BANKSETA ANNUAL REPORT 2023

ANNUAL FINANCIAL STATEMENTS ACCOUNTING POLICIES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2023 4. CURRENCY (continued) 4.2 Foreign currency A foreign transaction is a transaction that is denominated or that requires settlement, in a foreign currency. On initial recognition, a foreign currency transaction is recorded at the spot exchange rate prevailing at the transaction date. Foreign exchange assets and liabilities are classified as monetary or non monetary items. Monetary items are subsequently measured by using the closing rates at reporting date. BANKSETA does not have non monetary foreign currency assets and liabilities. 5. REVENUE RECOGNITION 5.1 Revenue from non-exchange transactions Non-exchange revenue transactions result in resources being received by the BANKSETA, usually in accordance with a binding arrangement. Non-exchange revenue is recognised in accordance with GRAP 23 using the ‘assets and liabilities’ approach. When the BANKSETA receives resources as a result of a non-exchange transaction, it recognises an asset and revenue in the period that the arrangement becomes binding and when it is probable that BANKSETA will receive economic benefits or service potential and it can make a reliable measure of the resources transferred. Where the resources transferred to the BANKSETA are subject to the fulfilment of specific conditions, it recognises an asset and a corresponding liability. As and when the conditions are fulfilled, the liability is reduced and revenue is recognised. The asset and the corresponding revenue are measured on the basis of the fair value of the asset on initial recognition. Non-exchange revenue transactions include the receipt of levy income from registered sector employers from SARS via the Department of Higher Education and Training (DHET), income from the National Skills Fund, and grants from the national government. Non-exchange revenue transactions also include penalties and interest levied by the South African Revenue Services (SARS) on arrear levies and channeled to the SETA via DHET. 5.1.1 Levy income The accounting policy for the recognition and measurement of skills development levy income is based on the Skills Development Act, 1998 (Act No 97 of 1998) as amended and the Skills Development Levies Act, 1999 (Act No 9 of 1999), as amended. Skills development levy (SDL) transfers are recognised when it is probable that future economic benefits will flow to the SETA and these benefits can be measured reliably. This occurs when the Department of Higher Education and Training either makes an allocation or payment, whichever comes first, to the SETA, as required by Section 8 of the Skills Development Levies Act, 1999 (Act No. 9 of 1999), as amended. In terms of section 3(1) and 3(4) of the Skills Development Levies Act, 1999 (Act No. 9 of 1999) as amended, registered member companies of the SETA pay a skills development levy of 1% of the total payroll cost to the South African Revenue Services (SARS), who collects the levies on behalf of the Department of Higher Education and Training which is within the Ministry of Higher Education Science and Innovation .

80% of skills development levies are paid over to the SETA (net of the 20% contribution to the National Skills Fund).

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PART F: FINANCIAL INFORMATION | BANKSETA ANNUAL REPORT 2022/23