OMBUD COUNCIL ANNUAL REPORT 2024/25

PART F: FINANCIAL INFORMATION

1.12 LEASES A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership. OPERATING LEASES – LESSEE Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments are recognised as an operating lease asset or liability. The operating lease liabilities are derecognised when the entity’s obligation to settle the liability is extinguished. The operating lease assets are derecognised when the entity no longer anticipates economic benefits or service potential to flow from the asset. Accumulated surplus include non-cash amounts such as invoiced income not recovered, hence the full balance at year end is not always represented by actual cash. National Treasury approval is required at the end of every financial year in order to retain the accumulated surplus. 1.14 RELATED PARTIES A related party is a person or an entity with the ability to control or jointly control the other party, or exercise significant influence over the other party, or vice versa, or an entity that is subject to common control, or joint control. All payments to executive management, board and committee members of the Ombud Council are disclosed as related party transactions. Transactions and balances with National Departments of Government and State-owned Entities which occur other than in accordance with the operating parameters established are disclosed separately in the notes to the financial statements. 1.15 IRREGULAR EXPENDITURE Irregular expenditure as defined in section 1 of the PFMA is expenditure other than unauthorised expenditure, incurred in contravention of or that is not in accordance with a requirement of any applicable legislation, including- (a) this Act: or (b) the State Tender Board Act, 1968 (Act No. 86 of 1986) or any regulations made in terms of the Act; or (c) any provincial legislation providing for procurement procedures in that provincial government. All expenditure relating to irregular expenditure is recognised as an expense in the Statement of financial performance in the period that the expenditure was incurred. The expenditure is classified in accordance with the nature of the expense and where recovered it is subsequently accounted for as revenue in the surplus or deficit. Irregular expenditure is disclosed in the notes to the financial statements when confirmed. The amount disclosed is the value of the iregular expendture incurred, unless it is impractical to determine, in which case the reasons therefore must be provided in the notes. 1.16 FRUITLESS AND WASTEFUL EXPENDITURE Fruitless expenditure means expenditure which was made in vain and would have been avoided had reasonable care been exercised. All expenditure relating to fruitless and wasteful expenditure is recognised as an expense in the statement of financial performance in the year that the expenditure was incurred. The expenditure is classified in accordance with the nature of the expense, and where recovered, it is subsequently accounted for as revenue in the statement of financial performance. Fruitless and wasteful expenditure is disclosed in the notes to the financial statements when confirmed. 1.13 ACCUMULATED FUNDS AND RESERVES ACCUMULATED FUNDS

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OMBUD COUNCIL ANNUAL REPORT 2024/25