REPORTS AND FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REPORT OF THE DIRECTORS (CONTINUED) The directors have pleasure in submitting their report together with the audited financial statements of the Agency for Volunteer Service (the Agency ) for the year ended 31 March 2017. Principal activities The principal activities of the Agency are promoting and developing volunteer services in Hong Kong, including: (i) volunteer referral which refers appropriate volunteers to organisations requiring their services; (ii) volunteer action which provides managed service opportunities for individuals to participate as volunteers; (iii) provision of training for volunteers and volunteer users; (iv) provision of technical assistance for organisations to improve their use of volunteer manpower and skills; (v) publication, promotion and public education to promote volunteer service; and (vi) operation of a neighbourhood elderly centre. Results and appropriations The results of the Agency for the year ended 31 March 2017 are set out in the Statement of Comprehensive Income on page 8. Directors The directors who held office during the year and up to the date of this report were: Mr. Lee Jark Pui, SBS, OBE, JP Chairman Dr. Shum Chi Wang Vice-Chairman Mr. Fan Chor Ho, Paul, SBS, JP Vice-Chairman Dr. Au Yiu Kai Elected as Honorary Secretary on 17 November 2016 Mr. Lee Chee Wah, Wilfred, MH Retired as Honorary Secretary on 17 November 2016 Ms. Lam Tyng Yih, Elizabeth Honorary Treasurer Mr. Barretto Ruy Octavio, SC Mr. Chan Ka Hong, Roland Mr. Chan Ka Kui, SBS, JP Mr. Chong Chong Yip, BBS, JP Mr. Fung Ka Ching Prof. Lai Nin, Alan, GBS, JP Prof. Lui Tai Lok Mr. Mo Tik Sang, Alex Dr. Ng Kam Cheung, Stephen (Resigned on 17 November 2016) Ms. Tsang Pui Kuen, Camilla Ms. Hai Hiu Chu (Appointed on 17 November 2016) Mr. Yam Kevin (Appointed on 17 November 2016) In accordance with Articles 78, 79 and 80 of the Agency s Articles of Association, Dr. Shum Chi Wang, Mr. Chan Ka Hong, Roland, Mr. Chan Ka Kui, SBS, JP, Mr. Chong Chong Yip, BBS, JP, Prof. Lai Nin, Alan, GBS, JP, and Prof. Lui Tai Lok retire from office at the forthcoming annual general meeting and are eligible for re-election. Directors' interests in contracts No contract of significance to which the Agency was a party and in which a director of the Agency had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year. Management contracts No contracts concerning the management and administration of the whole or any substantial part of the business of the Agency were entered into or existed during the year. Business Review Business Performance and Important Events The Agency is a non-profit organization with charity status funded by the Government, The Community Chest of Hong Kong and The Hong Kong Jockey Club Charities Trust (HKJC). With the vision to build a civil society and caring community, the Agency is dedicated to playing a proactive and pivotal role in the promotion and development of sustainable volunteerism, and develops partnership with all sectors of the community to provide value-added and quality volunteer service. The year was fruitful and rewarding. Most of the programmes and services were well accomplished while the financial position was robust. Some mega events during the year were the International Volunteer Day Recognition Ceremony, Go Volunteering Campaign, Share-to-Care Volunteer Campaign, the HKJC Community Project Grant - Volunteer Talent Bank 2014/16 Volunteer Recognition Ceremony and Get a Day. Get a Disney Day. Appointed by the Government s Commission on Poverty, the Agency has since October 2015 been operating the Life Buddies Mentoring Portal and undertook recruitment and training of around 200 mentors to serve 197 student mentees from 22 secondary schools under the Mentor Partner Programme. The 2-year pilot of UNV-Hong Kong Universities Volunteer Programme was completed with positive feedback from stakeholders. Additional funding by the Home Affairs Bureau has enabled the number of undergraduate volunteers to double from 10 to 20 each year from 2017. A new service agreement was signed with the United Nations Volunteers for another 3 years. Other significant programmes included organization of the Hong Kong Delegation to the International Association for Volunteer Effort (IAVE) World Volunteer Conference in Mexico City, and presentation of the 3rd Leadership Bauhinia Volunteer Award to three outstanding volunteers from different professionals nominated by member organizations of the Hong Kong Council of Volunteering. The Community Chest of Hong Kong increased its baseline allocation by 3% mainly for the Volunteer Training and Development Centre. The Volunteer Talent Bank project received further funding of HK$5.1 million from the HKJC for the next 3 years (2017/18-2019/20), an increase by 17.5% over the past round. Fundraising over-achieved the target by 22%, and around HK$2.3 million was raised mainly from the Charity Walk & Run for Volunteering and the territory-wide Flag Day. 1 2
REPORT OF THE DIRECTORS (CONTINUED) Business Review (Continued) Principal Risks and Uncertainties By the end of 2016/17, the Agency was short of around 250 square meters in office space. The situation was most serious at the Western Garden Neighbourhood Elderly Centre (WGE). The Agency would keep making every effort in finding suitable premises to ensure a proper level of service provision in the face of increased activities to meet demand. Future Development in Business The Social Welfare Development Fund approved a grant of HK$232,600 for professional training and development of staff of WGE in the coming 3 years (2016/17-2018/19). During the year, the Agency worked closely with the HKJC in thrashing out a funding arrangement for the Volunteer Networking System. A Task Force was set up to study the membership strategy for the Hong Kong Community Volunteers and the Hong Kong Institute of Volunteers. Financial Performance The Agency recorded a net surplus of HK$2,724,000 from recurrent operation for the year ended 31 March 2017, compared with HK$2,131,000 of last year, an increase of HK$593,000 mainly due to increase in income from fundraising. Having regard to the need for future development, HK$2 million was transferred from the General Fund to the Agency Development Fund. Environmental Policies The Agency used environmental-friendly lighting and air-conditioning system where possible. Compliance with Relevant Laws and Regulations The Agency complied with all the relevant laws and regulations, and in particular, the Companies Ordinance, employment related ordinances, the Lump Sum Grant Manual, Service Quality Standards and the Best Practice Manual of the Social Welfare Department, in addition to the Memorandum of Administrative Arrangements signed with the Home Affairs Bureau, and the guidelines of related funding bodies. 3
INDEPENDENT AUDITOR S REPORT TO THE MEMBERS OF (Incorporated in Hong Kong limited by guarantee and not having a share capital) We have audited the financial statements of Agency for Volunteer Service (the Agency ) set out on pages 8 to 36, which comprise the Statement of Financial Position as at 31 March 2017, and the Statement of Comprehensive Income, the Statement of Changes in Funds and the Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the financial statements give a true and fair view of the financial position of the Agency as at 31 March 2017, and of its financial performance and its cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards ( HKFRSs ) issued by the Hong Kong Institute of Certified Public Accountants ( HKICPA ) and have been properly prepared in compliance with the Hong Kong Companies Ordinance. Basis for opinion We conducted our audit in accordance with Hong Kong Standards on Auditing ( HKSAs ) issued by the HKICPA. Our responsibilities under those standards are further described in the Auditor s responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the HKICPA s Code of Ethics for Professional Accountants (the Code ), and we have 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. Information Other than the Financial Statements and Auditor s Report Thereon The directors of the Agency are responsible for the other information. The other information comprises the information included in the Report of the directors, but does not include the financial statements and our auditor s report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. INDEPENDENT AUDITOR S REPORT TO THE MEMBERS OF (CONTINUED) (Incorporated in Hong Kong limited by guarantee and not having a share capital) Responsibilities of Directors and Those Charged with Governance for the Financial Statements The directors of the Agency are responsible for the preparation of the financial statements that give a true and fair view in accordance with HKFRSs issued by the HKICPA and the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors of the Company are responsible for assessing the Company 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 directors of the Company either intend to liquidate the Company or to cease operations or have no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company's financial reporting process. Auditor s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. We report our opinion solely to you, as a body, in accordance with Section 405 of the Hong Kong Companies Ordinance, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with HKSAs 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 these financial statements. As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also: - Identify and assess the risks of material misstatement of the financial statements, 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. 5 6
STATEMENT OF COMPREHENSIVE INCOME Note Recurrent Designated Allocated Recurrent Designated Allocated Programmes Total Programmes Total Income Government Subventions and Funds 6 14,644,796 2,333,266-16,978,062 15,880,327 1,947,016-17,827,343 Allocations, Donations and Fundraising Income 7 8,235,209 1,971,728-10,206,937 7,006,910 970,683-7,977,593 Registration and Service Fee Income 1,378,184 2,079-1,380,263 1,415,245 - - 1,415,245 Other Income 8 393,543 1-393,544 287,964 7-287,971 Less: Elimination of Internal Income - - - (434,273) - - - (283,441) Total Income 24,651,732 4,307,074-28,524,533 24,590,446 2,917,706-27,224,711 Expenditure Personal Emoluments 15,419,771 - - 15,419,771 14,649,122 - - 14,649,122 Rent, Rates and Management Fee 1,866,899 - - 1,866,899 1,683,797 - - 1,683,797 Administrative Expenses 1,684,528 - - 1,684,528 1,488,815 - - 1,488,815 Expenses for Fundraising 195,953 - - 195,953 78,209 - - 78,209 Service and Programme Expenses 2,760,264 3,672,637-6,432,901 4,559,532 4,278,304 174,624 9,012,460 Less: Elimination of Internal Expenses - - - (434,273) - - - (283,441) Total Expenses 9 21,927,415 3,672,637-25,165,779 22,459,475 4,278,304 174,624 26,628,962 Surplus/(Deficit) for the year 2,724,317 634,437-3,358,754 2,130,971 (1,360,598) (174,624) 595,749 The revenue and expenditure items are classified into (1) recurrent programmes for volunteer service and general administration, (2) designated projects for purposes specified by the donors and managed under restricted funds of the Agency, and (3) allocated projects for funds set aside by the Agency for specific purposes. The notes on pages 14 to 36 are an integral part of these financial statements. 8
STATEMENT OF CHANGES IN FUNDS Agency s Funds Restricted Funds Provident Agency Operation Other Other Block Lump Sum Fund Reserve HAB Development Contingency Allocated Designated Grant Grant under Lump Subvention General Fund Fund Fund Funds Services Reserve Reserve Sum Grant Reserve Total Transfer of Fund: Upon Completion of Recurrent - Volunteer Talent Bank 2014-17 (220,168) - - - - - - - - (220,168) Transfer of Fund: Upon Completion of Designated - Care for the Elderly Charity Ticket Campaign 2016 17,469 - - - (17,469) - - - - - - Social Welfare Development Fund (Phase 2) (*) - - - - (23,145) - - - - (23,145) - Share-to-Care Volunteer Campaign 2016 79,793 - - - (79,793) - - - - - At 31 March 2017 2,007,743 5,347,501 2,300,000 29,473 1,352,226 151,592 815,077 95,615 1,797,947 13,897,174 Note (*): Net surplus refunded to respective funding bodies The notes on pages 14 to 36 are an integral part of these financial statements. 10
STATEMENT OF CASH FLOWS Note Cash flows from Operating Activities Surplus for the year 3,358,754 595,749 Adjustments for: Net Changes in Employee Benefit Obligations 109,291 89,362 3,526,802 735,446 Cash generated from/(used in) Operating Activities 6,704,503 (836,045) Depreciation 11 109,370 99,285 Interest Income 8 (50,613) (48,950) Changes in Working Capital Account and Other Receivables 3,293,741 (1,361,996) Prepayments and Deposits (4,690) (120,574) Account and Other Payables (147,788) 1,250 Receipts in Advance 36,438 (90,171) Cash Flows from Investing Activities Additions of Property, Plant and Equipment 11 (88,229) (94,524) (Increase)/decrease in Time Deposits with original maturity over three months (3,643,483) 2,262,622 Interest Income 50,613 48,950 Net Cash (used in)/generated from Investing Activities (3,681,099) 2,217,048 Cash Flows from Financing Activities Repayment of Finance Lease Obligations (21,300) (21,300) Net Cash used in Financing Activities (21,300) (21,300) Net increase in Cash and Cash Equivalents 3,002,104 1,359,703 Cash and Cash Equivalents at beginning of year 5,119,460 3,759,757 Cash and Cash Equivalents at end of year 12 8,121,564 5,119,460 The notes on pages 14 to 36 are an integral part of these financial statements. 12 STATEMENT OF CHANGES IN FUNDS (CONTINUED) Agency s Funds Restricted Funds General Fund Agency Development Fund Operation Contingency Fund Other Allocated Funds Other Designated Services Block Grant Reserve Lump Sum Grant Reserve Provident Fund Reserve under Lump Sum Grant HAB Subvention Reserve Total At 31 March 2015 2,616,849 1,847,501 2,300,000 5,173 1,998,515 29,892 445,268 42,272 1,222,446 10,507,916 Surplus/(Deficit) for the year 2,130,971 - - (174,624) (1,360,598) - - - - 595,749 Transfer (from)/to General Fund (from)/to Block Grant Reserves, Lump Sum Grant Reserves (345,750) - - - - 59,700 363,479 26,883-104,312 Transfer from General Fund to Agency Development Fund (1,500,000) 1,500,000 - - - - - - - - Transfer from Other Allocated Funds to Other Designated Services - - - 42,000 (42,000) - - - - - Transfer to Other Allocated Funds from THE AGENCY 45 th Anniversary Celebrations (200,000) - - 200,000 - - - - - - Transfer from General Fund to HAB Subvention Reserve (839,703) - - - - - - - 839,703 - Transfer from Other Allocated Funds to General Fund upon completion of AVS 45th Anniversary Celebrations 43,076 - - (43,076) - - - - - - Transfer of Fund: Upon Completion of Designated - Care for the Elderly Charity Ticket Campaign 16,237 - - - (16,237) - - - - - - Keep Clean 2015 HK our Home - - - - (800) - - - - (800) - Social Welfare Development Fund (*) - - - - (41,791) - - - - (41,791) - HSBC Share-to-Care Volunteer Campaign 2014/2015(*) - - - - (84,939) - - - - (84,939) At 31 March 2016 1,921,680 3,347,501 2,300,000 29,473 452,150 89,592 808,747 69,155 2,062,149 11,080,447 Note (*): Net surplus refunded to respective funding bodies The notes on pages 14 to 36 are an integral part of these financial statements. 11
STATEMENT OF CASH FLOWS (CONTINUED) Analysis of Balances of Cash and Cash Equivalents: Cash at Bank and on Hand 3,118,124 3,615,720 Time Deposits: - Original maturity of three months or less 5,003,440 1,503,740 - Original maturity over three months 6,380,861 2,737,378 Cash and Cash Equivalents as stated in the Statement of Financial Position 14,502,425 7,856,838 Less: Time Deposits with original maturity over three months (6,380,861) (2,737,378) Cash and Cash Equivalents per Statement of Cash Flows 8,121,564 5,119,460 The notes on pages 14 to 36 are an integral part of these financial statements. 13
2. Significant Accounting Policies (Continued) 2.2 Basis of Preparation (Continued) The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Judgements made by management in the application of HKFRSs that have significant effect on the financial statements and major sources of estimation uncertainty are discussed in note 5. 2.3 Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation. The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Major costs incurred in restoring assets to their normal working conditions are charged to the statement of comprehensive income. Improvements are capitalised and depreciated over their expected useful lives. In situations where expenditure incurred to replace a separate component of an item of furniture and equipment, including major inspection and overhaul expenditure, it is capitalised and accounted for as a component of the asset. Other subsequent expenditure is capitalised as an additional cost of the asset only when it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of the asset. Gain or loss arising from the retirement or disposal of property, plant and equipment is determined as the difference between the estimated net sales proceeds and the carrying amount of the assets and is recognised as income or expense in the statement of comprehensive income. Depreciation is provided to write off the cost of furniture and equipment, over their estimated useful lives from the date on which they become fully operational and after taking into account of their estimated residual values, using the straight-line method, at the following rates: - Computers 3 years - Furniture and equipment 5 years - Leasehold improvements 3 years The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. 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. 2. Significant Accounting Policies (Continued) 2.4 Account and Other Receivables Account and other receivables are rights to collect for services performed in the ordinary course of business. If collection of account and other receivables is expected within one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets. Account and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. 2.5 Cash and Cash Equivalents In the statement of financial position, cash and cash equivalents comprise cash at bank and on hand and time deposits with banks. In the statement of cash flows, cash and cash equivalents comprise cash at bank and on hand and time deposits with banks with original maturity of three months or less. 2.6 Account and Other Payables Account and other payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Account and other payables are classified as current liabilities if the payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Account and other payables are initially recognised at fair value and subsequently stated at amortised cost using the effective interest method, unless the effect of discounting is immaterial, in such case they are stated at cost. 2.7 Revenue Recognition (a) (b) (c) Government subventions and funds are not recognised until there is reasonable assurance to the compliance with the conditions attaching to them and the collectability. Unless the expenses have already been incurred in previous period, revenue will compensate and match with the related cost over the periods on a systematic basis. Grants and funds related to acquisition of assets are presented in the statement of financial position by deducting the grant and funds in arriving at the carrying amount of the assets. Other allocations, donations and fund-raising income are recognised when there is reasonable certainty that the amounts will be received. Registration and service fees are accounted for on accrual basis. (d) (e) Membership subscriptions are recognised when received. Interest income is recognised on a time apportionment basis using the effective interest rate. 15 16
2. Significant Accounting Policies (Continued) 2.8 Employee Benefits 2. Significant Accounting Policies (Continued) 2.10 Related Parties (a) Employee Leave Entitlements A related party is a person or entity that is related to the Agency: Provision for employee entitlements to annual leave is made for the estimated liability for annual leave as a result of services rendered by employees up to the end of the reporting period. Employee entitlements to sick leave and maternity or paternity leave are not recognised until the time of leave. (a) A person, or a close member of that person s family, is related to the Agency if that person: (i) has control or joint control of the Agency; (ii) has significant influence over the Agency; or (iii) is a member of the key management personnel of the Agency or the Agency s parent. (b) Mandatory Provident Fund Contribution (b) An entity is related to the Agency if any of the following conditions applies: 2.9 Leases The Agency operates a mandatory provident fund scheme (MPF scheme) in Hong Kong. The assets of the MPF scheme are held in separate trustee-administered funds. Contributions to the scheme by the Agency and employees are calculated as a percentage of employees salaries. The Agency has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of comprehensive income on a straight-line basis over the period of the lease. Leases of property, plant and equipment where the Agency has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease's commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges. The corresponding rental obligations, net of finance charges, are included in other long-term payables. The interest element of the finance cost is charged to the statement of comprehensive income over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases are depreciated over the shorter of the useful life of the asset and the lease term. (i) The entity and the Agency are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others). (ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member). (iii) Both entities are joint ventures of the same third party. (iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity. (v) The entity is a post-employment benefit plan for the benefit of employees of either the Agency or an entity related to the Agency. (vi) The entity is controlled or jointly controlled by a person identified in (a). (vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity). Close family members of an individual are those family members who may be expected to influence, or to be influenced by, that individual their dealings with the entity. 3. Changes in Accounting Policies and Disclosures The HKICPA has issued several amendments to HKFRSs that are first effective for the current accounting year of the Agency. The application of the new and revised HKFRSs in the current year has had no material impact on the Agency s financial performance and positions for the current and prior years and/or on the disclosures set out in these financial statements. The Agency has not applied any new standard or interpretation that is not yet effective for the current accounting year. 4. Financial and Capital Risks Management 4.1 Fund Management The Agency s objectives when managing capital are to safeguard the Agency s ability to continue as a going concern, to support the Agency s stability and growth and to provide adequate fund for the purpose of achieving the Agency s objectives. In particular, the Agency has set up the Agency Development Fund and the Operation Contingency Fund for the development of the Agency and to cope with unforeseeable circumstances. 17 18
4. Financial and Capital Risks Management (Continued) 4.1 Fund Management (Continued) The Agency defines total of all Agency s funds as its capital and is not subject to externally imposed capital requirements. The Agency regularly reviews and manages its fund structure and makes adjustments to the fund structure in light of changes in Agency s operating results. The Agency has no loan or trading debt except for finance leases for certain furnitures and equipment. It also maintains sufficient cash and cash equivalents to meet all its payment obligations. 4.2 Financial Risk Factors The Agency s activities expose it to a variety of financial risks: credit risk, interest rate risk and liquidity risk. The Agency s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Agency's financial performance. (a) (b) Credit Risk The Agency s credit risk is primarily attributable to account and other receivables, cash and cash equivalents and deposits. The exposure to these credit risks are monitored on an ongoing basis. The Agency limits its exposure to credit risk in bank balance by rigorously selecting the deposit-takers. Deposit is placed only with creditworthy banks. Interest Rate Risk 5. Critical Accounting Estimates and Judgements Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances. The Agency makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal to the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below: (a) (b) Impairment of Property, Plant and Equipment Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. The recoverable amounts of properties, plant and equipment have been determined based on value-in-use calculations, taking into account the latest market information and past experience. Provision for Impairment of Receivables The Agency makes provision for impairment of receivables based on an assessment of the recoverability of the receivables. Provisions are applied to receivables where events or changes in circumstances indicate that the balances may not be collectible. The identification of impairment of receivables requires the use of judgments and estimates. Where the expectations are different from the original estimates, such differences will impact the carrying values of receivables and loss for the impairment of receivables is recognised in the period in which such estimates have changed. The fair value or future cash flows of interest-bearing assets and liabilities of the Agency will fluctuate because of changes in market interest rates. It is the Agency s policy to minimise the interest rate risk by monthly review of the appropriate level of such assets and liabilities in view of the tendency of market interest rates. (c) Liquidity Risk Liquidity risk is the risk that cash or another financial asset will not be available to meet liabilities as they fall due, and it results from maturity mismatches of assets and liabilities. The Agency monitors its working capital requirements on an ongoing basis to ensure adequate cash for its operation. 4.3 Fair Value Estimation The carrying values of financial assets and liabilities are a reasonable approximation of their fair values. 19 20
6. Government Subventions and Funds Recurrent Programmes Total Recurrent Programmes Designated (note 17) Designated (note 17) Home Affairs Bureau - Subvention (note a) 10,000,000-10,000,000 10,000,000-10,000,000 - Other Grants and Funds - 1,549,000 1,549,000 1,548,600-1,548,600 Social Welfare Department - Lump Sum Grant (note b) 4,582,796-4,582,796 4,272,027-4,272,027 - Furniture and Equipment Replenishment and Minor Works Block Grant (note 18) 62,000-62,000 59,700-59,700 - Other Grants and Funds - 211,766 211,766-1,369,481 1,369,481 Commission on Poverty - 570,000 570,000-570,000 570,000 Others - 2,500 2,500-7,535 7,535 14,644,796 2,333,266 16,978,062 15,880,327 1,947,016 17,827,343 Notes: (a) The subvention for recurrent programmes was for the operation of the Agency and providing services on promotion of volunteerism. Total 7. Allocations, Donations and Fundraising Income Recurrent Programmes Designated (Note 17) Allocated Total Recurrent Programmes Designated (Note 17) Allocated The Community Chest 4,468,200 92,082-4,560,282 4,338,000 215,400-4,553,400 The Hong Kong Jockey Club Charities Trust 1,459,200 - - 1,459,200 1,459,200 - - 1,459,200 The Hong Kong Jockey Club Elderly Facilities Modernisation Scheme - 357,878-357,878 - - - - Fund Raising Income (Note a) 2,104,965 - - 2,104,965 933,693 - - 933,693 Sponsorship / Donation Income 202,844 1,521,768-1,724,612 276,017 755,283-1,031,300 Note: (a) 8,235,209 1,971,728-10,206,937 7,006,910 970,683-7,977,593 A total of HK$ 1,110,000 was raised from the Flag Day held on 14 January 2017. After deducting expenses of HK$97,582 which were included in Expenses for Fund Raising (note 9), net proceeds of HK$ 1,012,418 is used for developing sustainable volunteer projects and supplementing the Agency s operational expenses to maintain and enhance the service quality. Total (b) The Lump Sum Grant (LSG) was for the operation of the Western Garden Neighbourhood Elderly Centre. 8. Other Income Recurrent Programmes Designated Allocated Recurrent Designated Total Programmes Allocated Total Interest Income 50,612 1-50,613 48,943 7-48,950 Membership Subscriptions 30,956 - - 30,956 30,392 - - 30,392 Administration Support Recovery 255,192 - - 255,192 190,874 - - 190,874 Sundry Income 56,783 - - 56,783 17,755 - - 17,755 393,543 1-393,544 287,964 7-287,971 21 22
9. Expenditure Recurrent Programmes Designated Allocated Total Recurrent Programmes Designated Allocated Total Personal Emoluments Salaries 14,167,277 - - 14,167,277 13,441,313 - - 13,441,313 Provident Fund 1,096,016 - - 1,096,016 1,049,899 - - 1,049,899 Accumulating Compensated Absences 156,478 - - 156,478 157,910 - - 157,910 Rent, Rates and Management Fee 15,419,771 - - 15,419,771 14,649,122 - - 14,649,122 Rent 1,658,959 - - 1,658,959 1,480,062 - - 1,480,062 Rates 81,599 - - 81,599 81,598 - - 81,598 Management Fee 126,341 - - 126,341 122,137 - - 122,137 Administration Expenses 1,866,899 - - 1,866,899 1,683,797 - - 1,683,797 Audit Fee 39,000 - - 39,000 36,000 - - 36,000 Agency s Affairs 178,581 - - 178,581 196,353 - - 196,353 Depreciation 109,370 - - 109,370 99,285 - - 99,285 General Office Expenses 458,263 - - 458,263 430,075 - - 430,075 Insurance 72,743 - - 72,743 84,155 - - 84,155 Repairs and Maintenance 149,994 - - 149,994 108,426 - - 108,426 Staff Development and Welfare 289,772 - - 289,772 159,807 - - 159,807 Staff Recruitment 36,328 - - 36,328 41,008 - - 41,008 Utilities 195,915 - - 195,915 212,082 - - 212,082 Volunteer Staff Support 154,562 - - 154,562 121,624 - - 121,624 1,684,528 - - 1,684,528 1,488,815 - - 1,488,815 Expenses for Fundraising 195,953 - - 195,953 78,209 - - 78,209 Service and Programme Expenses 2,760,264 3,672,637-6,432,901 4,559,532 4,278,304 174,624 9,012,460 Less: Elimination of Internal Charges - - - (434,273) - - - (283,441) 21,927,415 3,672,637-25,165,779 22,459,475 4,278,304 174,624 26,628,962 10. Employee Benefit Expenses HK$ HK$ Personal Emoluments (note 9) 15,419,771 14,649,122 Other Emoluments included in Service and Programme Expenses: Salaries 934,541 874,112 Provident Fund 43,186 44,674 977,727 918,786 16,397,498 15,567,908 11. Property, Plant and Equipment Computers Furniture and Equipment Leasehold Improvements Total Cost At 1 April 2016 1,328,764 1,216,049 4,990,389 7,535,202 Additions 50,520 37,709-88,229 Written off (36,275) (2,850) - (39,125) At 31 March 2017 1,343,009 1,250,908 4,990,389 7,584,306 Less: Government Grant Related Assets At 1 April 2016 785,031 532,094 4,795,054 6,112,179 Written off (10,695) (2,850) - (13,545) At 31 March 2017 774,336 529,244 4,795,054 6,098,634 Less: Accumulated Depreciation At 1 April 2016 476,442 523,629 195,335 1,195,406 Charge for the year 44,415 64,955-109,370 Written off (25,580) - - (25,580) At 31 March 2017 495,277 588,584 195,335 1,279,196 Net Book Value At 31 March 2017 73,396 133,080-206,476 23 24
11. Property, Plant and Equipment (Continued) Computers Furniture and Equipment Leasehold Improvements Total Cost At 1 April 2015 1,086,662 1,283,686 4,827,341 7,197,689 Additions 378,270 224,698 97,698 700,666 Written off (136,168) (226,985) - (363,153) Transfer of assets - (65,350) 65,350 - At 31 March 2016 1,328,764 1,216,049 4,990,389 7,535,202 Less: Government Grant Related Assets At 1 April 2015 462,556 578,036 4,632,006 5,672,598 Additions 332,595 175,849 97,698 606,142 Written off (10,120) (156,441) - (166,561) Transfer of assets - (65,350) 65,350 - At 31 March 2016 785,031 532,094 4,795,054 6,112,179 Less: Accumulated Depreciation At 1 April 2015 566,255 535,666 190,792 1,292,713 Charge for the year 36,235 58,507 4,543 99,285 Written off (126,048) (70,544) - (196,592) At 31 March 2016 476,442 523,629 195,335 1,195,406 Net Book Value At 31 March 2016 67,291 160,326-227,617 Furniture and equipment includes the following amounts where the Agency is a lessee under finance leases: Cost capitalised finance leases 106,500 106,500 Accumulated depreciation (63,900) (42,600) Net book value 42,600 63,900 12. Cash and Cash Equivalents HK$ HK$ Cash at Bank 3,090,860 3,582,420 Cash on Hand 27,264 33,300 Time Deposits with original maturity of three months or less 5,003,440 1,503,740 Cash and Cash Equivalents as presented in the Statement of Cash Flows 8,121,564 5,119,460 Time Deposits with original maturity over three months 6,380,861 2,737,378 Cash and Cash Equivalents as presented in the Statement of Financial Position 14,502,425 7,856,838 13. General Fund General Fund represented the accumulated surplus of the Agency. 14. Agency Development Fund Agency Development Fund has been assigned for the Agency s future development relating to improvement of service quality and efficiency enhancement. 15. Operation Contingency Fund Operation Contingency Fund has been set up to meet contingencies and any unforeseen financial needs of the Agency. 16. Other Allocated Funds Service Improvement Plan (note a) 29,473 29,473 Allocated Funds were for projects with specific purpose approved by the Board of Directors (the Board ) which had not been completed at the end of the reporting year. Movements in Other Allocated Funds during the year were as follows: 25 26
16. Other Allocated Funds (Continued) (a) Service Improvement Plan The fund was allocated in 2006 to enhance service efficiency through an improved system and was mainly used to cover the costs for improving the Central Membership System in recent years. Balance brought forward 29,473 47,173 Total Income for the year - - Total Expenditure for the year - (17,700) Deficit for the year - (17,700) Balance carried forward 29,473 29,473 17. Other Designated Services (Continued) Balances of government grants and funds, donations and sponsorships were for service projects with designated purposes which had not been completed at the end of the reporting year. The services with material balances or movements during the year were disclosed below: (a) The Hong Kong Volunteer Award The Hong Kong Volunteer Award was to recognise outstanding volunteers contributions and achievements so as to raise public awareness of the value of volunteering, and to facilitate the development of sustainable volunteerism in Hong Kong. Awards were presented to individuals, volunteer groups and business corporations selected by the Award Judging Panel biennially. Movements during the year were as follows: 17. Other Designated Services HK$ HK$ Hong Kong Volunteer Award (note a) 701,570 258,379 Give a Day Get a Disney Day (note b) 205,028 192,193 Social Welfare Development Fund Phase II (HR Management System) (note c) - 68,010 Improvement Programme for Elderly Centre (IPEC) (note d) - (206,765) Jockey Club Elderly Facilities Modernisation Scheme (JCEFMS) (note e) - (304,194) Social Welfare Development Fund Phase III (Training and professional development programmes) (note f) 5,000 - Hong Kong Volunteer Awardees Society (note g) 105,520 95,758 Walking with Elderly ( ) 2015-2016 (note h) - 63,865 Walking with Elderly ( ) 2016-2018 (note i) 124,332 - TDC Database System Development Project (note j) 128,600 196,900 V - Union ( ) (note k) 103,936 70,432 Volunteer Networking System - (99,182) Life Buddies Portal (note l) (21,760) 116,754 UNV HK Universities Volunteer Programme (note m) - - HSBC Share-to-Care Volunteer Campaign 2014-2015 (note n) - - Share-to-Care Volunteer Campaign (note o) - - 1,352,226 452,150 (b) Balance brought forward 258,379 665,227 Total Income for the year 720,058 - Total Expenditure for the year (276,867) (406,848) Surplus/(Deficit) for the year 443,191 (406,848) Balance carried forward 701,570 258,379 Give a Day Get a Disney Day The Give a Day Get a Disney Day aimed at mobilising Hong Kong people to serve the community for building a harmonious society. Volunteers who had performed service of 10 hours or more were eligible to apply for a complimentary 1-day ticket to Hong Kong Disneyland via their service organisations. Movements during the year were as follows: Balance brought forward 192,193 171,896 Total Income for the year 305,000 300,000 Total Expenditure for the year (292,165) (279,703) Surplus for the year 12,835 20,297 Balance carried forward 205,028 192,193 27 28
17. Other Designated Services (Continued) 17. Other Designated Services (Continued) (c) Social Welfare Development Fund Phase II (HR Management System) (f) Social Welfare Development Fund Phase III (Training) (d) With the aim to upgrade business systems for non-government organisations, the Social Welfare Development Fund Phase II of the Social Welfare Department approved a grant of HK$580,000 for the Agency s Human Resources Management System. Movements during the year were as follows: Balance brought forward 68,010 338,010 Total Income during the year - - Total Expenditure for the year (44,865) (270,000) Deficit for the year (44,865) (270,000) Transfer to payable upon completion (23,145) - Balance carried forward - 68,010 Improvement Programme of Elderly Centres A grant of HK$2,112,000 was approved under the IPEC of the Social Welfare Department for the fitting-out works for the Western Garden Neighbourhood Elderly Centre. Movements during the year were as follows: (g) With the aim to provide training courses for staff, the Social Welfare Development Fund Phase III of the Social Welfare Department approved a grant of HK$232,600 for the Training and Development Programmes attended by staff of the Western Garden Neighbourhood Elderly Centre. Movements during the year were as follows: Total Income for the year 5,000 - Total Expenditure for the year - - Surplus for the year 5,000 - Balance carried forward 5,000 - Hong Kong Volunteer Awardees Society The Society aims at pooling the strengths and experience of the award recipients, provides a platform for exchange and spreading the spirit of the volunteerism in support of the Agency s initiatives. Movements during the year were as follows: Balance brought forward 95,758 73,530 Balance brought forward (206,765) (127,297) Total Income for the year 92,083 101,865 Total Expenditure for the year (82,321) (79,637) Surplus for the year 9,762 22,228 Balance carried forward 105,520 95,758 (e) Total Income for the year 206,765 - Total Expenditure for the year - (79,468) Surplus/(Deficit) for the year 206,765 (79,468) Balance carried forward - (206,765) Jockey Club Elderly Facilities Modernisation Scheme A grant of HK$437,400 was approved under the JCEFMS of the Social Welfare Department for purchase of furnitures and equipment for the Western Garden Neighbourhood Elderly Centre. Movements during the year were as follows: 29 Balance brought forward (304,194) (97,361) Total Income for the year 357,878 - Total Expenditure for the year (53,684) (206,833) Surplus/(Deficit) for the year 304,194 (206,833) Balance carried forward - (304,194) (h) Walking with Elderly ( ) 2015-2016 Donations of HK$100,000 were received from Leung Mui Foundation for serving visually impaired elderly, leading them to join more activities and motivating them to be more out-going. Movements during the year were as follows: Balance brought forward 63,865 - Total Income for the year - 100,000 Total Expenditure for the year (10,840) (36,135) (Deficit)/Surplus for the year (10,840) 63,865 Less: Transfer to Walking with Elderly ( ) 2016-2018 (53,025) - Balance carried forward - 63,865 30
17. Other Designated Services (Continued) (i) Walking with Elderly ( ) 2016-2018 17. Other Designated Services (Continued) (l) Life Buddies Portal (j) Donations of HK$200,000 were approved by Leung Mui Foundation, together with surplus transferred from Walking with Elderly ( ) 2015-2016, for serving the elderly, leading them to join more activities and be more out-going. Movements during the year were as follows: Surplus transferred from Walking with Elderly ( ) 2015-2016 53,025 - Total Income for the year 100,000 - Total Expenditure for the year (28,693) - (Deficit)/Surplus for the year 71,307 - Balance carried forward 124,332 - TDC Database System Development Project An allocation of HK$215,400 was approved by The Community Chest for developing a database system for the automation of training service workflow and reporting procedure for the Training and Development Centre (TDC). Movements during the year were as follows: Balance brought forward 196,900 - Total Income for the year - 215,400 Total Expenditure for the year (68,300) (18,500) (Deficit)/Surplus for the year (68,300) 196,900 Balance carried forward 128,600 196,900 A grant of HK$1,425,000 was approved under the Commission on Poverty of Community Care Fund for the promotion of mentoring culture in the community to help grassroots youth move upward in society. Movements during the year were as follows: Balance brought forward 116,754 - Total Income for the year 570,000 570,000 Total Expenditure for the year (708,514) (453,246) (Deficit)/Surplus for the year (138,514) 116,754 Balance carried forward (21,760) 116,754 (m) UNV HK Universities Volunteer Programme In collaboration with the United Nations Volunteers and funded by the Home Affairs Bureau, this programme enabled undergraduate volunteers to participate in volunteer assignments aboard. Movements during the year were as follows: Total Income for the year 1,549,000 - Total Expenditure for the year (1,835,861) - Deficit for the year (286,861) - Deficit Transfer to HAB Subvention Reserve 286,861 - Balance carried forward - - (n) The HSBC Share-to-Care Volunteer Campaign 2016 The Campaign received donations from business corporations and the Partnership Fund for the Disadvantaged of the Social Welfare Department to provide services for the disadvantaged groups. Movements during 2015-2016 were as follows: (k) V-Union ( ) Donation of HK$168,000 was received from Leung Mui Foundation for visiting and serving hidden elderly to meet their need in improving home environment and social activity. Movements during the year were as follows: 31 Balance brought forward 70,432 - Total Income for the year 80,000 80,000 Total Expenditure for the year (46,496) (9,568) (Deficit)/Surplus for the year 33,504 70,432 Balance carried forward 103,936 70,432 32 Balance brought forward - 965,884 Total Income for the year - 1,416,240 Total Expenditure for the year - (2,297,184) Deficit for the year - (880,944) Refund to funding body upon completion - (84,940) Balance carried forward - -
17. Other Designated Services (Continued) (o) Share-to-Care Volunteer Campaign 2017 The Campaign received donations from the business sector and provided services for the disadvantaged. Movements during the year were as follows: Total Income for the year 280,086 - Total Expenditure for the year (200,293) - Surplus for the year 79,793 - Refund to funding body upon completion - - Transfer to General Fund upon completion of the project (79,793) - Balance carried forward - - 18. Block Grant Reserve Balance brought forward 89,592 29,892 Block Grant received during the year 62,000 59,000 Other Income - 700 Surplus for the year 62,000 59,700 Balance carried forward 151,592 89,592 The above grant was allocated by the Social Welfare Department from the Lotteries Fund for furniture and equipment replenishment and minor works at the Western Garden Neighbourhood Elderly Centre. At 31 March 2017, there were no outstanding commitments in respect of Furniture and Equipment Replenishment and Minor Works related to Block Grant (2016: Nil) 19. Lump Sum Grant (LSG) Reserve Balance brought forward 808,747 445,268 Surplus for the year 305,045 231,254 Provident Fund Surplus under LSG 26,460 26,883 (Increase)/decrease in amount refundable for the portion of LSG Reserve exceeding the prescribed ceiling (298,715) 132,225 Transfer to Provident Fund Reserve under LSG (26,460) (26,883) Balance carried forward 815,077 808,747 The Grant was received from the Social Welfare Department for operation of the Western Garden Neighbourhood Elderly Centre. 20. Provident Fund Reserve under Lump Sum Grant The Reserve represented subvention balance designated for provident fund of subvented staff under the Lump Sum Grant. The Reserve is used for increase in personal emoluments or adjusting provident fund contribution rates of staff subvented under the Lump Sum Grant. 21. HAB Subvention Reserve The Reserve represented subvention fund balance from HAB. 22. Key Management Remuneration of the Agency Salaries 2,742,202 2,620,037 Provident Fund 353,724 335,246 Accumulating Compensated Absences 34,397 62,570 3,130,323 3,017,853 None of the Directors received or will receive any remuneration in respect of their services to the Agency during the year (2016: Nil). 33 34