BA VISION, MISSION AND CORE VALUES O · 2019. 12. 20. · ACCA - Association of Chartered Certified Accountants ... CHAIRPERSON’S LETTER TO THE MINISTER Honourable Kenneth O. Matambo

Botswana Accountancy Oversight Authority 2013 Annual Report

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VISION, MISSION AND CORE VALUES

VISIONTo attain international confidence in financial reporting,

audit and corporate governance in Botswana.

MISSIONTo develop, promote and implement globally credible

financial and non-financial reporting, audit and corporate governance standards, through proactive oversight

and regulation of an ethical accountancy profession in Botswana in order to protect the public interest.

VALUESKnowledge and Learning

To strive for enhanced understanding and growth in organisational and personal capabilities.

FortitudeTo demonstrate courage, resilience and strength in

executing the mandate of the Authority.

IndependenceTo promote the autonomy of the Authority, and freedom

from interference in the activities of the organisation.

PrincipledTo act in an ethical, just and honest manner at all times.

AdvocacyTo proactively advance quality and ethical standards in all aspects of financial and non-financial reporting, audit and

corporate governance.

InnovationTo adopt an inventive, imaginative and technological approach to organisational effectiveness and service

delivery.

BA = 100 BLACK

O = C=100 M=96 Y= 25 K= 22

A = C=75 M=13 Y= 0 K= 0


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Contents ................................................................................................................................. 3

Legislative Mandate .............................................................................................................. 4

General Information .............................................................................................................. 5

List of Abbreviations/Acronyms ........................................................................................... 6

Chairperson’s Letter to the Minister..................................................................................... 7

Chairperson’s Statement .................................................................................................. 8 - 9

Chief Executive Officer’s Statement ............................................................................. 10 -12

Board of Directors ........................................................................................................ 13 - 16

Finance, Audit and Tender Committee ............................................................................. 17

Human Resources Committee ............................................................................................ 18

Report on Corporate Governance .............................................................................. 18 - 21

Executive Staff ...............................................................................................................22 - 23

Management Team ............................................................................................................. 24

Technical Department Team ............................................................................................... 25

Report from the Technical Department ............................................................................. 26

Finance and Administration Department Staff ................................................................. 27

Reports from the Finance and Administration Department .....................................28 - 30

Annual Financial Statements .............................................................................................. 31

Table of Contents


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THE BOTSWANA ACCOUNTANCY OVERSIGHT AUTHORITY AND ITS LEGISLATIVE MANDATE

• TheBotswanaAccountancyOversightAuthoritywasestablishedbytheFinancialReportingAct,2010.

• AnindependentoversightbodyoftheaccountingandauditingprofessioninBotswana.

• Toregulatethereportingoffinancialmattersofpublicinterestentitiesandthecorporatesector.

• Promote the standard,quality and credibilityofprovidingfinancial andnon- financial informationbyentities.

• Regulateandpromotethehigheststandardsofauditors.

• Issue,adopt,establish,monitor,andenforcefinancialreporting,accountingandauditingstandards.

• Promotehighstandardsofcorporategovernanceandcompliancewithprofessionalethics.

• Protectpublicinterest.


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GENERAL INFORMATION

COUNTRY OF INCORPORATION AND DOMICILE

Botswana

NATURE OF BUSINESS AND PRINCIPAL ACTIVITIES

TheprincipalobjectiveoftheAuthorityistoprovideoversighttotheaccountingandauditingprofessionandpromotethestandard,qualityandcredibilityofprovidingfinancialandnon-financialinformationbyentities.Itsfunctionsincludestandardsetting,financial/non-financialreporting and audit practice reviews, enforcement of compliance and oversight over theeducationandtrainingofprofessionalaccountantsinBotswana.

DIRECTORS

TabakeKobedi-ChairpersonMariaMachailo-Ellis-Vice-ChairpersonDanielN.LoetoEmmaA.PeloetletseHiranMendisKeneilweR.MorrisMendelN.NlandaMichaelLesolleOaitseM.Ramasedi

BUSINESS ADDRESS

Plot145,BlockB,FifthFloorLakeViewOfficeParkGaboroneInternationalFinancePark

POSTAL ADDRESS

PrivateBag0056Gaborone

AUDITOR

Deloitte&ToucheCertifiedAuditors

BANKER

FirstNationalBankofBotswana


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LIST OF ABBREVIATIONS/ACRONYMS

AAT - AssociationofAccountingTechnicians

ACCA - AssociationofCharteredCertifiedAccountants

BAOA - BotswanaAccountancyOversightAuthority

BICA - BotswanaInstituteofCharteredAccountants

CIMA - CharteredInstituteofManagementAccountants

FATC - Finance,AuditandTenderCommittee

FRA - FinancialReportingAct,2010

FRMC - FinancialReportingMonitoringCommittee

HRC - HumanResourceCommittee

IASB - InternationalAccountingStandardsBoard

ICAEW - InstituteofCharteredAccountantsinEnglandandWales

ICT - InformationCommunicationsTechnology

IFIAR - InternationalForumofIndependentAuditRegulators

IFRS - InternationalFinancialReportingStandards

IPSAS - InternationalPublicSectorAccountingStandards

ISA - InternationalStandardsonAuditing

MFDP - MinistryofFinanceandDevelopmentPlanning

MOU - MemorandumofUnderstanding

PIE - PublicInterestEntity

SAICA - SouthAfricanInstituteofCharteredAccountants

SSC - StandardsSettingCommittee


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CHAIRPERSON’S LETTER TO THE MINISTER

HonourableKennethO.MatamboMinisterofFinanceandDevelopmentPlanningPrivateBag008GABORONE

DearSir

ANNUAL REPORT 2013

InaccordancewithSection67oftheFinancialReportingAct,2010,IherebysubmittheAnnualReport2013fortheBotswanaAccountancyOversightAuthority.

ThiscomprehensivereportcoverstheoperationsoftheAuthorityduring2013andisaccompaniedbyafinancialreport,togetherwiththeauditor’sreportandtheFinancialStatementsperSection65oftheFinancialReportingAct,2010.

Yoursfaithfully

--------------------------Tabake KobediBOARDCHAIRPERSON


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CHAIRPERSON’S STATEMENT

It is my pleasure to present the Annual Report2013fortheAuthorityinaccordancewithSection67oftheFinancialReportingAct,2010.

As you might be aware, this is my first reportas chairperson of the new Board following myappointment by the Minister of Finance andDevelopment Planning late last year. We, as theBoardoftheAuthority,faceanenormouschallengeaswe are all new in this field and findourselvestreadingonunchartedterritory.

It is of utmost importance thatwedoeverythingpossibletoempowerourselveswiththeknowledgethat will enable us to give an informed strategicdirection to this new organisation. We have toattend relevant workshops and benchmarkingexercisestoempowerourselvesinthisregard.Asaneworganisationthatisknowledgebasedandwithsuch an enormous responsibility, it is imperativethatitisaccordinglycapacitatedinordertomeetthestakeholderexpectations.

Our objective is to promote the high standards of financial reporting and auditing, create a culture of goodcorporategovernance,andenhancetransparencyandaccountability;whichisvitalfortheefficientandeffectiveoperationofcapitalmarketssoastoprotectpublic interestandattractforeigndirect investment.TheultimateresultbeingthefosteringoftheeconomicgrowthanddevelopmentofBotswana.Thisobjectiveonceachievedwill,withoutdoubt, breedeffectiveboards and audit committees, top class stewardship, competent auditors,effectiveandefficientpublicinterestentities,andageneralatmosphereoftrustandconfidenceinourprofession.Thiswillalsoservetoaddressthedamagesdonebythefinancialcrisisexperiencedafewyearsago.

BAOAisnotalone inall thisasotherregulatorsarealsoplayingtheirownvital roles inthisprocess.Whatweshouldguardagainst,however,isasituationwhererolesareduplicatedandaccountabilitiesblurred.Infurtheranceofthis,wearealreadyworkingonmemorandaofunderstandingwiththeBankofBotswana,Non-BankFinancialInstitutionsRegulatoryAuthority,BotswanaStockExchangeandprofessionalaccountancyorganisationssuchasthe Botswana Institute of CharteredAccountants.We are also pleased to note that The BotswanaCorporateGovernanceCodewas launchedattheendof2013.Wehopethatthecodeisgiventhe legislativebackingitdeservessothatcompliancetherewithcouldbeattheveryleastonthebasisof“ApplyorExplain”.

Westillneedtoaddresspertinentmatters inourprofessionrelatingtocontentious issuesofauditor/auditfirmrotations,auditretendering,andtheprovisionofnon-assuranceprofessionalservicestoassuranceclientsbyauditfirms.Theissueofauditorindependenceisquitetopicalacrosstheglobe;sowehavetoaddressithead-onhereinBotswanaaswell.

It is important thatwe continue towork very closelywith the Professional AccountancyOrganisations (PAOs)likeBotswanaInstituteofCharteredAccountants(BICA),AssociationofCharteredCertifiedAccountants(ACCA),CharteredInstituteofManagementAccountants (CIMA),amongstothers,as it istheirmembersthatareattheforefrontwhen itcomes tomeetingpublicexpectations inserviceprovisionbyaccountants.Thestrengthofaprofessionis inthestrengthofitsprofessionalqualificationse.g.InstituteofCharteredAccountantsinEnglandandWales(ICAEW)intheUKandSouthAfricanInstituteofCharteredAccountants(SAICA)inSouthAfrica.WethereforehaveabigroletoplayintheeducationandtrainingofprofessionalaccountantsinBotswana.ItisourstatutoryroletoaccreditthesePAOs,andtheissuesofthetrainingandregulationofaccountantsconsequentlyaffectBAOA.ItisintheinterestofBAOAthatthePAOsarestrengthenedandexaminationresultsimprovedtoalleviatethesignificantshortageofaccountantsinBotswana.


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CHAIRPERSON’S STATEMENT (continued)

Last but not least, I amdelighted thatBAOAhasbeen admitted as amemberof the International ForumofIndependentAuditRegulators(IFIAR)sosoonafteritsestablishment,makingitthefourthcountrytoachievethismilestoneinAfricaafterSouthAfrica,MauritiusandEgypt.Thebiggerchallenge,however,isforustomaintainthehighstandardsofperformancethatareessentialinfulfillingourmembershipobligationssothatweremainamemberingoodstanding.

InthepastyearthereweresomechangestoourBoardwhichsawMrLimitedNkaniresigningasmemberandchairpersonoftheBoardandIbeingappointedChairpersonasalreadyexplained;andMrMendelNgoniNlandaalsobeingappointedbytheMinistertojointheBoard.

MythanksgotoallmyfellowBoardmembers,stakeholdersandstaffforcontributingtotheachievementofourmandate.

_______________Tabake KobediCHAIRPERSON

27March2014


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CHIEF EXECUTIVE OFFICER’S STATEMENT

The year 2013 was dominated by issues relating tothe establishment of the Authority. These includedtherecruitmentofstaff,inparticular,thetechnicalstaffwhoareascarceresourceinBotswana,puttinginplacetheappropriateInformationTechnologyinfrastructuretoprovidethenecessarysupporttotheoperationsofBAOA,andmostsignificantlythetrainingoftechnicalstaff toundertakeauditquality reviewsandfinancialstatementsmonitoring.

Appropriate governance structures were also put inplace,includingsomeofthestatutoryandothernon-statutorycommitteesoftheBoard,namely:

➣ Finance,AuditandTenderCommittee➣ HumanResourcesCommittee➣ StandardsSettingCommittee

TheMinister of Finance and Development PlanningappointedmembersoftheBoardasrequiredbytheFinancialReportingAct,2010(theAct)andbytheendoftheyear,theBoardwasoperatingwithafullBoardmembership.

Stakeholderinteractionsonaone-on-onebasiswereundertakenandtheseincludemeetingswith:➣ BankofBotswana(BOB)➣ BotswanaStockExchange(BSE)➣ Non-BankFinancialInstitutionsRegulatoryAuthority(NBFIRA)➣ AuditFirms➣ TheBotswanaInstituteofCharteredAccountants(BICA)

Memoranda of Understanding (MOUs)

Followingthesemeetings,theregulators(BOB,BSE,NBFIRAandBICA)agreedthatitwasnecessarytocloselycooperatewiththeAuthorityincarryingouttheirrespectiveresponsibilitiesofoversightofpublicinterestentitiestoavoidpossibleduplicationofeffort,withtheconsequentmisallocationofthescarceresourcesofthecountry.Itwas,therefore,agreedthatthiscooperationshouldtaketheformofMemorandaofUnderstanding(MOUs).Atthetimeofwritingthisreport,fourdraftMOUshadbeenpreparedandwereintheprocessofbeingfinalisedbytherelevantboardsoftheregulators.

Extensive Training of Audit Quality and Financial Statements Monitoring Reviewers

AnextensiveprogrammewasdesignedfortheReviewersandthistooktheformofseveraltrainingworkshopsfor thenewlyrecruitedstaff.ThetrainingwasconductedbytheWorldBankthrough itsfirst initiativeprogramagreedwiththeMinistryofFinanceandDevelopmentPlanningtoofferassistanceindevelopingtheaccountancyprofessioninBotswana.AuditFirmswerealsoverycooperativeintheprocessandtheyavailedtheirauditfilestotheAuthoritytofacilitateareallifesimulationreviewofauditfilesforthebenefitofstaff.Threeauditfirmsandeightcertifiedauditorswere,therefore,reviewedwiththeassistanceofaWorldBankexpertinattendance.Thesereviewswerenotdifferentfromtheliveauditreviewsconductedundernormalcircumstancesandasaresultthereviewswerejudgedtohavesatisfiedtherequirementsforathreeyearreviewcycle.

Membership of the International Forum of Independent Audit Regulators (IFIAR)

BAOAwas admitted into themembership of the global body of audit regulators, the International ForumofIndependentAuditRegulators(IFIAR),andbecamethefourthcountryinAfricatobeacceptedintomembershipof


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thisesteemedbody;theotherthreecountriesbeingSouthAfrica,MauritiusandEgypt.Atotalof48countriesintheworldhavepassedthestringenttestofmembershipofIFIARwhichisdominatedbyEurope,whohaveincludedthisrequirementasaprerequisiteforgainingEuropeanUnionmembership.MembershipofIFIARmeansthatfromaglobalperspective,thedevelopmentoftheaccountancyprofessioninBotswanahasreachedaninternationallyacceptablelevelandthatitsinstitutionalframeworkincludingthesupportinglegislationandtechnicalexpertiseintheAuthoritymeetinternationalstandards.

Strategy Formulation

AtaworkshopheldinKanye,Managementcameupwitharoadmaptogiveguidanceatthisearlystageonissuesofastrategicnaturethatwouldrequiretobepursuedinthenextcoupleofyearsbeforeafullcorporatestrategyisprepared.Basedonthestakeholderexpectationsidentified,fivestrategicdriversorfocusareaswereidentifiednamely;OrganisationalDevelopment,RevisionoftheActtoalignitwithpracticalimplementationconsiderations,QualityAssuranceintermsofauditqualityreviewsandfinancialstatementsmonitoring,HumanResourcesandCommunications.Measurableobjectivestogetherwithcompletiontimelinesandaccountabilitiesweredevelopedforeachfocusarea.

Policies and Procedures

Inordertofacilitateoperations,provideguidanceandenhancethesystemofinternalcontrolswithintheAuthority,thefollowingpoliciesandprocedureswereprepared:

➣ GeneralConditionsofService➣ ProcurementandTenderProcedures➣ FinancialProcedures➣ InformationTechnologyRelatedProcedures➣ OtherHumanResourcesRelatedProcedures

Presentations made on the role of an oversight authority

TheCEOpresentedapaperontheroleofanindependentregulatoroftheaccountancyprofession,totheEastandSouthernAfricanAssociationofAccountantsGeneral(ESAAG)members,attendedbythirteencountries.HealsopresentedasimilarpaperattheLesothoInstituteofAccountants’Congress. Itwasnotedthatallbutfourcountries inAfrica still use self-regulation in their respective jurisdictions. Thepaper emphasised the need tomoveawayfromself-regulationasitsuffersfromafundamentalweaknessoflackofindependencewhichmakestheapproachineffectiveand,consequently,doesnotmeettherequirementsofinternationalbestpractice.Whiletheparticipantswere inagreementwith the recommendation, they indicated that the lackofpoliticalwillandgovernmentsponsorshipintheirrespectivecountriesmadethisrecommendedapproachdifficulttoimplement;asthestartingpointwouldbetheenactmentofarobustlegislativeframeworktosupporttheapproach,whichtheirrespectivegovernmentswereunlikelytosupport.

2013 Financial Statements

AsthiswasthefirstyearthattheAuthoritywasoperatingatfullcapacity,nomaterialincomewasreceivedfromsourcesotherthantheGovernmentsubvention;onlyasmallamountofinterestandotherincomewasreceived.Fiftysixpercent(56%)ofthissubventionwasspentonsalariesandwages,tenpercent(10%)onrental,sixteenpercent (16%)onotheradministrativecosts,andthebalanceonplantandequipment. In future it isexpectedthatmoreincomewillbegeneratedfromregistrationandinspectionfees.Itis,however,importantthatwedeviseafundingmodelthatisacceptabletothestakeholdersandatthesametimeensurethattheAuthorityremainsindependentoftheentitiesthatitregulates,foritssurvival.Itisalsoimportantthatintheinitialyears,GovernmentcontinuestobetheprincipalprovideroffinanceuntilsuchtimeastheAuthorityisinapositiontogenerateitsownrevenuestreamsindependently,andhasgainedtheconfidenceofthepublicthroughitsvisibilityandreputation.

CHIEF EXECUTIVE OFFICER’S STATEMENT (continued)


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Intermsofassets,aboutThreeMillionPulawasspentoncomputers,officeequipment,furnitureandfittingsandleasehold improvements. Since thiswas the initial outlay, futureexpenditureon such items is expected tobeminimal.

Work in Progress

ThepreparationoftheFinancialReportingRegulationsiswellunderwayandshouldbefinalisedandsubmittedtotheMinisterofFinanceandDevelopmentPlanningduringthesecondquarterof2014.ThiswillalsobeimmediatelyfollowedbythefinalisationoftheBAOARules.TheregistrationofPIEs,certifiedauditorsofPIEs,andfirmsofcertifiedauditorsofPIEsandaccreditationofProfessionalAccountancyBodieswouldthencommence.

ThepreparationofoperatingmanualsforauditqualityreviewsandfinancialstatementsmonitoringtobeusedduringthereviewofPublicInterestEntitiesiswellunderway,andshouldalsobecompletedduringthesecondquarterof2014.

The Challenges Ahead

WhilealotofprogresshasbeenmadeinthetrainingofourReviewers,theactualperformanceofthereviewstendstobemorechallenging.Thereisempiricalevidencethatmoreoftenthannotresistanceisencounteredfromsomestakeholdersreviewed.Thesesituationswill,therefore,needtobehandledwithcareandtact.

Amovefromself-regulationto independent regulation isabigstepwhichwill taketimetobe fullyaccepted.Therefore,anyimpedimentstoitssuccessfulimplementationshouldbeaddressedthroughtheapplicationofanappropriatechangemanagementstrategy.

FundingisalsoprovingtobeanobstacleasthemodelofgeneratingfundingfromthePIEsbeingregulatedbyBAOAisnotgloballyacceptableduetotheperceivedlossofindependencethatattachestothisapproach.Intheforeseeablefuture,therefore,itisexpectedthattheAuthoritywillcontinuetorelyonGovernmentfundinguntilaworkablefundingsolutionisfound.

BAOAshouldcontinuallybealerttoanychangesinotherrelatedlegislationsandchangesintheneedsofinvestors.Itwillneedtostriketherightbalancebetweenoverregulationandself-regulation;aswellasabalancebetweenpublicinterestprotectionandprotectionoftheprofession,especiallythoseauditorswhodotheirworkwithcareandduediligence.

Alineofcommunicationwithauditorsshouldbemaintainedthroughforumssuchassteeringcommitteessothattheresponsibilityforcreatinginternationalconfidenceinfinancialreporting,audit,andcorporategovernanceinBotswanaissharedbytheprofessionasawhole,notjustbyBAOA.

Acknowledgements

Finally,IwouldliketothankmyBoardmembersfortheirdirectionandguidanceinadifficultenvironmentinwhichnoneofthemhadanypriorexperience.IwouldalsoliketothanktheMFDPforfacilitatingallthesedevelopmentsatBAOA,andtheWorldBankforitssupportinprovidingappropriatetechnicaltraining.Lastbutnotleast,IwouldliketothankthestaffofBAOAwhoworkedtirelesslytobringthenewAuthoritytothelevelthatitisattoday.

________________________Duncan Dankie MajindaCHIEFEXECUTIVEOFFICER

27March2014

CHIEF EXECUTIVE OFFICER’S STATEMENT (continued)


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PriortoassuminghisnewroleasManagingDirectorofDTCBotswana,Mr.TabakeKobediwastheGroupFinanceManagerforDebswana,managingadiverse rangeof activities in finance, supply chain, riskmanagement

andinsurance.HehasbeenaseniorfigureandkeydriveroftheorganisationalalignmentinitiativeacrossDebswana.TabakeisanAssociateMemberoftheChartered Institute of Management Accountants and holds a Bachelor ofCommerceDegreewithaMajorinAccounting.

InhisroleasManagingDirectorofDTCBotswana,TabakeKobedileadsmultiplefunctionsthatmakeupDTCBotswana,whichmostcriticallyincludesdiamondsorting.HeplaysakeyroleinleveragingtheskillsandservicesprovidedbyDTCInternationalinordertomaximisethecommercialandtechnicalaspectsofthebusiness.HealsocontributestoDTCInternationalthroughhisparticipationataseniorlevelintheglobaloperationsofthatcompany.

ChairpersonTabake Kobedi

BOARD OF DIRECTORS

Ms. Machailo-Ellis is the Chief Executive Officer of BotswanaConfederationofCommerce,IndustryandManpower(BOCCIM).Sheis a CharteredCertifiedAccountant (FCCA) and FellowMember of

the Botswana Institute of Chartered Accountants (BICA). She obtained herACCAfromtheLondonSchoolofAccountancyintheUKandaB.A.degreeinEconomicsandAccountsfromtheUniversityofBotswana.Maria’sexperiencecovers areas of FinancialManagement,ManagementQuality Systems (ISO9000),Subcontracting,ForeignLinkages,ExportMarketingandLeadership.ShehasheldpositionsofAccountant,FinanceManagerandChiefExecutiveOfficerinvariouscompaniesinBotswana.

MsMachailo-Ellishas28yearsofexperience,ofwhich15yearshavebeenin working with Small andMedium size enterprises, and has a passion forentrepreneurshipandSMEdevelopment,havingtrainedover500entrepreneursin Botswana andMauritius. Her past and present BoardMemberships andparticipation in Other Bodies include amongst others; Local EnterpriseAuthority(Chairperson),WomeninBusinessAssociation(President),Botswana

Institute for Development Policy Analysis (BIDPA), Vision 2016 Council, American and AfricanWomen’sAlliance,BOCCIMCouncilandCitizenContractor’sFundsAppeals.

SheisalsoaNationalCoachforBotswanaWomeninMediaundertheMediaLeadershipProgramWAN–INFRA,whichisrunninginBotswana,NamibiaandZambia.

Vice-ChairpersonMaria Machailo-Ellis


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BOARD OF DIRECTORS (CONTINUED)

AChartered Certified Accountant (FCCA), Michael is currently theExecutiveDirectorofBotswanaAccountancyCollege(BAC),arolehehasdischarged for justoverfiveyears.Before thenhe servedas the

CEOofBotswanaSavingsBank(BSB).Thepastfifteenyearsofhisprofessionalcareerwere spent in theorganisational leadership role at the apex, andasarchitect/designeroforganisationaltransformation,strategyformulationanditsimplementation,aswellasmanagingchange.MikestartedhisaccountancycareerintheU.K.withthefirmofcharteredaccountants,DeloitteHaskins&Sells (as itwasknownat the time).WithinDeloitte,hehadexposure to theCorporate Finance, Consulting and Small Enterprise divisions of the firm.He learnt the ropeswithin the firm in the statutory audits of the blue chipcompaniesinvariousindustrygroupings,mostofthemlistedoninternationalexchanges.

AsCEO,hisaccountabilitiesatbothBACandBSB,entailedtheengineeringof teams’ behavioral changedynamics,mind-set change, the imperative ofholding the customer in high esteem, embracing technology, anticipating

marketchangesandwealthcreation.Hehascontributedextensively intheaccountancyprofessionatthethenBotswanaInstituteofAccountants(BIA),nowBotswanaInstituteofCharteredAccountants(BICA),whereformanyyearshewasMemberofCouncil,andultimatelyasPresidentoftheInstitute.Atinternationallevel,hewasinvolvedwithseveralACCAGlobalinitiatives.Inasimilarfashion,MikewasanactivememberoftheBotswana InstituteofBankers,andatsomepoint the InstitutePresident.HehaspreviouslyundertakenasignificantamountofPublicSectorConsultancywork.

Heisanon-executivedirectoronanumberofBoardsincludingasmemberoftheBDCAuditCommittee,ChairmanofVenturePartnersBotswana,formerMemberofUniversityofBotswanaCouncilandothers.

DanielNLoeto isChiefAccountantandHeadofFinanceDepartment,BankofBotswana.Heisresponsibleforaccounting,strategicplanningandriskmanagement.HeholdsaBachelorofScience(Mathematicsand

Physics)Degree;PostGraduateDiplomainEducationandaMasterofBusinessAdministrationDegree,allfromtheUniversityofBotswana.HeobtainedtheACCAqualificationinDecember,1997andwasadmittedasaFellowoftheAssociationoftheCharteredCertifiedAccountantsinFebruary2005;andhasbeenaFellowoftheBotswanaInstituteofBankerssinceDecember1998afterpassingtheAssociateDiplomaexaminationsinMarch1993.

Mr.LoetoisamemberoftheInternationalMonetaryFund(IMF)’s3-memberExternalAuditCommitteechargedwiththeresponsibilityoftheIMF’sexternalauditoversight for theperiodNovember1,2013toOctober31,2016;andservedon theBoardofBotswanaUnifiedRevenueService (BURS) from theorganisation’sinception(June2004)astheBank’srepresentativetoJune30,2013.Mr. Loeto has also served as amember of theBotswana Institute ofBankersCouncil,andtheThornhillPrimarySchoolCouncil,andasanEmployee

TrusteeoftheBankofBotswanaDefinedContributionPensionFund.

Intermsoftraining,Mr.LoetoattendedtheExecutiveDevelopmentProgrammeoftheUniversityofCapeTown’sGraduateSchoolofBusinessinJuly-August,2005,andhasalsoattendedseveralseminars,workshopsandothershort-termtrainingcoursesattheBankofEngland,DuetschbundesBankandtheEuropeanCentralBank,mainlyrelatedtoaccountingandcentralbanking.

BeforejoiningtheBankinAugust1991,Mr.LoetotaughtMathematicstoAdvanceLevelforabout5years,andhasalsobeenaparttimelecturerattheBotswanaInstituteofBankersforseveralyears.

MemberMichael Lesolle

MemberDaniel N Loeto


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Mr. Hiran Mendis was appointed the Chief Executive Officer of theBotswanaStockExchange(BSE)inJuly2006.PriortojoiningtheBSE,Mr.MendiswastheDirectorGeneraloftheColomboStockExchange

(CSE)inSriLankafor9years.

Mr.Mendis is a FellowMember of theChartered Institute ofManagementAccountants(CIMA),UnitedKingdom(UK)andhasservedontheCouncilofCIMAinLondon,SriLankaandSouthernAfrica.HealsoholdsMBAandMA(Economics)degreesfromtheUniversityofColomboinSriLanka.

TheBSEisundergoingaphaseofchangeandMr.HiranMendisisresponsibleforimplementingseveralstrategiestomodernizetheBSE.HeisresponsibleforsettingthestrategicdirectionoftheBSEandimplementingseveralprojectstodeveloptheBSE’sInfrastructure,RegulatoryFrameworkandProductOfferings,amongstmanyareasofdevelopment.


MemberHiran Mendis

Mr.KeneilweRMorrisisacareertaxofficialwhobringsover30years’experienceinthecustomsandtaxadministrationfield.Herosethroughthe ranks and has occupied various management and leadership

positions ingovernmentand theBotswanaUnifiedRevenueService.TheseincludeDirectorofCustomsandExcise,CommissionerofCustomsandExcise,andChiefExecutiveOfficer,BURS,apositionhehasoccupiedsinceDecember,2010.

Mr.Morrisisamemberofvariouslocal,regionalandinternationalcommitteesdealingwithtaxandcustomspolicyformulationandadministrationmatters.These include the membership to the Taxation Review Committee, theAfricanTaxAdministrationForumGoverningCouncil,andtheWorldCustomsOrganisationPolicyCommission.Someofhispersonalachievementsincludecoordinatingand leading the teamwhichestablished theBotswanaUnifiedRevenueServicein2004.

Mr. Morris has attended several technical, management and strategicleadershiptrainingprogrammeslocallyandabroad.

Mr. Nlanda is currently the Director of Finance at the University ofBotswana[UB].HeisaFellowmemberofboththeBotswanaInstituteof Chartered Accountants (BICA) and Association of Chartered

CertifiedAccountants (ACCA), a UK based professional body of CharteredCertified Accountants. He studied at Emile Wolf College in London andqualifiedasaCharteredCertifiedAccountantin1996.HealsoholdsaBachelorofCommerceDegreefromtheUniversityofBotswanaobtainedin1985.HesuccessfullycompletedacourseonStrategicFinancialManagementinHigherEducationofferedbyUNESCO/InternationalInstituteforEducationalPlanning(IIEP),Paris,France.

Mr.NlandaisaninsightfulandhighlyexperiencedAccountantandAdministrator.HespentayearonsabbaticalattheUniversityofPennsylvania,USA(July1,2008–June30,2009)togainhandsonexperienceontheinternationalsceneand at aworld class university. Apart from FinanceDirectorship at UB,Mr.NlandaisalsothePrincipalOfficeroftheUBPensionFund,thethirdlargestpensionfundbyvalueinthecountry,thetreasureroftheUBFoundationand

DeputyChairmanoftheUBTenderCommittee.

MemberKeneilwe R Morris

MemberMendel N Nlanda


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Mr.OaitseMRamasedi is currently theChiefExecutiveOfficerof theNon-BankFinancialInstitutionsRegulatoryAuthority(NBFIRA).Priortothat,heheadedtheNationalDevelopmentBankforalmostadecade.

Mr.RamasediisaCharteredManagementAccountantbytraining,andholdsaBachelorofCommerceandaMasterofArtsdegreesfromtheUniversityofBotswana, aswell as banking and insurance related qualifications from theBotswana Institute of Bankers (BIOB) and the Insurance Institute of SouthAfrica(IISA),respectively.

Hehasservedinanumberoforganisationsasaboardmember,andcurrentlychairstheSADCCommitteeonInsurance,SecuritiesandNon-BankAuthoritiesandalsositsontheBotswanaRetiredNursesSociety(BORNUS)Board.


Mrs.EmmaAPeloetletseistheAccountantGeneraloftheRepublicofBotswana,apositionshewasappointedtoin2009.SheisaBachelorofCommercegraduate from theUniversity of Botswana, andholds

a post-graduate Diploma in Public Finance from the National Institute ofFinancialManagementinIndia.Mrs.Peloetletsehasasoundbackgroundandexperience in strategic management and public sector governance issuesacquired fromthemore than twodecadesof service in theGovernmentofBotswanaatvariouslevels;frombeingatraineeaccountantandrisingthroughtherankstothepositionofthecountry’sAccountantGeneral.

Mrs.Peloetletsehasparticipatedinseveralhighlevelregionalandinternationalconferences representing theGovernmentofBotswana, andhas servedonseveral boards. She is currently amember of the Botswana PublicOfficersPensionFund (BPOF)Board,andtheBotswanaAccountancyCollege (BAC)Board. She is the reigning Chairperson of the East and Southern AfricanAssociationofAccountantsGeneral(ESAAG)ExecutiveCommittee,apositionshehasheldfromFebruary2013todate.

MemberEmma A Peloetletse

MemberOaitse M Ramasedi


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Daniel N LoetoChairperson

Emma A Peloetletse Oaitse M Ramasedi

COMMITTEES OF THE BOARD

Finance, Audit and Tender Committee

Human Resources Committee

Hiran Mendis Keneilwe R MorrisMaria Machailo-EllisChairperson


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REPORT ON CORPORATE GOVERNANCE

The Board of Directors

Thepowers and functionsof theAuthority are vested in theBoardofDirectors appointedby theMinister ofFinanceandDevelopmentPlanningintermsofSection7oftheFinancialReportingAct,2010.

Composition of the Board

It isessential thattheBoardofBAOAis independentoftheaccountancyandauditingprofessionbecausetheAuthoritywasestablishedtooverseetheprofession.Thisisalsoaprerequisiteformembershipoftheglobalbodyofregulators,IFIAR.TheBoardisthereforecomprisedofsixindependentex-officiomembersrepresentingthekeystakeholdersinthecountryandthreeexpertstoprovidecounseloncomplexaccountingandauditingmatters,making a total of ninemembers. For this reason, expertBoardmembers shouldpossesspractical knowledgeof internationally recognised financial reporting and auditing standards. The expert members consist of twoexperiencedmembers from the Botswana Institute of Chartered Accountants and one academic professionalaccountantmemberrepresentinginstitutesofhigherlearninginBotswana.

Theex-officioBoardmemberscompriseheadsofthefollowingentities:➣ AccountantGeneral➣ BankofBotswana➣ BotswanaConfederationofCommerce,IndustryandManpower➣ BotswanaStockExchange➣ BotswanaUnifiedRevenueService➣ Non-BankFinancialInstitutionsRegulatoryAuthority

TheBoardiscurrentlyoperatingwithitsfullcomplementofmembership.

Committees

InaccordancewithSection16oftheFinancialReportingAct,2010theBoardmay,forthepurposesofperformingitsfunctions,establishsuchcommitteesasitconsidersappropriateandmaydelegate,toanycommittee,anyofitsfunctionsasitconsidersnecessary.

During2013,theBoardestablishedthefollowingcommittees:

Name of committee Number of members

Finance,AuditandTenderCommittee 3HumanResourcesCommittee 3StandardsSettingCommittee 13

TheStandardsSettingCommitteewasestablishedasarequirementofSection16(2)oftheAct,whiletheHumanResources and Finance, Audit and Tender Committees were established to strengthen corporate governancewithintheAuthority.


19

REPORT ON CORPORATE GOVERNANCE (continued)

BOARD AND COMMITTEE MEMBERSHIP

Name Board FATC HRC SSCMr.TabakeKobedi Chairperson

Ms.MariaMachailo-Ellis Vice-Chairperson Chairperson

Mr.DanielNLoeto Member Chairperson Member

Ms.EmmaAPeloetletse Member Member

Mr.HiranMendis Member Member

Mr.KeneilweRMorris Member Member

Mr.MendelNNlanda Member Vice-Chairperson

Mr.MichaelLesolle Member Chairperson

Mr.OaitseMRamasedi Member Member

AAT Member

ACCA Member

AuditorGeneral Member

AccountantGeneral Member

BICA Member

CIMA Member

InternalAudit Member

SpecialistKnowledge(co-opted) Adhoc

TertiaryInstitutions Two(2)Members

Key:-FATC=Finance,AuditandTenderCommitteeHRC=HumanResourcesCommitteeSSC=StandardsSettingCommittee

In termsofSection7(4)of theFinancialReportingAct,2010, theChairpersonof theBoard isappointed fromamongmembersoftheBoardandshallholdofficeforthreeyears,unlessheorsheceasestobeamemberoftheBoard,andshallbeeligibleforre-appointmentforonefurtherterm.TheViceChairpersoniselectedbyBoardmembersatthefirstmeetingoftheBoardandshallholdofficefortwoyears,andshallbeeligibleforre-appointmentunlessheorsheceasestobeamemberoftheBoard.

Ex-officiomembersof theBoardshall serveasmembersof theBoardbyvirtueof theoffices theyholdwhileexpertsandacademicsappointedasmembersshall serve foraperiodnotexceeding fouryears,andshallbeeligibleforre-appointment.

Mandate of the Board of Directors

TheBoard’sresponsibilitiesinclude,amongotherthingsthefollowing:• strategicoversightovertheAuthorityandensuringcompliancewithgoodcorporategovernance;• settingandreviewingoftheAuthority’sstrategicplanandmonitoringtheimplementationthereof;and• approvaloftheannualbusinessplanandbudgetoftheAuthority.


20


Management of the Authority

Thedaytodaymanagementof theAuthorityhasbeendelegatedtotheChiefExecutiveOfficerwhoshallbeassistedbyanExecutiveManagementteam;subjecttosuchdirectiononmattersofpolicyasmaybegivenbytheBoard.

Board Meetings

Section15(2)oftheFinancialReportingAct,2010providesthattheBoardshouldholditsmeetingsatleastonceeverythreemonths.

TheBoardheldfive(5)BoardMeetingsthisreportingyear.

Quorum

ThequorumateveryBoardmeetingshallbefive(5)memberscomprisingofatleastthree(3)ex-officiomembersandoneexpertasdefinedbytheAct.

BOARD MEETINGS ATTENDANCE REGISTER

BOARD MEETING DATES

No Board Member Date of Appointment

29 Jan 2013

14 May 2013

27 Jun 2013

10 Oct 2013

28 Nov 2013 Total

1. TabakeKobedi Nov2011 √ √ √ √ √ 5/5

2. MariaMachailo-Ellis Nov2011 √ √ A A A 2/5

3. DanielNLoeto Nov2011 √ √ √ √ √ 5/5

4. EmmaAPeloetletse Nov2011 A √ √ √ A 3/5

5. HiranMendis Nov2011 A A √ √ √ 3/5

6. KeneilweRMorris Nov2011 √ A A √ √ 3/5

7. MendelNNlanda Sept2013 x x x W √ 1/1

8. MichaelLesolle Nov2011 √ √ A A A 2/5

9. OaitseMRamasedi Nov2011 A √ √ √ A 3/5

Key: √ - Present A- Apologies x - Notmember W- Member,butnotinvited


21


FINANCE, AUDIT AND TENDER COMMITTEE ATTENDANCE REGISTER

MEETING DATES

No Committee Member Date of Appointment 16 August 2013 18 November

2013 Total

1. DanielNLoeto November2011 √ √ 2/2

2. EmmaAPeloetletse November2011 √ √ 2/2

3. OaitseMRamasedi November2011 A √ 1/2

Key: √ - Present A - Apologies


22

Duncan Majinda is the current CEO of Botswana Accountancy OversightAuthority (BAOA). His accountancy career started when he qualified asanAccountingTechnician in1984.UsinghisAATto launchhiscareer,he

completedACCAin1990andwentontodohisMBA(Finance)attheUniversityofManchesterinEngland.HispastemployersareMinistryofLocalGovernmentandLands,DepartmentofLocalGovernmentAudit,AngloAmericanCorporation,DeloitteandTouche,BankofBotswanaandtheBotswanaInstituteofCharteredAccountants(BICA).HewentthroughtheranksfromAccountsClerktoAccountsSupervisor,toFinanceManagerbeforehejoinedBICAandBAOAasCEO.

DuncanhasservedinseveralpastandcurrentDirectorshipsincludingBotswanaAccountancyCollege;BotswanaStockExchange(Treasurer);Mascom;BotswanaInstitute of Accountants; Stockholm International School in Sweden (AuditCommitteeChairman);BotswanaInternalAudit(FoundingPresident);Companiesand Intellectual Property Authority (CIPA) (Audit Committee Chairman); GrandDeLuxeInvestmentandConsultingCompany;andTlotloHotelandConferenceCenter(Chairman).

LimitedQuiteNkaniistheDirectorofFinanceandAdministration.HestartedworkwiththeMinistryofLocalGovernmentandLandsintheDepartmentofLocalGovernmentAuditandproceededtowork forCoopersandLybrand,

nowPricewaterhouseCoopersandthenjoinedtheBotswanaInsuranceHoldingsGroupwherehebecameActingGeneralManagerofBotswanaLife in2002 to2003.HeproceededtoworkforMetropolitanBotswanaasManagingDirectorin2006andin2008joinedtheNationalFoodTechnologyResearchCentreastheDirectorofCorporateServices.

HeisaCharteredCertifiedAccountant,havingqualifiedin1985asanACCAandadmittedtomembershipin1989.HeholdsaMasterofBusinessAdministration(MBA)fromtheUniversityofBotswana.

Hehasattendedanumberofshortcourses;inInsurance,BusinessDevelopment,Management Leadership and Quality Assurance; in Botswana, South Africa,GermanyandtheUnitedStatesofAmerica.

Chief Executive OfficerDuncan Dankie Majinda

EXECUTIVE STAFF

Director Finance & AdminLimited Quite Nkani


23

SonnyMabheju is currently theDirector in charge of Technical andQualityAssurance.BeforethathewasTechnicalDirectorattheBotswanaInstituteofCharteredAccountants.

HeprovidedinternationalconsultancyservicestotheWorldBankfortwoandahalfyearsintheareaofcorporatefinancialreporting;coveringsomecountriesinSouthernAfricaandtheCaribbeanregioninSouthAmerica.

Before thatSonnywas theChiefExecutiveOfficerof the InstituteofCharteredAccountants of Zimbabwe for three years, and at the same time providingconsultancyservicesinforensicauditsintheminingsectorinZimbabwe.

HeservedarticleswithPricewaterhouseCoopersinHarare.HeworkedforDeloitteasSeniorManager,wherehewasresponsibleforauditandtraininginBulawayo,andwasPartneratBDOinHararefor12years,beinginchargeofauditandtraining,andwasamemberoftheBDOSouthernAfricaTechnicalCommittee.

HeisaCertifiedFraudExaminer(USA);CertifiedProfessionalAccountant(Botswana);andCharteredAccountant(Zimbabwe).

JoeMutwale is a holder of a Bachelor of Business Administration Degree(University of Zambia), Fellow of the Botswana Institute of CharteredAccountants, Fellowof theAssociationofCharteredCertifiedAccountants

(ACCA),FellowoftheZambiaInstituteofCharteredAccountants;withmorethantwentysevenyearsofpost-qualificationexperiencemainlyincentralbankinternalauditingandfinance,mining,andtheauditingprofession.

Between 2011 and 2013 he served as Group Internal Auditor of the SefalanaGroupofcompanies.PriortothatheservedinvariouscapacitiesintheBankofBotswanaforelevenandhalfyears,includingasChiefInternalAuditorforaperiodofsixyears,andasDeputyDirectorofFinance(ChiefAccountant)formorethanthreeyears.

Hehasextensivepracticalauditingexperience,includingprovisionofspecialisedprofessionalservicestorecipientsoffundsfrominternationalfundingorganisationssuchastheAfricanDevelopmentBankandtheWorldBank;gainedwhileworkingforDeloitteZambiaforatotalofsevenyears,whereherosefromAuditSeniorto

SeniorAuditManager.HealsoservedasSeniorAuditManagerwithKPMGBotswanafortwoyears.

EXECUTIVE STAFF (continued)

Director Technical & Quality Assurance

Sonny Mabheju

Chief Quality ReviewerJoe Mutwale


24

MANAGEMENT TEAM

Left to right: EphifaniaNkanga•MosheCZilaLibengo•BoitumeloRaditladi•MerapeloMokgosi•LameObotseng•PatrickJansen


25

TECHNICAL DEPARTMENT TEAM

Left to right:JoeMutwale•LesegoPheto•LameObotseng•EphifaniaNkanga•KennethUgokwe


26

REPORT FROM THE TECHNICAL DEPARTMENT

Technical Department

TheTechnicalDepartmentisresponsibleforauditreviewsofCertifiedAuditorsofPublicInterestEntitiesandAuditFirmsofPublicInterestEntities.TheDepartmentisalsoresponsibleforfinancialstatementsmonitoringofPublicInterestEntitiesandgovernanceissuesinPublicInterestEntities.

IntermsoftheFinancialReportingAct,2010,BAOAisallowedtoestablishthree(3)technicalcommittees;StandardsSettingCommittee,FinancialReportingMonitoringCommittee,andtheAuditPracticeReviewCommittee.Allthethreecommitteeswereatdifferentstagesofbeingformedinthecurrentyear.MembersoftheStandardsSettingCommitteewereidentifiedandapprovedbytheBoard.MembershipoftheothertwocommitteesisstillbeingconsideredandwillbepresentedtotheBoardforapprovalin2014.

TheAuthority’sfocusfortheTechnicalDepartmentwasonrecruitmentandtraining.Afullcomplementofstaffwasrecruitedduringtheyear,andtechnicaltrainingwasalsosuccessfullyconductedwithsupportfromtheWorldBankasfollows:

a) Handsontrainingfortheconductoffinancialstatementsreviewswasconductedovertwo(2)separatebutrelatedsessions.

b) Traininginauditpracticereviewscoveringthelegalcontext,processes,procedures,andthemethodologyofauditpracticereviewswasconductedoverasevenmonthperiod.Thisincludedhandsonpracticaltrainingatthree(3)volunteerauditfirmsthatvolunteeredtobeusedforBAOAstafftraining.

c) AnintegratedtrainingcourseonthepracticalapplicationofIFRSsandISAswasalsoconducted.SomelocalSmallandMedium-sizedPracticeswithnoglobalnetworkconnectionsalsoattendedthissession.Thiswasaimedatassistingtheminimplementingqualitycontrolsystemsintheirpractices,appropriatelyapplyingISAsonauditassignments,andenhancingtheirknowledgeofIFRSsforpracticalapplication.AsimilarcourseonIPSASwasplannedforJanuary2014.

Manualsforuseduringauditpracticeandfinancialstatementsreviewswerealsodevelopedandwillcontinuetobeimprovedupon,takingintoaccountanychangesintheinstitutionalframeworkandinternationalbestpracticeaffectingfinancialreportinginBotswana.

OneofthekeymandatesoftheAuthorityasoutlinedinSection5(g)oftheActistopromotehighstandardsofcorporategovernanceandcompliancewithprofessionalethicsbyentities,includingpublicinterestentities.

TheBotswanaCorporateGovernanceCode,basedonthe“ApplyorExplain”approach,waslaunchedlatein2013andisnowapplicable.CompilationofCorporateGovernanceReviewProgrammestobeusedcommencedduringthisreviewperiodandisexpectedtobecompletedandbroughtintouseduringthenextreviewperiod.


27

FINANCE AND ADMINISTRATION DEPARTMENT STAFF

Left to right (front row):KylieK.Kereng•LebogangMokgadinyana•ConstanceBolaane•MargretMontebatsiMerapeloMokgosi•BoitumeloRaditladi•KeitumetseKgasudi

Left to right (back row): BlessedSeretse•PatrickJansen•MosheCZilaLibengo•OlebeletseMokone


28

REPORTS FROM THE FINANCE AND ADMINISTRATION DEPARTMENT

TheFinanceandAdministrationDepartmentprovidessupportservicestothewholeorganisation.Inparticular,it deals with financial matters, procurement, administration, information technology and human resourcemanagement.TheDepartmenthaseleven(11)membersofstaff.

FINANCE SECTIONInaccordancewithSection66oftheFinancialReportAct,2010,theAuthorityisrequiredtoproduceanannualreport which shall include its audited financial statements. The annual report shall report on the Authority’soperationsandaffairsforthefinancialyear.

InaccordancewithSection60oftheFinancialReportAct,2010,therevenuesoftheAuthorityshallconsistof:a) suchmoniesasmaybeappropriatedbytheNationalAssembly;b) feesthattheAuthoritymaychargeforservicesitmayrender;c) moneypaidinrespectoffinesimposedbytheAuthorityundertheAct;d) grantsanddonationsthattheAuthoritymayreceive;e) incomethattheAuthoritymayreceivefrominvestments,rentals,saleoflandandbuildings;andf) suchothersourcesasmaybeapprovedbyGovernment.

DuringtheyearunderreviewtheAuthority’srevenuealmostentirelycamefromtheGovernment.TheAuthorityis in its infancy and has neither developed a comprehensive charging system for the services it is allowed toprovidenorhasitprovidedanyofthoseservicesyet.ConsultationswithstakeholdersisongoingsothattheycanappreciatetheroleoftheAuthorityandthebenefitsthatwillaccruetothemandtothebusinesscommunityatlarge.Intheshortandmediumterm,theAuthorityisthereforeexpectedtoderivemostofitsrevenuesfromtheGovernment.

BotswanaAccountancyOversightAuthorityisaknowledgebasedorganisationand,therefore,itisnotsurprisingthatduringtheyearoversixty-fourpercent(64%)ofitsadministrationcostsrelatedtosalaries.Otheradministrationcostscomprisedmainlyofrent,whichrelatestoafive(5)yearleaseofofficespacecommencing1stJanuary2013,anddepreciation.

Directors’feesaresignificantlylessthan2012feesduetofewermeetingsheldin2013.WhentheAuthoritystarteditsoperationsin2012,Boardmeetingswereheldmorefrequentlytoaddressurgentissuesrelatingtothenewlyestablishedorganisation.Theseincluded,amongstothers,staffingandacquisitionofplantandequipment.TheassetbaseisnowconsideredadequateasitenablestheAuthoritytocarryoutitsmandate.Goingforward,onlyitemsofamaintenanceandreplacementnaturearelikelytobeacquired.(Foradetailedbreakdownofassetsheld,seeNote3onPage52ofthefinancialstatements). Currently,theAuthoritydoesnotownanylandandbuildings.

AccountsreceivableincludestaffloanswhiletherestarepredominantlyprepaymentssecuringfutureservicesfortheAuthority.

CashandcashequivalentshavedeclinedfromP1,555,747in2012toP629,931in2013duetotheacquisitionofcomputerequipment,officeequipment,furniturefittingsandleaseholdimprovementsin2013.

Liabilities

Accountspayablecomprisepayroll-relatedaccruals,auditfees,andotherpayablesforgoods/servicessuppliedbutnotpaidfor.


29

REPORTS FROM THE FINANCE AND ADMINISTRATION DEPARTMENT (continued)

FINANCE SECTION (continued)

Budget Process

InaccordancewithSection61oftheFinancialReportingAct,2010(theAct),theAuthorityshallprepare,insuchformandatsuchtime,notlaterthanthreemonthsbeforethecommencementofeachfinancialyear,asmaybeprescribed:

a) abudgetinrespectofthenextensuingfinancialyearthatsetsforththeAuthority’sestimatedreceiptsandexpendituresandthesumswhicharelikelytoberequiredbyitfromtheGovernmentduringthenextensuingfinancialyearandforward;

b) abusinessplananditsstrategyandactivityprogramme;and

c) acertificationbytheChiefExecutiveOfficerandanyotherseniorofficerinchargeofaccountingandfinance functionsof theAuthority, that thebudget representsa fairand reasonableprojectionof theincomeandexpenditureoftheAuthority.

TheAuthority’sapprovedBudgetandBusinessPlanfor2014/15wentthroughtheabovebudgetaryprocessduring2013.

TheAuthorityhasstrengtheneditsfinancialandbudgetingmanagementbyemployingqualifiedandexperiencedstaffintheFinanceSection.

INFORMATION TECHNOLOGY (IT) SECTIONTheITSectionthisfinancialyearwasengagedinseveralprojectswhichincludedinitialinfrastructureacquisition,deploymentandcommissioningthereof.MostoftheservicesrequiredforthesmoothoperationofBAOAICTserviceshavebeenput inplaceandareprovidingthe requiredservices toBAOAusers. Tosafeguardthe ITInvestment, the IT Section has put in place several policies to guide the users of the information technologysystems.

BeingasmallunitoftheDepartment,theBAOAITSectionsignificantlyreliesontheservicesofthirdpartyserviceproviders.Toensurethatservicesarerenderedeffectively,thedepartmenthassignedservicelevelagreementswithitsserviceproviders.

TheITSectionhasalsodevelopedtheBAOAwebsite,whichisexpectedtobelaunchedtothegeneralpublicsometimein2014.ThewebsiteisintendedtoserveasanimportantcommunicationchannelbetweenBAOA,thegeneralpublicandallindividualsandentitiesregisteredwiththeAuthority.

TheSectionarrangedtrainingsessionsonofficeproductivitytools.Thesetraininginterventionswereaimedatbridgingthetrainingneedsgapinthetoolsusedbythetechnicalandadministrativestaffintheirdailyactivities.

HUMAN RESOURCES SECTIONTheHumanResourcesSection’scorefunction is toattractandretainqualifiedandexperiencedstaff toenabletheAuthoritytomeet itsmandate. Italsoundertakestraininganddevelopmentofstaff;anddevelopshumanresourcespoliciesandprocedureswithintheambitoftheLabourLawsofBotswana.

StaffingTheAuthorityhasanapprovedestablishmentofnineteen(19)employees.Allpositionswerefilledatthecloseoftheyear;eightyninepercent(89%)beingcitizensandelevenpercent(11%)beingnon-citizens.


30

REPORTS FROM THE FINANCE AND ADMINISTRATION DEPARTMENT (continued)

HUMAN RESOURCES SECTION (continued)

Training and Development

TheAuthoritycontinuestodevelopandnurturetalentinordertoachieveitsmandate.Professionalemployeesweretrainedthroughvariousmeansthatincludedworkshops,conferencesandcoursesintheperiodunderreview.TheareascoveredwereInternationalPublicSectorAccountingStandards,FinancialStatementsAnalysis,InternationalFinancialReportingStandards(IFRS)andInternationalStandardsonAuditing(ISA).

Thisisexpectedtoimprovethelevelofknowledgeofstaffmembersandaddtothedevelopmentoftheorganisation.

Remuneration Survey

TheAuthorityparticipated in a remuneration survey, intended todeterminehow theAuthority’s remunerationcomparestothemarket.This,togetherwiththeoutcomeofthejobevaluationexercise,shouldassistindeterminingthevalue/worthofeachjobinrelationtoothers.Theexerciseisstillon-goingandwillbeusedforpurposesofestablishingarationalpaystructurefortheAuthority.

TheAuthorityintendstoalignitsremunerationwiththemarketinordertoattractandretaincompetentemployeesandatthesametimemotivateindividualperformance,whilemaintainingsufficientlevelsofremunerationwhicharefairlydistributedwithintheorganisation.


31

ANNUAL FINANCIAL STATEMENTSFor the year ended 31 December 2013

BoardResponsibilitiesandApproval...................................................................................................................... 32

IndependentAuditor’sReport................................................................................................................................ 33

StatementofFinancialPosition.............................................................................................................................. 34

StatementofComprehensiveIncome.................................................................................................................... 35

StatementofChangesinReserves......................................................................................................................... 36

StatementofCashFlows........................................................................................................................................ 37

AccountingPolicies.........................................................................................................................................38-44

NotestotheFinancialStatements..................................................................................................................45-50

ThefollowingsupplementaryinformationdoesnotformpartoftheAnnualFinancialStatements:

DetailedStatementofComprehensiveIncome..................................................................................................... 51


32

BOARD RESPONSIBILITIES AND APPROVAL

TheBoardand theAuthorityare required tomaintainproperbooksof accountsand recordsof accountsandareresponsibleforthecontentandintegrityoftheannualfinancialstatementsandrelatedfinancialinformationincludedinthisreport. It istheirresponsibilitytoensurethattheannualfinancialstatementsfairlypresentthestateofaffairsoftheAuthorityasattheendofthefinancialyearandtheresultsofitsoperationsandcashflowsfortheperiodthenended,inconformitywiththeFinancialReportingAct,2010andInternationalFinancialReportingStandards.

TheannualfinancialstatementsarepreparedinaccordancewithInternationalFinancialReportingStandardsandarebaseduponappropriateaccountingpoliciesconsistentlyappliedandsupportedbyreasonableandprudentjudgementsandestimates.

TheBoardandtheAuthorityacknowledgethattheyareultimatelyresponsibleforthesystemofinternalfinancialcontrolestablishedbytheBoardandtheAuthorityandplaceconsiderableimportanceonmaintainingastrongcontrolenvironment.ToenabletheBoardandtheAuthoritytomeettheseresponsibilities,theBoardandAuthorityset standards for internal control aimed at reducing the risk of error or loss in a cost effectivemanner. Thestandardsincludetheproperdelegationofresponsibilitieswithinaclearlydefinedframework,effectiveaccountingproceduresandadequatesegregationofdutiestoensureanacceptablelevelofrisk.ThesecontrolsaremonitoredthroughoutbytheBoardandtheAuthorityandallemployeesarerequiredtomaintainhighestethicalstandardsinensuringtheBoard’sandtheAuthority’sbusinessisconductedinamannerthatinallreasonablecircumstancesisabove reproach. The focusof riskmanagement in theAuthority ison identifying,assessing,managingandmonitoringallknownformsofriskacrosstheAuthority.Whileoperatingriskcannotbefullyeliminated,theBoardand theAuthority endeavour tominimise it by ensuring that appropriate infrastructure, controls, systems andethicalbehaviourareappliedandmanagedwithinpredeterminedproceduresandconstraints.

TheBoardandtheAuthorityareoftheopinion,basedontheinformationandexplanationsgivenbyManagementthatthesystemofinternalcontrolprovidesreasonableassurancethatthefinancialrecordsmaybereliedonforthepreparationoftheannualfinancialstatements.However,anysystemofinternalfinancialcontrolcanprovideonlyreasonable,andnotabsolute,assuranceagainstmaterialmisstatementorloss.

TheBoardandtheAuthorityhavereviewedtheAuthority’scashflowforecastfortheyearto31December2014and,inthelightofthisreviewandthecurrentfinancialposition,aresatisfiedthattheAuthorityhas,orhasaccessto,adequateresourcestocontinueinoperationalexistencefortheforeseeablefuture.

TheannualfinancialstatementssetoutonPages39to59,whichhavebeenpreparedonthegoingconcernbasis,wereapprovedbytheBoardon27thMarch2014andweresignedonitsbehalfby:

Director___________________________________ Director___________________________________

Date:____________________________ Date:____________________________


33

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF BOTSWANA ACCOUNTANCY OVERSIGHT AUTHORITY

Wehaveaudited theaccompanyingfinancial statementsofBotswanaAccountancyOversightAuthority,whichcomprisethestatementoffinancialpositionasat31December2013,thestatementsofcomprehensiveincome,changesinreservesandcashflowsfortheyearthenended,andasummaryofsignificantaccountingpoliciesandotherexplanatorynotesassetoutonpages39to59.

Directors’ Responsibility for the Financial Statements

TheDirectorsareresponsibleforthepreparationandfairpresentationofthesefinancialstatementsinaccordancewith International Financial Reporting Standards and in the manner required by the Financial Reporting Act,2010andforsuchinternalcontrolastheDirectorsdetermineisnecessarytoenablethepreparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.

Auditor’s Responsibility

Our responsibility is to express anopinionon these financial statementsbasedonour audit. We conductedourauditinaccordancewithInternationalStandardsonAuditing.Thosestandardsrequirethatwecomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreefrommaterialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancialstatements.Theproceduresselecteddependontheauditor’sjudgement,includingtheassessmentoftheriskofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,theauditorconsidersinternalcontrolrelevanttotheentity’spreparationandfairpresentationofthefinancialstatements inorder todesignauditprocedures thatareappropriate in thecircumstances,butnot forthepurposeofexpressinganopinionontheeffectivenessoftheentity’sinternalcontrol.AnauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebyManagement,aswellasevaluatingthepresentationofthefinancialstatements.

Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinion.

Opinion

Inouropinion,thefinancialstatementsgiveatrueandfairviewofthefinancialpositionofBotswanaAccountancyOversightAuthorityasof31December2013anditsfinancialperformanceanditscashflowsfortheyearthenendedinaccordancewithInternationalFinancialReportingStandardsandinthemannerrequiredbytheFinancialReportingAct,2010.

Other Matter - Supplementary Information

Withoutqualifyingouropinion,wedrawattentiontothefactthatthesupplementaryinformationassetoutonpage60doesnotformpartoftheannualfinancialstatementsandispresentedasadditionalinformation.Wehavenotauditedthisinformationandaccordinglywedonotexpressanopiniononit.

Deloitte&ToucheCertifiedAuditors GaboronePracticingMember:MEBardopoulos(20090042) …………………...2014


34

STATEMENT OF FINANCIAL POSITIONas at 31 December 2013

Figures in Pula Note(s) 2013 2012

ASSETS

Non-current assets

Plant and equipment 3 3,082,655 502,962

Current assets

Accounts receivable 4 631,757 127,632

Cash and cash equivalents 5 629,931 1,555,747

1,261,688 1,683,379

Total assets 4,344,343 2,186, 341

RESERVES AND LIABILITIES

RESERVES

Retained earnings 3,173,061 1,865,225

LIABILITIES

Current liabilities

Accounts payable 6 1,009,776 321,116

Straight-lining lease liability 161,506 -___

1,171,282 321,116

Total equity and liabilities 4,344,343 2,186,341


35

STATEMENT OF COMPREHENSIVE INCOMEfor the year ended at 31 December 2013


Revenue 9 9,453,290 2,730,748

Other income 7,750 -____

9,461,040 2,730,748

Operating expenses (8,179,929) ( 877,758)

Operating surplus before interest 1,281,111 1,852,990

Interest income 11 26,725 17,932

Finance costs 12 ___ -_____ (5,697)

Surplus for the year 1,307,836 1,865,225 Other comprehensive income - ____ -____Total comprehensive income for the year 1,307,836 1,865,225


36

STATEMENT OF CHANGES IN RESERVESfro the year ended 31 December 2013

Figures in PulaRetained Earnings

Total Reserves

Balance at 01 January 2012 - -

Changes in Reserves

Total comprehensive income for the year 1,865,225 1,865,225

Total Changes 1,865,225 1,865,225

Balance at 31 December 2012 1,865,225 1 865 225

Balance at 01 January 2013 1,865,225 1,865,225

Changes in Reserves


Total Changes 3,173,061 3,173,061

Balance at 31 December 2013 3,173,061 3,173,061


37

STATEMENT OF CASH FLOWSFor the year ended 31 December 2013


CASH FLOWS FROM OPERATING ACTIVITIES

Net cash flows from operating activities 13 2,103,156 2,082,826

Interest income 11 26,725 17,932

Finance costs 12 ____-___ (5,697)

Net cash from operating activities 2,129,881 2,095,061

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of plant and equipment 3 (3,055,697) ( 539,314)

Net cash flows used in investing activities (3,055,697) ( 539,314)

Changes in cash and cash equivalents ( 925,816) 1,555,747

Cash and cash equivalents at beginning of the year 1,555,747 -____

Cash and cash equivalents at the end of the year 5

629,931 1,555,747


38

ACCOUNTING POLICIES

1. PRESENTATION OF ANNUAL FINANCIAL STATEMENTS

The annual financial statements have been prepared in accordance with International Financial Reporting Standards, and the Financial Reporting Act, 2010. The annual financial statements have been prepared on the historical cost basis, and incorporate the principal accounting policies set out below. They are presented in Botswana Pula.

1.1 NATURE OF THE BUSINESS

The principal objectives of the Authority is to provide oversight to the accounting and auditing profession and promote the standard, quality and credibility of providing financial and non-financial information by entities. Its functions include standard setting, financial reporting and audit practice reviews, enforcement of compliance and oversight over the education and training of professional accountants in Botswana. The Authority commenced operations in 2012.

1.2 SIGNIFICANT JUDGEMENTS AND SOURCES OF ESTIMATION UNCERTAINTY

In preparing the annual financial statements, management is required to make estimates and assumptions that affect the amounts represented in the annual financial statements and related disclosures. Use of available information and the application of judgement is inherent in the formation of estimates. Actual results in the future may differ from these estimates which may be material to the annual financial statements. Significant judgements include:

Loans and receivables

The Authority assesses its loans and receivables for impairment at the end of each reporting period. In determining whether an impairment loss should be recorded in the statement of comprehensive income, the Authority makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset.

Estimation of remaining useful lives and residual values of items of plant and equipment

The Authority estimates the residual values and remaining useful lives of items of plant and equipment at each reporting date.

Estimation of impairment of assets

The Authority assesses its assets for impairment at the end of each reporting period. In determining whether an impairment loss should be recorded in the statement of comprehensive income, the Authority makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from an asset.

Estimation of remaining useful lines and residual values of items of plant and equipment

The useful lives of assets are estimated based on the pattern of use, industry practice and technological advances on the market. These estimates are used in determining the depreciation charge for the year.

The estimation of residual values is affected by the market price of similar used items, technological advances, pattern of use and the industry practice. These estimates have an impact on the level of depreciation charged to the statement of comprehensive income and the carrying values of items of plant and equipment in the statement of financial position.


39

1.3 PLANT AND EQUIPMENT

The cost of an item of plant and equipment is recognised as an asset when:

it is probable that future economic benefits associated with the item will flow to the Authority; and

the cost of the item can be measured reliably.

Plant and equipment is initially measured at cost.

Cost includes costs incurred initially to acquire or construct an item of plant and equipment and costs incurred subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of plant and equipment, the carrying amount of the replaced part is derecognised.

Plant and equipment is carried at cost less accumulated depreciation and any impairment losses.

Plant and equipment are depreciated on the straight line basis over their expected useful lives to their estimated residual values.

The useful lives of items of plant and equipment have been assessed as follows:

Item Average useful life

Motor vehicle 4 years

Computer equipment 4 years

Office equipment 4 years

Furniture and fittings 4 years

The residual value and useful life of each category of asset are reviewed at the end of each reporting period. If the expectations differ from previous estimates, the change is accounted for as a change in accounting estimate.

The depreciation charge for each period is recognised in the statement of comprehensive income unless it is included in the carrying amount of another asset.

The gain or loss arising from the derecognition of an item of plant and equipment is included in the statement of comprehensive income when the item is derecognised. The gain or loss arising from the derecognition of an item of plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item.

1.4 FINANCIAL INSTRUMENTS

Classification

The Authority classifies financial assets and financial liabilities into the following categories:

Loans and receivables

Financial liabilities measured at amortised cost.

Classification depends on the purpose for which the financial instruments were obtained/incurred and takes place at initial recognition. Classification is re-assessed on an annual basis.

ACCOUNTING POLICIES (continued)


40


1.4 FINANCIAL INSTRUMENTS(continued)

Initial recognition and measurement

Financial instruments are recognised initially when the Authority becomes a party to the contractual provisions of the instruments.

The Authority classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement.

Financial instruments are measured initially at fair value. Transaction costs are included in the initial measurement of the instrument.

Subsequent measurement

Loans and receivables which comprise accounts receivable, and financial liabilities which comprise accounts payable, are subsequently measured at amortised cost, using the effective interest rate method, less accumulated impairment losses.

Impairment of financial assets

At each reporting date the Authority assesses all financial assets to determine whether there is objective evidence that a financial asset or group of financial assets has been impaired.

For amounts due to the Authority, significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy and default of payments (more than 60 days overdue) are all considered indicators of impairment. The amount of the provision (allowance) is the difference between the asset’s carrying amount and the present value of the estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the statement of comprehensive income within operating expenses.

When a trade receivable is uncollectable, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against operating expenses in the statement of comprehensive income.

Impairment losses are recognised in the statement of comprehensive income.

Impairment losses are reversed when an increase in the financial asset’s recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to the restriction that the carrying amount of the financial asset at the date that the impairment is reversed shall not exceed what the carrying amount would have been had the impairment not been recognised.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, and other short term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These are initially and subsequently recorded at fair value.

1.5 TAXATION

The Botswana Accountancy Oversight Authority is an entity wholly owned by the Botswana Government and as such it is exempt from income tax under Part 1 paragraph ii of the Second Schedule of the Income Tax Act Cap 52:01.


41


1.6 LEASES

A lease is classified as a finance lease if it transfers substantially all risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all risks and rewards incidental to ownership.

Operating leases – lessee

Operating lease payments are recognised as an expense on a straight line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments are recognised as an operating lease liability. This liability is not discounted.

Any contingent rents are expensed in the period they are incurred.

1.7 IMPAIRMENT OF ASSETS

The Authority assesses at the end of each reporting period whether there is any indication that an asset may be impaired. If any such indication exists, the Authority estimates the recoverable amount of the asset.

If there is any indication that an asset may be impaired, the recoverable amount is estimated for the individual asset. If it is not possible to estimate the recoverable

amount of the individual asset, the recoverable amount of the cash-generating unit to which the asset belongs is determined.

The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use.

If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. That reduction is an impairment loss.

The Authority assesses at each reporting date whether there is any indication that an impairment loss recognised in prior periods for assets may no longer exist or may have decreased. If any such indication exists, the recoverable amounts of those assets are estimated.

The increased carrying amount of an asset attributable to a reversal of an impairment loss is limited to the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior periods.

1.7 IMPAIRMENT OF ASSETS (continued)

A reversal of an impairment loss of assets carried at cost less accumulated depreciation is recognised immediately in the statement of comprehensive income.

1.8 EMPLOYEE BENEFITS

Short-term employee benefits

The cost of short-term employee benefits, i.e. those payable within 12 months after the service is rendered, such as paid vacation leave and sick leave, bonuses, and non-monetary benefits such as medical care, are recognised in the period in which the service is rendered and are not discounted.


42


1.8 EMPLOYEE BENEFITS (continued)

Post-employment benefits

Contract staff members of the Authority are entitled to gratuities on leaving the employment of the Authority or at the end of their contracts at the rates, and in accordance with the terms specified, in their contracts of employment.

An accrual is raised in respect of gratuity owed as the employee renders services to the Authority.

1.9 REVENUE RECOGNITION

Government Grants

Government grants are recognised when there is reasonable assurance that:

the Authority will comply with the conditions attaching to them; and

the grants will be received.

Government grants are recognised as income over the periods necessary to match them with the related costs that they are intended to compensate.

A government grant that becomes receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the entity with no future related costs is recognised as income of the period in which it becomes receivable.

Government grants related to assets, including non-monetary grants at fair value, are presented in the statement of financial position by setting up the grant as deferred income or by deducting the grant in arriving at the carrying amount of the asset.

Interest Revenue

Interest is income is recognised in the statement of comprehensive income on an accrual basis, by reference to the principal outstanding and the effective interest rate that exactly discounts estimated future cash receipts through the expected life of the financial assets to that asset’s net carrying amount.

1.10 BORROWING COSTS

All borrowing costs are recognised as an expense in the period in which they are incurred.


43


2 (a) ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS AND INTERPRETATION

In the current year, the following are applicable new or revised Standards issued by the International Accounting Standards Board (IASB) and effective for annual reporting periods beginning on 1 January 2013.

New/Revised International Financial Reporting Standards

IFRS 1 Amendments resulting from Annual Improvements 2009-2011 Cycle (repeat application)

IFRS 7 Financial Instruments: Disclosures (Amendments related to the offsetting of assets and liabilities)

IFRS 13 Fair Value Measurement (Amendments resulting from Annual Improvements 2010-2012 Cycle)

IAS 1 Presentation of Financial Statements (Presentation of other comprehensive income)

IAS 1 Amendments resulting from Annual Improvements 2009-2011 Cycle (comparative information)

IAS 16 (Amendment) Property, Plant and Equipment

IAS 32 Financial Instruments: Presentation (Amendments resulting from Annual Improvements 2009-2011 Cycle (tax effect of equity distributions)


44


2(b) NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS AND INTERPRETATION IN ISSUE NOT YET EFFECTIVE

Revised Statements in issue not yet effective

Effective date (Reporting period on or after)

IFRS 7 Financial Instruments: Disclosure (deferral of mandatory effective date of IFRS 9 and amendments to transition disclosures)

1 January 2015

IFRS 9 Financial Instruments: Reissue to include requirements for the classification and measurement of financial liabilities and incorporate existing derecognition requirements

1 January 2017

IFRS 9 Financial Instruments: Deferral of mandatory effective date of IFRS 9 and amendments

1 January 2015

IFRS 13 Fair Value Measurement (Amendments resulting from Annual Improvements 2011-2013 Cycle)

1 January 2014

IAS 16 Property, Plant and Equipment (Amendments resulting from Annual Improvements 2010-2012 Cycle)

1 July 2014

IAS 19 Employee Benefits (Amended to clarify the requirements that relate to how contributions from employees or third parties that are linked to service should be attributed to periods or service)

1 July 2014

IFRIC 21 Provides guidance on when to recognise a liability for a levy imposed by a government, both for levies that are accounted for in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets and those where the timing and amount of the levy is certain

1 January 2014


45

NO

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At 3

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62


46

NOTES TO THE FINANCIAL STATEMENTS (continued)

4. ACCOUNTS RECEIVABLE

2013

P

2012

PDeposits 55,895 55,895

Prepayments 355,361 69,944

Staff loans 216,931 -

Other receivables 3,570 1,793

631,757 127,632

5. CASH AND CASH EQUIVALENTS

2013

P

2012

PBank balances 629,931 1,555,747

6. ACCOUNTS PAYABLE

2013

P

2012

P Employee costs accrual

Audit fee accrual

888,935

80,000

284,396

30,000

Directors’ fees payable (Note 15) 7,140 6,720

Other payables 33,701

1,009,776

_-___

321,116

Fair value of accounts payable

Accounts payable 1,009,776 321,116


47


7. FINANCIAL ASSETS BY CATEGORY

The accounting policies for financial instruments have been applied to the items below:

2013

P

2012

PLoans and receivables

Accounts receivable 276,396 57,688

Bank balances 629,931 1,555,747

8. FINANCIAL LIABILITIES BY CATEGORY

The accounting policies for financial instruments have been applied to the line item below:

2013

P

2012

PFinancial Liabilities at Amortised cost

Accounts payable 113,701 30,000

9. REVENUE

2013 P

2012

P

Government grant (Note 15) 9,453,290 2,730,748

10. OPERATING SURPLUS BEFORE INTEREST

Operating surplus before interest for the year is stated after accounting for the following:

2013

P

2012

P Audit Fees 85,280 30,000

Depreciation on plant and equipment 476,004 36,352

Employee costs 5,254,692 324,399

Directors’ fees (Note 15) 32,480 103,050

Rental charge 910,127 -____


48


11. INTEREST INCOME

2013

P

2012

PBank 17,712 17,932

Staff loans 9,013 -___

26,725 17,932

12. FINANCE COSTS

2013 2012

P P

Bank interest - 5,697

13. NET CASH FLOWS FROM OPERATING ACTIVITIES

2013

P

2012

P Total comprehensive income for the year 1,307,836 1,865,225

Adjustments for:

Depreciation charge 476,004 36,352

Finance costs - 5,697

Interest income (26,725) (17,932)

Changes in working capital

Accounts receivable (504,125) (127,632)

Accounts payable 688,660 321,116

Deferred lease liabilities 161,506 _____-___

2,103,156 2,082,82614. COMMITMENTS

2013

P

2012

P Operating leases – as lessee expense

Minimum lease payments due:

Within one year 824,907 628,740

In second to fifth year inclusive 2,971,244 3,209,780

3,796,151 3,838,520

Operating lease payments represent rentals payable by the Authority for certain buildings it rents for use as offices. Leases are negotiated for an average term of five years. No contingent rent is payable.

The current lease agreement was signed on November 12, 2012 and took effect on January 1, 2013. Therefore, no rent was paid during 2012.


49


15. RELATED PARTIES

All related party transactions are entered into at arm’s length in the ordinary course of business. The transactions with key Management personnel are staff benefits provided for under the General Conditions of Service of the Authority.

2013

P

2012

PRelated party transactions

Grant received from related party (Note 9)

Government of the Republic of Botswana

Ministry of Finance and Development Planning 9,453,290 2,730,748

Compensation of key management personnel

Executive Management 2,937,560 -____

Loans to key Management 66,672 -_ _

Directors’ fees expense (Note 10) 32,480 103,050

Directors’ fees payable (Note 6) 7,140 6,720

16. RISK MANAGEMENT

Liquidity risk

Liquidity risk is the risk that the Authority will be unable to meet its payments obligations when they fall due. The source of the Authority’s cash resources is mainly from the Government annual subvention. Any expenditures and commitments are, therefore, restricted to the level of subvention received. Continuous monitoring through cash flow forecasts and variance analysis is in place to ensure that expenditure does not exceed the Authority’s cash resources.

Given below is the Authority’s net liquidity gap derived from comparing current assets with current liabilities. The liquidity gap (P251, 912) shows net liquidity exposure. The maximum liquidity exposure (P1, 009,776) is the total liabilities due within 12 months.

The amounts disclosed are the contractual undiscounted cash flows due within 12 months and are equal to their carrying balances as the impact of discounting is not significant.


50


16. RISK MANAGEMENT (continued)

Liquidity risk (continued)

ASSETS

2013

P

2012

P

Accounts receivable

Cash and Cash equivalent

Total liquid assets

LIABILITIES

Accounts Payable

631,757

629,931

1,261,688

1,009,776

127,632

1,555,747

1,683,379

321,116

Net liquidity gap 251,912 1,362,263

Interest rate risk

The Authority invests practically all its surplus funds in interest- earning overnight bank deposit accounts in order to discharge its liabilities as they fall due. The average interest rate on the overnight bank deposits is 0.5% (2012: 0.5%)

For a change in interest rates of 25 basis points, the gross interest earned would be negligible.

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations, resulting in financial loss to the Authority.

Credit risk relates mainly to cash deposits, cash equivalents and accounts receivable. The Authority only deposits cash with major banks with high quality credit standing. Therefore, credit risk is minimal.

The following table summarises the maximum exposures to credit risk without taking into account collateral held, in respect of which none is received on any of the financial assets.

2013

P

2012

PCash at bank 629,931 1,555,747

Accounts receivable 631,757 127,632

Total exposure to credit risk 1,261,688 1,683,379

17. EVENTS AFTER THE REPORTING DATE

No events have occurred between the statement of financial position date and the date of the approval of the annual financial statements, which would materially affect the annual financial statements.


51

DETAILED STATEMENT OF COMPREHENSIVE INCOMEfor the year ended 31 December 2013

Figures in Pula

Note(s) 2013 2012

Government subvention 9 9,453,290 2,730,748

Other Income 7,750 -___

9,461,040 2,730,748

OPERATING EXPENSES

Accounting fees 48,160 -

Advertising 7,773 24,229

Audit fees 85,280 30,000

Bank charges 34,209 10,341

Computer expenses 72,264 -

Consulting fees 66,083 -

Depreciation on plant and equipment 476,004 36,352

Donations 5,000 -

Directors’ fees 32,480 103,050

Insurance 123,422 618

Hospitality & Entertainment 54,189 -

Meetings & Conferences expenses 213,764 54,747

Motor vehicle expenses 21,648 -

Office expenses 53,692 -

Photocopier - Leasing 15,599 -

Printing & Stationery 245,835 -

Publications & Reference Material 31,293 -

Rent 910,127 -

Recruitment expenses 34,360 140,280

Employee costs 5,254,692 324,399

Subscriptions 29,938 -

Strategic planning 70,240 -

Security expenses 64,901 -

Telephone, Postage & Fax 113,714 2,255

Training 42,420 -

Travel & Accommodation 10,171 147,744

Utilities 62,671 3,743

8,179,929 877,758

Operating surplus before interest 1,281,111 1,852,990

Finance costs - Bank interest - (5,697)

Interest received 11 26,725 17,932


This detailed Statement of Comprehensive Income does not form part of the audited financial statements covered by the audit opinion on pages 37-38.


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BA VISION, MISSION AND CORE VALUES O · 2019. 12. 20. · ACCA - Association of Chartered Certified Accountants ... CHAIRPERSON’S LETTER TO THE MINISTER Honourable Kenneth O. Matambo

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