020/21
R’000 R’000
Cash – Bank Deposits 10 10
Cash – Investment Account 46,981 45,276
Total 46,991 45,286

The credit quality of cash at bank and short-term deposits, excluding cash on hand that are neither past due nor impaired can be
assessed by reference to external credit ratings (if available) or historical information about counterparty default rates.

279 DEPARTMENT OF SOCIAL DEVELOPMENT ANNUAL REPORT 2021/22