RAND WATER PROVIDENT FUND ANNUAL REPORT 2022-2023

Cash and cash equivalents Cash and cash equivalents comprise cash balances and call deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in fair value. Cash and cash equivalents are measured at fair value and subsequently at amortised cost which approximates fair value. Accounts receivable Accounts receivables are subsequently measured at amortised cost using the effective interest method, less impairment losses. Receivables with a short duration are not discounted, as the effects of discounting are immaterial. Accounts payable Accounts payable are subsequently measured at amortised cost, using the effective interest method. Payables with a short duration are not discounted, as the effects of discounting are immaterial. (a) The contractual rights to the cash flows arising from the financial asset have expired in the Fund; or (b) It transfers the rights to receive the contractual cash flows on the financial asset including transferring substantially all the risks and rewards of ownership of the asset; or (c) It transfers the financial asset, neither retaining nor transferring substantially all the risks and rewards of ownership of the asset, but no longer retains control of the asset. If the Fund has retained control, it shall continue to recognise the financial asset to the extent of its continuing involvement in the financial asset. Financial liabilities A financial liability is de-recognised when the liability is extinguished, that is when the obligation specified in the contract is discharged, cancelled or has expired. Impairment Impairment of financial assets at amortised cost Financial assets The carrying amounts of the Fund’s assets are reviewed at each reporting date to determine whether there is any indication of impairment. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of the asset. If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of a financial asset exceeds its recoverable amount. Impairment losses are recognised in the Statement of Changes in Net Assets and Funds. If in a subsequent period, the amount of the impairment loss decreases, and the decrease can be related objectively to an event occurring after the impairment was recognised, then the previously recognised impairment loss is reversed in the Statement of Changes in Net Assets and Funds. Derecognition Financial assets The Fund de-recognises a financial asset when:

44 Rand Water Provident Fund Annual Report | 2022-2023