South African Local Government Association
Schedule 3A public entity i.t.o. the Public Finance Management Act, 1999 and recognised i.t.o. the
Organised Local Government Act, 1997
Annual Financial Statements for the year ended 31 March 2017
Accounting Policies
1.11
Impairment of non-cash-generating
assets (continued)
A reversal of an impairment loss for a non-cash-
generating asset is recognised immediately in
surplus or deficit.
Any reversal of an impairment loss of a revalued
non-cash-generating asset is treated as a
revaluation increase.
After a reversal of an impairment loss is
recognised, the depreciation (amortisation)
charge for the non-cash-generating asset is
adjusted in future periods to allocate the non-
cash-generating asset’s revised carrying amount,
less its residual value (if any), on a systematic
basis over its remaining useful life.
Defined contribution plans
Payments to defined contribution retirement
benefit plans are charged as an expense as they
fall due.
Payments made to industry-managed retirement
benefit schemes are dealt with as defined
contribution plans where the SALGA’s obligation
under the schemes is equivalent to those arising
in a defined contribution retirement benefit plan.
SALGA’s defined contribution plans are as
follows:
•
1.12 Employee benefits
Short-term employee benefits
•
The cost of short-term employee benefits,
(those payable within 12 months after the end
of the reporting period in which the service is
rendered, such as paid vacation leave and sick
leave, bonuses, and non-monetary benefits such
as study leave), are recognised in the period
in which the service is rendered and are not
discounted.
•
•
The organisation remunerates employees
on total cost-to-company basis, this package
includes SALGA’s portion of contribution in
respect of retirement benefits. The expected
cost of compensated absences is recognised as
an expense as the employees render services
that increase their entitlement or, in the case of
non-accumulating absences, when the absence
occurs.
The expected cost of bonus payments is
recognised as an expense when there is a legal or
constructive obligation to make such payments
as a result of past performance.
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•
Pension fund - an employer contribution
based on 10.5% p.a. based on 85% of an
employee’s basic salary towards pension
and/or retirement funds. Employees are
required to contribute a corresponding
contribution of 6.5% p.a. based on their
basic salary.
Medical aid - an employer contribution
capped at R 2 429 per month (2016:
R 2 292) per employee per calendar year.
The contribution amount is reviewed
annually depending on prevailing
medical insurance inflation.
Group risk - an employer contribution that
covers funeral benefit for the employee
and immediate family members.
The risk cover also includes life assurance
at three times an employee’s annual
salary in case of death. The risk cover is
based on 1.392% (2016: 1.47%) of SALGA’s
basic payroll costs.
Long-term incentive scheme - the
employer provides for Long-Term
Incentive (LTI) scheme for fixed term
contract
(FTC)
employees.
These
employees make-up the top management
structure of the organisation and are
employed on a five year fixed term
contract. The incentive scheme is
based on performance (merit) and the
employee remaining in the employ of
the organisation for a period longer than
three years.