Tax

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 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

When trade payables are 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.

Cash and cash equivalents

Cash and cash equivalents are stated at carrying amount which is deemed to be fair value. Derecognition

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 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. Reclassification

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.

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. Financial liabilities Financial liabilities are not reclassified.

1.7 Property and equipment

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

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.

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:

Item

Leasehold land

Leasehold building

Furniture and fixtures Motor vehicles Office equipment Computer equipment Leasehold improvements Depreciation Method

Straight line

Straight line

Straight line Straight line Straight line Straight line Straight line Average Useful Life

The shorter of 50 years or remaining lease period The shorter of 50 years or remaining lease period 4 years 4 years 4 years 4 years 5 years

Accounting Policies (continued)

for the year ended 31 December 2019

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. 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.

1.9 Inventories

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.

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.

1.10 Leases

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.

Computer software costs 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 The Institute oversees 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.

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 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 Government subvention is 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)

Revenue, expenses and 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.

Accounting Policies (continued)

for the year ended 31 December 2019

2. 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. 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: Right-of-use assets Lease liability Operating lease liability Carrying amount Remeasurement Adjustments at 31 December post

2018 remeasurement amount at 1 January 2019

P P P P

-

574 081 (114 816) - (574 081) 87 135

(26 347)

-

-

26 347

- (1 334)

459 265 (486 946) -

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 571 531

571 531 (84 585) 486 946