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
1.22 Related parties
SALGA operates in an economic sector currently
dominated by entities directly or indirectly
owned by the South African Government. As a
consequence of the constitutional independence
of the three spheres of government in South
Africa, only entities within the national sphere
of government in respect of the Executive
Authority (CoGTA) and members of the NEC and
their respective municipalities belonging from
the local sphere of government are considered to
be related parties.
Management are those persons responsible for
planning, directing and controlling the activities
of SALGA, including those charged with the
governance of SALGA in accordance with
legislation and SALGA constitution.
Close members of the family of a person are
considered to be those family members who
may be expected to influence, or be influenced
by, that management in their dealings with the
entity.
A related party is considered to be related if one
party has the ability to control the other party or
jointly control or exercise significant influence
over the other party in making financial and
operating decisions or if the related party and the
other entity are subject to common control.
Specific information with regards to related party
transactions is included in the disclosure notes.
Identification of related parties
Controlling entities related party identification
All municipalities are represented at SALGA
through direct membership to SALGA,
furthermore representation in SALGA structures
is carried by the elected provincial representative
at a Provincial Conference as well at National
Conference.
structures. A single municipality would not
have control or significant influence over the
running the affairs or determining the policies
of SALGA. The control and significant influence
over SALGA’s policies and finances is jointly held
by all the 257 municipalities. In terms of SALGA’s
constitution all the municipalities are members
and would have equal rights over the residual
assets of the organisation upon dissolution.
The ten directly elected members at National
Conference and the nine ex-officio members
elected by the respective Provincial Conferences
are related parties of SALGA by virtue of being
part of the National Executive as well as the Chief
Executive who is also an ex-officio member of
the NEC due to his role. The NEC has an option to
co-opt up to three members, who once co-opted
become related parties by virtue of being part of
the NEC of SALGA.
SALGA does not have a sister entity that is
subjected to common control by the National
Conference or jointly by the 257 municipalities
in South Africa.
Significant influence entities related parties
identification
Legislatively SALGA reports to the Department
of Corporate Governance and Traditional Affairs
(CoGTA). SALGA reports on a quarterly to the
Minister of CoGTA in terms of the PFMA and
its regulations. CoGTA has significant influence
over SALGA’s activities by virtue of its role as the
designated Executive Authority in terms of the
PFMA. The department is tasked with the function
of developing national policies and legislation
with regard to provinces and local government.
CoGTA’s role has a direct impact or significant
influence over the decisions of SALGA’s policies
and finance decisions. Although disclosed as
a related party transaction, the fees paid by
CoGTA to SALGA are part of normal funding that
government grants to its entities.
The National Conference elects re