TEAR AUSTRALIA INC. AUDITED GENERAL PURPOSE FINANCIAL REPORTS FOR THE YEAR ENDED 30 JUNE 2010

Transcription

1 TEAR AUSTRALIA INC. AUDITED GENERAL PURPOSE FINANCIAL REPORTS FOR THE YEAR ENDED 30 JUNE 2010

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4 CONTENTS Financial Statements Directors' Report 1 Income Statement 2 Statement of Comprehensive Income 2 Statement of Financial Position 3 Statement of Changes in Equity 4 Statement of Cash Flows 5 6 Board of the Association Declaration 20 Independent Audit Report 21 Page

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6 INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2010 Note 2010 Revenue from Ordinary Activities 2 14,274,418 15,990, Funds to Overseas Projects (8,339,244) (9,327,436) Australian Indigenous Projects (235,109) (246,922) Other Projects Expenses (753,010) (724,468) Community Education (1,226,478) (1,438,088) Fundraising - Public (339,281) (329,239) Fundraising - Government (12,098) (12,393) Administration (975,922) (905,408) Surplus for the Year 2,393,276 3,006,919 STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2010 Note 2010 Surplus for the year 2,393,276 3,006,919 Other comprehensive income after income tax: Net (loss)/gain on revaluation of financial assets 315,009 (252,355) Other comprehensive income for the year - - Total comprehensive income for the year 2,708,285 2,754, The accompanying notes form part of these financial statements 2

7 STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2010 ASSETS CURRENT ASSETS Note 2010 Cash and cash equivalents 6 7,460,755 5,667,756 Trade and other receivables 7 160,091 32,337 Inventories 8 15,603 16,795 Other current assets 9 12, ,646 TOTAL CURRENT ASSETS 7,649,062 5,834,534 NON-CURRENT ASSETS Financial assets ,815 - Property, plant and equipment 11 2,397,503 2,348,555 TOTAL NON-CURRENT ASSETS 3,324,318 2,348,555 TOTAL ASSETS 10,973,380 8,183,089 CURRENT LIABILITIES Trade and other payables 12 82,580 61,061 Short-term provisions , ,794 TOTAL CURRENT LIABILITIES 547, ,855 NON-CURRENT LIABILITIES Long-term provisions 13 35,505 32,364 TOTAL NON-CURRENT LIABILITIES 35,505 32,364 TOTAL LIABILITIES 583, ,219 NET ASSETS 10,390,155 7,681,870 EQUITY Reserves , ,549 Retained earnings 9,859,597 7,466,321 TOTAL EQUITY 10,390,155 7,681, The accompanying notes form part of these financial statements 3

8 STATEMENT OF CHANGES IN EQUITY FOR YEAR ENDED 30 JUNE 2010 Note Retained Earnings Special Purpose Grant Reserve Foreign Currency Reserve Balance at 1 July ,459, ,904-4,927,306 Surplus for the year 3,006, ,006,919 Transfers to and from reserves - - (252,355) (252,355) Balance at 30 June ,466, ,904 (252,355) 7,681,870 Surplus for the year 2,393, ,393,276 Transfers to and from reserves , ,009 Balance at 30 June ,859, ,904 62,654 10,390,155 Total The accompanying notes form part of these financial statements 4

9 CASH FLOW STATEMENT FOR YEAR ENDED 30 JUNE 2010 CASH FLOW FROM OPERATING ACTIVITIES Donations received 10,532,200 11,915,141 Bequests and legacies received 41,705 2,018,706 Operating grant receipts 2,679,600 1,879,884 Other income received 113,506 95,320 Payments to suppliers and employees (3,430,324) (3,429,993) Distributions to overseas partners and fieldworkers (8,268,667) (9,521,042) Interest received 154, ,121 Net cash provided by (used in) operating activities 16 (b) 1,822,680 3,066,137 Note CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of property, plant and equipment 2,125 (2,262) Purchase of property, plant and equipment (146,806) (476,746) Sale of Treasury Bonds 115,000 - Net cash provided by (used in) investing activities (29,681) (479,008) CASH FLOW FROM FINANCING ACTIVITIES Net cash provided by (used in) financing activities - (98,355) Net increase in cash held 1,792,999 2,488,774 Cash at beginning of year 5,667,756 3,178,982 Cash at end of year 6,16 (a) 7,460,755 5,667,756 The accompanying notes form part of these financial statements 5

10 Note 1: Summary of Significant Accounting Policies The financial statements cover the Association of TEAR Australia Inc. as an individual entity. TEAR Australia Inc. is an association incorporated in Victoria under the Associations Incorporation Act The financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards, Australian Accounting interpretations and the Associations Incorporation Act Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial statements containing relevant and reliable information about transactions, events and conditions to which they apply. The following is a summary of the material accounting policies adopted by the Association in the preparation of the financial statements. The accounting policies have been consistently applied, unless otherwise stated. Basis of Preparation Reporting Basis and Conventions The financial statements has been prepared on an accruals basis and are based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied. Accounting Policies a. Income Tax No current or deferred income tax assets or liabilities have been raised by the Association as it is exempt from income tax under division 50 of the Income Tax Assessment Act b. Inventories Inventories are measured at the lower of cost and net realisable value. c. Property, Plant and Equipment Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses. Property Freehold land and buildings are shown at cost less subsequent depreciation for buildings. Plant and equipment Plant and equipment are measured on the cost basis less depreciation and impairment losses. The carrying amount of plant and equipment is reviewed annually by the Board members to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is the asset s depreciated replacement cost. Depreciation The depreciable amount of all fixed assets is depreciated on a straight line basis over their useful lives to the Association commencing from the time the asset is held ready for use. The depreciation rates used for each class of depreciable assets are: Class of Fixed Asset Buildings 2.5% Office Furniture & Equipment 5-17% Computer Systems 34% Motor Vehicles 5-15% Depreciation Rate The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset s carrying amount is written down immediately to its recoverable amount if the asset s carrying amount is greater than its estimated recoverable amount. Note 1: Summary of Significant Accounting Policies (cont d) 6

11 Depreciation (Continued) Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in the income statement. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings. d. Financial Instruments Recognition Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out below. Held-to-maturity investments These investments have fixed maturities, and it is the Association s intention to hold these investments to maturity. Any held-to-maturity investments held by the Association are stated at face value. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost. Loans and receivables are included in current assets, except for those which are not expected to mature within 12 months after the end of the reporting period, which will be classified as non-current assets. Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial assets that comprise of investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments. Available-for-sale financial assets are included in non-current assets, except for those which are expected to be disposed of within 12 months after the end of the reporting period, which will be classified as current assets. Fair value Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm s length transactions, reference to similar instruments and option pricing models. Impairment At each reporting date, the group assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the income statement. e. Employee Benefits Provision is made for the Association s liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. f. Cash and Cash Equivalents g Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Comparative Figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. Note 1: Summary of Significant Accounting Policies (cont d) h. Revenue 7

12 Donation revenue is recognised when the Association has received the donation. Grant revenue is recognised in the income statement when it is controlled by the Association. Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. i. Goods and Services Tax (GST) Revenues, expenses, and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST. j New Accounting Standards for Application in Future Periods The Australian Accounting Standards Board (AASB) has issued new and amended accounting standards and interpretations that have mandatory application dates for future reporting periods. The Association has reviewed the future requirements of the new and amended accounting standard and noted no impact on the Association k Adoption of New and Revised Accounting Standards During the current year, the Association has adopted all of the new and revised Australian Accounting Standards and Interpretations applicable to its operations which became mandatory. The adoption of these standards has impacted the recognition, measurement, and disclosure of certain transactions. The following is an explanation of the impact the adoption of these standards and interpretations has had on the financial statements of TEAR Australia Inc. AASB 101: Presentation of Financial Statements In September 2007, the Australian Accounting Standards Board revised AASB 101 and as a result, there have been changes to the presentation and disclosure of certain information within the financial statements. Below is an overview of the key changes and the impact on the Association s financial statements. Disclosure impact Terminology changes - The revised version of AASB 101 contains a number of terminology changes, including the amendment of the names of the primary financial statements. Statement of comprehensive income - The revised AASB 101 requires all income and expenses to be presented in either one statement, the statement of comprehensive income, or two statements, a separate income statement and a statement of comprehensive income. The previous version of AASB 101 required only the presentation of a single income statement. The Association's financial statements now contain a statement of comprehensive income. 8

13 Note 2: Revenue Operating activities Donations 10,532,200 11,915,141 Legacies and Bequests 968,521 2,018,706 AusAID grants 2,423,352 1,879,884 Other Australian agencies - - Grants from overseas agencies - - Other income 113,507 69,021 Non-operating activities Interest received 236, ,121 Total Revenue 14,274,418 15,990,873 Note 3: Surplus(Deficit) from Ordinary Activities a. Expenses Depreciation of property, plant and equipment 97,858 64,237 Net gain/(loss) on disposal of property, plant and equipment (2,125) 2,262 Rental expense 18,367 16,591 Total 114,100 83,090 9

14 Note 4: Key Management Personnel Compensation Key Management Personnel National Director Matthew Maury Other Key Management Personnel Peter Fitzgerald Ashley Humphreys Lyn Jackson (part-time.8) Barbara Deutschmann (part-time.6) John McKinnon Phil Wilkerson International Program Coordinator Office & Finance Administrator Australian Program Coordinator Indigenous Program Coordinator NSW State Coordinator Asst. International Program Coordinator Salary & Fees Superannuation Bonus Non-Cash Benefits Total Total compensation of Key Management Personnel ,113 55, , , ,841 55, , ,770 Note 5: Auditors Remuneration Remuneration of the auditor of the Association for: auditing or reviewing the financial report 10,400 7,875 10,400 7,875 Note 6: Cash Assets Cash at bank and in hand Cash on Deposit 3,460,755 5,667,756 4,000,000-7,460,755 5,667,756 Note 7: Receivables Sundry Debtors 145,845 4,792 Net Tax Receivable 14,246 27,545 Credit Risk: 160,091 32,337 The Association has no significant concentration of credit risk with respect to any single counterparty or group of counterparties. There are no indicators of impairment on receivables at year end and no provision for doubtful debts has been raised. Note 8: Inventories 10

15 Stock of publications at cost 15,603 16,795 Note 9: Other Assets Treasury Bonds - 115,000 Prepayments 12,613 2,646 12, ,646 Note 10: Other Financial Assets Available-for-sale financial assets Shares held at market value 926,815 - Note 11: Property, Plant and Equipment Office Furniture and Equipment at cost 98,047 98,047 Accumulated depreciation (70,827) (61,530) 27,220 36,517 Computer Systems at cost 345, ,672 Accumulated depreciation (210,792) (162,246) 134,825 29,426 Motor Vehicles at cost 125, ,615 Accumulated depreciation (61,478) (55,262) 63,702 93,353 Land and Buildings Freehold land at cost 1,500,000 1,500,000 Buildings at cost 700, ,106 Accumulated Depreciation (28,350) (10,847) 671, ,259 Total Land and Buildings 2,171,756 2,189,259 Total Property, Plant and Equipment 2,397,503 2,348,555 11

16 a. Movements in Carrying Amounts Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year Land & Buildings Office Furniture & Fixtures Computer System Motor Vehicles Total Balance at the beginning of year 2,189,259 36,517 29,426 93,353 2,348,555 Additions , ,616 Disposals - - (7,435) (9,375) (16,810) Depreciation expense (17,503) (9,297) (50,782) (20,276) (97,858) Carrying amount at the end of year 2,171,756 27, ,825 63,702 2,397,503 Note 12: Payables Unsecured liabilities: Trade creditors and accruals 42,332 58,588 Payments received in advance 40,248 2,473 82,580 61,061 Note 13: Provisions Employee Entitlements Balance at the beginning of year 440, ,274 Additional provisions raised during year 214, ,445 Amounts used (154,036) (164,561) Balance at the end of year 500, ,158 Current 465, ,794 Non-current 35,505 32, , ,158 12

17 Note 14: Reserves a. Special Purpose Grant Reserve The Special Purpose Grant Reserve was established for certain purposes. A purpose could include: A contribution towards the purchase of a suitable property To meet a critical need of an overseas partner when current available funds are not adequate To provide for essential funding commitments after a sudden or prolonged downturn in income receipts b. Foreign Currency Reserve The Foreign Currency Reserve holds movements in currency valuations as at balance date for outstanding Forward Exchange Contracts designated as hedges. Movements in valuations for foreign currencies held as at balance date are recorded in the Income Statement. Any gains/losses on transactions made in forward exchange contracts are recorded in the Income Statement on the date of transaction. Note 15: Related Party Transactions Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. The following payments were made to TEAR Board members or their spouses for services rendered in relation to legal services or employment with TEAR. Payments for services rendered to Board members are made in accordance with Board policy. Marjorie Quinn 48,195 47,141 Trevor Thomas 36,288 35,128 Paul Holdway (partner of Lewis Holdway Lawyers) 1, Note 16: Cash Flow Information a. Reconciliation of Cash Cash at bank and in hand including deposits 7,460,755 5,667,756 b. Reconciliation of Cash flow from Operations with Profit after Income Tax Profit after income tax 2,393,276 3,006,919 Non cash flows Shares received in kind (926,815) - Depreciation and amortisation 97,858 64,237 Loss on sale of assets (2,125) 2,262 Movement in reserves 315,009 (252,355) Changes to provisions 60,487 1,884 Changes in assets and liabilities (Increase)/decrease in receivable and other assets (129,356) 26,745 Increase/(decrease) in trade and other payables 14, ,445 Cash flows provided by operating activities 1,822,680 3,066,137 Note 17: Financial Instruments 13

18 Note 17: Financial Instruments TEAR Australia's financial instruments consist mainly of deposits with banks, short-term investments, accounts receivable, and payables. The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting policies to these financial statements, are as follows: Cash 6 7,460,755 5,667,756 Trade and other receivables 7 160,091 32,337 Available-for-sale financial assets ,815 - Total Financial Assets 8,547,661 5,700,093 Financial Liabilities Trade and other payables 12 82,580 61,061 Total Financial Liabilities 82,580 61,061 Financial Risk Management Policies The audit and risk committee s overall risk management strategy seeks to assist the association in meeting its financial targets, whilst minimising potential adverse effects on financial performance. Risk management policies are approved and reviewed by the finance committee on a regular basis. These include credit risk policies and future cash flow requirements. Specific Financial Risk Exposures and Management a. Credit risk Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract obligations that could lead to a financial loss for the Association. The Association does not have any material credit risk exposure as the major source of revenue is the receipt of grants and donations. Credit Risk Exposures The maximum exposure to credit risk by class of recognised financial assets at the end of the reporting period is equivalent to the carrying value and classification of those financial assets (net of any provisions) as presented in the statement of financial position. Trade and other receivables that are neither past due or impaired are considered to be of high credit quality. Aggregates of such amounts are as detailed in Note 7. The Association has no significant concentration of credit risk exposure to any single counterparty or group of counterparties. Details with respect to credit risk of Trade and Other Receivables are provided in Note 7. Credit risk is managed through maintaining procedures ensuring, to the extent possible, that counterparties to transactions are of sound credit worthiness. Risk is also minimised through investing surplus funds in financial institutions that maintain a high credit rating or in entities that the board has otherwise cleared as being financially sound. 14

19 Note 17: Financial Instruments b. Liquidity risk Liquidity risk arises from the possibility that the Association might encounter difficulty in settling its debts or otherwise meeting its obligations in relation to financial liabilities. The company manages this risk through the following mechanisms: preparing forward looking cash flow analysis in relation to its operational, investing and financing activities; managing credit risk related to financial assets; and only investing surplus cash with major financial institutions c. Market Risk i. Interest rate risk Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the reporting period whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments. 15

20 The Association s exposure to interest rate risk is as follows: FINANCIAL INSTRUMENTS AS AT 30 JUNE 2010 Financial Assets Weighted Average Interest Rate Floating Interest Rate Fixed Interest Rate < 1 year Fixed Interest Rate > 1 year Non-Interest Bearing Total Cash and cash equivalent 4.3% 2,405,715 4,000,000-1,055,040 7,460,755 Trade and other receivables NA , ,091 Treasury Bonds NA Available-for-sale financial assets , ,815 Total Financial Assets 2,405,715 4,000,000-2,141,946 8,547,661 Financial Liabilities Trade and other payables N/A ,580 82,580 Total Financial Liabilities ,580 82,580 Net Financial Assets/Liabilities 2,405,715 4,000,000-2,059,366 8,465,081 FINANCIAL INSTRUMENTS AS AT 30 JUNE 2009 Financial Assets Weighted Average Interest Rate Floating Interest Rate Fixed Interest Rate < 1 year Fixed Interest Rate > 1 year Non-Interest Bearing Cash 4.3% 4,570, ,097,644 5,667,756 Trade and other receivables N/A ,337 32,337 Treasury Bonds 6.3% - 115, ,000 Available-for-sale financial assets Total Financial Assets 4,570, ,000-1,147,387 5,815,093 Total Financial Liabilities Trade and other payables N/A , ,148 Total Financial Liabilities , ,148 Net Financial Assets/Liabilities ,872 5,608,945 Note 17: Financial Instruments 16

21 c. Market Risk (continued) ii Price risk Price risk relates to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices of securities held. The Association is not exposed to significant securities price risk on investments at year end. Sensitivity Analysis The following table illustrates sensitivities to the Association s exposures to changes in interest rates and equity prices. The table indicates the impact on how profit and equity values reported at the end of the reporting period would have been affected by changes in the relevant risk variable that management considers to be reasonably possible. These sensitivities assume that the movement in a particular variable is independent of other variables. Year ended 30 June 2010 Profit Equity +/- 2% interest rates +/- 149,215 +/- 149,215 Year ended 30 June /- 2% interest rates +/- 115,655 +/-115,655 Net Fair Values Fair value estimation The fair values of financial assets and financial liabilities are presented in the following table and can be compared to their carrying values as presented in the statement of financial position. Fair values are those amounts at which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm s length transaction. Fair values derived may impact on the amounts estimated. Areas of judgement and the assumptions have been detailed below. Where possible, valuation information used to calculate fair value is extracted from the market, with more reliable information available from markets that are actively traded. In this regard, fair values for listed securities are obtained from quoted market bid prices. Where securities are unlisted and no market quotes are available, fair value is obtained using discounted cash flow analysis and other valuation techniques commonly used by market participants. Differences between fair values and carrying values of financial instruments with fixed interest rates are due to the change in discount rates being applied by the market since their initial recognition by the company. Most of these instruments which are carried at amortised cost (ie trade receivables) are to be held until maturity and therefore the net fair value figures calculated bear little relevance to the Association. 17

22 Footnote Net carrying value Net fair value Net carrying value Net fair value Financial assets Cash and cash equivalents (i) 7,460,755 7,460,755 5,667,756 5,667,756 Trade and other receivables (i) 160, ,091 32,337 32,337 Total financial assets 7,620,846 7,620,846 5,700,093 5,700,093 Financial liabilities Trade and other payables (i) 82,580 82,580 61,061 61,061 Bank overdraft (ii) Total financial liabilities 82,580 82,580 61,061 61,061 The fair values disclosed in the above table have been determined based on the following methodologies: (i) Cash and cash equivalents, trade and other receivables and trade and other payables are short-term instruments in nature whose carrying value is equivalent to fair value. Trade and other payables exclude amounts provided for annual and long service leave, which is not considered a financial instrument. (ii) Fair values are determined using a discounted cash flow model incorporating current commercial borrowing rates. Note 18: Table of Cash Movements for Designated Purposes Cash available at beginning of year Cash raised during year Cash disbursed during year Cash available at end of year Designated Purpose Total for other purposes 5,667,756 13,638,796 11,845,797 7,460,755 Total 5,667,756 13,638,796 11,845,797 7,460,755 There were no appeals for a designated purpose that raised more than 10% of total revenue in the financial year. 18

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