GPW_AR_2013_Final_v10.pdf

30. FINANCIAL INSTRUMENTS (continued)

Operational risk Operational risk is the risk of loss arising from system failure, human error or external events. When controls fail to perform, operational risk can cause damage to reputation, have legal or regulatory implications or can lead to ½ nancial loss. The GPW can’t expect to eliminate all operational risks, but by initiating a rigorous control framework and by monitoring and responding to potential risk, it is able to manage the risk. Controls include effective segregation of duties, access control, authorisation and reconciliation procedures, staff education and assessment processes and ½ nancial processes. Price risk As the entity has no signi ½ cant interest-bearing assets, the entity’s income and operating cash ¾ ows are substantially independent of changes in market interest rates. Fair value At 31 March 2013, the carrying amounts of cash, accounts receivable, accounts payable and accrued expenses approximated their fair values due to the short term maturities of these assets and liabilities. Credit risk The GPW sells to government departments, state organs and the general public. It does not apply the credit management policies in a normal trading environment due to the fact that credit sales are only to government departments. Sales to the general public are either on a pre-paid or cash basis Currency risk The entity operates in the Republic of South Africa and is exposed to foreign exchange risk except to the extent that local suppliers pass increased cost due to exchange rate ¾ uctuations onto the GPW. At year end, the GPW had an exposure to the EURO due to agreements for the maintenance of machinery and supply of stock, for which contracts were concluded in EURO.

The entity did not hedge for foreign exchange ¾ uctuations on these contracts, due to the utilisation of the Paymaster General account.

Liquidity risk The entity’s exposure to liquidity risk is minimal since the GPW resides under the auspices of the DHA, which is the ultimate responsible party of the GPW.

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GPW ANNUAL REPORT 2012 | 2013