BANKSETA ANNUAL REPORT 2023

ANNUAL FINANCIAL STATEMENTS ACCOUNTING POLICIES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2023 15. RESERVES (continued) The BANKSETA also discloses a contingent liability (note 17.3) in regard to the amount of the mandatory grant payable to qualifying levy payers. Contributions received from public service employers in the national or provincial spheres of government may be used to fund its administration costs. Interest and penalties received from SARS as well as interest received on investments are utilised for discretionary grant projects. The administration grant reserve carries accumulated reserves allocated to administration expenditure in future years. The employer grant reserve carries accumulated reserves allocated to mandatory grants (employer grants) expenditure in future years. The discretionary grant reserve carries accumulated reserves allocated to discretionary grants and project expenses in future years. Surplus funds in the administration reserve and unallocated funds in the employer grant reserve are moved to the discretionary fund reserve. Provision is made in the administration reserve equal to the net book value of depreciable assets. Provision is made in the employer grant reserve for newly registered companies participating after the legislative cut-off date. Should the Minister approve that a SETA exceed the 10.5% administration expense limit, the excess would be funded from discretionary grant reserves. 16. COMMITMENTS Items are classified as commitments when the entity has committed itself through contractual agreements to future transactions that will normally result in the outflow of cash. - Contracts should be non-cancellable or only cancellable at significant cost; and - Contracts should relate to items other than the routine, steady, state business of the entity (such as administration services and goods contracts). Salary commitments relating to employment contracts or social security benefit commitments are therefore excluded. The SETA presents commitments for discretionary project contracts which would be funded out of discretionary reserves on hand at the date of the statement of financial position, lease contractual commitments and any capital expenditure commitments. In certain cases, the SETA enters into multi-year contracts whereby only the first year amount is unconditional and future years’ amounts are dependent on several suspensive conditions which normally include satisfactory execution of the deliverables by the service provider, the SETA’s continued need for the service, The availability of funds for that year and approval by the board. The SETA only discloses the commitment of the year where all suspensive conditions have been met as a commitment. The amounts that are still subject to suspensive conditions are not disclosed. Commitments for which disclosure is necessary to achieve a fair presentation should be disclosed in a note to the financial statements, if both the following criteria are met:

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