Entire Document - Chris Hani District Municipality

Debt is defined as Long- and Short-term Liabilities, as detailed in Note 17.Equity includes all Funds and Reserves of the municipality, disclosed as Net Assetsin the Statement of Financial Performance and Net Debt as described above.47.4 Financial Risk Management ObjectivesCHRIS HANI DISTRICT MUNICIPALITY ANNUAL REPORT 2011 / 2012The Accounting Officer has overall responsibility for the establishment and oversight ofthe municipality’s risk management framework. The municipality’s risk managementpolicies are established to identify and analyse the risks faced by the municipality, toset appropriate risk limits and controls and to monitor risks and adherence to limits.Due to the largely non-trading nature of activities and the way in which they arefinanced, municipalities are not exposed to the degree of financial risk faced bybusiness entities. Financial Instruments play a much more limited role in creatingor changing risks that would be typical of listed companies to which the IAS’s mainlyapply. Generally, Financial Assets and Liabilities are generated by day-to-dayoperational activities and are not held to manage the risks facing the municipality inundertaking its activities.The Directorate: Financial Services monitors and manages the financial risksrelating to the operations through internal policies and procedures. These risksinclude interest rate risk, credit risk and liquidity risk. Compliance with policies andprocedures is reviewed by the internal auditors on a continuous basis, and annually byexternal auditors. The municipality does not enter into or trade financial instrumentsfor speculative purposes.Internal audit, responsible for initiating a control framework and monitoring andresponding to potential risk, reports periodically to the municipality’s audit committee,an independent body that monitors the effectiveness of the internal audit function.Further quantitative disclosures are included throughout these Annual FinancialStatements.196