Academy of Science South Africa 2005/6 Annual Report

ASSAfAnnual financial statements5. TaxationThe academy is in the process of applying for exemption from income tax under section 10(1)(cn) asread with Section 30 of the Income Tax Act.6. Going concernThe existence of the academy is dependent on the continued support of its donors, by way of grants.Should the grants be withdrawn it is highly unlikely that the academy will be able to continue as a goingconcern. Donors have agreed to continue supporting the academy in 2006/2007 financial year.7. Financial instruments7.1 Currency riskThe academy is exposed to currency risk to the extent that grants are received by the academy in foreigncurrency.7.2 Interest rate riskThe academy is exposed to interest rate risk, as it places funds at both fixed and floating interest rates.The risk is managed by maintaining an appropriatemix between fixed and floating rates and placingswithin market expectations.7.3 Credit riskThe academy’s credit risk is attributable to liquid funds. The credit risk on liquid funds is limited becausethe counter party is a bank with credit rating assigned by international credit-rating agencies. Theacademy has no significant concentration of credit risk.124Promoting Excellence in Science for Society