2016 annual report - cpa papua new...

35
Certified Practising Accountants Papua New Guinea Certified Practising Accountants Papua New Guinea Established under the Accountants’ Act 1996 2016 ANNUAL REPORT

Upload: others

Post on 25-Dec-2019

35 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

Certified Practising Accountants Papua New Guinea Established under the Accountants’ Act 1996

2016

ANNUAL REPORT

Page 2: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 2015/2016 2 | P a g e

Contents

Page No

President’s Perspective 2

Executive Director’s Review

3

Governance and Council Responsibilities

4

Membership and Promoting CPA

4

Educating and Training Future CPAs Branch Report Annual Conference

6

10

10

Accounting Standards Board

11

Staffing

11

Financial Statement Council Declaration

12

13

Independent Auditors’ Report

14

Statement of Comprehensive Income and Profit and Loss

15

Statement of Changes in Equity

16

Statement of Financial Position

17

Statement of Cash Flows Notes to Financial Statements

18

19

Page 3: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 2015/2016 3 | P a g e

1. President’s Perspective

I am proud to report on behalf of the Council the major highlights of 2016 which include the following: (a) Organised number of high level continued professional

development (CPD) activities. In particular the success of executive management training conducted by our international partner Mr. Ric Willmot of Executive Wisdom Consulting.

(b) 2016 is the full year of implementing the 5 year strategic plan (2015-2019). With the

full staff strength we are on course to achieving the key projects contained in the strategic plan.

(c) The next stage of ICT Integration is progressing well. The complete ICT plan will

integrate and automate critical tasks and functions of the operations of the organisation. The long term outcome will be cost efficiency and value creation.

(d) Council’s plan to move towards securing new land and relocating current office is

progressing well. The new location will allow greater access and flexibility for members and secure recreational and residential zones for the institution.

(e) The amendments to the Accountants’ Act 1996 is now in the final stages. The

changes reflect the changing needs of the profession and keeping touch with global best practices. It is expected to be completed in the next sitting of Parliament.

(f) We are pleased to note that the CPA PNG Branch offices are doing well to serve the

members in the respective regions. At the right time a new branch office will be opened to serve the Highlands region.

(g) We are pleased to announce CPA PNG’s membership on CAPA’s Public Sector

Finance Management Committee. This adds value and recognition to CPA PNG as a Professional Accountancy Body.

(h) Our effort to secure full membership with International Federation of Accountants

(IFAC) has been steady. Our compliance efforts pertaining to satisfying membership obligations required by IFAC was last published on the IFAC website in May 2016. Our compliance and reporting efforts are active, consistent and ongoing. This cannot be achieved in isolation but through the collaborative process of getting key stakeholders involved particularly the government institutions. With the progress so far, we expect to achieve full membership by end of 2017.

I wish to take this opportunity to thank members of the Council, past and present, members of the profession and management of CPA PNG for giving me the opportunity to lead this prestigious organisation. Thank you and God bless.

___________________________ Mr. Richard Kuna President & Chairman of Council 2015 / 2016

Page 4: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 2015/2016 4 | P a g e

2. Executive Director’s Review

I have the privilege of reporting to the Annual General Meeting some of the significant progress that have been made in the recent past We understand that CPA PNG is an institution that exists by an Act of Parliament. Our core responsibilities are to serve members. This year we have focused on two key strategic actions. The first strategic action relates to effective promotion of memberships. Under this strategy, we have written to key stakeholders and had meetings and consultations concerning the requirements for structured CPDs and meaningful engagement with subject matter experts in order to secure their services to offer CPDs. We have also reviewed current membership status and recommended to Council for deletion over three years aged listing of non-financial members. We have proactively executed other initiatives in alignment with our strategic focus in order to achieve our strategic outcome which is to increase membership. Our second strategic action that we focused on this year relates to providing quality CPDs to our members at all levels. Our ongoing partnership with subject matter experts has been strong. We are happy to report that this year we have offered high level executive development training as well as technical updates provided by our participating accounting firms. We maintain active, ongoing consultation with the accounting firms to continue offering quality CPDs that are relevant and appropriate to the needs of our members. Next year, we would like to focus on two projects. One of which is the Accountants Act Amendments. This is now in the final stages of review. We expect that the Act amendment process will be completed by end of 2017. The other ongoing project that we are keen to report is the IFAC Membership. CPA PNG became an associate member in 2006. We are happy to report that only two areas that are still outstanding to be complied with. The first being, that there are no audit oversight arrangements in PNG. Our council is looking into addressing that. Secondly the Accounting Standards Board never met for some time now. Our IFAC member compliance program dashboard report of May 2016 shows that International Public Sector Accounting Standards (IPSAS) has not been adopted by the Government of PNG. We are advocating to getting the ASB reconstituted to endorse and provide guidance on adoption of standards that are promulgated by IFAC. Once these two outstanding obligations are extinguished, we will be lodging our application for full membership. Consistent with the Council’s commitment for 2017, we anticipate to embark on ICT project which will integrate our current membership database management systems with online options. With the adoption of Customer relationship management (CRM) software, we can better manage and analyse member interactions and achieve greater efficiency and maximizing value to our services. How well we can deliver on our strategy depends on the organisation’s capability, which the Council has taken a bold step to invest in ICT as a very significant infrastructure. I invite you to join with me on our journey towards growing our Professional Accountancy Organisation in reaching its maturity.

___________________ Mr. Yuwak TAU Executive Director

Page 5: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 2015/2016 5 | P a g e

3. Governance and Council Responsibilities

CPA PNG is governed by 14 elected councillors comprising a President, a Vice President, a Treasurer, and 11 Councillors. Two co-opted members representing Auditor General’s Office and Finance Department. Councillors retire each year and may offer themselves for re-election. The Council has a number of committees that address issues concerning the profession. The main committees include the following:

Executive Committee

Education & Examination Committee (in accordance with the Accountants Act 1996)

Membership, Ethics and Disciplinary Committee

Accounting Standards Committee and

Continuing Professional Education, Conference / Branch Committee

Investment Committee

Appointments and Representation Committee

Strategic Planning Committee

Disciplinary matters are referred to the Accountants Statutory Committee established under the Accountants Act 1996.

The council members for the 2015/2016 year were:

Name

Meetings

Comments

Eligible to attend

Attended

1 Richard Kuna (President) 4 4 -

2 Rachel Kichawen (V/President) 4 4 -

3 Veronica Thomas (Treasurer) 4 3 1 apology

4 Manny Masangkay 4 2 2 apologies

5 Rajadurai Jeyankanthan 4 4 -

6 Stephen Beach 4 3 1 apology

7 Paul Nindipa 4 2 2 apologies

8 Jack Namaliu 4 2 2 apologies

9 Tep Dami 4 4 -

10 Thomas Holland 4 4 -

11 Andy Rutil 4 3 1 apology

12 Juanette Grobler 4 - Resigned (4/5/16)

13 Lemeki Ila – Co-opted (Auditor General’ Office) 4 3 1 apology

14 Lawrence Ouma – Co-opted (Dept. of Finance 4 4 -

4. Proactively Market and Promote CPA PNG

The Council aims to continue to make CPA PNG the premier accounting professional body in Papua New Guinea. Mr. Richard Kuna’s membership with the Regional Accountancy body, Confederation of Asia Pacific Accountants (CAPA) is a testament to recognition of CPA PNG as a professional accountancy body capable of participating and contributing to leading the Asia Pacific Regional Accounting body.

Page 6: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 2015/2016 6 | P a g e

4.1 Statutory Requirement

Section 67 of the Accountants Act stipulates that:

(1) A person who –

(a) possesses qualifications of diploma, degree or professional level in commerce, economics, business or related disciplines; and

(b) is employed by the State or by a statutory body or by a private organisation

to perform duties connected with –

(i) the recording, classifying and analysing of financial transactions; or (ii) the preparing of financial information; or (iii) the making of financial or business decisions; or (iv) auditing and/or investigation transactions of an accounting nature; or (v) book-keeping and accounting generally,

shall be registered as an Accountant in Employment.

(2) The prospective employer of a person to whom Subsection (1) applies shall

apply for the registration of that person prior to that person commencing employment.

The degree and diploma qualifications from the following local universities and institutions are prerequisite qualifications to becoming a member under Registered Accounting Graduate and Registered Accounting Technician categories.

University of Papua New Guinea

Papua New Guinea University of Technology

Pacific Adventist University (including Sonoma Adventist College)

Divine Word University

University of Goroka

National Polytechnic Institute of PNG (Lae Technical College)

Port Moresby Business College

Goroka Business College

Kokopo Business College

Institute of Business Studies

International Training Institute

IEA College of TAFE

Overseas Tertiary Institutions which conduct Diploma and Degree courses at least at the same level as the above Institutions.

Expatriates who are qualified members of a recognised overseas accounting professional body may be admitted to membership at CPA level only. Fellow membership is awarded not by application but in recognition of significant contributions made to CPA PNG administered under the existing policies and guidelines.

Page 7: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 2015/2016 7 | P a g e

4.2 Categories of CPA PNG Membership

The two distinct categories of membership are; Certified Practising Accountants (CPA) and Certified Accounting Technician (CAT). These two categories have gained prominence and the tiers are consistent with similar arrangements around the globe. The premier CPA membership category is restricted to degree qualified accountants (those with accounting major qualifications), while the CAT membership category is open to members with diplomas in accounting, or degree qualifications in disciplines other than a major in accounting from affiliated institutions. The Council realised the importance of the role played by the lower tier accounting staff in organisations and have since adopted high profile papers for its examinations to enhance and further develop candidates with the subject knowledge through the issue of high quality study materials that may be used well after the examinations.

4.3 Membership Statistics

The graph below shows the total membership trend since 2000. Membership of financial members has been moving upwards until 2015 when it slipped to 2016. At the same time the combined non-financial membership has moved up due to payments being received late in the year. We anticipate a similar movement in 2016/2017 period.

5. Educating and Training Future CPAs

Interest in the examination programme continues to increase as Registered Graduate and Accounting Technician members realise the importance of completing professional programmes. The Institute’s branding efforts has greatly added value as indicated by the increase in enrollment for examination. The Council envisages members’ advancement through to CPA status.

The courses in the old structure have been gradually phased out in 2014. This effectively means that the candidates have enrolled under the new CAT and CPA categories as part of the CPA professional program.

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

2,600

1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Total Membership Trend (2000 - 2016)

Non-Citizen(Financial)Citizen (Financial)

Non-Financial(All)

Page 8: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 2015/2016 8 | P a g e

Courses currently run under the two tiers are noted below.

Certified Practising Accountant (CPA) Certified Accounting Technician (CAT)

1. Foundations of Accounting

1. Foundations of Accounting

2. PNG Business Law 2. Financial Accounting & Reporting 3. PNG Taxation Law & Practice 3. Management Accounting 4. Financial Reporting 4. Intro to Business Law 5. Strategic Management Accounting 5. Intro to Taxation 6. Advanced Audit & Assurance 7. Financial Risk Management 8. Ethics & Governance

6. Accounting Concepts & Principles or Business Finance 7. Ethics & Governance

5.1 Mentoring Program

The current three years’ work experience requirement before Accounting Technicians and Certified Practising Accountants are issued their respective certificates will continue to be maintained for the benefit of the members. For the good of the profession, fully qualified CPA members may be asked to volunteer to supervise upcoming members under the mentoring program.

5.2 Acknowledgment of Distinctions in the various examinations Congratulations to high performers and award winners in the two semesters’ examinations that were concluded recently. These are listed below:-

SEMESTER 2 (OCTOBER) 2015 EXAMINATION

SUBJECT

NAME OF

CANDIDATE

EMPLOYER

SCORE

RE- MARKS /COMMENTS

Business Law

Martha BAUELUA Ernst & Young A Distinction (82%) Winner of

Deloitte Award Maureen ADADIKAM

Auditor General’s Office A Distinction (82%)

Joseph OGI DWU University A Distinction (81%)

Moro WAUGA Steamships Ltd A Distinction (81%)

Foundations of Accounting (CPA) Category

Dickson KIPOI DWU Student

A Distinction (90%) Winner of Star Business Consultants Award

Janet SETA Bank of South Pacific Ltd A Distinction (88%)

Max MINIMBI JR DWU Student A Distinction (85%)

Serah WESLEY DWU Student A Distinction (84%)

Miriam LIUNA DWU Student A Distinction (81%)

Moti PATI PNG Ports Corporation A Distinction (81%)

David Paul VINIT DWU Student A Distinction (80%)

Mai KURAYA Department of Finance A Distinction (80%)

Page 9: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 2015/2016 9 | P a g e

Foundations of Accounting (CAT) Category

Betty SETA

Department of Finance

A Distinction (92%)

Winners of Gore Accountants & Business Advisors Award

Dorcas MASIU ENB Savings & Loans Society Ltd A Distinction (90%)

Wesley KIAPRING ENB Savings & Loans Society Ltd A Distinction (88%)

Kaisa ENTONIO Kokopo Business College A Distinction (86%)

Dick HAREVILA New Britain New Ireland Mission of SDA Church

A Distinction (86%)

Gabriella SURI PNG Ports Corporation Limited A Distinction (85%)

Flora KAINA Deloitte Touche Tohmatsu A Distinction (84%)

Sokara GUMUNA PNG Ports Corporation Limited A Distinction (83%)

Wendy TOMBELE PNG Ports Corporation Limited A Distinction (83%)

Sharon RAGAT Oceanic Communication (PNG) Ltd A Distinction (82%)

Jeremy WAKIAS Agmark Pacific Limited A Distinction (82%)

Margaret TUKAL PNG Ports Corporation Limited A Distinction (81%)

John BONAT ENB Savings & Loans Society Ltd A Distinction (80%)

Introduction to Taxation

Bernard KERA KPMG Chartered Accountants A Distinction (89%) Winner of PWC Award

Introduction to Business Law

Salome DELABU PricewaterhouseCoopers A Distinction (84%)

Winner of ITI Award

Joycelyn PUTUBU Tabubil Engineering A Distinction (82%)

Peter Rumba PricewaterhouseCoopers A Distinction (82%)

Professionalism & Professional Ethics Professionalism & Professional Ethics

Christopher MAITANG

KPMG Chartered Accountants A Distinction (94%) Winners of CPA Australia (PNG Branch) Award

Joshua NEKITEL Pacific Assurance Group Ltd A Distinction (92%)

Augustine DAMA Exxonmobile PNG Limited A Distinction (91%)

Cathy BENKOVIC C/-Mathias Benkovic, ELCPNG A Distinction (88%)

Daisy DAUROBONA Kiel Consultants A Distinction (88%)

Benly MICAH Auditor General’s Office A Distinction (88%)

Alois MINIRU KPMG Chartered Accountants A Distinction (88%)

Stanford RAUFUN Deloitte Touche Tohmatsu A Distinction (88%)

Beverly YAKOP Lihir Business Services A Distinction (88%)

Martha BAUELUA Ernst & Young A Distinction (87%)

Esther GILPIP Air Niugini Limited A Distinction (87%)

Hazel NAWARA KPMG Chartered Accountants A Distinction (87%)

Ruth NORUM Deloitte Touche Tohmatsu A Distinction (87%)

Rosa BANIK Bank of Papua New Guinea A Distinction (86%)

Sarah Rose GABUT Ernst & Young A Distinction (86%)

Gerard JANGIKO PricewaterhouseCoopers A Distinction (86%)

Olive KUUSA Origin Energy PNG Limited A Distinction (86%)

Ruth PERO Finer Auto Electrical Services Ltd A Distinction (86%)

Rachel SILAS Strickland Real Estate A Distinction (86%)

Veronica TOKSY Bank South Pacific Limited A Distinction (86%)

Etty Fred RUTHANA Deloitte Touche Tohmatsu A Distinction (84%)

Helias APUREL Westpac Bank A Distinction (83%)

Alafina KATOVAI Deloitte Touche Tohmatsu A Distinction (83%)

Rachael PILAMB PricewaterhouseCoopers A Distinction (83%)

Belinda SARWABE University of Papua New Guinea A Distinction 83%)

Gynellevin TANABI PricewaterhouseCoopers A Distinction (83%)

Florence AKOITAI DFK Mayberry Chartered Accountants A Distinction (82%)

Joseph MAKASU Bank South Pacific Limited A Distinction (82%)

Grace MAZEWIN NGIP Agmark Limited A Distinction (82%)

Page 10: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 2015/2016 10 | P a g e

Henry DANIEL Deloitte Touche Tohmatsu A Distinction (81%)

Stanley HONDIA Deloitte Touche Tohmatsu A Distinction (81%)

Vincent HUGO Auditor General’s Office A Distinction (81%)

Sera MEK PricewaterhouseCoopers A Distinction (81%)

Chrisanto PILIN Deloitte Touche Tohmatsu A Distinction (81%)

Betty TREMANI Exxon Mobil A Distinction (81%)

SEMESTER 1 (MAY) 2016 EXAMINATION

SUBJECT NAME OF CANDIDATE

EMPLOYER SCORE RE-MARKS/

COMMENTS

Business Law Juliana ISOY Ernest & Young A Distinction (86%)

Winner of Deloitte Award

Vince NINDIPA Department of Finance A Distinction (85%)

Eileen P TUMBA Cameron Construction Ltd A Distinction (82%)

Mathew KAMAKA Comrade Trustee Services Ltd A Distinction (81%)

Foundations of Accounting (CPA

Category)

Max BUNEI PricewaterhouseCoopers A Distinction (84%)

Winner of Star Business Consultants

Jackson ESS University of Technology - Student A Distinction

(81%)

Moses KEVIN Telikom PNG, C/-Thomas Dumu A Distinction

(80%)

Carolyn KULANGIL University of Technology - Student A Distinction

(80%)

Moses TOMBA UPNG - Student Member A Distinction

(80%)

Foundations of Accounting (CAT) Category

Phineas KENI PricewaterhouseCoopers A Distinction (90%)

Winner of Wau Accountants & Business Consultants Award

Thercla LEI KG Contractors Ltd A Distinction (88%)

Ai TOM Air Niugini Ltd A Distinction (86%)

Joe BRERE Port Moresby Nature Park A Distinction (85%)

Mechtild Pilailo ENGA National Broadcasting Corporation A Distinction (85%)

Vincent BAYANG PricewaterhouseCoopers A Distinction (84%)

Margaret GIYOMATALA Lee Partners A Distinction (84%)

Christine WARPIN PNG Microfinance Ltd A Distinction (84%)

Dorothea LLOYD Bank South Pacific Ltd A Distinction (83%)

Noelyn JAMES Incentive Fund A Distinction (82%)

Jerry KUIWAL PNG Microfinance Ltd A Distinction (82%)

Joyce IAMO Oil Search PNG Ltd A Distinction (80%)

Delsia SARIMAN MRL Petroleum Ltd A Distinction (80%)

Introduction to Taxation

Flora KAINA Deloitte Touche Tohmatsu A Distinction (81%)

Winner of P W C Award

Introduction to Business Law

Eddie LAMUR East New Britain Development Corporation

A Distinction (88%)

Winner of ITI Award

Lucy GAWI Bank of South Pacific A Distinction (82%)

Ethics & Governance

Chris OROHO PNG Ports Corporation Ltd A Distinction (81%)

Winner of CPA Australia (PNG Branch) Award

Page 11: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 2015/2016 11 | P a g e

5.3 Continuing Professional Education

CPA PNG will continue to deliver quality, practical Continuing Professional Education Programmes (CPEs) to its members. The total number of CPDs conducted has increased compared to the previous years. It is expected to further increase with many of our subject matter experts already confirmed to participate in 2017. The fees charged for our ongoing CPDs for both members and non-members are competitive compared to other similar sessions conducted by training providers and consultants. This will remain unchanged for some time, until a cost structure review is undertaken.

5.4 CPE Hours

As per CPA PNG Rule 10.1: Fellow, CPA and Accounting Technician members are required to undertake a minimum of 40 hours (20 structured and 20 unstructured) of continuing professional education in each year. 10 of the 20 hours of structured CPE must be obtained from CPE organised by CPA PNG. The requirement to complete CPE hours is a necessary requirement to renewing membership. A member can make up for the CPEs within the 12 months if CPEs were not undertaken for the previous year.

6. Branch Activity Reports: The Kokopo branch has witnessed a constant growth in its activities and membership hence, increase in revenue. In collaboration with some stakeholders, Mr. Walom conducted 4 CPDs and other trainings related to business development services with good customer turnout and participation. The branch has some interesting plans for the new financial year including the Enterprise Management Skills. Similarly, the Lae branch also did well despite the Manager being away on sick leave. The branch President and her team focused on maintaining the current membership and driving its marketing activities further to secondary schools and colleges in Lae. Such initiatives are crucial for the growth of the profession. With the branch manager back on site, we foresee increased level of membership drive activities.

7. Annual Conference Participation in our three annual conferences continues to grow each year. The Branch conferences have also been successfully organised with more activities and stakeholder participation. 7.1 Kokopo Conference – held at Vunapope Conference Centre, on 17th June 2016. The

theme was “Tax Revenue as an enabler of economic growth – what are the challenges?” A total of 132 delegates attended. This was slightly more than the previous period (2015 - 110).

7.2 Lae Annual Conference – held at Melanesian Hotel, Lae on 19 and 20 August 2016.

The theme was “Business Management and Financial Control in Challenging time”. We had 291 participants. This was a bit more than the previous period (2015 - 289).

7.3 CPAPNG / CPA Australia Annual Conference – held at Gateway Hotel, Port

Moresby in November 2015. The theme was “Accounting beyond accountability-enhancing professionalism and adding value”. We maintained the attendance over 1,000 with 1,049 but it was slightly below the previous year (2014 – 1,062).

Page 12: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 2015/2016 12 | P a g e

7. Accounting Standards Board (ASB)

The Accounting Standards Board that comes under the Investment Promotion Authority has not met for more than five years to deliberate on outstanding issues falling within their jurisdiction. One of the notable outstanding agenda items awaiting ASB attention is the International Financial Reporting Standards for Small to Medium-sized Entities (IFRSs for SMEs). If adopted, this will mean that those entities who meet the SME/SMP criteria may prepare accounts using these standards which are a simpler version of the current IFRSs. It has been a practice that we only adopt the globally applicable standards as we do not have the capacity to develop and apply our own standards in this jurisdiction.

8. Staffing CPA PNG currently has fourteen full time staff. Twelve are based in Port Moresby while one in Lae and one in Kokopo. During the period, the newly created positions of Public Relations Officer and Front Desk Receptionist have been filled in early 2016. Recruitments for other new positions have been put on hold including the position of Manager Mt Hagen Branch. Other staff movements are the recruitment of Talie Andrew Irabu to fill in the position of the Finance and Administration Director vacated by Mr. Nicholas Koimo and the position of the office driver. CPA PNG employees are committed serving members.

Page 13: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 13 | P a g e

9. Financial Statement Report of the Council Members

The Council members are pleased to present their report on the financial statements of Certified Practising Accountants Papua New Guinea (CPA PNG) for the financial year ended 30 September 2016.

Nature of entity and activities The Certified Practising Accountants Papua New Guinea (formerly Papua New Guinea Institute of Accountants) was established under the Accountants Act 1996. CPA PNG is governed by an elected Council and is not subject to the control or direction of any person other than as provided by the Accountants Act 1996. The primary purpose of CPA PNG is to promote the interests of the accountancy profession and its members in Papua New Guinea. Its functions include the determination of the qualifications acceptable for membership, the administration of membership, examinations, and the provision of continuing professional education, developing and formulating rules of ethical and professional conduct applicable to members, the promotion of accounting, auditing and other professional standards and the provision of services to members.

Results The results for the financial year ended 30 September 2016 show a net loss of K170,330 (2015: net loss of K217,450). Members funds as at 30 September 2016 is K11,100,761 (2015: K11,271,090).

Council members

The Council members for the 2015/2016 year were:

Name Designation

1 Richard Kuna President

2 Rachel Kichawen Vice President

3 Veronica Thomas Treasurer

4 Emmanuel Masangkay Councillor

5 Rajadurai Jeyakanthan Councillor

6 Stephen Beach Councillor

7 Paul Nindipa Councillor

8 Jack Namaliu Councillor

9 Tep Dami Councillor

10 Thomas Holland Councillor

11 Andy Rutil Councillor

12 Juanette Grobler Councillor (resigned 4/5/16)

13 Lemeki Ila Co-opted

14 Lawrence Ouma Co-opted

Page 14: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 2015/2016 14 | P a g e

Report of the Council Members continued

Auditors The members in their last Annual General Meeting appointed JAJ & Associates as the Auditors. Audit fees are disclosed in note 5(c).

Council declaration statement The Council states that in its opinion: (a) there are reasonable grounds to believe that CPA PNG will be able to pay its debts as

and when they become due and payable;

(b) the attached financial statements and notes hereto are prepared in accordance with, including compliance with generally accepted accounting practice and giving a true and fair view of the financial position and performance of CPA PNG.

Signed in accordance with a resolution of the Council.

…………………..…………….. Richard Kuna President

……………………………….. Veronica Thomas Treasurer

Dated at Port Moresby this 5th day of December 2016.

Page 15: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 2015/2016 15 | P a g e

Auditor’s Report

Page 16: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 2015/2016 16 | P a g e

Page 17: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 2015/2016 17 | P a g e

Statement of profit or loss and other comprehensive income For the financial year ended 30 September 2016

2016 2015

Notes K K

Revenue

Operating revenue 2 (a) 3,553,911 3,555,889

Investment income 2 (b) 371,082 257,456

Other income 2 (c) 39,915 17,656

Total revenue

3,964,908 3,831,001

Fair value gain on financial assets

25,368 (43,111)

Expenses

Membership services costs 5 (a) (2,054,080) (1,936,580)

Staff costs 5 (b) (992,542) (919,005)

Administration costs 5 (c) (753,819) (871,805)

Building expenses 5 (d) (360,165) (321,061)

Total expenses

(4,160,606) (4,048,451)

Net profit/(loss) for the year

(170,330) (217,450)

Net movement on revaluation 1 (g)(ii) - 1,351,117

Other comprehensive income

- -

Total comprehensive income/(loss) for the year

(170,330) 1,133,667

The above statement is to be read in conjunction with the notes to the financial statements.

Page 18: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 17 | P a g e

Statement of Changes in Equity

For the Financial Year ended 30 September 2016

Asset revaluation reserve

Retained earning

Total

K K K

Balance at 1 October 2014 5,824,897 4,312,527 10,137,424

Net profit/(loss) for the year - (217,450) (217,450)

Balance at 30 September 2015 5,824,897 4,095,077 9,919,974

Net profit/(loss) for the year - (170,330) (170,330)

Asset Revaluation increment for the year 1,351,117 - 1,351,117

Balance at 30 September 2016 7,176,014 3,924,747 11,100,761

The above statement is to be read in conjunction with the notes to the financial statements.

Page 19: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 18 | P a g e

Statement of Financial Position As at 30 September 2016

2016 2015

Notes K K

Current assets

Cash and cash equivalents 6 3,507,982 2,478,671

Financial assets 10,18 1,299,406 1,274,037

Other debtors and prepayments 7 454,151 242,823

Inventory – educational materials

362,201 437,164

Total current assets

5,623,740 4,432,695

Non-current assets

Property, plant and equipment 9 6,880,134 7,212,714

Total assets

12,503,874 11,645,409

Liabilities

Creditors and accruals 8 106,185 84,792

Employee provisions 16 109,569 100,364

Income received in advance 4 1,187,360 189,162

Total liabilities

1,403,114 374,318

Net assets

11,100,761 11,271,091

Members equity

Retained earnings

3,924,747 4,095,077

Reserve 15 7,176,014 7,176,014

Total members equity

11,100,761 11,271,091

The above statement is to be read in conjunction with the notes to the financial statements.

Page 20: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 19 | P a g e

Statement of Cash Flows

For the Financial Year ended 30 September 2016

2016 2015

Note

K K

Cash flows from operating activities

Cash received from membership fees and members activities during the financial year

4,937,738 3,827,621

Cash paid for operating expenses

(3,867,789) (3,495,578)

Net operating cash inflow/(outflow)

3

1,069,949 332,043

Cash flows from investing activities

Purchase of property, plant and equipment

(40,639) (248,464)

Net investing cash inflow/(outflow)

(40,639) (248,464)

Cash flows from financing activities

- -

Net increase/(decrease) in cash and cash equivalents

1,029,310 83,579

Cash and cash equivalents at the beginning of the financial year

2,478,671 2,395,092

Cash and cash equivalents at the end of the financial year

3,507,982 2,478,671

The above statement is to be read in conjunction with the notes to the financial statements.

Page 21: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 20 | P a g e

Notes to the Financial Statements For the Financial Year ended 30 September 2016 1. Summary of accounting policies

Statement of compliance The financial statements of Certified Practising Accountants Papua New Guinea (“CPA PNG”) have been prepared in accordance with International Financial Reporting Standards as adopted by the Accounting Standards Board of Papua New Guinea (ASB). Basis of preparation The financial report has been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported. The following significant accounting policies have been adopted in the preparation and presentation of the financial report. a) Cash and cash equivalents Cash and cash equivalents comprise cash on hand, cash in banks and investments in

money market instruments, net of outstanding bank overdrafts. b) Comparative amounts

Where applicable comparative amounts are to be reclassified with current year classification, to ensure consistency. There were no such reclassifications done during the financial year.

c) Employee benefits Provision is made for benefits accruing to employees in respect of annual leave and long

service leave when it is probable that settlement will be required and they are capable of being measured reliably.

Provisions made in respect of employee benefits expected to be settled within 12 months,

are measured at their nominal values using the remuneration rate expected to apply at the time of settlement.

Defined contribution plans Contributions to defined contribution superannuation plans are expensed when incurred. d) Provisions Provisions are recognized when the CPA PNG has a present obligation, the future

sacrifice of economic benefits is probable, and the amount of the provision can be measured reliably.

Page 22: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 21 | P a g e

Summary of accounting policies continued

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks 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 recognized as an asset if it is virtually certain that recovery will be received and the amount of the receivable can be measured reliably.

e) Taxation

The net income of CPA PNG is exempted from income tax under Section 27 of the Papua New Guinea Income Tax Act 1959 as amended.

f) Impairment of assets

At each reporting date, CPA PNG reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, CPA PNG estimated the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognized in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the reversal of the impairment loss is treated as a revaluation increase.

g) Financial instruments

Financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’, ‘held-to-maturity’ investments, ‘available-for-sale’ financial assets, and ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Investments are valued as at 30 September 2016 as follows: i. Listed shares are valued at 30 September 2016 at last sale price on that date.

Page 23: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 22 | P a g e

Summary of accounting policies continued ii. The net movement on revaluation is reflected in the statement of comprehensive

income. Financial assets at FVTPL are subsequently re-measured at fair value based on quoted bid prices. Gains or losses arising from changes in the fair value of securities classified as FVTPL are recognized in the statement of comprehensive income in the period in which they arise. AFS financial assets are recognized at fair value based on an independent valuation. Gains or losses arising from the change in the fair value are recognized in the investment revaluation reserve. Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the CPA PNG’s has the positive intention and ability to hold-to-maturity. Where there is intention to sell other than insignificant amount to held-to-maturity assets, the entire category would be tainted and reclassified as available-for-sale. Held-to-maturity investments are carried at amortised cost using effective interest rate method. Trade receivables, loans and other receivables are recorded at amortised cost less impairment.

h) Property, plant and equipment

Land and buildings are measured at fair value. Fair value is determined on the basis of independent valuation prepared by external valuation experts, based on discounted cash flows or capitalization of net income (as appropriate). The fair values are recognized in the financial statements of the CPA PNG, and are reviewed at the end of each reporting period to ensure that the carrying value of land and buildings is not materially different from their fair values. Any revaluation increase arising on the revaluation of land and buildings is credited to the asset revaluation reserve, except to the extent that it reverses a revaluation decrease for the same asset previously recognized as an expense in profit or loss, in which case the increase is credited to the income statement to the extent of the decrease previously charged. A decrease in carrying amount arising on the revaluation of land and buildings is charged as an expense in profit or loss to the extent that it exceeds the balance, if any, held in the asset revaluation reserve relating to a previous revaluation of that asset. Depreciation on revalued buildings is charged to profit or loss. On the subsequent sale or retirement of a revalued property, the attributable revaluation surplus remaining in the asset revaluation reserve, net of any related deferred taxes, is transferred directly to retained earnings. Plant and equipment are stated at cost less accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the item. In the event that settlement of all or part of the purchase consideration is deferred, cost is determined by discounting the amounts payable in the future to their present value as at the date of acquisition.

Page 24: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 23 | P a g e

Summary of accounting policies continued

Depreciation is provided on property, plant and equipment, including freehold buildings but excluding land. Depreciation is calculated on a straight line basis so as to write-off the net cost or other revalued amount of each asset over its expected useful life to its estimated residual value. The estimated useful lives and depreciation method is reviewed at the end of each annual reporting period. The following estimated useful lives are used in the calculation of depreciation:

Buildings 20 years Office equipment 4 years Computers and printers and furniture 5 years Motor vehicle 5 years

i) Revenue recognition

Revenue is accounted for on the accrual basis of accounting, except for membership fees which are brought to account when received. Interest revenue Interest income is recognized when it is probable that the economic benefits will flow to the CPA PNG and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition. Dividend revenue Dividend revenue from investments is recognized when the shareholder’s right to receive payment has been established (provided that it is probable that the economic benefits will flow to the CPA PNG and the amount of income can be measured reliably). Property rental income Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease. Initial direct cost incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized on a straight-line basis over the lease term. Movement in fair market value of investments Changes in fair market value of investments are recognized as income and are determined between the difference between the fair market value at year end or consideration received (if sold during the year) and the fair market value as at the prior year end or cost (if the investment was acquired during the period).

Page 25: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 24 | P a g e

Notes to the Financial Statements For the Financial Year ended 30 September 2016

` 2016 2015

K K

2. Revenue

(a) Operating revenue

Membership fees 1,118,435 1,112,872

Examination fees and modules 1,141,376 1,109,932

Conference – National 674,410 718,946

Conference – Lae Branch 148,650 145,995

Conference – Others 58,550 73,034

Continuing Professional Education 404,490 387,110

CPAA (PNG Branch) Fee 8,000 8,000

Total 3,553,911 3,555,889

(b) Investment income

Interest income 134,652 99,175

Rent received 176,200 122,350

Dividends received 60,230 79,042

Total 371,082 257,456

(c ) Other income

Merchandising income 4,593 7,783

Training room hire 16,865 2,719

Sundry income 18,457 7,154

Total 39,915 17,656

3. Reconciliation of cash flows from operating activities to statement of comprehensive income

Surplus/(deficit) for the year (170,330) (217,450)

Adjustments for non-cash items

Loss on disposal of asset - 30,521

Depreciation 373,219 379,276

Fair value movement in financial asset (25,368) 43,111

Charge for staff provisions-net 9,204 29,716

Movement in assets and liabilities

(Increase)/decreased in inventory 74,963 (35,031)

Decrease/(increase) in prepayments (217,005) 140,672

Increase/(decrease) in creditors and accruals 27,068 (10,024)

(Decrease)/increase in advance income 998,198 (28,748)

Net cash provided by normal activities 1,069,951 332,043

Page 26: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 25 | P a g e

Notes to the Financial Statements

For the Financial Year ended 30 September 2016

4. Income Received in Advance

2016 2015

K K

Opening balance 189,162 217,910

Receipts during the year 1,911,610 885,018

Transfers during the year (913,412) (913,766)

Closing balance 1,187,360 189,162

Income received in advance is the sum of opening balance and receipts for the year minus the transfers to income during the year.

5. Operating expenses

(a) Member services costs

Education / Examinations 792,637 661,351

Continuing Professional Development 287,509 275,417

Journals and Membership Recognition 38,721 32,817

National Conference costs 456,954 509,370

Lae Conference costs 198,409 158,556

Conference costs – Others 59,760 43,529

Branch Expenses 143,772 125,534

Overseas Conference Expenses - 58,357

CAPA Conference costs 70,318 64,349

Awards and Donations 6,000 7,300

Total 2,054,080 1,936,580

(b) Staff costs

Salary and Wages 532,347 504,743

Staff Accommodation 209,124 177,769

Staff Packaged benefits 30,384 22,656

Long Service Leave 23,503 27,447

Leave fares 33,935 27,523

Annual leave 34,793 26,151

Superannuation 43,132 39,085

Staff training 20,377 45,588

Staff Medical Insurance 13,867 13,260

Staff costs/uniforms/subscriptions 51,080 34,783

Total 992,542 919,005

(c) Administration costs

Advertising and Promotions 70,724 94,685

Affiliations 29,039 26,593

Communication Expenses 83,294 59,971

Postages 13,452 11,117

Printing and Stationery 33,200 21,728

Motor Vehicle Expenses 54,195 59,744

Page 27: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 26 | P a g e

Notes to the Financial Statements

For the Financial Year ended 30 September 2016

2016 2015

K K

Electricity 32,347 47,782

Accountants Act Review 20,000 27,920

Audit fees 5,000 3,930

Insurance 30,877 33,775

Professional fees - 59,923

Security costs 41,490 -

Bank Charges 20,493 17,993

Bad Debts 19,960

Computer/Copier Supplies - 21,216

Repairs and Maintenance – Others 47,651 26,809

Council Expenses 56,903 103,126

President’s Expenses 7,800 7,800

Training Room Hire Costs 1,900 209

Recruitment and Repatriation 21,928 11,715

School fees 58,300 68,611

Consumables and Sundry Expenses 8,139 8,910

Depreciation - Others 117,087 125,516

Loss/(Gain) on Disposal - 12,772

Total 753,819 871,805

(d ) Building Costs

Repairs and Maintenance – Air Conditioner 12,436 12,666

Repairs and maintenance – Generator 5,150 4,339

Repairs and Maintenance – Others 73,610 34,438

Rates and Other Taxes 6,461 10,972

Land Rent 6,377 3,007

Insurance - 1,879

Depreciation - Building 256,131 253,760

Total 360,165 321,061

6. Cash and Cash Equivalents

Cash on Hand 1,000 1,000

Cash at Bank-BSP Bank 1,565,533 523,670

Cash at Bank-ANZ Bank Visa Card 10,088 20,000

Total Cash on Hand 1,576,621 544,670

Treasury Bills 931,360 934,001

Short Term Deposits 1,000,001 1,000,001

Total 3,507,982 2,478,671

The above short term deposits are held with Bank South Pacific Limited for a period of 12 months. The Treasury Bill is held with Bank of PNG for 365 days. It will mature in September 2017. A Visa Credit Card security deposit of K20,000 is held with ANZ Bank Limited.

Page 28: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 27 | P a g e

Notes to the Financial Statements

For the Financial Year ended 30 September 2016

7. Other Debtors and Prepayments

Conference / CPD Expenses prepaid 92,051 1,420

Prepayments 119,870 75,686

Sundry Debtors 64,335 64,538

GST Recoverable - 5,675

Accrued Income 148,959 46,771

Rent Bonds 16,103 13,900

Housing Advance 12,833 34,833

Total 454,151 242,823

8. Creditors and Accruals

Bond Fees Refundable 20,699 20,699

Sundry Creditors and Accruals 85,486 64,093

Total 106,185 84,792

9. Property, Plant and Equipment

`Land & Building at Fair Value

K

Motor Vehicle at Cost

K

Office Equipment

at Cost

K

Furniture & Fittings

at Cost

K

Computers & Printers

at Cost

K

Total

K

Gross Carrying Amount Balance at 1 October 2014 6,436,188 258,926 204,578 74,653 337,404 7,311,749

Additions 41,817 96,954 67,411 26,397 15,885 248,464

Disposals / Transfers - (83,636) - (2,925) - (86,561)

Revaluation Increment 1,351,117 - - - - 1,351,117

Balance at 1 October 2015 7,829,122 272,244 271,989 98,125 353,289 8,824,769

Additions - 23,125 5,318 12,196 40,639

Revaluation Increment - - - - - -

Disposals / Transfers

Balance at 30 September 2016

7,829,122 272,244 295,114 103,443 365,485 8,865,408

Accumulated Depreciation

Balance at 1 October 2014 732,750 72,067 141,940 53,043 289,019 1,288,819

Depreciation Expense 253,760 52,849 41,189 10,267 21,211 379,276

Disposals / Transfers - (54,333) - (1,706) - (56,040)

Balance at 1 October 2015 986,510 70,584 183,129 61,603 310,230 1,612,056

Depreciation Expense - Building 256,131 256,131

Depreciation Expense – Others - 54,449 36,476 11,775 14,387 117,087

Disposals / Transfers - -

Balance at 30 September 2016

256,131 54,449 36,476 11,775 14,387 373,218

Net Book Value – 30/09/16 6,586,481 147,211 75,509 30,064 40,868 6,880,134

Net Book Value – 30/09/15 6,842,612 201,660 88,860 36,522 43,059 7,212,714

Page 29: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 28 | P a g e

Notes to the Financial Statements

For the Financial Year ended 30 September 2016

Independent valuations of CPA PNG’s land and buildings are usually performed after three to five years by reputable valuers to determine the fair value of land and building, which conforms to International Valuation Standards, determined by reference to market values. Recent valuation was done in September 2015 by LJ Hooker and revaluation increments were taken up accordingly in the accounts. Next revaluation will be done in September 2018 or 2020. The carrying amount of land and building had they been recognized under the cost model are as follows:

2016 2015

K K

Land 405,000 405,000

Building 1,004,564 954,122

Total 1,409,564 1,359,122

10. Investments in Financial assets

a) Investment in treasury bills 931,360 934,001

b) Investment in Short term deposits 1,000,001 1,000,001

Total 1,931,360 1,934,001

c) Investment in equities

Closing Purchase/ Fair value Opening

balance (Disposals) movement balance

movement

2016 2016 2016 2015

K K K K

Bank South Pacific Ltd (shares 41,619) 378,733 - 66,591 312,142

Credit Corporation Ltd (shares 70,000) 129,500 - (38,500) 168,000

City Pharmacy Ltd (shares 250,000) 287,500 - (62,500) 350,000

New Britain Palm Oil Ltd (shares 6,000) - - - -

Oil Search Limited (shares 29,593) 503,673 - 59,778 443,895

Total 1,299,406 - 25,369 1,274,037

11. Government Grants The Annual Government Grant (NEC Decision No. 207/2003) of K500,000 for the twelve years starting 2005 to 2016 totaling K6 million has not been received. These amounts have not been brought into the account. 12. Related Party Transactions During the year, CPA PNG entered into transactions with accounting firms by whom certain Council members are employed. All transactions were conducted on terms either favorable to CPA PNG or on an arm’s length commercial basis.

Page 30: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 29 | P a g e

Notes to the Financial Statements For the Financial Year ended 30 September 2016

2016 2015

K K

Key management personnel disclosures

(a) Names of senior management personnel

1 Yuwak Tau Executive Director

2 Nicholas Koimo Director Finance & Administration (resigned 24 March 2016)

3 Kevin Kepore Director Academic

4 Talie Andrew Irabu Director Finance & Administration (appointed 31 August 2016)

(b) Remuneration of senior management personnel

Remuneration of Senior Management team

K5,000 – K49,999 1 -

K50,000 – K99,999 1 1

K100,000 – K199,999 2 2

All staff remuneration in aggregate for the year 2016:

Salary 187,307 191,212

Non-monetary 24,890 17,460

Superannuation:

- Employee 10,971 9,373

- Employer 15,359 13,122

Total 238,527 231,167

Non-monetary benefits relate to value of assessable benefits charged for salary tax purposes on housing and motor vehicles provided to senior management.

Page 31: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 30 | P a g e

Notes to the Financial Statements

For the Financial Year ended 30 September 2016 13. Contingent Liabilities

There were no contingent liabilities at balance date and none have arisen since balance date. (2015: Knil).

14. Capital Commitments

The Council resolved and approved K350,000 capital commitment towards Information and Computer Technology (ICT) development in its Ordinary Meeting No. 4/2016 dated 10th November 2016 to start committing in 2017.

15. Revaluation Reserve

2016 2015

K K

Balance at 1 October 2015 7,176,014 5,824,897

Movement during the Year - 1,351,117

Balance at 30 September 2016 7,176,014 7,176,014

CPA Haus was last revalued at K6.47 million in September 2015 by LJ Hooker. The property is revalued after every three to five years.

16. Employee Provisions

Long Service Annual Packaged Total

K K K K

Balance at 1 October 2015 76,373 23,992 - 100,365

Adjustment - - - -

Additional Provisions Recognized 9,785 35,435 30,196 75,416

Reductions Arising from Payments - (39,540) (26,672) (66,212)

Balance at 30 September 2016 86,158 19,887 3,524 109,569

Current - 19,887 3,524 23,411

Non-Current 86,158 - - 86,158

Total 86,158 19,887 3,524 109,569

Page 32: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 31 | P a g e

Notes to the Financial Statements For the Financial Year ended 30 September 2016 17. Financial Instruments

(a) Financial Risk Management Objectives

CPA PNG’s Council provides services to the institute, co-ordinates access to domestic financial markets, and manages the financial risks relating to the operations of the CPA PNG. CPA PNG does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. The use of financial derivatives is governed by the CPA PNG’s policies approved by the Council, which provide written principles on the use of financial derivatives. Compliance with policies and exposure limits is reviewed by the Council on a continuous basis.

(b) Significant Accounting Policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognized, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 1 to the financial statement.

(c) Interest Rate Risk Management

CPA PNG is not exposed to interest rate risk as it does not have any borrowing with any financial institutions at year end.

(d) Credit Risk Management

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the CPA PNG. CPA PNG recognized membership fees only when received and is brought to account. The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the CPA PNG’s maximum exposure to credit risk.

(e) Liquidity Risk Management

CPA PNG manages liquidity risk by maintaining adequate reserves and banking facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

Page 33: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 32 | P a g e

Notes to the Financial Statements For the Financial Year ended 30 September 2016

18. Fair values

Fair value estimation The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1)

Inputs other than quoted prices included within Level 1 that are observable for the asset or

liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2)

Inputs for asset or liability that are not based on observable market data (unobservable

inputs) (Level 3)

The following table presents assets and liabilities that are measured at fair value at 30 September 2016:

Level 1 K

Level 2 K

Level 3 K

Total K

Assets

Investments – Listed securities 1,299,406 - - 1,299,406

Total 1,299,406 - - 1,299,406

Liabilities - - - -

Sensitivity analysis If the share prices moves up or down by 10% the investment portfolio will increase or decrease by K129,941.

19. Subsequent Events

There has not been any matter or circumstance, other than that referred to in the financial statements or notes thereto, that has arisen since the end of the financial year, that has significantly affected, or may significantly affect, the operations of the CPA PNG, the results of those operations, or the state of affairs of the CPA PNG in future financial years.

Page 34: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 33 | P a g e

OUR STRATEGIC FOUNDATION

VISION “To be a globally recognised professional Accountancy body,

bringing value to the members, the profession and the wider public”

MISSION To promote, develop and maintain high standards in the

Accountancy profession, to meet the needs of our stakeholders”

VALUE STATEMENT “CPA PNG strives to achieve professional excellence while

continually meeting our member’s expectations in all aspects of our services. We strive to promote a culture of mutual respect,

collaboration and maintain high ethical standards and integrity”

Page 35: 2016 ANNUAL REPORT - CPA Papua New Guineacpapng.org.pg/data/documents/Annual-Report-2016_AI.pdfCertified Practising Accountants Papua New Guinea CPA PNG Annual Report 2015/2016 3 |

Certified Practising Accountants Papua New Guinea

CPA PNG Annual Report 34 | P a g e

CERTIFIED PRACTISING ACCOUNTANTS PNG CPA Haus, Level 2 (Street Level), Armit Street, Paga Hill,

Port Moresby, P O Box 1937,

PORT MORESBY, National Capital District

Papua New Guinea

Tel: (675) 320 1891 / 321 2105

Fax: (675) 320 0469

Email: [email protected]

Website: www.cpapng.org.pg