HDA Annual Report

ANNUAL REPORT 2023/24

Accounting Policies subsequently arise. Lease commitments are derived from the signed lease agreements based on the future premiums. Commitments value is based on system purchase orders that are open at year end. For Multi-year Funding Agreements where the commitment amount cannot be determined at year end, a disclosure is made to this effect and a list of all long-term funding contracts where purchase orders have not been issued at year end is maintained.

14. Land

14.1 Land owned by the HDA

Land purchased and controlled by the HDA utilising its own funds for the purpose of future residential development and where there is uncertainty regarding date of release is classified as Property Plant and Equipment in line with the HDA mandate and accounted for in accordance with GRAP 17. Control of land is determined by applying GRAP18 and is evidenced by the following criteria: legal ownership and/or the right to direct access to land, and to restrict or deny the access of others to land. Initial Recognition is at cost. Where an asset is acquired at no cost, or for a nominal cost, its cost is its fair value as at the date of acquisition. Where the entity concludes that it does not control land after recognising it in its books, but land is currently recognised as an asset in its statement of financial position, the land is derecognised. Land is derecognised as an asset from the statement of financial position in accordance with GRAP 17. A principal-agent arrangement exists where there is a binding arrangement in which one entity (an agent), undertakes transactions with third parties on behalf, and for the benefit of, another entity (the principal). The HDA acquires and holds land in terms of signed agreements on behalf of provinces and municipalities in order to release it for future human settlement development. The Agency is considered an agent in terms of the circumstances of these arrangements. Where the HDA is the agent to the transaction, only the portion of revenue (conditional grant) it receives and expenses it incurs in executing the transactions on behalf of the principal is recorded with unspent or moneys due being recorded in terms of GRAP 104: Financial Instruments. 14.2 Land held on behalf of the principal: Accounting by principals and agent

13. Contingent liabilities and assets

13.1 Contingent Liabilities

A contingent liabilities is:

- A possible obligation that arises from past events, and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity, or A present obligation that arises from past events but is not recognised because it is not probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability. Contingent liabilities are not recognised in the financial statements. They are disclosed in the notes to the financial statements when it is possible that economic benefits will flow from the entity, or when an outflow of economic benefits or service potential is probable but cannot be measured reliably. - A contingent asset is a possible asset that arises from past events, and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future event not wholly within the control of the entity. Contingent assets are not recognised but are disclosed where an inflow of economic benefits or service potential is probable. 13.2 Contingent assets

Land assets acquired by the Agency in terms of the signed agreements on behalf of provinces

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