3. Significant Accounting Policies 3.1 Basis of Financial Statements Presentation The financial statements have been prepared in terms of generally accepted accounting practice in compliance with Section 37 of the Public Finance Management Act (Chapter 22:19) of Zimbabwe. On that basis, the Commission chose to treat the transactions and preparation of the statements in accordance with the modified cash receipts and cash payments basis. On the basis, revenue is recognized when received rather than when anticipated, and expenses are recognized when paid rather than when incurred. Depreciation estimates are made on the portion of the assets that have been consumed during the financial period and charged against the statement of receipts and payments. The liabilities that have been created during the year and prior years are treated in terms of Section 17 (8) of the Public Finance Act (Chapter 22:19); such liabilities are treated as current expenditure in the following years as provided through the Appropriation Act of that particular year. The Commission has applied the following accounting policies and will consistently apply them from one period to the other unless need for change in accounting policy is justified in its future financial statements presentation. 3.2 Grant Income Revenue is recognized when received rather than when earned. 3.3 Expenses These are recognized when paid rather than when incurred. The only expenditure item that is accrued is depreciation charge for the use of Commission Assets during a financial year. 3.4 Home Currency The Commission is operating in an economy where multi-currency system has been permitted since February 2009. However, for purposes of presentation, the Commission has adopted the United States of America Dollar (US$) as its home currency. 3.5 Taxation The Commission is a State Entity created in terms of Chapter 12 of the Constitution of Zimbabwe (Amendment No. 20) Act of 2013. The Entity is exempt in terms of paragraph 2(d) of the Third Schedule of the Income Tax Act (Chapter 23:06) 3.6 Property, Plant and Equipment (PPE) Property, Plant and Equipment relates to tangible non-current assets owned by the Commission mainly held for use in the production and supply of services in terms of the Constitutional mandate. These assets are in form of land and buildings, furniture and equipment, motor vehicles and specialised computer software. The cost of an item of PPE is recognized as an asset when it is probable that future economic benefits or service potential associated with the item accrue to the entity and the cost of such an item can be measured reliably. PPE is measured at cost together with other attributable costs to ensure it has been put for its intended use less accumulated depreciation. In the presentation of these financial statements, depreciation has been charged to reflect their estimated values as at the year-end. 3.7 Management Judgements and Estimations In the process of preparation of these annual financial statements, management is inherently required to make certain assumptions and estimates that may affect the amounts reported and other related disclosures. Actual results in the future may differ from those reflected in these financial statements, resultantly in material difference. Such judgements have been made on the treatment of values of property, plant and equipment and resultant depreciation. Protecting, Promoting and Enforcing Human Rights and Fundamental Freedoms 51