Page 327 - Department of Social Development Annual Report 2021

PART E: FINANCIAL INFORMATION

DISASTER RELIEF FUND

Notes To The Financial Statements Of The Disaster Relief Fund For The Year Ended
31 March 2021.

9.1.2 Credit Risk
Credit risk is the risk of financial loss to the Disaster Relief Fund if a financial institution to a financial instrument
fails to meet its contractual obligations. The Disaster Relief Fund 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 purpose

9.1.3 Financial Assets

2020/21 2019/20
R’000 R’000

Cost 30 291 94 657
Interest accrued 1 182 6 603
Closing Balance 31 473 99 992

9.1.4 Liquidity risk
Liquidity risk is the risk that the Disaster Relief Fund will not be able to meet its financial obligations as they fall
due. The Disaster Relief 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 Disaster Relief Fund
monitors its cash flow requirements and optimizes its cash return on investments.

2020/21 2019/20

R’000 R’000

Cash and Cash Equivalents
Cash and Balances with Banks 1 031 50 732
Investments 30 442 49 260
Total 31 473 99 992

9.1.5 Interest Rate Risk
The Disaster Relief 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 capitalised and
will therefore not affect the operations of the Disaster Relief Fund.

Change Effective Rate Effective Rate

Investments (2,7)% 3,9% 6,6%

9.1.6 Interest risk sensitivity analysis

2020/21 2019/20
R’000 R’000

Investments 30 442 49 260
2.7 % interest fluctuation impact 821 93 197 04

DEPARTMENT OF SOCIAL DEVELOPMENT ANNUAL REPORT 2020/21 327