Page 365 - Department of Social Development Annual Report 2021

PART E: FINANCIAL INFORMATION

STATE PRESIDENT FUND

Notes To The Financial Statements Of The State President Fund For The Year Ended
31 March 2021.
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 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.

2020/21 2019/20
R’000 R’000

Cost 43 618 40 741
Additions during the year 1 668 2 877
Closing Balance 45 286 43 618

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 and optimizes its cash return on investments.

2020/21 2019/20

R’000 R’000

Cash and Cash Equivalents 45 276 43 608
Investment 10 10
Cash and Balances with Banks 45 286 43 618
Total

365 DEPARTMENT OF SOCIAL DEVELOPMENT ANNUAL REPORT 2020/21