Financial statements for the year ended 31 December 2012 SizweNtsalubaGobodo Inc. Registered Auditors Issued 13 March 2013
General Information Country of incorporation and domicile Nature of business and principal activities Board Members Business address Postal address Bankers Auditors Chief Executive Institute registration number Executive Committee Audit and Risk Committee Investigating Committee Disciplinary Committee South Africa Professional services S Olsen (Ms.) (Chairman) H Salie K Naicker (Ms.) R Naidoo H Pretorius S Gounden A Parker B Tamba T Kubheka R Ludwig (Observer) SAIPA House Howick Close, Waterfall Park, Vorna Valley, Midrand, South Africa P.O. Box 2407, Halfway House, South Africa 1685 First National Bank SizweNtsalubaGobodo Inc. Registered Auditors S Daniels 069 956 NPO S Olsen (Ms.) (Chairman) R Naidoo K Naicker (Ms.) H Salie S Gounden (Chairman) C Dibete (Ms.) G Walters H Pretorius H Salie (Chairman) H Pretorius M van Rensburg K Naicker (Ms.) (alternate) B Noble (Ms.) (alternate) Adv N Peremanov (Chairman) S Dollie A Mangolele Board Secretary M Nkumanda 1
Index The reports and statements set out below comprise the financial statements presented to the members: Index Page Independent Auditors' Report 3-4 Board Members' Responsibilities and Approval 5 Board Members' Report 6 Statement of Financial Position 7 Statement of Comprehensive Income 8 Statement of Changes in Equity 9 Statement of Cash Flows 10 Accounting Policies 11-14 Notes to the Financial Statements 15-25 The following supplementary information does not form part of the financial statements and is unaudited: Statement of Financial Performance 26-27 2
Independent Auditors' Report To the members of South African Institute of Professional Accountants We have audited the financial statements of South African Institute of Professional Accountants set out on pages 6 to 25 which comprise the statement of financial position at 31 December 2012, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information. Board's Responsibility for the Financial Statements The Institute's Board is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and in the manner required by the Constitution, and for such internal control as the Board determines necessary to enable the preparation of financial statements that are free from material misstatement, that due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance that the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of the South African Institute of Professional Accounts at 31 December 2012, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards and the Constitution. Other reports As part of our audit of the financial statements for the year ended 31 December 2012, we have read the Members Report for the purpose of identifying whether there are material inconsistencies between this report and the audited financial statements.the Members Report is the responsibility of the members. Based on reading the Members Report we have not identified material inconsistencies between this report and the audited financial statements. However, we have not audited the Members Report and accordingly do not express an opinion thereon. 3
Independent Auditors' Report Supplementary information Without qualifying our opinion, we draw attention to the fact that supplementary information set out on pages 26 to 27 does not form part of the financial statements and is presented as additional information. We have not audited this information and accordingly do not express an opinion thereon. SizweNtsalubaGobodo Inc. Registered Auditors Cilliers van Zyl Johannesburg 13 March 2013 4
Board Members' Responsibilities and Approval The Board is required to maintain adequate accounting records and is responsible for the content and integrity of the annual financial statements and related financial information included in this report. It is its responsibility to ensure that the financial statements fairly present the state of affairs of the Institute at the end of the financial year end the results of its operations and cash flows for the year ended, in conformity with International Financial Reporting Standards. The external auditors are engaged to express an independent opinion on the financial statements. The financial statements are prepared in accordance with International Financial Reporting Standards and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates. The Board acknowledges that it is ultimately responsible for the system of internal financial control established by the Institute and places considerable importance on maintaining a strong control environment. To enable it to meet these responsibilities, the Board sets standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the Board and all employees are required to maintain the highest ethical standards in ensuring the Board s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the Board is on identifying, assessing, managing and monitoring all known forms of risk across the Board. While operating risk cannot be fully eliminated, the Board endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints. The Board is of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss. The Board has reviewed the Institute s cash flow forecast and, in the light of this review and the current financial position, is satisfied that the Institute has or has access to adequate resources to continue in operational existence for the foreseeable future. The external auditors are responsible for independently reviewing and reporting on the Institute's financial statements. The financial statements have been examined by the Institute's external auditors and their report is presented on pages 3 to 4. The annual financial statementsset out on pages 6 to 27, which have been prepared on the going concern basis, were approved by the Board on 13 March 2013 and were signed on its behalf by: Ms S Olsen (Chairman) S Daniels (Chief Executive) 5
Board Members' Report The Board submits its report for the year ended 31 December 2012. 1. Review of activities Main business and operations The Institute is a qualification and membership body for professional individuals engaged in accounting and related services. The operating results and state of affairs of the Institute are fully set out in the attached annual financial statements and do not in our opinion require any further comment. 2. Going concern The annual financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business. 3. Events after the reporting period The Board is not aware of any matter or circumstance arising since the end of the financial year. 4. Non-current assets Details of major changes in the nature of the non-current assets of the Institute during the year were as follows: The Institute purchased property, plant and equipment to the value of R1,462,554 (2011: R388,076) and intangible assets to the value of R457,944 (2011: R10,864). 5. Board Members The Board members of the Institute during the year and to the date of this report are as follows: Name Designation Changes in Board S Olsen (Ms.) Chairman H Salie K Naicker (Ms.) R Naidoo R Hattingh Term completed on 30 May 2012 H Pretorius S Gounden A Parker Appointed on 13 March 2012 B Tamba Appointed on 30 May 2012 T Kubheka Appointed on 30 May 2012 R Ludwig Observer 6. Secretary SAIPA's Board secretary is M Nkumanda. 6
Statement of Financial Position Figures in Rand Note(s) 2012 2011 Restated 2010 Assets Non-Current Assets Property, plant and equipment 3 8,955,029 8,366,585 8,823,490 Intangible assets 4 345,119 17,505 22,696 Investments 5 163,008 105,043 101,657 9,463,156 8,489,133 8,947,843 Current Assets Loans to related parties - - 426,262 Accounts receivable 7 3,565,405 3,464,088 1,450,334 Cash and cash equivalents 8 11,079,132 9,156,391 9,365,768 14,644,537 12,620,479 11,242,364 Total Assets 24,107,693 21,109,612 20,190,207 Equity and Liabilities Equity Designated funds 9,10,11 6,149,790 5,165,330 5,416,767 Accumulated funds 6,474,043 6,186,140 8,075,711 Liabilities 12,623,833 11,351,470 13,492,478 Non-Current Liabilities Finance lease obligation 12 1,065,484 322,576 453,388 Current Liabilities Finance lease obligation 12 239,349 130,812 108,537 Accounts payable 13 10,179,027 9,304,754 6,135,804 10,418,376 9,435,566 6,244,341 Total Liabilities 11,483,860 9,758,142 6,697,729 Total Equity and Liabilities 24,107,693 21,109,612 20,190,207 7
Statement of Comprehensive Income Figures in Rand Note(s) 2012 2011 Restated 2010 Revenue 15 30,610,538 27,485,967 26,006,057 Other Income 16 5,098,346 3,881,854 4,630,743 Operating expenses (35,006,321) (34,050,760) (31,321,848) Operating surplus/(deficit) 17 702,563 (2,682,939) (685,048) Investment revenue 18 640,460 593,537 764,047 Finance costs 20 (128,624) (54,992) (72,109) Surplus/(Deficit) for the year 1,214,399 (2,144,394) 6,890 Other comprehensive income 57,965 3,386 18,825 Total comprehensive income (loss) 1,272,364 (2,141,008) 25,715 8
Statement of Changes in Equity Figures in Rand Development Fund Revaluation Fund Bursary Funds Total Funds Accumulated Funds Total equity Balance at 1 January 2011 4,995,819 70,948 350,000 5,416,767 8,075,711 13,492,478 Changes in equity Total comprehensive income for the year as previously reported - 3,386-3,386 (2,779,362) (2,775,976) Transfer (to)/from funds (254,823) - - (254,823) 254,823 - Total changes (254,823) 3,386 - (251,437) (2,524,539) (2,775,976) Opening balance as previously reported 4,740,996 74,334 350,000 5,165,330 5,551,172 10,716,502 Adjustments Prior period errors - - - - 634,968 634,968 Balance at 1 January 2012 as restated 4,740,996 74,334 350,000 5,165,330 6,186,140 11,351,470 Changes in equity Total comprehensive income for the year - 57,964-57,964 1,214,399 1,272,363 Transfer of funds 876,496-50,000 926,496 (926,496) - Total changes 876,496 57,964 50,000 984,460 287,903 1,272,363 Balance at 31 December 2012 5,617,492 132,298 400,000 6,149,790 6,474,043 12,623,833 Note(s) 9 10 11 9
Statement of Cash Flows Figures in Rand Note(s) 2012 2011 Restated 2010 Cash flows from operating activities Cash generated from operations 23 2,537,923 (897,101) (644,559) Interest income 640,459 593,537 760,260 Dividends received - - 3,786 Finance costs (128,624) (54,992) (72,109) Net cash from operating activities 3,049,758 (358,556) 47,378 Cash flows from investing activities Purchase of property, plant and equipment 3 (1,462,553) (388,076) (1,437,402) Proceeds from disposal of property, plant and equipment 3-233,780 - Purchase of other intangible assets 4 (457,944) (10,864) (35,436) (Increase)/Decrease in loans to related parties - 426,262 (24,333) Revaluation of financial assets - - 41,872 Revaluation of shares (57,965) (3,386) (18,824) Net cash from investing activities (1,978,462) 257,716 (1,515,995) Cash flows from financing activities Finance lease movements 851,445 (108,537) 561,925 Total cash movement for the year 1,922,741 (209,377) (906,692) Cash at the beginning of the year 9,156,391 9,365,768 10,272,460 Total cash at end of the year 8 11,079,132 9,156,391 9,365,768 10
Accounting Policies 1. Presentation of Financial Statements The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The financial statements have been prepared on the historical cost basis, and incorporate the principal accounting policies set out below. They are presented in South African Rands. These accounting policies are consistent with those of the previous year. 1.1 Significant judgements and sources of estimation uncertainty In preparing the annual financial statements, management is required to make estimates and assumptions that affect the amounts presented in the annual financial statements and related disclosures. Use of available information and the application of judgement are inherent in the formation of estimates. Actual results in the future could differ from these estimates, which may be material to the annual financial statements. Significant judgements include: Accounts receivable/loans and receivables The Institute measures its accounts receivables and/or loans and receivables for impairment at each Statement of Financial Position date. In determining whether an impairment loss should be recorded in the Statement of Comprehensive Income, the Institute makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset. Provisions Provisions are recognised when: the Institute has an obligation at the reporting date as a result of a past event; it is probable that the Institute will be required to transfer economic benefits in settlement and the amount of the obligation can be estimated reliably. 1.2 Property, plant and equipment Property, plant and equipment is recognised as an asset when: it is probable that future economic benefits associated with the item will flow to the Institute and the cost of the item can be measured reliably. Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised. Depreciation is provided using the straight line method to write down the cost, less estimated residual value over the useful life of the property plant and equipment as follows: Property, plant and equipment is carried at cost less accumulated depreciation and any impairment losses. Item Land Buildings Furniture and fixtures Motor vehicles Office equipment IT equipment Average useful life Indefinite 50 years 10-12 years 5 years 5 years 3 years The residual value and the useful life of each asset is reviewed at the end of each financial year-end. The depreciation charge for each period is recognised in surplus or deficit unless it is included in the carrying amount of another asset. The gain or loss arising from the derecognition of an item of property, plant and equipment is included in surplus or deficit when the item is derecognised. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item. 11
Accounting Policies 1.3 Intangible assets An intangible asset is an identifiable non-monetary asset without physical substance. Intangible assets are initially recognised at cost. All research and development costs are recognised as an expense unless they form part of the cost of another asset that meets the recognition criteria. Amortisation is provided to write down the intangible assets, on a straight line basis, to their residual values as follows: Item Computer software Website Useful life 2 years 2 years 1.4 Financial instruments Initial recognition The Institute classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement. Financial assets and financial liabilities are recognised on the Institutes Statement of Financial Position when the Institute becomes party to the contractual provisions of the instrument. Fair value determination The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Institute establishes fair value by using valuation techniques. These include the use of recent arm s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models making maximum use of market inputs and relying as little as possible on entity-specific inputs. Loans to (from) related parties These include loans that are recognised initially at fair value plus direct transaction costs. Subsequently these loans are measured at amortised cost using the effective interest rate method, less any impairment loss recognised to reflect irrecoverable amounts. On loans receivable an impairment loss is recognised in profit and loss when there is objective evidence that it is impaired. The impairment is measured as the difference between the investment's carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition. Impairment losses are reversed in subsequent periods when an increase in the investment's recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to the restriction that the carrying amount of the investment at the date the impairment is reversed shall not exceed what the amortised cost would have been had the impairment not been recognised. Accounts receivable Accounts receivable are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in surplus or deficit when there is objective evidence that the asset is impaired. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired. The allowance recognised is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the asset is recognised in the Statement of Comprehensive Income within operating expenses. When an accounts receivable is uncollectable, it is written off against the allowance account for accounts receivables. Subsequent recoveries of amounts previously written off are credited against operating expenses in the Statement of Comprehensive Income. Accounts payable Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method. 12
Accounting Policies 1.4 Financial instruments (continued) Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These are initially and subsequently recorded at fair value. Available-for-sale financial assets These financial assets are non-derivatives that are either designated in this category or not classified elsewhere. Investments are recognised and derecognised on a trade basis, where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned. These investments are measured initially and subsequently at fair value. Gains and losses arising from changes in fair value are recognised directly in equity until the security is disposed of, or is determined to be impaired. 1.5 Leases A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership. Finance leases lessee Finance leases are recognised as assets and liabilities in the statement of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease. The lease payments are apportioned between the finance charge and reduction of the outstanding liability.the finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of on the remaining balance of the liability. Operating leases lessee Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments is recognised as an operating lease asset. This liability is not discounted. 1.6 Impairment of assets The Institute measures at each reporting period date, whether there is any indication that an asset may be impaired. If any such indication exists, the Institute estimates the recoverable amount of the asset. If there is any indication that an asset may be impaired, the recoverable amount is estimated for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-generating unit to which the asset belongs is determined. If an impairment loss subsequently reverses the carrying amount of the asset (or group of related assets) it is increased to the revised estimate of its recoverable amount (selling price less cost to complete and sell in the case of inventories), but not in excess of the amount that would have been determined had no impairment loss been recognised for the asset (or group of assets) in prior years. A reversal of impairment is recognised immediately in profit and loss. 13
Accounting Policies 1.7 Employee benefits Defined contribution plans Contributions to a defined contribution plan in respect of services in a particular period are recognised as an expense in that period. 1.8 Provisions and contingencies Provisions are recognised when: the Institute has a present obligation as a result of a past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the obligation. Provisions are not recognised for future operating losses. Contingent assets and contingent liabilities are not recognised (Note 26). 1.9 Revenue Revenue from the sale of goods is recognised when all the following conditions have been satisfied: the Institute has transferred to the buyer the significant risks and rewards of ownership of the goods; the Institute retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; the amount of revenue can be measured reliably; it is probable that the economic benefits associated with the transaction will flow to the Institute and the costs incurred or to be incurred in respect of the transaction can be measured reliably. When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction is recognised by reference to the stage of completion of the transaction at the Statement of Financial Position date. The outcome of a transaction can be estimated reliably when all the following conditions are satisfied: the amount of revenue can be measured reliably; it is probable that the economic benefits associated with the transaction will flow to the Institute; the stage of completion of the transaction at the Statement of Financial Position date can be measured reliably and the costs incurred for the transaction and the costs to complete the transaction can be measured reliably. When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue shall be recognised only to the extent of the expenses recognised that are recoverable. Revenue is measured at the fair value of the consideration received or receivable and represents the amounts receivable for goods and services provided in the normal course of business, net of trade discounts and volume rebates, and value added tax. Interest is recognised, in profit or loss, using the effective interest rate method. Dividends are recognised, in profit or loss, when the Institute s right to receive payment has been established. 14
Notes to the Financial Statements Figures in Rand 2012 2011 2010 2. New Standards and Interpretations 2.1 Standards and interpretations effective and adopted in the current year In the current year, the Institute has not adopted any effective standards and interpretations as none is relevant to its operations. Standard/Interpretation: IFRS 7 Amendments to IFRS 7 (AC 144) Disclosures Transfers of financial assets IAS 12 Income Taxes: Amendment: Deferred Tax: Recovery of Underlying Assets Effective date: Years beginning on or after 1 January 2012 1 January 2012 The above standard had no impact on the Institute's financials during the year. 2.2 Standards and Interpretations early adopted The Institute has chosen not to early adopt any standards and interpretations. 2.3 Standards and interpretations not yet effective The Institute has chosen not to early adopt the following standards and interpretations, which have been published and are mandatory for the Institute s accounting periods beginning on or after 1 January 2013 or later periods: Standard/ Interpretation: Effective date: Years beginning on or after IFRS 9 Financial Instruments 1 January 2013 IAS 27 Separate Financial Statements 1 January 2013 IFRS 12 Disclosure of Interests in Other Entities 1 January 2013 IFRS 13 Fair Value Measurement 1 January 2013 IAS 1 Presentation of Financial Statements 1 January 2013 IAS 19 Employee Benefits Revised 1 January 2013 Management is currently reviewing the impact of these standards on the Institute. 2.4 Standards and interpretations not yet effective or relevant The following standards and interpretations have been published and are mandatory for the Institute s accounting periods beginning on or after 1 January 2013 or later periods but are not relevant to its operations: Standard/ Interpretation: Effective date: Years beginning on or after IFRS 10 Consolidated Financial Statements 1 January 2013 IAS 27 Separate Financial Statements 1 January 2013 IFRS 11 Joint Arrangements 1 January 2013 IFRS 12 Disclosure of Interests in Other Entities 1 January 2013 Management is currenty reviewing the impact of these standards on the Institute. 15
Notes to the Financial Statements 3. Property, plant and equipment Cost / Valuation 2012 2011 Accumulated depreciation Carrying value Cost / Valuation Accumulated depreciation Carrying value Land 775,000-775,000 775,000-775,000 Buildings 7,071,266 (808,583) 6,262,683 7,054,244 (667,527) 6,386,717 Furniture and fixtures 452,946 (159,955) 292,991 424,547 (113,490) 311,057 Motor vehicles 131,491 (72,320) 59,171 131,491 (46,022) 85,469 Office equipment 767,173 (387,702) 379,471 911,026 (339,993) 571,033 IT equipment 863,684 (625,091) 238,593 781,720 (544,411) 237,309 Finance lease assets - Office equipment 1,183,900 (236,780) 947,120 - - - Total 11,245,460 (2,290,431) 8,955,029 10,078,028 (1,711,443) 8,366,585 Cost / Valuation 2010 Accumulated depreciation Carrying value Land 775,000-775,000 Buildings 6,977,345 (527,980) 6,449,365 Furniture and fixtures 289,936 (38,255) 251,681 Motor vehicles 329,565 (98,953) 230,612 Office equipment 873,068 (126,980) 746,088 IT equipment 678,820 (308,076) 370,744 Finance lease assets - Office equipment - - - Total 9,923,734 (1,100,244) 8,823,490 Reconciliation of property, plant and equipment - 2012 Opening balance Additions Other changes, movements Depreciation Land 775,000 - - - 775,000 Buildings 6,386,717 17,022 - (141,056) 6,262,683 Furniture and fixtures 311,057 26,465 - (44,531) 292,991 Motor vehicles 85,469 - - (26,298) 59,171 Office equipment 571,033 73,394 (138,680) (126,276) 379,471 IT equipment 237,309 161,772 - (160,488) 238,593 Finance lease asset - Office equipment - 1,183,900 - (236,780) 947,120 Reconciliation of property, plant and equipment - 2011 Opening balance Total 8,366,585 1,462,553 (138,680) (735,429) 8,955,029 Additions Disposals Reversal of accumulated depreciation Impairments Depreciation Total Land 775,000 - - - - - 775,000 Buildings 6,449,365 76,899 - - - (139,547) 6,386,717 Furniture and fixtures 251,681 170,318 (35,707) - (32,997) (42,238) 311,057 Motor vehicles 230,612 - (198,073) 112,241 - (59,311) 85,469 Office equipment 746,088 37,958 - - (28,990) (184,023) 571,033 IT equipment 370,744 102,901 - - (27,415) (208,921) 237,309 8,823,490 388,076 (233,780) 112,241 (89,402) (634,040) 8,366,585 16
Notes to the Financial Statements 3. Property, plant and equipment (continued) Reconciliation of property, plant and equipment - 2010 Opening balance Additions Transfers Other changes, movements Depreciation Land 775,000 - - - - 775,000 Buildings 6,296,255 200,719 212,275 - (259,884) 6,449,365 Furniture and fixtures 562,282 42,764 (212,275) (155,282) 14,192 251,681 Motor vehicles 155,158 131,491 - - (56,037) 230,612 Office equipment 47,613 865,198 - (44,877) (121,846) 746,088 IT equipment 795,110 197,230 - (539,440) (82,156) 370,744 4. Intangible assets Total 8,631,418 1,437,402 - (739,599) (505,731) 8,823,490 Cost / Valuation 2012 2011 Accumulated Carrying value Cost / amortisation Valuation Accumulated Carrying value amortisation Computer software 415,024 (123,751) 291,273 37,769 (20,264) 17,505 Website 80,689 (26,843) 53,846 - - - Total 495,713 (150,594) 345,119 37,769 (20,264) 17,505 Cost / Valuation 2010 Accumulated Carrying value amortisation Computer software 26,905 (4,209) 22,696 Website - - - Total 26,905 (4,209) 22,696 Reconciliation of intangible assets - 2012 Opening Additions Amortisation Total balance Computer software 17,505 377,255 (103,487) 291,273 Website - 80,689 (26,843) 53,846 17,505 457,944 (130,330) 345,119 17
Notes to the Financial Statements 4. Intangible assets (continued) Reconciliation of intangible assets - 2011 Opening Additions Amortisation Total balance Computer software 22,696 10,864 (16,055) 17,505 Reconciliation of intangible assets - 2010 Opening balance Additions Other changes, movements Amortisation Computer software 238,648 35,436 (247,353) (4,035) 22,696 5. Investments Available-for-sale Listed shares at market value 3,641 shares held in Sanlam Limited at a fair value of R44,77 (2011: R28,85) Total 163,008 105,043 101,657 Available-for-sale 163,008 105,043 101,657 Fair values are determined annually at Statement of Financial Position date. The Institute has not reclassified any financial assets from cost or amortised cost to fair value or from fair value to cost or amortised cost during the current or prior years. The maximum exposure to credit risk at the reporting date is the fair value of the debt securities classified as available for sale. 6. Financial assets by category The accounting policies for financial instruments have been applied to the line items below: 2012 2011 14,644,537 163,008 14,807,545 Loans and receivables Available-forsale Total Other financial assets - 163,008 163,008 Trade and other receivables 3,565,405-3,565,405 Cash and cash equivalents 11,079,132-11,079,132 Loans and receivables Available-forsale Total Other financial assets - 105,043 105,043 Trade and other receivables 3,464,088-3,464,088 Cash and cash equivalents 9,156,391-9,156,391 12,620,479 105,043 12,725,522 18
Notes to the Financial Statements 7. Accounts receivable Accounts receivable 3,485,417 3,182,710 1,142,822 Provision for bad debts (693,393) (873,056) (640,569) Prepayments 730,238 144,000 900,784 Deposits 26,651 369,222 16,135 VAT - 622,029 - Other receivables 16,492 19,183 31,162 Accounts receivables pledged as security Accounts receivable have not been pledged as security for any other financial obligation. Credit quality of accounts receivables 3,565,405 3,464,088 1,450,334 The credit quality of accounts receivables that are neither past nor due nor impaired can be assessed by reference to historical repayment trends of individual debtors. Credit terms are offered only to members registered on the Institute's database with valid details. The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above. Fair value of accounts receivables The carrying value of accounts receivable approximates fair value. Accounts receivables past due but not impaired All accounts receivable that were past due have been provided for. Accounts receivables impaired As of 31 December 2012, accounts receivables of R693,393 (2011: R873,056 ; 2010: R640,569) were provided for. Reconciliation of provision for impairment of trade and other receivables Opening balance (873,056) (640,569) (42,008) Provision for impairment - (232,487) (598,561) Unused amounts reversed 179,663 - - 8. Cash and cash equivalents Cash and cash equivalents consist of: (693,393) (873,056) (640,569) Cash on hand 9,707 7,075 12,157 Bank balances 2,287,254 2,354,636 1,903,318 Call account investments 8,782,171 6,794,680 7,450,293 11,079,132 9,156,391 9,365,768 Cession of Investment Account for Overdraft facility 500,000 500,000 500,000 Credit quality of cash at bank and short term deposits, excluding cash on hand The credit quality of cash at bank and short term deposits, excluding cash on hand that are neither past due nor impaired can be assessed by reference to historical information about counterparty default rates. None of the financial institutions with which bank balances are held defaulted in prior periods and as a result a credit rating of high is ascribed to the financial institutions. The Institute's maximum exposure to credit risk as a result of the bank balances held is limited to the carrying value of these balances as detailed above. 19
Notes to the Financial Statements 9. Development Fund The fund was set up to undertake projects in the different regions. Balance at the beginning of the year 4,740,996 4,995,819 4,583,943 Movement for the year - 50% of entrance fee received 520,255 412,677 400,073-25% of net surplus 356,241-11,803 Transfer of funds for development projects - (667,500) - 10. Revaluation Fund 5,617,492 4,740,996 4,995,819 Balance at the beginning of the year 74,334 70,948 52,123 Increase/(decrease) in revaluation of shares 57,964 3,386 18,825 11. Bursary Fund The fund was set up to distribute bursaries from reserves. 132,298 74,334 70,948 Balance at the beginning of the year 350,000 350,000 300,000 Transfer from accumulated funds 50,000-50,000 12. Finance lease obligation 400,000 350,000 350,000 Minimum lease payments due - within one year 386,749 166,384 154,776 - in second to fifth year inclusive 1,188,702 352,941 519,326 1,575,451 519,325 674,102 less: future finance charges (270,618) (65,937) (112,177) Present value of minimum lease payments 1,304,833 453,388 561,925 Present value of minimum lease payments due - within one year 275,573 130,812 108,537 - in second to fifth year inclusive 1,029,260 322,576 453,388 1,304,833 453,388 561,925 Non-current liabilities 1,065,484 322,576 453,388 Current liabilities 239,349 130,812 108,537 SAIPA leases certain office equipment under finance leases. The average lease term is five years and the average effective borrowing rate is 9% (2011: 9%) Interest rates are linked to prime at the contract date. The Finance leases have fixed repayments. 1,304,833 453,388 561,925 The Institute's obligations under finance leases are secured by the lessor's charge over the leased assets (Note 3). 20
Notes to the Financial Statements 13. Accounts payable Accounts payable 1,625,599 1,564,021 701,070 Amounts received in advance 5,652,508 5,569,525 4,487,941 VAT 81,866-99,204 Other trade creditors 1,962,164 1,381,850 290,277 Accrued leave pay 856,890 789,358 557,312 The accounts payable are interest free and are also unsecured. Fair value approximates carrying value. 14. Financial liabilities by category The accounting policies for financial instruments have been applied to the line items below: 2012 10,179,027 9,304,754 6,135,804 Financial Total liabilities at amortised cost Other financial liabilities 1,304,833 1,304,833 Trade and other payables 10,179,027 10,179,027 2011 11,483,860 11,483,860 Financial Total liabilities at amortised cost Other financial liabilities 453,388 453,388 Trade and other payables 9,304,754 9,304,754 15. Revenue 9,758,142 9,758,142 Approved training centres 2,081,410 2,007,782 2,152,614 Entrance and Administration fees 1,692,010 1,384,186 1,429,023 Other fees 6,525 452,457 82,337 Technical income 336,071 718,692 19,151 Membership fees 23,601,164 21,486,171 21,009,255 National Convention 1,030,805 - - Professional Evaluation 1,862,553 1,436,679 1,313,677 16. Other income 30,610,538 27,485,967 26,006,057 CPD Income 4,279,305 3,372,659 3,440,616 Advertising Income 819,041 509,195 1,190,127 5,098,346 3,881,854 4,630,743 21
Notes to the Financial Statements Figures in Rand 2012 2011 2010 17. Operating surplus/(deficit) Operating surplus/(deficit) for the year is stated after accounting for the following: Operating lease charges Premises Contractual amounts 36,368 16,220 25,842 Equipment Contractual amounts 131,397 170,785 123,912 167,765 187,005 149,754 Amortisation on intangible assets 103,487 16,055 4,035 Depreciation on property, plant and equipment 762,272 634,040 505,731 Employee costs 13,896,659 12,344,926 9,261,777 Research and development - - 379,000 Bad debts written off (520,154) (155,590) (678,212) 18. Investment revenue Dividend revenue Listed financial assets - Local - - 3,787 Interest revenue Bank 640,459 593,537 760,260 19. National Convention 640,459 593,537 764,047 National Convention Income (1,030,805) - - National Convention Expenses 1,501,084 30,347 - Deficit/(Surplus) for the National Convention 470,279 30,347 - SAIPA hosted its 30th Anniversary Accounting Convention in July 2012 at the Birchwood Hotel & Convention Centre in Gauteng. It was themed "Accounting as a Catalyst for Change". The convention sessions raised thought provoking issues on the crucial role that Accountants play in the changing economic environment and SME sector in the South African economy. 20. Finance costs Finance leases 126,795 46,239 65,747 Bank 1,829 8,753 6,362 21. Taxation 128,624 54,992 72,109 No provision has been made for 2012 as the Institute is exempt from income tax in terms of Section 30 and 10(1)(cN) of the Income Tax Act. 22. Auditors' remuneration External audit fee - Current year 144,375 189,700 85,226 External audit fee accrual 97,870 56,700-242,245 246,400 85,226 22
Notes to the Financial Statements Figures in Rand 2012 2011 2010 23. Cash generated from operations (Deficit)/Surplus for the year 1,214,399 (2,144,394) 6,890 Adjustments for: Depreciation and amortisation 865,759 650,095 509,766 Dividends received - - (3,787) Interest received (640,459) (593,537) (760,260) Finance costs 128,624 54,992 72,109 Revaluation of shares 57,965 3,386 18,824 Other non-cash items (Property, Plant and Equipment) 138,680 (22,839) 986,952 Changes in working capital: Trade and other receivables (101,317) (2,013,754) (1,187,415) Trade and other payables 874,272 3,168,950 (287,638) 24. Committee expenses 2,537,923 (897,101) (644,559) Charco 166,959 148,064 132,957 Board 331,715 319,052 530,560 Executive Committee 162,112 126,904 137,548 Edcom 107,492 84,620 86,815 Audit Committee 73,693 104,312 160,349 Investigation and Disciplinary Committee 125,078 130,217 156,146 Legislative projects and other 571,896 700,250 357,234 Technical 66,805 67,990 65,894 25. Commitments Authorised capital expenditure 1,605,750 1,681,409 1,627,503 Already contracted for but not provided for Website - - 20,000 Operating leases as lessee (expense) Minimum lease payments due - within one year 3,432 3,432 - - in second to fifth year inclusive 2,288 6,292-5,720 9,724 - Operating lease payments represent rentals payable by the Institute for certain of its office equipment. Leases are negotiated for an average term of three years. Operating leases also include rental for storage facility. 26. Contingent asset Professional Indemnity Policy Bonus The Institute holds the right to a Professional Indemnity Policy Bonus which could result in the Institute receiving a future cash benefit dependent on the outcomes of current and future members litigation claims. The amount of the bonus can currrently not be quantified and the outcome of the bonus is unknown. 27. First-time adoption of International Financial Reporting Standards The Institute has applied IFRS 1, First-time adoption of International Financial Reporting Standards, to provide a starting point for the reporting under International Reporting and Accounting Standards. On principle these standards have been applied retrospectively and the comparatives contained in these financial statements do not, as a result of first time adoption of IFRS, differ from those published in the financial statements published for the year ended 31 December 2011. 23
Notes to the Financial Statements Figures in Rand 2012 2011 2010 28. Key management emoluments Executive Executives - Short term benefits 2,332,611 2,238,750 1,744,050 29. Prior period adjustments A debtors journal for the year ended 31 December 2010 was incorrectly reversed in 2011. Management discovered the journal in 2012, and corrected the misallocation retrospectively in 2011, which has resulted in a restatement of the 2011 accounts. The effect of the adjustments were as follows: Statement of Financial Position Accounts receivable - 723,864 - Liabilities - (88,896) - Statement of Financial Performance Membership fees - (634,968) - 30. Comparative figures Certain comparative figures have been reclassified. In 2011 the financial statements were restated to include the prior period error. The effects of the reclassification are as follows: Statement of Financial Position Assets - 723,864 - Equity - (634,968) - Liabilities - (88,896) - 31. Risk management Capital risk management There are no externally imposed capital requirements. Financial risk management The Institute s activities expose it to a variety of financial risks: market risk (including cash flow interest rate risk), credit risk and liquidity risk. 24
Notes to the Financial Statements Figures in Rand 2012 2011 2010 31. Risk management (continued) Liquidity risk The Institute s risk to liquidity is a result of the funds available to cover future commitments. The Institute manages liquidity risk through an ongoing review of future commitments and credit facilities. Cash flow forecasts are prepared and borrowing facilities are monitored. The table below analyses the entity s financial assets and financial liabilities into relevant maturity groupings based on the remaining period at the statement of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within twelve months equal their carrying balances as the impact of discounting is not significant. At 31 December 2012 Less than 1 year Between 1 and 2 years Between 2 and 5 years Over 5 years Accounts receivable 2,835,167 - - - Short term deposits 8,782,171 - - - Bank balances 2,296,961 - - - Investments - - - 163,008 Accounts payable (4,444,653) - - - At 31 December 2011 Less than 1 year Between 1 and 2 years Between 2 and 5 years Over 5 years Accounts receivable 2,698,059 - - - Short term deposits 6,794,680 - - - Bank balances 2,361,711 - - - Investments - - - 105,043 Accounts payable (2,945,871) - - - At 31 December 2010 Less than 1 year Between 1 and 2 years Between 2 and 5 years Over 5 years Accounts receivable 549,550 - - - Short term deposits 7,450,293 - - - Bank balances 1,915,475 - - - Loans to related parties 462,262 - - - Investments - - - 101,657 Accounts payable (1,548,659) - - - Interest rate risk The Institute's interest rate risk arises mainly from cash and cash equivalents. Interest rate is managed by having both fixed and variable interest rate agreements with banks. Cash flow interest rate risk Financial instrument Current Due in less interest rate than a year Call account - FNB 4.50 % 8,782,171 Cash in current banking institutions 0.05 % 2,296,961 Credit risk Credit risk consists mainly of cash and cash equivalents and accounts receivable. The Institute deposits cash only with major banks with high quality credit standing and limits exposure to any one counterparty. Accounts receivable comprise a widespread membership base. Management evaluates credit risk relating to members on an ongoing basis. 25
Statement of Financial Performance Figures in Rand Note(s) 2012 2011 2010 Revenue Approved Training Centres 2,081,410 2,007,782 2,152,614 Entrance and Administration Fees 1,692,010 1,384,186 1,429,023 Technical income 336,071 718,692 19,151 Membership Fees 23,601,164 21,486,171 21,009,255 National Convention 19 1,030,805 - - Other fees 6,525 452,457 82,337 Professional Evaluation 1,862,553 1,436,679 1,313,677 15 30,610,538 27,485,967 26,006,057 Other income Advertising 819,041 509,195 1,190,127 Dividend revenue 18 - - 3,787 Interest received 18 640,459 593,537 760,260 CPD income 4,279,305 3,372,659 3,440,616 5,738,805 4,475,391 5,394,790 Expenses (Refer to page 27) (35,006,320) (34,050,761) (31,321,849) Operating surplus/(deficit) 17 1,343,023 (2,089,403) 78,998 Finance costs 20 (128,624) (54,992) (72,109) Surplus/(Deficit) for the year 1,214,399 (2,144,395) 6,889 26 The supplementary information presented does not form part of the financial statements and is unaudited
Statement of Financial Performance Figures in Rand Note(s) 2012 2011 2010 Expenses Advertising and Exhibitions (1,673,842) (2,572,667) (2,378,522) Approved training centres (889,612) (830,086) (581,615) Attendance fees (758,261) (717,597) (941,460) Auditors remuneration 22 (242,245) (246,400) (85,226) Bad debts written-off (520,154) (155,590) (678,212) Bank charges (184,952) (152,842) (178,647) Computer expenses (707,247) (661,851) (733,044) Consulting and professional fees (1,701,084) (2,594,630) (2,155,372) CPD expenses (2,832,155) (2,708,975) (3,067,565) Depreciation and amortisation (865,759) (650,095) (509,766) Donations (9,000) (1,750) (1,510) Employee costs (13,896,659) (12,344,926) (9,261,777) Entertainment (74,161) (174,995) (126,386) Fines and penalties - (1,336) (471) IFAC meeting sponsorships (354,290) - - Impairment of assets 21,165 81,024 (986,952) Insurance (240,811) (152,267) (181,671) Lease rentals on operating lease (167,765) (187,005) (149,754) Legal expenses (124,306) (523,678) 9,040 Motor vehicle expenses (22,062) (89,492) (79,819) National Convention 19 (1,501,084) (30,347) - Postage (171,385) (191,182) (146,838) Printing and stationery (395,718) (491,692) (651,347) Professional evaluations (638,941) (384,340) (274,949) Promotions (600,865) (98,750) (144,555) Provision for bad debts 179,664 (232,487) (598,561) Publications (1,692,506) (2,503,014) (2,145,359) Research and development costs - - (379,000) Regional grant (81,877) (66,000) (82,500) Repairs and maintenance (261,316) (229,656) (347,765) Security (11,544) (8,515) (10,996) Website expenses (823,244) (946,507) (656,494) Staff welfare (377,738) (269,276) (388,146) Strategic operations (538,483) (527,988) (59,416) Subscriptions (263,049) (744,530) (716,475) Telephone and fax (686,876) (461,916) (418,703) Travel - local (588,006) (850,491) (1,341,826) Travel - overseas (606,480) (469,068) (365,290) Utilities (344,868) (272,282) (238,040) Venue and Catering (358,804) (587,562) (266,860) (35,006,320) (34,050,761) (31,321,849) 27 The supplementary information presented does not form part of the financial statements and is unaudited