Mr LJ Mahlangu - Municipal Demarcation Board

26. FINANCIAL RISK MANAGEMENT (CONT.)
c. Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with
financial liabilities. Management regularly reviews the Board’s going concern. This includes reviewing
the effectiveness of working capital management and budgetary control.
The following table indicates the maturity analysis for financial liabilities showing the remaining earliest
contractual maturities.
CARRYING
AMOUNT
DUE WITHIN
1 YEAR
DUE BETWEEN 1
AND 5 YEARS
2011/12
Trade payables 2,758 2,758 0
2010/11
Trade payables 2,353 2,353 0
There were no defaults during the current and previous financial year.
d. Financial instruments
FINANCIAL INSTRUMENT CLASSIFICATION
CARRYING
AMOUNT 2011/12
(R’000)
CARRYING AMOUNT
2010/11
(R’000)
Cash and cash equivalents Cash and cash equivalents 19,259 16,388
Trade receivables Loans and receivables 418 449
Trade payables Financial liabilities at amortised cost 2,758 2,353
27. IRREGULAR EXPENDITURE
Non-compliance with Supply chain management practices
The Board instigated a special audit investigation with regard to the awarding of the Capacity Assessment
contract at the Board for the period 1999 to 2009. Due to the sensitivity of the investigation the
Board did not follow the normal procurement processes. Although this was in contravention of the
PFMA and Treasury Regulations relating to supply chain management, the Board did not suffer any
financial loss in this regard.
The irregular expenditure has been reported to National Treasury and the Board requested National
Treasury to condone the expenditure. National Treasury has since declined to condone the expenditure
that was incurred in 2010/11. No debt was raised in this regard as no person is liable in law for
such expenditure.
In 2011/12, the Board incurred irregular expenditure amounting to R627 675.00 as a result of noncompliance
with PPPFA and related prescripts.
MUNICIPAL DEMARCATION BOARD - Annual Report 2012 70