REPORT FOR THE 6 MONTHS ENDED 31 MAY Registration Number: 1985/003686/08

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2 EPOT FO THE 6 MONTHS ENDED 31 MAY 2016 egistration Number: 1985/003686/08 2 EPOT FO THE 6 MONTHS ENDED 31 MAY 2016

3 CONTENTS CHAIMAN AND CHIEF EXECUTIVE OFFICE S EPOT 4 EPOT OF THE AUDIT, ISK AND FINANCE COMMITTEE 8 EPOT OF THE SOCIAL AND ETHICS COMMITTEE 10 THE INSTITUTE OF INTENAL AUDITOS SOUTH AFICA FINANCIAL STATEMENTS 12 GENEAL INFOMATION 12 INDEX 13 DIECTOS ESPONSIBILITIES AND APPOVAL 14 INDEPENDENT AUDITOS EPOT 15 DIECTOS EPOT 16 STATEMENT OF FINANCIAL POSITION AS AT 31 MAY STATEMENT OF COMPEHENSIVE INCOME 18 STATEMENT OF CHANGES IN EQUITY 18 STATEMENT OF CASH FLOWS 19 ACCOUNTING POLICIES 20 NOTES TO THE FINANCIAL STATEMENTS 23 DETAILED INCOME STATEMENT 27 LEADESHIP ACADEMY FO GUADIANS OF GOVENANCE FINANCIAL STATEMENTS 28 GENEAL INFOMATION 28 INDEX 29 DIECTOS ESPONSIBILITIES AND APPOVAL 30 INDEPENDENT AUDITOS EPOT 31 DIECTOS EPOT 32 STATEMENT OF FINANCIAL POSITION AS AT 31 MAY STATEMENT OF COMPEHENSIVE INCOME 33 STATEMENT OF CHANGES IN EQUITY 34 STATEMENT OF CASH FLOWS 34 ACCOUNTING POLICIES 35 NOTES TO THE FINANCIAL STATEMENTS 37 DETAILED INCOME STATEMENT 40 EPOT FO THE 6 MONTHS ENDED 31 MAY

4 CHAIMAN AND CHIEF EXECUTIVE OFFICE S EPOT CEO: Claudelle von Eck Chairman: Vonani Chauke It is our pleasure to present you with this eport. While it is our custom to produce an Annual Integrated eport, we produced a shorter eport for this period as our year end change has resulted in the last financial period ending after six months. We have shifted our year end from November to May. This was primarily to bring our financial year in line with our membership year which runs from June to May. As our 2015 Integrated eport, which was released in April 2016, is fairly detailed, this report will only highlight those matters where an interim update is necessary. OU STATEGY The Board presides over an adaptive strategic plan, which typically has a three year horizon. The current strategy, which is supported by tactical operational plans, consists of four strategic imperatives which collectively are the driving force behind our approach to our activities. These are: Professionalise internal audit to meet current and anticipated market expectations and regulatory environment The IIA SA creating value for all of its stakeholders Safeguarding and optimal utilisation of all relevant capitals Long-term sustainability In addition to its three-yearly strategy setting sessions, the Board meets annually, outside of the normal Board meetings, to specifically focus on the strategy. In addition, the Board monitors progress against the strategy in every Board meeting. Furthermore, the various committees are each responsible for oversight over one or some components of the strategy. The context, within which the strategy is set has a profound impact on the direction the Board decides to take. The key factors in the environment that would guide the Board s strategic decisions include: 1. Maturity of the profession, including the level of competence of internal auditors in South Africa; 2. The needs of the stakeholders of internal audit and the profession s ability to meet those needs; 3. The regulatory environment; 4. Degree to which leadership in organisations understand and embrace the mandate and value of internal audit; and 5. The pace at which the Secretariat can deliver given the limited resources. Professionalise internal audit to meet current and anticipated market expectations and regulatory environment Our major focus under this strategic imperative has been to align our occupational qualifications and related learnerships to the requirements of the recently established Quality Council for Trades and Occupations (QCTO). At the time of writing this report, the new qualifications, which will replace our current Internal Audit Technician (IAT) and General Internal Auditor (GIA), were in the QCTO approval process. These qualifications underpin the Institute s designations IAT and PIA. Once the QCTO has approved these qualifications, they will be national qualifications that may be offered by any Skills Development Provider. The Institute has therefore established the Leadership Academy for Guardians of Governance (the Academy), which will be responsible for providing the learnerships and training that will form the base for the qualifications. The Institute itself has been appointed as the Assessment Quality Partner, which makes it responsible for the assessment process. 4 EPOT FO THE 6 MONTHS ENDED 31 MAY 2016

5 Number of IATs: 1451 Number of PIAs: 506 Number of IATs in the pipeline: 582 Number of PIAs in the pipeline: 72 Number of active CIAs: 1103 Number of CIAs in the pipeline: 190 The IIA SA creating value for all of its stakeholders Number of national event attendees: 371 Executive Leadership Network Service to Chief Audit Executives Number of regional event attendees: 1283 Average number of technical queries dealt with per month: 7 Number of course attendees: 1094 Number of books sold: 1081 EPOT FO THE 6 MONTHS ENDED 31 MAY

6 Safeguarding and optimal utilisation of all relevant capitals Our database Most important manufactured capital Non-profit Biggest financial capital challenge Attracting talent Biggest human capital challenge Preference for electronic Contributing to a paperless society Strategic alliances Approach to social and relationship capital Technical guidance Most important intellectual capital Long-term sustainability Number of paid up members at end of May: 8039* Membership fees Biggest contributor to the revenue Corporate Governance Index Most important advocacy tool Collecting fees Biggest challenge to cash flow Strategic alliances Approach to social and relationship capital Low fees Biggest challenge to funding the strategy * This figure includes all individuals who were members for the period 1 June May 2016 as at 30 September The number of members would fluctuate over time as members who have lapsed have the option of reinstating their membership by paying for previous membership periods. 6 EPOT FO THE 6 MONTHS ENDED 31 MAY 2016

7 KEY CONCENS IN ELATION TO THE STATEGY The current staff complement does not match the increasing pressures on the secretariat. The rate at which vacancies are filled are too slow. This is primarily a result of the specialised skills required, transformation strategy and an inability to compete with the private sector. There is a greater than reasonable dependency on key personnel as a result of the resource constraints. KEY FOCUS AEAS FO THE YEA AHEAD Completing the establishment of the Academy Taking the new qualifications to market under the QCTO Finalising the establishment of a student chapter Gearing up for the impending regulation of the profession The Institute has an ambitious strategy to bring to fruition. It will take a collective effort to make it reality. We therefore encourage members of the Institute to join us on this journey and get involved in the structures of the Institute. Vonani Chauke Chairman Dr Claudelle von Eck Chief Executive Officer IIA SA BOAD MEMBES Below is a list of all the directors who held office during the reporting period. All non-executive Directors are appointed or re-appointed at the AGM, which was held on 20 April Name Position Appointed Status No. of meetings attended Vonani Chauke Chairman (Previous Vice Chairman) 04/11 Active 3/3 Shirley Machaba Past Chairman 04/05 Active 1/3 Justine Mazzocco Past Past Chairman 04/05 Active 3/3 Claudelle von Eck CEO 01/10 Active 3/3 Molefi Nkhabu Vice Chairman (Previous Director) 04/13 Active 2/3 Faith Burn Director 04/15 Active 1/3 Ursula Basani Duiker Director 04/16 Active 1/1 James Gourrah Director 04/16 Active 1/1 Paresh Lalla Director 05/12 Active 3/3 Tshepo Mofokeng Director 04/15 Active 3/3 ob Newsome Director 08/95 Active 1/3 Sikhuthali Nyangintsimbi Director 04/16 Active 1/1 Jan Opperman Director 04/15 Active 2/3 Lizelle Padayachee Director 04/16 Active 1/1 Kameetha Singh Director 04/15 Active 3/3 Arno Vorster Director 04/05 Active 3/3 iaan Thiart Ex - Chairman 04/09 esigned 04/16 2/2 Oupa Mbokodo Director 05/12 esigned 04/16 2/2 udzani Nemaangani Director 04/14 esigned 04/16 1/2 Dion Poole Director 04/14 esigned 04/16 1/2 The Board met 3 times during the reporting period, being 01 December May EPOT FO THE 6 MONTHS ENDED 31 MAY

8 EPOT OF THE AUDIT, ISK AND FINANCE COMMITTEE INTENAL AUDIT The Committee is satisfied that the Institute s key risks have been identified and are receiving adequate attention from Management. Due to the size of the Institute, it is not feasible to have an in-house Internal Audit function, nor is it feasible to outsource the function from a cost perspective. To this end, the Institute periodically engages the services of volunteers to conduct an Internal Audit on a pro bono basis. An Internal Audit was conducted during the 2015/2016 financial year. The pro bono Internal Auditors report administratively to the CEO and functionally to the Audit, isk and Finance Committee. EXTENAL AUDIT Chairman: Molefi Nkhabu We are pleased to present our report for the financial year ended 31 May The Audit, isk and Finance Committee consists of the members listed below. The Committee adopted its terms of reference which are approved by the Board on an annual basis. The Committee is satisfied that it has complied with these terms of reference. AUDIT, ISK AND FINANCE COMMITTEE ESPONSIBILITIES The Committee reports that it has complied with its responsibilities arising from the Companies Act 71 of 2008 ( the Act ) that became effective on 1 May THE EFFECTIVENESS OF INTENAL CONTOL AND ISK MANAGEMENT The system of controls is designed to provide reasonable assurance that laws, policies and procedures are complied with, organizational objectives are achieved, operations are effective and efficient, assets are safeguarded and financial and operational information is reliable. The External Auditors provided the Board, the Committee and Management with assurance that the internal financial controls are appropriate and effective. This is achieved by means of the isk Management process, as well as the identification of corrective actions and suggested enhancements to the controls and processes. The Committee is directly responsible for the appointment (subject to member ratification), compensation, retention, and oversight of the independent auditors. The Committee has satisfied itself that the auditors of the Institute are independent as defined by the Act. The Committee, in consultation with executive management, agreed to an audit fee for the 2016 six month financial period. The fee is considered appropriate for the work that could reasonably have been foreseen at that time. The Committee has nominated, for approval at the Annual General Meeting, Nexia SAB&T as the external auditor for the 2017 financial year. ISK The Institute s risk register is continuously updated and reviewed quarterly to ensure that Management is addressing relevant issues. The Committee is satisfied that the risks identified are receiving adequate attention from Management. FINANCE The Committee reviews the budget, management accounts, financial statements and other financial matters of the Institute and presents them to the Board. ANNUAL FINANCIAL STATEMENTS The Committee has reviewed and recommended the annual financial statements for approval to the Board. The Board has subsequently approved the financial statements which will be open for discussion at the Annual General Meeting which is scheduled for 26 October Molefi Nkhabu Chairman of the Audit, isk and Finance Committee 8 EPOT FO THE 6 MONTHS ENDED 31 MAY 2016

9 AUDIT, ISK AND FINANCE COMMITTEE MEMBES Name Position No. of meetings attended Vonani Chauke Chairman (esigned May 2016) 4/4 Molefi Nkhabu Member (Appointed Chairman May 2016) 3/4 Shirley Machaba Member (Appointed May 2015) 1/4 Kameetha Singh Member (Appointed May 2015) 4/4 James Gourrah Member (Appointed May 2016) 1/2 Claudelle Von Eck Ex Officio (Non-voting) member 4/4 Warren Elbourne Staff Liaison 4/4 EPOT FO THE 6 MONTHS ENDED 31 MAY

10 EPOT OF THE SOCIAL AND ETHICS COMMITTEE OLES AND ESPONSIBILITIES The Committee s roles and responsibilities are governed by its Terms of eference. The Terms of eference are subject to annual review and approval of the Board. The main objective of the Committee is to assist the Board in monitoring the Institute s performance as a good and responsible corporate citizen. This is achieved by reviewing the Institute s activities, having regard to any relevant legislation, other legal requirements as well as prevailing codes of best practice and making recommendations regarding matters in relation thereto. The Committee is satisfied that it has fulfilled its duties during the year under review, as further detailed below. The Social and Ethics Committee assists the Board in monitoring IIA SA s performance as a good and responsible corporate citizen. This report by the Committee is prepared in accordance with the requirements of the Companies Act, 71 of 2008, as amended (the Companies Act) and describes how the Committee has discharged its statutory duties in terms of the Companies Act as well as additional duties assigned to it by the Board in respect of the financial year ended 31 May EPOTING PEIOD Chairman: Arno Vorster This report is in respect of the period 01 December May 2016 (the eporting Period). COMMITTEE MEMBES AND ATTENDANCE AT MEETINGS During the eporting Period, the Committee was comprised of three non executive directors appointed by the Board, the Chief Executive Officer and two senior members of the Secretariat, being the Administration and Infrastructure Portfolio Manager together with the Governance Officer. In addition to this, the Committee accommodated a representative of the IIA Tanzania as an invitee for mentoring purposes. The Committee was chaired by Mr Arno Vorster. The table below details the Committee composition, number of meetings held as well as meeting attendance. One Committee meeting was held during the eporting Period. Since the eporting Period was only 6 months long, the Committee will report on its adherence in terms of the minimum requirement of at least two meetings annually, as per the Committee s Terms of eference, in the next reporting period. COMPLIANCE EVIEW The Committee has established a compliance matrix, adherence to which is monitored and evaluated at each meeting held. The compliance matrix addresses all relevant areas necessary to ensure that the Institute remains in keeping with its duties as a good and responsible corporate citizen. Management plays a significant role in ensuring that the principles, as contained in the compliance matrix, are being implemented at an operational level. The compliance matrix is subject to annual review, however is amended as is necessary following legislative or other developments on an ad hoc basis. MONITOING OF SUSTAINABLE DEVELOPMENT PACTICES The sustainable development practices of the Institute, which are monitored as part of the compliance matrix, include the following: ethical leadership and corporate citizenship; stakeholder relations; broad-based black economic empowerment; health and public safety; labour relations and working conditions; and training and skills development. The Committee s monitoring role includes the monitoring of relevant legislation, other legal requirements as well as prevailing codes of best practice, specifically with regard to matters relating to good corporate citizenship, the environment, health and public safety, consumer relationships, as well as labour and employment. PUBLIC EPOTING AND ASSUANCE As per the requirements of the Companies Act, the Committee reports, through one of its members, to the members of the Institute (de facto the shareholders of the Institute) on the matters within its 10 EPOT FO THE 6 MONTHS ENDED 31 MAY 2016

11 mandate at the institute s Annual General meeting, to be held on 26 October DEVELOPMENTAL AEAS The Committee continues to monitor progress and developments in relation to King IV, with the intent of ensuring that the Institute is in keeping with best practice principles as at the onset of its release. In relation to industry specific legislation, the Committee continues to monitor relevant changes to the education and training landscape, specifically with regard to the standards and regulations as per the South African Qualifications Authority (SAQA), Fasset and the Quality Council for Trades and Occupations (QCTO). The principles contained in the Protection of Personal Information Act 4 of 2013 have been a key focus area for the Committee, with a task team within the Secretariat being formed in order to provide the Committee with operational insight. AEAS OF CONCEN During the eporting Period, the Committee has focused on the ability of the Institute to sustain its B-BBEE Level ating, owing to the implementation of the newly amended Broad-Based Black Economic Empowerment (B-BBEE) Verification Codes. The Committee continues to seek means of ensuring that the Institute s B-BBEE endeavours are recognised, in light of it being a Non-Profit Company with limited resources. Arno Vorster Chairman of the Social and Ethics Committee SOCIAL AND ETHICS COMMITTEE MEMBES Name Position No. of meetings attended Arno Vorster Chairman 1/1 Jan Opperman Member 1/1 Vonani Chauke Member (esigned May 2016) 1/1 Sikhuthali Nyangintsimbi Member (Appointed May 2016) 0/0 Claudelle Von Eck Member 1/1 Terusha amchund Member 1/1 Ulrich Maistry Member 1/1 Kafaso Millinga* Invitee 1/1 * Kafaso Millinga is the Chief Executive Officer of the IIA Tanzania EPOT FO THE 6 MONTHS ENDED 31 MAY

12 THE INSTITUTE OF INTENAL AUDITOS SOUTH AFICA FINANCIAL STATEMENTS GENEAL INFOMATION THE INSTITUTE OF INTENAL AUDITOS SOUTH AFICA (egistration number 1985/003686/08) Financial statements For the 6 months ended 31 May 2016 Country of incorporation and domicile South Africa Nature of business and principal activities The Institute of Internal Auditors SA is a registered section 21 company as a professional body for Internal Auditors. The Institute provides training, certification and promotion for Internal Auditors and is affiliated to the Institute of Internal Auditors Inc. based in the United States of America. egistered office Unit 2, Bedfordview Office Park, 3 iley d, Bedfordview, 2008 Business address Unit 2, Bedfordview Office Park, 3 iley d, Bedfordview, 2008 Postal address PO Box 2290, Bedfordview, Gauteng, 0028 Bankers Nedbank, Standard Bank, Investec, ABSA Auditor s Nexia SAB&T egistered Auditors Company registration number 1985/003686/08 Level of assurance These financial statements have been audited in compliance with the applicable requirements of the Companies Act 71 of Preparer The financial statements were internally compiled by: Warren Elbourne Bcom Accounting, DMS Dip in Fin Man 12 EPOT FO THE 6 MONTHS ENDED 31 MAY 2016

13 INDEX DIECTOS ESPONSIBILITIES AND APPOVAL 14 INDEPENDENT AUDITOS EPOT 15 DIECTOS EPOT 16 STATEMENT OF FINANCIAL POSITION AS AT 31 MAY STATEMENT OF COMPEHENSIVE INCOME 18 STATEMENT OF CHANGES IN EQUITY 18 STATEMENT OF CASH FLOWS 19 ACCOUNTING POLICIES 20 NOTES TO THE FINANCIAL STATEMENTS 23 DETAILED INCOME STATEMENT 27 EPOT FO THE 6 MONTHS ENDED 31 MAY

14 DIECTOS ESPONSIBILITIES AND APPOVAL The directors are required by the Companies Act 71 of 2008, to maintain adequate accounting records and are responsible for the content and integrity of the financial statements and related financial information included in this report. It is their responsibility to ensure that the financial statements fairly present the state of affairs of the Institute as at the end of the financial 6 months and the results of its operations and cash flows for the period then ended, in conformity with the International Financial eporting Standard for Small and Medium-sized Entities. The external auditors are engaged to express an independent opinion on the financial statements. The financial statements are prepared in accordance with the International Financial eporting Standard for Small and Medium-sized Entities and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates. The directors acknowledge that they are ultimately responsible for the system of internal financial control established by the Institute and place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the directors set standards for internal control aimed at reducing the risk of material misstatement or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the Institute and all employees are required to maintain the highest ethical standards in ensuring the Institute s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the Institute is on identifying, assessing, managing and monitoring all known forms of risk across the Institute. While operating risk cannot be fully eliminated, the Institute endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints. The directors are of the opinion, based on the information and explanations given by management that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss. The directors have reviewed the Institute s cash flow forecast and, in the light of this review and the current financial position, they are satisfied that the Institute has or has access to adequate resources to continue in operational existence for the foreseeable future. The external auditors are responsible for independently reviewing and reporting on the Institute s annual financial statements. The annual financial statements have been examined by the Institute s external auditors and their report is presented on page 15. The annual financial statements set out on pages 17 to 26, which have been prepared on the going concern basis, were approved by the board of directors on 20 September 2016 and were signed on its behalf by: 20 September 2016 Vonani Chauke, Chairman Date 20 September 2016 Dr Claudelle von Eck, Chief Executive Officer Date 14 EPOT FO THE 6 MONTHS ENDED 31 MAY 2016

15 INDEPENDENT AUDITOS EPOT To the members of the Institute of Internal Auditors South Africa We have audited the annual financial statements of The Institute of Internal Auditors South Africa as set out on pages 17 to 26, which comprise the statement of financial position as at 31 May 2016, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information Board's esponsibility for the Financial Statements The Institute s directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial eporting Standards for Small and Medium-sized Entities and the requirements of the Companies Act of South Africa, and for such internal control as the Board determine is necessary to enable the preparation of financial statements that are free from material misstatements, whether due to fraud or error. Auditor's esponsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures th at are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounti ng estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of The Institute of Internal Auditors South Africa as at 31 May 2016, and its financial performance and cash flows for the year then ended in accordance with International Financial eporting Standards for Small and Medium-sized Entities and the requirements of the Companies Act of South Africa Supplementary information Without qualifying our opinion, we draw attention to the fact that supplementary information set out on page 27 does not form part of the financial statements and is presented as additional information. We have not audited this information and accordingly do not express an opinion thereon. Other reports required by the Companies Act As part of our audit of the financial statements for the year ended 31 May 2016, we have read the Directors eport for the purposes of identifying whether there are material inconsistences between this report and the audited financial statements. This report is the responsibility of the respective preparers. Based on reading this report we have not identified material inconsistencies between this report and the audited financial statements. However, we have not audited this report and accordingly do not express an opinion on these reports. Nexia SAB&T egistered Auditors S. Kleovoulou 20 September 2016

16 DIECTOS EPOT The directors have pleasure in submitting their report on the financial statements of The Institute of Internal Auditors South Africa for the 6 months ended 31 May eview of financial results and activities The financial statements have been prepared in accordance with International Financial eporting Standard for Small and Medium-sized Entities and the requirements of the Companies Act 71 of The accounting policies have been applied consistently compared to the prior 6 months, except for the adoption of new or revised accounting standards as set out in note 19. Full details of the financial position, results of operations and cash flows of the Institute are set out in these financial statements. 2. Events after the reporting period The directors are not aware of any material event which occurred after the reporting date and up to the date of this report. 3. Going concern The directors believe that the Institute has adequate financial resources to continue in operation for the foreseeable future and accordingly the financial statements have been prepared on a going concern basis. The directors have satisfied themselves that the Institute is in a sound financial position and that it has access to sufficient borrowing facilities to meet its foreseeable cash requirements. The directors are not aware of any new material changes that may adversely impact the Institute. The directors are also not aware of any material non-compliance with statutory or regulatory requirements or of any pending changes to legislation which may affect the Institute. 4. Auditors Nexia SAB&T will continue in office in accordance with section 90 of the Companies Act 71 of Secretary The company secretary is T. amchund. 16 EPOT FO THE 6 MONTHS ENDED 31 MAY 2016

17 STATEMENT OF FINANCIAL POSITION AS AT 31 MAY 2016 NOTE(S) 6 MONTHS ENDED 31 MAY Assets Non-Current Assets Property, plant and equipment Intangible assets Current Assets Inventories Loans to group companies Trade and other receivables Cash and cash equivalents Total Assets Equity and Liabilities Equity eserves etained income Liabilities Current Liabilities Trade and other payables Deferred income Provisions Unidentified deposits Total Equity and Liabilities EPOT FO THE 6 MONTHS ENDED 31 MAY

18 STATEMENT OF COMPEHENSIVE INCOME NOTE(S) 6 MONTHS ENDED 31 MAY evenue Cost of sales 11 ( ) ( ) Gross profit Other income Operating expenses ( ) ( ) Operating (deficit) 13 ( ) ( ) Investment revenue (Deficit) for the 6 months ( ) ( ) Other comprehensive income: evaluation reserve Total comprehensive surplus (deficit) for the 6 months ( ) STATEMENT OF CHANGES IN EQUITY EVALUATION ESEVE SPECIAL ESEVE TOTAL ESEVES ETAINED INCOME TOTAL EQUITY Balance at 01 June Loss for the 6 months ( ) ( ) Other comprehensive income Total comprehensive loss for the 6 months ( ) ( ) Special reserve expenditure ** - (67 847) (67 847) - (67 847) Total changes - (67 847) (67 847) - (67 847) Balance at 01 June Loss for the 6 months ( ) ( ) Other comprehensive income Total comprehensive loss for the 6 months ( ) Special reserve expenditure** - ( ) ( ) - ( ) Total changes - ( ) ( ) - ( ) Balance at 31 May ** Special projects identified by the Board 18 EPOT FO THE 6 MONTHS ENDED 31 MAY 2016

19 STATEMENT OF CASH FLOWS NOTE(S) 6 MONTHS ENDED 31 MAY Cash flows from operating activities Cash receipts from customers Cash paid to suppliers and employees ( ) ( ) Cash used in operations 15 ( ) ( ) Interest income Net cash from operating activities ( ) Cash flows from investing activities Purchase of property, plant and equipment 2 ( ) ( ) Net proceeds on sale of property, plant and equipment Purchase of other intangible assets 3 (45 668) - Loans advanced to group companies ( ) - Net cash from investing activities ( ) ( ) Total cash movement for the 6 months ( ) Cash at the beginning of the 6 months Total cash at end of the 6 months EPOT FO THE 6 MONTHS ENDED 31 MAY

20 1. PESENTATION OF FINANCIAL STATEMENTS ACCOUNTING POLICIES The financial statements have been prepared in accordance with the International Financial eporting Standard for Small and Medium-sized Entities, and the Companies Act 71 of The financial statements have been prepared on the historical cost basis, except for biological assets at fair value less point of sale costs, and incorporate the principal accounting policies set out below. They are presented in South African ands. These accounting policies are consistent with the previous period, except for the changes set out in note 19 First-time adoption of the International Financial eporting Standard for Small and Medium-sized Entities 2015 Amendments. 1.1 Significant judgements and sources of estimation uncertainty Critical judgements in applying accounting policies Management are required to make critical judgements in applying accounting policies from time to time. The judgements, apart from those involving estimations, that have the most significant effect on the amounts recognised in the financial statements, are outlined as follows: Key sources of estimation uncertainty Provisions Provisions are inherently based on assumptions and estimates using the best information available. Additional disclosure of these estimates of provisions are included in note 8 - Provisions. 1.2 Property, plant and equipment The cost of an item of property, plant and equipment is recognised as an asset when: - it is probable that future economic benefits associated with the item will flow to the Institute; and - the cost of the item can be measured reliably. Office furniture equipment, IT equipment and computer software are carried at cost less accumulated depreciation and accumulated impairment losses. Building is measure at fair value less any subsequent accumulated depreciation and any subsequent accumulated impairment losses. Cost include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised. Depreciation is provided using the straight-line method to write down the cost, less estimated residual value over the useful life of the property, plant and equipment as follows: Item Depreciation method Average useful life Buildings Straight line 50 years Office furniture and equipment Straight line 5 years IT equipment Straight line 3 years Computer software Straight line 3 years Land is not depreciated The residual value, depreciation method and useful life of each asset are reviewed only where there is an indication that there has been a significant change from the previous estimate. evaluations are made with sufficient regularity such that the carrying amount does not differ materially from that which would be deter- 20 EPOT FO THE 6 MONTHS ENDED 31 MAY 2016

21 mined using fair value at the end of the reporting period. Land and building are independently revalued every three years. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in surplus and deficit in the period. 1.3 Intangible assets An intangible asset is recognised when: - it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and - the cost of the asset can be measured reliably. Intangible assets are initially recognised at cost. Intangible assets are initially recognised at cost and subsequently at cost less accumulated amortisation and accumulated impairment losses. esearch and development costs are recognised as an expense in the period incurred. Amortisation is provided to write down the intangible assets, on a straight-line basis, as follows: Item Useful life Software 3 years The residual value, amortisation period and amortisation method for intangible assets are reassessed when there is an indication that there is a change from the previous estimate. 1.4 Financial instruments Initial measurement Financial instruments are initially measured at the transaction price (including transaction costs except in the initial measurement of financial assets and liabilities that are measured at fair value through surplus or deficit unless the arrangement constitutes, in effect, a financing transaction in which case it is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument. Financial instruments at amortised cost Financial instruments may be designated to be measured at amortised cost less any impairment using the effective interest method. These include trade and other receivables, loans and trade and other payables. At the end of each reporting period date, the carrying amounts of assets held in this category are reviewed to determine whether there is any objective evidence of impairment. If so, an impairment loss is recognised. Financial instruments at fair value All other financial instruments, including equity instruments that are publicly traded or whose fair value can otherwise be measured reliably, are measured at fair value through surplus and deficit. Trade and other receivables eceivables are measured at amortised cost using the effective interest method. At the end of each reporting period, the carrying amounts of trade and other receivables are reviewed to determine whether there is any objective evidence that the amounts are not recoverable. If so, an impairment loss is recognised immediately in profit or loss. Trade and other payables Trade payables are obligations on the basis of normal credit terms and do not bear interest. EPOT FO THE 6 MONTHS ENDED 31 MAY

22 Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These are initially measured at fair value and subsequently recorded at amortised cost. 1.5 Impairment of assets The company assesses at each reporting date whether there is any indication that property, plant and equipment or may be impaired. If there is any such indication, the recoverable amount of any affected asset (or group of related assets) is estimated and compared with its carrying amount. If the estimated recoverable amount is lower, the carrying amount is reduced to its estimated recoverable amount, and an impairment loss is recognised immediately in surplus or deficit. If an impairment loss subsequently reverses, the carrying amount of the asset (or group of related assets) is increased to the revised estimate of its recoverable amount, but not in excess of the amount that would have been determined had no impairment loss been recognised for the asset (or group of assets) in prior 6 months. A reversal of impairment is recognised immediately in profit or loss. 1.6 Employee benefits Short-term employee benefits The cost of short-term employee benefits, (those payable within 12 months after the service is rendered, such as leave pay and sick leave, bonuses, and non-monetary benefits such as medical care), are recognised in the period in which the service is rendered and are not discounted. 1.7 Provisions and contingencies Provisions are recognised when the Institute has an obligation at the reporting date as a result of a past event; it is probable that the Institute will be required to transfer economic benefits in settlement; and the amount of the obligation can be estimated reliably. Contingent assets and contingent liabilities are not recognised. 1.8 evenue evenue is recognised to the extent that the Institute has transferred the significant risks and rewards of ownership of goods to the buyer, or has rendered services under an agreement provided the amount of revenue can be measured reliably and it is probable that economic benefits associated with the transaction will flow to the Institute. evenue is measured at the fair value of the consideration received or receivable, excluding sales taxes and discounts. Interest is recognised, in profit or loss, using the effective interest rate method. evenue comprises of subscription income, book sales, conference fees, educational course fees, certification fees and other ancillary income. Membership income is accounted for on the accrual basis. 22 EPOT FO THE 6 MONTHS ENDED 31 MAY 2016

23 2. POPETY, PLANT AND EQUIPMENT NOTES TO THE FINANCIAL STATEMENTS 2016 Cost 2016 Accumulated depreciation 2016 Carrying Value 2015 Cost 2015 Accumulated depreciation 2015 Carrying Value Buildings (16 272) Office equipment ( ) ( ) IT equipment ( ) ( ) Computer software ( ) ( ) Total ( ) ( ) econciliation of property, plant and equipment Opening balance Additions Disposals evaluation Depreciation Total Buildings (5 768) (10 504) Office equipment (81 234) - (40 044) IT equipment (43 902) - (44 652) Computer software (5 585) - (2 766) ( ) (97 966) econciliation of property, plant and equipment Opening balance Additions Disposals Depreciation Total Buildings Office equipment (85 092) IT equipment (6 630) (89 785) Computer software (21 029) (6 630) ( ) Property, plant and equipment encumbered as security The Institute has no assets classified under Property, Plant and Equipment pledged as security for liabilities and no restrictions have been imposed on any of its assets. 6 MONTHS 2015 ENDED 31 MAY 2016 Details of properties Property 1: Unit 2, Bedfordview Office Park, Bedfordview Ext 928 & Purchase price: 20 October Additions since purchase or valuation Building accumulated depreciation ( ) ( ) evaluation The effective date of the revaluations was 25 May evaluations were performed by independent valuer, Mr GC Jacobs, from Mirfin. Mr, GC Jacobs is not connected to the Institute. Land and buildings are re-valued independently every 3 years. Income Capitalisation Approach method of valuation has been used in determination of market value of the property. EPOT FO THE 6 MONTHS ENDED 31 MAY

24 3. INTANGIBLE ASSETS 2016 Cost 2016 Accumulated amortisation 2016 Carrying Value 2015 Cost 2015 Accumulated amortisation 2015 Carrying Value Software econciliation of intangible assets Opening balance Additions Amortisation Total Software (8 601) econciliation of intangible assets Opening balance Amortisation Total Software (34 302) INVENTOIES 6 MONTHS ENDED 31 MAY 2016 Books TADE AND OTHE ECEIVABLES Trade receivables Prepayments Deposits VAT Sundry debtors CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of: Cash on hand Bank balances DEFEED INCOME Fees in advance: Membership Fees in advance: Learnerships Fees in advance: egional events EPOT FO THE 6 MONTHS ENDED 31 MAY 2016

25 8. POVISIONS econciliation of provisions Opening balance Utilised during the year eversed during the year Total Provision for audit fees ( ) Leave pay provision ( ) ( ) econciliation of provisions Opening balance Additions Utilised during the year Total Provision for audit fees Leave pay provision ( ) ( ) TADE AND OTHE PAYABLES 6 MONTHS ENDED 31 MAY 2016 Trade payables VAT Debtors with credit balances IA Inc. QA oyalty Accruals EVENUE evenue COST OF SALES Costs OTHE INCOME Profit and loss on sale of assets Administration fees OPEATING (DEFICIT) Operating (deficit) for the year is stated after accounting for the following Property, plant and equipment Amortisation of intangible assets Depreciation on property, plant and equipment Employee costs INVESTMENT EVENUE Interest revenue Bank EPOT FO THE 6 MONTHS ENDED 31 MAY

26 15. CASH USED IN OPEATIONS 6 MONTHS ENDED 31 MAY 2016 Loss before taxation ( ) ( ) Adjustments for: Depreciation and amortisation Profit on sale of assets (34 273) Interest received ( ) ( ) Movements in provisions ( ) Special reserves expenditure ( ) (67 847) Changes in working capital: Inventories Trade and other receivables Trade and other payables ( ) Deferred income ( ) ( ) ( ) ( ) ELATED PATIES elationships Members of key management: Claudelle Von Eck elated party balances and transactions with other related parties elated party balances Loan accounts - Owing (to) by related parties Leadership Academy for Guardians of Governance elated party transactions Administration fees paid to (received from) related parties Learnership Academy for Guardians of Governance ( ) DIECTOS EMUNEATION Executive 2016 Emoluments Other Bonus Total benefits* Claudelle Von Eck Emoluments Other Total benefits* Claudelle Von Eck COMPAATIVE FIGUES The reporting period is shorter than a year, therefore comparative amounts are not comparable to the current balances. 19. EALY ADOPTION OF INTENATIONAL FINANCIAL EPOTING STANDADS FO SMALL AND MEDIUM-SIZED ENTITIES 2015 AMENDMENTS The Institute has early adopted the International Financial eporting Standards for Small and Medium-sized Entities and this resulted in change in accounting policy for Building from cost model to revaluation model. The impact of the change has been disclosed on note 2 Property, plant and equipment. 26 EPOT FO THE 6 MONTHS ENDED 31 MAY 2016

27 DETAILED INCOME STATEMENT NOTE(S) 6 MONTHS ENDED 31 MAY 2016 evenue evenue Cost of sales 11 ( ) ( ) Gross profit Other income Administration fees Interest received Gains on disposal of assets Operating expenses AGM costs (14 229) (6 894) Auditors remuneration (42 378) ( ) BEE - ( ) Bad debts provision Bank charges (53 381) ( ) Consulting fees (16 277) (77 041) Debtors correction ( ) ( ) Depreciation, amortisation and impairments ( ) ( ) Disciplinary hearing (737) ( ) Electricity and water ( ) ( ) Employee costs ( ) ( ) Entertainment (15 690) (18 652) Exchange rate difference (2 241) 979 Insurance (40 340) (68 262) Library costs - (5 679) Marketing expenses (89 116) ( ) Office expenses (46 635) ( ) Postage (4 285) (22 004) Printing and stationery (24 443) ( ) Prizes (2 489) (2 810) Public relations ( ) ( ) ecruitment ( ) ( ) epairs and maintenance (41 782) ( ) Telephone and fax ( ) ( ) Training (87 803) ( ) Travel - Local (41 566) ( ) Travel - Overseas: Committee members refreshments ( ) (68 980) Travel - egional Governors/Board committees (50 665) ( ) Travel local refreshments (16 142) ( ) Travel - overseas ( ) ( ) ( ) ( ) Deficit for the 6 months ( ) ( ) 2015 The supplemary information presented does not form part of the financial statements and is unaudited EPOT FO THE 6 MONTHS ENDED 31 MAY

28 LEADESHIP ACADEMY FO GUADIANS OF GOVENANCE FINANCIAL STATEMENTS GENEAL INFOMATION LEADESHIP ACADEMY FO GUADIANS OF GOVENANCE (egistration number 2013/079823/07) Financial statements for the 6 Months ended 31 May 2016 Country of incorporation and domicile South Africa Nature of business and principal activities The Leadership Academy provides training, certification and promotion for Internal Auditors and is affiliated to the Institute of Internal Auditors South Africa. egistered office Unit 2, Bedfordview Office Park, 3 iley d, Bedfordview, 2008 Postal address PO Box 2290, Bedfordview, Gauteng, 0028 Bankers Nedbank Auditor s Nexia SAB&T - egistered Auditors Company registration number 2013/079823/07 Level of assurance These financial statements have been audited in compliance with the applicable requirements of the Companies Act 71 of Preparer The financial statements were internally compiled by: Warren Elbourne Bcom Accounting, DMS Dip in Fin Man 28 EPOT FO THE 6 MONTHS ENDED 31 MAY 2016

29 INDEX DIECTOS ESPONSIBILITIES AND APPOVAL 30 INDEPENDENT AUDITO S EPOT 31 DIECTOS EPOT 32 STATEMENT OF FINANCIAL POSITION AS AT 31 MAY STATEMENT OF COMPEHENSIVE INCOME 33 STATEMENT OF CHANGES IN EQUITY 34 STATEMENT OF CASH FLOWS 34 ACCOUNTING POLICIES 35 NOTES TO THE FINANCIAL STATEMENTS 37 DETAILED INCOME STATEMENT 40 EPOT FO THE 6 MONTHS ENDED 31 MAY

30 DIECTOS ESPONSIBILITIES AND APPOVAL The directors are required by the Companies Act 71 of 2008, to maintain adequate accounting records and are responsible for the content and integrity of the financial statements and related financial information included in this report. It is their responsibility to ensure that the financial statements fairly present the state of affairs of the company as at the end of the financial 6 months and the results of its operations and cash flows for the period then ended, in conformity with the International Financial eporting Standard for Small and Medium-sized Entities. The external auditors are engaged to express an independent opinion on the financial statements. The financial statements are prepared in accordance with the International Financial eporting Standard for Small and Medium-sized Entities and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates. The directors acknowledge that they are ultimately responsible for the system of internal financial control established by the company and place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the board sets standards for internal control aimed at reducing the risk of material misstatement or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the company and all employees are required to maintain the highest ethical standards in ensuring the company s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the company is on identifying, assessing, managing and monitoring all known forms of risk across the company. While operating risk cannot be fully eliminated, the company endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints. The directors are of the opinion, based on the information and explanations given by management that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss. The directors have reviewed the company s cash flow forecast and, in the light of this review and the current financial position, they are satisfied that the company has or has access to adequate resources to continue in operational existence for the foreseeable future. The external auditors are responsible for independently reviewing and reporting on the company s annual financial statements. The annual financial statements have been examined by the company s external auditors and their report is presented on page 31. The annual financial statements set out on pages 33 to 39, which have been prepared on the going concern basis, were approved by the board of directors on 20 September 2016 and were signed on its behalf by: 20 September 2016 Phuti Semenya, Chairman Date 20 September 2016 Dr Claudelle von Eck, Chief Executive Officer Date 30 EPOT FO THE 6 MONTHS ENDED 31 MAY 2016

31 INDEPENDENT AUDITOS EPOT To the members of the Leadership Academy for Guardians of Governance We have audited the annual financial statements of the Leadership Academy for Guardians of Governance as set out on pages 33 to 39, which comprise the statement of financial position as at 31 May 2016, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information Board's esponsibility for the Financial Statements The Company s directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial eporting Standards for Small and Medium-sized Entities and the requirements of the Companies Act of South Africa, and for such internal control as the Board determine is necessary to enable the preparation of financial statements that are free from material misstatements, whether due to fraud or error. Auditor's esponsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statement s. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s inter nal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of The Leadership Academy for Guardians of Governance as at 31 May 2016, and its financial performance and cash flows for the year then ended in accordance with International Financial eporting Standards for Small and Medium-sized Entities and the requirements of the Companies Act of South Africa Supplementary information Without qualifying our opinion, we draw attention to the fact that supplementary information set out on page 40 does not form part of the financial statements and is presented as additional information. We have not audited this information and accordingly do not express an opinion thereon. Other reports required by the Companies Act As part of our audit of the financial statements for the year ended 31 May 2016, we have read the Directors eport for the purposes of identifying whether there are material inconsistences between this report and the audited financial statements. This report is the responsibility of the respective preparers. Based on reading this report we have not identified material inconsistencies between this report and the audited financial statements. However, we have not audited this report and accordingly do not express an opinion on these reports. Nexia SAB&T egistered Auditors S. Kleovoulou 20 September 2016

32 DIECTOS EPOT The directors have pleasure in submitting their report on the financial statements of Leadership Academy for Guardians of Governance for the 6 months ended 31 May Nature of business Leadership Academy for Guardians of Governance was incorporated in South Africa with interests in the Non-profit industry. The company operates in South Africa. 2. eview of financial results and activities The financial statements have been prepared in accordance with International Financial eporting Standard for Small and Medium-sized Entities and the requirements of the Companies Act 71 of The accounting policies have been applied consistently compared to the prior 6 months. Full details of the financial position, results of operations and cash flows of the company are set out in these financial statements. 3. Events after the reporting period The directors are not aware of any material event which occurred after the reporting date and up to the date of this report. 4. Going concern The directors believe that the Company has adequate financial resources to continue in operation for the foreseeable future and accordingly the financial statements have been prepared on a going concern basis. The directors have satisfied themselves that the Institute is in a sound financial position and that it has access to sufficient borrowing facilities to meet its foreseeable cash requirements. The directors are not aware of any new material changes that may adversely impact the Company. The directors are also not aware of any material non-compliance with statutory or regulatory requirements or of any pending changes to legislation which may affect the Company. 5. Auditors Nexia SAB&T will continue in office in accordance with section 90 of the Companies Act 71 of EPOT FO THE 6 MONTHS ENDED 31 MAY 2016

33 STATEMENT OF FINANCIAL POSITION AS AT 31 MAY 2016 Assets NOTE(S) 6 MONTHS ENDED 31 MAY 2016 Non-Current Assets Property, plant and equipment Intangible assets Current Assets Trade and other receivables Cash and cash equivalents Total Assets Equity and Liabilities Equity Accumulated loss ( ) Liabilities Current Liabilities Trade and other payables Loans from group companies Provisions Total Equity and Liabilities STATEMENT OF COMPEHENSIVE INCOME NOTE(S) 6 MONTHS ENDED 31 MAY 2016 evenue Cost of sales 10 ( ) Gross profit Operating expenses ( ) Operating loss 11 ( ) Investment revenue Loss for the 6 Months ( ) Other comprehensive income - Total comprehensive loss for the 6 Months ( ) EPOT FO THE 6 MONTHS ENDED 31 MAY

34 STATEMENT OF CHANGES IN EQUITY ACCUMULATED LOSS TOTAL EQUITY Loss for the 6 Months ( ) ( ) Other comprehensive income - - Total comprehensive loss for the 6 Months ( ) ( ) Balance at 31 May 2016 ( ) ( ) STATEMENT OF CASH FLOWS NOTE(S) 6 MONTHS ENDED 31 MAY 2016 Cash flows from operating activities Cash receipts from customers Cash paid to suppliers and employees ( ) Cash used in operations 14 ( ) Interest income Net cash from operating activities ( ) Cash flows from investing activities Purchase of property, plant and equipment 2 (84 050) Purchase of other intangible assets 3 (4 713) Loans advanced to group companies Net cash from investing activities Total cash movement for the 6 Months Total cash at end of the 6 Months EPOT FO THE 6 MONTHS ENDED 31 MAY 2016

35 1. PESENTATION OF FINANCIAL STATEMENTS ACCOUNTING POLICIES The financial statements have been prepared in accordance with the International Financial eporting Standard for Small and Medium-sized Entities, and the Companies Act 71 of The financial statements have been prepared on the historical cost basis, except for biological assets at fair value less point of sale costs, and incorporate the principal accounting policies set out below. They are presented in South African ands. These accounting policies are consistent with the previous period, except for the changes set out in note 17 First-time adoption of the International Financial eporting Standard for Small and Medium-sized Entities. 1.1 Significant judgements and sources of estimation uncertainty Critical judgements in applying accounting policies Management did not make critical judgements in the application of accounting policies, apart from those involving estimations, which would significantly affect the financial statements. Key sources of estimation uncertainty Provisions Provisions are inherently based on assumptions and estimates using the best information available. Additional disclosure of these estimates of provisions are included in note 7 - Provisions. 1.2 Property, plant and equipment Property, plant and equipment is carried at cost less accumulated depreciation and accumulated impairment losses. Cost include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised. Depreciation is provided using the straight-line method to write down the cost, less estimated residual value over the useful life of the property, plant and equipment as follows: Item Depreciation method Average useful life Office equipment Straight line 5 years IT equipment Straight line 3 years The residual value, depreciation method and useful life of each asset are reviewed only where there is an indication that there has been a significant change from the previous estimate. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss in the period. 1.3 Intangible assets An intangible asset is recognised when: - it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and - the cost of the asset can be measured reliably. Intangible assets are initially recognised at cost. Intangible assets are initially recognised at cost and subsequently at cost less accumulated amortisation and accumulated impairment losses. EPOT FO THE 6 MONTHS ENDED 31 MAY

36 Amortisation is provided to write down the intangible assets, on a straight-line basis, as follows: Item Computer software Useful life 3 years The residual value, amortisation period and amortisation method for intangible assets are reassessed when there is an indication that there is a change from the previous estimate. 1.4 Financial instruments Initial measurement Financial instruments are initially measured at the transaction price (including transaction costs except in the initial measurement of financial assets and liabilities that are measured at fair value through profit or loss). Financial instruments at amortised cost Financial instruments may be designated to be measured at amortised cost less any impairment using the effective interest method. These include trade and other receivables, loans and trade and other payables. At the end of each reporting period date, the carrying amounts of assets held in this category are reviewed to determine whether there is any objective evidence of impairment. If so, an impairment loss is recognised. Financial instruments at fair value All other financial instruments, including equity instruments that are publicly traded or whose fair value can otherwise be measured reliably, are measured at fair value through profit and loss. Trade and other receivables eceivables are measured at amortised cost using the effective interest method. At the end of each reporting period, the carrying amounts of trade and other receivables are reviewed to determine whether there is any objective evidence that the amounts are not recoverable. If so, an impairment loss is recognised immediately in profit or loss. Trade and other payables Trade payables are obligations on the basis of normal credit terms and do not bear interest. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These are initially measured at fair value and subsequently recorded at amortised cost. 1.5 Impairment of assets The company assesses at each reporting period date whether there is any indication that an asset may be impaired. If any such indication exists, the company estimates the recoverable amount of the asset. If there is any such indication, the recoverable amount of any affected asset is estimated and compared with its carrying amount. If the estimated recoverable amount is lower, the carrying amount is reduced to its estimated recoverable amount, and an impairment loss is recognised immediately in profit or loss. If an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but not in excess of the amount that would have been determined had no impairment loss been recognised for the asset (or group of assets) in prior 6 months. A reversal of impairment is recognised immediately in profit or loss. 36 EPOT FO THE 6 MONTHS ENDED 31 MAY 2016

37 1.6 Employee benefits Short-term employee benefits The cost of short-term employee benefits, (those payable within 12 months after the service is rendered, such as leave pay and sick leave, bonuses, and non-monetary benefits such as medical care), are recognised in the period in which the service is rendered and are not discounted. 1.7 Provisions and contingencies Provisions are recognised when the company has an obligation at the reporting date as a result of a past event; it is probable that the company will be required to transfer economic benefits in settlement; and the amount of the obligation can be estimated reliably. Contingent assets and contingent liabilities are not recognised. 1.8 evenue evenue is recognised to the extent that the company has transferred the significant risks and rewards of ownership of goods to the buyer, or has rendered services under an agreement provided the amount of revenue can be measured reliably and it is probable that economic benefits associated with the transaction will flow to the company. evenue is measured at the fair value of the consideration received or receivable, excluding sales taxes and discounts. Interest is recognised, in profit or loss, using the effective interest rate method. NOTES TO THE FINANCIAL STATEMENTS 2. POPETY, PLANT AND EQUIPMENT 6 MONTHS ENDED 31 MAY 2016 Cost Accumulated Carrying 2016 depreciation value and impairments Furniture and fixtures (940) IT equipment (534) Total (1 474) econciliation of property, plant and equipment Opening Additions Depreciation Total balance Furniture and fixtures - (64 834) (940) IT equipment - (19 216) (534) (1 474) INTANGIBLE ASSETS 6 MONTHS ENDED 31 MAY 2016 Cost Accumulated amortisation Carrying value Computer software (131) econciliation of intangible assets Opening Additions Amortisation Total balance Computer software (131) EPOT FO THE 6 MONTHS ENDED 31 MAY

38 6 MONTHS ENDED 31 MAY LOANS TO (FOM) GOUP COMPANIES Fellow subsidiaries Institute of Internal Auditors South Africa ( ) 5. TADE AND OTHE ECEIVABLES Trade receivables Prepayments VAT CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of: Bank balances POVISIONS econciliation of provisions Opening Additions Total balance Provision for audit fees TADE AND OTHE PAYABLES 6 MONTHS ENDED 31 MAY 2016 Trade payables Accruals EVENUE endering of services COST OF SALES endering of services Cost of services OPEATING LOSS Operating loss for the year is stated after accounting for the following: Amortisation on intangible assets 131 Depreciation on property, plant and equipment Employee costs INVESTMENT EVENUE Interest revenue Bank AUDITO S EMUNEATION Fees EPOT FO THE 6 MONTHS ENDED 31 MAY 2016

39 14. CASH USED IN OPEATIONS 6 MONTHS ENDED 31 MAY 2016 Loss before taxation ( ) Adjustments for: Depreciation and amortisation Interest received (3 378) Movement in provisions Changes in working capital: Trade and other receivables ( ) Trade and other payables ( ) 15. ELATED PATIES elationships Members of key management: Claudelle von Eck elated party balances and transactions with other related parties elated party balances Loan accounts - Owing (to) by related parties Institute of Internal Auditors South Africa ( ) elated party transactions Administration fees paid to (received from) related parties Institute of Internal Auditors South Africa COMPAATIVE FIGUES No comparative figures have been presented as these are the first financial statements of the company. 17. FIST TIME ADOPTION OF INTENATIONAL FINANCIAL EPOTING STANDADS FO SMALL AND MEDIUM-SIZED ENTITIES The company has adopted the International Financial eporting Standards for Small and Medium-sized Entities, for the first time for the 2016 financial year end. The adoption of International Financial eporting Standing for Small and Medium-sized Entities does not have a material effect on the financial statements. EPOT FO THE 6 MONTHS ENDED 31 MAY