SANDYPORT HOMEOWNERS ASSOCIATION LIMITED
Audited Financial Statements for the Year Ended December 31, 2023 and Independent Auditors’ Report
INDEPENDENT AUDITORS’ REPORT
To the Board of Directors of:
Sandyport Homeowners Association Limited
Opinion
We have audited the accompanying financial statements of Sandyport Homeowners Association Limited (the “Homeowners Association”) which is comprised of the statement of financial position as at December 31, 2023 and the related statements of maintenance fund, changes in equity and cash flows for the year ended December 31, 2023 and a summary of significant accounting policies and other explanatory information.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Homeowners Association as at December 31, 2023, and of its maintenance fund and its cash flows for the year ended December 31, 2023 are in accordance with International Financial Reporting Standards (“IFRSs”).
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (“ISAs”). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Homeowners Association in accordance with the ethical requirements that are relevant to our audit of the financial statements in the Commonwealth of The Bahamas, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
hlbbahamas.com
Building 12 • Office 1 • Caves Village • P.O. Box N-3205 • Nassau, Bahamas
TEL: (242) 327-0689 FAX: (242) 327-0696 EMAIL: info@hlbbahamas.com
Building A, Unit 2 • Pyfrom Manor Corporate Plaza• West Mall Drive, Freeport, Grand Bahama • TEL: (242)-828-7068
In preparing the financial statements, management is responsible for assessing the Homeowners Association’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Homeowners Association or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Homeowners Association’s financial reporting process.
Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors’ Report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omission, misrepresentation or the override of internal control;
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Homeowners Association’s internal control;
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Homeowners Association’s ability to continue as a going concern. If we conclude that a material uncertainty exists, then we are required to draw attention in our Auditors’ Report to the related disclosure in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to date of our Auditors’ Report. However, future events or conditions may cause the Homeowners Association to cease to continue as a going concern; and
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicated with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identified during our audit.
May 10, 2024
Nassau, Bahamas
HOMEOWNERS ASSOCIATION LIMITED STATEMENT OF FINANCIAL POSITION AS AT DECEMBER 31, 2023 (Expressed in Bahamian Dollars)
ASSETS
Current assets
Cash and cash equivalents (Notes 6, 8 and 20)
Accounts receivable (Notes 7, 8, and 20)
(Continued)
The accompanying notes form an integral part of these audited financial statements.
SANDYPORT HOMEOWNERS ASSOCIATION LIMITED
STATEMENT OF FINANCIAL POSITION (CONTINUED) AS AT DECEMBER 31, 2023 (Expressed in Bahamian Dollars)
Restated December 31, 2022 Restated January 1, 2022
LIABILITIES AND SHAREHOLDER’S EQUITY
LIABILITIES
Current liabilities
Prepaid maintenance fees and deposits (Note 11)
Accounts payable and accrued expenses (Notes 8 and 20)
(Note 10)
liability (Note 19)
Non-current liability
(Concluded)
These financial statements were approved by the Board of Directors on May 10, 2024 and are signed on its behalf by: Director
The accompanying notes form an integral part of these audited financial statements.
HOMEOWNERS ASSOCIATION LIMITED STATEMENT OF MAINTENANCE FUND FOR THE YEAR ENDED DECEMBER 31, 2023 (Expressed in Bahamian Dollars)
OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2023
(Expressed in Bahamian Dollars)
CASH FLOWS FROM OPERATING ACTIVITIES
(Expressed in Bahamian Dollars)
1. GENERAL INFORMATION
Sandyport Management Association Limited was incorporated under the laws of the Commonwealth of The Bahamas on May 25, 1990 as a wholly-owned subsidiary of Sandyport Development Association Limited (“Devco”). On September 14, 1998, the name of the Association was changed to Sandyport Homeowners Association Limited (the “Homeowners Association”).
On May 21, 2008, ownership of the common areas and common infrastructure of the Sandyport residential community was transferred from Devco to the Homeowners Association.
The principal activity of the Homeowners Association is to manage the Sandyport residential community in accordance with the terms of the authority granted to Devco by licenses issued to each property owner defining their rights and obligations in regard to the common areas. Devco assigned the said authority under these licenses to the Homeowners Association on November 3, 2009.
On January 2, 2010, Devco transferred the ownership of the Homeowners Association to the property owners of the Sandyport residential community.
2. STATEMENT OF COMPLIANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS
The Homeowners Association’s audited financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and are presented in United States Dollars (“$”), the Homeowners Association’s reporting currency.
3. BASIS OF PREPARATION
a. Presentation of financial statements
The financial statements are presented in accordance with IAS 1, Presentation of Financial Statements (Revised 2007). The Homeowners Association has elected to present “Statement of Comprehensive Income” in one statement.
b. Management’s use of judgments and estimates
The Homeowners Association uses accounting estimates and assumptions in the preparation of the financial statements. Although these estimates are based on management’s best knowledge of current events and transactions, actual results may ultimately differ from those estimates.
THE YEAR ENDED DECEMBER 31, 2023
(Expressed in Bahamian Dollars)
3. BASIS OF PREPARATION (CONTINUED)
b. Management’s use of judgments and estimates (Continued)
The effect of any changes in estimates will be recorded in the Homeowners Association’s financial statements when determinable. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
c. Correction of an error
On September 1, 2022, the Homeowners Association renewed it’s lease contract with Artech Bahamas Ltd. to occupy Lagoon Court #204 to be used as the Homeowners Association’s office for two years. In the initial year of the lease, the Homeowners Association recognized a right - of - use asset and lease liability related to the contract. However, it was incorrectly recognized for a period of 10 years. In January 2023, the Homeowners Association revisited the significant contracts and discovered the error.
The error has been corrected by restating each of the affected financial statement lines for the periods, as follows:
4. NEW OR REVISED STANDARDS OR INTERPRETATIONS
Overall considerations
The Homeowners Association applied for the first time certain standards and amendments, which are effective for annual periods beginning on or after January 1, 2023 (unless otherwise stated). The Homeowners Association has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2023
(Expressed in Bahamian Dollars)
4. NEW OR REVISED STANDARDS OR INTERPRETATIONS (CONTINUED)
Overall considerations (Continued)
IFRS 17 Insurance Contracts
Definition of Accounting Estimates – Amendments to IAS 8
Disclosures of Accounting Policies – Amendments to IAS 1 and IFRS 2 Practice Statement 2
Deferred Tax related to Assets and Liabilities arising from single transaction –Amendment to IAS 12
International Tax Reform – Pillar Two Moder Rules Amendments to IAS 12
IFRS
17 Insurance Contract
IFRS 17 Insurance Contracts is a comprehensive new accounting standard for insurance contracts covering recognition and measurement, presentation and disclosures. IFRS 17 replaces IFRS 4 Insurance Contracts. IFRS 17 applies to all types of insurance contracts (i.e, life, non-life, direct insurance and re-insurance), regardless of the type of entities that issue them and as well as to certain guarantees and financial instruments with discretionary participation features; few scope exceptions will apply. The overall objective of IFRS 17 is to provide a comprehensive accounting model for insurance contracts that is more useful and consistent for insurers, covering all relevant accounting aspects. IFRS 17 is based on general model, supplemented by:
A specific adaption for contracts with direct participation features (the variable fee approach)
A simplified approach (the premium allocation approach) mainly for short duration contracts
The new standard had no impact on the Homeowners Association’s financial statements.
Definition of Accounting Estimates – Amendments to IAS 8
The amendments to IAS 8 clarify the distinction between changes in accounting estimates, changes in accounting policies and correction of errors. They also clarify how entities measurement techniques and inputs to develop accounting estimates.
The amendment had no impact on the Homeowners Association’s financial statements.
YEAR ENDED DECEMBER 31, 2023
(Expressed in Bahamian Dollars)
4. NEW OR REVISED STANDARDS OR INTERPRETATIONS (CONTINUED)
Disclosure of Accounting Policies – Amendment to IAS 1 and IFRS Practice Statement 2
The amendments to IAS 1 and IFRS Practice statement 2 Making Materiality Judgements and provide guidance and examples help entities apply materiality judgement to account policy disclosures. The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their “significant” accounting policies with a requirement to disclose their material accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures.
The amendments have had an impact on the Homeowners Association’s disclosures of accounting policies, but not on the measurement, recognition or presentation of any items in the Homeowners Association’s financial statements.
Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendment to IAS 12
The amendments to IAS 12 Income tax narrow the scope of the initial recognition exception so that it no longer applies to transactions that give rise to equal taxable and deductible temporary differences such as leases and decommissioning liabilities.
The amendments had no impact on the Homeowners Association’s financial statements.
International Tax Reform – Pillar Tow Model Rules – Amendments to IAS 12
The amendments to IAS 12 have been introduced in response to OECD’s BEPS Pillar Two rules and include:
A mandatory temporary exception to the recognition and disclosure of deferred taxes arising from the jurisdictional implementation of the Pillar Two model rules; and
Disclosure requirements for affected entities to help users of the financial statements better understand an entity’s exposure to Pillar Two income taxes arising from that legislation, particularly before its effective date.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2023
(Expressed in Bahamian Dollars)
4. NEW OR REVISED STANDARDS OR INTERPRETATIONS (CONTINUED)
International Tax Reform – Pillar Tow Model Rules – Amendments to IAS 12 (Continued)
The mandatory temporary exception – the use of which is required to be disclosed – applies immediately. The remaining disclosure requirements apply for annual reporting periods beginning on or after January 1, 2023, but not for any interim periods ending on or before December 31, 2023.
The amendments had no impact on the Homeowners Association’s financial statements as the Homeowners Association is not in the scope of the Pillar Two model rules.
5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Financial instruments
i. Recognition and derecognition
Financial assets and financial liabilities are recognized when the Homeowners Association becomes a party to the contractual provisions of the financial instrument. Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognized when it is extinguished, discharged, cancelled or expires.
ii. Classification and initial measurement of financial assets
All financial assets are initially measured at fair value adjusted for transaction costs (where applicable).
Financial assets, other than those designated and effective as hedging instruments, are classified into the following categories:
amortized cost;
fair value through profit or loss (FVTPL); and
fair value through other comprehensive income (FVOCI).
YEAR ENDED DECEMBER 31, 2023
(Expressed in Bahamian Dollars)
5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
a. Financial instruments (Continued)
ii. Classification and initial measurement of financial assets (continued)
The classification is determined by both:
the entity’s business model for managing the financial asset; and
contractual cash flow characteristics of the financial asset.
All income and expenses relating to financial assets that are recognized in the statement of maintenance fund are presented within revenue and expenses.
iii. Subsequent measurement of financial assets
Financial assets at amortized cost
Financial assets are measured at amortized cost if the assets meet the following conditions (and are not designated as FVTPL):
they are held within a business model whose objective is to hold financial assets and collect its contractual cash flows; and
the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.
After initial recognition, these are measured at amortized cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
As at December 31, 2023, the Homeowners Association’s cash and cash equivalents and accounts receivable fall into this category.
Financial assets at fair value through profit or loss (FVTPL)
Financial assets that are held within a different business model other than “hold to collect” or “hold to collect and sell” are categorized at fair value through profit and loss. Further, irrespective of the business model financial assets whose contractual cash flows are not solely payments of principal and interest are accounted for at FVTPL.
LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2023
(Expressed in Bahamian Dollars)
5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
a. Financial instruments (Continued)
iii.Subsequent measurement of financial assets (continued)
Financial assets at fair value through profit or loss (FVTPL) (continued)
All derivative financial instruments fall into this category, except for those designated and effective as hedging instruments, for which the hedge accounting requirements apply.
Assets in this category are measured at fair value with gains or losses recognized in the statements of profit or loss and other comprehensive income.
The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists.
As at December 31, 2023, the Homeowners Association had no financial assets at FVTPL.
Financial assets at fair value through other comprehensive income (FVOCI)
The Homeowners Association accounts for financial assets at FVOCI if the assets meet the following conditions:
they are held under a business model whose objective it is “hold to collect” the associated cash flows and sell; and
the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Any gains or losses recognized in other comprehensive income (OCI) will be recycled upon derecognition of the asset.
As at December 31, 2023, the Homeowners Association had no financial assets at FVOCI.
(CONTINUED)
THE YEAR ENDED DECEMBER 31, 2023
(Expressed in Bahamian Dollars)
5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
a. Financial instruments (Continued)
iv. Impairment of financial assets
IFRS 9’s impairment requirements use more forward-looking information to recognize expected credit losses - the “expected credit loss (ECL) model”. This replaces IAS 39’s “incurred loss model”. Instruments within the scope of the new requirements included loans and other debt-type financial assets measured at amortized cost and FVOCI, trade receivables, contract assets recognized and measured under IFRS 15 and loan commitments and some financial guarantee contracts (for the issuer) that are not measured at fair value through profit or loss.
Recognition of credit losses is no longer dependent on the Homeowners Association first identifying a credit loss event. Instead, the Homeowners Association considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made between:
financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk (“Stage 1”);
financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low (“Stage 2”); and
“Stage 3” would cover financial assets that have objective evidence of impairment at the reporting date. “12-month expected credit losses” are recognized for the first category while “lifetime expected credit losses” are recognized for the second category.
TO THE
STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2023
(Expressed in Bahamian Dollars)
5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
a. Financial instruments (Continued)
v. Classification and subsequent measurement of financial liabilities
As the accounting for financial liabilities remains largely the same under IFRS 9 compared to IAS 39, the Homeowners Association’s financial liabilities were not impacted by the adoption of IFRS 9. However, for completeness, the accounting policy is disclosed below.
Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Homeowners Association designated a financial liability at fair value through profit or loss. Subsequently, financial liabilities are measured at amortized cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognized in profit or loss (other than derivative financial instruments that are designated and effective as hedging instruments).
All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in maintenance fund are included within other expenses.
The Homeowners Association’s financial liabilities include accounts payable, and accrued expense are measured at amortized cost using the effective interest rate method.
vi. Fair value of financial instruments
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. The fair value of financial assets and liabilities traded in active markets are based on quoted market prices at the close of trading on the reporting date. If a significant movement in fair value occurs subsequent to the close of trading on the period end date, valuation techniques will be applied to determine the fair value.
THE YEAR ENDED DECEMBER 31, 2023
(Expressed in Bahamian Dollars)
5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
a. Financial instruments (Continued)
vi.Fair value of financial instruments (continued)
A significant event is any event that occurs after the last market price for a security or close of market, but before the Homeowners Association’s valuation time that materially affects the integrity of the closing prices for any security, instrument or securities affected by that event so that they cannot be considered “readily available” market quotations.
Management applies valuation techniques to determine the fair value of financial instruments where active market quotes are not available. This requires management to develop estimates and assumptions based on market inputs, using observable data that market participants would use in pricing the instrument. Where such data is not observable, management uses its best estimate. Estimated fair values of financial instruments may vary from the actual prices that would be achieved in an arm’s length transaction at the reporting date.
b. IFRS 15 Revenue from Contracts with Customers
Revenue is recognized when a customer obtains control or consumes the services. Determining the timing of the transfer of control, at a point in time or over time, requires judgment.
The Homeowners Association recognises revenue from contract customers based on a five-step model as set out in IFRS 15:
Step 1 – Identify the contract(s) with a customer: A contract is defined as an agreement between two or more parties that creates enforceable rights and obligations and sets out the criteria for every contract that must be met.
Step 2 – Identify the performance obligations in the contract: A performance obligation is a promise in a contract with a customer to transfer goods or render the services to the customer.
Step 3 – Determine the transaction price: The transaction price is the amount of consideration to which the Homeowners Association expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.
(CONTINUED)
THE YEAR ENDED DECEMBER 31, 2023
(Expressed in Bahamian Dollars)
5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
b. IFRS 15 Revenue from Contracts with Customers (Continued)
Step 4 – Allocate the transaction price to the performance obligations in the contract: For a contract that has more than one performance obligation, the Homeowners Association will allocate the transaction price to each performance obligation in an amount that depicts the amount of consideration to which the Homeowners Association expects to be entitled in exchange for satisfying each performance obligation.
Step 5 – Recognize revenue: When or as the entity satisfies a performance obligation.
The Homeowners Association satisfies a performance obligation and recognises revenue over time, if one of the following criteria is met:
1. The customer simultaneously receives and consumes the benefits provided by the Homeowners Association’s performance as the Homeowners Association performs; or
2. The Homeowners Association’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or
3. The Homeowners Association’s performance does not create an asset with an alternative use to the Homeowners Association and the entity has an enforceable right to payment for performance completed to date.
For performance obligations where one of the above conditions are not met, revenue is recognised at the point in time at which performance obligation is satisfied.
When the Homeowners Association satisfies a performance obligation by delivering the promised goods or services, it creates a contract asset based on the amount of consideration earned by the performance. Where the amount of consideration received from a customer exceeds the amount of revenue recognized, this gives rise to a contract liability.
c. Cash and cash equivalents
Cash and cash equivalents include cash on hand and at bank and other shortterm deposits with original maturities of three months or less.
TO THE
STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2023
(Expressed in Bahamian Dollars)
5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
d. Accounts receivable
Accounts receivable is stated at cost less provision for doubtful accounts and any impairment losses. Management records provisions when in their opinion, amounts are irrecoverable based on historical performance and solvency of the customer. The provision for doubtful accounts policy is based on accounts that are 360 days old and remains unpaid.
e. Property and equipment
Property and equipment is stated at cost less accumulated depreciation and any impairment losses. Historical cost includes expenditures that is directly attributable to the acquisition of the items. Depreciation is calculated on the straight-line basis to write-off assets over their estimated useful lives as follows:
Waste water system – 3 – 5 years
Maintenance equipment – 3 years
Computer and office equipment – 3 years
Security equipment – 3 years
Leasehold improvements – 5 years
f. Improvements
These are various projects that are undertaken for the improvement of common areas. These projects are additions and modifications to existing infrastructure within the community. When accounting for improvements, capitalize them if they exceed the Homeowners Association’s capitalization limit. If not, they are charged to expense in the period incurred but are accounted for on the accrual basis for projects not completed within the fiscal year. Improvements are itemized separately and by project for clarity.
g. Expenses recognition
Expenses are recognized using the accrual basis of accounting. Payments to suppliers and other vendors are recognized on the date of the invoices.
h. Related party transactions
Related parties include members of the Board who are also homeowners .
(CONTINUED)
THE YEAR ENDED DECEMBER 31, 2023
(Expressed in Bahamian Dollars)
5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
i. Impairment of assets
An assessment is made at each financial position date to determine whether there is any indication of impairment of any assets, or whether there is any indication that an impairment loss previously recognized on an asset in prior years may no longer exist; the asset’s recoverable amount is estimated. An asset’s recoverable amount is computed as the higher of the asset’s value in use or its net selling price. An impairment loss is recognized only if the carrying amount of an asset exceeds its recoverable amount. An impairment loss is charged to operations in the period in which it arises unless the asset is carried at a revalued amount in which case the impairment is charged to revaluation. A previously recognized impairment is reversed only if there has been a change in the estimates used to determine the recoverable amount of the asset, however, not to an amount higher than the carrying amount that would have been determined (net of any depreciation), had no impairment loss been recognized for the asset in prior years.
j. Leases
The Homeowners Association assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Homeowners Association as a lessee
The Homeowners Association applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Homeowners Association recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
i) Right-of-use assets
The Homeowners Association recognises right-of-use assets at the commencement date of the lease. Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities.
TO THE
STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2023
(Expressed in Bahamian Dollars)
5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
j. Leases (Continued)
The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows:
• Office - 2 years
If ownership of the leased asset transfers to the Homeowners Association at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-ofuse assets are also subject to impairment. Refer to the accounting policies in section.
ii) Lease liabilities
At the commencement date of the lease, the Homeowners Association recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including insubstance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Homeowners Association and payments of penalties for terminating the lease, if the lease term reflects the Homeowners Association exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs. In calculating the present value of lease payments, the Homeowners Association uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable.
HOMEOWNERS
LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2023
(Expressed in Bahamian Dollars)
5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
j. Leases (Continued)
After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
6. CASH AND CASH EQUIVALENTS
Cash and cash equivalents are comprised of the following balances:
7.
ACCOUNTS RECEIVABLE
Accounts
are comprised of the following balances:
The movement in the provision for doubtful accounts is as follows:
ASSOCIATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2023 (Expressed in Bahamian Dollars)
8. FINANCIAL INSTRUMENT BY CATEGORY
Financial assets
December 31, 2023
31, 2022
Financial liabilities
December 31, 2023
Balance as at December 31, 2023
December
9. PROPERTY AND EQUIPMENT, NET
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2023 (Expressed in Bahamian Dollars)
9. PROPERTY AND EQUIPMENT,
(CONTINUED)
HOMEOWNERS ASSOCIATION LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2023
(Expressed in Bahamian Dollars)
9. PROPERTY AND EQUIPMENT, NET (CONTINUED)
Leasehold Improvements consist of the roadwork project conducted within the Sandyport community to improve the pavement of the roads.The project commenced in February 2023 and was completed in October 2023.
The Homeowners Association was carrying water waste system and maintenance equipment on its books that amounted to $266,071 and $36,630, respectively. However both assets have been fully depreciated as of December 31, 2023 and are still in use.
10. LEASES
The Homeowners Association rents office space from Artech Bahamas Ltd. at $41,760 per annum, inclusive of electricity and water. The lease will expire on August 31, 2024.
The table summarizes the movement in the right-of-use assets arising from leases entered by the Homeowners Association.
ACCUMULATED DEPRECIATION
Amounts recognized in the statement of maintenance fund
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2023
(Expressed in Bahamian Dollars)
10.
LEASES (CONTINUED)
Amounts recognized in the statement of financial position
11. PREPAID MAINTENANCE FEES AND DEPOSITS
Prepaid maintenance fees and deposits are comprised of the following balances:
12. RESERVE FUND
This amount represents a reserve established to provide for future contingencies.
13. SECURITY EXPENSES
(CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2023
(Expressed in Bahamian Dollars)
14. MAINTENANCE OF COMMON AREAS
The expenses associated with the maintenance of common areas are comprised of the following balances :
15. GARDENING EXPENSES
Gardening expenses are comprised of the following balances:
16. WATER AND METERS
Water and meters expenses are comprised of the following
HOMEOWNERS ASSOCIATION LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2023
(Expressed in Bahamian Dollars)
17. PAINTING EXPENSES
Painting expenses are comprised of the following balances:
18 WASTE WATER MANAGEMENT
Waste water management expenses are comprised of the following balances:
19. CONTINGENT LIABILITY/ASSETS
Lionel Levine – During the year 2023, the Homeowners Association was involved in a legal dispute with the listed property owner for legal fees among other things. The Directors believe that the claim can be successfully resisted, however, there is a risk of an award in favour of Mr. Levine for $12,193, for damages.
Craig Bowe – During the year 2023, the Homeowners Association was involved in legal actions against the listed property owners who failed to act in accordance with the rules and covenants of the properties. A ruling was issued in favor of the Homeowners Association, in which Mr. Bowe made a payment of $20,700. However, the payment was short by $24.72 which the Homeowners Association is seeking to recover.
Delinquent properties – During the year 2023, the Homeowners Association was involved in three legal actions against property owners who failed to act in accordance with the rules and covenants of the properties. A ruling was issued in favor of the Homeowners Association, however, receipt of the funds has not been made and the Homeowners Association awaits the hearing of the appeals.
THE
STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2023
(Expressed in Bahamian Dollars)
20. FINANCIAL RISK MANAGEMENT
Risk is inherent in the Homeowners Association’s activities but is managed through a continuing and pro-active process of identification, measurement and monitoring. The process of risk management is critical to the Homeowners Association’s continuing profitability. The Homeowners Association’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Homeowners Association’s financial performance.
a. Market risk
Market risk is the risk of loss to future earnings, fair values or future cash flows that may result from changes in the price of a financial instrument. The value of a financial instrument may change as a result of changes in foreign currency exchange rates, equity prices and other market changes.
i. Price risk
Price risk is the risk that the value of an instrument will fluctuate as a result of changes in market prices whether caused by factors specific to an individual investment, its issuer or all factors affecting all instruments traded in the market.
As of December 31, 2023, the Homeowners Association has no significant exposure on price risk.
ii.
Currency risk
Currency risk is the risk that the fair value of a financial instrument will fluctuate because of changes in foreign exchange rates. The Homeowners Association may invest in financial instruments denominated in currencies other than USD.
Consequently, the Homeowners Association is exposed to the risk that the exchange rate of USD relative to other currencies may change in a manner that has an adverse effect on the reported value of that portion of the Homeowners Association’s assets that are denominated in currencies other than USD.
As at December 31, 2023, possible changes in currency rates other than USD will have no material effect on the Homeowners Association’s financial statements.
(CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2023
(Expressed in Bahamian Dollars)
20. FINANCIAL RISK MANAGEMENT(CONTINUED)
a. Market risk (Continued)
ii. Interest rate risk
Interest rate risk is the risk that changes in the market interest rates will reduce the Homeowners Association’s current and future earnings or economic values.
The Homeowners Association’s management policy on interest rate exposure focuses on reducing the Homeowners Association’s overall interest expense and exposure to changes in interest rates. Changes in market interest rates relate primarily to the Homeowners Association’s interest-bearing debt obligations with floating interest rate as it can cause a change in the amount of interest payments.
The Homeowners Association’s manages its interest rate risk by converting its debt portfolio mix of both fixed and floating interest rates to debts with fixed interest rates in order to mitigate the Homeowners Association’s exposure to fluctuating interest rates.
As of December 31, 2023, the Homeowners Association had no significant exposure on interest rate risk as it has no loans during the year.
b. Credit risk
Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Homeowners Association. Credit risk is generally higher when a non-exchangetraded financial instrument is involved, as the counterparty is not backed by an exchange clearing house.
The carrying amount of financial assets best represents the maximum credit risk exposure at the reporting date.
At the reporting date, the financial assets exposed to credit risk amounted to the following:
YEAR ENDED DECEMBER 31, 2023
(Expressed in Bahamian Dollars)
20. FINANCIAL RISK MANAGEMENT (CONTINUED)
b. Credit risk (Continued)
Bankruptcy or insolvency of the banks may cause the Homeowners Association's rights with respect to cash at bank to be delayed or limited. The Homeowners Association regularly monitors its risk by monitoring the credit quality of the banks.
c.
Liquidity risk
Liquidity risk is the risk that the entity will encounter difficulty in meeting obligations associated with its financial liabilities. To the extent possible the Investment Manager attempts to mitigate this risk by attempting to match the timeline of the Homeowners Association's assets and liabilities, however, no assurance can be given that at all times this will be achieved.
The Homeowners Association’s investor shares are at the shareholders’ option. The Homeowners Association is therefore potentially exposed to the liquidity risk of meeting redemption requests. The Homeowners Association’s policy is to maintain sufficient cash at the bank to meet normal operating requirements and expected redemption requests.
All securities present a risk of loss of capital. The Homeowners Association moderates this risk through a careful selection of securities and other financial instruments within specified limits. The maximum risk resulting from financial instruments is determined by the fair value of the financial instruments.
The table below summarizes the maturity profile of the Homeowners Association’s financial instruments based on undiscounted contractual payments.
HOMEOWNERS ASSOCIATION LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2023 (Expressed in Bahamian Dollars)
20. FINANCIAL RISK MANAGEMENT(CONTINUED)
c. Liquidity risk (Continued)
d. Capital risk management
The Homeowners Association's objectives when managing capital are to safeguard its ability to continue as a going concern and to maximize the return to stakeholders. The capital structure of the Homeowners Association consists of other financial liabilities and the participating shares. The Homeowners Association's directors manage the Homeowners Association's capital and make adjustments to it in light of changes in economic conditions. The capital structure is reviewed on an ongoing basis.
TO THE
STATEMENTS (CONCLUDED) FOR THE YEAR ENDED DECEMBER 31, 2023
(Expressed in Bahamian Dollars)
21. RELATED PARTIES BALANCES AND TRANSACTIONS
Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions. Related parties include the Directors, Insurance Agents and Brokers as well as the Insurance Companies.
22. COMPARATIVE INFORMATION
Certain changes in the classification of accounts and accordingly, to the supporting note disclosures have been made to the previous year’s financial statements to conform to the current year’s financial statement presentation.
During the year, the Homeowners Association has reclassified certain items from the previous year. The reclassification did not affect previously reported profit or equity.
The presentation and classification of items in the financial statements shall be retained from one period to the next unless a change in presentation including the reclassification of comparative figures provides more reliable and relevant information to the users of the financial statements. The reclassifications of comparative figures did not affect the previously reported results of operations and retained earnings.
23. SUBSEQUENT EVENTS
There were no material events subsequent to December 31, 2023 to the date of this report which necessitate a revision of the figures or disclosure thereof in the financial statements.