HSRC Integrated Annual Report 2018/2019

HSRC INTEGRATED ANNUAL REPORT 2018/19 / 123 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2019 (Continued) 2019 March 2018 March R’000 R’000 23 Contingent Assets and Liabilities Pending claims All the claims are being contested based on legal advice. The financial details of these claims are as follows: Counter claim made by the HSRC (Possible contingent asset) - 2 950 Claim against HSRC (Possible contingent liability) (198) (8 048) Reported accumulated surplus** - (503) (198) (5 601) Case 1 The Applicant’s case was dismissed with costs by the High Court. The Applicant filed for leave to appeal, and the HSRC filed its opposing papers. The application for leave to appeal was heard on 30 May 2018, and the Court dismissed the Application with costs. The Applicant’s time to petition the High Court to Appeal this judgment lapsed on 27 June 2018. The HSRC instructed its attorneys to draft the bill for opposing the application and the bill was set down and taxed on 31 October 2018. This matter is considered to be finalised apart from the costs. HSRC’s attorneys are currently attempting to recoup the legal costs from the Plaintiff. Bill was taxed in favour of the HSRC, in the amount of R159 792.78. Case 2 After service of summons on the HSRC, a Special Plea was filed, as the claim had prescribed. No further action has been taken by the Plaintiff. Amount claimed R105 400. Case 3 Summons were received by the HSRC on 10 October 2018. Plaintiff instituted a claim against the HSRC, for R93 316.08 relating to arrears of rental and service charges. The Plaintiff’s attorney has withdrawn as attorney of record. The HSRC has instructed its attorneys to apply for a dismissal of the matter and claim legal costs. ** The previously reported accumulated surplus was approved for retention. Prior year adjustments have been effected on this amount. 24 Events After the Reporting Date The HSRC lost a pending claim instituted by one of its employees. The matter was heard in the 2018/19 financial year with judgement issued after year end. The HSRC was ordered to pay the employee a backdated salary and all related benefits. This amount has been accrued in the Financial Statements for the year ended 31 March 2019. An amount of R1 260 756.53 had been identified and listed as irregular expenditure due to an approval that had been granted by National Treasury on 26 April 2018 after following a deviation process and later withdrawn by National Treasury on 06 July 2018 pending submission of additional information. Engagements were ongoing as at 31 March 2019; management therefore disclosed the cost incurred as irregular expenditure. National Treasury subsequently granted approval on 27 June 2019 and retracted the withdrawal of approval issued on 6 July 2018. The Financial Statements have been adjusted accordingly as the previously disclosed irregular expenditure no longer constitutes irregular expenditure.