HDA Annual Report

ANNUAL REPORT 2023/24

Accounting Policies estimates are reviewed on a regular basis. Changes in estimates that are not due to errors are processed in the period of the review and applied prospectively. In the process of applying these accounting policies, management has made the following judgements that may have a significant effect on the amounts recognised in the financial statements:

1.4.4 Effective interest rate

The entity uses an appropriate interest rate, taking into account guidance provided in the Standards, and applying professional judgement to the specific circumstances, to discount future cash flows. The entity used the prime interest rate to discount future cash flows of receivables at year-end.

1.4.1 Provisions

1.4.5 Impairment of trade and other receivables

Provisions were raised and management determined an estimate based on the information available. Additional disclosure of these estimates of provisions are included in note 10 of the accounting policy.

For trade and other receivables, an impairment loss is recognised in surplus and deficit when there is objective evidence that it is impaired. The impairment is measured as the difference between the carrying amount of the trade receivable and the expected amount to be received in future. When a trade receivable is uncollectable, it is written off against the surplus or deficit in the year. Subsequent recoveries of amounts previously written off are credited against operating expenses in the Statement of Financial Performance. The present value of estimated future cash flows is not calculated, as the potential timeframes of receiving future payments are not certain and can vary materially, based on past experience. The Agency identifies, acquires and holds land on behalf of the clients. To avert the risk of the land invasions, the Agency enters into rental agreements with small businesses in the area to temporarily use part of the land for their business purposes. The nature of businesses include small scale business ventures. The rental income from these land parcels are recognised in project obligations. The funds are used to fund incidental expenditure to maintain these land parcels. 1.4.6 Incidental Revenue

1.4.2 Contingent liabilities

Contingent liabilities are recognised in the notes to the financial statements when there is a possible obligation that arises from a past event and whose existence will be confirmed at the occurrence or non occurrence of one or more uncertain future events beyond the control of the entity or where there is a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation or where there is a liability that cannot be recognised because it cannot be measured reliably. At the end of each financial year, management assesses whether there is any indication that the entity’s expectations about the residual value and useful life of assets included in property, plant and equipment have changed since the preceding reporting date. If any such indication exists, the change is accounted for as a change in accounting estimate in accordance with the Standards of GRAP on accounting policies, change in accounting estimates and errors. Management will increase the depreciation charge where useful lives are less than previously estimated useful lives and decrease depreciation charge where useful lives are more than previously estimated useful lives. 1.4.3 Depreciation and amortisation

1.4.7 Going Concern

Management considers key financial metrics and approved medium-term budgets, together with the Agency’s dependency on the grants from national and provincial departments, to conclude that the going concern assumptions used in the compilation

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