Table of Contents Notice of Annual General Meeting ………………………………….……………………………. 2 Nominees to Council …………………………………………………….……………………………..….. 3 The Report of Council …………………………………………………….……………………………….. 5 President’s Report …………………………………………………………….……………………………. 6 The Reports of the Committees of Council …………………………………………..……12 List of Committees for the year 2013 – 2014……………………………………..... 25 Council Members …………………………………………………………………………………………... 26 Secretariat Support Team……………………………………………………………………………. 28 Financial Highlights and Outlook………………………………………………………………….. 29 Independent Auditor’s Report and Financial Statements……………………… 32
NOTICE OF ANNUAL MEETING NOTICE OFGENERAL ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Forty-Ninth Annual General Meeting of the Institute of Chartered Accountants of Jamaica will be held at the ICAJ Secretariat, 8 Ruthven Road, Kingston 10, on July 29, 2014, commencing at 5:30 p.m. for the following purposes: 1. To confirm Minutes of the Forty-Eighth Annual General Meeting held on July 25, 2013. 2. To receive the Reports of the Council and President, the Financial Statements and Report of the Auditor thereon for the year ended March 31, 2014. 3. To re-elect Council members: The following members of the Council retire by rotation in accordance with Bye-Law 15(1) (a): • • • •
Mr. Archibald Campbell, FCA – Not in Public Practice - will not be seeking re-election. Miss Vintoria Bernard, FCA - In Public Practice - will be seeking re-election. Mr. Nigel Chambers, FCA – In Public Practice - who was appointed to fill a casual vacancy, resulting from the resignation of Mr. Linroy Marshall during the year, retires and will be seeking election. Mr. Sixto Coy, FCA – In Public Practice - who was appointed to fill a casual vacancy, resulting from the resignation of Mr. Audley Gordon during the year, retires and will be seeking election.
4. To consider and if thought fit, pass the following resolution:“That Mr. Kenneth Lewis be elected as Auditor and authorise Council to fix his remuneration or to determine the manner in which such remuneration is to be fixed.” 5. To consider any other business that may be properly brought before an Annual General Meeting. Your attention is drawn to: (i) The Public Accountancy Act, Second Schedule (section 19-2):“The Council shall consist of not fewer than eight or more than twelve of the members of the Institute, and of the members of the Council at least one shall be a Public Officer, and of the remaining members at least one-third shall be persons who are neither Accountants in Private Practice nor Public Officers.” (ii) The Institute’s Bye-Laws:Bye-Law 13 (2). At least 21 days notice of the Annual General Meeting shall be given to each member. The Notice convening the meeting shall set forth the procedure of nomination and election to Council and shall be accompanied by:(a) A copy of the report of the President and the Council, including the Annual Financial Statements and the Report of the Auditor thereon. (b) The names, qualifications, and resumes of members nominated for election. Bye-Law 14 (1). Nominations of candidates for election to the Council shall be in writing signed by two members, and shall be lodged with the Secretary by the first working day in June. Bye-Law 14 (2). Election of the Council shall be by ballot. Bye-Law 19. On any vote by ballot, any member may cast his/her vote by proxy in the form determined by the Council from time to time. A specimen of the proxy form is enclosed. BY ORDER OF COUNCIL Dated this 30th day of June 2014
--------------------------------------Elaine Robinson HONORARY SECRETARY
ICAJ ANNUAL REPORT 2013/2014
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NOMINEES TO COUNCIL ELIZABETH ANN MCGREGOR, FCA, FCCA, CIA, CISA, EMBA, BSc Elizabeth McGregor is employed to the University of the West Indies as a Senior Manager in the Management Audit Department. Prior to that she held management positions in various organisations in Jamaica in the manufacturing, banking, insurance and financial industries as well as in external audit firms. She has over 20 years’ internal audit experience and seven years’ external audit experience. A Fellow of ICAJ, she was admitted to membership in 1994 after successfully completing the ACCA examinations in June 1992. She is a Fellow of ACCA as well as a Certified Internal Auditor (CIA) and a Certified Information Systems Auditor (CISA). Elizabeth serves as Chairman of ICAJ’s Resource Centre and Website Committee; Secretary of the UWI (Mona) and Community Cooperative Credit Union; Secretary of the National Council for Indian Culture in Jamaica; and Treasurer of the Holy Childhood High School Alumnae Association. She is also a mentor in the UWI Mona Mentorship Programme.
SIXTO P. COY, FCA, FCCA, MBA Sixto Coy is an audit and business advisory partner at Mair Russell Grant Thornton (MRGT) for over 17 years with 29 years experience in providing auditing, accounting and business advisory services. Sixto began his career at MRGT in 1985 as a junior accountant and was promoted through the ranks to partner in 1997. He is the engagement partner on several audits in a wide spectrum of industries including manufacturing, hospitality, airline, insurance and distribution, credit unions and pension schemes. He is a Fellow of both ICAJ and ACCA. He also completed his CPA exams in California in 2002 and received his Masters in Business Administration (MBA) from the Manchester Business School in 2004. In December 2013, Sixto was co-opted to serve on Council and is the Chairman of ICAJ’s Legislation Review Committee. He is also a member of ICAJ’s Accounting Standards and Audit Practice Committees. Sixto is the current Treasurer of the Rotary Club of Kingston and the outgoing Treasurer of the Kingston College Old Boys’ Association.
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NIGEL R. CHAMBERS, FCA, FCCA, MBA Nigel Chambers joined KPMG in 1992 and became a Partner in 2006. He has over 20 years’ experience with KPMG in a broad range of businesses, including banking, insurance, manufacturing, construction, retail distribution, hospitality and agribusiness. He has significant experience in the audit and preparation of group financial statements for clients under both IFRS and US GAAP. He currently serves as Lead Audit Partner or as Quality Control Review Partner for several of the firm’s listed and public interest clients. He also services a range of mid-market listed and private companies. In addition to audit, Nigel has participated in and managed several transactions engagements including business valuations and financial modelling. He has served as Risk and Methods Manager for KPMG Caricom and currently serves as a designated team leader in KPMG’s international quality performance review process and a member of the firm’s technical committee. Nigel is an awardee for the ICAJ/ACCA joint examinations and for the Manchester Business School Caribbean Chapter. In December 2013, Nigel was co-opted to serve on Council and he is the Chairman of ICAJ’s Audit Practice Committee. He is a Fellow of ICAJ and ACCA.
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THE REPORT OF COUNCIL The following Officers were elected on July 25, 2013 at a special meeting of the Council. President Vice President -
Mr. Dennis Chung Mr. Bruce Scott
Mr. Dennis Brown and Mrs. Elaine Robinson were appointed as Treasurer and Secretary, respectively. The first regular Council meeting of 2013/2014 was held at the offices of the Institute, 8 Ruthven Road, Kingston 10, on September 12, 2013. COUNCIL MEETINGS The attendance of Council members during the period April 2013 – March 2014 was as follows: Names
First Elected
Prunella Vassell* Linroy Marshall* Martin Gooden* Archibald Campbell Dennis Chung Ann Marie Rhoden Vintoria Bernard Audley Gordon* Bruce Scott Glossie Stone* Raymond Campbell Alok Jain Allison Peart Marlene McIntosh Eric Scott
1997 1998 2001 2002 2004 2005 2005 2008 2009 2010 2011 2012 2013 2013 2013
Re-elected
Meetings Attended
Total Possible Meetings
2010 2012 2010 2011 2011 2011 2008 2012 2013 -
4 7 3 6 11 8 10 1 9 4 9 7 7 7 6
4 8 4 11 11 11 11 8 11 4 11 11 7 7 7
a)
The following members of the Council retire by rotation in accordance with Bye-Law 15 (1) (a):
• •
Mr. Archibald Campbell, FCA – Not in Public Practice - will not be seeking re-election. Miss Vintoria Bernard, FCA - In Public Practice - will be seeking re-election.
b)
Mr. Nigel Chambers, FCA – In Public Practice - who was appointed to fill a casual vacancy, resulting from the resignation of Mr. Linroy Marshall during the year, retires and will be seeking election. Mr. Sixto Coy, FCA –In Public Practice - who was appointed to fill a casual vacancy, resulting from the resignation of Mr. Audley Gordon, during the year, retires and will be seeking election.
c)
*d ) *e ) *f ) *g ) *h )
Miss Prunella Vassell, FCA - In Public Practice - retired from Council in July 2013. Mr. Linroy Marshall, FCA – In Public Practice - resigned from Council in December 2013. Mr. Martin Gooden, FCA – Not in Public Practice - was not re-elected in July 2013. Mr. Audley Gordon, FCA - In Public Practice - resigned from Council in December 2013. Mrs. Glossie Stone, FCA – Not in Public Practice - retired from Council in July 2013.
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PRESIDENT’S REPORT I am privileged to present the President’s Report and thank you for your dedication, commitment and unwavering support during my first year at the helm of this noble Institute. As the oversight body for Jamaica’s Accountancy profession, we are pleased with the profession’s progress over the years and look forward to maintaining our established tradition of integrity and the high level of professionalism of our membership. We remain committed to ICAJ being the reference point for Chartered Accountants, not only in Jamaica but also in the region. I am pleased to say that although the financial year 2013/14 proved to be another financially challenging year for the Institute, we executed our programmes successfully and were still able to show a small surplus. We sought new ways and devised new strategies to achieve our targets, against the backdrop of a weakened economy exacerbated by a declining Jamaican dollar, which had an equal impact on our members. Even so we recognized the need to improve value to our members. Following the Institute’s Strategic Planning Retreat held in April 2013, we endeavoured to implement the recommendations from the retreat, cognizant that it is only through productivity and innovation that an organisation will overcome and survive challenges. We also sought to creatively formulate short- and medium-term strategies for income generation as we seek to chart a financially sustainable course for the future.
DENNIS CHUNG PRESIDENT
“Creating Professional Leaders For a Global Marketplace” We are in an age where Chartered Accountants are expected to bring a full set of skills to the table while making our mark of excellence across all aspects of business and financial life. As an Institute, we are sensitive to these increasing demands of the global marketplace and continue to support professional development programmes for our members. We continue to emphasize simultaneously, that both technical and social skills are important for a productive work force. Gone are the days of the passive bespectacled accountant… the finance professional of today is expected to be confident, socially savvy, intellectually gifted, and perceptive with the capacity to command attention with both the spoken and the written word. Our mandate, therefore, must be to create professional leaders for a global marketplace. ICAJ Professional Development Clubs We are proud of our ICAJ Toastmasters’ and Writers’ Clubs which continue to hone leadership, public speaking and writing skills among our members. All this is done in a relaxed stimulating environment which encourages confidence and self-esteem. We encourage our members to take advantage of this development opportunity, as we have already seen the growth of some members through their involvement.
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MAXIMISING TECHNOLOGY We cannot over emphasize the need for us to embrace technology and maximize its earning potential. As an Institute, we wish to fully develop our capability to host seminars, provide training material online and facilitate e-learning to be utilized at one’s convenience. As our members become more comfortable with utilizing on line facilities, we recognize that this must be a medium that we could use to enhance our systems of operation. Surely, last year, we were pleased to note that an increasing number of members are using the Institute’s online facility. Webcast viewership of our seminars continues to increase and our online post viewings are gaining support. During the year, we also witnessed many companies using ICAJ’s website and emailing facility to communicate their messages to a target audience of Chartered Accountants, accounting students, and persons in the field. We developed a policy for online advertising which will continue to be fine-tuned. These represent a drop in the ocean of opportunities for income generation through the Internet. e-IFRS As ICAJ seeks to enhance its offerings through technology, since January 2014 members have been able to access from their Personal Profile, up-to-date information on International Financial Reporting Standards (IFRSs) including International Accounting Standards Interpretations (IFRICs/SICs). We encourage you to take advantage of this benefit. BUILDING PROJECT We continue to be proud of the progress being made with our building project. With the acquisition of a second mortgage we recommenced work on the second floor and in the new year this should be completed with the inclusion of amenities. Our meeting room rental of the facilities on the lower level has been positive and we are looking to even greater utilization in the future. PRACTICE MONITORING As you may be aware, the first round of Practice Monitoring was completed during the year. However, the review has revealed areas of weakness that must be addressed expeditiously. Practices that have not successfully passed the first round of audits have been allowed time to improve after which sanctions may be applied. It should also be noted that prospective employers have been asking persons for the results of their practice monitoring audit and we expect this trend to continue. Against this backdrop, ICAJ continued to encourage practitioners to take the necessary steps to improve their practices. ICAJ has also facilitated workshops to assist in remedying the areas of concern. Launched in 2011 by the Public Page 7
Accountancy Board (PAB), in partnership with the Institute of Chartered Accountants of the Caribbean (ICAC), the Institute of Chartered Accountants of Jamaica (ICAJ) and the Association of Chartered Certified Accountants (ACCA), Practice Monitoring inspires confidence in the quality of audit in Jamaica and consequently confidence in financial reporting. This is all a part of the strategy to improve the profile and credibility of ICAJ members and we must ensure that as many firms as possible are brought up to the required standard. CORPORATE GOVERNANCE As a member of the International Federation of Accountants (IFAC), ICAJ is mandated to promote the adoption of international standards and best practices. As such, the Institute continued its call for the adoption of proper governance and the establishment of effective risk management and internal control systems within organisations, in both the public and private sectors. Service on Public Bodies Our members continue to volunteer their services on public bodies, in response to the Ministry of Finance and Planning’s request for us to supply them with a database of professionals from which appointments can be made. This is consistent with the revised Corporate Governance Framework (CGF) for Public Bodies where they are looking for diversity of skills, qualifications and experience. Courtesy Call on Minister of Finance and Planning Last year, ICAJ’s Principal Officers and the Executive Director paid a courtesy call on Dr the Hon. Peter Phillips, Minister of Finance and Planning. The meeting facilitated discussions on important topics such as the Practice Monitoring Programme, introduction of IPSAS and the audit procurement process, the future of the Accountancy profession in the Caribbean and the role and function of the ICAJ in national development. We also discussed our efforts in ensuring that the local profession is fully compliant with the requirements of International Financial Reporting and Auditing Standards, as well as our ongoing initiative in assisting public sector entities to improve accountability through the strengthening of corporate governance structures in service to the public. MEMBERSHIP Members’ Successes Many of our members have been contributing to national development, business and the economy, privately and publicly, through service on many boards and committees. Some continue to make presentations across the globe. We wish to thank them for their service as they continue to enhance the influence of the Accountancy profession in Jamaica and abroad. We also congratulate those who ICAJ ANNUAL REPORT 2013/2014
excelled academically last year.
•
We would like to mention some of our membership who received appointments and honours during the 20132014 year in review: •
We also salute Mrs. Ethlyn Norton-Coke, past Secretary, who was accorded the Order of Distinction in the rank of Officer in recognition of her outstanding service in the field of Taxation.
The 2013 ICAJ Distinguished Member Award was presented to Mr. Everton McDonald, Past President and a former Territory Senior Partner at PricewaterhouseCoopers and the Founding Chairman of PricewaterhouseCoopers Caribbean & Bermuda.
Mr. Everton McDonald (right) FCA, FCCA, BSc receives the 2013 ICAJ Distinguished Member Award from Mr. Dennis Chung (left) , President of the Institute of Chartered Accountants of Jamaica (ICAJ) for his outstanding contribution to the Institute and the Accountancy profession.
Mrs. Ethlyn Norton-Coke, Past ICAJ Honorary Secretary and Chairman, ICAJ Taxation Committee, was accorded the Order of Distinction in the rank of Officer for her outstanding service in the field of Taxation in 2013, by Governor- General, His Excellency Sir Patrick Allen.
•
The Award was presented at the ICAJ’s Annual Awards Banquet which was held at the Jamaica Pegasus Hotel in New Kingston.
Mr. Leighton McKnight, Past President, received the Order of Distinction in the rank of Commander, in recognition of his distinguished contribution over the years to Public Service, Philanthropy and Community Service.
The prestigious ICAJ Distinguished Member Award has been established by ICAJ to recognise members who have contributed, through their achievements, to the prestige and status of the Institute and have made significant contributions to the development of the Accountancy profession. A Past President of ICAJ, Mr. McDonald is a former Managing Partner and Territory Senior Partner at PricewaterhouseCoopers and is the Founding Chairman of PricewaterhouseCoopers Caribbean & Bermuda.
Mr. Leighton McKnight (right), Past President, ICAJ receives the Order of Distinction from Governor General, His Excellency, Sir Patrick Allen, in 2013.
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•
•
•
Mrs. Ingrid Christian-Baker, Jamaica Private Power Company (JPPC) was appointed General Manager of the JPPC, effective August 1, 2013. Ingrid holds the distinction of being the first Jamaican and first woman to serve at the helm of the JPPC. Mr Dwight Moore was appointed Vice President – Finance at CGM Gallagher Insurance Brokers Jamaica Limited, effective January 1, 2014. He is also responsible for the Information Technology Department. Miss Allison Peart, Country Managing Partner, Ernst and Young, ICAJ Council member, Chairman of Taxation Committee and member of ICAJ’s Future of the Profession and Property Development Committees, was elected President of the Rotary Club of Kingston. Allison was also the first female to be elected to the position in its 54 years’ history.
•
Miss Juliette J. Brown, Executive Director, Tax Services, Ernst & Young Services Limited, who was installed as President of the Lions Club of St. Andrew Central for the Administrative Year 2013, in recognition of her outstanding contribution to the development of the organization.
•
Mr. Adrian Young, member of our Taxation and Resource Centre and Website Committees, on attaining the designation, Certified Management Accountant (CMA), with the Institute of Certified Management Accountants (ICMA), Australia. We are delighted at his achievement and may his dedication to continuing professional education inspire others in the profession.
•
•
Mrs. Pamela Monroe Ellis, Chairman of the Institute’s Investigations Committee continues to make significant contributions as a member of the Board of the International Federation of Accountants, where she represents Latin America and the Caribbean. Her Technical Advisor, ICAJ Vice President, Mr. Bruce Scott continues also to make invaluable contributions.
Mr Glaister R. Williams. We continue to keep their families and friends in our prayers. We also remember our members who lost loved ones. Prospective Members It is our resolve to bring the many professionally qualified accountants into our membership and ask all members to encourage eligible persons with whom they are associated to apply for ICAJ membership. This will allow them access to a range of benefits as well as the ability to contribute to the profession through service on various ICAJ Committees and other local and international ICAJ affiliated organizations. MAINTAINING LINKS WITH REGIONAL AND INTERNATIONAL ORGANISTIONS ICAJ continued to collaborate with regional and international bodies. ACCA Our longstanding partnership with ACCA was enhanced by a historic Memorandum of Understanding signed on December 5, 2013, establishing mutual cooperation between both bodies to develop and implement a recruitment drive in secondary schools and tertiary institutions in Jamaica to introduce the Foundation Level and ACCA professional qualifications. This has gotten off to a good start and it is hoped that the numbers of schools being visited will increase in the ensuing years until the island is fully covered. IFAC As a member body of IFAC, we were pleased to have collaborated with them in hosting a SMP seminar on March 18, 2014, targeting small and medium practices (SMPs) and small and medium enterprises (SMEs), under the theme, “Building a Profitable Business”. The first of its kind in Jamaica, the Seminar sought to address the challenges and opportunities facing Accountancy practitioners and small and medium enterprises locally and regionally as well as build the capacity of these entities. We thank IFAC’s Monica Foerster, Dawn McGeachy and Christopher Arnold for their presentations at the Seminar.
Deceased Members It is with sadness that we said farewell to our beloved members ICAJ Past President, Mr. Ken LaCruise, Ms. Grace Wright and Ms. Georgette Howell who passed away during the year under review. We recently suffered the loss of Mrs. Ethlyn Norton- Coke who served as the Honorary Secretary of the Council of ICAJ and as Chairman of ICAJ’s Taxation Committee. We also bade farewell recently to ICAJ member, Page 9
ICAJ ANNUAL REPORT 2013/2014
Mr. Dennis Chung (at right), President, ICAJ, converses with (left to right) representatives from the International Federation of Accountants (IFAC) Ms. Monica Foerster and Dawn McGeachy, Members of IFAC’s Small and Medium Practices (SMP) Committee; and Mr. Christopher Arnold, Technical Manager, SME & SMP Affairs. The occasion was a Seminar hosted by the ICAJ, in partnership with IFAC, entitled “Building a Profitable Business”, targetting small and medium practices (SMPs) and small and medium enterprises (SMEs), which was held on March 18, 2014 at the Jamaica Conference Centre, in Kingston. The first of its kind in Jamaica, the Seminar sought to address the challenges and opportunities facing accountancy practitioners and small and medium enterprises locally and regionally as well as build the capacity of these entities.
WORLD BANK/ROSC REPORT ICAJ participated in a workshop hosted by the World Bank on January 15, 2014 at the Jamaica Pegasus Hotel to discuss the initial findings of the Report on the Observance of Standards and Codes (ROSC) - Accounting and Auditing based on the request of the Ministry of Finance.
Mr. Dennis Chung (at right), President, ICAJ, in discussion with Mr. Mozammal Hoque (left) Senior Financial Management Specialist, The World Bank and Mr. Devon Rowe, Financial Secretary, Ministry of Finance and Planning at the Reports of the Observance of Standards and Codes (ROSC) Workshop which was hosted by the World Bank at the Jamaica Pegasus Hotel, under the theme, “Development of Accounting and Auditing Standards in Jamaica”.
ICAC ICAJ, through its Public Relations and Marketing Committee, continued to host meetings of the ICAC Regional Publicity Sub-Committee. The main focus of the year was the establishment of guidelines for an ICAC Lifetime Achievement Award to honour the outstanding contribution of a member of the regional Accountancy profession who has a minimum of fifteen (15) years’ service and sustained contribution to the development of the Accountancy profession nationally and regionally. We hail this initiative which will serve to enhance the visibility and profile of the Accountancy profession in the region. 50TH ANNIVERSARY CELEBRATIONS During the year, much preparatory work was undertaken for the celebration of ICAJ’s 50th Anniversary in 2015. Under the chairmanship of Mr. Dennis Brown, the Planning Committee has worked assiduously to formulate a theme, logo and programme of activities for the island- wide celebrations which will be officially unveiled at ICAJ’s Annual Awards Banquet on December 4, 2014 at the Jamaica Pegasus Hotel. We have been extremely privileged to have serving on the Planning Committee, ICAJ Founding Members, and distinguished members, Messrs. Philmore Ogle and Denis Goldson, who continue to guide our efforts with wisdom. One matter for which we have lobbied over the years is that of the inclusion of Chartered Accountants among persons who can certify official documents, and who can provide recommendations for individuals who are opening new accounts. As one of the most credible set of professionals in Jamaica, entrusted with many business and other interests, we trust that finally Chartered Accountants will be credited with this authority, especially during our celebratory year. LOOKING FORWARD As we move forward, we have to improve the public profile of the ICAJ and our members and provide the tools and opportunities for our members to do so. While we make such provisions within ICAJ, each member must individually take advantage of the opportunities. The 2014/15 financial year will be a landmark year for the ICAJ as we mark our 50th anniversary. We want to make it a special year of celebration and an opportunity to cause an acceleration in the profile of the Chartered Accountant as a leading professional body in the region.
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Acknowledgements In closing, I wish to express my sincere appreciation and gratitude to all Council and Committee members, the wider membership, students, Secretariat staff, sponsors and other stakeholders for your tremendous support. I also wish to extend appreciation to Messrs. Linroy Marshall, ICAJ Past President and Audley Gordon, who resigned during the year, for their service on Council and for their contributions to the work of the Institute. As we approach our Golden Jubilee, we crave your support of all the Institute’s activities and invite members in the Diaspora to also participate in the celebrations.
............................................................. Dennis Chung PRESIDENT
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The Reports of the Committees of Council The objectives of the Institute are achieved through the work of 16 Committees, 10 of which are headed by members of Council. The other Committees which are headed by non-members of Council are Current Affairs, Disciplinary, Finance, Investigations, Membership, Resource Centre and Website. ACCOUNTING STANDARDS COMMITTEE During the year 2013/2014, the Committee continued to promote compliance with international standards in financial reporting and provide the necessary information, training and guidance to both members and stakeholders on developments in accounting internationally. e-IFRS The Committee was successful in granting members electronic access to the International Accounting Standards Board’s e-IFRS subscription service, providing immediate online access to all standards, interpretations and any revisions as soon as they are released. Access to e-IFRS is via the ICAJ website, through members’ personal profiles. The cost is included in members’ ICAJ subscriptions. This was facilitated through the signing of an agreement with the IFRS Foundation.
Lead presenter Mr Graham Fairclough, international specialist in IFRS, addresses the IFRS Workshop, held February 7 and 8, 2014 at the Jamaica Conference Centre while Mr. Devon Rowe (centre), Financial Secretary and Mr Dennis Chung, President, ICAJ, look on.
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IFRS Workshop The Committee collaborated with the Continuing Professional Development Committee in hosting our annual two-day workshop on International Financial Reporting Standards on February 7 and 8, 2014 at the Jamaica Conference Centre. Advisories The Committee, in conjunction with the local actuarial profession, continued its periodic review of changes in market yields and issued a series of advisories related to the discount rate for measuring Defined Benefit Long Term Obligations. Advisories were also issued on the suggested rate bands for sensitivity analyses under IFRS 7 - Financial Instruments, Disclosures. Review of Selected Financial Statements As part of its ongoing monitoring of the application of IFRS in Jamaica, the Committee continued to review selected financial statements of companies listed on the main market and the junior market of the Jamaica Stock Exchange. AUDIT PRACTICE COMMITTEE During the year in review, the Committee continued to provide updated practice guidelines for members and ensured that reviews were done for auditing standards and regulations. Practitioners Development - Practice Monitoring Review The first round of Practice Monitoring was completed, with the results showing areas for improvement. The practices that have not successfully passed the first round of audits have been allowed time to improve after which sanctions may be applied. Practitioners were reminded to ensure that they take all the necessary steps to improve their practices. The Committee will explore the following recommendations to assist practitioners (i) Formulate the content for training through CPD (ii) Firms that were successful will be asked to assist in the capacity of presenters (iii) Communicate to the practitioners the things that will help them to pass subsequent reviews. Professional Indemnity Insurance The Committee prepared and submitted a draft of the declaration form for Council’s approval.
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Government Procurement Guidelines Discussions were held with the Ministry of Finance on this matter and we have been advised that ICAJ, as a confirmed stakeholder, will be notified when a decision has been reached to begin external consultations. BOJ Electronic Securities Following discussions with the Bank of Jamaica regarding the standardization of requests for audit confirmations from the BOJ Central Securities Depository, the templates approved by the BOJ were circulated to all practitioners. Capping Auditors’ Liability The draft position paper is to be finalised for submission to the Minister with responsibility for the Companies Act. The position paper includes proposals to (i) amend Section 156 of the Companies Act and allow auditors to operate as limited liability companies (ii) provide for proportionate liability, and (iii) restrict parties who may sue to those having probity of contract. IFAC Update Updates published by the International Auditing and Accounting Standards Board (IAASB) were reviewed and disseminated for comment. Postings reviewed include: Exposure Draft on Audited Financial Statements IAASB released proposals to enhance the future auditor’s report - exposure draft, Reporting on Audited Financial Statements: Proposed New and Revised International Standards on Auditing (ISA). The draft was reviewed and it was observed that it was being proposed that a significant amount of additional details be included in the Auditor’s Report. ICAJ’s comments were compiled and submitted. DFID Approves £4.935M Funding for IFAC PAO Development Activities: Under the agreement, DFID will provide £4.935m funding to IFAC over seven years. The funding will be used to strengthen PAOs in at least 10 DFID focal countries in four regions: Asia, the Caribbean, the Middle East and North Africa and Sub-Saharan Africa. The Committee reviewed the criteria for funding with a view to determining if Jamaica could access funding under this facility. IAASB Re-Proposes Standard Addressing Information in Annual Reports; Further Clarifies Auditor Effort and Reporting Responsibilities: Under the proposed ISA, the auditor would now be required to perform limited procedures to evaluate the consistency of the other information with the audited financial statements. In addition, while reading the other information, the auditor would be responsible to consider whether there is a material inconsistency between the ICAJ ANNUAL REPORT 2013/2014
other information and the auditor’s knowledge obtained during the course of the audit, and to remain alert for other indications that the other information appears to be materially misstated.
Court Hotel, under the theme, ‘Driving Business Performance Through Internal Audit’. The forum was attended by approximately 220 persons. •
ICAJ Seminar on Forensic Accounting – July 20, 2013 This was held at the ICAJ Secretariat and was facilitated by Mr. Collin A. A. Greenland, Forensic Accountant. Approximately 75 persons were in attendance.
•
Taxation Seminar – September 25, 2013 This seminar was held at the Jamaica Pegasus Hotel under the theme “Compliance in the Midst of Tax Reform”. There were approximately 329 participants.
BYE-LAWS AND HANDBOOK COMMITTEE Affiliates The matter of affiliates being allowed to vote and sit on Council continued to be discussed. Following a decision from Council, it was agreed that the Bye-Law pertaining to this matter should remain as is at this time. Website The Bye-Laws were updated and posted on the ICAJ website. The amendments approved at the 2013 Annual General Meeting have been incorporated in the document. CONTINUING PROFESSIONAL DEVELOPMENT COMMITTEE Over the period under review, the Committee endeavoured to fulfil its mandate to facilitate and promote the professional development of members. A wide range of training events were organised, including practical workshops, seminars and fora. The Committee also sought to engage members through on-line webinars and post-viewings which continue to attract an increasing number of participants. CPD Events • ACCA/ICAJ Roundtable – April 19, 2013 The 2013 Audit Roundtable themed, “Audit and Integrity: maximizing stakeholder value” was held at the Knutsford Court Hotel. •
Repeat- ICAJ/ACCA Forensic Accounting Workshop – April 27, 2013 A repeat workshop was held at the ICAJ Secretariat with facilitator, Collin Greenland. Approximately 75 persons attended.
•
Seminar on Taxation - May 8, 2013 The seminar was held at the Jamaica Pegasus Hotel with approximately 210 participants inclusive of webcast viewers.
•
Corporate Governance Seminar – May 14, 2013 The seminar was hosted under the theme, “Effective Corporate Governance in the Public Sector” at the Jamaica Conference Centre. There was no webcast and 135 persons attended at the venue.
•
IIA/ICAJ Forum - May 21, 2013 The captioned event was held in collaboration with the Institute of Internal Auditors at the Knutsford ICAJ ANNUAL REPORT 2013/2014
(left to right) Ms Juliette Brown, Executive Director, Tax, Ernst & Young; Ms. Debbie-Ann Gordon, Attorneyat-Law, Debbie-Ann Gordon & Associates; Mr Denzil Whyte, Senior Manager, Tax, KPMG; Miss Allison Peart, Chairman, Taxation Committee, ICAJ and Country Managing Partner, Ernst & Young; and Ms. Meris Haughton, Communication Director, Tax Administration Jamaica in discussion at the ICAJ’s Taxation Seminar, “Compliance in the Midst of Tax Reform”, which was held on September 25, 2013 at the Jamaica Pegasus Hotel. •
ACCA/ICAJ Seminar – October 26, 2013 The seminar which was held at the Knutsford Court Hotel under the theme: “Future of the Finance Professional and the Impact of Cyber-Crime” had 130 attendees.
•
Deferred Taxation Workshop – November 21, 23 & December 19, 2013 The Committee, in partnership with the Taxation and Accounting Standards Committees, organized three (3) small workshops on ‘Calculating and Understanding Deferred Taxation’, at the ICAJ Secretariat. These sessions each had approximately 70 attendees
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•
PAB/ICAJ Seminar – November 30, 2013 The Public Accountancy Board (PAB), in collaboration with the Committee organized a seminar themed, ‘Regulatory Mechanisms to Counter MoneyLaundering/Financing of Terrorism’ on November 30, 2013 at the Knutsford Court Hotel which was supported with 134 venue and 39 webcast participants.
•
Taxation Forum - December 10, 2013 The forum was held to inform participants of the e-Filing of Taxes and its Benefits. A total of 80 persons attended the forum which was held at the ICAJ Secretariat.
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ICAJ IFRS Workshop – February 7-8, 2014 The seminar was held at the Jamaica Conference Centre, in collaboration with the Accounting Standards Committee, under the theme “Understanding and Applying Major IFRS Changes 2013 - 2014”. There were approximately 460 participants including webcast participants.
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ICAJ/IFAC Seminar – March 18, 2014 Targetting SMPs and SMEs, the event was held at the Jamaica Conference under the theme, “Building a Profitable Business”. There were approximately 120 participants including webcast viewers.
Post Viewing of ICAJ Webinars The Committee arranged rebroadcasts of the 2013 IFRS workshop and Taxation Seminar held on September 25, during the period December 13 to 31 and on January 7 respectively. The option of making all seminars/ conferences held during the year available to members and other interested parties via rebroadcast on the ICAJ website is being explored by the Committee. Members would receive the awarded CPD credits for their participation.
also continued to engage the social media as a platform for discussions. The projects undertaken were as follows: ICAJ Writers Club The Club’s membership grew to over 70, comprising ICAJ members; students; Secretariat staff as well as members of the public. Members are required to produce at least one article per year, as well as to attend and participate in informal discussion fora. Presenters at the Writers’ Club during the year were Mr. Dennis Chung, President, ICAJ and Ms. Corine LaFont, Gleaner columnist. Two events themed, “Evening of Expression” were hosted on October 31, 2013 and February 27, 2014, where persons were encouraged to share previously written items. Writers Club Facebook Page The Committee’s Writers’ Club Facebook Page continues to be a dynamic social medium which is used to generate ideas and host discussions. The page is seen as an avenue for encouraging discourse and sharing ideas which can assist in generating articles and is located at http://www. facebook.com/IcajWritersClub. ICAJ/NIA Forum A Joint Forum was successfully hosted by the Committee in association with the National Integrity Action (NIA) on April 11, 2013 at the Knutsford Court Hotel, under the theme “Combatting Corruption – The Role of the Professional”. The forum received positive reviews and was attended by approximately 150 persons. CaPRI/ICAJ Forum The Committee hosted a Joint Forum with the Caribbean Policy Research Institute (CaPRI) on “Designing Jamaica’s Fiscal Rules” on January 23, 2014 at the ICAJ Secretariat. This involved the presentation of the Report, “Designing a Fiscal Rule for Jamaica” by Ms. Altricia Dawson, Lead Researcher. Dr. Nigel Clarke spoke on the topic, “Entrench the Fiscal Rule” while Dr. Christopher Tufton, Co-Executive Director, CaPRI moderated the event which received wide publicity across the media.
Filing of 2014 CPD Return A new CPD declaration form was published on the website for members’ access. Members are still able to utilize the online CPD facility which forms part of the Members’ database to file their annual returns. CURRENT AFFAIRS COMMITTEE During the period under review, the Current Affairs Committee continued its efforts to enhance the influence of the Institute, through its contributions and participation in national issues. Efforts were also made to encourage the writing and publication of articles and commentaries by members on current affairs issues. The Committee Page 15
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3. The aforementioned revised Bye-Law as approved at the Annual General Meeting on 27 July, 2011 provided for the requirements for CPD to be specified in the CPD Guidelines which provide inter alia for each member to make an annual return of the CPD hours accumulated during the year. The Disciplinary Committee concluded that since the revised Bye-Law 37K was not published as a part of the Institute’s Bye-Laws, then it had no standing and members could not be held to its requirements, including the requirements of the CPD guidelines, and in particular the requirement to make an annual return and accordingly the matter was dismissed.
ICAJ President, Dennis Chung delivers the Welcome at the CaPRI/ICAJ Forum, “Designing Jamaica’s Fiscal Rules” while Dr Christopher Tufton, Co-Executive Director, Caribbean Policy Research Institute listens keenly. The event which was held on January 23, 2014 at the ICAJ Secretariat. ICAJ Business Conference The Committee, in collaboration with the Continuing Professional Development Committee, commenced plans for the staging of the inaugural annual ICAJ Business Conference themed, “Going For Growth”, which is scheduled to be held on Saturday, November 8, 2014 at the Jamaica Conference Centre. The Conference seeks to address issues unique to the local, regional and global business environment and to promote strategies for effectively growing businesses.
The Committee notes that during April 2014 the Bye-Laws were updated to reflect the amendment to Bye-Law 37K approved at the Annual General Meeting on 27 July, 2011 and that the revised requirements of Bye-Law 37K now apply to members. FUTURE OF THE PROFESSION COMMITTEE In fulfilling its mandate, the Committee continued to pursue programmes aimed at advancing the profession in Jamaica during the past year. In order to define its agenda for the short to medium term a forum titled, “Future of the Accountancy Profession” was hosted at the ICAJ Secretariat on January 28, 2014. Approximately 60 persons were in attendance and the topics discussed included the establishment of variant law and tax papers and the introduction of specialist practising certificates for areas such as business valuation, taxation and insolvency. The forum also provided the opportunity to expand the membership representation on the Committee.
DISCIPLINARY COMMITTEE As reported last year the Disciplinary Committee had received reports from the Investigations Committee regarding numerous members who had not filed mandatory Continuing Professional Development returns for the calendar year 2011. The Disciplinary Committee considered the matter and concluded in August 2013 as follows: 1. The Bye-Laws of the Institute as published on its website did not include the revised Bye-Law 37K which was approved at the Annual General Meeting on 27 July, 2011. 2. The Bye-Law 37K published on the website required members to undertake CPD but did not provide for members to make returns to the Institute accounting for their CPD. ICAJ ANNUAL REPORT 2013/2014
Participants in rapt attention at the Future of the Profession Forum which was held on January 28, 2014 at the ICAJ Secretariat.
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Following the forum the Committee focused on these areas and provided significant input on the Bankruptcy and Insolvency Bill currently under consideration by the Joint Select Committee of Parliament. We have begun dialogue with the Public Accountancy Board to update the regulations surrounding the provision of non accountancy but related services to the public. We are proposing a revised regulatory framework which will (i) create a framework for accreditation and applicable continuing professional education requirement regime and (ii) the need for persons providing specialist services to be in possession of the relevant specialist practising certificate. We have resumed discussions with the University of the West Indies, Mona Campus and the ACCA for the introduction of variant papers in Jamaican law and taxation exams as an option to the current UK law and tax exams taken by students as part of ICAJ/ACCA joint examination scheme. The current discussions are probably a little less ambitious but hopefully more achievable than previous attempts which included ICAJ as the potential examining body. We are seeking to leverage UWI’s education infrastructure, examination setting and tertiary accreditation to meet ACCA’s requirement for variant papers. We live in a dynamic environment and as a profession we continue to meet our broader social and community obligations. This is evident in the level of contribution we are making to the debate on the Bankruptcy and Insolvency Bill currently under consideration by the Joint Select Committee. This potentially far reaching legislation and the regulations which will bring it into effect have received significant input from members of the Committee who have attended many of the sessions including the clause by clause review. We also provided input to our regional colleagues at the Institute of Chartered Accountants of the Caribbean on the proposed regulatory framework for professional services in the Caribbean. We have made the case that a member of the public who procures accountancy services, a regulated profession, should not be exposed to jurisdictional complications where they wish to seek redress from the individual or firm who is supplying the service. Through our Cooperative Agreement with UWI, we continued to work on initiatives, including the launch of an internship programme. Two firms, Ernst and Young and PricewaterhouseCoopers, have provided a work experience programme whereby UWI Accounting students spend three months of their study gaining work experience in the audit environment. Page 17
Much of the work we are doing is by its nature medium term, in terms of time for completion, but is foundational to the long-term success of the ICAJ and the public image of the profession. In closing I wish to thank all of the members of the Committee, the staff of the Secretariat and the members of Council for their support over the past year. LEGISLATION REVIEW COMMITTEE Last year, the Committee continued to pursue matters pertaining to Company Law as well as the certification of documents by Chartered Accountants. Certification of Documents by Chartered Accountants The Committee has renewed the initiative with regard to Chartered Accountants being authorized to certify certain public documents. A letter was submitted to the Solicitor General on the matter. The Companies Act, 2004 Recommendations for amendments to the Companies Act regarding conflicts between the Companies Act, IFRS and other regulations are to be revisited. MEMBERSHIP COMMITTEE During the year, the Committee focussed on formulating strategies to increase membership and ensuring that the benefits of membership are effectively communicated. We developed a brochure, “The Benefits of Membership” in our efforts to successfully convert the large number of graduates as well as other eligible individuals to membership. As at March 31, 2014, there were 1,225 members registered, representing a net increase of 3% over the previous period. Sixty four (64) new members were admitted while we suffered attrition of 34 members due to death, resignation and suspension of membership. The Committee will be introducing new initiatives in 2014, in an effort to increase the number of new applicants annually as well as to reduce the time that persons take to apply after meeting the requirements for membership. Continued efforts will be made to sensitise employers about the value of ICAJ membership and employing persons with the Chartered Accountant (CA) designation. Efforts are also being made to reduce the high number of deregistered members annually and to increase the number of new members admitted. Strategic Retreat The Committee held a Strategic Retreat with the objective of aligning the Committee’s plans with the ICAJ’s strategic goals and objectives for the next few years. One of the main objectives arising from the retreat is to increase the number of new members by simplifying the membership admission process. Consideration is also being given to ICAJ ANNUAL REPORT 2013/2014
MEMBERSHIP STATISTICS
offering incentives to encourage qualified persons who are currently not ICAJ members to become members. Membership Recruitment Drive The Committee hosted cocktail receptions with students from the UWI MSc Accounting programme as well as graduates from the CPA and ACCA programmes aimed at introducing the benefits of becoming members of the Institute to qualified persons. Members in Retirement The Committee plans to organize a series of events in honour of retirees to re-establish their relationship with the ICAJ. Members Welfare Fund The finalization of tax exempt status for the fund is still pending. Members have been encouraged to donate to the fund using the ICAJ website and other means.
PUBLIC RELATIONS AND MARKETING COMMITTEE During the past year, the Committee strengthened its role as the Institute’s public relations and marketing arm. A plethora of activities were pursued and new strategies formulated to enhance the Institute’s profile among its publics including members, students and other stakeholders. The Committee extends its appreciation to our stakeholders who supported all the Institute’s programmes and activities during the year and expresses gratitude to the many organisations and companies that provided sponsorship for our events, charities and publications. The achievements of the Public Relations and Marketing Committee would not have been realised without your support and commitment to our efforts. Rebranding of Committee The Committee was rebranded and renamed Public Relations and Marketing Committee. The Resolutions for the name change and for a revision of the Committee’s Terms of Reference, were adopted at the 2013 Annual General Meeting. The amendments were made to reflect the expanded focus and objectives of the Committee and the Institute.
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Annual Awards Banquet The Annual Awards Banquet was held on December 5, 2013 at the Jamaica Pegasus Hotel in Kingston. The major highlight of the evening was the presentation of the 2013 ICAJ Distinguished Member Award to Mr. Everton McDonald, ICAJ Past President and former Managing Partner and Territory Senior Partner at PricewaterhouseCoopers. Tributes to Mr. McDonald were made by Mr. Colin Maxwell, Territory Senior Partner, PwC, Ms Brenda Lee Tang, Head of ACCA Caribbean and Mr. Vivian Palmer, Past President, Calabar Old Boys’ Association, Toronto Chapter. We also acknowledged the contributions of 15 retired members and recognized 71 new members. The event was emceed by ICAJ Past President, Mr. Leighton McKnight while entertainment was provided by Mr. Dimario McDowell and Friends. Over 400 persons were in attendance. Thanks to the support received from our sponsors, PricewaterhouseCoopers, Association of Chartered Certified Accountants (ACCA), GraceKennedy Ltd., Jamaica National Building Society, Jamaica Broilers Group, Chase Fund, Mair Russell Grant Thornton, and contributing sponsors, Half Moon, A RockResort, Sunset Beach, Courtleigh Hotel and Suites, Dolphin Cove Ltd., and Pioneer Manufacturing Ltd.
and 64 Professional graduates were honoured. Special awards and mentions were made to students for their outstanding achievements. The Guest Speaker was Dr. Godfrey McAllister, Supreme Court Mediator, Dispute Resolution Foundation. Entertainment was provided by Miss Nickette Morgan, 2012 JCDC gospel finalist and graduands. Membership and Social Outreach The ICAJ Toastmasters Club and ICAJ Writers Club continue to provide a stimulating environment conducive to growth and development as members and students hone their public speaking, writing and leadership skills in a relaxed setting. Both groups have participated in cross clubbing activities to maximise the synergies present in both clubs. The ICAJ Toastmasters Club ended its first year and celebrated the achievement of President’s Distinguished Club designation. The Club continues to grow as the members progress. Currently the Club celebrates the following member achievements: 5 Competent Communicators 4 Competent Leaders 2 Advanced Leader Bronze 1 Advanced Communicator Bronze 1 Advanced Communicator Silver Lyme The Lyme was held on November 8, 2013 at the ICAJ Secretariat. Approximately 130 persons including members, students, their guests and staff attended the event. Patrons fellowshipped, played games and participated in a karaoke competition.
ICAJ members enjoying the ICAJ Annual Awards Banquet held on December 5, 2013 at the Jamaica Pegasus Hotel. ICAJ’s 49th Anniversary Church Services The Institute’s 49th Anniversary was marked by Church Services in Kingston at the Bethel Baptist Church on January 12, 2014 and at the Trumpet Call Ministries International in Montego Bay on January 26, 2014. Both Services were followed by a brunch with more than 65 members, students and family members in attendance at each event.
Community Outreach Activities The Outreach Sub-Committee hosted a Benefit play, “Jamaica Sweet” at the Green Gables Theatre on February 16, 2014 in aid of its programmes at the Sunbeam Children’s Home (for boys) and the Elsie Bemand Home for Girls. The Outreach Sub-Committee collaborated with the ICAJ Toastmasters Club in hosting a Christmas Treat for the boys at the Sunbeam Children’s Home on December 14, 2013. We are also grateful to ICAJ member, Mr Wilfred McKenley for providing auditing services to Sunbeam enabling them to now qualify for exemptions as a charity.
ICAJ/ACCA Joint Graduation Ceremony For the first time, ICAJ and ACCA hosted a joint graduation ceremony to honour graduates of the FIA/CAT and ACCA Professional programmes combined, on October 26, 2013 at the Jamaica Pegasus Hotel. A total of 15 CAT Page 19
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Publications Our key channels for the dissemination of the Institute’s programmes and activities remained the print and electronic media along with e-blasts, ICAJ website and the social media, Facebook and Twitter. A Supplement was published in the Observer on December 23, 2013, featuring the 2013 ICAJ Distinguished Member Awardee, Mr. Everton McDonald. Additionally, a new brochure, “Benefits of Membership” and promotional banner were produced. ICAJ Logo As ICAJ rebrands, the Committee sought to have a logo designed for the Institute which is simple, modern yet impactful. Brand rules will be developed for the treatment of the logo and for the standardization of the use of the logo for website, banners, letterheads and varied media. Liaison Officer for Montego Bay ICAJ member, Mr. Horace Gyles, was officially appointed as the liaison officer in the western region to coordinate the Institute’s social and training activities for Montego Bay and its environs. Institute of Chartered Accountants of the Caribbean An ICAC Lifetime Achievement Award has been proposed by the ICAC Regional Publicity Committee which is the responsibility of the ICAJ, through its Public Relations and Marketing Committee. The Award has been proposed to recognise members of the national institutes that comprise the Institute of Chartered Accountants of the Caribbean. This Award will be presented to members who have contributed significantly through their achievements and/ or contribution to the development and prestige of the Accountancy profession within their respective territories and regionally. The awardee will be honoured at the President’s Dinner at the ICAC’s Annual Conference. As a member institute, ICAJ also continued to provide timely reports on its activities and developments for the ICAC’s annual report and newsletters. Strategic Plan Following the ICAJ’s Strategic Plan retreat last April, the Committee formulated a work plan aimed at achieving specific milestone targets within a realistic timeframe in order to fulfill the ICAJ’s mandate. A range of activities were suggested under the Strategic Plan including raising the profile of the Institute and members, creating promotional programmes around ICAJ events and developing a public education campaign on being a Chartered Accountant and the benefits of membership.
PUBLIC SECTOR COMMITTEE As a Committee, we continued to promote the adoption of international standards for better financial management systems within the public sector. Programmes were undertaken over the period 2013/14 as follows: IPSAS/Accrual Accounting The Institute, through its Public Sector Committee, continued to support the Ministry of Finance and Planning’s (MOFP) initiative towards adoption of accrual accounting and the use of the International Public Sector Accounting Standards (IPSAS) in Jamaica. This included: - participation in a seminar hosted by the World Bank entitled, “Jamaica: Rationale for Implementing International Public Sector Accounting Standards (IPSAS)” on January 16, 2014, at the Jamaica Pegasus Hotel. The objective was to sensitize senior managers in the Government on the topic. - participation in a seminar hosted by the Institute of Chartered Accountants of Trinidad and Tobago in December 2013 to sensitize its constituents about the implications of adopting accrual accounting. ICAJ supports the MOFP’s decision to adopt accrual accounting on a phased. The Committee reviewed the draft Work Plan prepared by the Ministry and made recommendations. Preparatory work is underway for the formalization of a cash-basis system of accounting (phase 1) which is scheduled to begin on April 1, 2015. Fiscal Rule The Institute provided assistance to MOFP in its effort to develop a Fiscal Rule for Public Private Partnerships. This involved a review of IPSAS 32 (Service Concession Arrangements: Grantor) and facilitated negotiations between the Ministry and the International Monetary Fund. Government Accounting Certification The Institute proposed and gained support from the Hon. Minister of Finance and Planning on the need to pursue Certification in Government Accounting. A sub-committee of the PSC has since been formed to collaboration with ICAJ, MIND, the universities and the Ministry of Finance and Planning on this matter. IFAC The Committee reviewed and commented on Exposure Drafts (ED) and other Consultation Papers as follows: - Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities: Presentation in General Purpose Financial Reports
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- IPSASB Strategy Consultation for 2015 (Comments due July 2014). Internship Programme The Committee, in collaboration with the MOFP and selected private and public sector bodies, is organizing an Internship Programme for Central Government Auditors. This will be implemented in the latter part of 2014. RESOURCE CENTRE AND WEBSITE COMMITTEE Over the period, the Committee continued to effectively manage the development of the ICAJ website and Resource Centre to enhance the services offered to members, students and other stakeholders. Terms of Reference The terms of reference of the Committee was amended to reflect its mandate to develop the Resource Centre and website. The Committee also proposed a name change from ‘Library and Website Development Committee’ to ‘Resource Centre and Website Committee.’ Both the amended terms of reference and the name change were approved at the Institute’s 2013 Annual General Meeting. Website The Committee explored the construction of a new site with improved security features as well as the ability to reach a wider audience through compatibility with smartphones, smart televisions, tablets and other devices. This would enhance the site’s income generation capabilities. Income Generation The Committee noted that an increasing number of organizations are using ICAJ’s website and emailing facility to advertise job vacancies and promote their services. With more structure and promotion, the website can become a significant income earner for the Institute. Letters are being sent to companies informing them of advertising opportunities through ICAJ’s website/emailing facility. Social Media The Committee has continued to monitor the Institute’s social media accounts on Facebook and Twitter, which have been used as promotional and information tools. Digitization As the Committee focused on website development, the project to digitize the Institute’s documents was put on hold. However, an inventory of the items to be digitized in each department at the Secretariat was undertaken. George S. Willie Resource Centre The Resource Centre currently provides Internet access and publications in accounting, auditing and taxation for Page 21
research purposes. During the coming year, the Committee will be looking at maximizing the use of the facility for income generation through computer-based exams, and training such as short courses in accounting software, especially for those starting businesses or careers. STUDENT AFFAIRS COMMITTEE ICAJ/ACCA Joint Scheme Examinations Over the period April 1, 2013 – March 31, 2014, students’ performances in the joint scheme examinations were as follows: • June 2013 sittings: 7 students completed the Certified Accounting Technician (CAT) programme while 27 completed the ICAJ/ACCA professional examinations. •
December 2013 sittings: 9 students completed the Foundation in Accountancy (FIA) examinations, while 42 students completed the professional examinations. This was the first batch of graduates under the FIA/ CAT programme. The FIA consists of a suite of awards including certificates, diplomas and a revised Certified Accounting Technician (CAT) qualification.
Graduation Ceremony For the first time, ICAJ and ACCA hosted a joint graduation ceremony for CAT and Professional accountants combined. The event was held on October 26, 2013 at the Jamaica Pegasus Hotel in recognition of the 16 CAT and 64 ACCA students completing the ACCA examinations in the June and December 2012 and the June 2013 exam diets. The keynote speaker Dr. Godfrey E. McAllister, DTM, J.P., Supreme Court Mediator of the Dispute Resolution Foundation, delivered an address on the role of the accountancy profession globally which was well received by the audience. The following awards were presented to the students with outstanding performances in the ACCA and CAT exams: 1. ICAJ Knowledge Level Award - the student attaining the highest average mark in that level , was presented to Alexander Oberheim and Danielle Hall, for the December 2012 and June 2013 exam diets, respectively; 2. ICAJ CAT Award - This award was presented to the student completing the CAT programme in 3 sittings over a period of two years. Shane Arnold was the recipient for the June 2012 exam diet; 3. Sushil Jain Award – presented to the youngest graduates to complete the CAT and ACCA professional exams. Shane Arnold and Kurt Hamil received the award for their performance in the June 2012 and December 2012 examination diets, respectively; 4. Student Nikita Francis received the Joslyn E. Lowrie ICAJ ANNUAL REPORT 2013/2014
AWARDEES 1. CAT AWARD: ICAJ President, Mr. Dennis Chung (left) presents the CAT Award to Mr. Shane Arnold of the CAT June 2012 examination diet for attaining the highest overall mark in that diet. 2. FUNDAMENTAL LEVEL AWARD: Miss Vintoria Bernard (right) ICAJ Immediate Past President and Chairman of the Student Affairs Committee, presents the Fundamental Level Award (Knowledge Module) to Ms. Alexandra Oberheim of the ACCA December 2012 examination diet for obtaining the highest score in that diet. 3. JOSLYN E. LOWRIE AWARD: Sydney Lowrie, presents the Joslyn E. Lowrie Award to Nikita Francis. This Award is presented to the candidate who obtains the highest mark in Paper P1 – Professional Accountant, on first attempt. 4. SUSHIL JAIN AWARD: Alok Jain (right) presents the Sushil Jain Award to Kurt Hamil. The Sushil Jain Award is presented to the youngest ACCA graduate who completes the final stage of the ICAJ/ ACCA Examinations on the first attempt each year.
Award – presented to the student who attained the highest mark (not less than 70 per cent) in Paper P1 – Governance, Risk and Ethics, on the first attempt. Ms Francis achieved this during the December 2012 exam diet. The event was well attended by ICAJ and ACCA representatives, tutors, university faculty representatives and guests of the graduates. Entertainment was provided by former JCDC gospel song competition finalist and ICAJ member, Nickette Morgan; and a poem, “A.C.C.A” was read by ACCA Professional December 2012 graduate, Camille James. Orientation/Rap/Technical Sessions Orientation sessions were held in Mandeville and Ocho Rios on July 13 and 27, 2013, respectively. The sessions outlined the role and structure of ICAJ, our partnership with ACCA, the code of ethics of the accountancy professionand examination preparation. The presentations were done by members of the Committee. ICAJ, in association with ACCA, hosted a Revision Session on May 17, 2013. Facilitated by ACCA Tutor, Nagin Lad, the session focused on examination
techniques for papers F5 – Performance Management and F7 – Financial Reporting. This was conducted to assist students in applying conceptual framework in Financial Reporting and to demonstrate audit and assurance practices. The ICAJ and ACCA will continue to host future sessions as a means to improve the students’ pass rates on challenging papers of the ACCA Qualification. Career Expositions ICAJ participated in career expositions to inform students at the tertiary and secondary levels of career opportunities being offered through the Accountancy profession and the benefits of ICAJ membership. The expositions in which the ICAJ participated included: UWI Career Expo held on February 27-28, 2014; NCU Expo held on March 21, 2014; Wolmer’s Boys’ School Career Expo which was held on March 21, 2014; and Morant Bay High School Career Expo which was also held on March 21, 2014.
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ICAJ/ACCA Recruitment Drive ICAJ and ACCA have collaborated in hosting a recruitment drive which commenced in February 2014, to enhance the number of registrants for the ACCA/FIA qualifications in Jamaica. Presentations were made by ICAJ and ACCA members at several high schools, universities and community colleges across the island informing students of the benefits of pursing the professional qualifications. Bursary Awards An ICAJ bursary award of $100,000 was presented to student Channay Mundle from the University of the West Indies while two students, Felecia Ricketts and Okeeno Grant from the University of Technology were awarded bursaries of $80,000 each for the academic year 2013/14.
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TAXATION COMMITTEE In keeping with its mandate, during the period, the Committee monitored developments relating to taxation and organized sessions to facilitate discussions on these issues. Taxation Sessions The following sessions were organized: • Annual post budget seminar held on May 8, 2013 at the Jamaica Pegasus Hotel to consider new tax measures and their impact from the 2013/2014 national budget. A total of 200 persons participated. •
Seminar, “Compliance in the Midst of Tax Reform” hosted on September 25, 2013 at the Jamaica Pegasus Hotel to consider matters related to the Administrative Changes in the Revenue Services; Legal & Accounting Perspectives on Changes to Revenue & Tax Administration Acts; Simplifying Recurring Withholding Tax Issues; and Examining GCT Measures. Approximately 329 persons attended the event, including 229 at the venue and 97 webcast participants.
Jamaica (TAJ). The Committee plans to start making presentations to schools during the 4th quarter of 2014. Consultation Members of the Committee attended a TAJ led session to discuss the Single Tax Payment Form for self-employed persons before its introduction at the end of 2013. The Committee was involved in consultation sessions with the Private Sector Association of Jamaica (PSOJ), Micro, Small and Medium-Sized Enterprises (MSMEs) Alliance and the International Finance Corporation (IFC) on a new regime for taxing small and medium sized enterprises. Members of the Committee also attended a Ministry of Finance (MoF) briefing session on The New Tax Incentive Reform Package. The Committee continues to consult with interest groups, multilateral agencies as well as the Tax Department on the drafting of new legislation, amendments to existing legislation as well as other policy matters. Strengthening Relationship with Public Bodies Representatives from the NIS and NHT have been appointed to serve on the Committee to respond to issues as well as to act as a liaison between the ICAJ and the public bodies which they represent.
Participants doing assignments at one of the workshops on ‘Calculating and Understanding Deferred Taxation’ which was held at the ICAJ Secretariat. •
Three workshops were held on “Understanding and Calculating Deferred Taxation” on November 21 and 23, and on December 19, 2013 at the ICAJ Secretariat. The sessions each had approximately 70 attendees.
•
A Taxation Forum was hosted on December 10, 2013 at the ICAJ Secretariat, entitled, “E-Filing and its Benefits”. A total of 80 persons attended the Forum.
Member Development A new feature was added to the monthly meetings of the Committee comprising a 15 minute segment designed to highlight the skills and knowledge of members in various areas that do not necessarily have to do with Taxation. Members were asked to present on topics such as the Kingston Re-development/Renewal programme, charitable organisations, with emphasis on new measures, and the GCT Act. Acknowledgements Thanks to the ICAJ Secretariat staff and Committee members who assisted with presentations at seminars for their contributions to the affairs of the Committee during the period.
Outreach Initiative The Committee continued plans to embark upon an outreach programme to provide Tax Education for high school students in the 4th, 5th and 6th forms. Endorsements have been received from the Minister of Education and the Commissioner of Tax Administration ICAJ ANNUAL REPORT 2013/2014
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List of Committees for the Year 2013 – 2014 ACCOUNTING STANDARDS Alok Jain (Chairman) Winston Robinson (Vice-Chairman) Dennis Brown Donald Brown Archibald Campbell Yvonne Clarke (Mrs) Dennis Cohen Sixto Coy Damion Dodd Linval Freeman Andrew Kerr Cynthia Lawrence (Miss) Linroy Marshall Leighton McKnight Andrew Messado Recardo Nathan Garfield Reece Ann Marie Rhoden (Mrs) Wilbert Spence Allison Wynter (Miss) AUDIT PRACTICE Nigel Chambers (Chairman) Audley Gordon (Vice-Chairman) Laurene Augier (Mrs) Dennis Chung Sixto Coy Olive Duhaney-Williams (Mrs) Raphael Gordon C Patricia Hayle (Mrs) Jennifer Hibbert (Mrs) Orville Lewis Leighton McKnight Courtney Miller Pamela Monroe Ellis (Mrs) Aspinal Pearce Nicola Reid (Miss) George Roper Richard Rose Ashburn Simon Paula Turner (Miss) BYE-LAWS & HANDBOOK Archibald Campbell (Chairman) Sophia Beckford (Miss) Karen Bennett (Miss) Donald Brown Effie Crooks (Miss) Kenneth Lewis Audrey Malcolm (Miss) Leighton McKnight CONTINUING PROFESSIONAL DEVELOPMENT Eric Scott (Chairman) Rene Allen-Casey (Mrs.) Carolyn Bell-Wisdom (Mrs) Vintoria Bernard (Miss) Dennis Brown Lewis Brown Carlene Chin (Ms) Dennis Chung Everton Ferguson Alvin Henry Gladstone Johnson Clayton McEwan Raynold McFarlane Noel Morgan
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Carey Peterkin Richard Ranger Jacqueline Scott-Crossley (Mrs) Joan Sicard (Mrs) Glossie Stone (Mrs.) Amilca Thame-Rodney (Mrs) Kimolee Thomas-Spence (Mrs) CURRENT AFFAIRS Carlton Barclay (Chairman) Geoffrey Messado (Vice-Chairman) Wilfred Baghaloo Dennis Cohen Raphael Gordon C Patricia Hayle (Mrs) Suzette Hemmings-Davidson (Mrs) Alvin Henry Earl Jarrett Raquel Johnson (Ms) L Garth Kiddoe Linroy Marshall Gordon Webster Trisha Williams (Mrs) DISCIPLINARY Stephen Holland (Chairman) William Hines (Vice-Chairman) Michelle Chevannes (Ms) Audrey Chin (Mrs) Caryl Fenton (Ms) Everton McDonald Geoffrey Messado Philmore Ogle FINANCE Dennis Brown (Chairman) Dennis Chung Bruce Scott Elaine Robinson (Mrs) FUTURE OF THE PROFESSION Raymond Campbell (Chairman) Vintoria Bernard (Miss) Angela Bisasor (Mrs) Dennis Brown Archibald Campbell Caydion Campbell Dennis Chung Trevor Francis Elizabeth Hartley (Ms) Alok Jain L Garth Kiddoe Oswald Lee Marlene McIntosh (Mrs) Allison Peart (Miss) Karen Ragoobirsingh (Mrs) Ann Marie Rhoden (Mrs) Elaine Robinson (Mrs) Bruce Scott Eric Scott Jacqueline Scott-Crossley [Mrs] Prunella Vassell (Miss) Taneka Whyte (Ms]
INVESTIGATIONS Pamela Monroe Ellis (Mrs) (Chairman) Carl Domville (Vice-Chairman) Judith Cooper-Bachelor (Mrs) Michele Dunkley-White (Mrs) Judy Hylton (Mrs) Emile Lafayette Aspinal Pearce Maxim Rochester LEGISLATION REVIEW Sixto Coy (Chairman) Dennis Brown Sharon Donaldson-Levine (Mrs) Audley Gordon Raphael Gordon Janette Lodge (Mrs) Angela Pennant (Mrs) Donald Reynolds Kenneth Wilson MEMBERSHIP Elaine Robinson (Mrs) (Chairman) Elaine Walters (Miss) (Vice-Chairman) Bruce Scott Wilfred Bailey Sandra Barnett (Mrs) Peta-Gaye Bartley (Miss) Atasha Bernard (Miss) Dennis Chung Carl Domville Raphael Gordon Leighton McKnight Marsha Melhado-Beersingh (Mrs) Andrea Messam (Mrs) Ouida Nesbeth-Dunn (Mrs) Prunella Vassell (Miss) Kenneth Wilson PUBLIC RELATIONS & MARKETING Marlene McIntosh (Ms) (Chairman) Janet Plummer (Mrs) (Vice-Chairman) Vintoria Bernard (Miss) Nerine Boothe-Brown (Mrs) Diedre Codner-Campbell (Mrs) Patrick Galbraith Jasmine Gibson (Ms) Steadman Pitterson Nackeisha Richards (Ms) Kareen Thompson (Miss) Roxiana Tyrell (Mrs) Prunella Vassell (Miss)
Hugh Jones Lorraine King (Mrs) Hillet Martin (Ms) Jason McPherson Karlene McRae (Mrs) Carlene O’Connor (Miss) Monica O’Meally (Miss) Nicola Reid (Miss) Judith Robinson (Dr) Richard Rose (Non-Member) Elaine Walters (Miss} RESOURCE CENTRE & WEBSITE Elizabeth McGregor (Mrs) (Chairman) Muriel Bailey (Mrs) (Vice-Chairman) Jason McPherson Elaine Robinson (Mrs) Blondell Wilson-Henry (Mrs) Adrian Young STUDENT AFFAIRS Vintoria Bernard (Miss) (Chairman) Marlene McIntosh (Ms) (Vice- Chairman) Dwight Bailey Evaslie Comrie (Ms) Effie Crooks (Miss) Martin Gooden Joshua Haye Fiona Hyman (Ms) Nyssa Johnson (Ms) Errol Jones Sheryl Lemard (Mrs) Keith Mitchell Damion Reid Nackeisha Richards (Ms) Andrew Thomas Roxiana Tyrell (Mrs) Prunella Vassell (Miss) Hyacinth Williams (Ms)
TAXATION Allison Peart (Miss) (Chairman) Denzil Whyte (Vice-Chairman) Vintoria Bernard (Miss) Patricia Bowen (Miss) Juliette Brown (Miss) Diedre Codner-Campbell (Mrs) Brian Denning Everald Dewar Nigel Dixon Clivia Green (Miss) Elizabeth Hartley (Ms) PUBLIC SECTOR Millicent Hughes (Ms) Ann Marie Rhoden (Mrs) (Chairman) Lois Hyde (Ms) Vintoria Bernard (Miss) Eric Mardner Dennis Brown Ethlyn Norton-Coke (Mrs) Archibald Campbell Kimberley Nugent McFarlane (Mrs.) Dennis Chung Jacqueline Murray (Ms) Ann Marie Cummings (Mrs) Charles O’Connor Berome Edwards Janet Plummer (Mrs.) Tricia Elliot (Mrs) Georgia Silvera-Finnikin (Mrs.) Pamela Monroe Ellis (Mrs) Donna Thompson (Miss) Leah Francis (Ms) Prunella Vassell (Miss) Jason Gordon Norman Washington Marcia Hamilton (Miss) Geta Wright-Jarrett (Mrs.) Millicent Hughes (Ms) Carlene Wynter (Mrs.) Carol Jones (Miss) Adrian Young
ICAJ ANNUAL REPORT 2013/2014
COUNCIL MEMBERS
!"#$%&,
ICAJ ANNUAL REPORT 2013/2014
Page 26
(Front row, left to right) Elaine Robinson, Honorary Secretary, Chairman, Membership Committee; Dennis Chung, President; Bruce Scott, Vice President; Dennis Brown, Honorary Treasurer. (Behind, left to right) Allison Peart, Chairman, Taxation Committee; Alok Jain, Chairman, Accounting Standards Committee; Vintoria Bernard, Immediate Past President, Chairman, Student Affairs Committee; Raymond Campbell, Chairman, Future of the Profession Committee; Nigel Chambers, Chairman, Audit Practice Committee; Archibald Campbell, Chairman, Bye-Laws and Handbook Committee; Sixto Coy, Chairman, Legislation Review Committee; Marlene McIntosh, Chairman, Public Relations and Marketing Committee; Eric Scott, Chairman, Continuing Professional Development Committee; Ann Marie Rhoden, Chairman, Public Sector Committee.
Page 27
ICAJ ANNUAL REPORT 2013/2014
SECRETARIAT SUPPORT TEAM (Left to right) Rosemarie Heaven (Executive Director); Angela Reid-Gordon (Public Relations Officer); Lorrine Whyte ( Office Attendant); Victor Hall (Bearer/ Caretaker); Kenrick Reid (Accounting Officer); Nordia Collins ( Services Officer– Students); Sophia Dorman (Accountant); Stacy-Ann Morris (Senior Services Officer); Raquel Smith (Receptionist); Oshane Frazer (Office Assistant).
ICAJ ANNUAL REPORT 2013/2014 !"#$%'/
Page 28
FINANCIAL HIGHLIGHTS AND OUTLOOK As a professional membership organisation, the Institute represents a common voice for its members and the profession. Its business is organized to advance the professional development of its members, students and publics. As an organisation, it is also committed to promote creative thought leadership, encourage national development and the advancement of positive changes. The Institute’s vision is to have a net positive impact on the economy and society. It recognizes that a successful business is a sustainable business. TABLE 1
The 2014 financial year was a very challenging one and in response it has implemented a strategy to grow and diversify its revenue base amidst the spiralling effects of the harsh economic climate. The impact on our members and students has continued to flow through to the Institute. Notwithstanding, we have managed to enhance our financial performance and achieved better than budgeted targets in some areas. The success of the activities outlined in the preceding pages and the results disclosed in the financial statements set out in the following pages are evidence of this achievement. The financial results of the Institute show a surplus for the year (before tax) of $2.4 million. The outcome exceeded our expectations as the surplus was 36% more than the previous year (Table 1) and 289% more than budgeted (Table 3). We also wish to highlight this milestone increase in surplus as over the last five years, we have been experiencing a decline in the level of surplus (Table 1).
Page 29
FIVE YEAR STATISTICS 2013/2014
2012/2013
2011/2012
2010/2011
2009/2010
$’000
$’000
$’000
$’000
$’000
20,277 129
17,551 70
16,954 83
15,406 122
14,841 261
10,831
10,814
11,537
12,224
12,619
11,031 740 2,499 2,811 48,318
5,918 873 2,841 2,696 40,763
6,982 899 2,455 1,050 39,960
3,264 1,472 2,800 1,398 36,686
5,571 4,478 3,280 936 41,986
20,610
18,355
16,479
14,122
15,110
20,982
18,642
17,656
16,273
15,870
2,020
2,104
600
482
479
2,290 45,902
(114) 38,987
1,251 35,986
1,133 32,010
987 32,446
2,416
1,776
3,974
4,676
9,540
(15)
(9)
(112)
7
(671)
Surplus for the year before transfer
2,401
1,767
3,862
4,683
8,869
Interest transferred to designated funds (net of tax)
(241)
(348)
(470)
(670)
(2,344)
Surplus for the year
2,160
1,419
3,392
4,013
6,525
REVENUE Members’ subscription and admission fees Graduates’ subscription Students’ subscription and registration fees Surplus from self-financing activities Interest and dividends Subvention for students Miscellaneous
EXPENSES Salaries and staff costs Office operating expenses Mortgage loan and bank interest Depreciation
Surplus for the year before taxation Income tax (expense)/credit
ICAJ ANNUAL REPORT 2013/2014
FINANCIAL HIGHLIGHTS AND OUTLOOK
Factors contributing to the overall success include: •
Surplus from self-financing activities - 86% increase over prior year While we continue to receive support from our members and students, we are grateful for the increased support from non-members who demonstrated worthy interest in the opportunities offered for professional development, through our seminars, workshops and presentations. It is our strategy to respond to the concerns of our stakeholders and to continue to tailor presentations to address their needs. Meeting room rental has been a recent addition to our revenue generation streams and this source yielded laudable success during the year. We are, however, positioning ourselves to complete the upper floor of the building in order to further enhance this revenue stream in the year ahead.
•
Office operating expenses and staff costs - 3% reduction, compared with budget This resulted from the application of strong cost-containment measures, while other planned expenditures were deferred.
•
Bank and short-term deposits - 16% increase over prior year 60% of the total deposits pertain to designated funds.
•
Membership dues and other receivables - 56% increase over prior year Collections during the year have been slow and this has impacted our cash flow. While we are aware of the economic pressures, we implore members to settle accounts in a timely manner so that the Institute can attain its goals.
TABLE 2
Other Relevant Financial Data 2013/2014 $’000
2012/2013 $’000
2011/2012 $’000
2010/2011 $’000
2009/2010 $’000
27,330
23,440
22,135
24,768
27,617
6,621
4,245
6,822
8,290
3,921
Total loan balances
17,680
8,609
8,879
9,396
9,815
Accumulated surplus
17,176
15,137
13,861
18,822
17,809
Percentage increase/(decrease) in cash resources over prior year
16.6%
5.9%
(10.6%)
(10.0%)
(21.3%)
Percentage increase/(decrease) in membership dues and other receivables over prior year
56.0%
(37.8%)
(17.7%)
111.4%
(8.9%)
Percentage increase/(decrease) in accumulated surplus over prior year
13.5%
9.2%
(26.3%)
5.7%
9.4%
Bank & short term deposits
Membership dues and other receivables
Page 30
TABLE 3
COMPARATIVE DATA 2014/2015 $’000 Projected
2013/2014 $’000 Actual
2013/2014 $’000 Projected
22,896
20,277
20,187
279
129
257
Students’ subscription and registration fees
12,383
10,831
10,625
Surplus from self-financing activities Interest and dividends Subvention for students Miscellaneous
14,978 761 2,718 1,436 55,451
11,031 740 2,499 2,811 48,318
12,724 791 2,228 3,235 50,047
EXPENSES Salaries and staff costs
22,298
20,610
21,057
Office operating expenses
24,369
20,982
22,132
Mortgage loan and bank interest Depreciation
3,758 4,167 54,592
2,020 2,290 45,902
3,634 2,603 49,426
859
2,416
621
REVENUE Members’ subscription and admission fees Graduates’ subscription fees
Surplus for the year (before tax & transfer to administered funds)
Outlook for 2014/15 Having successfully coped with the challenges of the past year we intend to focus on areas such as increasing revenue growth, managing our costs as well as continued attention on enhancing our service benefits to members and other stakeholders. In doing so we must adjust our strategy to address the challenges of 2014/15. Table 3 shows our projected revenue, expenses and resulting surplus for the year (before tax) of $859,000. Recognising the urgency to expand the revenue base the Institute has embarked on charting strategic plans which are geared towards diversifying the scope of services offered. A number of cost-containment initiatives will be implemented to meet our budgetary expectations while at the same time ensuring that we achieve symmetry in promoting our goals for: • Membership retention • Improved service delivery • Enhanced visibility of the Accountancy profession We express sincere gratitude to our members, students and other stakeholders for their unwavering support over the past year and look forward to continued support for the years to come.
Page 31
ICAJ ANNUAL REPORT 2013/2014
Institute of Chartered Accountants of Jamaica
Contents
pendent auditor’s report
– Auditor’s report – –
Page 32
Independent auditor’s report
To the Members of Institute of Chartered Accountants of Jamaica
I have audited the accompanying financial statements of Institute of Chartered Accountants of Jamaica, which comprise the statement of financial position as at March 31, 2014, and the statement of comprehensive income, statement of changes in reserves and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements Management is responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards and the requirements of the Public Accountancy Act, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with International Standards on Auditing. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether 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 auditor’s judgment, 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 of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.
Page 33
ICAJ ANNUAL REPORT 2013/2014
34
Independent auditor’s report (cont’d)
To the Members of Institute of Chartered Accountants of Jamaica
Opinion In my opinion, the financial statements give a true and fair view of the financial position of Institute of Chartered Accountants of Jamaica as at March 31, 2014, and of its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards.
Kingston, Jamaica July 8, 2014
Chartered Accountant
Page 34
Institute of Chartered Accountants of Jamaica 35
Statement of financial position At March 31, 2014 (Expressed in Jamaican Dollars, unless otherwise indicated) Note
Assets Non-current assets Property, plant and equipment Investment in equity instruments
Restated 2013 $
2014 $
Restated April 1, 2012 $
4 5
63,749,689 339,456 64,089,145
59,213,363 335,232 59,548,595
57,083,005 502,080 57,585,085
6
147,976
218,355
51,379
7 8 9
7,360,730 2,522,886 8,085,089 19,244,889 37,361,570 101,450,715
4,773,757 2,256,204 2,022,358 21,417,643 30,688,317 90,236,912
7,330,459 3,835,053 22,134,692 33,351,583 90,936,668
10 11
17,175,785 334,736 31,617,715 49,128,236
15,137,234 330,512 31,495,715 46,963,461
13,860,500 497,360 31,353,856 45,711,716
12 13 14 15
1,509,440 10,713,718 155,110 6,376,315 18,754,583
1,451,685 11,599,485 76,355 8,816,879 21,944,404
1,326,435 11,888,433 836,374 11,184,103 25,235,345
Non-current liabilities Long-term loans Deferred tax liability
16 17
16,192,929 45,772 16,238,701
7,371,515 30,428 7,401,943
8,186,911 21,211 8,208,122
Current liabilities Deferred income Payables and accruals Current portion of long-term loans
18 19 16
7,763,700 8,078,195 1,487,300 17,329,195 52,322,479 101,450,715
6,632,625 6,057,181 1,237,298 13,927,104 43,273,451 90,236,912
6,906,900 4,182,729 691,856 11,781,485 45,224,952 90,936,668
Current assets Inventories Membership dues, other receivables and prepayments Taxation recoverable Short-term deposits Cash and cash equivalents Total assets Reserves and liabilities Reserves Accumulated surplus Fair value reserve Capital assets reserve Total reserves Liabilities Funds Administered funds Capital Assets Fund ICAJ Welfare Fund ICAJ/IDB Project Fund Total funds
Total liabilities Total reserves and liabilities
The notes on the accompanying pages 39 to 65 form an integral part of the financial statements. The financial statements were approved and authorised for issue by the Council on July 8, 2014 and signed on its behalf by:
______________________ Dennis Chung President
Page 35
_______________________ Dennis V. Brown Hon. Treasurer
ICAJ ANNUAL REPORT 2013/2014
Institute of Chartered Accountants of Jamaica 36
Statement of comprehensive income Year ended March 31, 2014 (Expressed in Jamaican Dollars, unless otherwise indicated) Note
Revenue Members’ subscription and admission fees Students’ subscription and registration fees Surplus from self-financing activities Finance income Subvention for students Advertising and sponsorship Sale of handbooks, bags and shirts Miscellaneous
2014 $
Restated 2013 $
2e 20 21
Transfer from Capital Assets Fund Gain on disposal of property, plant and equipment Gain on foreign exchange
20,406,307 10,831,229 11,030,625 740,052 2,499,414 317,978 541,545 16,483
17,620,736 10,814,160 5,917,886 872,623 2,841,070 82,976 902,513 149,903
46,383,633 936,267 1,999 995,950
39,201,867 1,006,229 555,084
48,317,849
40,763,180
Administrative and other operating expenses
22
(41,983,985)
(35,632,471)
Donation – ICAJ Welfare Fund
14
(75,000)
(75,000)
Bad debts specific charges
7
(2,623,249)
(1,966,649)
Bad debts recovered
14,893
Loss on disposal of property, plant and equipment
-
62,383 (69,244)
Finance costs
21
(1,233,918)
(1,305,850)
Surplus for the year before taxation
23
2,416,590
1,776,349
Income tax expense
24
Surplus for the year before transfer Interest transferred to designated funds (net of tax) Surplus for the year Other comprehensive income: Items that maybe reclassified subsequently to surplus or deficit: Gain/(loss) on revaluation of equity instruments Total comprehensive income for the year
(15,344) 2,401,246
12, 13, 14, 15
(240,695)
(9,217) 1,767,132 (348,539)
2,160,551
1,418,593
4,224 2,164,775
(166,848) 1,251,745
The notes on the accompanying pages 39 to 65 form an integral part of the financial statements.
Page 36
Institute of Chartered Accountants of Jamaica 37
Statement of changes in reserves Year ended March 31, 2014 (Expressed in Jamaican Dollars, unless otherwise indicated)
Note
Balance at March 31, 2012 Reclassification
Accumulated Surplus $ 13,860,500
31
-
Fair Value Reserve $ 497,360 -
Capital Assets Reserve $
Total $
43,242,289
57,600,149
(11,888,433)
(11,888,433)
31,353,856
45,711,716
13,860,500
497,360
Changes in reserves for 2013 Loss on revaluation of equity instruments Surplus for the year
1,418,593
(166,848) -
-
(166,848) 1,418,593
Total comprehensive income for year
1,418,593
(166,848)
-
1,251,745
15,279,093
330,512
Restated balance at March 31, 2012
Transfer
11
(141,859)
-
31,353,856 141,859
-
15,137,234
330,512
Changes in reserves for 2014 Gain on revaluation of equity instruments Surplus for the year
2,160,551
4,224 -
-
4,224 2,160,551
Total comprehensive income for year
2,160,551
4,224
-
2,164,775
17,297,785
334,736
31,495,715
49,128,236
(122,000) 17,175,785
334,736
122,000 31,617,715
49,128,236
Restated balance at March 31, 2013
Transfer Balance at March 31, 2014
11
31,495,715
46,963,461
The notes on the accompanying pages 39 to 65 form an integral part of the financial statements.
Page 37
ICAJ ANNUAL REPORT 2013/2014
46,963,461
Institute of Chartered Accountants of Jamaica 38
Statement of cash flows Year ended March 31, 2014 (Expressed in Jamaican Dollars, unless otherwise indicated) Note Cash flows from operating activities Surplus for the year before taxation Adjustments for: Depreciation Capital assets contributions (Gain)/loss on disposal of property, plant and equipment Interest and dividend income Interest expense
4 21 21
Decrease/(increase) in inventories (Increase)/decrease in membership dues, other receivables and prepayments Increase/(decrease) in deferred income Increase in payables and accruals
Cash flows from financing activities Contributions received – administered funds Disbursement of awards from administered funds Proceeds from loan Mortgage loan repayment Contributions received – Capital Assets Fund Contributions received – ICAJ Welfare Fund Disbursement from ICAJ Welfare Fund Disbursement from ICAJ/IDB Project Fund Net cash provided by/(used in) financing activities
2,416,590
1,776,349
2,289,803 (936,267) (1,999) (1,133,603) 1,233,918 3,868,442
(114,510) (1,006,229) 69,244 (872,623) 1,305,850 1,158,081 (166,976)
(2,525,597) 1,131,075 2,021,014
2,614,782 (274,275) 1,874,452
4,565,313 (1,233,918) (266,682) 3,064,713
5,206,064 (1,305,850) 1,777,324 (198,475) 5,479,063
4
(6,826,130) 2,000 (6,062,731) 1,058,403 13,824 (11,814,634)
(2,088,592) 3,500 (2,022,358) 790,543 24,000 (3,292,907)
12 12
228,375 (212,993) 10,965,261 (1,893,845) 50,500 78,755 (2,638,886) 6,577,167
236,107 (143,699) 974,158 (1,244,112) 632,244 106,355 (866,374) (2,597,884) (2,903,205)
(2,172,754) 21,417,643 19,244,889
(717,049) 22,134,692 21,417,643
13 14 14 15
Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year
2013 $
70,379
Cash generated from operations Interest paid Income taxes refunded Income taxes paid Net cash provided by operating activities Cash flows from investing activities Additions to property, plant and equipment Proceeds from disposal of property, plant and equipment Investment in short-term deposits Interest received Dividends received Net cash used in investing activities
2014 $
9
The notes on the accompanying pages 39 to 65 form an integral part of the financial statements.
Page 38
Institute of Chartered Accountants of Jamaica 39
Notes to the financial statements March 31, 2014
The Institute of Chartered Accountants of Jamaica (the Institute) was constituted on January 18, 1965 and on July 6, 1970 became a body corporate under the Public Accountancy Act. The Institute is domiciled in Jamaica with registered offices located at 8 Ruthven Road, Kingston 10, Jamaica. The principal objectives of the Institute are to: a
Promote and increase the knowledge, skills and proficiency of its members and students
b
Regulate the discipline and professional conduct of its members and students
c
Promote and protect the welfare and interest of the Institute and the accounting profession, both in Jamaica and abroad
d
Make provision for the training, education and examination of persons engaging in or intending to engage in the said profession, whether in Jamaica or elsewhere, in private practice or as employees of the Government of Jamaica or by statutory body or industrial or commercial enterprise or any other person who is not an accountant in private practice.
i
Statement of compliance The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and have been prepared under the historical cost convention, except for certain financial assets and financial liabilities measured at fair value. The preparation of financial statements in conformity with IFRS, requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Institute’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 2(b).
ii
Significant accounting policies, changes in accounting policies and disclosures New and amended standards adopted by the Institute The following standards have been adopted by the Institute for the first time for the financial year beginning on or after 1 April 2013. These standards do not have a material impact on the financial statements of the Institute: Amendment to IAS 1, ‘Financial statement presentation’ regarding other comprehensive income. The main change resulting from these amendments is a requirement for entities to group items presented in ‘other comprehensive income’ (OCI) on the basis of whether they are potentially re-classifiable to surplus or deficit subsequently (reclassification adjustments). Amendment to IFRS 7, ‘Financial instruments: Disclosures’, on asset and liability offsetting. This amendment includes new disclosures to facilitate comparison between those entities that prepare IFRS financial statements to those that prepare financial statements in accordance with US GAAP.
Page 39
ICAJ ANNUAL REPORT 2013/2014
Institute of Chartered Accountants of Jamaica 40
Notes to the financial statements March 31, 2014
(cont’d) (cont’d) ii
Significant accounting policies, changes in accounting policies and disclosures (cont’d) IFRS 12, ‘Disclosures of interests in other entities’ includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, structured entities and other off balance sheet vehicles. IFRS 13, ‘Fair value measurement’ aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRS. The requirements, which are largely aligned between IFRS and US GAAP, do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRS. The Standard applies when another IFRS requires or permits fair value measurements or disclosures about fair value measurements (and measurements, such as fair value less costs to sell, based on fair value or disclosures about those measurements). With some exceptions, the standard requires entities to classify these measurements into a 'fair value hierarchy' based on the nature of the inputs: Level 1 - quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date Level 2 - inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3 - unobservable inputs for the asset or liability Entities are required to make various disclosures depending upon the nature of the fair value measurement (e.g. whether it is recognised in the financial statements or merely disclosed) and the level in which it is classified. Annual Improvements 2009-2011 Cycle. The improvements in this amendment clarify the requirements of IFRS and eliminate inconsistencies within and between standards. The main standards affected include: IFRS 1 - Permit the repeated application of IFRS 1, borrowing costs on certain qualifying assets IAS 1 - Clarification of the requirements for comparative information IAS 16 - Classification of servicing equipment IAS 32 - Clarify the tax effect of a distribution to holders of equity instruments
Page 40
Institute of Chartered Accountants of Jamaica 41
Notes to the financial statements March 31, 2014
(cont’d) (cont’d) ii
Significant accounting policies, changes in accounting policies and disclosures (cont’d) New standards and interpretations not yet adopted The following new standards, interpretations and amendments, which have not been applied in these financial statements, may have an effect on the Institute’s future financial statements: IFRS 7 (Amendment) - Financial Instruments: Disclosures on offsetting asset and liability (effective for annual periods commencing on or after 1 January 2015). This amendment includes new disclosures to facilitate comparison between those entities that prepare IFRS financial statements to those that prepare financial statements in accordance with US GAAP. IFRS 9 Financial Instruments IFRS 9 introduced new requirements for the classification and measurement of financial assets and the classification and measurement requirements for financial liabilities along with the requirements for recognition and derecognition of financial assets and liabilities. IFRS 9 Financial Instruments will ultimately replace IAS 39 Financial Instruments: Recognition and Measurement in its entirety. Amendments to IFRS 12: Transition guidance The amendments clarify transition guidance and provide additional transition relief, limiting the requirement to provide adjusted comparative information to only the preceding comparative period. IAS 32 (Amendment) - "Financial Instruments: Presentation" (effective for annual periods commencing on or after 1 January 2014) aims to clarify some of the requirements for offsetting financial assets and financial liabilities on the statement of financial position. As a result of diversity in application of the requirements on offsetting, the amendment focused on four main areas: the meaning of 'currently has a legally enforceable right of set-off' the application of simultaneous realisation and settlement the offsetting of collateral amounts the unit of account for applying the offsetting requirements. IAS 36 (Amendment) - Impairment of Assets on the recoverable amount disclosures for non-financial assets. This amendment removed certain disclosures of the recoverable amount of CGUs which had been included in IAS 36 by the issue of IFRS 13. The amendment is not mandatory for the Institute until 1 January 2014. IAS 12 (amendment) Deferred tax: Recovery of Underlying Assets IAS 12 requires an entity to measure deferred tax relating to an asset depending on whether the entity expects to recover the carrying amount of the asset through use or sale. The amendment introduces a presumption that recovery will normally be through sale.
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ICAJ ANNUAL REPORT 2013/2014
Institute of Chartered Accountants of Jamaica 42
Notes to the financial statements March 31, 2014 (cont’d) (cont’d) ii
Significant accounting policies, changes in accounting policies and disclosures (cont’d) Annual Improvements - 2010 - 2012 and 2011 - 2013 Cycles (effective for annual periods commencing on or after 1 July 2014).The improvements in these amendments clarify the requirements of IFRS and eliminate inconsistencies within and between standards. Management will perform an assessment of the impact of all applicable standards that will apply for financial period ending March 31, 2015.
iii
Measurement bases The financial statements are prepared using the measurement bases specified by IFRS for each type of asset, liability, income and expense. The measurement bases are more fully described in the accounting policies below. Except where otherwise stated, the financial statements are presented in Jamaican Dollars.
The preparation of financial statements in accordance with IFRS requires management to make estimates and assumptions that affect the amounts and related disclosures reported in the financial statements. These estimates are based on historical experience and management’s best knowledge of current events and actions. Actual results may differ from those estimates and assumptions. There were no critical judgements, apart from those involving estimation, that management has made in the process of applying the Institute’s accounting policies that have a significant effect on the amounts recognised in the financial statements. The estimates and assumptions which have the most significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are discussed below. i
Useful lives of property, plant and equipment Depreciation is provided so as to write down the respective assets to their estimated residual values over their expected useful lives and, as such, the selection of the expected useful lives and the estimated residual values of the assets require the use of estimates and judgements. Details of the estimated useful lives are as shown in note 2c.
ii
Impairment An impairment loss is recognised for the amount by which the asset’s or cashgenerating unit’s carrying amount exceeds its recoverable amount. Management estimates expected future cash flows from each asset or cash-generating unit and determines the recoverable amount and the present value of the expected future cash flows [see note 2p]. In the process of measuring expected future cash flows management makes assumptions about future operating results. These assumptions relate to future events and circumstances. The actual results may differ from estimates.
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Institute of Chartered Accountants of Jamaica 43
Notes to the financial statements March 31, 2014 (cont’d) (cont’d) iii
Taxation The Institute is required to estimate income tax payable to the Commissioner General of Tax Administration Jamaica on any non-exempt surplus derived from operations [note 24a]. This requires an estimation of the current tax liability together with an assessment of the temporary differences which arise as a consequence of different accounting and taxation treatments. These temporary differences result in deferred tax assets or liabilities which are included in the statement of financial position. Deferred tax assets and liabilities are measured using the enacted tax rate at the end of the reporting period. If the tax eventually payable, or recoverable, differs from the amounts originally estimated then the difference will be accounted for in the year such determination is made. The significant accounting policies that have been used in the preparation of the financial statements are summarised below and have been consistently applied for all the years presented.
i
Property, plant and equipment are measured at cost, less accumulated depreciation and accumulated impairment losses [note 2q]. Land is not depreciated.
ii
Depreciation is calculated on the straight-line (SL), or reducing-balance (RB), basis at annual rates to write down the cost of assets to their estimated residual values over the period of their expected useful lives. The annual rates of depreciation in use are: Building (SL) Building extensions and improvements (SL) Certain furniture and equipment (RB) Electronic equipment and other furniture and equipment (SL)
2.5% 10% 15% 10% - 25%
The expected useful lives and estimated residual values are re-assessed at the end of each reporting period and adjusted, if appropriate. The useful life and estimated residual value of the buildings were revised in 2013. iii
Construction-in-progress represents costs incurred to date, including interest on borrowings obtained to finance construction on the building development project [note 2l]. Construction-in-progress is not depreciated until completion.
iv
Repairs and renewals Costs of repairs and renewals which do not enhance the value of existing assets are written off to surplus or deficit as they are incurred.
v
Page 43
Gains or losses on disposal of property, plant and equipment are included in surplus or deficit, when they arise.
ICAJ ANNUAL REPORT 2013/2014
Institute of Chartered Accountants of Jamaica 44
Notes to the financial statements March 31, 2014
(cont’d)
Inventories are stated at the lower of cost, determined on a first-in, first-out basis, and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. Using information available at year-end date, the Institute makes judgements based on experience on the level of provision required to account for potential unsaleable inventories.
Revenue is recognised to the extent that it is probable that the received and receivable for goods and services provided in the normal course of business, net of discounts and GCT. Annual subscription and rental income is recognised in surplus or deficit on a straight line basis over the period. Courses and conference income is recognised in the year of the relevant course or event. Members and student subscriptions are recognised in the accounting period to which the subscriptions relate. These subscriptions are due each year on April 1 and January 1 respectively. To the extent that income is received in advance, it is deferred and recognised in the relevant period for which services for these subscriptions or fees are given. The unearned portions, if any, are shown as deferred income [note 18]. -financing activities are recognised when invoiced. Interest and other income are recognised when earned in accordance with the relevant agreements in place Interest income is recognised on a time-proportionate basis using the e ective interest method. Dividend income is recognised when the right to receive payment is established. Donations or contributions received for the purposes of funding the acquisition, capital assets are credited to the capital assets fund and released to surplus or deficit over the expected useful life of the respective assets in line with the depreciation policy. Donations or contributions received for the acquisition of freehold land or other non-depreciable assets are credited to surplus or deficit in the year of acquisition.
Foreign currency transactions are translated into the functional currency of the Institute, using the exchange rates prevailing at the dates of the transactions. Foreign currency balances at the end of the reporting period are translated at the closing rates of exchange. Foreign exchange gains and losses resulting from the settlement of such transactions and from the re-measurement of monetary items at year-end exchange rates are recognised in surplus or deficit. Non-monetary items measured at historical cost are translated using the exchange rates at the dates of the transactions. Non-monetary items measured at fair value are translated using the exchange rates at the date when fair value was determined.
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Institute of Chartered Accountants of Jamaica 45
Notes to the financial statements March 31, 2014
(cont’d)
A financial instrument is any contract that gives rise to a financial asset in one entity and a financial liability or equity instrument in another entity. Financial assets and financial liabilities are recognised in the Institute’s statement of financial position when it becomes a party to the contractual provisions of the instruments. A financial asset is derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expired. The financial instruments carried in the statement of financial position are: Financial assets: Investment in equity instruments, membership dues and other receivables, short-term deposits and cash and cash equivalents;
s is impaired. income costs or gain/loss on disposal of investment in equity instruments, except for impairment of membership dues and other receivables, which is presented as bad debt provision [note 2i]. Financial liabilities: The Institute’s financial liabilities include payables and long-term loans. These are recognised initially as the proceeds received, net of transaction costs incurred. Financial liabilities are subsequently measured at amortised cost using the effective interest method. Any difference between proceeds (net of transaction costs) and the redemption value is recognised in surplus or deficit over the life of the liabilities.
Management determines the appropriate classification of investments at the time of purchase and re-evaluates such designation on a periodic basis. Investments, comprising quoted equity, are intended to be held for the purposes of generating long-term investment income and are treated as non-current assets. The securities may be sold in response to need for liquidity or changes in market prices. Investments are initially recognised at cost, which includes transaction costs, and subsequently re-measured at fair value based on quoted bid prices. Unrealised gains and losses arising from changes in fair value of these securities are recognised in reserves. When securities are disposed of or impaired, the related accumulated unrealised gains or losses included in reserves are transferred to surplus or deficit.
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ICAJ ANNUAL REPORT 2013/2014
Institute of Chartered Accountants of Jamaica 46
Notes to the financial statements March 31, 2014
(cont’d)
All purchases and sales of investment securities are recognised at settlement date. Dividends from investment in equity instruments are recognised in surplus or deficit as part of finance income when the Institute's right to receive payments is established. At each year-end date, an assessment is made as to whether there is objective evidence that an equity instrument is impaired. A significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the asset is impaired. Judgment is used in determining what a significant or prolonged decline is. Impairment charges are recognised in the income statement.
Membership dues and other receivables are classified as loans and receivables. These are initially recognised at original invoice amount (which represents fair value) and subsequently measured at amortised cost less any provision for doubtful debts. A provision for doubtful debt is recognised when there is objective evidence that the full amount due will not be collected, in accordance with the original terms of these receivables. The amount of the write-down is determined as the difference between the carrying amount and the present value of estimated future cash flows discounted at the original effective interest rate. Discounting is omitted where the effect of discounting is immaterial.
Short-term deposits consist of investment in deposits with maturity dates greater than three (3) months and up to twelve (12) months.
Cash and cash equivalents consist of cash in hand, deposits held on call with banks, and other short-term highly liquid investments with original maturity dates of three (3) months or less.
Borrowings are recognised initially at fair value net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in surplus or deficit over the period of the borrowings using the effective interest method. Borrowed funds not utilised are invested until they are required and any interest earned during the reporting period is set-off against borrowing costs incurred during the reporting period. Fees paid on the establishment of the loan facilities are recognised as transaction costs of the loan to the extent it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. Borrowing costs comprise primarily interest on the Institute’s borrowings. Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset is capitalised during the period of time that is necessary to complete and prepare the asset for its intended use or sale less any interest earned during the reporting period on borrowed funds. Other borrowing costs are expensed in the period in which they are incurred and are included in ‘finance costs’.
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Institute of Chartered Accountants of Jamaica 47
Notes to the financial statements March 31, 2014 (cont’d)
Income tax on the results for the year comprises current and deferred tax. Current tax is the expected tax payable on the taxable surplus for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is accounted for using the financial position liability method, providing for deferred tax on temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the corresponding basis used in the computation of taxable surplus. In principle, deferred tax liabilities are recognised for taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable surplus will be available against which the assets can be realised. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled. Deferred tax is charged or credited to surplus or deficit, except when it is related to items credited or charged directly to reserves, in which case the deferred tax is also dealt with in reserves. The Commissioner General of Tax Administration Jamaica has granted the Institute exemption from income tax under the mutuality principle in respect of income derived from transactions with members and students. In consequence, the Institute is only taxable on a proportion of its income after setting-off a proportion of its expenses and capital allowances. As the proportion of capital allowances which can be claimed varies from year to year, it is not practical to ascertain temporary differences arising from variances between depreciation and capital allowances. These have, therefore, been dealt with as reconciling items for taxation purposes. Deferred tax assets and liabilities are off-set when they arise from the same tax authority and when legal right of set-off exists.
Provisions are recognised when there is a present legal or constructive obligation as a result of past events, it is probable that an out-flow of resources will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made.
i
The Institute provides post employment benefits through a defined contribution plan. A defined contribution plan is a superannuation plan under which the Institute pays fixed contributions into a privately administered fund. The Institute has no legal or constructive obligations to pay further contributions after its payment of the fixed contribution. Contributions to the plan are recognised as an expense in the period that relevant employee services are received.
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ICAJ ANNUAL REPORT 2013/2014
Institute of Chartered Accountants of Jamaica 48
Notes to the financial statements March 31, 2014 (cont’d)
ii
Employee obligations Employees’ entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to year-end date.
iii
Termination benefits Termination benefits are payable when employment is terminated by the Institute before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Institute recognises termination benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy. The termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the reporting date are discounted to present value.
Property, plant and equipment and other non-current assets, are reviewed for impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of an asset’s net selling price and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows.
Accumulated surplus includes all current and prior retained surpluses. Fair value reserve comprises gains and losses arising on the revaluation of the investment in equity instruments. Capital assets reserve includes funds appropriated from accumulated surplus for the purposes of funding the acquisition, construction and completion of the Institute’s capital assets.
Certain prior year figures have been restated to conform to current year’s presentation. [Note 31].
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Institute of Chartered Accountants of Jamaica 49
Notes to the financial statements March 31, 2014
i
Financial assets by categories The categories of financial assets included in the statement of financial position are as follows: 2014 2013 $ $ Financial assets measured at fair value Non-current assets Investment in equity instruments (note 5) Financial assets measured at amortised cost Current assets Loans and receivables (including cash and cash equivalents) (notes 7, 8 and 9) Total
ii
339,456
335,232
33,951,140 34,290,596
27,684,853 28,020,085
Financial liabilities by categories The categories of financial liabilities included in the statement of financial position are as follows: 2014 2013 $ $ Financial liabilities measured at amortised cost Non-current liabilities Long-term loans Current liabilities Payables and accruals Current portion of long-term loans Total
16,192,929
7,371,515
8,078,195 1,487,300 25,758,424
6,057,181 1,237,298 14,665,994
An amendment to IFRS 7 introduced new requirements relating to the disclosure of financial instruments that are measured at fair value. The amendment requires that, as of January 1, 2010, financial instruments measured at fair value be disclosed by levels using the fair value measurement hierarchy. The hierarchy comprises three (3) levels as follows: Level 1 includes those instruments which are measured based on quoted prices in active markets for identical assets or liabilities. Level 2 includes those instruments which are measured using inputs other than quoted prices within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). Level 3 includes those instruments which are measured using valuation techniques that include inputs for the instrument that are not based on observable market data (unobservable inputs). The Institute’s investment in equity quoted on the Jamaica Stock Exchange falls into the Level 1 tier of the fair value measurement hierarchy. The Institute uses the bid price at the end of the reporting period, as the quoted market price in valuing these assets.
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ICAJ ANNUAL REPORT 2013/2014
Institute of Chartered Accountants of Jamaica 50
Notes to the financial statements March 31, 2014 Freehold Land & Buildings $
Construction Computers, -InFurniture & Progress Equipment $ $
Total $
Gross carrying amount at April 1, 2013 Additions Disposal
49,355,333 531,492 -
13,200,828 6,080,129 -
12,044,170 214,509 (50,000)
74,600,331 6,826,130 (50,000)
Gross carrying amount at March 31, 2014
49,886,825
19,280,957
12,208,679
81,376,461
Depreciation at April 1, 2013 Depreciation eliminated on disposal Charge for the year
(6,255,309) (1,260,228)
-
(9,131,659) (15,386,968) 49,999 49,999 (1,029,575) (2,289,803)
Depreciation at March 31, 2014
(7,515,537)
-
(10,111,235) (17,626,772)
Carrying amount at March 31, 2014
42,371,288
19,280,957
Freehold Land & Buildings $
2,097,444
Construction Computers, -InFurniture & Progress Equipment $ $
63,749,689
Total $
Gross carrying amount at April 1, 2012 Additions Disposal
49,612,567 (257,234)
12,017,591 1,183,237 -
15,080,616 905,355 (3,941,801)
76,710,774 2,088,592 (4,199,035)
Gross carrying amount at March 31, 2013
49,355,333
13,200,828
12,044,170
74,600,331
Depreciation at April 1, 2012 Depreciation eliminated on disposal Adjustment Charge for the year
(7,762,933) 247,842 2,500,279 (1,240,497)
-
(11,864,836) (19,627,769) 3,878,449 4,126,291 2,500,279 (1,145,272) (2,385,769)
Depreciation at March 31, 2013
(6,255,309)
-
(9,131,659) (15,386,968)
Carrying amount at March 31, 2013
43,100,024
13,200,828
2,912,511
59,213,363
Included in gross carrying amount is a sum of $8,054,897 (2013 - $6,752,630), representing the cost of equipment which are fully depreciated, but are still in use. Buildings were valued on June 12, 2012 by Langford and Brown, independent chartered surveyors, on an open market value basis for mortgage loan, at $118,000,000. Management is of the opinion that the current open market value of buildings is in excess of the carrying amount at year end and there is no impairment. During the previous year, management re-assessed the expected useful lives of buildings which were being depreciated at 4% per annum. This resulted in a change in the depreciation rate to 2.5% per annum and depreciation adjustment of $2,500,279. Construction-in-progress represents construction costs and professional fees incurred to date on the building development project [note 27]. During the year, net borrowing costs amounting to $582,327 (2013 - $NIL), representing borrowing costs incurred on a loan obtained to finance the construction less interest income earned on unspent loan funds were capitalised.
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Institute of Chartered Accountants of Jamaica 51
Notes to the financial statements March 31, 2014 (cont’d)
Land and buildings were used as collateral to secure the loan received from Jamaica National Building Society [note 16]. At March 31, 2014, there were no contracts for capital expenditure not provided for in these financial statements.
2014 $
2013 $
Quoted equity at fair value: National Commercial Bank Jamaica Limited – 19,200 ordinary shares (2013 – 19,200) Historical cost of quoted investment
339,456
335,232
4,720
4,720
Fair value has been determined by reference to the quoted bid prices at the end of the reporting period. The method and valuation techniques used to measure fair value are unchanged compared to the previous year.
2014 $ Oxford shirts branded with ICAJ logo Medallions branded with ICAJ and ACCA logos Unbranded laptop backpacks Less: Provision for slow moving inventories Total
9,532 147,976 69,000 226,508 78,532 147,976
2013 $ 14,979 218,355 129,000 362,334 143,979 218,355
In 2014, a total of $492,435 (2013 - $765,745) of inventories was included as an expense in surplus or deficit. This includes an amount of $63,947 (2013 - $65,446), resulting from write-back of inventories.
2014 $ Members’ subscription Students’ subscription and graduate fees Professional associations Room rental Banquet and seminars Less: Allowance for impairment of amounts receivable Interest Deposits Other Prepayments Total
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248,335 3,705,145 125,587 475,072 2,053,200 6,607,339 (1,025,423) 5,581,916 183,088 353,434 502,724 6,621,162 739,568 7,360,730
2013 $ 101,992 3,452,674 27,089 109,245 175,136 3,866,136 (673,262) 3,192,874 121,712 353,434 576,832 4,244,852 528,905 4,773,757
ICAJ ANNUAL REPORT 2013/2014
Institute of Chartered Accountants of Jamaica 52
Notes to the financial statements March 31, 2014 Membership dues, other receivables and prepayments (cont’d) All membership dues and other receivables are short-term and the carrying value is considered a reasonable approximation of fair value. Membership dues and other receivables have been reviewed for indication of impairment. Certain receivables were found to be impaired and the appropriate provision has been made. The impaired receivables are due primarily from students who are likely to be suspended for overdue subscriptions. In addition, some unimpaired subscriptions and other receivables are past due at the end of the reporting period. The age of these past due but not impaired receivables is as follows: 2014 2013 $ $ Not more than three (3) months More than three (3) months but not more than six (6) months More than six (6) months Total
5,333,231
3,126,369
193,060 55,625 5,581,916
41,417 25,088 3,192,874
No collateral or debt enhancements have been requested as security for receivables that are either past due or impaired. The movement in the provision for impairment is as follows:
Balance at beginning of year Receivables recovered during the year Increase in provision during the year Receivables written off during the year Balance at end of year
2014 $
2013 $
673,262 (27,660) 2,650,909 (2,271,088) 1,025,423
354,679 (62,383) 1,966,649 (1,585,683) 673,262
Management considers the credit quality of membership dues and other receivables that are neither past due nor impaired to be good, as based on historical information and experience, management does not expect the counterparties to default on their obligations.
Interest rate % p.a. Corporate Bond BOJ variable rate CD Total
5.85 7.0
2014 $ 2,111,089 5,974,000 8,085,089
2013 $ 2,022,358 2,022,358
i.
Corporate Bond is invested with a licensed financial institution for a period of twelve (12) months.
ii.
BOJ variable rate CD is invested for a period of twelve (12) months, maturing on December 11, 2014. Interest is receivable quarterly, at the rate of 0.25% point above the benchmark rate for each quarterly interest payment.
The carrying value of short-term deposits is considered a reasonable approximation of fair value.
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Institute of Chartered Accountants of Jamaica 53
Notes to the financial statements March 31, 2014 Interest Rate % p.a. Short-term deposits US$ Short-term deposits (US$17,689 (2013 - US$39,483)) Sterling savings account (£7,259 (2013 - £12,801)) US$ savings accounts (US$4,715 (2013 – US$9,736)) J$ current accounts Cash in hand
2014 $
4.5 - 6
10,183,353
9,268,303
1.4
1,927,971
3,866,782
0.1
1,302,228
1,895,165
0.2 - 0.35
513,892 4,393,282 924,163 19,244,889
953,533 5,391,900 41,960 21,417,643
Total
Included in cash and cash equivalents are amounts held for the following: 2014 Note $ Administered funds Capital assets fund ICAJ Welfare fund ICAJ/IDB Project fund
2013 $
12 13 14 15
Total
1,509,440 3,601,290 155,110 5,717,565 10,983,405
2013 $ 1,451,685 3,428,790 76,355 8,158,129 13,114,959
Short-term deposits at the end of the reporting period represent amounts invested with licensed financial institutions with maturity dates of three (3) months or less. The carrying value of cash and cash equivalents is considered a reasonable approximation of fair value.
Fair value reserve represents net unrealised gains on the revaluation of investment in equity instruments [note 5].
This represents funds appropriated from accumulated surplus to be utilised to fund the Institute’s building development project in accordance with Council’s approval. Council is authorised to exercise discretion and transfer an amount not exceeding 10% of surplus for the year to the capital assets reserve. The movement on the account during the year is as follows: 2014 $ Balance at beginning of year Transfer from accumulated surplus Balance at end of year
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31,495,715 122,000 31,617,715
2013 $ 31,353,856 141,859 31,495,715
ICAJ ANNUAL REPORT 2013/2014
Institute of Chartered Accountants of Jamaica 54
Notes to the financial statements March 31, 2014 Balance at Net interest Balance at April 1, for the year Receipts Disbursements March 31, 2013 2014 $ $ $ $ $ a. Education Fund
544,133
15,780
-
-
559,913
b. Company Law Reform Fund
298,373
8,652
-
-
307,025
c. Deloitte & Touche Awards Fund
22,090
640
-
-
22,730
d. Jasper Burnett Award Fund
70,058
2,032
-
-
72,090
e. Sushil Jain Award Fund
26,665
1,167
40,000
(12,853)
54,979
222,252
6,445
-
g. Joslyn E. Lowrie Award Fund
19,910
458
-
(8,214)
12,154
h. Library Grant
63,112
1,831
-
-
64,943
185,092 1,451,685
5,368 42,373
188,375 228,375
f. Raphael E. Gordon Award Fund
i. Outreach Projects Total
-
228,697
(191,926) (212,993)
186,909 1,509,440
The above funds represent donations received and other funds designated to finance specific activities. An amount of $42,373 (2013 - $32,842) was transferred from surplus or deficit for the year in respect of net interest earned on cash held for these funds, which are included with the Institute’s cash resources [note 9].
Capital Assets Fund represents direct contributions received from members and other donors to finance the Institute’s capital assets development project [note 27]. Previously, such contributions were recognised in capital assets reserve and treated as part of the Institute’s equity. It is now determined that the amounts should be recognised as a fund maintained for capital assets development project and has been reclassified to a specially designated fund accordingly. On completion of each phase of the capital assets project an amount equivalent to depreciation of the relevant assets will be transferred to surplus or deficit. The movement on the account during the reporting period is as follows: 2014 2013 $ $ Balance at beginning of year Contributions received during the year Net interest received during the year Transfer to surplus or deficit Balance at end of year
11,599,485 50,500 (936,267) 10,713,718
11,888,433 632,244 85,037 (1,006,229) 11,599,485
The above balance is represented by bank balances maintained by the Institute on behalf of the Fund [note 9].
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Institute of Chartered Accountants of Jamaica 55
Notes to the financial statements March 31, 2014
ICAJ Welfare Fund (the Fund) was incorporated as a company limited by guarantee and not having share capital. The Fund commenced operation on May 11, 2010, for the purpose of promoting the welfare, including assisting with relief of poverty, distress and illness of all members (past and present) of the Institute of Chartered Accountants of Jamaica. By resolution of the Board of Directors, financial statements for the first period of operation will cover the period ended March 31, 2012. The Fund balance comprises donations received on its behalf and not yet paid over [note 9]. The movement on the account during the year is as follows: 2014 2013 $ $ Balance at beginning of year Add: Donation from the Institute during the year Donation from other donors during the year Less: Transfer to ICAJ Welfare Fund’s bank account Balance at end of year
76,355 75,000 3,755 155,110
836,374 75,000 31,355 (866,374) 76,355
By resolution of the members of ICAJ, approved at the Annual General Meeting on July 27, 2011, Council may exercise discretion and donate an amount, not exceeding 10% of each year’s surplus to the Fund. During the year, the Institute made a donation of $75,000 (2013 - $75,000) to the Fund. The above balance is represented by bank balances maintained by the Institute on behalf of the Fund [note 9].
In March 2003, the Institute signed an Agreement for a grant of US$665,000 from the InterAmerican Development Bank (IDB) to finance the Improving the Application of and Compliance with International Financial Reporting and Auditing Standards Project. Under the Agreement, the Institute was required to provide counterpart contributions totalling US$350,000 in cash and kind over the life of the Project. The Project was initially for a period of thirty-six (36) months and consisted of four (4) main components: a.
Conduct of an independent assessment of accounting and auditing in Jamaica in accordance with the Reports on the Observance of Standards and Codes (ROSC) program;
b.
Assistance in the Standards (IFRS);
c.
Building adequate mechanisms for the enforcement of IFRS and International Standards on Auditing (ISA); and
d.
Establishing systems and processes that sustain the implementation of IFRS and ISA.
implementation
of
International
Financial
Reporting
The Project activities commenced and the Institute began receiving Grant funds from IDB in April 2004. The Project was completed on November 24, 2008. In accordance with the grant agreement, funds remaining at the end of the project will be used by the Institute to support the sustainability of the project.
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Notes to the financial statements March 31, 2014 i. Fund balance at the end of the reporting period comprises: 2014 $ Balance at beginning of year Interest earned during the year Project cost incurred during the year
8,816,879 198,322 (2,638,886) 6,376,315
Balance at end of year
2013 $ 11,184,103 230,660 (2,597,884) 8,816,879
ii. In February 2011, the Institute entered into a contractual arrangement with Northern Caribbean University for the provision of a Database Solution that will assist with the dissemination of IFRS, in continuance of the project. The agreed development cost is US$52,000; at the end of the reporting period a total of US$40,000 (2013 - US$30,000) was paid and recovered from ICAJ/IDB Project funds. iii. On December 2, 2013, the Institute entered into a contractual arrangement with International Financial Reporting Standards Foundation to provide members with non-exclusive right to access the eIFRS service. The contract is renewable annually and access is available through the Institute’s secure membership database. In the inaugural year of the contract, costs totalling J$1,778,386 were financed through the ICAJ/IDB Project Fund. The above balance is represented by bank balances maintained by the Institute on behalf of the funds [note 9].
a) Jamaica National Building Society (JNBS) b) Jamaica National Building Society (JNBS) c) JN Finance Limited Less: Current portion Balance at end of year
Interest rate % p.a.
2014 $
2013 $
15 13 2.85
7,358,475 10,000,000 321,754 17,680,229 (1,487,300) 16,192,929
8,175,854 432,959 8,608,813 (1,237,298) 7,371,515
a) In September 2009, the Institute received a loan of $10 Million, from Jamaica National Building Society (JNBS) to partially finance construction of the ground floor of the Institute’s building development project. The loan is collaterised by a first mortgage on the Institute’s property at 8 Ruthven Road, Kingston 10, and is repayable over a period of 120 months [note 4]. Repayment commenced October 2009. Instalments are due at the end of each month and interest is calculated on the reducing balance. At the end of the reporting period, the Institute was in full compliance with the terms of the financing agreement. b) In May 2013, the Institute accepted an offer of finance from Jamaica National Building Society (JNBS) for an additional loan of $15 million to continue the building development project. This additional loan is collaterised by a second mortgage on the Institute’s property at 8 Ruthven Road, Kingston 10, and is repayable over a period of 180 months [note 4]. In July 2013, $10 million was drawn down, with a deferral of the balance for a later date. Instalments are due at the end of each month and interest is calculated on the reducing balance. At the end of the reporting period, the Institute had paid up interest accrued on the $10 million, however, repayment of principal had not commenced.
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Institute of Chartered Accountants of Jamaica 57
Notes to the financial statements March 31, 2014 c) Since 2012, the Institute has been financing insurance premium under an agreement with JN Finance Limited for a period of nine (9) months. At the end of the reporting period, the Institute was in full compliance with the terms of the financing agreement.
Deferred income tax is calculated using a tax rate of 25%. The movement in the deferred income tax balance is as follows:
Liability at beginning of year Deferred tax charge [note 24b] Liability at end of year
2014 $
2013 $
30,428 15,344 45,772
21,211 9,217 30,428
Deferred income tax balance arose on interest receivable.
Students’ subscriptions are due and payable on January 1 of each year. Deferred income relates to the portion of such subscriptions to be recognised as income in the subsequent financial year.
Subscriptions to professional associations (US$19,845 (2013 – US$19,092)) Prepaid members’ subscriptions Payroll liabilities Audit fees General Consumption Tax (GCT) Payables Accruals Due to contractor – R&S Construction Retention – construction contract Other Total
2014 $
2013 $
2,120,023 624,780 1,154,006 377,000 262,210 613,110 277,017 547,703 485,882 1,616,464 8,078,195
1,887,991 559,039 793,235 419,750 379,871 385,797 1,631,498 6,057,181
All amounts are short-term and the carrying value is considered a reasonable approximation of fair value.
Seminars Graduations Awards Banquet Room rental Total
Page 57
Gross income
Expenses
$
$
15,622,825 540,848 3,544,119 3,577,375 23,285,167
6,571,449 754,511 2,638,379 2,290,203 12,254,542
Surplus/ (deficit) 2014 $ 9,051,376 (213,663) 905,740 1,287,172 11,030,625
Surplus/ (deficit) 2013 $ 5,737,033 (352,578) 336,578 196,853 5,917,886
ICAJ ANNUAL REPORT 2013/2014
Institute of Chartered Accountants of Jamaica 58
Notes to the financial statements March 31, 2014 Finance income may be analysed as follows:
Interest income from cash and cash equivalents Interest income from short-term deposits Total interest income from financial assets not at fair value through surplus or deficit Less: Interest earned on unspent mortgage loan Dividend income from investment in equity instruments Finance income
2014 $
2013 $
668,245 451,534
774,397 74,226
1,119,779 (393,551) 726,228
848,623 848,623
13,824 740,052
24,000 872,623
2014 $
2013 $
Finance cost comprises:
Interest expense Less: Borrowing cost on mortgage loan capitalised Finance cost
2,209,796 (975,878) 1,233,918
1,305,850 1,305,850
2014 $
2013 $
Total Administrative and other operating expenses:
Employee benefits (note 25) Depreciation - current year (note 4) - adjustment (note 4) Advertising and public relations Legal and professional fees Property taxes Student affairs and awards Travelling and entertainment Subscriptions to professional associations Communication and technology Utilities Cost of sales – handbooks, bags and shirts Newsletters and annual report Other expenses Total
20,609,652 2,289,803 2,007,269 102,600 216,500 759,495 3,065,767 3,367,968 940,211 2,760,832 492,435 644,006 4,727,447 41,983,985
Surplus for the year before taxation is stated after charging/(crediting): 2014 $ Key management compensation: Executive remuneration (note 25) Council members’ remuneration (note 28) Depreciation - current year (note 4) - adjustment (note 4) Auditor’s remuneration
5,429,645 NIL 2,289,803 377,000
18,355,232 2,385,769 (2,500,279) 2,073,323 24,000 82,000 732,647 2,021,090 2,895,838 961,631 2,538,930 765,745 693,500 4,603,045 35,632,471
2013 $ 3,456,496 NIL 2,385,769 (2,500,279) 362,000
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Institute of Chartered Accountants of Jamaica 59
Notes to the financial statements March 31, 2014 a
The Commissioner General of Tax Administration Jamaica has granted the Institute exemption from income tax under the mutuality principle in respect of income derived from transactions with members and students. The Institute is subject to income tax on investment income and on surplus arising from services to the extent that they relate to transactions with non-members.
b
Income tax has been computed at the rate of 25% on non-exempt income, adjusted for tax purposes, and comprises: 2014 2013 $ $ Deferred tax charge (note 17)
15,344 15,344
Total c
Subject to the agreement of the Commissioner General of Tax Administration Jamaica, losses of approximately $2.6 million (2013 - $1.7 million) are available to be set off against future taxable profits. These losses, if not utilised, will be carried forward indefinitely. However, effective January 1, 2014 losses utilised in any one year is restricted to fifty percent (50%) of the chargeable income.
d
Reconciliation of theoretical tax charge to actual tax charge:
Surplus for the year before taxation Income tax thereon at 25% Income tax consequence of the following: Expenses not deductible for tax purposes Income not chargeable to tax Dividend income not chargeable to tax Foreign exchange gain not chargeable to tax Expenses not claimed against accounting surplus Reduction in effective tax rate Income tax expense
Salaries and related expenses Pension (note 26) Health insurance Training and other benefits Total (note 22)
2014 $
2013 $
2,416,590
1,776,349
604,148
444,087
10,032,945 (10,278,622) (248,987) (94,140) 15,344
Salaries and related expenses Pension Medical and other benefits Total
9,097,683 (9,298,145) (1,824) (138,771) (88,510) (5,303) 9,217
2014 $
2013 $
18,955,075 616,528 796,600 241,449 20,609,652
16,360,975 498,882 830,911 664,464 18,355,232
Included in employee benefits is executive remuneration as follows: 2014 $
Page 59
9,217 9,217
4,516,265 142,519 770,861 5,429,645
2013 $ 2,802,248 654,248 3,456,496
The number of employees at year end was twelve (12) (2013 –REPORT thirteen (13)). ICAJ ANNUAL 2013/2014
Institute of Chartered Accountants of Jamaica 60
Notes to the financial statements March 31, 2014 The Institute operates a defined-contribution pension plan for its employees, which is administered by a life assurance organisation. The plan was established in financial year ended March 31, 1999 and is funded by contributions from employees and employer. The Institute contributes at a rate of five percent (5%) of pensionable salaries, while employees contribute at a mandatory rate of five percent (5%) but may make voluntary contributions not exceeding an additional five percent (5%). Pension benefits are based on contributions plus accumulated interest;; accordingly, the Institute’s liability is restricted to its contributions. The Institute’s contribution to the plan during the year amounted to $616,528 (2013 $498,882) [note 25].
Capital expenditure, originally estimated at approximately $55 million, in respect of the building development project (note 4) was previously approved by the members. The project was further broken down into ground and upper levels. At the end of the reporting period, actual expenditure amounted to $55.8 million. In 2012, construction on the first phase (ground level) of the project was completed and the related costs of $36.5 million were capitalised. The balance of $19.3 million in construction-in-progress represents cost incurred to date on the upper levels. At end of the reporting period, the estimated costs to complete the upper floor was $5.8 million. There are no capital commitments at the end of the reporting period. Cost incurred in completing the upper levels will be capitalised on completion.
The members of the Council are volunteers. No member of the Council has received payment in respect of services to the Institute, other than by way of reimbursement of incidental expenses incurred in providing such services. The members of Council and the Executive Director are referred to as “key management personnel” [note 23].
The Institute’s activities expose it to a variety of financial risks in respect of its financial instruments: market risk (currency risk, interest rate risk and other price risk), credit risk and liquidity risk. The Institute seeks to manage these risks by close monitoring of each class of its financial instruments, as follows: a
Market risk i
Currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Institute is exposed to currency risk due to fluctuations in exchange rates on transactions and balances that are denominated in currencies other than the Jamaica dollar. Foreign currency bank accounts are maintained from foreign currency receipts, at levels which will meet foreign currency obligations. At the end of the reporting period, the Institute had net foreign currency assets of £7,259 (2013 - £12,801) and US$4,361 (2013 – US$30,304), which were subject to foreign exchange rate changes as follows:
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Institute of Chartered Accountants of Jamaica 61
Notes to the financial statements March 31, 2014 .
Risk management objectives and policies (cont’d) a Market risk (cont’d) i
Currency risk (cont’d) Concentrations of currency risk
Financial assets - Other receivables - Cash and bank balances Financial liabilities - Payables and accruals Net foreign currency assets
2014 US$
2014 £
2013 US$
2013 £
1,802 22,404 24,206
7,259 7,259
177 49,219 49,396
12,801 12,801
(19,845) 4,361
7,259
(19,092) 30,304
12,801
The above assets/(liabilities) are receivable/(payable) in United States dollars (US$) and Pound Sterling (£). Exchange rates applicable at the end of the reporting period are J$108.99 to US$1 (2013 – J$97.93 to US$1) and J$179.38 to £1 (2013 – J$148.04 to £1). Foreign currency sensitivity Due to the nature of the Institute’s operations and the very short-term nature of balances denominated in currencies other than the Jamaican dollar, there is no material impact on the results of the Institute’s operations as a result of changes in exchange rates. ii
Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates. The Institute’s cash and cash equivalents are subject to interest rate risk. However, the Institute attempts to manage this risk by monitoring its interest-bearing instruments closely and procuring the most advantageous rates under contracts with interest rates that are fixed for the life of the contract, where possible. The Institute invests excess cash in short-term deposits and maintains interestearning bank accounts with licensed financial institutions. Short-term deposits are invested for periods of three (3) to twelve (12) months at fixed interest rates and are not affected by fluctuations in market interest rates up to the dates of maturity. Interest rates on interest-earning bank accounts are not fixed but are subject to fluctuations based on prevailing market rates [note 9]. Interest rate sensitivity As interest rates on the Institute’s short-term deposits and long-term loans are fixed up to maturity and interest earned from the Institute’s interest-earning bank accounts is immaterial, there would be no material impact on the results of the Institute’s operations as a result of fluctuations in interest rates.
iii Other price risk Other price risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market prices, whether those changes are caused by factors specific to the individual instrument or its issuer or factors affecting all instruments traded in the market. The Institute’s financial instruments are substantially independent of changes in market prices as they are short term in nature.
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ICAJ ANNUAL REPORT 2013/2014
Institute of Chartered Accountants of Jamaica 62
Notes to the financial statements March 31, 2014 .
Risk management objectives and policies (cont’d) b Credit risk Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Institute faces credit risk in respect of its receivables, cash at bank and short-term deposits held with financial institutions. It is the Institute’s policy to deal only with credit worthy financial institutions and other counterparties, to control credit risk. Credit risk for receivables is controlled by activities under the provisions of the ByeLaws of the Institute, where necessary. Credit risk for cash at bank and short-term deposits is managed by maintaining these balances with licensed financial institutions considered to be stable and creditworthy. Savings and current accounts held with commercial banks are insured under the Jamaica Deposit Insurance Scheme (JDIS). However, for amounts held with commercial banks at the end of the reporting period, a total of $2,400,000 (2013 - $2,400,000) is insured under the JDIS. The Institute is not exposed to any significant credit risk to any single counterparty or group of counterparties. The majority of the Institute’s counterparties are members or member firms which are not considered to be a credit risk to the Institute. The Institute does not require collateral or other credit enhancements in respect of its receivables as it considers its debtors creditworthy and do not expect them to default on their obligations. c
Liquidity risk Liquidity risk is the risk that the Institute will encounter difficulty in raising funds to meet its commitments associated with financial instruments. The Institute manages its liquidity risk by maintaining an appropriate level of resources in liquid or near liquid form. The Institute maintains cash and short-term deposits for up to 90-day periods to meet its liquidity requirements.
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Notes to the financial statements March 31, 2014 .
Risk management objectives and policies (cont’d) c Liquidity risk (cont’d) The Institute’s financial liabilities comprise long-term loans and payables. These amounts are due as follows: Current Within 3 Months 4 to 12 Months 2014 2013 2014 2013 $ $ $ $ Long-term loans – current portion Payables and accruals Total
597,479 7,592,313 8,189,792
514,622 6,057,181 6,571,803
889,821 485,882 1,375,703
722,676 722,676
Non-Current 2 to 5 Years Over 5 Years 2014 2013 2014 2013 $ $ $ $ Long-term loans Total
6,791,805 6,791,805
4,736,117 4,736,117
9,401,124 9,401,124
2,635,398 2,365,398
The Institute considers its capital to be its accumulated surplus and reserves. The Council’s financial objective is to generate a targeted operating surplus, in order to strengthen and provide for the future continuity of the Institute, taking into account the various competitive risks. The Council regularly reviews the financial position of the Institute at meetings. The Institute is not subject to any externally imposed capital requirements.
Donations are received for the purposes of funding the construction and completion of the Institute’s building development project and acquisition of other capital assets, including outfitting the resource centre. These are credited to capital assets fund and released to surplus or deficit over the economic life of the respective assets, in line with the depreciation policy. Previously, such donations were included in capital assets reserve and treated as part of the Institute’s equity. It is now determined that the amounts should be included in a specially designated fund and accordingly, the accumulated donations and the net interest received arising from the investment of the funds have been re-classified from equity to the capital assets fund. On completion of each phase of the capital assets project, an amount equivalent to depreciation of the relevant assets will be released to surplus or deficit. The financial statements for the years ended March 31, 2013 and 2012 (the immediately preceding comparative periods) have been restated to reflect the impact of the reclassification. The financial effects of the re-classification are set out as follows:
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Institute of Chartered Accountants of Jamaica 64
Notes to the financial statements March 31, 2014 a
’d) Impact of re-classification of capital contributions on statement of financial position as at March 31: As previously Effect of rereported classification 2013 2013
$ Assets Non-current assets Property, plant and equipment Investment in equity instruments
$
Restated
Effect of reclassification 2012
Restated
2013
As previously reported 2012
$
$
$
$
2012
59,213,363
-
59,213,363 57,083,005
-
57,083,005
335,232 59,548,595
-
335,232 502,080 59,548,595 57,585,085
-
502,080 57,585,085
218,355
-
218,355
51,379
-
51,379
4,773,757 2,256,204 2,022,358
-
4,773,757 2,256,204 2,022,358
7,330,459 3,835,053 -
-
7,330,459 3,835,053 -
Total assets
21,417,643 30,688,317 90,236,912
-
21,417,643 22,134,692 30,688,317 33,351,583 90,236,912 90,936,668
-
22,134,692 33,351,583 90,936,668
Reserves Accumulated surplus Fair value reserve Capital assets reserve Total reserves
15,137,234 330,512 43,095,200 58,562,946
(11,599,485) (11,599,485)
15,137,234 330,512 31,495,715 46,963,461
13,860,500 497,360 43,242,289 57,600,149
(11,888,433) (11,888,433)
13,860,500 497,360 31,353,856 45,711,716
Liabilities Funds Administered funds Capital Assets Fund ICAJ Welfare Fund ICAJ/IDB Project Fund Total funds
1,451,685 76,355 8,816,879 10,344,919
11,599,485 11,599,485
1,451,685 11,599,485 76,355 8,816,879 21,944,404
1,326,435 836,374 11,184,103 13,346,912
11,888,433 11,888,433
1,326,435 11,888,433 836,374 11,184,103 25,235,345
7,371,515 30,428 7,401,943
-
7,371,515 30,428 7,401,943
8,186,911 21,211 8,208,122
-
8,186,911 21,211 8,208,122
6,632,625 6,057,181
-
6,632,625 6,057,181
6,906,900 4,182,729
-
6,906,900 4,182,729
1,237,298 13,927,104 31,673,966
-
1,237,298 691,856 13,927,104 11,781,485 43,273,451 33,336,519
-
691,856 11,781,485 45,224,952
90,236,912
-
90,236,912 90,936,668
-
90,936,668
Current assets Inventories Membership dues, other receivables and prepayments Taxation recoverable Short-term deposits Cash and cash equivalents
Non-current liabilities Long-term loans Deferred tax liability Current liabilities Deferred income Payables and accruals Current portion of longterm loans Total liabilities Total reserves and liabilities
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Institute of Chartered Accountants of Jamaica 65
Notes to the financial statements March 31, 2014 b
ions (cont’d) Impact of re-classification of capital contributions on statement of comprehensive income for year ended March 31, 2013 As previously Effect of reRestated stated classification 2013 2013 2013 $ $ $
Revenue Members’ subscription and admission fees Students’ subscription and registration fees Surplus from self-financing activities Finance income Subvention for students Advertising and sponsorship Sale of handbooks, bags and shirts Miscellaneous
17,620,736 10,814,160 5,917,886 872,623 2,841,070 82,976 902,513 149,903
Transfer from Capital Assets Fund Gain on foreign exchange
39,201,867 555,084
1,006,229 -
39,201,867 1,006,229 555,084
39,756,951
1,006,229
40,763,180
Administrative and other operating expenses Donation – ICAJ Welfare Fund Bad debts specific charges Bad debts recovered Loss on disposal of property, plant and equipment Finance costs Surplus for the year before taxation and transfer Income tax expense Surplus for the year before transfer Interest transferred to designated funds Surplus for the year Other comprehensive income: Items that maybe reclassified subsequently to surplus or deficit: Increase in capital contributions Loss on revaluation of equity instruments Total comprehensive income for the year
Page 65
-
17,620,736 10,814,160 5,917,886 872,623 2,841,070 82,976 902,513 149,903
(35,632,471)
-
(35,632,471)
(75,000)
-
(75,000)
(1,966,649)
-
(1,966,649)
62,383
-
62,383
(69,244)
-
(69,244)
(1,305,850)
-
(1,305,850)
770,120
1,006,229
(9,217) 760,903 (348,539) 412,364
717,281 (166,848) 962,797
1,776,349 (9,217)
1,006,229 1,006,229
(717,281) 288,948
1,767,132 (348,539) 1,418,593
(166,848) 1,251,745
ICAJ ANNUAL REPORT 2013/2014
66
Additional information – Auditor’s report
To the Council of Institute of Chartered Accountants of Jamaica On Additional Information The additional information presented on the following pages has been taken from the accounting records of the Institute of Chartered Accountants of Jamaica and has been subjected to the tests and other auditing procedures applied in my examination of its financial statements for the year ended March 31, 2014. In my opinion, the said information is fairly presented in all material respects in relation to the financial statements taken as a whole although it is not necessary for a fair presentation of the state of the Institute’s affairs as at March 31, 2014 or of the results of its operations or its cash flows for the year then ended.
Chartered Accountant
Kingston, Jamaica July 8, 2014
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Institute of Chartered Accountants of Jamaica 67
Additional information Supporting schedule of expenses Year ended March 31, 2014 2014 $ Administrative and other operating expenses Meeting expenses Salaries and other staff costs Water Property taxes Insurance Legal and other professional fees Audit fees - current year - prior year General and office expenses Travelling and entertainment Advertising and public relations Subscriptions to professional associations Repairs and maintenance Depreciation: building - current year - adjustment Depreciation: computer, furniture and equipment Printing, stationery and computer supplies Communication and technology Electricity Postage and delivery Cleaning and sanitation Security services Library services Student affairs and awards Newsletters and annual report Cost of sales – handbooks, bags and shirts Bank charges
Page 67
694,176 20,609,652 316,602 216,500 905,226 102,600 377,000 (28,875) 563,491 3,065,767 2,007,269 3,367,968 459,346 1,260,228 1,029,575 254,885 940,211 2,444,230 92,695 398,500 211,728 12,855 759,495 644,006 492,435 786,420 41,983,985
2013 $ 409,835 18,355,232 313,810 82,000 638,767 24,000 390,875 (1,050) 482,978 2,021,090 2,073,323 2,895,838 773,075 1,240,497 (2,500,279) 1,145,272 437,375 961,631 2,225,120 173,466 275,986 186,066 37,399 732,647 693,500 765,745 798,273 35,632,471
ICAJ ANNUAL REPORT 2013/2014
Institute of Chartered Accountants of Jamaica 68
Additional information Detailed statement of surplus/(deficit) from selffinancing activities Year ended March 31, 2014
Seminar Graduations $
$
Awards Banquet
Room Rental
$
$
Total 2014 $
Total 2013 $
Income Fees – Members 10,259,302 Non-members 4,676,828 Room rental Sponsorship 686,695 Graduates’ contribution ACCA contribution
157,597 25,751 97,500 260,000
1,675,536 693,562 1,175,021 -
12,092,435 11,096,648 5,370,390 3,713,437 3,577,375 3,577,375 1,469,063 1,887,467 40,676 97,500 91,014 260,000 400,000
Total income
15,622,825
540,848
3,544,119
3,577,375 23,285,167 16,810,838
473,468 -
203,100 10,000
1,102,797 150,000
229,913 2,356,540 172,161 1,257,047
388,043 22,910 16,667
1,328,466 -
1,910,909 -
17,083 -
37,316 -
133,411 38,000 6,571,449
96,708 754,511
19,800 2,638,379
9,051,376
(213,663)
Less: Expenses Advertising and public relations Entertainment Share of profit – ACCA/ICAC Catering charges Printing and stationery Presenters’ expenses Parking, equipment and facilities rental Electricity Security services Staff travelling and subsistence Transportation Other costs Total expenses Surplus/(deficit) for year (note 20)
905,740
1,779,365 160,000
1,636,974 399,000
18,898 -
229,913 4,073,049 213,969 1,273,714
361,087 4,007,066 217,068 749,677
297,790 938,838 373,856
2,263,098 938,838 373,856
2,387,141 350,368 225,105
-
608,651 310,112 455,440 38,000 22,000 205,381 302,089 227,354 2,290,203 12,254,542 10,892,952 1,287,172 11,030,625
5,917,886
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ICAJ ANNUAL REPORT 2013/2014