Page 190 - WCPP Annual Report 2021-22_Draft #7.6.2

Annual Report for the 2021/22 Financial Year
Vote 2: Western Cape Provincial Parliament
Part E: Financial Information for the year ended 31 March 2022

Notes to the Annual Financial Statements

31. Risk management

Financial risk management

The legislature’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk.
Liquidity risk

The legislature’s risk to liquidity is a result of the funds available to cover future commitments. The legislature manages liquidity

risk through an ongoing review of future commitments and credit facilities. This is further managed by the fact that the
legislature receives it's funding via the equitable share.

The table below analyses the legislature’s financial liabilities into relevant maturity groupings based on the remaining period at
the statement of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual
undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not
significant.
At 31 March 2022 Within 1 year Between 2
and 5 years
Payables from exchange transactions 2,661,218 -
Finance lease obligation 631,800 1,089,644

3,293,018 1,089,644

At 31 March 2021 Within 1 year Between 2
and 5 years

Payables from exchange transactions 1,240,935 -

Finance lease obligation 878,434 1,628,621

2,119,369 1,628,621

Credit risk
Credit risk consists mainly of cash deposits, cash equivalents and receivables. The legislature only deposits cash with major

banks with high quality credit standing and limits exposure to any one counter - party.

Receivables comprise of a limited customer base. Management evaluated credit risk relating to receivables on an ongoing
basis. If receivables are independently rated, these ratings are used. Otherwise, if there is no independent rating, risk control
assesses the credit quality of the receivable, taking into account its financial position, past experience and other factors.

Individual risk limits are set based on internal or external ratings in accordance with limits set by the management.

Financial assets exposed to credit risk at year end were as follows:

Financial instrument 2022 2021
Cash and cash equivalents 21,977,767 14,119,065
Receivables from non-exchange transactions 77,400 73,400
Receivables from exchange transactions 73,571 135,271
Long term receivables from non-exchange transactions 5,941 8,341
Long term receivables from exchange transactions 9,329 10,415

Market risk

Interest rate risk

As the legislature has no significant interest -bearing assets, the legislature’s income and operating cash flows are substantially
independent of changes in market interest rates.

32. Unauthorised expenditure

No unauthorised expenditure was incurred during the current financial period ended 31 March 2022.

Annual Report for 2021/22 Financial Year Page 175