ACNC Special Purpose Financial Statements Disclaimer: These financial statements include illustrative disclosures for an ACNC special purpose company limited by guarantee and are not intended to be and are not comprehensive in relation to their subject matter. This document is not a substitute for reading technical pronouncements relating to the preparation of financial statements. To the extent permitted by law, CaseWare Australia and New Zealand, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences arising from the reliance on the information contained in this document or for any decisions based on it.
Contents Financial Statements Statement of Profit or Loss and Other Comprehensive Income 1 Statement of Financial Position 2 Statement of Changes in Equity 3 Statement of Cash Flows 4 5 Directors' Declaration 15 Independent Audit Report 16 Page
Statement of Profit or Loss and Other Comprehensive Income Revenue 6,753,090 2,676,782 Other income - 17,078 Employee benefits expense (1,295,363) (619,673) Depreciation and amortisation expense (8,439) (5,289) Program costs (3,757,954) (1,152,411) Administrative expenses (1,177,115) (595,646) Other expenses (433,436) (218,932) Profit for the year 80,783 101,909 2018 2017 Total comprehensive income for the year 80,783 101,909 The accompanying notes form part of these financial statements. 1
Statement of Financial Position As At 30 June 2018 ASSETS CURRENT ASSETS Cash and cash equivalents 6 250,890 203,989 Trade and other receivables 7 287,183 242,786 Inventories 70,346 45,975 Other assets 140,145 16,254 TOTAL CURRENT ASSETS 748,564 509,004 NON-CURRENT ASSETS Property, plant and equipment 76,918 16,522 TOTAL NON-CURRENT ASSETS TOTAL ASSETS Note 2018 2017 76,918 16,522 825,482 525,526 LIABILITIES CURRENT LIABILITIES Trade and other payables 8 544,436 340,211 Bank loan 44,018 56,490 Employee benefits 25,279 16,852 Other liabilities 5,600 - TOTAL CURRENT LIABILITIES 619,333 413,553 NON-CURRENT LIABILITIES Employee benefits 48,127 34,734 TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS 48,127 34,734 667,460 448,287 158,022 77,239 EQUITY Retained earnings 158,022 77,239 TOTAL EQUITY 158,022 77,239 The accompanying notes form part of these financial statements. 2
Statement of Changes in Equity 2018 Retained Earnings Balance at 1 July 2017 77,239 77,239 Result for the year 80,783 80,783 Balance at 30 June 2018 158,022 158,022 Total 2017 Balance at 1 July 2016 (24,670) (24,670) Result for the year 101,909 101,909 Balance at 30 June 2017 77,239 77,239 The accompanying notes form part of these financial statements. 3
Statement of Cash Flows Note 2018 2017 CASH FLOWS FROM OPERATING ACTIVITIES: Cash receipts in the course of operations 6,577,344 2,662,051 Cash payments in the course of operations (6,456,594) (2,609,693) Interest received 7,458 3,868 Net cash provided by operating activities 13 128,208 56,226 CASH FLOWS FROM INVESTING ACTIVITIES: Payments for property, plant and equipment (68,835) (1,452) Net cash used in investing activities (68,835) (1,452) CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of borrowings (12,472) (1,452) Net cash provided by financing activities (12,472) (1,452) Net increase in cash and cash equivalents held 46,901 53,322 Cash and cash equivalents at beginning of year 203,989 92,725 Cash and cash equivalents at end of financial year 6 250,890 146,047 The accompanying notes form part of these financial statements. 4
The financial report covers ACNC Special Purpose as an individual entity. ACNC Special Purpose is a not-for-profit Company, registered and domiciled in Australia. The principal activities of the Company for the year ended 30 June 2018 were provision of counselling and education services and supply of low cost goods to families in need. The functional and presentation currency of ACNC Special Purpose is Australian dollars. Comparatives are consistent with prior years, unless otherwise stated. 1 Basis of Preparation In the Directors opinion the Company is not a reporting entity since there are unlikely to exist users of the financial statements who are not able to command the preparation of reports tailored so as to satisfy specifically all of their information needs. These special purpose financial statements have been prepared to meet the reporting requirements of the Australian Charities and Not-for-profits Commission Act 2012. The financial statements have been prepared in accordance with the recognition and measurement requirements of the Australian Accounting Standards and Accounting Interpretations, and the disclosure requirements of AASB 101 Presentation of Financial Statements, AASB 107 Statement of Cash Flows, AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors and AASB 1054 Australian Additional Disclosures. 2 Summary of Significant Accounting Policies (a) Income Tax The Company is exempt from income tax under Division 50 of the Income Tax Assessment Act 1997. (b) Leases Lease payments for operating leases, where substantially all of the risks and benefits remain with the lessor, are charged as expenses on a straight-line basis over the life of the lease term. (c) Revenue and other income Revenue is recognised when the amount of the revenue can be measured reliably, it is probable that economic benefits associated with the transaction will flow to the Company and specific criteria relating to the type of revenue as noted below, has been satisfied. Revenue is measured at the fair value of the consideration received or receivable. Sale of goods Revenue is recognised on transfer of goods to the customer as this is deemed to be the point in time when risks and rewards are transferred and there is no longer any ownership or effective control over the goods. 5
2 Summary of Significant Accounting Policies continued (c) Revenue and other income continued Grant revenue Grant revenue is recognised in the statement of profit or loss and other comprehensive income when the entity obtains control of the grant, it is probable that the economic benefits gained from the grant will flow to the entity and the amount of the grant can be measured reliably. When grant revenue is received whereby the entity incurs an obligation to deliver economic value directly back to the contributor, this is considered a reciprocal transaction and the grant revenue is recognised in the statement of financial position as a liability until the service has been delivered to the contributor, otherwise the grant is recognised as income on receipt. Interest revenue Interest is recognised using the effective interest method. Rendering of services Revenue in relation to rendering of services is recognised when the counselling or education services are complete. Where there are a number of sessions to be provided then revenue is recognised in proportionate to the sessions completed. Other income Other income is recognised on an accruals basis when the Company is entitled to it. (d) Goods and services tax (GST) Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). Receivables and payable are stated inclusive of GST. Cash flows in the statement of cash flows are included on a gross basis and the GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows. (e) Inventories Inventories acquired at no cost, or for nominal consideration are valued at the current replacement cost as at the date of acquisition, which is the deemed cost. 6
2 Summary of Significant Accounting Policies continued (f) Property, plant and equipment Each class of property, plant and equipment is carried at cost less, where applicable, any accumulated depreciation and impairment. Items of property, plant and equipment acquired for nil or nominal consideration have been recorded at the acquisition date fair value. Depreciation Plant and equipment, is depreciated on a straight-line basis over the assets useful life to the Company, commencing when the asset is ready for use. The estimated useful lives used for each class of depreciable asset are shown below: Fixed asset class Useful life Office Equipment 2-10 years At the end of each annual reporting period, the depreciation method, useful life and residual value of each asset is reviewed. Any revisions are accounted for prospectively as a change in estimate. (g) Financial instruments Financial instruments are recognised initially using trade date accounting, i.e. on the date that the Company becomes party to the contractual provisions of the instrument. On initial recognition, all financial instruments are measured at fair value plus transaction costs (except for instruments measured at fair value through profit or loss where transaction costs are expensed as incurred). Financial Assets Financial assets are divided into the following categories which are described in detail below: loans and receivables. Financial assets are assigned to the different categories on initial recognition, depending on the characteristics of the instrument and its purpose. A financial instrument s category is relevant to the way it is measured and whether any resulting income and expenses are recognised in profit or loss or in other comprehensive income. All income and expenses relating to financial assets are recognised in the statement of profit or loss and other comprehensive income in the finance income or finance costs line item respectively. 7
2 Summary of Significant Accounting Policies continued (g) Financial instruments continued Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers but also incorporate other types of contractual monetary assets. After initial recognition these are measured at amortised cost using the effective interest method, less provision for impairment. Any change in their value is recognised in profit or loss. The Company s trade and other receivables fall into this category of financial instruments. In some circumstances, the Company renegotiates repayment terms with customers which may lead to changes in the timing of the payments, the Company does not necessarily consider the balance to be impaired, however assessment is made on a case-by-case basis. If there is objective evidence that an impairment loss on financial assets carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset s carrying amount and the present value of the estimated future cash flows discounted at the financial assets original effective interest rate. Impairment on loans and receivables is reduced through the use of an allowance accounts, all other impairment losses on financial assets at amortised cost are taken directly to the asset. Subsequent recoveries of amounts previously written off are credited against other expenses in profit or loss. (h) Impairment of non-financial assets At the end of each reporting period the Company determines whether there is an evidence of an impairment indicator for non-financial assets. Where an indicator exists, the recoverable amount of the asset is estimated. Where assets do not operate independently of other assets, the recoverable amount of the relevant cashgenerating unit (CGU) is estimated. The recoverable amount of an asset or CGU is the higher of the fair value less costs of disposal and the value in use. Value in use is the present value of the future cash flows expected to be derived from an asset or cashgenerating unit. Where the recoverable amount is less than the carrying amount, an impairment loss is recognised in profit or loss. (i) Cash and cash equivalents Cash and cash equivalents comprises cash on hand, demand deposits and short-term investments which are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. 8
2 Summary of Significant Accounting Policies continued (j) Employee benefits Provision is made for the Company's liability for employee benefits arising from services rendered by employees to the end of the reporting period. Employee benefits that are expected to be wholly settled within one year have been measured at the amounts expected to be paid when the liability is settled. Employee benefits expected to be settled more than one year after the end of the reporting period have been measured at the present value of the estimated future cash outflows to be made for those benefits. In determining the liability, consideration is given to employee wage increases and the probability that the employee may satisfy vesting requirements. Cashflows are discounted using market yields on high quality corporate bond rates incorporating bonds rated AAA or AA by credit agencies, with terms to maturity that match the expected timing of cashflows. Changes in the measurement of the liability are recognised in profit or loss. Defined contribution schemes Obligations for contributions to defined contribution superannuation plans are recognised as an employee benefit expense in profit or loss in the periods in which services are provided by employees. (k) Adoption of new and revised accounting standards The Company has adopted all standards which became effective for the first time at 30 June 2018, the adoption of these standards has not caused any material adjustments to the reported financial position, performance or cash flow of the Company. (l) New Accounting Standards and Interpretations The AASB has issued new and amended Accounting Standards and Interpretations that have mandatory application dates for future reporting periods. The Company has decided not to early adopt these Standards. The following table summarises those future requirements, and their impact on the Company where the standard is relevant: NB: These standards are examples only. Please refer to our Standards Issued by Not Yet Effective publication on our FAQ site for the most up to date Standards (http://caseware.com.au/faq/article.php?id=178) 9
2 Summary of Significant Accounting Policies continued (l) New Accounting Standards and Interpretations continued Effective date Standard Name for entity Requirements Impact AASB 9 Financial Instruments and amending standards 30 June 2019 Significant revisions to the classification and measurement of financial assets, reducing the number of categories and simplifying the measurement choices, including the removal of impairment testing of assets measured at fair value. The amortised cost model is available for debt assets meeting both business model and cash flow characteristics tests. All investments in equity instruments using AASB 9 are to be measured at fair value. We anticipate that the impact will be minimal, although the process for recognising provisions for bad debts is likely to change under the expected loss model. AASB 15 Revenue from contracts with customers Amends measurement rules for financial liabilities that the entity elects to measure at fair value through profit and loss. Changes in fair value attributable to changes in the entity s own credit risk are presented in other comprehensive income. 30 June 2020 AASB 15 introduces a five step process for revenue recognition with the core principle of the new Standard being for entities to recognise revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration (that is, payment) to which the entity expects to be entitled in exchange for those goods or services. Accounting policy changes will arise in timing of revenue recognition, treatment of contracts costs and contracts which contain a financing element. As revenue is currently recognised on completion of education and counselling services, we do not anticipate significant changes, however we are continuing to review the revenue recognition policy for longer term contracts and grants. AASB 15 will also result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively (for example, service revenue and contract modifications) and improve guidance for multiple element arrangements. 10
2 Summary of Significant Accounting Policies continued (l) New Accounting Standards and Interpretations continued Effective date Standard Name for entity Requirements Impact AASB 16 Leases 30 June 2020 AASB 16 will cause the majority of leases of an entity to be brought onto the statement of financial position. There are limited exceptions relating to short-term leases and low value assets which may remain off-balance sheet. The calculation of the lease liability will take into account appropriate discount rates, assumptions about lease term and increases in lease payments. A corresponding right to use asset will be recognised which will be amortised over the term of the lease. Rent expense will no longer be shown, the profit and loss impact of the leases will be through amortisation and interest charges. Whilst the impact of AASB 16 has not yet been quantified, the entity currently has 104,280 worth of operating leases which we anticipate will be brought onto the statement of financial position. Interest and amortisation expense will increase and rental expense will decrease. 3 Critical Accounting Estimates and Judgments The Directors make estimates and judgements during the preparation of these financial statements regarding assumptions about current and future events affecting transactions and balances. These estimates and judgements are based on the best information available at the time of preparing the financial statements, however as additional information is known then the actual results may differ from the estimates. The significant estimates and judgements made have been described below. Key estimates - receivables The receivables at reporting date have been reviewed to determine whether there is any objective evidence that any of the receivables are impaired. An impairment provision is included for any receivable where the entire balance is not considered collectible. The impairment provision is based on the best information at the reporting date. 11
4 Revenue and Other Income Revenue from continuing operations Sales revenue - sale of goods 216,875 260,328 - provision of services 5,110,771 1,847,221 2018 2017 5,327,646 2,107,549 Finance income - other interest received 7,458 3,868 Other revenue - operating grants 1,417,986 565,365 Total Revenue 6,753,090 2,676,782 Other Income - Other income - 17,078 5 Result for the Year The result for the year includes the following specific expenses: Other expenses: Rental expense on operating leases: - Minimum lease payments 34,093 27,489 6 Cash and Cash Equivalents Cash at bank and in hand 86,042 108,330 Short-term deposits 164,848 95,659 250,890 203,989 7 Trade and Other Receivables CURRENT Trade receivables 277,421 243,086 Provision for impairment - (300) 277,421 242,786 Other receivables 9,762 - Total current trade and other receivables 287,183 242,786 The carrying value of trade receivables is considered a reasonable approximation of fair value due to the short-term nature of the balances. The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable in the financial statements. 12
8 Trade and Other Payables CURRENT Trade payables 544,089 334,988 Other payables 347 5,223 2018 2017 544,436 340,211 All amounts are short term carrying values are considered to be a reasonable approximation of fair value. 9 Capital and Leasing Commitments (a) Operating Leases Minimum lease payments under non-cancellable operating leases: - not later than one year 42,100 12,450 - between one year and five years 62,180 21,500 104,280 33,950 Operating leases are in place for office equipment and normally have a term between 2 and 5. Lease payments are increased on an annual basis to reflect market rentals. 10 Members' Guarantee The Company is registered under the Australian Charities and Not-for-profits Commission Act 2012 and is a Company limited by guarantee. If the Company is wound up, the constitution states that each member is required to contribute a maximum of 50 each towards meeting any outstandings and obligations of the Company. At 30 June 2018 the number of members was 217 (2017: 205). 11 Auditors' Remuneration Remuneration of the auditor of the company, AUDITORS R US, for: - auditing or reviewing the financial statements 7,000 6,060 12 Contingencies In the opinion of the Directors, the Company did not have any contingencies at 30 June 2018 (30 June 2017:Nil). 13
13 Cash Flow Information (a) Reconciliation of result for the year to cashflows from operating activities Reconciliation of net income to net cash provided by operating activities: Profit for the year 80,783 101,909 Cash flows excluded from profit attributable to operating activities Non-cash flows in profit: - depreciation and amortisation 8,439 5,289 - impairment of receivables - 300 Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries: - (increase)/decrease in trade and other receivables (44,397) (27,664) - (increase)/decrease in other assets (123,891) (577) - (increase)/decrease in inventories (24,371) (750) - increase/(decrease) in trade and trade payables 204,225 (25,500) - increase/(decrease) in other payables 5,600 (1,255) - increase/(decrease) in employee benefits 21,820 4,474 Cashflows from operations 2018 2017 128,208 56,226 (b) Changes in liabilities arising from financing activities 2017 Non-cash changes Acquisition Long term borrowings 56,490 (12,472) 44,018 Total liabilities from financing activities 56,490 (12,472) 44,018 2018 14 Statutory Information The registered office and principal place of business of the company is: ACNC Special Purpose 100 City Road East Melbourne Victoria 3002 14
Directors' Declaration The directors declare that in the directors' opinion: there are reasonable grounds to believe that the registered entity is able to pay all of its debts, as and when they become due and payable; and the financial statements and notes satisfy the requirements of the Australian Charities and Not-for-profits Commission Act 2012. Signed in accordance with subsection 60.15(2) of the Australian Charities and Not-for-profit Commission Regulation 2013. Director... Roger Vinci Director... Novak Pennetta Dated 16 September 2018 15
Independent Audit Report to the members of ACNC Special Purpose Report on the Audit of the Financial Report Opinion We have audited the financial report of ACNC Special Purpose, which comprises the statement of financial position as at 30 June 2018, the statement of profit or loss and other comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors' declaration. In our opinion the financial report of ACNC Special Purpose has been prepared in accordance with Division 60 of the Australian Charities and Not-for-profits Commission Act 2012, including: (i) giving a true and fair view of ACNC Special Purpose's financial position as at 30 June 2018 and of its financial performance for the year ended; and (ii) complying with Australian Accounting Standards to the extent described in Note 1, and Division 60 of the Australian Charities and Not-for-profits Commission Regulation 2013. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of our report. We are independent of ACNC Special Purpose in accordance with the auditor independence requirements of the Australian Charities and Not-for-profits Commission Act 2012 (ACNC Act) and the ethical requirements of the Accounting Professional and Ethical Standards Board's APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of Matter - Basis of Accounting We draw attention to Note 1 to the financial report, which describes the basis of accounting. The financial report has been prepared for the purpose of fulfilling ACNC Special Purpose's financial reporting responsibilities under the ACNC Act. As a result, the financial report may not be suitable for another purpose. Our opinion is not modified in respect of this matter. Responsibilities of Responsible Entities for the Financial Report The responsible entities of ACNC Special Purpose are responsible for the preparation of the financial report that gives a true and fair view and have determined that the basis of preparation described in Note 1 to the financial report is appropriate to meet the requirements of the ACNC Act and the needs of the members. The responsible entities' responsibility also includes such internal control as the responsible entities determine is necessary to enable the preparation of a financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the responsible entities are responsible for assessing ACNC Special Purpose's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the responsible entities either intend to liquidate ACNC Special Purpose or to cease operations, or have no realistic alternative but to do so. 16
Independent Audit Report to the members of ACNC Special Purpose Auditor's Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit 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 ACNC Special Purpose s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the responsible entities. Conclude on the appropriateness of the responsible entities use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on ACNC Special Purpose s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor s report. However, future events or conditions may cause ACNC Special Purpose to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. AN Auditor AUDITORS R US Chartered Accountants Melbourne 16 September 2018 17