Page 354 - SAMRC AnnualReport 2025-26

ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2026
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
(CONTINUED)

46. Financial Instruments – Risk Management and other disclosures

Overview
The entity is exposed to the following risks from its use of annual financial statements.

– Credit risk;
– Liquidity risk; and

– Market risk (currency, interest rate risk and price risk)
The SAMRC Board has overall responsibility for the establishment and oversight of the entity’s risk management
framework. The accounting authority has established the risk committee, which is responsible for developing and
monitoring the entity’s risk management policies. The committee reports quarterly to the board of members on
its activities.
The Entity’s risk management policies are established to identify and analyse the risks faced by the entity, to set
appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and
systems are reviewed regularly to reflect changes in market conditions and the entity’s activities.
The entity Audit, IT and Risk (ARIC) committee oversees how management monitors compliance with the risk
management policies and procedures and reviews the adequacy of the risk management framework in relation
to the risks faced by the entity. ARIC is assisted in its oversight role by internal audit. Internal audit undertakes
both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported
to ARIC.

The quantative data disclosed as at 31 March 2026 is considered representative of the entity’s exposure to
financial risk during the year.

Credit risk
Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation and cause
the entity to incur a financial loss.
Management has a debtors policy in place, and this makes provision for credit evaluation for customers requiring
credit above R1 million. Investments are allowed only in liquid securities and only with the SARB, the entity
considers the credit risk associated with SARB deposits to be minimal. The SARB, as the central bank of the
Republic of South Africa, is regarded as the lowest-risk counterparty available to the entity for domestic cash
placements.

Contract work constitutes a significant portion of the SAMRC’s income, and the major exposure is delays in
finalising contracts, and disputes in terms of whether or not the outputs have been produced. A certain number
of contracts are started and paid on a reimbursive basis, and this poses a risk if the funder is not satisfied with
the outputs.

The entity is exposed to credit risk primarily from:
– cash and cash equivalents held with banking institutions and at the subsidiaries of the South African Reserve Bank

– trade and other receivables from exchange transactions due from research contracts/grants and
– receivables from non-exchange transactions due from research contracts/grants.

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