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 (continued)
Senior management of SALGA comprises of the
Chief Executive Officer; Chief Financial Officer;
Executive Manager in the Office of the Chief
Executive; and other senior managers including
their close family members have been identified
as Related Parties of SALGA due to the significant
influence that senior / key management exert
over SALGA’s operating and finance policies.
The governing body members of SALGA, being
the NEC, audit committee, and performance and
remuneration committee members and their
close families have been identified as related
parties, due to the significant influence these
structures exert over SALGA’s operating and
finance policies.
SALGA does not provide loans whether at market
rates/prices or non-market related rates/prices to
either senior management, NEC members, audit
committee, and performance and remuneration
committee members.
Only transactions with related parties not at arm’s
length or not in the ordinary course of business
are disclosed.
Compensation paid to key management
personnel including their family members,
where relevant is included in the disclosure notes
1.23 Commitments
Commitments are recorded at cost in the
notes to the financial statements when there
is a contractual arrangement or an approval
by management in a manner that raises a
valid expectation that SALGA will discharge
its responsibilities thereby incurring future
expenditure that will result in the outflow of cash.
Items are classified as commitments when an
entity has committed itself to future transactions
that will normally result in the outflow of cash.
1.24 Segment reporting
SALGA has considered the implementation of
GRAP 18 – segment reporting. The organisation
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is unable to implement the Standard, however,
because it does not satisfy all the requirements
of the Standard. GRAP 18.05(b) requires regular
review of the potential segment financial
information at its management meetings for the
purpose of making decisions about resources
allocations.
Section 51(1)(a)(i) of the PFMA requires that
public entities must ensure and maintain an
effective, efficient and transparent systems of
financial and risk management. In ensuring a
transparent system for resource allocation, the
SALGA budgeting process includes “budget
panel hearings”. The budget panel is a formal
established forum where all business units are
granted an equal opportunity to present their
respective programmes, in detail or summary,
depending on the process for each year.
The SALGA budget process requires all business
units to populate their budget, in a prescribed
format, on an annual basis based on their annual
priorities in line with the approved annual plan.
The respective budgets are presented to the
Budget Panel which is chaired by a member of
SALGA’s NEC. Members of the Budget Panel
also include the Chief Finance Officer (CFO),
Executive Manager (EM) and the Chief Executive
Officer (CEO) (alternate chairperson), who assist
the panel in dealing with various inputs from the
directorates and provinces.
The budget panel is a structure that decides
and recommends the budget allocation after
deliberations and requests presentation from
all cost centres, based on the organisational
strategic imperatives and advice of the CFO.
Financial management reports for business units
are only presented at management meetings for
budget implementation and cost monitoring
purposes. There are no comprehensive segment
financial reports that serve at management
meetings for purposes of making decisions about
resources allocations as defined in the Standard.
In view of the above mentioned SALGA cannot
comply with all the requirements of GRAP 18
and thus the Standard is not applicable to the
organisation.