SACAA Annual Report 2022_23

PART F I Annual Financial Statements Annual Financial Statements for the year ended 31 March 2023

Accounting Policies

Derecognition Financial assets The SACAA derecognises a financial asset only when: • The contractual rights to the cash flows from the financial asset expire, are settled or waived; • The SACAA transfers to another party substantially all of the risks and rewards of ownership of the financial asset; or • The SACAA, despite having retained some significant risks and rewards of ownership of the financial asset, has transferred control of the asset to another party and the other party has the practical ability to sell the asset in its entirety to an unrelated third party, and is able to exercise that ability unilaterally and without needing to impose additional restrictions on the transfer. In this case, the SACAA : -- Derecognise the asset; and --Recognise separately any rights and obligations created or retained in the transfer. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received is recognised in surplus or deficit. Financial liabilities The SACAA removes a financial liability (or a part of a financial liability) from its statement of financial position when it is extinguished, i.e. when the obligation specified in the contract is discharged, cancelled, expires or is waived. An exchange between an existing borrower and lender of debt instruments with substantially different terms is accounted for as having extinguished the original financial liability and a new financial liability is recognised. Similarly, a substantial modification

1.4 Financial instruments Classification (continued) Impairment and uncollectibility of financial assets The SACAA assesses at the end of each reporting period whether there is any objective evidence that a financial asset or group of financial assets is impaired. Objective evidence of impairment includes: • Long overdue amounts for which further collection procedures have been regarded as uneconomical; • Information received about the debtor indicating their inability to settle the debt; or • Legal action has been instituted to recover the amount owing. Financial assets measured at amortised cost If there is objective evidence that an impairment loss on financial assets measured at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced directly. The amount of the loss is recognised in surplus or deficit. 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, the previously recognised impairment loss is reversed directly. The reversal does not result in a carrying amount of the financial asset that exceeds what the amortised cost would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in surplus or deficit.

188 I Annual Report 2022/23 I Annual Financial Statements