< PreviousANNUAL REPORT 2022 – 2023 Preserving and advancing the highest international standards for the profession of architecture ANNUAL REPORT 2022 – 2023 88 • 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 omissions, misrepresentations, 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 Council’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Council Members. • Conclude on the appropriateness of the Council Members’ 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 council’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures 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 the date of our auditor’s report. However, future events or conditions may cause the council to cease to continue as a going concern. • 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 communicate with the Council Members 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 identify during our audit. Nexia SAB&T Y Soma Director Registered Auditor 17 August 2023South African Council for the Architectural Profession PART E FINANCIAL INFORMATION 89 COUNCIL MEMBERS RESPONSIBILITIES AND APPROVAL The Council members are required by the Architectural Profession Act No 44 of 2000 to maintain adequate accounting records and are responsible for the content and integrity of the annual financial statements and related financial information included in this report. It is their responsibility to ensure that the annual financial statements satisfy the International Financial Reporting Standards as to form and content and present fairly the statement of financial position, results of operations and business of the Council, and explain the transactions and financial position of the business of the Council at the end of the financial year. The annual financial statements are based upon appropriate accounting policies consistently applied throughout the Council and supported by reasonable and prudent judgements and estimates. The Council members acknowledge that they are ultimately responsible for the system of internal financial control established by the Council and place considerable importance on maintaining a strong control environment. To enable the Council members to meet these responsibilities, the Council sets standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the Council and all employees are required to maintain the highest ethical standards in ensuring the Council’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the Council is on identifying, assessing, managing and monitoring all known forms of risk across the Council. While operating risk cannot be fully eliminated, the Council endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints. The Council members are of the opinion, based on the information and explanations given by management and the internal auditors, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the annual financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss. The Council members have reviewed the Council`s cash flow forecast and, in the light of this review and the current financial position, it is satisfied that the entity has or has access to adequate resources to continue in operational existence for the foreseeable future. The financial statements have been audited by the independent audit firm, Nexia SAB&T, who have been given unrestricted access to all financial records and related data, including minutes to all meetings of the Council. The Council members believe that all representations made to the independent auditors during the audit were valid and appropriate. The external auditors’ unqualified audit report is presented on page 87 to 88. The annual financial statements as set out on pages 92 to 94 were approved by the Council on 04 August 2023 and were signed on their behalf by: Mr Ntsindiso Charles Nduku President Ms Letsabisa Shongwe né Lerotholi Vice-PresidentANNUAL REPORT 2022 – 2023 Preserving and advancing the highest international standards for the profession of architecture ANNUAL REPORT 2022 – 2023 90 REGISTRAR’S REPORT The Registrar presents his report for the year ended 31 March 2023. 1. REVIEW OF ACTIVITIES Main business and operations The entity is a statutory body that regulates the architectural profession in South Africa and there were no major changes herein during the year. The South African Council for the Architectural Profession (SACAP) (the entity) is a regulatory body that was established in terms of the Architectural Profession Act, 2000 (Act No. 44 of 2000), which was published on 1 December 2000 and came into effect on 26 January 2001. Vision Transformed Architectural leaders serving society in a sustainable built environment. Mission • A SACAP that is inclusive and transparent; • An Architectural Profession recognised as a global leader in the built environment; • A clear understanding of our mandate amongst other regulators and stakeholders towards comprehensive conclusive delivery. 2. GOING CONCERN The Council’s financial statements have been prepared on the going concern basis. This basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business. The application of this basis is supported by a detailed budget process and include a certain level of judgements and estimates as well as ongoing compliance with budgeting controls. Loadshedding is a challenge that many businesses in South Africa are facing. SACAP have ensured that backup power sources have been installed reducing the risks in relation to loadshedding. The impact is therefore deemed not to be material on the business of SACAP. At the time of finalising the report, the Council is confident that the adequate measures have been implemented to ensure that SACAP continues to operate as a going concern. 3. EVENTS AFTER THE REPORTING DATE The Council is not aware of any matter or circumstance arising since the end of the financial year to the date of this report that could have a material effect on the financial position of the Council. 4. COUNCIL MEMBERS The members of the Council during the year and to the date of this report are as follows: Mr NC Nduku - President Ms LR Shongwe née Lerotholi - Vice-President Ms N Daki Dr S Dlamini Mr V Phailane Mr K Bingham Mr MA Mohidien Mr RG Nicholls Mr L NematsweraniSouth African Council for the Architectural Profession PART E FINANCIAL INFORMATION 91 5. OPERATING RESULTS The operating results and Statement of Financial Position of the Council are fully set out in the annual financial statements. The net deficit of R0.4 million (2022: net surplus of R2.2 million) was recorded in the year ended 31 March 2023. The decrease in net surplus in comparison to the previous financial year was mainly as a results of the increase in total operating expenses by R3.6 million, offset by the increase in total income by R1.8 million. The increase in total expenses comparison to the previous financial year was mainly due to: • R0.6 million increase in consulting fees relating to pre-implementation stage of the new membership system. The new system is expected to go-live during the 2023/24 financial year. • Increase of R3.6 million in staff costs as a result of the appointment of 2 senior managers and investigating officer, the salary benchmarking which affected 26 employees as well as a 6% adjustment in salaries from previous financial year. • higher CBE levy expense in the 2023 financial year. During 2022 financial year, CBE granted SACAP a 100% discount on CBE levies, however no discount was granted in the 2023 financial year. 6. ANNUAL FINANCIAL STATEMENTS The Annual Financial Statements consist of Statement of Financial Position, Statement of Comprehensive Income, Statement of Cash Flow and the Notes to the Annual Financial Statement of The South African Council for the Architectural Profession. This annual financial statements include the cost and fees for Canberra Accord. SACAP is the current secretariat of the Canberra Accord up to 31 December 2025. Adv Toto Fiduli Registrar 04 August 2023ANNUAL REPORT 2022 – 2023 Preserving and advancing the highest international standards for the profession of architecture ANNUAL REPORT 2022 – 2023 92 STATEMENT OF FINANCIAL POSITION as at 31 March 2023 Figures in RandNotes20232022 Assets Non-Current Assets Property, plant and equipment614,931,61315,300,954 Intangible assets7123,587194,421 15,055,20015,495,375 Current Assets Financial assets 8 *–1,022,234 Trade and other receivables9841,0081,053,954 Cash and cash equivalents - Council 1024,530,19322,073,652 Cash and cash equivalents - Education Fund 10 *1,109,988453,162 26,481,18924,603,002 Total Assets41,536,38940,098,377 Equity and Liabilities Equity Retained earnings34,746,78535,129,464 34,746,75835,129,464 Non-Current Liabilities Finance lease liabilities11–84,741 –84,741 Current Liabilities Trade and other payables126,704,8634,797,705 Current portion of finance lease liabilities1184,74186,467 6,766,9904,884,172 Total Equity and Liabilities41,536,38940,098,377 * Education funds investment, amounting to R1.0 million, matured on 31 March 2023 and was subsequently reinvested in a twelve (12) months fixed interest instrument in April 2023.South African Council for the Architectural Profession PART E FINANCIAL INFORMATION 93 STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 March 2023 Figures in RandNotes20232022 Revenue 1339,993,97539,505,757 Other income141,159,980721,563 Student grants(440,000)(400,000) Operating costs(42,913,713)(38,452,981) Operating (Deficit)/Surplus(2,199,758)1,374,339 Finance income161,826,324867,313 Finance costs17(9,245)(21,950) Deficit / surplus for the year(382,679)2,219,702 Other comprehensive surplus–– Total comprehensive deficit / surplus for the year(382,679)2,219,702 STATEMENT OF CHANGES IN EQUITY as at 31 March 2023 Figures in Rand Retained earningsTotal Balance at 1 April 202132,909,76232,909,762 Total comprehensive surplus for the year Surplus for the year2,219,7022,219,702 Total comprehensive surplus for the year2,219,7022,219,702 Balance at 31 March 202235,129,46435,129,464 Balance at 1 April 202235,129,46435,129,464 Total comprehensive surplus for the year Deficit for the year(382,679)(382,679) Total comprehensive surplus for the year(382,679)(382,679) Balance at 31 March 202334,746,75834,746,758ANNUAL REPORT 2022 – 2023 Preserving and advancing the highest international standards for the profession of architecture ANNUAL REPORT 2022 – 2023 94 STATEMENT OF CASH FLOW as at 31 March 2023 Figures in RandNotes20232022 Operating cash flow before working capital change18(1,296,851)2,874,603 Working capital changes Decrease in trade and other receivables212,9461,024,230 Increase in trade and other payables 1,907,1591,059,293 Net cash generated by operations823,2544,958,126 Finance income161,826,324867,313 Finance costs17(9,245)(21,950) Net cash generated by operating activities2,640,3335,803,489 Cash flows (used in) / from investing activities Property, plant and equipment acquired6(482,347)(154,073) Intangible assets acquired7(26,157)(23,909) Proceeds on disposals of property, plant and equipment45,7718,900 Decrease / (Increase) in financial asset *1,022,234(1,022,234) Net cash flows from / used in investing activities559,501(1,191,316) Cash flows used in financing activities Finance lease repayment(86,467)(80,637) Net cash flows used in financing activities(86,467)(80,637) Net increase in cash and cash equivalents3,113,3674,531,536 Cash and cash equivalents at beginning of the year22,526,81417,995,278 Cash and cash equivalents at end of the year 10 Ʌ 25,640,18122,526,814 * Education funds investment, amounting to R1.0 million, matured on 31 March 2023 and was subsequently reinvested in a twelve (12) months fixed interest instrument in April 2023. Ʌ The Council’s cash and cash equivalent balance included the fixed interest instrument which was due to mature in April 2023. An amount totaling R13 million was subsequently re-invested in a twelve (12) months fixed interest instrument in April 2023.South African Council for the Architectural Profession PART E FINANCIAL INFORMATION 95 ACCOUNTING POLICIES 1. GENERAL INFORMATION The annual financial statements have been prepared in accordance with all applicable International Financial Reporting Standards (IFRS) and the Architectural Profession Act, 2000 (Act no 44 of 2000). 2. BASIS FOR PREPARATION The annual financial statements of the Council have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) applicable to entities reporting under IFRS. The annual financial statements have been prepared under the historical cost convention. The financial statements are presented in South African Rand, which is the entity’s functional currency. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Council’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the annual financial statements are disclosed in note 4 below. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these annual financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. New Standards and Interpretations Standards and interpretations effective and adopted in the current year At the date of authorisation of these financial statements for the year ended 31 March 2023, there were no new standards that were adopted. IFRS/IFRIC Title and details Effective Expected Impact IAS 1Classification of Liabilities as Current or Non-Current Annual periods commencing on or after 1 January 2023 The impact of the amendments is not material IAS 1Disclosure of Accounting Policies Annual periods commencing on or after 1 January 2023 The impact of the amendments is not material IAS 8Definition of Accounting EstimatesAnnual periods commencing on or after 1 January 2023 The impact of the amendments is not material IFRS 1Annual Improvement to IFRS Standards 2018-2020: Amendments la |FRS 1 Annual periods commencing on or after 1 January 2022 The impact of the amendments is not material IFRS 9Annual Improvement to IFRS Standards 2018-2020: Amendments lo |FRS 9 Annual periods commencing on or after 1 January 2022 The impact of the amendments is not material IAS 16Property, Plant and Equipment: Proceeds before Intended Use: Amendments to IAS 16 Annual periods commencing on or after 1 January 2022 The impact of the amendments is not material IAS 37Onerous Contracts - Cost of Fulfilling a Contract: Amendments lo IAS 37 Annual periods commencing on or after 1 January 2022 The impact of the amendments is not material Standards and interpretations not yet effective. The Council has not applied the following new, revised or amended pronouncements that have been issued by the IASB as they are unlikely to have material impact in the current accounting period (the list does not include information about new requirements that affect interim financial reporting or first-time adopters of IFRS since they are not relevant to the Council). The Council anticipates that the new standards, amendments and interpretations will be adopted in the Council’s financial statements when they become effective. The Council has assessed, where practicable, the potential impact of all these new standards,amendments and interpretations that will be effective in future periods.ANNUAL REPORT 2022 – 2023 Preserving and advancing the highest international standards for the profession of architecture ANNUAL REPORT 2022 – 2023 96 The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Council’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the annual financial statements are disclosed in note 4 below. IFRS/IFRIC Title and details EffectiveExpected Impact IAS 16Lease Liability in a Sale and LeasebackAnnual periods commencing on or after 1 January 2024 Unlikely to have a material impact IAS 1Classification of Liabilities as Current or Non-current: Narrow-scope amendments to IAS 1 to clarify how to classify debt and other liabilities as current or non-current. Annual periods commencing on or after 1 January 2024 Unlikely to have a material impact IAS 8Definition of Accounting EstimatesAnnual periods commencing on or after 1 January 2023 Unlikely to have a material impact IFRS 17Insurance ContractsAnnual periods commencing on or after 1 January 2023 Unlikely to have a material impact All applicable standards will be complied with in the financial statements for the period ending 31 March 2023. Compliance with these amendments, revisions and improvements require additional disclosure compared to that required in terms of existing IFRS. Management performed an assessment of the impact of all applicable standards that will apply for the period ending 31 March 2023. 3.1 Property, Plant and Equipment Property, plant and equipment owned by the Council comprise building, motor vehicles, office equipment, computer equipment and furniture and fittings. Property, plant and equipment also including right-of-use assets of the Council and are measured at cost less accumulated depreciation and any accumulated impairment. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Council and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred. 3.1.1 Owned assets Property, plant and equipment is stated at historical cost less depreciation and accumulated impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Council and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within ‘Other income’ in the statement of comprehensive income. The assets’ residual values, useful lives and methods of depreciation are reviewed, and adjusted if appropriate, at each financial year end. Depreciation is provided on the straight-line basis which will reduce the carrying amount of the property, plant and equipment to their residual values at the end of their useful lives. Items of property, plant and equipment are depreciated from the date that they are installed and available for use. Where an item of property, plant and equipment comprises major components with different useful lives, the components are accounted for as separate items of property, plant and equipment. The major categories of property, plant and equipment have the following estimated used full life: ItemAverage useful lifeDepreciation method Building50 yearsStraight line Motor vehicles5 yearsStraight line Office equipment5 yearsStraight line Computer equipment3 yearsStraight line Furniture and fittings10 yearsStraight lineSouth African Council for the Architectural Profession PART E FINANCIAL INFORMATION 97 3.1.2 Right of use assets Right of use assets are tangible assets which the Council holds in terms of a lease agreement with the lessor which are expected to be used for a period of 3 years. An item of right of use asset is recognised at the commencement of the lease agreement with the lessor, and the cost of the item can be measured reliably. Right of use assets is initially measured at cost. Cost is calculated as the initial amount of the lease liability, plus any lease payments made to the lessor before the lease commencement date, plus any initial direct costs incurred, minus any lease incentives received. Property, plant and equipment is subsequently stated at cost less accumulated depreciation and any accumulated impairment losses, except for land which is stated at cost less any accumulated impairment losses. The depreciation period for the right-of-use asset is from the lease commencement date to the earlier of the end of the lease term or the end of the useful life of the asset. An exception is when it is reasonably certain that the lessee will exercise an option to purchase the asset, in which case the amortisation period is through the end of the asset’s useful life. The useful lives of items of right of use assets has been assessed as follows: ItemAverage useful lifeDepreciation method Leased AssetsOver the term of the leaseStraight line If a right-of-use asset is determined to be impaired, the impairment is immediately recorded, thereby reducing the carrying amount of the asset. Its subsequent measurement is calculated as the carrying amount immediately after the impairment transaction, minus any subsequent accumulated depreciation. At the termination of a lease, the right-of-use asset and associated lease liability are removed from the books of the lessee. The difference between the two amounts is accounted for as a profit or loss at that time. 3.2 Intangibles An intangible asset is an identifiable, non-monetary asset without physical substance. Intangible assets are identifiable resources controlled by the Council from which the Council expects to derive future economic benefits. An intangible asset is identifiable if it either is separable, ie is capable of being separated or divided from the Council and sold, transferred, licensed, rented or exchanged, either individually or together with a related contract, identifiable asset or liability, regardless of whether the Council intends to do so or arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the Council or from other rights and obligations. An intangible asset is recognised if it is probable that the expected future economic benefits that are attributable to the asset will flow to the Council and the cost of the asset can be measured reliably. The Council assesses the probability of expected future economic benefits using reasonable and supportable assumptions that represent management’s best estimate of the set of economic conditions that will exist over the useful life of the asset. Intangible assets that are acquired and have finite useful lives are initially recognised at cost with subsequent measurement at cost less any accumulated amortisation and any impairment losses. Intangible assets are derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the profit or loss in the year the asset is derecognised. Intangible assets have the following estimated used full life: ItemAverage useful lifeAmortisation method Softwares3 YearsStraight line 3.2.1 Amortisation Intangible assets are amortised on a straight-line basis in profit or loss over their estimated useful lives, from the date that they are available for use. Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. 3.3 Financial assets 3.3.1 Loans and receivables Council applied the principles of IFRS 9. In terms of IFRS 9 the classification and measurement requirements are driven by cash flow characteristics and the council business model. Financial instruments are classified into one of three classes: amortised cost, fair value through profit or loss, and fair value through other comprehensive income.Next >