BICA Annual Report by Phemelo Malema

Botswana Institute of Chartered Accountants Annual Report 2019

Integrating skills and the best practice into the next generation for Botswana’s transformation

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

Integrating and best practice into the next Generation for Botswana’s Transformation

BICA Annual Report 2019

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

1. Governance Structure • • •

Table of Contents

7 7 8

Incorporation and nature of business Vision, Mission and Core values BICA Council Members

2. President’s Report

3. Chief Executive Officer’s Report

4. Corporate Governance

5. Strategic Plan Implementation Reports from Committees

• • • • • • • •

40 52 56 62 66 70 78 82

Membership and Examinations Tax Training and Professional Development Technical Public Sector Finance and Administrative Accounting Technicians Northern

6. Annual Financial Statements

BICA Annual Report 2019

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

1.1

Governance Structure

BICA Annual Report 2019

Incorporation And Nature Of Business The Botswana Institute of Chartered Accountants is a professional body of accountants domiciled in the Republic of Botswana. The Institute was incorporated in Botswana in terms of the Accountants Act, 2010.

1.2

Mission and Vision Statements and Core Values

iii) BICA Core Values

Integrity

Excellence

i) Vision To support Botswana’s development through a dynamic and ethical accountancy profession. ii) Mission

Independence

Transparency

To protect public interest through: • Promoting the accountancy profession • Supporting accountants • Facilitating quality professional accountancy services through the monitoring and regulation of accountants • Developing Chartered Accountants

Accountability

BICA Annual Report 2019

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

1.3 BICA Council Members

Ms. Gosego Motsamai

BICA President

Ms. Gosego Motsamai is the Managing Partner at KPMG Botswana. Ms Motsamai has over 23 years’ experience in Audit, Accounting, Advisory and Tax compliance services, 21 of which are with KPMG Botswana. Ms Motsamai is a Fellow member of the Botswana Institute of Chartered Accountants (FCA), Fellow of the Association of Certified Chartered Accountants, UK (FCCA) and is a Certified Internal Auditor (CIA). She also holds a Bachelor of Commerce (majoring in Accounting) obtained from the University of Botswana. Ms. Motsamai holds an Audit Certificate of Practice (Certified Auditor) issued by Botswana Institute of Chartered Accountants (BICA) and Certified Auditor of a Public Interest Entity awarded by Botswana Accountancy Oversight Authority (BAOA).

in Botswana, including but not limited to public sector, financial services, healthcare, mining and retail to name but a few, providing auditing accounting and advisory services. Ms. Motsamai is passionate about the development of the accounting profession in Botswana and continuously mentors and supports young aspiring professionals in qualifying as chartered accountants. She has over the years served in the BICA Council in various capacities and in a number of BICA subcommittees. Prior to being the BICA President, she served a two-year term as the Vice President and one year as the Treasurer and Chairperson of the Finance & Administration Committee. She has also served as the Chairperson of Training and Professional Development Committee and as the Chairperson of the Public Sector Committee. Ms. Motsamai currently chairs the BICA Tax Committee in her capacity as the BICA President.

Mr. Maemo S. D. Mesotlo

Treasurer

He is a Chartered Accountant and Certified Auditor registered with Botswana Institute of Chartered Accountants (BICA). Mr. Mesotlo has over 10 years’ experience in the field of accounting and auditing, and he is responsible for overseeing MSD’s portfolio of assignments spanning across external audit, Internal audit cosourcing, IFRS Conversions and Implementation, Due diligence assignments and business valuations.

Vice President

Ms. Cecilia Ramatlapeng, a Partner at Deloitte & Touche, is a Chartered Accountant who has over two decades experience in the auditing, accounting and advisory profession. Her career began in 1997 when she joined Deloite & Touche as a graduate from the University of Botswana. Over her 22 years at the multi-national and reputable firm, Ms. Ramatlapeng has managed to rise through the ranks to her current position of Partner. She has a wealth of experience in assurance and IFRS advisory services, where she has taken a lead role in various complex projects involving parastatals, retirements funds, multinationals, listed companies amongst others. Ms. Ramatlapeng has also worked in Deloitte’s Global Financial Services Industry (GFSI) group in the firm’s Boston office, United States of America. Ms. Ramatlapeng currently chairs the Training and Professional Development Committee. She has also been a member of the Finance and Administration Committee as well as the

BICA Annual Report 2019

Technical and Practice Review committees at BICA. Ramatlapeng is currently a member of the Botswana Accountancy College Board. Ms. Ramatlapeng is a Fellow and Practicing Member of BICA and a Registered Auditor with the Botswana Accountancy Oversight Authority (BAOA). In addition, she is a Fellow member in good standing with Association of Certified Chartered Accountants (United Kingdom-UK). Ms. Ramatlapeng graduated with a Bachelor of Commerce (Accounting) from the University of Botswana in 1997.

playing a key role as a member of BICA’s organizing committee responsible for the Biennial Conference. He has also been a member of several Committees of the Institute including Examinations and Membership, Training and Professional Development and Public Sector. Mr. Mesotlo has a passion for promoting and empowering BICA Qualification students and ensuring members have equal rights. He also has an interest in the citizen and youth empowerment drives developing in the accountancy profession including joint audits initiatives. He is a Fellow member of the Association of Chartered Certified Accountants (ACCA), a Fellow Certified Professional Accountant and a member of the Institute of Internal Auditors Botswana, Mr. Mesotlo also holds a Bachelor of Commerce Degree in Accounting from North West University (South Africa).

He currently chairs the Institute’s Finance and Administrative Committee and has had significant contributions to various initiatives and developments within the Institute including

In her long and illustrious career, Ms. Motsamai has worked with businesses and business leaders across various industries and sectors

Ms. Cecilia Ramatlapeng

Mr. Maemo S. D. Mesotlo is Founder and Managing Partner at MSD Mesotlo & Associates (“MSD”), a 100% citizen owned audit and advisory services firm providing audit and assurance and corporate advisory services (e.g. Finance, Tax, Accounting, Transactional, Information Technology, Risk Management) across a wide spectrum of industries in Botswana.

Ms. Susanne Swaniker-Tettey

Council Member

Ms. Susanne Swaniker-Tettey was appointed Chief Financial Officer (CFO) of the De Beers Diamond Trading business in May 2018, responsible for finance in the Diamond Trading (Midstream) which covers Botswana, South Africa, Namibia and Singapore Diamond Sales business.

Susanne is a Council member and the chairperson of the BICA Public Sector Committee.

Prior to joining De Beers, Susanne’s career started as an auditor with Deloitte. After 10 years in the audit field, she joined the mining industry where she spent another 14 years working extensively across the mining sector in Botswana for copper nickel and diamond mines. Outside finance, she has led various functions including HR, IT, Compliance, Security, Procurement and Marketing. She is a fellow member of both the Botswana Institute of Chartered Accountants and the Certified Chartered Accountants (ACCA, UK), has an M.Sc. in Accounting and an MBA. She has also completed the Senior Executive Development Program at the London Business School.

BICA Annual Report 2019

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

BICA Council Members Continued

Mr. Moshe C. Zila Libengo

Council Member

Mr. Zaeem Anwar Council Member

Mr. Moshe C. Zila Libengo is a Financial Controller at Botswana Power Corporation. He is currently a council member of BICA, chairing its Membership and Examinations Committee. Throughout his accounting career spanning over 15 years post qualification, Mr. Libengo has worked for several private companies in senior roles of finance and administration management, management accountant and audit. Some of the private and government parastatals he worked at include Stanbic Bank of Botswana, Botswana Railways, Botswana Accountancy Oversight Authority (BAOA), Botswana Stock Exchange (BSE), Local Enterprise Authority (LEA) and BA ISAGO University. The above management positions have allowed him to have hands on experience in strategy and policy development, service delivery, networking and coordination, resource management, implementation of financial and accounting systems, auditing and taxation. He has been a council member of BICA and Botswana Accountancy College (BAC) since 2015.

Mr. Zaeem Anwar is a Fellow Chartered Accountant who has been practicing as an Auditor in Botswana since 2002 and has served BICA in various Committees as well as being a member of the Council. Mr Anwar is the current Chairperson of the Technical Committee which is responsible to oversee the technical aspects of the profession in Botswana particularly in the areas of International Financial Reporting Standards (IFRS) and International Standards on Auditing (ISAs). It also provides support and guidance to the institute’s membership on technical pronouncements released by the International Federation of Accountants (IFAC). In the past, Mr. Anwar was the Chairman of the Membership and Examinations Committee, Training and Development Committee. As a Council member, he has represented BICA at various fora like the Ministry of Employment, Labour, Productivity and Skills Development Sectoral HLCC Committee up until 2015.

BICA Annual Report 2019

He has also served and currently serves in various boards of State Owned Enterprises such as Botswana Oil, Botswana Savings Bank (BSB) and Citizen Entrepreneurial Development Agency (CEDA). Moshe is a Director at Alliant CPA Consultancy (Pty) Ltd. At one point he was the Vice President of the Association of Accounting Technicians, Botswana branch.

Mr. Conductor P. Masena Council Member – Ministerial Appointee

Mr. Libengo’s professional qualifications include MBA from University of Derby, AAT from Accountancy and Business College and Association of Certified Chartered Accountant from Botswana Accountancy College (BAC). He is a fellow member of BICA (FCA).

He currently sits on the Ministry of Trade and Investment Sectoral HLCC Committee. Mr Anwar continues to play a much broader role in the Accounting profession through his investment in Imperial School of Business and Science (ISBS), which also trains accountants. He is also an Authorized Training Employer (ATE) who is ready to take on students whenever they need practical experience. This assists in the training and development of citizen Chartered Accountants. Apart from playing key strategic roles in the affairs of BICA, Mr. Anwar also volunteers his time by being in the Committee of the Chartered Institute of Management Accountants (CIMA) which is also aimed at advancing the development of the Accountancy Profession in Botswana. In the past, he has also served in Africa Branch Forum and African Regional Board of CIMA.

Mr. Conductor P. Masena was appointed as the inaugural Registrar General of CIPA in August 2013. He led the transformation of ROCIP to Companies and Intellectual Property Authority (CIPA) an autonomous body, and is charged with driving the strategic direction of the Authority and ensuring that CIPA delivers its mandate as per the Companies and Intellectual Property Authority Act, 2011. Mr. Masena joined the then Registrar of Companies and Intellectual Property Authority (ROCIP) in 1999 as a Commercial Officer and rose through the ranks to Commercial Officer - Head of Companies and Business Names (2001), Senior Commercial Officer - Head of Copyright Section (2003), Principal Commercial Officer - Head of Companies Division (2007), Deputy Registrar (2009), Registrar (2011), until he became the Registrar General at the then newly created parastatal (CIPA). He is credited with putting in place processes that significantly reduced the turn-around times for registering companies in Botswana, spearheading the amendments of the Companies Act resulting in the successful implementation of the Online Business Registration System (OBRS), which has seen tremendous improvements in efficiencies within CIPA therefore contributing to the ease of doing business and transformation agenda in Botswana.

Ms. Boineelo Magdalene Peter Council Member – Ministerial Appointee

Ms Boineelo M. Peter is Director, Budget Analysis and Debt Management, stationed at Ministry of Finance and Economic Development. She has been in the current position for over ten years. Ms. Peter plays a critical role in the country’s budget consolidation and monitoring, which among others includes facilitating the provision of funds for approved development projects, maintenance of comprehensive debt portfolio, regular monitoring of central Government’s development expenditure, loan assessment and negotiation of new borrowings. Ms. Peter, who joined Government as Assistant Economist more than 30 years ago, is also tasked with ensuring that Government complies with international data compilation and dissemination set standards regarding Government Finance Statistics and Debt.

He was also instrumental in facilitating amendments to the Copyright Act and Neighbouring Rights and the Industrial Property Act. Mr. Masena has also cemented CIPA’s relationship with international bodies such as the World Intellectual Property Organization (WIPO), African Regional Intellectual Property Organization (ARIPO) and the Corporate Registers Forum among others, ensuring that all CIPA activities are based on international standards. A seasoned professional who has extensive experience in both Copyright and Industrial Property, Mr. Masena was elected to chair ARIPO Administrative Council from 2009 to 2011. During his tenure as chairperson, ARIPO adopted the Swakopmund Protocol on Traditional Knowledge and Expressions of Folklore, approved a new organogram transforming ARIPO into a more effective organization and registered a surplus budget. Mr. Masena is a holder of a Master of Intellectual Property, Commerce and Technology, a Bachelor of Arts in Accounting and Economics and a Diploma in Trade Policy from the World Trade Organization. He has also worked for the Ministry of Communications, Science and Technology, Botswana Export Development and Investment Promotion Agency (BEDIA) as well as the Trade & Investment Promotion Agency (TIPA). He is currently a Board Member of Botswana Institute of Chartered Accountants (BICA), Botswana Accounting College (BAC) and Executive Committee Member of the Corporate Registers Forum (CRF).

funds for procurement of goods and services under the HIV/AIDS project. Ms. Peter has BA Economics and Accounting from the University of Botswana (UB) and Msc Economics from the University of Illinois, United States. She has also attended a number of professional courses, locally and abroad. For example, Peter has participated in a Government Finance Statistics course organised by the International Monetary Fund, Debt Strategies and Techniques, Domestic Debt Sustainability in Zimbabwe and India. Private and Public Partnership workshop, Financial Programming and Policies, Sovereign Bond Issuance, Design and Implementation of Medium Term Debt Management Strategy are some of the professional workshops and short courses she has attended over the years to hone her skills on budget and debt management in general.

As an experienced Debt Manager, Ms. Peter is the current Chairperson of the United States President’s Emergency Plan for AIDS Relief (PEPFAR) Procurement Committee which avails BICA Annual Report 2019

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

BICA Council Members Continued

Mr. Emmanuel Marufu Northern Committee Representative in Council

Mr. Emmanuel Marufu is a Chartered Management Accountant by training and an Associate member of the Botswana Institute of Chartered Accountants. He has more than ten years of accounting work experience gained by working for several companies from different sectors such as Education, Manufacturing, and FMCG.

Mr. Emmanuel is also a Consultant and Director of Juba Management a BICA registered member firm, offering accounting and advisory services. He has a BBA degree in Accounting, He is a member in good standing of the Chartered Institute of Management Accountants-UK and is currently at the final stage of completing an Mcom in Management Accounting with the North-West University in South Africa.

Mr. Emmanuel started his accounting career by working as a Cost Accountant at Marvo Stationery Manufacturers and then went on to work for Delta Beverages a subsidiary of South African Brewery Millers as an Assistant Accountant (TOP Trainee). He then went to Rosh Plastics a manufacturer of PVC conduits in Francistown where he worked as a Finance Manager. Currently Mr. Emmanuel is a Lecturer at Baisago University (Francistown Campus) specializing in the areas of costing, management accounting, taxation and auditing.

Ms. Mpho Magdeline Masuge Accounting Technicians Representative

Ms. Mpho M. Masuge is a seasoned professional in the fields of finance and banking. She is currently an entrepreneur, and before then was employed within the Ministry of Finance and Economic Development as Chief Finance Administrator (Finance and Banking). Key to her then role was regulating, managing and overseeing the processing and approval of Government Employees Motor Vehicles & Property Advance Scheme (GEMVAS) loan applications for the entire Central Government’s qualifying workforce. She was also responsible for the suspension of the management of Guaranteed Loans Insurance Fund (GLIF) whose management was outsourced to private insurance companies appointed through tendering process. Ms. Masuge was also the Ministry’s desk officer for monitored operations of National Development Bank (NDB), Public Procurement and Asset Disposal Board (PPADB), Botswana

BICA Annual Report 2019

Ms. Verily Molatedi Council Secretary

Ms. Verily Molatedi is the current Chief Executive Officer of Botswana Institute of Chartered Accountants (BICA). She is responsible for the day to day running of BICA, charged with the responsibility of implementing all aspects of BICA mandate.

Apart from her demanding job, she continues to sit in various boards in Botswana and the Southern African region. She is a member of Africa Integrated Reporting Committee. Ms. Molatedi also chairs the Botswana Integrated Reporting Committee.

Prior to joining the Institute, Ms. Molatedi, a dynamic individual, worked for various parastatals and a leading local bank, where she held senior management positions. Some of the organizations she has worked for include Local Enterprise Authority (LEA), Botswana Meat Commission (BMC), Botswana Bureau of Standard (BOBS), Standard Chartered Bank Botswana and Botswana Housing Corporation (BHC). She is a highly experienced individual who has over 25 years working for large corporates which exposed her to diverse leadership skills ranging from Corporate Governance, Project Management, Strategic Planning, Financial Business Unit Development to Internal Systems Controls.

Academically, Ms. Molatedi graduated from the University of Botswana (UB) with a B. Com degree. She has also graduated from the Association of Chartered Certified Accountants (ACCA). To continuously sharpen her leadership skills, Ms. Molatedi has attended a number of leadership and executive development programs with various institutions. She is also a fellow member of BICA and ACCA.

Savings Bank (BSB) and Botswana Building Society (BBS) Limited. Ms. Masuge deputised the Director of Finance and Banking. In addition, she was also responsible for formulating and coordinating of answers to Parliamentary Questions including the Public Accounts Committee (PAC) report. Her career began as Accounts Clerk for Jwaneng Town Council in 1985. Over time, Ms. Masuge moved up the ranks and worked for several private companies, parastatals and Government both at middle and senior management positions. In a career spanning over 30 years, she gained experience in fields such as accounting, banking, credit control and finance administration. Ms. Masuge has a Certificate in Accountancy and Business Studies from Botswana Institute of Administration and Commerce (BIAC). She also qualified from Association of Accounting Technician (UK) and Botswana Accountancy College (BAC)/Arthur Portland (part qualified).

BICA Annual Report 2019

President’s Report

BICA Annual Report 2019

Honourable Minister, Dr Thapelo Matsheka Minister of Finance and Economic Development

It is an honour and a privilege to present on behalf of Council the Annual Report of the Botswana Institute of Chartered Accountants (BICA) for the year ended 31 December 2019. Our results for the year are a clear demonstration of our long-term efforts to establish and implement a successful strategy. We continue to experience growth in our memberships and financially, despite the challenges we face in executing our mandate.

BICA Annual Report 2019

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

President’s Report Gosego Motsamai BICA President

As the Council, we continue to monitor and review the 2017-2021 strategic plan to ensure that it is relevant and aligns to the current operations of the Institute and is responsive to the emerging changes.

BICA 2017-2021 Strategic Plan Implementation The 2017-2021 strategy was reviewed in August 2019 to ensure that it is relevant and aligns to the current operations of the Institute and is responsive to the emerging changes. The BICA Management continued to monitor and review progress achieved as per the set implementation plan for the year 2019. The progress reports are shared with the BICA Council to apprise them as well as seek guidance where necessary. However, it must be noted that while there is progress in strategy implementation, there are other areas of concern which impede our progress such as the amendment of The Accountants Act. Maintaining Professional Standards One of the key responsibilities of the Institute is to ensure that its members adhere to the highest levels of professional standards and ethical codes which ultimately ensures protection of public interest and enhances stakeholder trust in the accountancy profession. The Institute is also responsible for ensuring that members are educated and informed of all pronouncements issued by the International Education and Standards Board (IESB) of the International Federation of Accountants (IFAC) and of any changes in the local regulatory landscape.

BICA Annual Report 2019

Professional Accountants The Institute continued to monitor Continuing Professional Development (CPD) compliance as per requirement of Professional Accountants to submit their CPD evidence every three-year cycle. An online CPD platform was developed to assist members to take courses at their convenience and to provide access for members who are unable to attend conventional CPD events hosted by the Institute. The Institute discharged its responsibilities under the International Federation of Accountants (IFAC) Statements of Membership Obligations. Adherence To The BICA Code Of Conduct The Institute continues to take action against members not abiding by the Accountants Act of 2010, BICA Code of Ethics and BICA Rules. As we aim to curb disciplinary cases, The Institute will continue to train and capacitate our members to minimise misconducts in their workplace and the profession at large. BICA Qualification One of our strategic objectives is to increase the number of Professional Accountants who register with the Institute to meet the demands of Botswana’s economy. Over and above that, the Institute targets to increase the number of citizen qualified Chartered Accountants thus reduce overreliance on non-citizen qualified Chartered Accountants. Since the introduction of the BICA Qualification

in 2011, the Institute has produced 20 BICA qualified Chartered Accountants. We are not where we had hoped to be by now. However, we need to recognise the difficulty of the qualification and its high pass mark thresholds, so it is more challenging for the students, who have to work full time and study concurrently. The advantage however, is that once they qualify they are work ready and are able to address the challenges that we have as a country of having graduates with qualifications but no experience. The Institute is not taking the low pass rate lightly, it conducts examination feedback sessions with the students and the lecturers to discuss the focus areas where students’ performance should be improved. The Institute conducted motivational sessions for all BICA students by BICA Graduates to address student challenges and sharing tips on how they can overcome any study constraints. The Institute continues to intensify its monitoring role by conducting bimonthly inspections of the Tuition Providers to assess their adherence to the standards as set out in the service level agreements. I am delighted to announce that on the 2 August 2019, the Institute was granted accreditation of the BICA Qualification by Botswana Qualification Authority which runs for five years until 1 August 2024. This further adds credibility to The Qualification.

BICA Annual Report 2019

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

President’s Report Continued Membership Growth The Institute continues to execute its mandate of registration and regulation of all accountants working in Botswana. The membership base grew by 1.6% from 4634 members as at 31st December 2018 to 4708 members at the end of 2019, compared to a growth rate of 22% achieved in 2018. The slower growth rate was due to a decrease in new admissions as the Institute registered 458 new members compared to 1026 members registered in 2018. The large number of membership registrations in 2018 was a result of the moratorium issued for individuals to register by the 30th June 2018, compared to the year 2019 where the new admissions were consistent with prior periods. In addition, the membership growth was impacted negatively due to a large number of members suspended totalling 377 as at the end of 2019. Financial Performance During this financial year the Institute grew both financially and membership. Total revenue growth was 4% and membership growth was 1.6%. The key revenue growth contributors were membership fees and seminar revenue streams. Costs on the other hand increased by 11% compared to 2018 financial year mainly attributable to the filling of vacant positions and increased number of seminars and implementation of various projects aimed at the attainment of the Institute’s mandate. Cost containment will continue to a priority for the Institute.

BICA Annual Report 2019

Accounting Technicians Committee In view of the fact that our membership is dominated by Accounting Technicians (3300 out of a total of 4708), an Accounting Technician Committee was established in 2019. The purpose of the committee is to ensure that issues that affect the Accounting Technicians Committee are brought to the attention of the Council. BICA Support To Governement/ Public Sector The Institute continues to work with the Accountant General’s Office in accordance with the Memorandum of Understanding (MoU) signed in August 2017. The objective of the MOU is to work together to strengthen public financial management and financial reporting capacity and capability within the Government of Botswana. The primary responsibility for the Institute under this MoU is to support public sector reforms such as the Government’s transition to accrual accounting based on the International Public Sector Accounting Standards (IPSAS) framework. In the prior year, BICA Public Sector Committee developed a BICA Capacity Development Roadmap for the Accrual Project aligned to the Roadmap developed by the Accountant General’s Office for the overall project. This was so as to ensure that the Institute is ready to support each phase of the project as initiated by Government.

In the current year, BICA continued to be involved in the project and provided inputs aimed at successful implementation of the project, through the Institute’s Public Sector Committee and representation in the Project Steering Committee and Project Implementation Committee. Through these forums, the Institute advised on the development of a Public Asset Management Policy and a Chart of Accounts for Government. In addition, the Institute was involved in identifying short term practical training in various areas of the public finance cycle aimed at capacitating finance officers in view of the imminent reforms.

Following this, the Institute facilitated the risk assessment for the accountancy sector, and guided member firms in performing their individual risk assessments. The Institute also developed guidance on AMLCFTP, facilitated outreach sessions to raise awareness and conducted inspections of member firms to gauge the state of compliance within the profession and advise firms on how to bridge the identified gaps. All these efforts contribute to the national efforts to combat financial crime and improve the country’s reputation in the international community.

Regulatory Environment Annual General Meeting (AGM) The Institute has been designated by the Financial Intelligence Act (2019) as the supervisory authority for the accountancy profession for AntiMoney Laundering (AML), combating the Financing of Terrorism and the Financing of the Proliferation of Arms of War, Nuclear, Biological and Chemical weapons (AMLCFTP). Therefore, the Institute has an obligation to monitor compliance with the Act within the profession and support practitioners in the fight against financial crime. The Institute also participated in the National Risk Assessment for AMLCFTP organized by the Ministry Finance and Economic Development whose purpose was to identify and analyse the risk of money laundering at national level.

The Annual General Meeting was successfully held on the 29th of April 2019 at Cresta Lodge, Gaborone. BICA Council Elections The following BICA members were reelected / elected into the BICA Council at the AGM: Mr. Zaeem Anwar Ms. Gosego Motsamai Ms. Susanne Swaniker-Tettey The following BICA Council members resigned during 2019: Mr R. Binedell Mr H. Chilisa

Special Thanks To The BICA Council I wish to extend my sincere gratitude to the BICA Council for being committed and instrumental in driving the Institute’s vision and mandate to date. My fellow Council members, I thank you for your stewardship and your commitment to selflessly serve the accountancy profession, and the nation as we continue ‘to support Botswana’s development through a dynamic and ethical accountancy profession’. End Of My Tenure As President Having served my full term of two years as BICA President, I wish to announce that I shall be stepping down as President at the 2020 Annual General Meeting. I shall however continue to serve in Council for one year to give my successor the necessary support. This has been a great experience for me and I will cherish it forever. I sincerely thank everyone who supported me in my role over the years and I pledge my full support to my successor as he/she leads the Institute to greater heights.

My appreciation also extends to our other key stakeholders, the Botswana Accountancy Oversight Authority (BAOA), Ministry of Tertiary Education, Research, Science & Technology through the Department of Tertiary Education Financing (DTEF), the Auditor General, the Institute of Chartered Accountants in England and Wales (ICAEW), the Association of Accounting Technicians (AAT), the Association of Chartered Certified Accountants (ACCA), Chartered Institute of Management Accountants (CIMA), BICA Qualification Tuition Providers, Approved Training Employers, Government departments, Member firms, Members, BICA Committee Members and BICA staff for their support in the implementation of BICA’s various initiatives.

Gosego Motsamai BICA President

Conclusion On behalf of BICA Council, I wish to note and acknowledge the support of the Government of Botswana and the Ministry of Finance and Economic Development through the Accountant General’s office for the support rendered to the Institute to enable the growth of the profession in Botswana.

BICA Annual Report 2019

Chief Executive Officer’s Report

BICA Annual Report 2019

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

Chief Executive Officer’s Report Verily Molatedi BICA Chief Executive Officer

I am privileged to present the CEO’s report for the year ended 31 December 2019.

In 2019, we steered our Institute through another year of success and growth. We continue to successfully implement our operational plans, evolving our Institute by strengthening our portfolio and bringing in new services that are relevant to our stakeholders. In 2019, we introduced Online CPDs, established the Accounting Technicians Committee and launched the Integrated Reporting Committee. We believe that these will aid in the smooth operation of our Institution. BICA Strategy 2017-2021 During this financial year the we conducted a review our 2017 – 2021 Strategic Plan in order to reflect on the journey thus far as well as to set the direction for the remainder of the strategy period. Our strategic priorities did not change and will continue to be focused around membership and other stakeholder management and engagement, BICA Qualification and customer services leveraging technology for efficiency gains. Financial Performance The Institute reported a 4% growth in its total revenues in the financial period ended 31st December 2019 which was mainly attributable to the membership fees and seminar revenue streams. The increase in the membership fees was due to the annual membership subscription free increment, additional members and the introduction of the 50% penalty for late renewals after the 31st December as members restored their membership, however, we believe that going forward members will pay their subscriptions on time. During the 2019 financial period, the Institute’s Continuous Professional Development (CPDs) workshops were well responded to and taken up by members, thus further contributing to the growth in revenues.

BICA Annual Report 2019

On the other side of the spectrum, the total costs increased by 11% in comparison to the prior year. This increase was mainly due to the filling in of critical staff positions which were previously vacant, undertaken during the year and the implementation of various projects aimed at the attainment of the Institute’s mandate such as the development of learning programmes for the BQA accreditation process in relation to CPD and BICA qualification and review of the Institute’s 2017 -2021 corporate strategy. The Institute will continue its efforts on cost containment as it strives to achieve one of its strategic goals of self- sustainability. The full financial performance is provided in detail under the Finance & Administration Committee report. Our Employees The Institute is committed to the capacitation of its employees as part of its concerted efforts to improve service delivery and the achievement of its mandate. During the year, staff members were trained in alignment with the training needs of the Institute targeting their key responsibilities as maintaining a well-trained, wellqualified workforce is a critical function to both the Institute and the public as a whole. In 2019, the Institute conducted Employee Satisfaction and Leadership Index Surveys to gauge employee engagement, satisfaction and management capacity to achieve the mandate of the Institute. The results and the recommendations of the surveys will be analyzed and implemented in the 2020 financial period.

BICA Annual Report 2019

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

Chief Executive Officer’s Report continued Stakeholder Engagement a) Employers’ Forum The Institute in partnership with AAT, ACCA and CIMA convened the first Employers’ Forum on the 5th December 2019. The purpose of the forum was for accounting bodies and technicians’ bodies to inform the public about the services which their members can provide. 61 companies participated at the forum and from these 61 companies, 13 showed interest in registering as ATEs. We believe this will help in the increase of placements. We hope that this registration will be concluded soon as we need ATEs to assist our students with the much needed work experience. b) Career Fairs As part of our concerted efforts to interact with our stakeholders, the Institute conducted and participated in some events and projects to increase awareness on the BICA brand, promote the BICA Qualification, recruit new members and also to get insights on how we can serve our members better. Through the Human Resources Development Council Fairs, Sphalabanyana Mega Expo, Dreams Alive Careers Expo and Botswana International University of Science and Technology (BUIST) Youth Expo we managed to reach out to communities. We believe that as we create awareness about the Institute’s mandate in to different parts of the country we will achieve our mandate thus we will continue to participate in fairs and expos in 2020. A new initiative that the Institute implemented is the placement of our resource materials in public libraries around the country. We will continue to identity new avenues to engage our external stakeholders. of how we can reach out to the public. c) Integrated Reporting (IR) Committee Botswana is one of only 8 countries in Africa to secure membership to the Africa Integrated Reporting Committee (AIRC). AIRC seeks to promote the adoption and improvement in integrated

BICA Annual Report 2019

reporting standards across the continent. Botswana is represented by the Botswana Accountancy Oversight Authority (BAOA), Botswana Stock Exchange (BSE) and Botswana Institute of Chartered Accountants (BICA). To drive the adoption of Integrated Reporting more broadly, The Botswana Integrated Reporting Committee (BIRC) has thus been established to extend the value of integrated reporting at a national level, with BICA serving as the Secretariat. The primary objective of the Committee is to increase awareness around the merits and sustainable benefits that integrated reporting can deliver for public and private organisations in Botswana. It also seeks to increase the adoption of international best practice in integrated reporting, ultimately enhancing governance and compliance standards and cementing Botswana’s reputation as a worldclass economy worthy of international investment and partnership. A number of regulators and stakeholders in the financial reporting landscape have been invited to join the Committee. To mark BICA’s establishment of the Botswana Integrated Reporting Committee, a Thought Leadership Breakfast Session was hosted at GICC on 5 December 2019. The event was markedly successful, and included talks from local and international speakers who explained integrated reporting and what it involves, and a panel discussion on the best approach to implementation. Membership With Other Professional Bodies The Institute continued to play its role by participating and sharing in all relevant meetings organised by Pan African Federation of Accountants (PAFA) and International Federation of Accountants (IFAC). To this end, I participated in a panel discussion at the Integrated Reporting Conference which was organised by PAFA. As a member of IFAC, BICA is required to submit a Statement of Member Obligations (SMOs) biennially.

This is to give IFAC comfort that the Institute maintains professional standards under all the requirements of SMOs. I am delighted to report that BICA has successfully submitted its SMOs over the years and due to the consistency, and quality of the reports that we have been submitting, IFAC has upgraded us to submit every 4 years instead of 2 years. This shows growth on the part of the Institute and the profession at large.

Verily Molatedi BICA CEO

Launch Of The BICA Student Representative Committee As part of our efforts to improve communication between the Institute and the BICA students, the Student Representative Committee was launched in May 2019 to create a platform for students to freely express their issues with the Institute. The committee will also contribute to increasing the number of BICA graduates through devising ideas that would make the BICA study manageable and easier. Outlook Our strategy review has provided us with a clear roadmap and focus areas for the remainder of our strategy period. Communication and engagement with all our stakeholders will remain key drivers to the execution of our mandate. As the landscape changes and as we get feedback and input from our stakeholders we will continuously review our roadmap to stay true to our vision to support Botswana’s development through a dynamic and ethical accountancy profession. Special Thanks To The BICA Council And Staff I wish to convey my sincere gratitude to the BICA Council for guiding us in discharging the BICA vision and mandate to date. I further wish to thank the BICA staff for their commitment to serve our stakeholder to the best of their ability at all times. Thank you.

BICA Annual Report 2019

BICA Secretariat

From left to right

First Row Edmund Bayen Mokeresete Kgosimore Verily Molatedi Cleophas Samusodza Second Row Joseph Gontse Ookeditse Khachana Priscillah M. Setimela Letsalo Morapedi Kelebogile Kagiso Keneilwe Rathedi Gofaone Marena Catherine Monageng Veronica Mogapi Tshepo B. Boitumelo Thapelo Selelo Othusitse Gatang Nonhlanhla Ledimo Khumo A. Khudu

BICA Annual Report 2019

Third Row Mosireletsi M. Mogotlhwane Patricia Atlhopheng Oduetse Boditse Oarabile Sedigeng Boemo Gaolathe Oaitse Dube Not in the picture Tshegofatso Nkepu Tumelo Tsheole

BICA Annual Report 2019

Francistown Satellite Office

From left to right

Second Row Merapelo Ramarula Thato Thipe Orebeile Seboka

BICA Annual Report 2019

Corporate Governance

BICA Annual Report 2019

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

Corporate Governance

The BICA Council is the custodian of corporate governance and believes good corporate governance is fundamental to ensuring the Institute carries out its mandate effectively. The Institute adopted King IV Code on corporate governance in 2019 and will develop a program for the implementation of the King IV principles from 2020.

The Council delegates certain functions to BICA Committees. The Council is governed by the Accountants Act, 2010 and the Council Charter which sets out the responsibilities of the Council. Committees are governed by Committee Terms of Reference. The Council approves the decisions of the various committees and takes ultimate responsibility for the governance of the Institute.

BICA Annual Report 2019

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

Corporate Governance continued Corporate Governance workshop To ensure that that the Council and Management are equipped and well conversant with corporate governance principles, the Institute organised a workshop for its Council members on the 28th June 2019. This will in turn ensure that the Institute is managed in a manner that fits the best interests of all stakeholders and the general public. Ethical Leadership The Shareholder compact signed between the Council and the Government of Botswana requires Council to undertake performance evaluations. Currently, only Council’s collective performance is evaluated. Individual Council members’ performance evaluation was not

performed for the period under review and will be considered in future. The Institute has established a plan to address the gaps identified by the evaluation. Council members are bound by the Code of Ethics and have to comply with the Accountants Act 2010. The responsibility to comply with regulatory instruments is reflected in the Council members’ annual declarations and reinforced during induction which is conducted upon each member’s election to Council. Furthermore, declaration of interest forms are completed at every Council meeting and members are requested to recuse themselves where conflicts are identified. During the year, BAOA audited the Institute’s financial reporting and corporate governance arrangements with satisfactory results.

Council Committees Council has a number of Committees to which it has delegated certain responsibilities. Each committee has set terms of references as determined by the Accountants Act 2010 and Council. Each committee is chaired by a member of the Council. The Committees’ terms of reference were reviewed during the year. The composition of each committee is determined by the mandate of the committee and is currently drawn from the members of the Institute. The terms of reference stipulate the objectives and mandates of the different committees. The Committees are categorised into statutory (those prescribed in the Act) and non-statutory as follows:

Statutory Committees i) Technical Committee ii) Training and Professional Development Committee iii) Finance and Administration Committee iv) Disciplinary Committee v) Appeals Committee

Non-Statutory Committees i) Membership and Examinations Committee ii) Tax Committee iii) Public Sector Committee iv) Northern Committee v) Accounting Technicians Committee

The Institute’s Council is satisfied that it has fulfilled its responsibilities in accordance with its BICA Council Charter.

Council and Committees Meetings The table below shows the attendance of Council Members at Council and Committee meetings during the year 2019.

The Council and Governance The Council consists of six members elected at the Annual General Meeting and three members appointed by the Minister of Finance and Economic Development. The table below shows the respective appointments of Council members and their term in office.

NAMES

COUNCIL

TECH

T & PD

FAC

MEM & EXAM TAX

PSC

NORTHERN

ACC TECH

Gosego Motsamai

8/8

2/2

Cecilia V. Ramatlapeng

7/8

2/3

1/2

Maemo S.D. Mesotlo

7/8

1/2

2/4

Moshe C. Z. Libengo

4/8

Zaeem Anwar

4/5

4/4

Susanne Swaniker-Tettey

4/5

2/4

Boineelo M. Peter

4/8

Conductor P. Masena

5/8

Emmanuel M. Marufu

5/8

3/3

NAME

POSITION

DATE OF APPOINTMENT

TERM

Gosego Motsamai

President

April 2019 (re-election)

2 years

Cecilia V. Ramatlapeng

Vice President

April 2018

2 years

Maemo S.D. Mesotlo

Treasurer

April 2018

2 years

Zaeem Anwar

Member

April 2019 (re-election)

2 years

Adelaide Enid Mpho Masuge

7/8

2/8

5/6

Moshe C. Z. Libengo

Member

April 2018 (re-election)

2 years

Verily Molatedi

8/8

2/2

1/8

Susanne Swaniker-Tettey

Member

April 2019

2 years

Conductor P. Masena

Ministerial Appointment

September 2017 (re-appointment) 2 years

Boineelo M. Peter

Ministerial Appointment

September 2017 (re-appointment) 2 years

Mpho A. Masuge

Accounting Technicians Representative

April 2019 (re-election)

2 years

Emmanuel Marufu

Northern Committee Representative

April 2019 (re-election)

1 year

BICA Annual Report 2019

Key:

TECH T & PD FAC MEM & EXAM PSC ACC. TECH

= = = = = =

Technical Committee Training and Professional Development Committee Finance and Administrative Committee Membership and Examinations Committee Public Sector Committee Accounting Technicians Committee

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

Corporate Governance continued

Organisational Ethics

The committee will consider the following:

IT Strategy

The Institute continues to ensure that it is fully compliant with all regulations that it is subject to. The Council remains committed to supporting good governance as the benefits of ethical leadership and a well-run Institute accrues to the Members.

• Projects must be sustainable to the BICA focus areas • Projects must be long term partnerships with measurable outcomes • Projects must have a broad community reach • Projects must have visible benefit(s) to BICA’s brand value • Beneficiaries must be accountable and credible • Projects’ Implementation, management, monitoring and evaluation must be clearly defined

The Council is responsible for the governance and ongoing oversight of the Institute’s Information Technology function. During the year under review, the Institute developed an IT Strategy that is used as a roadmap for governing and managing Information Technology. The developed IT Strategy is aligned to the Institute Strategy for 2017 - 2021. Management is responsible for implementation of the IT Strategy with oversight from the Finance and Administration Committee.

The CSR projects will be included in the strategic plan so that they can be monitored and be part of the strategic performance monitoring process. The Institute will commence CSR projects in 2020.

The key areas of focus include cyber security, systems integration, digitization of services, development and review of IT policy. Successful implementation of this strategy will help improve information security, efficiency and the easy of doing business. An IT policy that includes procedures for the acquisition of Information Technology products was developed during the year under review.

The charter entrusts the Council with control and supervision of the general business of the Institute. Good governance by the Institute builds and increases stakeholders’ confidence and enables better decision making for the benefit of Members. Therefore, The Council has committed itself to the highest standards of Governance by adhering to The Council charter which outlines the Council’s duties and responsibilities. These responsibilities are achieved through a systematic process of comprehensive reporting to the Council and functional Committees, and The Council is ultimately responsible for ensuring the reporting standards conform to the principles laid out in The Council Charter and other internationally recognised reporting codes. The Institute also guides its members through the BICA Rules which is informed by the Accountants Act 2010. Responsible Corporate Citizenship The Institute developed a Corporate Social Responsibility (CSR) policy which will be implemented in 2020. The aim of the CSR policy is to invest in and make a social difference in communities in which BICA draws its employees and operates. The policy will focus on Education and Training. The CSR committee will identify projects that fit the Institute’s mandate and the CSR policy objectives.

BICA Annual Report 2019

Strategy and Performance The Institute’s strategy is developed by Council and management, then cascaded to all employees and shared with the stakeholders. The Institute strategy performance monitoring meetings are convened every two months to determine and appreciate the alignment of core purposes, determine opportunities, risks and to monitor performance on the set objectives. The Council has delegated the implementation of strategic initiatives to the management team led by the CEO. The role of the Council is to monitor strategic performance, appreciate results and mitigate shortfalls through the secretariat. The Council was involved in the strategy mid-term review in August 2019.

Risk Management Framework The Enterprise Risk Management (ERM) is governed by the ERM Policy. The objective of the policy is to embed the risk culture throughout the Institute and its structures. The policy defines the roles and responsibilities of the Council, Council sub-committees and various lines of assurance. Council is responsible for determining the Institute’s risk appetite. The Risk Management Framework was developed during the year and the Institute will operationalise the framework in 2020. As part of this initiative, an internal audit service firm will be contracted to provide independent assurance in order to aid Management and Council in ensuring that the control environment improves and both strategic and operational objectives are attained.

BICA Annual Report 2019

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BICA Annual Report 2019

Strategic Plan Implementation Reports From Committees

BICA Annual Report 2019

5.1 Membership And Examinations Committee Report From left to right

Front row Kudakwashe T. Nhlema Koketso Letsididi Moshe C. Z. Libengo Nozipho Ramokgalo Not in the picture Cyril Makole Mmoloki Letshwao Barbara Chimanga Regina Ramanteba

BICA Annual Report 2019

Back row Cleophas Samusodza Priscillah Setimela Raymond Pule Shwajupti Pal Oaitse Dube Francis K. K. Tettey Kamogelo Nnoi Joseph Gontse Oaitse Gabatshwarane Khumoitsile P. Modisa

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

Membership And Examinations Committee Report Continued 5.1.1 Introduction The role of the Membership and Examinations Committee is to ensure that applications for membership satisfy requirements as prescribed in the BICA Rules. Such criteria include among others, approved training, examinations and fitness for membership. Furthermore, with the introduction of the BICA Qualification, through the Accountants Act of 2010, The Committee is tasked with overseeing the processes involved in producing BICA Chartered Accountants, which includes registration, examinations, practical work, experience, professional development and structured training in ethics and professional scepticism. It is with great pleasure that I present this report on behalf of the Membership and Examinations Committee.

Notable Achievements And Developments

b) Membership growth for the year

In the pursuit of the Committee’s mandate during the year, the following progress was noted in the Institute’s endeavour to attain its objectives:

i.) Individual membership The membership grew by 1.6% from 4634 members as at 31 December 2018 to 4708 members as at 31 December 2019. The details of the 2019 membership statistics are analysed per membership category in the charts below:

5.1.2 MEMBERSHIP KEY HIGHLIGHTS a)

Registration of accountants in all branches of accounting The Institute registered 458 new members in the year 2019 compared to 1026 members registered in 2018 showing a decrease of 55% in new registrations as analysed in the chart below:

Membership registration comparisons between 2018 and 2019 1200 1000

44.1%

2078

Male

Membership Statistics 5500 4708

5000 4500

55.9%

2630

Female

1026

956

4000

800 600

Distribution by gender

3500 458

397

400

3300

3000 2500

200

2000

1408

1500 Accounting Technician

Professional Accountants

Total

The large number of membership registrations in 2018 was a result of the moratorium issued for individuals to register by 30 June 2018, compared to the year 2019 where the new admissions were consistent with prior periods.

Distribution by Nationality

1000 500 0 Accounting Technicians

Professional Accountants

Total

Citizen 80% Non-Citizen 20%

BICA Annual Report 2019

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

Membership And Examinations Committee Report Continued Further analysis between citizen membership and non-citizen membership between Professional Accountants and Accounting Technicians is shown in the chart on the side :

Citizen Vs Non-Citizen Membership Composition

ii) Member Firms The number of member firms increased by 10% from 215 registered firms as at 31 December 2018 to 237 firms as at 31 December 2019 as shown in the chart on the side:

3500

250

237 215

200

158

142

150 100

3789

4000

Member Firm Composition

3104

3000 0

2500

2018

2019

2000 Audit

1500 1000

Accounting Technician

Professional Accountants Citizen

The Institute identified a number of qualified accountants that were active but had not yet upgraded to Professional Accountant category. The Institute then managed to upgrade 50 Accounting Technicians to Professional Accountants category.

Total

iii) Members holding Practicing Certificates

196

0 Total

During 2019, the Institute received two applications for registration of Certified Auditors which were rejected as they did not satisfy the application requirements of passing both the Local Variant Law and Tax examinations as well as completion of 30 months experience.

Non-Citizen

Further analysis of the membership trends over the period from 2010 to 2019 is shown in the graph below: Membership Growth 5000

4634

4500

4708

3803

4000 3355

3500 3000 2500 1835

2000 1500

Non-Audit Accounting Technician

685

500

Even though the total citizen members were higher compared to the non-citizen members, the number of citizen Professional Accountants was 685 or 49% at the end of the year 2019, which was lower compared to non-citizen Professional Accountants who totalled to 723 or 51%. As a result, the need to increase the number of citizen members who attain professional accountancy qualification if the country is to attain the target of reducing reliance on non-citizen Professional Accountants remains a key priority.

Non-Audit

919

723

1247

1474

1931

As at 31st December 2018

Resigned

Suspended Renewals from 2018

Total as at 31st December 2019

Associate

Fellow

(1)

Total

(1)

1629

500 0 2011

Membership Category

2085

1000

2010

The movement in Certified Auditors between 31 December 2018 and 31 December 2019 is analysed in the table below.

2012

2013

2014

2015

2016

2017

2018

2019

The Certified Auditors as at the end of 2019 are further analysed by citizen and non-citizen membership composition as per the chart on the side:

Citizen vs Non-Citizen Certified Auditors

8.13%

The analysis above shows that the country is relying more on non-citizen Certified Auditors. Therefore, the need to train citizens to qualify as Certified Auditors is a key priority of the Institute.

BICA Annual Report 2019

Citizen

Non-Citizen

53.87%

BICA Annual Report 2019

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

Membership And Examinations Committee Report Continued 5.1.3

Improving Compliance To The Registration Requirements In an effort to ensure compliance with membership registration and as part of the Institute’s obligation to supervise the accounting profession in the protection of the public interest, the following initiatives were undertaken:

•

The Institute engaged a number of employers where the suspended members were employed and these employers were requested to provide a list of their personnel providing accounting services. From these initiatives, unregistered members were identified and encouraged to apply for membership with BICA. As a result, a number of new applications were received by the end of the year and these are still pending approval of the Membership and Examinations Committee. The applications will be processed in February 2020. Furthermore, the Institute is still working with various employers whose employees had not regularised their membership to complete this process in the first quarter of 2020. The Institute had six pending cases that were reported to the Botswana Police in 2018. Out of these cases, two members regularised their membership in the current year and four are still being investigated by the Botswana Police. Further to this, a total of 189 employees were identified as offering accounting services to the public and were reported to the Botswana Police on 20 November 2019. Further investigations are being carried out and the Institute awaits the feedback from the Botswana Police.

The Institute has observed that a high number of members were being suspended for nonpayment of annual subscription fees. As a result, engagement will be carried out to ascertain the action to be taken against suspended members.

From these, the Institute will contact the members for disciplinary process which is expected to commence in the first quarter of 2020. 5.1.4

5.1.5

BICA Annual Report 2019

•

Conducted feedback session with ATEs and Tuition Providers post the BICA students feedback session on the Brand Perception and Customer Satisfaction Survey to provide feedback on the issues requiring resolution.

The induction sessions will continue to be hosted in 2020 as they provide a platform for the Institute to adequately orientate the new members.

•

Hosted Examination Techniques Session with Advanced Level students to improve their computer skills and ability to manage time during the examinations

BICA Qualification Key Highlights

BICA Qualification Uptake

Consultative meetings

•

Provided training on interview skills to assist students and boost their confidence during interviews at an ATE.

•

Conducted motivational sessions for all BICA students by BICA Graduates to address student challenges and sharing tips on how they can overcome study constraints.

•

This allowed the Institute to obtain student feedback and develop an action plan to address the students’ challenges and engage other key stakeholders that include tuition provides, ATEs and the Department of Tertiary Education Financing.

Induction workshops were conducted in Gaborone and Francistown, to orientate the members on their membership obligations. The program was based on the Accountants Act of 2010 and the BICA Code of Ethics.

In 2019, seven meetings were hosted by the Institute in order to strengthen the relationship between the Institute and its key stakeholders who include employers, students and those who provide tuition. The main objective of these stakeholder engagements is to ensure smooth delivery of the BICA Qualification. The consultative meetings were as follows:

•

Induction Of New Members

a) Students Sponsorship

Students Retention Analysis YEAR

RETENTION RATE

2018

80%

2019

82%

At the beginning of 2019, 335 students reactivated their students’ membership reflecting a student’s retention rate of 82% in 2019 compared to students’ retention rate of 80% in 2018. The Institute admitted 121 students in 2019, bringing the total number of active students to (456) and translating to a growth rate of eleven per cent (11%) from the closing number of students of four hundred and five (405) in 2018. The improvement in the student retention rate is attributed to the motivational sessions that were held with students highlighting the competitive edge that one will have once they have completed the BICA qualification. The table and chart below shows the analysis for the student’s retention rates between the years 2019 and 2018.

Provided feedback on the Brand Perception and Customer Satisfaction Survey Results from 2018.

BICA Annual Report 2019

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

Student Retention

d) Number of Qualified BICA Chartered Accountants

500

During the period under review two students completed the BICA qualification. This brings the total number of students who graduated from the programme to 20 within a period of four years. The analysis of students at the Advanced Level shows that there are 17 students that are left with three modules to complete the qualification. The number of students remaining with one module at the Advanced Level stands at 11. The Institute expects a substantial increase in graduates from 2020, as the current finalists successfully complete the remaining modules.

450 400 350 300 250

456

200 150

306

100 50

405 99

80%

82% 121

2018

2019

Reactivated Students

306

335

Percentage Retention

80%

82%

121

405

456

New Students Total Active Students Reactivated Students

Percentage Retention

New Students

Student Success Rate During 2019 the Institute administered four examination sessions at Professional Level in March, June, September and December. The 2019 cumulative pass rate was 47.8% compared to 42.73 % attained in 2018 which shows a slight improvement.

Holding meetings with the students to encourage and motivate them to practice continuously using the correct software

BICA Annual Report 2019

e) Accreditation of Tuition Providers The period under review witnessed the accreditation of ABM University and this brings the total number of accredited tuition providers to four. This is in addition to the existing Tuition Providers being Botswana Accountancy College, Botho University and Arthur Portland.

Total Active Students

since the qualification requires students to do a lot of practice using the computer based examinations software. •

The Tuition Providers were reviewed and compelled to have enough computers and install the right software which students can use to practice for the examinations. From the inspections carried out by the Institute the Tuition Providers were found to be compliant with computer based examinations requirements.

•

Tuition Providers were required to submit reports on performance and bi-monthly class attendance by students so that the Institute can intervene where necessary.

The Institute initiated a number of interventions geared towards improving the performance of the students which included the following: •

335

Tuition Providers Review The Institute carried out reviews of Tuition Providers namely Arthur Portland, Botho University and Botswana Accountancy College. The reviews are carried out to determine the compliance adherence to the agreed standards as set out in the Service Level Agreements (SLAs). The reviews were based on the availability of appropriate ICT resources, qualified teaching staff and accessibility of learning materials for the students. The cumulative score for the reviews is 97% compared to 95% attained in 2018. The Institute continues to engage the Tuition Providers to implement improvements to increase the pass rates per module.

To this end the Institute will be reviewing the SLAs with Tuition Providers to incorporate agreed pass rates to justify renewal of accreditation to offer the BICA Qualification in the future. Review of SLAs will be implemented in 2020. 5.1.6 Authorized Training Employer (ATE) Key Highlights a) Introduction The Institute works with the Authorized Training Employers in ensuring that BICA students are given the relevant practical work experience. The ATEs were monitored to assess if they were upholding the accreditation standards and were compliant with the provisions stipulated in the Memorandum of Agreement (MoA). b) Students Awaiting Placement During 2019, a total of 117 students required placement with employers for practical work experience, however 59 were placed and 58 students still require placement. The number of students placed during the year increased by 11% from 52 students placed in 2018 compared to 59 students placed in 2019. Cumulatively a total of 233 students have been placed with employers, out of which 59 students were new placements from 2019. Engagements are currently ongoing with 7 big corporates to take students on board as they are registered as Authorised Training Employers with the Institute, which is expected to alleviate the low uptake of students for training recorded in 2019.

BICA Annual Report 2019

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

Registration Of Authorized Training Employers Efforts to encourage more employers to register as ATEs continued throughout the year and as result a total of ten new ATE registrations was achieved compared to nine achieved in the year 2018. The Institute closed the year with a total of 95 active ATEs out of which 86 were located in Gaborone and nine outside Gaborone as analysed in chart on the side:

The 95 active ATEs are categorised in the table on the side: Classification of ATE as at 31st December 2019

TOTAL 95

Gaborone

Francisown

Ghanzi

Lobatse

Number

Audit

Non-Audit

Commerce/Business

Others

Total

The number of registered ATEs was negatively impacted by the deregistration of ATEs in 2019. A total of 27 ATEs were deregistered in the year 2019 compared to 13 in 2018 bringing a total of deregistered ATEs to 40 as at the end of December 2019.

BICA Annual Report 2019

Business Category

Training

g) Sponsorship Of Students For One Repeat Module

In 2019, 47 reviews of ATEs were carried out to monitor and assess that the employers continued to uphold BICA accreditation standards. Out of the 47 reviews carried out, the compliance rate was 74% in the three areas of Practical Work Experience, Professional Development and Ethics and Professional Scepticism.

d) Deregistration Of Authorised Employers During The Year

e) ATE Reviews

Locations of Active ATEs

Palapye

However, 26% of the students from ATEs were found lacking in the Professional Development and Ethics and Professional Scepticism training. These students are being monitored to ensure that they will become compliant in 2020. The compliance rate is expected to increase in 2020 with continuous engagements and education of the employers.

Pilane

The deregistration of the ATEs was necessitated by their inability to absorb students for periods exceeding one year after accreditation. The ATEs were first engaged to identify how they can absorb students before their deregistration was effected. They will be re-registered when they are ready to take students on board.

Review Of BICA Students Practical Work Experience Online Training Files The Institute regularly reviews the students’ online training files so as to track the students’ progress and ensure that they are progressing well in all the three components of the qualification being technical work experience, professional development and ethics modules. A total of 113 BICA students’ online training files were due for review in 2019 and out of these, 73 or 65% were reviewed satisfactorily by qualified person responsible for training (QPRT). There will be more engagement with students and QPRT’s to ensure that student files are timeously reviewed in 2020. At the end of 2019, 13 students had completed their practical work experience and they are still left with modules to finish the qualification.

The Institute engaged the Department of Tertiary Education Financing (DTEF) to seek a solution on sponsorship of BICA students. DTEF approved to grant an immediate repeat sponsorship for the identified students to clear failed modules. DTEF indicated that repeat sponsorship is limited to only two semesters, thus if students continue to fail, their sponsorship shall be terminated accordingly. 5.1.7

Conclusion The Institute will continue to create awareness among its members and other stakeholders to increase knowledge and understanding about the BICA mandate and improve compliance with the Accountants Act of 2010 and applicable international standards. Lastly, I take this opportunity to express my sincere appreciation and gratitude to the members of the Committee and subCommittee for their endless contributions and devotion of time which was vital in ensuring the activities of the Committee progressed unhindered. My appreciation also goes to the Secretariat for their continued support and dedication to the Committee’s mandate.

Moshe C. Zila Libengo Chairperson

BICA Annual Report 2019

5.2 Tax Committee Report

From left to right Front row Cleophas Samusodza Gosego Motsamai Thapelo Lebogang Ramnath Kudao

BICA Annual Report 2019

Back row Godfrey Aogon P. V.Siva Prasad Marang Pillar Mohammed Tharique

BICA Annual Report 2019

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

Tax Committee Report 5.2.1

Introduction The primary role of the BICA Tax Committee is to suggest proposals for tax administration and policy improvements as well as provide a forum for effective communication between the BICA and Botswana Unified Revenue Services (BURS) .

The Committee deliberated and engaged BURS to address the following key issues that impacted the administration of taxation during the year: • •

To achieve this mandate, the Tax Committee assigns its members to: •

• • •

• •

To advocate for the review of the provisions for the Income Tax Act and the Value Added Tax Act that impose constraints on attracting both domestic and foreign investment. To provide comments on all legislative reviews relating to taxation before the presentation of the bills to Parliament. To recommend ways of improving and simplifying the tax system for the tax payers and tax agents. To provide a service to the members through the dissemination of information on tax matters, soliciting views of the wider membership and putting them together for submission as an agenda item to the BICA/ BURS bilateral meetings. To hold regular consultative meetings with BURS and discuss emerging issues and suggest possible solutions. To collaborate with Business Botswana and use the HLCC through Business Botswana to influence Tax Policy reforms in Botswana.

•

> > > > >

5.2.2

Tax Committee Contributions To The Improvement In Tax Administration >

a) Issues resolved through consultation with BURS

BICA Annual Report 2019

Use of new Companies and Intellectual Property Authority (CIPA) company registration numbers by BURS BURS initially requested companies to submit their new CIPA registration numbers by the 1st October 2019 which was not aligned to the closing date for company registration from CIPA of the 2nd June 2020. The Committee engaged BURS and the closing date for companies to submit their new CIPA registration numbers was extended to the 30th June 2020. The Committee advocated for the review of the provisions of the Income Tax Act and the Value Added Tax Act that imposed constraints on the tax administration. BURS addressed these provisions by implementing appropriate measures which included: Receipt of online payment of VAT from BURS now incorporating the reference to company paying and VAT registration number. Receipt of online payment of deferred VAT through EFT now registered online. Delays in sending assessments by post addressed and these now being shown on the BURS Website. Clearance of backlogs in assessment process particularly on individuals and in some Northern BURS Offices. Objections to assessments taking a substantial period of time (months, years) to be responded to/resolved were now being attended to timely. Trend of delays in assessments being raised where Tax Payers are due for refunds, which was addressed.

b) Issues raised with BURS still under review The Committee deliberated on a number of issues pertaining to transfer pricing and e-service administration and submitted these to BURS for consideration. As at the end of the year 2019 BURS was still attending to the issues and a meeting is scheduled for 20 February 2020 for BICA and BURS representatives to deliberate on the issues raised. 5.2.3

Contributions On TAX Policy Matters The Institute continues to collaborate with Business Botswana and use the HLCC through Business Botswana to influence Tax Policy reforms in Botswana. During the year, the Institute engaged the Ministry of Finance and Economic Development (“the Ministry”) to appoint a representative from their Tax Unit to attend the BICA / BURS meetings. The representative will provide a direct link between the Ministry and the Institute, enabling the Institute to provide comments on tax policy matters and legislative reviews before the presentation of the tax bills to Parliament. This will ensure that BICA contributions / proposals are considered before policies are implemented.

5.2.4

Conclusion I sincerely thank the Tax Committee and the Secretariat for their continued support and dedication to the Committee’s mandate. I also thank BURS Management for creating time to have meetings with the Tax Committee for purposes of improving the tax administration in Botswana.

Gosego Motsamai Chairperson

BICA Annual Report 2019

5.3 Training And Professional Development Committee Report From left to right Front row Jonnah M. Pongaponga Cecilia V. Ramatlapeng Bob Siakalanga Bokani B. Molosiwa

Back row Cleophas Samusodza Kealeboga O. Sepapi Tshegofatso Nkepu Suresh Vishwanath Kiron George Not in Picture Nametso G. Gaopotlake Saad Sheikh Mubashir Abednico Mfolwe Meshack T. Letlhare Mpiwa Bosenogile Mohammed K. Aboobakar Tendai Mutsinze Regina Ramanteba Oaitse Dube

BICA Annual Report 2019

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

Training And Professional Development Committee Report 5.3.1

Introduction

a) CPD monitoring

The role of the Training and Professional Development Committee is to monitor the Institute’s activities for educating and informing members on pronouncements issued by the International Education and Standards Board (IESB) of the International Federation of Accountants (IFAC). To achieve this, the Committee provides inputs on the Continuing Professional Development (CPD) courses to be offered to the members throughout the year and supports the Institute in monitoring members’ compliance with the CPD requirements. The Committee assesses the CPD courses offered and their impact in enhancing members level of competence. In all these efforts, the Committee’s objective is to ensure that high quality courses are offered which assist the members to keep pace with dynamic changes in the accountancy profession. It is with great pleasure that I present this report on behalf of the Training and Professional Development Committee. 5.3.2

Continuing Professional Development (CPD) Monitoring and Compliance

The Institute uses the three year CPD cycle where members are required to have attained one hundred and twenty (120) CPD hours in a period of three (3) years. On an annual basis, all members are required to submit their annual returns demonstrating they have attained the minimum of twenty-one (21) verifiable CPD units and nineteen (19) non-verifiable units. Members were required to submit their 2019 CPD evidence following a sampling process based on a three year CPD cycle.

b) CPD Annual Return and Compliance Rates The CPD returns and compliance for the year 2017 and 2018 were assessed in the years 2018 and 2019 respectively. The CPD annual return and compliance rates as at 31st December 2019 were as follows:

CPD Returns Submission Rate

CPD Returns Compliance Rate

2018

2017

2018

2017

Professional Accountants

95%

97%

93%

95%

Accounting Technicians 80%

83%

80%

74%

Total

89%

86%

84%

BICA Annual Report 2019

This is attributed to the requirement for Professional Accountants to submit their CPD evidence every three-year cycle and the Institute sanctioning the members through the disciplinary process for non-compliance. In addition, during the year 2019, the Institute automatically sampled the non-compliant Professional Accountant members to provide CPD evidence for their three year CPD cycle thus enforcing compliance to CPD requirements. The Institute expects the submission and compliance rates for Accounting Technicians to increase from 2020 onwards as these members will be required to submit their CPD evidence for verification by the Institute as part of the increased monitoring process.

A total of 358 members were required to submit evidence for the years 2016, 2017, 2018. At the end of the year, 8 members had not submitted their CPD evidence despite several follow ups by the Institute. As a result, the members will now be taken through the disciplinary process in the first quarter of the year 2020.

Membership Category

85%

The CPD annual return and compliance rates for Professional Accountants for the years 2018 and 2017 were higher compared to the Accounting Technicians category of membership.

5.3.3

Review of Botswana Qualification Authority (BQA) Related Policies The Committee considered and recommended for Council approval three policies that were drafted to comply with the BQA requirements for the accreditation as an Education Training Provider (ETP)-Consultancy. The three policies developed and approved were on the following:

a) The Assessment and Moderation Policy. Non-Credit Bearing Short Courses

Accreditation Requirements. The Assessment and Moderation Policy details the principles to be adhered to which relate to objectivity, fairness, transparency, validity, reliability, authenticity, practicality and flexibility, that are regarded as key to quality assurance and continuous life-long learning. b) The Learning Programme Review and Evaluation Policy. Non-Credit Bearing Short Courses This provides guiding principles as the Institute develops and reviews its learning programmes to ensure that they are relevant, current and of high quality standard. Such guidelines are vital and beneficial to the learners as they direct the Institute in transforming obsolete content to current and latest trends in the market. c) The Learning Programme Development and Delivery Policy. Non-Credit Bearing Short Courses The Institute developed the policy to provide guidance in aligning and ensuring that all its identified and designed training programmes suit the learner’s needs based on the levels of complexity and market needs. The Online CPD comes at a standard cost thus members can complete their annual CPD credit hours at fixed cost using the Bica Accountingcpd.net Online CPD platform.

This details the guidelines by the Institute in its efforts to provide a coherent assessment and moderation system across all the noncredit bearing short courses in accordance with BQA Assessment and Moderation

BICA Annual Report 2019

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

Training And Professional Development Committee Report Continued 5.3.4

PAID CPD Events In the year 2019, a total of 43 paid CPD events were held compared to 35 in 2018. The CPD events for the year 2019 consisted of 33 events that were conducted at various venues in Botswana and 10 corporate training workshops. The CPD events per location are summarised in the chart on the side:

5.3.7

Paid CPD Events Per Area 30

The Institute encourages members to submit their CPD annual returns and evidence when sampled to maintain their good standing with the Institute. 2019 was a fruitful year for the Institute and I wish to thank members of the Committee and Secretariat for their diligence.

A total of 43 CPD events for 2019

25 20 15 10

5 0

3 Gaborone

Francistown Palapye

4 1 Maun

1 Kang

Jwaneng

The average customer satisfaction rate based on surveys of the participants after each CPD event was 88% compared to 80% for 2018. The improved customer satisfaction rate was attributed to the use of feedback from the previous events to continually improve the range of CPD seminars offered. 5.3.5

Free CPD Events The Institute conducted a total of 18 free CPD events and seminars during the year. These comprised 8 in Gaborone, 9 in Francistown and 1 in Maun. The free CPD events were held as part of the Institute’s efforts to educate members on the changes taking place in the accounting fraternity such as the newly adopted BICA Code of Ethics and implications of various legislation such as Financial Intelligence Act of 2018.

5.3.6

Online CPD During the first quarter of 2019 the members in the Professional Accountant category had free access to various online courses. This was part of the test run to assess members’ interest in undertaking online CPD courses. A survey was conducted in 2019 and the results showed that 85% were interested in the online CPD. Further, 60 % expressed willingness to pay for the online CPD when rolled out.

BICA Annual Report 2019

Conclusion

Cecilia Ramatlapeng Chairperson

Following feedback from the Online CPD survey the Institute will roll out the paid Online CPD platform for members from the 1st of January 2020. The objective of the Online CPD is to promote a strong culture for members to invest in personal development at their own pace, including providing a platform to the members that are unable to attend the conventional CPD events hosted by the Institute. This is also the Institute’s initiative to support members’ efforts in maintaining their professional competencies. The main advantage of the Online CPD platform is that members attaining their CPD credit hours through the BicaAccountingcpd.net Online CPD platform will have access to state of the art, user friendly e-learning portal anywhere and anytime. This platform gives members access to high quality videos twenty-four hours a day and members can navigate different online courses specially designed to cover the needs in the accounting sphere.

BICA Annual Report 2019

5.4 Technical Committee Report

From left to right

Front row Lindiwe Mafavuneh Zaeem Anwar Evgeniya Kyuchukova-Troanska Tinotenda Douglas Hwara

BICA Annual Report 2019

Back row Ratang Icho-Molebatsi Patrick Mugoniwa Shashi Velambath Josiah Jairos Sheyan Endirisinghe Tshepo B. Boitumelo Mosireletsi M. Mogotlhwane Nkosana Ndlovu Edmund Bayen

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

Technical Committee

5.4.1

Introduction

5.4.3

The Technical Committee oversees the technical aspects of the profession in Botswana, particularly in the areas of International Financial Reporting Standards (IFRS) and International Standards on Auditing (ISAs). It also provides support and guidance to the Institute’s membership on technical pronouncements released by the International Federation of Accountants (IFAC).

SMO 1 Quality Assurance (QA) The Committee reviewed the Proposed International Standard on Quality Management 2, Engagement Quality Reviews issued in December 2018 and developed the Institute’s position with regards to the Standard. The Committee supports the issue of a separate standard for Engagement Quality Reviews (EQRs) and believes this would improve the manner in which firms manage and achieve quality. The Committee also reviewed the nonaudit quality review procedure manuals of the Institute to ensure they were in compliance with the International Standards of Quality Control (ISQC) 1. The Committee also ensured that adequate training was provided during the year on ISQC 1 for both audit and non-audit members. A workshop was conducted where the Botswana Accountancy Oversight Authority (BAOA)’s common practice review findings were discussed with practitioners for the purpose of mitigating the recurrence.

BICA Annual Report 2019

5.4.5

5.4.4

SMO 7 And International Financial Reporting Standards (IFRS) The Committee contributed to the standard setting process for IFRS by developing comments for the exposure drafts for IAS 12 Income Taxes and IAS 1 Presentation of Financial Statements. It is the Committee’s view that this would improve financial reporting for taxes and the presentation of financial statements. During the year, training was provided on the presentation of Financial Statements and key disclosures to Chief Financial Officers in parastatal organisations. The training was also open to CFOs in private organisations and was attended by over 200 delegates. This training was developed with the objective of improving the quality of financial reporting in Botswana.

Anti-Money Laundering Supervision

5.4.7

With Botswana being listed as a high-risk country for financial crime, the Committee facilitated the development of a risk-based Supervisory Manual which the Institute implemented in monitoring the member firms for compliance with the Financial Intelligence Act. Significant guidance documentation was also developed for member firms to implement and training was provided to all firms. The Committee oversaw the anti-money laundering risk assessment for the accountancy sector performed by a working group chaired by the Institute. The Institute was then able to ensure member firms performed their individual risk assessments and joint inspections were performed with the Financial Intelligence Agency. All these efforts were significant in helping the Institute effectively discharge its role as a supervisory authority under the Financial Intelligence Act.

The Committee has revised the template for the audit report of Attorney Trust Accounts. This revision was necessary in order to ensure compliance with International Standard on Assurance Engagements (ISAE) 3000 Revised, Assurance Engagements Other Than Audits or Reviews of Historical Financial Information. Once this new template has been approved by Law Society of Botswana it would be made available to members on the BICA website. The Committee also provided guidance on the new format for audit reports, to ensure standard reports were adopted so as to prevent variances in wording for audit reports issued by different practitioners. The recommended format would be made available to members once approved by Council.

The Technical Committee supported the Institute in achieving a number of notable milestones during the year. This was particularly with regards to the discharge of the Institute’s responsibilities under the IFAC Statements of Membership Obligations (SMOs). It is with great pleasure that I present this report on behalf of the Committee. 5.4.2

SMO 3 And International Auditing And Assurance Standards

5.4.6

Since the Technical Committee recommended the adoption of the International Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants (IESBA) issued in April 2018, there has been a series of training sessions held for members. The focus initially was on students and Accounting Technicians, but it has now been extended to all members to ensure that they are all aware of and able to practically apply the ethical requirements of the Restructured Code. The Committee intends to assist the Institute in strengthening the regulatory environment, especially with regard to anti-money laundering supervision. It would also deepen the collaboration with standard setters, notably with the Botswana Accountancy Oversight Authority (BAOA). Since ethics are also taking greater prominence in the profession especially in the face of growing digitalization and Artificial Intelligence, the Committee intends to ensure that more training is provided to members.

Technical Bulletin The Technical Committee oversees the Technical Bulletin, which typically includes technical articles that are relevant to members. The Bulletin is published monthly and is the main vehicle for communicating technical updates and other technical matters of interest to the membership. The Technical Bulletin received good feedback from the members during the year and covered topics in financial reporting, taxation, audit and public accounting and finance amongst others. It is a valuable source of technical information for members both in the private and public sectors.

Technical Training On Ethics

5.4.8

Conclusion I wish to thank Members of the BICA Technical Committee for their dedication in ensuring that the Committee carries out its mandate in an effective manner. I thank Council for their usual support and the Secretariat for their continued support to the Committee.

Zaeem Anwar, Chairperson

BICA Annual Report 2019

5.5 Public Sector Committee Report

From left to right

Front row Setlhalefi Motshegwa Nandie K. Lunga Susanne Swaniker-Tettey Ronald M. Phole

BICA Annual Report 2019

Back row George M. Kiilu Tshepo B. Boitumelo Mosireletsi M. Mogotlhwane Christian J. Mbekomile Meshack Letlhare Mark Sims Edmond Bayen Parsha Ghosh

BICA Annual Report 2019

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

Public Sector Committee Report 5.5.1

Introduction The primary objective of the Public Sector Committee (PSC) is to support the professionalisation of public financial management by advocating for the adoption of best practice accounting across Government. In order to achieve this the Committee seeks to influence and empower all stakeholders in the Public Sector Accounting fraternity, notably Accountant General, Ministry of Finance and Economic Development, Auditor General, Institute of Directors, Institute of Internal Auditors, Local Government and professional bodies including International Public Sector Accounting Standards Board (IPSASB) and the International Organisation of Supreme Audit Institutions (INTOSAI). International practice encourages professional accountancy bodies to take the responsibility of driving public sector accounting reforms. BICA’s Memorandum of Understanding (MoU) with the Accountant General provides the Institute, through its Public Sector Committee, with an opportunity to support public sector accounting reforms and oversee the development of Accounting Professionals in the public sector. It is with great pleasure that I present this report on behalf of the Public Sector Committee.

5.5.2

Government Accrual Project Government of Botswana is moving from cash accounting to accrual accounting based on the International Public Sector Accounting Standards (IPSAS) as part of broader public sector reforms.

BICA Annual Report 2019

The PSC supports this project by availing itself to provide advisory services to the Accountant General’s Office, as they oversee the project on behalf of the Ministry of Finance and Economic Development. The PSC reviewed the Public Asset Management Policy developed by the Ministry for compliance with international best practice. The PSC also advised and supported the Accountant General’s Office as they developed the Chart of Accounts for the Public Sector. 5.5.3

Development Of Break Through Training For The Public Sector The PSC has been involved in the identification of short term courses needed to capacitate and develop officers in view of delivery in 2020. These courses will provide practical hands on training in various operational areas to develop and upgrade the skills of accountants in the public sector. Short term interventions developed include training in all areas of the public finance cycle including:

• • • • • • • • • • • •

5.5.4

Conclusion As the Government continues to roll out its public sector reforms, the PSC will remain dedicated to helping the Institute execute its mandate of supporting skills development in the Public Sector by quality assuring the finance and accounting training programmes provided to the public sector. I am grateful to the Members of the Public Sector Committee for their dedication and would like to highlight my appreciation to both Council and the Secretariat for all the support demonstrated during the year.

Susanne Swaniker-Tettey Chairperson

Asset Management Accounts Receivable Management Accounts Payable Management Employee Benefits and Payroll Financial Accounting and Reporting (IPSAS) Public Sector Internal Audit Public Sector External Audit Budget Formulation and Execution Legal and Regulatory Environment Policy Formulation and Execution Change Management and other Strategic Soft Skills Information Technology

BICA Annual Report 2019

5.6 Finance and Administrative Report

From left to right

Front row Benny Medupe Catherine Monageng Maemo Mesotlo Keneilwe Rathedi

Not in the picture Benedicta Abosi Onneile Maripe Nonhlanhla Ledimo

BICA Annual Report 2019

Back row Oduetse Boditse Mogakolodi Sane Kehiloe Serero Shirley Selolwane Oarabile Sedigeng Omphile Rabatshabeng Cleophas Samusodza Devaprasad Arakkal Boemo Gaolathe

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

Finance and Administrative Report

5.6.1

Introduction The purpose of the Finance and Administrative Committee is to provide assistance to Council in discharging its oversight responsibilities over financial reporting and other functions being; Public Relations and Marketing, Information Technology and Human Resources. The Committee also provides strategic direction on procurement processes. The Finance and Administrative Committee plays a critical role of advancing BICA’s financial sustainability and ultimately reduce dependence on Government subvention, through provision of oversight and strategic advisory role to the Institute.

Committee Mandate During the year, the Committee deliberated on a number of issues that were aimed at ensuring attainment of the following objectives of the Institute: • •

• • •

review the annual budget; review and monitor monthly management accounts, including comparison of actual financial performance against budget and monitor cash flows, etc; review analysis of student and membership fee structure for adequacy; review selection and application of appropriate accounting policies; advise and guide aspects of financial management, including maximising revenue streams, optimum cost control and investment decisions for surplus cash resources; review external audit reporting; oversee preparation for year-end external audit and preparation of annual report; and assist on tender review processes where independent oversight is required by BICA policies and procedures.

BICA Annual Report 2019

It is with great pleasure that I present this report on behalf of the Finance and Administrative Committee. 5.6.2

Finance

Key Activities a) Budgetary oversight One of the FAC’s key activities during 2019 was the review of 2020 budgets and recommendation for approval to Council. Critical to this process was ensuring the budgets were approved in line with BICA’s revised strategy therefore enabling the Institute to achieve its strategic priorities while remaining financially sound. b) Appointment of the external auditors The Committee was involved in the selection of external auditors following BICA’s external auditor’s rotation policy. The appointment of Grant Thornton as external auditors for the 2019 financial reporting year was approved at the 2019 Annual General Meeting. c) Risk Management The Enterprise Risk Management (ERM) is governed by the ERM policy adopted by Council, with the objective of embedding the risk culture throughout the Institute and its structures. Council is responsible for determining the Institute’s risk tolerance level, and a framework has been formulated for this purpose. In addition, the policy has defined the roles and responsibilities of the Council, Council sub-committees and various lines of assurance.

Furthermore, once implementation is completed, in order to aid Management and Council in ensuring improvement of the control environment, and both strategic and operational objectives are attained, an internal audit service provider will be contracted to provide independent assurance. d) IFRS 16 Adoption With the new standard for lease accounting being effective for annual reporting periods beginning on or after 1 January 2019, the standard became applicable to the Institute for the 2019 financial period and has been adopted.

e) The Integrated Reporting journey With the world moving to one of the most recent innovative approaches to corporate reporting, the Institute is fully committed to the adoption of best practice in reporting to all its stakeholders. In 2019, a task team was formed to drive this project and an implementation plan will be developed in the first quarter of 2020 to map a way forward for adoption.

Income Statement 30, 000, 000 7, 783, 141

1, 150, 854

689, 988

643, 590 -31, 651

25, 000, 000

20, 000, 000

18, 219, 055

15, 000, 000 10, 000, 000

5, 000, 000

1, 823, 129 -26, 631, 848

0 Revenue

Subvention

Rental Income

Other Income

Finance Income

Finance Costs

Expenses

Surplus

The implementation of the framework is still ongoing and the Institute is committed to ensuring the framework is fully implemented during 2020.

BICA Annual Report 2019

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

Finance and Administrative Report Continued Key Financial Highlights Total income (including subvention) increased to P27 843 038 (2018: P26 739 921) mainly due to the following: •

•

Membership fees increased by 18% as a result of membership subscription fee increment of 5% and additional members. The Institute experienced a 1.6% growth in the membership numbers, from 4 634 to 4 708. Furthermore, the introduction of the 50% penalty for late renewals after the 31st December contributed to the increase as members renewed their membership. Seminars and CPD workshops income increased by 15% due to additional seminar sessions, a total of 43 paid up CPD events were carried out in comparison to 35 in the prior year Number of the BICA qualification students increased to 454 (2018: 404).

Expenses during the period under review increased by P2 626 161 from 2018 mainly as a result of the following;

b) Information Technology Strategy The IT Strategy that includes Implementation of Integrated Information Systems and increase in Online Services was approved by the Council during the year.

5.6.4

• 5.6.3

Development of learning programmes for the BQA accreditation process in relation to CPD and BICA qualification, and the related increase in seminars. 19% increase in staff costs as a result of the recruitment of seven additional staff members. INFORMATION TECHNOLOGY

a) My BICA Portal The Institute’s MYBICA Portal registration continued to grow during the year and closed the year at 3 575 members (2018: 2 796). The increase was due to ongoing initiatives to increase awareness around the existence of the Portal.

BICA Annual Report 2019

Human Resources During the year, seven vacancies were filled as listed below.

> > >

Mr Oarabile Sedigeng Manager-Information Technology Mr Oduetse Boditse Human Resource Services Officer Mr Oaitse Dube Manager-Training, Examination, Exemption & Accreditation Ms Tshepo Boitumelo Technical Officer Ms Kelebogile Kagiso Membership Services Officer Ms Nonhlanhla Ledimo Assistant Public Relations and Marketing Officer Mr Khudu Khumo Information Technology Officer At the close of the year, BICA recognised and awarded long term service awards to Mr. Boemo Gaolathe for attaining 15 years, Ms. Veronica Mogapi 10 years and Ms. Verily Molatedi, Tumelo Tsheole, Merapelo Ramarula attained five years of continuous service with the Institute. Staff turnover remained low in 2019 with only two employees leaving the Institute.

Training and Development areas to capacitate the Institute In addition to on-job-training, the Institute continues to provide its staff members with training conducive to both professional and personal development. Staff members participated in various trainings to enhance their skills in line with the Institute’s mandate; the trainings included Investment in Excellence, Executive Assistant Seminar, Report Writing Skills, Speech Writing Skills and other CPD related programmes.

The implementation of Integrated Information Systems Project is expected to commence during the second quarter of 2020. This initiative will improve operational efficiency, customer service delivery and support to members.

> •

5.6.5

Public Relations And Marketing In 2019, we continued to invest in Public Relations and Marketing function to engage our stakeholders to ensure we are well positioned to meet their needs. The Institute reinforced its efforts to create awareness about BICA’s mandate and positioning the BICA qualification’s international portability in the local market. The Public Relations and Marketing function implemented the following marketing and communications activities informed by the Institute’s strategy for the period 2017-2021:

a) bica Bulletin As an Institute sharing organisational events with our members is our utmost priority hence the production of the biannual publication dubbed the bica bulletin. The first edition was released in July and the second in December 2019. The articles were consolidated with the assistance of members and stakeholders. The electronic version of the newsletter was shared with members through emails and was published on the website.

b) BICA Ethics Hotline As part of living its core values, the Institute embarked on a campaign to promote the BICA Ethics hotline whose purpose includes reporting individuals and firms offering accounting services without registering with BICA as per Section 30 of the Accountants Act of 2010. This hotline can also be used to report BICA members, employees and other stakeholders doing business with the Institute suspected of theft, bribery, fraud, dishonesty, harassment, intimidation and blackmail. The campaign commenced in February 2019 using integrated communication tools including email signatures, print and social media as well as the use of the Technical bulletin, bica Bulletin, the annual report and events. c) Customer Relatipnship Management (CRM) The Institute has increased efficiency of responding to stakeholder feedback through the implementation of the CRM system. The CRM system measures the frequency of enquiries received and the response turnaround time. The CRM report is produced and analysed on a monthly basis and remedial action taken, as appropriate. d) Digital Engagement For most of our members, digital media is becoming the norm. To connect with digitally savvy clients, we continued to use digital media during the year. The platforms include BICA website, Facebook, LinkedIn and Twitter. The members mainly engaged with us about our services. Regular updates were made in all the platforms to ensure the members are abreast of the emerging developments in the Institute and the industry. To make the digital platform more effective, the PR and IT departments continue to work closely in ensuring that our digital platforms are appealing to our members and user friendly.

BICA Annual Report 2019

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

Finance and Administrative Report Continued Digital media continues to play an important role in communicating the BICA mandate as well as providing updates on the Institute’s activities. This includes advertising BICA events such as sporting and social activities, vacancies and CPD events. The key activities executed on the digital platforms are as follows: • • • • • • •

Promotion of the BICA Qualification Awareness on adherence to the Accountants Act of 2010 Advertisement of Information Security course Advertisement of Implementing IFRS 16: leases course Awareness of BICA Code of Ethics Awareness of the BICA website Awareness of MyBICA portal To increase our reach and further connect with our members and the general public, we will continue to focus on digital media opportunities in 2020.

The billboards adverts were placed in the following areas: • • • • • • • •

BICA Annual Report 2019

The street poles were placed in Gaborone and Francistown As part of the Institute’s concerted efforts to reach out to the general public, we partnered with 30 public libraries around the country to distribute the BICA publications (brochures, bica Bulletin). Outreach Projects The Institute’s outreach projects are our opportune platforms to leverage on existing mass events organised by other players in the industry. These events allow us to reach our key stakeholders and the general public. In 2019 we participated at the following annual events:

e) Advertising The Institute increased frequency of advertising in the newspapers, billboards, street poles and digital platforms. Our CPD events were strategically placed in the newspapers to lure members to enroll in the workshops and seminars. The Institute placed static billboards, digital billboards and street pole adverts promoting the BICA mandate, BICA Qualification and Membership subscriptions, in high traffic areas.

Francistown Gaborone Ghanzi Jwaneng Lobatse Mahalapye Maun Molepolole

• • • • •

g) Media Relations The Institute continues to engage with stakeholders through the media. Appropriate media has been identified for covering and advertising BICA events. h) Sporting And Social Events Sporting and social events form an integral part of engaging with key stakeholders, individual professionals as well as their employers. Through this initiative the professional colleagues mingle and catch up on the new developments in their respective companies and the industry in an informal setting. The events also enabled the Institute to reinforce its relationships with stakeholders through sponsoring and coordinating the events. Moreover, the sporting events afford the participating entities in particular the sponsor and the Institute a platform to increase their branding mileage through the branded sporting equipment and outdoor branding merchandise.

The following events were held successfully in 2019: Event

Sponsor

Pool

Botswana Accountancy College

Golf

Deloitte & Touche

Soccer

PricewaterhouseCoopers

Up Kgale Challenge

KPMG

Cricket

Grant Thornton

5.6.6

CONCLUSION I wish to take this opportunity to thank all the members of the Finance and Administrative Committee and the Secretariat for their continued support and dedication to the Committee’s mandate.

Maemo Mesotlo Chairperson

Human Resource Development Council Fair (Gaborone) Human Resources Development Council Fair (Francistown) Sphalabanyana Mega Expo (Palapye) Dreams Alive Career Fair (Gaborone) BIUST Youth Construction Pitso (Palapye)

BICA Annual Report 2019

5.7 Accounting Technicians Committee Report From left to right

Front row Kamogelo M. Kenosi Cleophas Samusodza Mpho Masuge Lucas Gaopalelwe

BICA Annual Report 2019

Back row Moshekwa G. Majaha Kelebogile Kagiso Khumoetsile P. Modisa Oratile O. Mahatlhe Keletse S. Moshega Kelebale Rampou Khumoetsile Ntshinogang Tumalano A. Baruti

BICA Annual Report 2019

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

Accounting Technicians Committee Report 5.7.1

Introduction The Accounting Technicians Committee’s primary role is to provide a forum to articulate issues which affect Accounting Technicians in an organised and formal manner. The Committee acts as a medium of communication between Accounting Technicians members and BICA Council. It is with great pleasure that I present this report on behalf of the Accounting Technicians Committee.

5.7.2

This will be considered as part of amendments to the Accountants Act Regulations. •

Benchmarking On The Membership Fees The Committee was involved in the benchmarking exercise on the annual subscription fees, CPD fees and the 50% late payment penalty for BICA members. The main observations considered by the Committee relate to the following:

•

As a result, the Committee recommended that no interest should be levied for payments received in the first 30 days from the due date.

Accounting Technician fees are not significantly higher on average compared to other Institutes in the region. The current method of determining the fees should be maintained.

•

Continuing professional development (CPD) fees should remain the same for all members as these were comparable to the other Institutes. However, BICA should consider levying different rates for one day events and the two day events. This will be considered for possible implementation during the year 2020.

•

The benchmarking exercise showed that only BICA charges penalties for payments received within 30 days after the due date as other Institutes do not levy any interest.

BICA Annual Report 2019

5.7.3

The Committee recommended that late payment fee of 50% of the annual subscriptions due payable in the year be reduced to 15% applying from 1 February to 29 February and 25% from 1 March to 31 March. The benchmarking exercise showed that the penalty rate levied by BICA was much higher than for others Institutes. This will be considered during the revisions to the Accountant’s Act Regulations. Suspension And Deregistration Of Members The Committee noted that a high number of members totaling 352 or 93% of total suspension in 2019, were in the Accounting Technician category. The Accounting Technician Committee will work with the Secretariat in 2020 to improve public awareness of Accounting Technician members. Meetings will be held with the members to sensitize them about their membership obligations and provide feedback on progress made in the execution of the Committee’s mandate.

5.7.4

Conclusion I wish to encourage Accounting Technician members to abide with the Accountants Act of 2010 and other statutory regulations to ensure that they remain compliant with their membership obligations. I would like to thank the Committee members and the Secretariat for their commitment to drive the Institute’s mandate. I thank the members for their endless contributions and time devotion which was vital in ensuring that the activities of the Committee progressed successfully during the year.

Mpho Masuge Chairperson

BICA Annual Report 2019

5.8 Northern Committee Report

From left to right

Emmanuel Marufu (Chairperson)

Gibson Chabveseri

Mohamed Haniffa Ameen

Segopotso Mokgatla

Christopher Makombe

Thato Thipe

Emmanuel Marufu Gibson Chabveseri Mohamed Haniffa Ameen Segopotso Mokgatla Christopher Makombe Thato Thipe Not in Picture Girly Buka Wame Mothibi

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Northern Committee Report 5.8.1

Introduction The Northern Committee’s mandate is to assist the BICA Council in executing its mandate by driving the Institute’s strategy in the Northern region of Botswana. The Committee achieves this through improving membership growth, recommending initiatives to increase visibility of the Institute as well as supporting the Institute in monitoring the continuing professional development compliance for members and coordinating and providing inputs to improve pronouncements and other accepted accounting practices in the accounting profession from members in the northern region. It is with great pleasure that I present this report on behalf of the Northern Committee.

5.8.2

Membership Statistics The membership in the Northern Region comprises of 20% of the total BICA membership. The membership has grown by 8% from 790 members in 2018 to 855 in 2019 as presented in the chart below: Membership Statistics 790 total membership 754

691

101

2018

2019

Acctech

855 total membership

BICA Annual Report 2019

Professional

In 2019 11.8% of the membership in the North comprised Professional Accountants and 88.2% were Accounting Technicians.

This was consistent with 2018, where 12.5% of the membership comprised Professional Accountants and 87.5% were Accounting Technicians 5.8.3

Marketing Fairs and Expos The Committee through the Satellite Office Secretariat, participated in a number of marketing events in an effort to educate and raise awareness about BICA mandate and services. The following key outputs were attained:

Attended the Annual HRDC Fair and Career Clinics which were held in Francistown and for the first time in Maun. Given that the Ministry of Basic Education has made it compulsory for students to attend this event, the Institute used this as an opportunity to meet a large pool of students within a central location to market the benefits of pursuing the BICA qualification.

b) Participated in the Business Botswana Northern Trade Fair which gives the Institute a platform to display and showcase our services. The event was open to the general public and attracted students, business owners and professionals from different fields. The fair was useful in pursuing the Institute’s objective of educating and by sensitizing the public wwabout BICA.

For the first time the Sphalabanyana Mega Expo was held in Palapye. The event drew crowds from the business fraternity, local schools and institutions of higher learning and the public at large. BICA got the opportunity to make a presentation about its mandate and services thus like other organisations and businesses raised the profile of the Institute through public awareness at this forum.

d) Invitations to attend career fairs from local schools were honored. The Institute attended two career fairs at Masunga Senior School and Francistown Senior School. This allowed the Institute to reach out to the potential students and guide them in their decision making process to pursue a career in accounting. 5.8.4

Compliance Check Letters were written to 28 employers in the Maun area requesting them to submit the list of their personnel responsible for providing accounting services. In addition, a total of 9 organizations in the city of Francistown were visited in order to explain the BICA mandate and assess compliance of members with registration requirements. The key takeaway from the consultations was that the Institute managed to improve employers’ knowledge about its role and mandate through the engagements with human resources and finance personnel.

totals

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Northern Committee Report Continued 5.8.5

Continuing Professional Development (CPD) Events

on the changes taking place in the accounting fraternity and implications of various legislation such as Financial Intelligence Act of 2018. Concerns were raised by some members who find it overwhelming to attend more than one paid CPD in a month. A decision has been taken to run 1 paid CPD event per month. This will assist in mitigating the negative impact on the number of members attending and reducing the risk of workshop cancellations.

The delivering of CPD workshops continues to be a challenge with low turnouts being recorded mainly due to the negative impact of the economic collapse in the Region, particularly due to mine closures and the impact on downline businesses. However, the Institute managed to host a total of 24 workshops in the North consisting of 14 paid CPD events and 10 free CPD events. The number of free workshops has increased in the current year as compared to the previous years, due to efforts by the Institute to educate members

The Northern Committee will always strive to make sure that the strategic objectives of the Institute in the North are realised. I wish to thank the Northern Committee members and the Secretariat for their commitment and sacrifice to serve the Northern region.

Emmanuel Marufu Chairperson

Conclusion

The table below shows the CPD analysis for the year 2019.

CPD ANALYSIS

5.8.6

Francistown 9

Francistown 8

Francistown 7

7 6 5

Maun 4

Palapye 3

3 2

Maun 1

1 0 Paid CPD

Free CPD

Francistown

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Maun

Cancelled CPD

Palapye

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Annual Financial Statements

Contents

for the year ended 31 December 2019

General Information

Councils’ Approval of Annual Financial Statements

Independent Auditor’s Report

Statement of Surplus or Deficit and Other Comprehensive income

Statement of Financial Position

Statement of Changes in Accumulated Funds

Statement of Cash Flows

Accounting Policies

Notes to the Annual Financial Statements

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General Information Country of incorporation and domicile

Botswana

Nature of business and principal activities

The entity is a regulatory body of Chartered Accountants and overseer of the Chartered Accountancy Qualification in Botswana. It derives revenues primarily from membership/ students fees, seminars and Government grant.

Council Members

G. Motsamai (President) C. V. Ramatlapeng (Vice President) M. S. D. Mesotlo (Treasurer) Z. Anwar R. Binedell (Resigned 25 April 2019) H. Chilisa (Resigned 5 June 2019) M. C. Z. Libengo S. Swaniker - Tettey (Appointed 25 April 2019) C. Masena (Ministerial Appointment ) B. Peter (Ministerial Appointment) E. Marufu (Northern Committee Representative) M. Masuge (Accounting Technician Representative)

Council Secretary

V. Molatedi

Chief Executive Officer

V. Molatedi

Registered Office

Botswana Institute of Chartered Accountants Plot 50374, Block 3, Fairgrounds Financial Centre P/ Bag 0021 Gaborone Botswana

Business Address

Plot 50374, Block 3, Fairgrounds Financial Centre P/ Bag 0021 Gaborone Botswana

Bankers

Stanbic Bank of Botswana Limited First National Bank Botswana Limited Stanlib Investment Management Services (Proprietary) Limited

Auditors

Grant Thornton Chartered Accountants A Botswana member of Grant Thornton International Limited

Functional Currency

Botswana Pula (BWP)

BICA Annual Report 2019

Council’s Approval of Annual Financial Statements The Council is required in terms of the Accountants Act 2010 and the BICA rules to maintain adequate accounting records and is responsible for the content and integrity of the annual financial statements and related financial information included in this report. It is its responsibility to ensure that the annual financial statements fairly present the state of affairs of the Institute as at the end of the financial year and the results of its operations and cash flows for the period then ended, in conformity with International Financial Reporting Standards. The external auditors are engaged to express an independent opinion on the annual financial statements. The annual financial statements are prepared in accordance with International Financial Reporting Standards and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates. The Council acknowledge that they are ultimately responsible for the system of internal financial control established by the Institute and place considerable importance on maintaining a strong control environment. To enable the Council to meet these responsibilities, the Council sets standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk.

These controls are monitored throughout the Institute and all employees are required to maintain the highest ethical standards in ensuring the Institute’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the Council is on identifying, assessing, managing and monitoring all known forms of risk across the Institute. While operating risk cannot be fully eliminated, the Council endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints. The Council is of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the annual financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss.

The annual financial statements have been examined by the Institute’s external auditors and their report is presented on pages 92 to 93. The annual financial statements set out on pages 94 to 132, which have been prepared on the going concern basis, were approved by the Council on 4th March 2020 and were signed on their behalf by: Approval of financial statements

G. Motsamai President

M. S. D. Mesotlo Treasurer

The Council has reviewed the Institute’s cash flow forecast for the year to 31 December 2020 and, in light of this review and the current financial position, they are satisfied that the Institute has access to adequate resources to continue in operational existence for the foreseeable future. The external auditors are responsible for independently auditing and reporting on the Institute’s annual financial statements.

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94 to 132

MeFBW11013

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Statement of Financial Position

Statement of Surplus or Deficit and Other Comprehensive income

as at 31 December 2019

for the year ended 31 December 2019 Note

2019 P

2018 P

18 219 055 7 783 141 1 150 854 542 929 147 059 27 843 038

15 746 310 8 783 143 1 152 915 910 494 147 059 26 739 921

Operating Expenses Administration expenses 8 9 Public relations expenses Training and professional development expenses 10 Technical and public sector accounting services 11 Employee costs 12

(6 895 913) (2 219 410) (5 964 391) (766 710) (10 785 424) (26 631 848)

(6 010 327) (2 509 332) (5 433 494) (1 023 601) (9 028 933) (24 005 687)

Operating surplus 1 211 190 Finance income 13 643 590 Finance costs 14 (31 651) Net surplus for the year 1 823 129 Other comprehensive income Total comprehensive income for the year 1 823 129

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Note

2019 P

2018 P

Assets

Income Revenue earned from services 4 Government subvention 5 Rental income 6 Other income 7 Recognition of deferred capital grant 22

2 734 234 481 013 3 215 247 3 215 247

Non-Current Assets Property and equipment 15 Right-of-use assets 16 Intangible assets 17 Operating lease asset 23 Current Assets Inventories 19 Trade and other receivables 20 Cash and cash equivalents 21 Total Assets Reserves and liabilities Reserves Accumulated funds

9 929 229 344 449 1 150 28 337 10 303 165

10 267 917 88 540 74 336 10 430 793

2 511 782 26 149 283 28 661 065 38 964 230

14 534 2 160 395 20 985 081 23 160 010 33 590 803

20 511 654

18 689 859

278 553 3 529 410 3 807 963

26 347 3 676 469 3 702 816

9 502 728 113 600 5 028 284 14 644 612 18 452 575 38 964 230

7 186 578 4 011 550 11 198 128 14 900 944 33 590 803

Liabilities Non-Current Liabilities Lease liabilities 16&24 Operating lease liability 23 Deferred capital grant 22 Current Liabilities 25 Trade and other payables Lease liabilities 16&24 Contract liabilities 26 Total Liabilities Total Reserves and Liabilities

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Statement of Cash Flows

Statement of Changes in Accumulated Funds

for the year ended 31 December 2019

Accumulated Funds P

Note Cash flows from operating activities

Balance at 01 January 2018 Surplus for the year Other comprehensive income Total comprehensive income for the year Opening balance as previously reported Adjustments Impact on adoption of IFRS 16 (refer to note 2)

15 474 612 3 215 247 3 215 247 18 689 859

Surplus for the year

1 823 129

3 215 247

Balance at 1 January 2019 as restated Surplus for the year Other comprehensive income Total comprehensive income for the year Balance at 31 December 2019

18 688 525 1 823 129 1 823 129 20 511 654

Adjustments for: Depreciation and amortisation (Gains) losses on disposals of assets Unrealised exchange gain on foreign bank balances Finance income Finance costs Movements in operating lease assets and liability Deferred capital grant

1 117 318 (50 195) (25 688) (643 590) 31 651 72 344 (147 059)

1 126 309 5 845 (481 013) 18 810 (147 059)

Changes in working capital: Inventories Trade and other receivables Trade and other payables Contract liabilities

14 534 (351 387) 2 316 151 1 016 734

45 359 (65 259) 1 637 149 735 296

Cash generated from operating activities Finance costs Net cash from operating activities

5 173 942 (31 651) 5 142 291

6 090 684 6 090 684

(1 334)

2019 P

2018 P

Cash flows from investing activities Purchase of property and equipment 15 Sale of property and equipment 15 Purchase of other intangible assets 17 Finance Income Net cash from investing activities

(643 522) 117 293 643 590 117 361

(726 740) (9 196) 443 203 (292 733)

Cash flows from financing activities Payment on lease liabilities Net cash from financing activities

(121 138) (121 138)

Total cash movement for the year 5 138 514 Cash at the beginning of the year 20 985 081 Effect of foreign exchange rate changes 25 688 Total cash at end of the year 21 26 149 283

BICA Annual Report 2019

5 797 951 15 149 320 37 810 20 985 081

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

Accounting Policies for the year ended 31 December 2019

Statement of compliance The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB) which comprise IFRS, International Accounting Standards (IAS) and Interpretations originated by the International Financial Reporting Interpretations Committee (IFRIC) or the former Standing Interpretations Committee (SIC).

1.1

Basis of preparation and presentation The financial statements are presented in Botswana Pula (BWP or P), which is also the functional currency. The financial statements, which assume a going concern basis, have been prepared using the accrual basis of accounting, except for cash flow information. Further, the financial statements have been prepared under the historical cost basis except for certain financial instruments that are measured at revalued amounts or fair values at the end of each reporting period, as explained in the accounting policies below. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique.

BICA Annual Report 2019

In estimating the fair value of an asset or a liability, the Institute takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. 1.2

Accounting judgements and key sources of estimation uncertainty Accounting judgements in applying the Institute’s accounting policies In the application of the Institute’s accounting policies the Council is required to make judgements apart from those involving estimations (see note below), that they have made in the process of applying the entity’s accounting policies. These judgements are based on Council’s best estimates. Revenue from contracts with customers The Institute applied the following judgements that significantly affect the determination of the amount and timing of revenue from contracts with customers: Identifying performance The Institute identified the performance obligations on its sources of revenue from ordinary activities and determined that on membership subscriptions (including audit and nonaudit member firm practicing fees) its obligations are to provide members with services as an accountancy body.

As regards the revenue from seminars and workshops and sale of books, its performance obligations are restricted to the successful completion of the seminars or workshops or the delivery of the books. No warranties are offered by the Institute for the goods or services rendered. Determining the timing of the satisfaction of goods and services The Institute concluded that revenue for membership subscriptions is to be recognised over time because the member simultaneously receives and consumes the benefits provided by the Institute. The Institute determined that it is best to spread the income evenly over 12 months, because the member receives and consumes the benefits provided by the Institute evenly over the period. As regards admission fees and income from seminars and workshops revenue is recognised at a point in time, generally upon delivery of the service. In the case of sale of books, revenue is recognised at the point in time when control of the asset is transferred to the customer, generally on delivery of such books. The normal credit term for these goods or services is cash or 30 days from delivery of the goods or services.

Principal versus agent considerations The Institute has contracts with certain customers to provide, on their behalf, student assessment, student memberships, admission fees and training provider admission fees. The Institute’s role is only to arrange for another entity to provide the services. It has no discretion in establishing prices and its consideration is in the form of a commission. The Institute’s role is only to arrange services on behalf of another entity. In addition, the Institute oncluded that it transfers control over its services at a point in time, upon receipt by the customer of the services, because this is when the customer benefits from the Institute’s agency service. Key sources of estimation uncertainty Residual values and useful lives of assets The Institute reviews the estimated useful lives and residual values of property and equipment at the end of each annual reporting period. During the financial year, the Institute determined that all assets of the Institute will have no residual values of any significance at the end of their useful lives; such useful lives being stated in the Institute’s accounting policy on property and equipment.

Use of leasehold land an buildings The Institute has leased out less than 10% of its office building to third parties. In accordance with IAS 40, the portion of the property which is leased out, if saleable, should be classified as Investment Properties. The Institute has not sectionalised its land and buildings. It is also of the view that the office property was developed for self-use by the Institute, and is being rented out temporarily to provide a return to the stakeholder. As the Institute increases its services, it will utilize the currently leased office premises for self-use, and hence has classified all the leasehold land and buildings as Property and Equipment under IAS 16. Provision for employee benefits In determining the liability for long-service employee benefit, management has made an estimate of how many employees will leave employment in the next financial year, to arrive at the current portion of the liability. Management has decided to be prudent and conservative in classifying the entire amount as a current liability.

Explanation of the inputs, assumptions and estimation techniques used in measuring ECL, which also sets out key sensitivities of the ECL to changes in these elements. A number of significant judgements are also required in applying the accounting requirements for measuring ECL, such as: • Choosing appropriate models and assumptions for the measurement of ECL; and • Establishing entities of similar financial assets for the purposes of measuring ECL. The financial statements incorporate the accounting policies set out below, which have been consistently applied in all material aspects to all the years presented. 1.3 Cash and cash equivalents Cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of less than three months. Cash and cash equivalents are classified and subsequently measured at amortised cost, using the effective interest method.

Measurement of the expected credit loss allowance The measurement of the expected credit loss allowance for financial assets measured at amortised cost is an area that equires the use of models and significant assumptions about future economic conditions and credit behaviour (e.g. the likelihood of customers defaulting and the resulting losses).

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

Accounting Policies (continued) for the year ended 31 December 2019

1.4

Contractual gratuity Contract staff members of the Institute are entitled to gratuities at the end of their contracts at the rates and in accordance with the terms specified in their contracts of employment. Gratuities are recognized at the end of each financial year as they are accrued and a provision is made up to the end of each reporting period which approximates the liability estimated as the employee renders services to the Institute.

Employee benefits Salaries, wages, social costs, paid annual leave, paid sick leave, performance bonuses payable within twelve months of the end of the period, non-monetary benefits and workmen’s compensation insurance, payable to current employees of the Institute, are recognised when they accrue and are disclosed as shortterm employee benefits. Employees include full-time, parttime, permanent, casual or temporary employees. Employees also include the executive management personnel, but do not include Institute members who offer honorary services to the Institute. Pension fund contribution The Institute contributes to a defined pension contribution plan for its employees. It makes contributions to the Mompati Retirement Annuity Fund administered by Botswana Life Insurance Limited (BLIL). This operates like a defined contribution plan where the Institute and staff members make fixed contributions based on pensionable earnings into the Fund. The Institute does not have a legal or constructive obligation to pay further contributions if the fund fails to meet employee benefits from these life policies. Leave pay The Institute provides for leave pay at the end of the year based on the number of leave days accrued and the salary cost to the Institute at the year end.

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1.5

Translation of foreign currencies Foreign currency translation The Institute’s presentation and functional currency is the Botswana Pula. currency transactions Foreign are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of profit or loss and other comprehensive income.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the statement of comprehensive income within ‘finance income or cost’. All other foreign exchange gains and losses are presented in statement of profit or loss and other comprehensive income within ‘net foreign exchange gains.’

1.6

At each reporting date, monetary assets and liabilities denominated in foreign currencies are converted using year-end spot foreign exchange rates. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are converted using foreign exchange rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

The specific accounting policies for the classification, recognition and measurement of each type of financial instrument held by the Institute are presented below:

Financial instruments

They have been classified in this manner because their contractual terms give rise, on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding, and the Institute’s business model is to collect the contractual cash flows on trade and other receivables.

Financial instruments held by the Institute are classified in accordance with the provisions of IFRS 9 Financial Instruments. Broadly, the classification possibilities, which are adopted by the Institute, as applicable, are as follows: Financial assets which are debt instruments: • Amortised cost. Financial liabilities: • Amortised cost. Financial instruments and risk management (note 28) presents the financial instruments held by the Institute based on their specific classifications. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

Trade and other receivables Classification Trade and other receivables, excluding, when applicable, VAT and prepayments, are classified as financial assets subsequently measured at amortised cost (note 20).

Recognition and measurement Trade and other receivables are recognised when the Institute becomes a party to the contractual provisions of the receivables. They are measured, at initial recognition, at fair value plus transaction costs, if any. They are subsequently measured at amortised cost. The amortised cost is the amount recognised on the receivable initially, minus principal repayments, adjusted for any loss allowance.

Trade and other receivables denominated in foreign currencies When trade and other receivables are denominated in a foreign currency, the carrying amount of the receivables are determined in the foreign currency. The carrying amount is then translated to the Pula equivalent using the spot rate at the end of each reporting period. Any resulting foreign exchange gains or losses are recognised in profit or loss in other operating gains. Details of foreign currency risk exposure and the management thereof are provided in the financial instruments and risk management (note 28). Impairment The Institute recognises a loss allowance for expected credit losses on trade and other receivables, excluding VAT and prepayments. The amount of expected credit losses is updated at each reporting date. The Institute measures the loss allowance for trade and other receivables at an amount equal to lifetime expected credit losses (lifetime ECL), which represents the expected credit losses that will result from all possible default events over the expected life of the receivable. Measurement and recognition of expected credit losses The Institute makes use of a provision matrix as a practical expedient to the determination of expected credit losses on trade and other receivables.

The provision matrix is based on historic credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current and forecast direction of conditions at the reporting date, including the time value of money, where appropriate. The customer base is widespread and does not show significantly different loss patterns for different customer segments. The loss allowance is calculated on a collective basis for all trade and other receivables in totality. Details of the provision matrix is presented in note 20. An impairment gain or loss is recognised in profit or loss with a corresponding adjustment to the carrying amount of trade and other receivables, through use of a loss allowance account. The impairment loss is included in other operating expenses in profit or loss as a movement in credit loss allowance. Write off policy The Institute writes off a receivable when there is information indicating that the counterparty is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the counterparty has been placed under liquidation or has entered into bankruptcy proceedings. Receivables written off may still be subject to enforcement activities under the Institute recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognised in profit or loss.

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Accounting Policies (continued) for the year ended 31 December 2019

Credit risk Details of credit risk are included in the trade and other receivables note (note 20) and the financial instruments and risk management note (note 28). Derecognition Refer to the derecognition section of the accounting policy for the policies and processes related to derecognition. Trade and other payables Classification Trade and other payables (note 25), excluding VAT and amounts received in advance, are classified as financial liabilities subsequently measured at amortised cost. Recognition and measurement They are recognised when the Institute becomes a party to the contractual provisions, and are measured, at initial recognition, at fair value plus transaction costs, if any. They are subsequently measured at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other

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premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the amortised cost of a financial liability. Trade and other payables expose the Institute to liquidity risk and possibly to interest rate risk. Refer to note 28 for details of risk exposure and management thereof. Trade and other payables denominated in foreign currencies payables are When trade denominated in a foreign currency, the carrying amount of the payables are determined in the foreign currency. The carrying amount is then translated to the Pula equivalent using the spot rate at the end of each reporting period. Any resulting foreign exchange gains or losses are recognised in profit or loss in the other operating gains. Details of foreign currency risk exposure and the management thereof are provided in the financial instruments and risk management note (note 28). Derecognition Refer to the “derecognition” section of the accounting policy for the policies and processes related to derecognition.

Derecognition

Reclassification

Financial assets The Institute derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Institute neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset,the Institute recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Institute retains substantially all the risks and rewards of ownership of a transferred financial asset, the Institute continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

Financial assets The Institute only reclassifies affected financial assets if there is a change in the business model for managing financial assets. If a reclassification is necessary, it is applied prospectively from the reclassification date. Any previously stated gains, losses or interest are not restated.

Financial liabilities The Institute derecognises financial liabilities when, and only when, the Institute obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

The reclassification date is the beginning of the first reporting period following the change in business model which necessitates a reclassification. There were no financial assets reclassified during the year.

Item

1.7

Financial liabilities Financial liabilities are not reclassified.

associated with the item will flow to the Institute and the cost of the item can be measured reliably.

Property and equipment

All other repairs and maintenance expenditures are charged to the statement of profit or loss and other comprehensive income during the financial period in which they are incurred.

Leasehold land and buildings held for use for administrative purposes or self occupied are stated in the statement of financial position at cost, less accumulated depreciation and accumulated impairment losses. Equipment is stated at cost, less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits

Depreciation Method

Gains or losses arising on the disposal or retirement of an item of property and equipment is determined as the difference between the sale proceeds and the carrying amount of the asset and is recognised in profit or loss. The useful lives of items of property and equipment have been assessed as follows:

Average Useful Life

Leasehold land Straight line

The shorter of 50 years or remaining lease period

Straight line Leasehold building

The shorter of 50 years or remaining lease period

Furniture and fixtures

Straight line

4 years

Motor vehicles

Straight line

4 years

Office equipment

Straight line

4 years

Computer equipment

Straight line

4 years

Leasehold improvements

Straight line

5 years

Cash and cash equivalents Cash and cash equivalents are stated at carrying amount which is deemed to be fair value. BICA Annual Report 2019

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Accounting Policies (continued) for the year ended 31 December 2019

The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

Leasehold improvements are depreciated over the shorter of their estimated useful lives or the term of the related lease. The asset’s residual values, useful lives and methods of depreciation are reviewed, and adjusted if appropriate, at each financial year end and accounted for on a prospective basis. Major renovations are depreciated over the remaining useful life of the related asset or to the date of the next major renovation, whichever is sooner. An item of property and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of comprehensive income in the year the asset is derecognised. 1.8

Impairment of non-financial assets Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment 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 asset’s carrying amount exceeds its recoverable amount.

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1.9

If an item, or group of items, of inventory is impaired, the Institute reduces the carrying amount of such inventory to its selling price less costs to complete and sell, and recognizes such reduction, which is an impairment loss, immediately in profit or loss. When inventories are sold, the Institute recognises the carrying amount of those inventories as an expense in the period in which the related revenue is recognised.

Inventories 1.10 Leases

Inventories are stated at the lower of cost and estimated selling price less costs to complete and sell. Inventories comprise of BICA qualification text books held for sale by the Institute. The cost of books comprises of the costs of purchase and other costs incurred in bringing the books to their present location and condition. Selling costs are excluded. Cost is calculated using FirstIn-First-Out. The above text books undergo impairment when a revised amendment is announced or an updated text book is released. The carrying amount of such an item of text book is reduced to nil, such impairment loss being recognised immediately in profit or loss. At the end of each reporting period, the Institute assesses whether any other inventories are impaired, i.e. the carrying amount is not fully recoverable (e.g. because of damage, obsolescence or declining selling prices) by comparing the carrying amount of each item of inventory, or group of similar items, with its selling price less costs to complete and sell.

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception date: whether fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset. Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. The Institute had operating leases both as a lessor and as a lessee. Institute as lessee The Institute has entered into an operating lease for its satellite office in Francistown. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

Lease rights Lease rights represent rights covered by contract or similar arrangement to occupy, lease out or otherwise utilise property. Separately acquired lease rights are shown at historical cost. Where land rights are acquired directly through agreement with Government, the Institute records these at nominal amounts the inception of the underlying lease/ rental agreements or when such agreements are renewed. Lease rights have a finite useful life based on the underlying contractual agreement assigning such right to the lessor and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight–line method to allocate the cost of lease rights over their estimated useful lives based on contractual terms. Institute as lessor Rental income is recognised on a straight line basis over the term of the relevant lease, and is included in revenue in the statement of surplus or deficit and other comprehensive income. 1.11 Intangible assets Intangible assets comprise of computer software which has been procured externally. Costs that are directly attributable for the installation of identifiable computer software controlled by the Institute, and that will

probably generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. software costs Computer recognised as assets are amortised over their useful lives on a straight-line basis, which does not exceed two years and are tested annually for impairment. Costs associated with maintaining computer software are recognised as an expense as incurred. 1.12 Tax The Institute is exempt from Income Tax in accordance with paragraph XIV of the Second Schedule of the Income Tax Act (Cap 52:01) as amended. 1.13 Provisions Provisions are recognised when the Institute has a present obligation (legal or constructive) as a result of a past event, and it is probable that the Institute will be required to settle that obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as provision is the best estimate of the consideration required to settle the present obligation at balance sheet date, taking in to account the risk and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the receivable can be measured reliably. Provisions are measured at the Institute’s best estimate of the expenditure required to settle the obligation at the balance sheet date, and are discounted to the present value where the effect is material. 1.14 Revenue recognition Revenue from contracts with customers oversees The Institute professional accountancy services and derives income from membership subscriptions, admission fees, other subscriptions, CPD training seminars, workshops and conferences, sales of books relating to the profession as its ordinary activities. The Institute has generally concluded that it is the principal in its revenue arrangements, except for the agency services below, because it typically controls the goods or services before transferring them to the customer. The Institute has chosen to describe the revenue from contracts with customers as “Revenue earned from services” and discloses it separately from its other sources of income.

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Accounting Policies (continued) for the year ended 31 December 2019

Revenue is recognised over time or at a specific point in time depending on the nature of the performance obligations embedded in the contract. Revenue recognition follows a five step model listed below: Step 1: Identify the contract (s) with a customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation. The disclosures of significant accounting judgements, estimates and assumptions relating to revenue from contracts with customers are provided in 1.2. Membership subscriptions The Institute provides professional accountancy services and derives income from membership subscriptions (including audit and non-audit member firm practicing fees). Each contract with its customer and the performance obligations attached with the contracts are capable of being distinct and identifiable, the

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Institute can identify the payment terms of each contract, each contract has commercial substance and the Institute assesses that it will collect the consideration to which it will be entitled to in exchange of the services. The Institute recognises revenue from these services over time, which is spread evenly over 12 months, because the customer receives and consumes the benefits provided by the Institute evenly over the period. The Institute receives membership fees in advance from its customers. Using the practical expedient in IFRS 15, the Institute does not adjust the promised amount of consideration for the effects of a significant financing component as, at contract inception, it expects to deliver the service within one year. Admission and registration fees, income from seminars and workshops, sale of books As part of its ordinary activities the Institute derives income from admission and registration fees, income from conducting CPD seminars, workshops and conferences and sale of books relating to the accountancy profession. Each contract with its customer and the performance obligations attached with the contracts are capable of being distinct and identifiable, the Institute can identify the payment terms of each contract, each contract has commercial substance and the Institute assesses that it will collect the consideration to which it will be entitled to in exchange of the goods or services.

The Institute recognises revenue from these services at a point in time, generally upon delivery of the service, and in the case of sale of books, at the point in time when control of the asset is transferred to the customer, generally on delivery of such books.The normal credit term is cash or 30 days from delivery of the goods or services. Services to other professional bodies The Institute has contracts with certain customers to provide, on their behalf, student assessment, student memberships, admission fees and training provider admission fees. The Institute’s role is only to arrange services on behalf of another entity. It has no discretion in establishing prices and its consideration is in the form of a commission. The Institute has generally concluded that is acting as an agent in these arrangements. The Institute accounts for the agency commission only as its revenue at a point in time, generally upon delivery of the service. The Institute does not provide warranty obligations on its goods or services. Customers do not have the right of return of the goods or services and consequently the Institute does not have assets and liabilities arising from rights of return.Furthermore, itis not common for the Institute to provide volume rebates to its customers, nor does it receive any non-cash consideration for its goods or services rendered. The Institute does not incur any significant costs to obtain its contracts.

Other sources of revenue Rental income The Institute has entered into operating leases with certain tenants while sub-leasing some portions of its leasehold building. The receipts are recognised on a straight line basis over the term of the lease. Government subvention subvention is Government recognised in the statement of profit or loss and comprehensive income according to the policy on Government grants as described in section below (refer to note 1.16). Interest income Interest income is accrued on a time proportion basis using the effective interest method. When a receivable is impaired, the Institute reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at original effective interest rate of the instrument, and continues unwinding the discount as interest income. 1.15 Contract balances Contract assets A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Institute performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional.

The Institute ordinarily does not transfer goods or services to a customer before the customer pays consideration or before payment is due, and hence it does not carry any contract assets. Trade receivables A receivable represents the Institute’s right to an amount of consideration that is unconditional (i.e only the passage of time is required before payment of consideration is due). Contract liabilities A contract liability is the obligation to transfer goods or services to a customer for which the Institute has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Institute transfers goods or services to the stomer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Institute performs under the contract. 1.16 Government grants Government grants are recognised when there is reasonable assurance that the grant will be received and all attached conditions will be compiled with. When the grant relates to an expense item, it is recognised as income over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate.

When the grant relates to an asset it is recognised as deferred income as a liability and it is released to income in equal amounts over the remaining lease period of the asset. 1.17 Related party transactions The Institute maintains a very close relationship with the Government of Botswana. The Government of Botswana provides significant income to the Institute through capital grants and operational subventions and also has a statutory right to representation of up to three members of the Institute’s Council. Transactions directly with the Government of Botswana are treated as related party transactions. 1.18 Value added tax (VAT) expenses and Revenue, assets are recognised net of the amount of VAT, except where the amount of VAT incurred is not recoverable from the Botswana Unified Revenue Service (BURS). In these circumstances the VAT is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables in the statement of financial position are shown inclusive of VAT. VAT receivable or payable at the end of the reporting period is disclosed under other receivables or other payables respectively.

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Accounting Policies (continued) for the year ended 31 December 2019

Changes in accounting policy The annual financial statements have been prepared in accordance with International Financial Reporting Standards on a basis consistent with the prior year except for the adoption of the following new or revised standards. IFRS 16 ‘Leases’ IFRS 16 ‘Leases’ replaces IAS 17 ‘Leases’ along with three Interpretations (IFRIC 4 ‘Determining whether an Arrangement contains a Lease’, SIC 15 ‘Operating LeasesIncentives’ and SIC 27 ‘Evaluating the Substance of Transactions Involving the Legal Form of a Lease’). The adoption of this new Standard has resulted in the Institute recognising a right-of-use asset and related lease liability in connection with all former operating leases except for those identified as lowvalue or having a remaining lease term of less than 12 months from the date of initial application.

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The new Standard has been applied using the modified retrospective approach, with the cumulative effect of adopting IFRS 16 being recognised in equity as an adjustment to the opening balance of retained earnings for the current period. Prior periodshave not been restated. For contracts in place at the date of initial application, the Institute has elected to apply the definition of a lease from IAS 17 and IFRIC 4 and has not applied IFRS 16 to arrangements that were previously not identified as lease under IAS 17 and IFRIC 4. On transition, for leases previously accounted for as operating leases with a remaining lease term of less than 12 months and for leases of low-value assets the Institute has applied the optional exemptions to not recognise right-of-use assets but to account for the lease expense on a straightline basis over the remaining lease term.

On transition to IFRS 16 the weighted average incremental borrowing rate applied to lease liabilities recognised under IFRS 16 was 6.5%. The Institute has benefited from the use of hindsight for determining the lease term when considering options to extend and terminate leases. The following is a reconciliation of the financial statement line items from IAS 17 to IFRS 16 at 1 January 2019:

Carrying amount Remeasurement Adjustments IFRS 16 at 31 December post carrying 2018 remeasurement amount at 1 January 2019 P P P P Right-of-use assets Lease liability Operating lease liability

(26 347) -

574 081 (574 081) -

(114 816) 87 135 26 347 (1 334)

Total operating lease commitments disclosed at 31 December 2018 Recognition exemptions Leases of low value assets Leases with remaining lease term of less than 12 months Operating lease liabilities before discounting Discounted using incremental borrowing rate Total lease liabilities recognised under IFRS 16 at 1 January 2019

459 265 (486 946) -

571 531 571 531 (84 585) 486 946

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Notes to the Annual Financial Statements for the year ended 31 December 2019

New Standards and Interpretations

3.1 Standards and interpretations effective and adopted in the current year In the current year, the institute has adopted the following standards and interpretations that are effective for the current financial year and that are relevant to its operations:

•

IFRS 16 Leases IFRS 16 Leases is a new standard which replaces IAS 17 Leases, and introduces a single lessee accounting model. The main changes arising from the issue of IFRS 16 which are likely to impact the institute are as follows: Institute as lessee: • Lessees are required to recognise a right-of-use asset and a lease liability for all leases, except short term leases or leases where the underlying asset has a low value, which are expensed on a straight line or other systematic basis. •

110

The cost of the right-of-use asset includes, where appropriate, the initial amount of the lease liability; lease payments made prior to commencement of the lease less incentives received; initial direct costs of the lessee; and an estimate for any provision for dismantling, restoration and removal related to the underlying asset. BICA Annual Report 2019

•

The lease liability takes into consideration, where appropriate, fixed and variable lease payments; residual value guarantees to be made by the lessee; exercise price of purchase options; and payments of penalties for terminating the lease. The right-of-use asset is subsequently measured on the cost model at cost less accumulated depreciation and impairment and adjusted for any re-measurement of the lease liability. However, right-of-use assets are measured at fair value when they meet the definition of investment property and all other investment property is accounted for on the fair value model. If a right-of-use asset relates to class of property, plant and equipment which is measured on the revaluation model, then that right-of-use asset may be measured on the revaluation model. The lease liability is subsequently increased by interest, reduced by lease payments and remeasured for reassessments or modifications. Re-measurements of lease liabilities are affected against right-of-use assets, unless the assets have been reduced to nil, in which case further adjustments are recognised in profit or loss.

•

The lease liability is re-measured by discounting revised payments at a revised rate when there is a change in the lease term or a change in the assessment of an option to purchase the underlying asset.

•

The lease liability is remeasured by discounting revised lease payments at the original discount rate when there is a change in the amounts expected to be paid in a residual value guarantee or when there is a change in future payments because of a change in index or rate used to determine those payments.

•

Certain lease modifications are accounted for as separate leases. When lease modifications which decrease the scope of the lease are not required to be accounted for as separate leases, then the lessee re-measures the lease liability by decreasing the carrying amount of the right of lease asset to reflect the full or partial termination of the lease. Any gain or loss relating to the full or partial termination of the lease is recognised in profit or loss. For all other lease modifications which are not required to be accounted for as separate leases, the lessee re-measures the lease liability by making a corresponding adjustment to the right-of-use asset.

Right-of-use assets and lease liabilities should be presented separately from other assets and liabilities. If not, then the line item in which they are included must be disclosed. This does not apply to right-of-use assets meeting the definition of investment property which must be presented within investment property. IFRS 16 contains different disclosure requirements compared to IAS 17 leases. Institute as lessor: • Accounting for leases by lessors remains similar to the provisions of IAS 17 in that leases are classified as either finance leases or operating leases. Lease classification is reassessed only if there has been a modification.

underlying asset shall be measured as the net investment in the lease immediately before the effective date of the modification. IFRS 9 is applied to all other modifications not required to be treated as a separate lease.

•

A modification is required to be accounted for as a separate lease if it both increases the scope of the lease by adding the right to use one or more underlying assets; and the increase in consideration is commensurate to the stand alone price of the increase in scope. If a finance lease is modified, and the modification would not qualify as a separate lease, but the lease would have been an operating lease if the modification was in effect from inception, then the modification is accounted for as a separate lease. In addition, the carrying amount of the

•

Modifications to operating leases are required to be accounted for as new leases from the effective date of the modification. Changes have also been made to the disclosure requirements of leases in the lessor’s financial statements.

Sale and leaseback transactions: • In the event of a sale and leaseback transaction, the requirements of IFRS 15 are applied to consider whether a performance obligation is satisfied to determine whether the transfer of the asset is accounted for as the sale of an asset. •

•

If the fair value of consideration for the sale is not equal to the fair value of the asset, then IFRS 16 requires adjustments to be made to the sale proceeds. When the transfer of the asset is not a sale, then the seller-lessee continues to recognise the transferred asset and recognises a financial liability equal to the transfer proceeds. The buyerlessor recognises a financial asset equal to the transfer proceeds. The effective date of the standard is for years beginning on or after 1 January 2019. The Institute has adopted the standard for the first time in the 2019 annual financial statements. The impact of the standard is set out in note 2 Changes in Accounting Policy.

If the transfer meets the requirements to be recognised as a sale, the seller-lessee must measure the new right-of use asset at the proportion of the previous carrying amount of the asset that relates to the right-of-use retained. The buyerlessor accounts for the purchase by applying applicable standards and for the lease by applying IFRS 16

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Notes to the Annual Financial Statements (continued) for the year ended 31 December 2019

Revenue earned from services 4.

2019 P

2018 P

Disaggregation of revenue from contracts with customers 3.2

Standards and interpretations not yet effective The Institute has chosen not to early adopt the following standards and interpretations, which have been published and are mandatory for the Institute’s accounting periods beginning on or after 1 January 2020 or later periods:

Standard/ Interpretation:

Effective Date: Years beginning on or after

• Conceptual Framework for Financial Reporting 01 January 2020

Expected Impact:

Unlikely there will be a material impact

• IAS 1 and IAS 8 - Definition of Material 01 January 2020 Unlikely there will be a (Amendments to IAS 1 and IAS 8) material impact • IFRS 9, IAS 39 and IFRS 7 - Interest Rate 01 January 2020 Unlikely there will be a Benchmark Reform material impact • Practice Statement 2 - Making 01 January 2020 Unlikely there will be a Materiality Judgements material impact

In the following table, revenue is disaggregated by major service lines and timing of revenue recognition.

By major service lines / products Membership fees Income from seminars and workshops Services to other professional bodies BICA administration fees, subscriptions and sale of books Total

Timing of revenue recognition

Over time Membership and student fees (excluding penalties)

At a point in time Seminars, services to other professional bodies and other services Total revenue from contracts with customers

Contract balances Trade receivables (refer to note 20)

1 919 860

1 858 117

Contract liabilities Contract liabilities (refer to note 26)

5 028 284

4 011 550

Government subvention Received from Government of Botswana

7 783 141

8 783 143

156 533 994 321 1 150 854

136 227 1 016 688 1 152 915

125 596 50 195 286 875 80 263 542 929

120 183 260 628 364 286 165 397 910 494

BICA Annual Report 2019

8 591 036 4 613 908 1 300 240 1 241 126 15 746 310

(9 310 296 )

(8 439 325)

(8 908 759 ) (18 219 055)

(7 306 985) (15 746 310)

The Government of Botswana provides funding to cover running costs of the Institute by way of an annual subvention from the Consolidated and Development Fund.

Rental income 6. Other recoveries Rental income 7. Other income Bad debts recoveries, previously written off Sale of publications and sundry income Profit on disposal of property and equipment Income from annual dinner dance fundraiser Reimbursement of AAT annual award event expenses

112

10 126 691 5 294 446 1 184 786 1 613 132 18 219 055

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Notes to the Annual Financial Statements (continued) for the year ended 31 December 2019

2019 2018 P P Public relations expenses 9. Administration expenses 8. Marketing and branding Amortisation of intangible assets (87 390 ) (115 732) AAT annual award event costs Audit fees (105 518 ) (65 000) Advertising and promotions Bad debts (241 220 ) (41 579) BICA graduation Bank charges (199 609 ) (173 023) AGM, dinner dance and cocktail costs Cleaning and refreshments (288 459 ) (255 000) Computer consumables (120 570 ) (125 089) Consulting fees (1 044 819 ) (701 894) 10. Training and professional development expenses Courier and postage (147 523 ) (205 973) Seminars and workshops Database licensing and maintenance (230 040 ) (212 326) Publication expenses Depreciation (1 029 928 ) (1 010 577) Biennial conference Travel expenses (467 990 ) (45 587) Business travel and accommodation to external meetings General office expenses (216 288 ) (171 036) BICA qualification course materials and other costs Insurance (242 094 ) (182 724) Internet services (191 980 ) (189 262) Legal expenses (175 823 ) (188 753) Levies (138 000 ) (136 998) Licences and permits (277 056 ) (276 331) Loss on disposal of property and equipment - (5 846) Motor vehicle expenses (25 892 ) (26 627) Photocopier rental, maintenance and supplies (169 160 ) (251 618) Practicing monitoring costs (162 000 ) (145 000) Printing and stationery (149 547 ) (113 508) Recruitment expenses (87 340 ) (37 084) Rent (Francistown satellite office) - (167 519) Repairs and maintenance (224 031 ) (234 151) Security expenses (14 210 ) (14 041) Sponsorships (14 400 ) (57 400) Subscriptions (367 500 ) (310 561) Telephone, fax and cellphone (175 398 ) (276 563) Training Levy (33 711 ) (29 538) Utilities (268 417 ) (243 987) (6 895 913) (6 010 327)

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2019 P

2018 P

(1 534 191 ) (80 263 ) (127 025 ) - (477 931 ) (2 219 410)

(1 153 268) (165 397) (92 775) (280 725) (817 167) (2 509 332)

(4 261 323 ) (36 688 ) - - (1 666 380 ) (5 964 391)

(3 336 551) (22 640) (530 340) (760 268) (783 695) (5 433 494)

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Notes to the Annual Financial Statements (continued)

for the year ended 31 December 2019

2019 2018 P P 11. Technical and public sector accounting services expenses FIA supervision expenses (675 510 ) Public Sector Curriculum development - (594 500) Quality assurance reviews for Public Sector Curriculum - (306 000) Technical training and bulletin (91 200 ) (123 101) (766 710) (1 023 601)

Cost P

12.

Employee costs

Employee costs Salaries and wages Group life cover, medical aid and uniform costs Leave pay Training, conferences and staff welfare Allowances, benefits and performance rewards Pension contribution The average number of persons employed by the Institute during the year was 31 (2018: 28). 13.

Finance income Bank and other cash equivalents

14.

Finance costs Lease liabilities

(6 705 740 ) (162 136 ) (149 885 ) (589 180 ) (1 876 086 ) (1 302 397 ) (10 785 424)

643 590

31 651

(5 566 248) (128 875) (119 149) (521 670) (1 634 737) (1 058 254) (9 028 933)

481 013

15.

2019 Accumulated Carrying Cost Depreciation Value P P P

2018 Accumulated depreciation P

Carrying Value P

(173 545) (2 676 935) (1 374 886) (463 300) (1 813 791) (191 006) (6 693 463)

541 669 8 355 281 117 163 176 432 841 924 235 448 10 267 917

Property and Equipment

Leasehold land Leasehold buildings Furniture and fixtures Motor vehicles IT equipment Leasehold improvements Total

715 214 11 032 216 1 464 962 741 990 2 736 155 449 954 17 140 491

(194 581) (3 001 412) (1 389 804) (286 224) (2 082 617) (256 624) (7 211 262)

520 633 8 030 804 75 158 455 766 653 538 193 330 9 929 229

715 214 11 032 216 1 492 049 639 732 2 655 715 426 454 16 961 380

Opening Balance P

Additions

Disposals

541 669 8 355 281 117 163 176 432 841 922 235 450 10 267 917

38 500 370 654 210 868 23 500 643 522

(67 098) (67 098)

(21 036) (324 477) (80 505) (24 222) (399 252) (65 620) (915 112)

520 633 8 030 804 75 158 455 766 653 538 193 330 9 929 229

Opening Balance P

Additions

Disposals

562 705 8 679 758 155 566 233 547 682 404 243 617 10 557 597

64 451 581 294 80 995 726 740

(2 602) (3 243) (5 845)

(21 036) (324 477) (102 854) (57 115) (419 172) (85 921) (1 010 575)

541 669 8 355 281 117 163 176 432 841 924 235 448 10 267 917

Reconciliation of property and equipment - 2019 Leasehold land Leasehold buildings Furniture and fixtures Motor vehicles IT equipment Leasehold improvements

Depreciation

Total

Reconciliation of property and equipment - 2018 Leasehold land Leasehold buildings Furniture and fixtures Motor vehicles IT equipment Leasehold improvements

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Depreciation

Total

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Notes to the Annual Financial Statements (continued) for the year ended 31 December 2019

Leasehold land and leasehold buildings The leasehold land is located at Fairgrounds Financial Centre, Gaborone described as Lease Area No. 4466-KO, situated on the Remainder of Lot 50676, Gaborone, to be used for office accommodation only. The lease is for a period of 34 years commencing 15 October 2009.

Cost P

2019 2018 Accumulated Carrying Cost Accumulated Depreciation Value Depreciation P P P P

Carrying Value P

The leasehold buildings comprise of a three storey office building on the leasehold land.

2019 P

2018 P

16.

Right-of-use assets

Net carrying amounts of right-of-use assets

Depreciation recognised on right-of-use assets

Depreciation recognised on each class of right-of-use assets, is presented below. It includes depreciation which has been expensed in the total depreciation charge in profit or loss

344 449

Additions to right-of-use assets Buildings

Intangible assets

Computer software

Reconciliation of intangible assets - 2019

582 425

(581 275)

1 150

The carrying amounts of right-of-use assets are included in the following line items: Buildings

17.

459 265

Computer software

Reconciliation of intangible assets - 2018

582 425

(493 885)

88 540

Opening balance P

Amortisation

Total

88 540

(87 390)

1 150

Opening balance P

Additions

Amortisation

Total

195 078

9 196

(115 734)

88 540

Computer software

Buildings Other disclosures: Interest expense on lease liabilities Lease liabilities The maturity analysis of lease liabilities is as follows: Within one year Two to five years More than five years Less finance charges component

139 090 305 997 - 445 087 (52 934) 392 153

Payments recognised as an expense

Non-current liabilities Current liabilities

278 553 113 600 392 153

Future minimum lease payments Not later than one year Later than 1 year but not later than 5 years

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BICA Annual Report 2019

114 816

18. Operating lease commitments The Institute as a lesse

31 651

Leasing arrangements

Operating leases relate to the Institute’s operating office premises in Francistown satellite office, with a lease term of 5 years, with an option to extend for a further 5 years. All operating lease contracts contain market review clauses in the event that the Institute exercises its option to renew. The Institute does not have the option to purchase the leased asset at the expiry of the leased period. 2019 P

2018 P

114 950

- - -

126 445 445 086 571 531

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

Notes to the Annual Financial Statements (continued) for the year ended 31 December 2019

2019 P

2018 P

18. Operating lease commitments (continued) The Institute as a lessor Leasing arrangements Operating lease relates to part of the office building at Fairgrounds, Gaborone leased out with a term of 3 years, escalating by 10% per annum, with an option to renew for a further 3 years at the choice of the lessee. The lease contract contains market review clauses in the event that the lessee exercises its option to renew. The tenants do not have the option to purchase the leased asset at the expiry of the lease period. Lease income received Contractual revenue Straight line lease rental adjustment Future minimum lease payments Not later than 1 year Later than 1 year but not later than 5 years 19. Inventories Study books - at cost Inventory recognised as an expense during the period Opening balance of inventory Add: Purchases Less: Inventory write-downs Less: Closing balance of inventory Cost of sales included under training and professional development expenses

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BICA Annual Report 2019

1 040 320 (45 999) 994 321

982 929 33 759 1 016 688

321 447 - 321 447

824 074 321 447 1 145 521

14 534

14 534 141 735 156 269 - - 156 269

59 893 131 351 191 244 (42 088) (14 534) 134 622

20.

2019 P

2018 P

Trade and other receivables Financial instruments: Trade receivables Loss allowance Trade receivables at amortised cost

2 194 719 (274 859) 1 919 860

1 891 756 (33 639) 1 858 117

Non-financial instruments: Staff advances 4 467 Prepayments and other receivables 587 455 Total trade and other receivables 2 511 782

16 575 285 703 2 160 395

Exposure to credit risk Trade receivables inherently expose the institute to credit risk, being the risk that the institute will incur financial loss if customers fail to make payments as they fall due. The Institute’s historical credit loss experience does not show significantly different loss patterns for different customer segments. The provision for credit losses is therefore based on past due status without disaggregating into further risk profiles. The loss allowance provision is determined as follows:

2019 2019 2018 P P P Estimated Loss Estimated gross carrying allowance gross carrying amount at (Lifetime amount at default expected default credit loss) Expected credit loss rate:

Current: 12.0% (2018: 0.50%) 247 727 30 days past due: 26.6% (2018: 1.50%) 850 60 days past due: 48.0% (2018: 3%) 39 142 90 days past due: 85.7% (2018: 0.4%) 96 453 120 days past due: 100% (2018: 2.8%) 143 605 Specific debtors 0.0% (2018: 0.0%) 1 666 942 Total 2 194 719

(29 730) (226) (18 781) (82 517) (143 605) (274 859)

566 571 414 725 415 856 80 405 414 199 1 891 756

2018 P Loss allowance (Lifetime expected credit loss) (2 833) (6 221) (12 476) (350) (11 759) (33 639)

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Notes to the Annual Financial Statements (continued) for the year ended 31 December 2019

20.

2019 P

2018 P

Trade and other receivables (continued)

Reconciliation of loss allowances The following table shows the movement in the loss allowance (lifetime expected credit losses) for lease receivables:

Opening balance Provision for impairment Bad debts recoveries, previously impaired Closing balance

(33 639) (241 220 ) - (274 859)

(135 040) (21 530) 122 931 (33 639)

The Institute has credit terms of 30 days (2018: 30 days) after which amounts are considered to be past due. The Institute has significant concentration of credit risk through an amount receivable from a single Institutional debtor (AAT) of P 926 020 (2018: P1 203 696), due at the reporting date. Management believes that this amount, which has not been impaired, is still collectable in full based on historical payment behaviour.

Fair value of trade and other receivables The fair value of trade and other receivables approximates their carrying amounts.

2018 P

21. Cash and cash equivalents Cash and cash equivalents consist of: Balances with bank and on hand 11 512 984 8 950 143 Short-term deposits 14 636 299 12 034 938 26 149 283 20 985 081 Included in the bank balances is an amount of P3 450 965 (2018: P2 689 858) which is held in trust accounts for various international professional governing bodies. An agreement exists between the Institute and such other governing bodies wherein students in Botswana pay their professional dues directly into the Institute’s bank account and the Institute repatriates these monies weekly to the respective bodies. Short term investments represent an investment in Stanlib Botswana Money Market Fund with Stanlib Investment Management Services (Proprietary) Limited. The interest is determined on the 7-day yield, which at the reporting date was 3.96% (2018: 4.30%).

The carrying amounts of trade and other receivables is a reasonable approximation of their fair values as at the end of the reporting period. The Institute did not hold any collateral or security on its trade and other receivables.

2019 P

For the purposes of the statement of cash flows, cash and cash equivalents include cash in hand and at banks and shortterm investments. 22.

Deferred capital grant At the beginning of the year Recognised in the statement of surplus or deficit and other comprehensive income At end of the year

3 676 469 (147 059 ) 3 529 410

3 823 528 (147 059) 3 676 469

This non-refundable grant was received from the Government of Botswana for the construction of the Institute’s building. It is recognised in the statement of surplus or deficit and other comprehensive income over the period of the lease of the leasehold land as stated in note 15. 23. Operating lease asset / (liability) Non-current assets 28 337 74 336 Non-current liabilities - (26 347) 28 337 47 989 All operating lease contracts contain market review clauses in the event that the Institute exercises its option to renew. The Institute does not have the option to purchase the leased asset at the expiry of the leased period.

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

Notes to the Annual Financial Statements (continued) for the year ended 31 December 2019

24.

2019 P

2018 P

Fair value of trade and other payables

The fair value of trade and other payables approximates their carrying amounts.

Lease liabilities

Minimum lease payments due - within one year - in second to fifth year inclusive - later than five years less: future finance charges Present value of minimum lease payments Present value of minimum lease payments due - within one year - in second to fifth year inclusive - later than five years Non-current liabilities Current liabilities It is institute policy to lease certain property and equipment under operating leases.

139 091 305 996 - 445 087 (52 934) 392 153

113 600 278 553 - 392 153

278 553 113 600 392 153

The average lease term was 5 years and the average effective borrowing rate was 6.5%. Interest rates are linked to prime at the contract date. All leases have fixed repayments and no arrangements have beenentered into for contingent rent. 25. Trade and other payables Financial instruments: Trade payables Other payables - amounts due to professional bodies Other payables Non-financial instruments: Amounts received in advance Value added tax payable Accrual for employee benefits

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BICA Annual Report 2019

849 757 3 450 965 145 752

461 144 2 689 858 318 471

1 378 661 736 416 2 941 177 9 502 728

259 990 654 277 2 802 838 7 186 578

2019 P

2018 P

The average credit period on rendering of services is 30 days (2018:30 days). No interest is charged by the suppliers for the first 60 days from the date of the invoice. Thereafter interest may be charged at 1.5% per month on the outstanding balance by some suppliers. The Institute has financial risk management policies in place to ensure that all payables are paid within the credit time frame. Provisions for employee benefits: Accrual for performance rewards Accrual for leave pay Accrual for gratuity Disclosed as: Current

650 836 540 796 1 749 545 2 941 177

460 146 501 065 1 841 627 2 802 838

2 941 177

2 802 838

Accrual for performance rewards (P) (1)

Accrual for leave pay (P)

Accrual for gratuity (P)

(2)

(3)

At beginning of the year Additional accrual made during the year Amounts used during the year At the end of the year

460 146 377 942 (187 252) 650 836

501 065 147 719 (107 988) 540 796

1 841 627 1 024 135 (1 116 217) 1 749 545

Movement of accruals during the year 31 December 2018

Accrual for performance rewards (P)

Accrual for leave pay (P)

Accrual for gratuity (P)

At beginning of the year Additional accrual made during the year Amounts used during the year At the end of the year

(1) 97 802 460 146 (97 802) 460 146

(2) 439 329 119 149 (57 413) 501 065

(3) 1 346 958 799 263 (304 594) 1 841 627

Movement of accruals during the year 31 December 2019

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

Notes to the Annual Financial Statements (continued) for the year ended 31 December 2019

2019 P

2018 P

(1). The accrual is in respect of performance rewards payable to the Institute’s staff. (2). The accrual is in respect of leave accrued up to the end of the reporting period in accordance with the conditions of employment, which accrue within 12 months of reporting date. (3). The accrual is in respect of gratuity pay in accordance with the contracts of employment. The obligations are payable on the date of termination of the employment or end of contract of service, whichever is earlier. These calculations are based on a management’s discretion as at the reporting date. Management has further assumed that all employees may request their dues within the next 12 months, and hence the entire provision is classified as a current liability. 26.

Contract liabilities

Contract liabilities comprises of membership subscriptions and registration fees received in advance. Summary of contract liabilities Deferred membership income Deferred BICA qualification income 27.

4 984 678 43 606 5 028 284

3 847 550 164 000 4 011 550

Related parties

Related parties include the following, whether there have been transactions or not: The Executive members, being two Directors and CEO, are considered key management of the Institute. Council members of the Institute do not receive remuneration for services rendered.

The Government of Botswana remains a principal stakeholder of the Institute.

The following are transactions entered into with related parties:

Subvention received from Government of Botswana

7 783 141

8 783 143

Compensation and benefits of Key management personnel

3 080 987

2 500 701

Provision for employee benefits for key management personnel

1 341 717

1 431 682

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The following are balances due to related parties:

BICA Annual Report 2019

28. Financial instruments and risk management Categories of financial instruments Categories of financial assets 2019 Note

Amortised cost P

Total

Trade and other receivables 20 1 919 860 Cash and cash equivalents 21 26 149 283 28 069 143 2018 Amortised cost P

1 919 860 26 149 283 28 069 143

Trade and other receivables 20 Cash and cash equivalents 21

1 858 117 20 985 081 22 843 198

Leases

Total

Categories of financial liabilities 2019

Amortised cost P

Trade and other payables 25 4 446 475 - Lease obligations 16&24 392 153 4 446 475 392 153 2018 Amortised cost Total P Trade and other payables 25 3 469 473

Total P

4 446 475 392 153 4 838 628

P 3 469 473

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

Notes to the Annual Financial Statements (continued) for the year ended 31 December 2019

28.

Financial instruments and risk management (continued)

Funds management The Institute’s objectives when managing its liquidity include ensuring a positive operating cash flows in order to meet its mandate to promote the accountancy profession through developing and supporting the accountants, at the same time, safeguarding the Institute’s ability to continue as a going concern. The Institute considers the following items as funds: excess cash balances and the accumulated funds. The non-refundable deferred capital grant was for the development of the Institute’s office premises and is not considered as capital. The Institute is not subject to any externally imposed capital requirements.

With respect to credit risk arising from other financial assets of the Institute, which comprise cash and cash equivalents, the Institute’s exposure to credit risk arises from default of the counter-party. The Institute limits material counter-party credit risk on these assets by dealing with reputable financial institutions.

2019 2018 Gross Credit loss Amortised Gross Credit loss Amortised cost carrying allowance cost carrying allowance amount amount P P P P P p

Planning, annual budgeting and controls over major investment decisions are the primary tools used to manage the Institute’s capital. Updates are made as necessary to both capital expenditure and operational budgets in order to adapt to changes as required from time to time.

Trade and other receivables 20 Cash and cash equivalents 21

The Council reviews the funds management of the Institute at least on a semi-annual basis. Financial risk management Overview The Institute is exposed to the following risks from its use of financial instruments: • Credit risk; • Liquidity risk; and • Market risk (currency risk, interest rate risk and price risk).

The maximum exposure to credit risk is presented in the table below:

2 194 719 26 149 283 28 344 002

(274 859) 1 919 860 1 891 756 - 26 149 283 20 985 081 (274 859) 28 069 143 22 876 837

(33 639) 1 858 117 - 20 985 081 (33 639) 22 843 198

Liquidity risk Liquidity risk is the risk that the Institute will be unable to meet its payments obligations when they fall due. The source of the Institute’s cash resources is mainly from the registration fees, subscription fees, seminars and Government annual subvention.

Credit risk

Continuous monitoring through cash flow forecasts and variance analysis is in place to ensure that expenditure does not exceed the Institute’s cash resources.

Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Institute. The Institute only deals with its members and other credit worthy counterparties as a means of mitigating the risk of financial loss from defaults.

The liquidity gap as at 31 December 2019 amounting to P 14 016 453 (2018: P 11 961 882) shows a positive liquidity position.

The Institute has significant concentration of credit risk through an amount receivable from a single Institutional debtor (AAT) of P926 020 (2018: P1 203 696 ), due at the reporting date. Other trade receivables consist of a number of customers spread across diverse industries and geographical areas. On-going credit evaluation is performed on the financial condition of trade receivables.

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

Notes to the Annual Financial Statements (continued) for the year ended 31 December 2019 Exposure in Pula 28.

Financial instruments and risk management (continued) The amounts disclosed are the contractual undiscounted cash flows due within 12 months and are equal to their carrying balances as the impact of discounting is not significant.

2019 Non-current liabilities Lease liabilities 24 Current liabilities Trade and other payables 25 Lease liabilities 24

Less than 1 year -

4 446 475 113 600 4 560 075

1 to 2 Total years 278 553

278 553

4 446 475 113 600 4 838 628

2018 Less than Total 1 year Current liabilities Trade and other payables 25 3 469 473 3 469 473

Carrying amount 278 553

4 446 475 113 600 4 838 628

Carrying amount 3 469 473

Foreign exchange risk The Institute transacts with other International Professional Bodies and is exposed to foreign exchange risk arising from various currencies, primarily with respect to the Pound Sterling. Foreign exchange risk arises from investment and other commercial transactions. The Institute’s risk management objective is to manage foreign exchange risk related to foreign denominated cash flows. The Institute is exposed to currency risk related to changes in rates of exchange between the Pound Sterling and the Botswana Pula. A significant change in the currency exchange rate between the Pound Sterling and the Botswana Pula could have a material effect on the Institute’s surplus. There are no open forward cover contracts. The Institute is exposed to currency risk through trade receivables, trade payables and certain bank accounts denominated in Pound Sterling as shown below:

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BICA Annual Report 2019

The net carrying amounts, in Pula, of the various exposures, are denominated in the following currencies. The amounts have been presented in Pula by converting the foreign currency amounts at the closing rate at the reporting date: 2019 P

2018 P

930 436 3 278 533

1 037 563 2 866 710

(3 051 457) 1 157 512

(2 665 632) 1 238 641

Current assets: Trade and other receivables Cash and cash equivalents

69 695 245 581

78 014 215 547

Current liabilities: Trade and other payables Net GBP exposure

(228 572) 86 704

(200 428) 93 133

13.3501

13.2997

Current assets: Trade and other receivables Cash and cash equivalents

Current liabilities: Trade and other payables Net Pula exposure

Exposure in foreign currency amounts

The net carrying amounts, in foreign currency of the above exposure was as follows: GBP exposure:

Exchange rates

Pula per unit of foreign currency: GBP

Foreign currency sensitivity analysis The following information presents the sensitivity of the institute to an increase or decrease in the respective currencies it is exposed to. The sensitivity rate is the rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated amounts and adjusts their translation at the reporting date. No changes were made to the methods and assumptions used in the preparation of the sensitivity analysis compared to the previous reporting period. BICA Annual Report 2019

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Botswana Institute of Chartered Accountants Annual Report Integrating skills and best practice into the next generation for Botswana’s Transformation Year 2019

Notes to the Annual Financial Statements (continued) for the year ended 31 December 2019

The strengthening of GBP against the Pula by 10% at 31 December 2019, would have had an approximate positive impact of P115 751 (2018: P 123 864) on the institute’s surplus, with all other variables held constant. A 10% weakening of the GBP against the Pula would have had the equal but opposite effect on the surplus to the amounts disclosed above, on the basis that all other variables remain constant.

Interest rate risk Financial instruments which are sensitive to interest rate risk are cash and cash equivalents. Interest rates applicable to cash and cash equivalents fluctuate with movements in the Botswana prime interest and are comparable with rates currently available in the market.

Financial instruments subject to interest rate risk are summarised as follows:

Interest rate per annum 2019 2018 2019 P Stanlib Botswana Money Market fund 3.96% 4.30% 14 636 299

2018 P 12 034 938

An increase of 50 basis points in interest rates during the reporting period would have resulted in an increase/decrease in the Institute’s surplus P 73 181 (2018: P 60 175) summarised as follows:

Stanlib Botswana Money market fund

73 181

60 175

A 50 basis point decrease in interest rates during the reporting period would have an equal but opposite effect on the reported surplus P73 181 (2018: P60 175) to the amounts disclosed above, on the basis that all variables remain constant. 29.

Contingent liabilities

The Council confirms that as at the reporting date there were no contingent liabilities which required disclosure.

30. Events after the reporting period There were no material events that occurred after the end of the reporting period that require adjustment to the statement of profit or loss and other comprehensive income or the statement of financial position, that require disclosure or adjustment in the annual financial statements. 31. Contractual capital commitments The Council of the Institute confirms that there were no significant contractual capital commitments as at the reporting date which require disclosure.

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