DURNFORD HEIGHTS BODY CORPORATE (Registration number SS638/2008) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 OCTOBER 2011

Transcription

1 (Registration number SS638/2008) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 OCTOBER 2011

2 INDEX The reports and statements set out below comprise the annual financial statements presented to the unit owners: Index Page Trustees' Responsibilities and Approval 2 Independent Auditor's Report 3-4 Trustees' Report 5 Statement of Financial Position 6 Statement of Comprehensive Income 7 Statement of Changes in Equity 8 Statement of Cash Flows 9 Accounting Policies 10 Notes to the Annual Financial Statements

3 TRUSTEES' RESPONSIBILITIES AND APPROVAL The trustees are required to maintain adequate accounting records and are responsible for the content and integrity of the annual financial statements and related financial information included in this report. It is their responsibility to ensure that the annual financial statements fairly present the state of affairs of the body corporate as at the end of the financial year and the results of its operations and cash flows for the period then ended, in conformity with the International Financial Reporting Standard for Small and Medium-sized Entities. The external auditor is engaged to express an independent opinion on the annual financial statements. The annual financial statements are prepared in accordance with the International Financial Reporting 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 trustees acknowledge that they are ultimately responsible for the system of internal financial control established by the body corporate and place considerable importance on maintaining a strong control environment. To enable the trustees to meet these responsibilities, the trustees set standards for internal control aimed at reducing the risk of error 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 body corporate and all employees are required to maintain the highest ethical standards in ensuring the body corporate s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the body corporate is on identifying, assessing, managing and monitoring all known forms of risk across the body corporate. While operating risk cannot be fully eliminated, the body corporate endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints. The trustees 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 annual financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss. The trustees have reviewed the body corporate s cash flow forecast for the year to 31 October 2012 and, in the light of this review and the current financial position, they are satisfied that the body corporate has or has access to adequate resources to continue in operational existence for the foreseeable future. The external auditor is responsible for independently reviewing and reporting on the body corporate's annual financial statements. The annual financial statements have been examined by the body corporate's external auditor and the report is presented on pages 3 to 4. The annual financial statements set out on pages 5 to 12, which have been prepared on the going concern basis, were approved by the trustees on 03 February 2012 and were signed on its behalf by: Trustee Trustee Empangeni 03 February

4 INDEPENDENT AUDITOR'S REPORT To the unit owners of Durnford Heights Body Corporate We have audited the annual financial statements of Durnford Heights Body Corporate, which comprise the statement of financial position as at 31 October 2011, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes, and the trustees' report, as set out on pages 5 to 12. Trustees' Responsibility for the Annual Financial Statements The body corporate s trustees are responsible for the preparation and fair presentation of these annual financial statements in accordance with the International Financial Reporting Standard for Small and Medium-sized Entities, and in the manner required by the Sectional Titles Act, This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of annual financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor's Responsibility Our responsibility is to express an opinion on these annual 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 whether the annual financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the annual 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 annual 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 internal 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 annual financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 3

5 INDEPENDENT AUDITOR'S REPORT Opinion In our opinion, the annual financial statements present fairly, in all material respects, the financial position of Durnford Heights Body Corporate as at 31 October 2011, and its financial performance and its cash flows for the year then ended in accordance with the International Financial Reporting Standard for Small and Medium-sized Entities, and in the manner required by the Sectional Titles Act, Sneddon & Co. Registered Auditor 03 February 2012 Empangeni 4

6 TRUSTEES' REPORT The trustees submit their report for the year ended 31 October Review of activities Main business and operations The Body Corporate of Durnford Heights is the controlling body of the block of flats known as "Durnford Heights", which came into being on 01 November In terms of the Sectional Titles Act, 1986, as amended, the maintenance and management of the buildings and common property, as provided for in the Act and Schedule 1 and 2 rules, are under the control of the trustees. The operating results and state of affairs of the body corporate are fully set out in the attached annual financial statements and do not in our opinion require any further comment. Net surplus of the body corporate was R 110,173 (2010: surplus R 112,092), after taxation of R Nil (2010: R Nil). 2. Events after the reporting period The trustees are not aware of any matter or circumstance arising since the end of the financial year, that requires adjustment or disclosure in the attached annual financial statements. 3. Trustees The trustees of the body corporate during the year and to the date of this report are as follows: Name Changes J P de Lira T Sibiya K Pillay T H Makhoba Resigned 20 July 2011 N Mkhwanazi Resigned 20 July 2011 T Mdlalose Appointed 20 July 2011 R Moodley Appointed 20 July 2011 In terms of the rules, the trustees retire at the forthcoming annual general meeting, but are eligible for renomination and election. 4. Insurance A schedule of replacement values of all units in terms of the rules will be tabled for consideration at the forthcoming annual general meeting. 5. Auditor Sneddon & Co. will continue in office for the next financial period. 5

7 STATEMENT OF FINANCIAL POSITION Note R R Assets Current Assets Trade and other receivables 2 118, ,172 Cash and cash equivalents 3 334, , , ,184 Total Assets 452, ,184 Equity and Liabilities Accumulated surplus 360, ,520 Liabilities Current Liabilities Trade and other payables 4 91,903 38,164 Provisions 5-2,500 91,903 40,664 Total Equity and Liabilities 452, ,184 6

8 STATEMENT OF COMPREHENSIVE INCOME Note R R Revenue Levies received 884, ,191 Special levy income - 126, , ,110 Other income Fees for final demands and handovers - 10,317 Fines 5,750 8,175 Insurance claims received - storm damage 61,519 - Remotes and tags 4,600 4,200 Interest received 7 41,317 11, ,186 34,383 Operating expenses AGM expenses 727 1,350 Accounting fees - 10,556 Auditor's remuneration 8 19,386 22,487 Bank charges 10,805 11,820 Employee costs 37,344 44,240 Garden services 57,930 55,100 Increase in provision for doubtful debts 43,517 64,685 Insurance 65,975 69,908 Legal expenses 1,487 1,299 Management fees 117, ,892 Postage Printing and stationery - 14,148 Repairs and maintenance 349, ,077 Security 124, ,290 Training - 1,400 Utilities 59,295 85, , ,401 Surplus for the year 110, ,092 Total comprehensive surplus 110, ,092 7

9 STATEMENT OF CHANGES IN EQUITY Accumulated surplus R Total equity R Balance at 01 November , ,428 Changes in equity Total comprehensive surplus for the year 112, ,092 Total changes 112, ,092 Balance at 01 November , ,520 Changes in equity Total comprehensive surplus for the year 110, ,173 Total changes 110, ,173 Balance at 31 October , ,693 8

10 STATEMENT OF CASH FLOWS Note R R Cash flows from operating activities Cash generated from operations ,868 33,764 Interest income 41,317 11,691 Net cash flows from operating activities 198,185 45,455 Total cash movement for the year 198,185 45,455 Cash and cash equivalents at the beginning of the year 136,012 90,557 Total cash and cash equivalents at end of the year 3 334, ,012 9

11 ACCOUNTING POLICIES 1. Presentation of Annual Financial Statements The annual financial statements have been prepared in accordance with the International Financial Reporting Standard for Small and Medium-sized Entities. The annual financial statements have been prepared on the historical cost basis, and incorporate the principal accounting policies set out below. These accounting policies are consistent with the previous period. 1.1 Financial instruments Financial instruments at amortised cost Financial instruments may be designated to be measured at amortised cost less any impairment using the effective interest rate 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. 1.2 Impairment of assets The body corporate assesses at each reporting period date whether there is any indication that an asset may be impaired. If any such indication exists, the body corporate estimates the recoverable amount of the asset. 1.3 Provisions and contingencies Provisions are recognised when: the body corporate has an obligation at the reporting period date as a result of a past event; it is probable that the body corporate 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. 1.4 Revenue Levies are recognised, in surplus or deficit, when the levies are raised. Interest is recognised, in surplus or deficit, using the effective interest rate method. 10

12 NOTES TO THE ANNUAL FINANCIAL STATEMENTS R R 2. Trade and other receivables Trade receivables 299, ,557 Provision for doubtful debts (182,202) (138,685) Deposits paid 1,300 1, Cash and cash equivalents Cash and cash equivalents consist of: 118, ,172 Current account 30,339 14,677 Marketlink account 303, , Trade and other payables 334, ,012 Trade payables 74,461 21,577 Accrued expenses 17,442 16, Provisions Reconciliation of provisions ,903 38,164 Opening balance Reversed during the year Closing balance Bonus pay 2,500 (2,500) - Reconciliation of provisions Opening balance Additions Closing balance Bonus pay - 2,500 2, Revenue Normal levy income 884, ,191 Special levy income - 126, Investment revenue 884, ,110 Interest revenue Marketlink account 9,562 1,340 Trade receivables 31,755 10,351 41,317 11,691 11

13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS R R 8. Auditor's remuneration Fees 17,442 16,587 Prior year (over)under provision (57) 2,058 Other services 2,001 3, Taxation The body corporate is partially exempt from normal taxation in terms of section 10 (1) (e) of the Income Tax Act, and pays taxation on interest received from investments in excess of R 50,000. No provision has been made for 2011 tax as the body corporate has no taxable income. 10. Cash generated from operations 19,386 22,487 Surplus before taxation 110, ,092 Adjustments for: Interest received (41,317) (11,691) Movement in provisions (Note 5) (2,500) 2,500 Changes in working capital: Trade and other receivables 36,773 (64,343) Trade and other payables 53,739 (4,794) 11. Insurance Buildings situated at 86 Durnford Road, more fully described as Lot 3164 Richards Bay, Province of KwaZulu Natal, in extent 5,229 square metres, are comprehensively insured under the combined Sectional Title policy with Centriq Insurance Company Limited for a sum of R 63,250,000 (2010: R 55,000,000). 156,868 33,764 12