SWD CRICKET BOARD REMARKS TO THE FINANCIAL STATEMENTS: 2010/11 By LLUWELLYN COETZEE (TREASURER SWD CRICKET BOARD) ___________________________________________________________________ In the presentation of the audited financial statements for the 2010/11 financial year, as ended on 30 April 2011, it is of importance to explain and highlight to all stakeholders the following: 1. The Executive Committee of the SWDCB is responsible for the preparation and integrity of the Annual Financial Statements that fairly present the state of affairs of the Board, and other information contained in this report. The Executive Committee sets policies and principles and management (the Chief Executive Officer) implements systems of internal control and information systems in a cost effective manner. The Finance Committee, reporting to the Executive Committee on a regular basis, plays an important oversight role in all matters relating to financial administration and internal control, accounting policies and reporting requirements. The independent appointed auditors who are responsible to report on the Financial statements conducted an audit in accordance with statements of South African Auditing Standards. Those standards require that an audit be performed to obtain reasonable assurance that the financial statements are free of material misstatement. As from the 2009/10 Financial Year an Audit Committee was appointed. The duties and responsibilities of the members of the committee as set out are in addition to those duties and responsibilities of the Executive members. The deliberations of the committee do not reduce the individual and collective responsibilities of the board members in regard to their fiduciary duties and responsibilities, and they must continue to exercise due care and judgment in accordance with their legal obligations. The overall function of the committee is to assist the directors in discharging their responsibilities: - Relating to the safeguarding of assets, the operation of adequate and effective systems and control - Processes, the preparation of fairly presented financial statements in compliance with all applicable Legal and regularity requirements and accounting standards, - and the oversight of the of the external - And internal audit appointments and functions. The committee is an advisory committee and not an executive committee. As such it must not perform any management functions or assume any management responsibilities and shall have an objective, independent role. 1. The financial figures of the Board shows a nett profit of R184,634 versus a profit of R218,416 for the previous financial year. This also underlines the healthy cash flow position as stipulated in the Balance Sheet. 2. Provision is made for Reserves of R303,305 - which reflects as cash in the bank which were specifically dedicated to the following projects in the 2010/11 Financial Year: a. Transfer to SWD Cricket Academy: R120,000 b. Transfer to Electronic Score Board: R100,000 c. Transfer to Procurement of Vehicle: R20,000 d. Transfer of Nets for Bongolethu: R40,000 e. Transfer to Stadium Development: R23,305 3. The cash and equivalents at the end of the Financial Year (on 30 April 2011) representing a total of R1,312,777 was: a. Cash on Hand (Petty Cash): R679 b. Bank Balance (Current Account): R187,908 c. Call Account: R1,124,190 4. The budget allocation, in terms of amateur funding, is done according to expenditure guidelines from Cricket South Africa. CSA, on an annual basis conducts an audit to determine whether affiliates comply in terms of expenditures with reference to specific cricket programmes (Mini Cricket, Regional programs, Central Place Cricket Centres) administrative expenses, club cricket, schools/youth and women’s cricket. The grant to clubs in terms of CSA funding used (R141,350 in 2010/11 versus R56,453 in 2009/10) represents an increase of 150.38%. The CSA Amateur allocation guideline required an allocation of R373, 183 for programs to clubs (including grants) and the operations thereof. The total allocation in 2010/11 is made up of: a. Total allocation to clubs: R169,934 b. Scorers Association: R51,085 – the budgeted amount was R65,000 c. Umpires Association: R86,861 (excluding non-panel umpires) – the budgeted amount was R112,000 d. Women’s Cricket: R55,420 e. Expenditures was a total of R363,300 5. The most significant contributions to the 13.7% increase in the income for the period under review (from R5,158,631 to R6,964,757) are as a result of: a. An increase of 6% in the CSA Amateur Allocation for 2010/11 including an amount of R530,000 for the implementation and sustainment of the CSA Presidential Amateur plan. b. The NLDTF Allocation for Project 39730 was R3,8 million. The first trache payment of R1,8 million was done in February 2011. AMOUNT EXPENDITURE BALANCE ALLOCATED Black African Cricket R 120,000.00 R 95,382.00 R 24,618.00 Development Program Capacity Building: Clubs R 120,000.00 R 120,000.00 Capacity Building: Schools R 100,000.00 R 16,884.00 R 83,116.00 Construction of Club House R 2,756,000.00 R 393,337.00 R and Facilities, REC Ground 2,362,663.00 Regional Development R 42,000.00 R 36,000.00 R 6,000.00 Program Development: Schools R 60,000.00 R 23,000.00 R 37,000.00 Disabled Cricket Program R 80,000.00 R 70,758.00 R 9,242.00 Elite Group Development R 42,000.00 R 14,111.00 R 27,889.00 Support to Clubs R 220,000.00 R 220,000.00 Training of Coaches R 40,000.00 R 20,971.00 R 19,029.00 Training of Scorers R 20,000.00 R 20,000.00 Training of Umpires R 20,000.00 R 20,000.00 Women’s Cricket Program R 180,000.00 R 160,745.00 R 19,255.00 TOTAL R3,800,000.00 R 831,188.00 R2,968,812.00 b. SWD hosted the CSA Academies Tournament in September 2010 – the allocation for tournament levies was R231,397. c. An increase from R105,080 to R177,156 as levies for travelling costs to National tournaments. d. An increase from R51,300 to R108,300 in the Chevrolet High Performance sponsorship funded via Cricket Eastern Cape. f. An allocation of R30,000 from the Western Cape Department of Cultural Affairs and Sport for Major Events projects (CSA Academies week) g. A financial grant of R134,470 from the Western Cape Department of Cultural Affairs and Sport for the Club Development program. Expenditures are listed as a separate line item (R91,356). Outstanding income in this regard (R64,470) for 2009/10 was only paid over in the 2010/11 financial year. This program is making provision for a transport subsidy, apparel and equipment to the following seven identified clubs: - Bongolethu CC - Dysselsdorp CC - Selbourne CC - Ramblers CC - Ladismith CC - Sussex CC - Melkhoutontein CC h. The strain economic climate negatively effected the recruitment of sponsorships and a total amount of R73,411 was obtained. Sponsorships were received from: - Eden District Municipality and Local Government: R25,000 - Palisade Fencing/ Advertising: R21,401 - Leveraging: R25,000 i. An amount of R57,000 was received as a grant from the Champions League T20 tournament that was presented in South Africa in September 2010. As part of the application and project plan this funding is dedicated to the construction of net facilities at Isalathisho Primary School in Mossel Bay. j. The SWDCB, for the first time, received ICC World Cup dividends, as circulated via CSA to affiliates and associate members. R450,000 of the allocated amount of R500,000 (VAT excluded) was carried over as part of the income for the 2011/12 budget year. 6. A motor vehicle (Opel Corsa) was sold for R18,840. The settlement amount was R10,835 with a profit of R8,005. 7. The following matters must be noted in terms of expenditures: a. An increase in the Salaries of office staff was done to comply with staffing according to the Presidential Amateur Plan of CSA. Salary adjustments were done as part of a two-year cycle to bring the SWD staff in line with counterparts at other provinces. The Board also appointed a Financial Administrator in July 2010. This appointment was done to comply with the CSA requirements for affiliate status. b. High Performance coaching contracts (Human Resource Expenses) contributed to the expenses of R485,044. Since the 2007/08 season the SWDCB make use of provincial cricket players and appoint such players in the capacity of High Performance- Cricketing HUBB- and Coaches for Centres of Excellence. In 2009/10 the Board also invested in appointing local players in such capacities. The allocated funding from CSA makes provision for Hubbs and Centres of Excellence. e. An increase from R100,351 to R170,522 in Provincial team and Coaching expenses was a result of extensions to Specialist Training (team dynamics and conditions training), an increase in team clothing (more players used) and the fact that SWD catered for accommodation of players recruited from outside the province. f. Executive Expenses represented a decrease (from R59,801 to R45,605). The increase in travel expenses can be resulted in additional committee meetings and a road show before and after the season where clubs were visited on a regional basis. g. A sponsorship of R10,000 from the Eden District Municipality were added as an income and resulted in expenses of R29,130 for the Annual Awards Function that was presented at the VG Wilderniss Hotel. f. The Professional Services: Legal Fees expense of R16,189 were utilised for legal expenses for Disciplinary Hearings. The Executive Committee in May 2011 also referred a matter of Breach In Confidentiality to a legal consultant. The legal consultant advised the Executive Committee to request information in terms of the Promotion of Access to Information Act, 2 of 2000 to Standard Bank, the banking service provider of SWDCB. On 27 September 2010 the Group Risk Management Division of Standard Bank provided the following feedback: A customer consultant at the George branch of Standard Bank was responsible for the breach in confidentiality. He provided the confident information to a member of the public who told the customer consultant that he was requesting the information as a member on behalf of the SWDCB. The breaches occurred as follows: - 19 April 2010 – 22 April 2010 - 26 April 2010 – 29 April 2010 - 05 May 2010 – 11 May 2010 The bank confirmed these transactions with an audit log. The bank took disciplinary action against the person responsible for the breach. The customer consultant accepted responsibility for the breach of confidentiality and the sanction thereto. The legal fees to address this matter was R5,467.65. The balance was spent on Disciplinary Hearings and Legal Advice matters. g. The increase from R366,928 to R394,248 for the payment of VAT to the SA Revenue Services was due to a much higher income of revenue’s. h. The expenses for the inaugural SWD Cricket Academy was R175,700. 8. Changes in Accounting Policy. During the year, the organization changed its accounting policy with respect to the treatment of Assets. In order to conform with the benchmark treatment in of IAS16 – Property, Plant and Equipment, The company now provides more reliable and more relevant information for Property, Plant and Equipment. The aggregate effect of the changes in accounting policy is reflecting on to the notes of the Financial Statements. Since this policy in the past was to write off assets to R1, seeing that the amount on the face of the balance sheet was reflected in previous years as R2, the assets weren’t audited. With the policy change, the 2010 assets were also audited. In 2011 a policy change occurred, and assets are now at cost price less accumulated depreciation. The accounting policy in respect of Property, Plant and Equipment is on page 10 in the financial statements. The assets purchased during the 2011 financial year are confirmed by supporting documentation as well as the cost prices of vehicles reflected in the financial statements. - The greatest audit risk of fixed assets is overstatement, and therefore my audit procedures also included the following: 1.) an asset register with the cost prices were requested seeing that physical purchase documents were not available. 2.) Physical inspection of the assets was conducted to determine reasonableness of the numbers indicated on the fixed asset register. This figure is regarded as reasonable. (Valuation Statement Audit) 3.) I took the asset register and went to the offices of SWD Cricket to ensure that everything on the list were in the offices of SWD Cricket (Existence and Completeness Audit Theorem) When looking at SWD Cricket's insurance contract, the amounts disclosed for insurance purposes are similar to those in the financial statements. Current legislation requires companies to keep invoices for a period of 7 years.
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