CIPC Annual Report V1

Companies and Intellectual Property Commission Annual Financial Statements for the year ended 31 March 2021 Notes to the Annual Financial Statements

2021

2020

R '000

R '000

31. Risk management (continued)

Market risk

Market risk is the risk that changes in market prices, such as the interest rate, will affect the value of the financial assets of the entity.

Interest rate risk

The CIPC’s exposure to interest risk is managed by investing, on a short term basis, in current accounts and the Corporation for Public Deposits (CPD), to ensure maximum interest on surplus funds within the prescribed legislation. The risk arises when there are interest rate changes downward, as this will reduce the interest income on invested funds. The entity manages its interest rate risk by only investing its funds in accounts at financial institutions wherein the accounts accrue interest at market related interest rates. In terms of National Treasury Regulation (section 31.3.3), all surplus funds are deposited in the call account – Corporation for Public Deposits (CPD).

The CIPC is exposed to interest rate changes in respect of returns on its investments with financial institutions.

A change in the market interest rate would have increased / (decreased) the surplus for the year by the amounts below:

March 2021

Change in interest rate

Increase in the surplus for the year upward change

Decrease in the surplus for the year downward change

Cash and cash equivalents

1% 5 929

(5 875)

March 2020

Change in interest rate

Increase in the surplus for the year upward change

Decrease in the surplus for the year downward change

Cash and cash equivalents

1% 6 075

(6 017)

34

COMPANIES AND INTELLECTUAL PROPERTY COMMISSION I Annual Report 2020/21

104