Annual Financial Report · surplus of the National Spiritual Assembly (“NSA”) for the year ending 31 December 2018 was $6,547,239 compared to a surplus of $1,553,357 for the year

Annual Financial Report The National Spiritual Assembly of the Bahá’ís of Australia

Incorporated

ABN 71 174 672 086

175 B.E

31 December 2018

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Contents Report by the National Spiritual Assembly 3 Statement of Surplus or Deficit and Other Comprehensive Income 4 Statement of Financial Position 5 Statement of Changes in Equity 6 Statement of Cash Flows 7 Notes to the Financial Statements 8 - 22 Statement by Members of the National Spiritual Assembly 23 Independent Auditor’s Report 24 - 26 Auditor’s Independence Declaration 27

Auditor Grant Thornton Audit Pty Ltd Level 17 383 Kent Street Sydney NSW 2000

Registered Office Bahá’í National Centre 173 Mona Vale Road Ingleside NSW 2101

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Report by the National Spiritual Assembly For the year ended 31 December 2018

The National Spiritual Assembly (“Responsible Entities”) present their report together with the financial report of The National Spiritual Assembly of the Bahá’ís of Australia for the year ended 31 December 2018 and the auditor’s report thereon. 01. National Assembly members The names of the Members in office at the date of the report appear in the statement by the members at the end of this financial report. 02. Principal activities The principal activities of the National Spiritual Assembly during the course of the financial year were religious, educational and charitable in nature. 03. Operating and financial review The consolidated operating surplus includes the Yerrinbool School Building Fund, the Bahá’í Education in State Schools Fund (“BESS”), the BCL Building Fund for South Australia, the Ancillary Fund, the BCL Building fund for Tasmania, and the BCL Building fund for Victoria. The consolidated statement of surplus or deficit and other comprehensive income shows a consolidated operating surplus of $7,229,671 for the year ending 31 December 2018 compared to a surplus of $1,497,112 for the year ending 31 December 2017. The operating surplus of the National Spiritual Assembly (“NSA”) for the year ending 31 December 2018 was $6,547,239 compared to a surplus of $1,553,357 for the year ending 31 December 2017. 04. Events subsequent to reporting date There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the National Spiritual Assembly, to affect significantly the operations, the results of those operations, or the state of affairs of the National Spiritual Assembly of the Bahá’ís of Australia, in future financial years. 05. Significant changes in the state of affairs There were no other significant changes in the nature of the activities of the National Spiritual Assembly during the year other than those disclosed in this report or the financial statements. 06. Assembly members’ benefits Since the end of the previous financial year, no Member has received or become entitled to receive a benefit by reason of a contract made by the Assembly with the Member or with a firm of which they are a member or with a National Spiritual Assembly in which they have a financial interest other than that as disclosed in Note 17 to the accounts. For and on behalf of the National Spiritual Assembly:

__________________________________ __________________________________ Mathew James Kia Manouchehri National Secretary National Treasurer Sydney, 31 March 2019 Sydney, 31 March 2019

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The National Spiritual Assembly of the Bahá’ís of Australia Incorporated Statement of Surplus or Deficit and Other Comprehensive Income For the year ended 31 December 2018 Consolidated NSA Note 2018

$ 2017

$ 2018

$ 2017

$ Revenue from ordinary activities

Revenue from the sale of goods 2(c) 229,357 183,357 229,357 183,357Cost of sales (225,298) (195,098) (225,298) (195,098)Gross profit 4,059 (11,741) 4,059 (11,741) Contributions 2(c) 10,665,597 6,748,015 10,009,638 5,868,263Other revenue from ordinary activities 2(c) 4,093,899 2,501,914 4,030,184 2,463,170Total income 14,763,555 9,238,188 14,043,881 8,319,692 Expenses from ordinary activities Salaries 17 2,825,131 2,511,981 2,825,131 2,511,981Borrowing costs 2(b) 150,065 188,494 150,065 188,494 Other expenses from ordinary activities 2(a) 4,558,688 5,040,601 4,521,446 4,065,860 Surplus/(Deficit) from ordinary activities 7,229,671 1,497,112 6,547,239 1,553,357

The statement of surplus or deficit and other comprehensive income is to be read in conjunction with the notes of the financial statements

set out on pages 8 to 22.

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The National Spiritual Assembly of the Bahá’ís of Australia Incorporated Statement of Financial Position As at 31 December 2018 Note Consolidated NSA

2018$

2017 $

2018$

2017$

Assets Cash and cash equivalents 4 24,899,778 9,593,842 21,624,445 8,324,613 Trade and other receivables 6 54,298 77,009 54,298 77,009 Inventories 7 338,012 331,506 338,012 331,506 Other financial assets 5 336,974 2,963,780 38,726 1,341,861 Other 9 85,132 66,258 85,132 66,258Total current assets 25,714,194 13,032,395 22,140,613 10,141,247 Receivables 6 576,611 629,611 576,611 629,611 Property, plant and equipment 8 68,355,828 73,181,199 68,355,828 73,181,199Total non-current assets 68,932,439 73,810,810 68,932,439 73,810,810 Total assets 94,646,633 86,843,205 91,073,052 83,952,057 Liabilities Creditors and Borrowings 10 3,186,307 7,545,407 3,186,307 7,545,407 Provisions 11 375,827 318,688 375,827 318,688 Other 12 47,342 167,176 47,342 167,176Total current liabilities 3,609,476 8,031,271 3,609,476 8,031,271 Creditors and Borrowings 10 34,380,000 30,000,000 34,380,000 30,000,000 Provisions 11 40,587 24,523 40,587 24,523Total non-current liabilities 34,420,587 30,024,523 34,420,587 30,024,523 Total liabilities 38,030,063 38,055,794 38,030,063 38,055,794 Net assets 56,616,570 48,787,411 53,042,989 45,896,263

Accumulated funds Retained surplus 19 31,619,570 24,917,370 29,517,477 23,477,227 Reserves 13 24,922,000 23,761,041 23,450,512 22,310,036 Endowments 14 75,000 109,000 75,000 109,000Total equity 56,616,570 48,787,411 53,042,989 45,896,263

The statement of financial position is to be read in conjunction with the notes to the financial statements set out on pages 8 to 22.

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The National Spiritual Assembly of the Bahá’ís of Australia Incorporated Statement of changes in equity For the year ended 31 December 2018 Note Consolidated NSA

2018$

2017 $

2018$

2017$

Retained Surplus Balance at the beginning of the year 24,917,370 23,601,624 23,477,227 21,654,231 Transfer to earmarked funds reserve and (527,471) (181,366) (506,989) 269,639 adjustment to opening balance Operating (deficit)/surplus for the year 7,229,671 1,497,112 6,547,239 1,553,357 Balance at the end of the year 19 31,619,570 24,917,370 29,517,477 23,477,227

Asset Revaluation Reserve Balance at the beginning of the year 20,663,643 20,663,643 20,663,643 20,663,643 Additions (32,970) - (32,970) - Balance at the end of the year 13 20,630,673 20,663,643 20,630,673 20,663,643 Earmarked Funds Reserve Balance at the beginning of the year 2,931,166 2,749,800 1,480,161 1,749,800 Utilised (163,364) (263,093) (163,364) (281,094) Additions 1,357,293 444,459 1,336,810 11,455 Balance at the end of the year 13 4,125,095 2,931,166 2,653,607 1,480,161 Acquisition Reserve Balance at the beginning of the year 166,232 166,232 166,232 166,232 Additions - - - - Balance at the end of the year 13 166,232 166,232 166,232 166,232 Endowments Balance at the beginning of the year 109,000 109,000 109,000 109,000 Transferred to retained earnings on (34,000) - (34,000) - death of grantee Balance at the end of the year 14 75,000 109,000 75,000 109,000

56,616,570 48,787,411 53,042,989 45,896,263

The statement of changes in equity should be read in conjunction with the notes to the financial statements set out on pages 8 to 22.

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The National Spiritual Assembly of the Bahá’ís of Australia Incorporated Statement of Cash Flows For the year ended 31 December 2018

Consolidated NSA

Note 2018$

2017 $

2018 $

2017$

Cash flows from operating activities

Contributions 10,516,859 6,877,229 9,860,901 5,997,477 Other income 159,406 143,273 158,860 1,086,820 Sales of literature 212,569 202,466 212,569 202,466 Payments – Promotion and consolidation of the Faith

(6,125,550) (6,404,521) (6,087,763) (6,373,328)

Interest paid (218,347) (195,563) (155,837) (195,563) Interest received 505,421 336,591 379,196 297,848 Rent received 2,274,470 1,969,039 2,274,470 1,969,039 Net cash from operating activities 15 7,324,828 2,928,514 6,642,396 2,984,759

Cash flows from investing activities

Proceeds from the sale of land and buildings 5,388,600 - 5,388,600 -

Proceeds from the sale of plant and equipment 5,599 - 5,599 -

Proceeds/(payment) from term deposits invested 2,640,466 3,972,063 1,316,794 5,593,982

Proceeds/(payment) from security deposits (13,660) (870) (13,660) (870)

Acquisition of land - (9,500,000) - (9,500,000)

Acquisition of buildings (22,268) (2,065,177) (22,268) (2,065,177) Acquisition for improvements - - - - Acquisition of plant and equipment (70,632) (153,833) (70,632) (153,833)

Net cash from investing activities 7,928,105 (7,747,817) 6,604,433 (6,125,898)

Cash flows from financing activities

Repayment of Loans receivable from Bahá’ís and Bahá’í Institutions

53,000 406,324 53,000 406,324

(Repayment)/proceeds of Loans payable to Bahá’ís and Bahá’í Institutions

3 (651,516) 3 (1,551,516)

Net cash from financing activities 53,003 (245,192) 53,003 (1,145,192)

Net (decrease)/increase in cash and cash equivalents

15,305,936 (5,064,495) 13,299,832 (4,286,331)

Add opening cash brought forward 9,593,842 14,658,337 8,324,613 12,610,944

Closing cash carried forward 4 24,899,778 9,593,842 21,624,445 8,324,613

The statement of cash flows is to be read in conjunction with the notes to the financial statements set out on pages 8 to 22.

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The National Spiritual Assembly of the Bahá’ís of Australia Incorporated Notes to the Financial Statements

Significant accounting policies The National Spiritual Assembly of the Bahá’ís of Australia Incorporated (“NSA”) is domiciled in Australia.

01 (a) Statement of compliance

The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards Reduced Disclosure Requirements (“AASBs”), Accounting Interpretations. Australian Charities and Not-for-profits Commission Act 2012 and the requirements of the Associations Incorporation Act 1991(ACT).

(b) Basis of preparation

The financial report is presented in Australian dollars.

The financial report is prepared on the historical cost basis and does not take into account changing money values or, except where stated, current valuations of non-current assets. The preparation of a financial report in conformity with Australian Accounting Standards requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. These accounting policies have been consistently applied by the National Spiritual Assembly.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. The accounting policies set out below have been applied consistently to all periods presented in the financial report.

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Significant accounting policies (continued) (c) Basis of consolidation

The consolidated accounts comprise the National Spiritual Assembly, Yerrinbool School Building Fund, the Bahá’í Education in State Schools Fund (“BESS”), the Bahá’í Centre of Learning (BCL) Building Fund for South Australia, the Ancillary Fund, the BCL Building Fund for Tasmania, and the BCL Building Fund for Victoria.

The Yerrinbool School Building Fund has been earmarked for construction and maintenance of the buildings at the Yerrinbool Bahá’í Centre of Learning since establishment. The BESS Fund was established on 25 June 2003 to provide funding for all activities related to Bahá’í education in state schools. The BESS Fund was closed in November 2017. The BCL Building Fund for South Australia was established on 1 January 2005 and has been earmarked for acquisition, renovation and maintenance of the BCL Building South Australia since establishment. The BCL Building Fund for Tasmania was established on 7 March 2008 and has been earmarked for acquisition, renovation and maintenance of the BCL Building Tasmania since establishment. The BCL Building Fund for Victoria was established on 3 December 2010 and has been earmarked for acquisition, renovation and maintenance of the BCL Building Victoria since establishment. The Ancillary Fund was established on 1 March 2008 for funds to be distributed to tax deductible funds mentioned above. The similarities of these funds being funds operating as fixed trusts and the limitations on the use of the assets of the trust funds demanded treatment as separate entities for consolidation purposes. Unrealised gains and losses and inter-entity balances resulting from transactions between entities are eliminated in full on consolidation.

(d) Property, plant and equipment

(i) Owned assets Freehold land, buildings and carpets are stated at valuations less accumulated depreciation. Freehold land is revalued every five years at Independent Valuation. Revaluation increments, on a class of assets basis, are recognised in the asset revaluation reserve except that amounts reversing a decrement previously recognised as an expense are recognised as revenues. In the absence of an independent valuation the members’ valuation is used based on the most recent independent valuation. Freehold land and buildings in the course of construction are stated at cost. Items of property, plant and equipment are stated at cost or deemed cost less accumulated depreciation (see below).

Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.

(ii) Subsequent costs Costs incurred on assets subsequent to initial acquisition are capitalised when it is probable that the future economic benefits in excess of the original assessed performance will flow to the National Spiritual Assembly and the cost of the item can be measured reliably. All other costs are recognised in the statement of surplus or deficit and other comprehensive income as an expense as incurred.

(iii) Depreciation Depreciation is charged to the statement of surplus or deficit and other comprehensive income on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Freehold land is not depreciated. The estimated useful lives in the current and comparative periods are as follows:

Class Rate Buildings 2.50% Improvements 2.50%-14.29% Plant and Equipment, Furniture and Fittings 10%-50%

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The National Spiritual Assembly of the Bahá’ís of Australia Incorporated Notes to the Financial Statements Significant accounting policies (continued) (e) Investments

Non-current investments are carried in the National Spiritual Assembly’s financial statements at lower of cost or members’ valuation.

(f) Trade and other receivables Trade and other receivables are stated at their cost. At each reporting date, the National Spiritual Assembly assesses whether there is objective evidence that the Trade and other receivables have been impaired. Impairment losses are recognised in the Statement of Surplus or Deficit and Other Comprehensive Income.

(g) Inventories

Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

The cost of other inventories is based on the first-in first-out principle and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition.

Inventories consist of stock on hand and work in progress of publications.

(h) Cash and cash equivalents For the purpose of the cash flow, cash and cash equivalents comprise cash on hand and cash at bank.

(i) Employee benefits

(i) Long-term service benefits The National Spiritual Assembly’s net obligation in respect of long-term service benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods. The obligation is calculated using expected future increases in wage and salary rates including related on-costs and expected settlement dates, and is discounted using the rates attached to the Commonwealth Government bonds at the balance sheet date.

(ii) Wages, salaries, annual leave, sick leave and non-monetary benefits Liabilities for employee benefits for wages, salaries, annual leave and sick leave that are expected to be settled within 12 months of the reporting date represent present obligations resulting from employees’ services provided to reporting date and are calculated at nominal amounts based on remuneration wage and salary rates that the National Spiritual Assembly expects to pay as at reporting date including related on-costs.

(iii) Staff provident provision The National Spiritual Assembly has no legal obligation, other than the superannuation guarantee levy, to provide benefits to employees on retirement or cessation of employment. Due to the positions of National Secretary and the Secretaries of the Regional Bahá’í Councils being elected positions in the Bahá’í administration, it is possible for the occupants of these positions to change on an annual basis. Because the holders of these positions often leave other paid and permanent employment and may be working out of their occupation, a limited provision is made to compensate them on leaving the positions. This is included in the Staff Provident Provision. The Staff Provident provision is also used on occasion to fund other miscellaneous employee payments, for example redundancy payments, where the National Spiritual Assembly chooses to do so.

(j) Provisions A provision is recognised in the statement of financial position when the National Spiritual Assembly has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation.

(k) Trade and other payables Trade and other payables are stated at cost.

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The National Spiritual Assembly of the Bahá’ís of Australia Incorporated Notes to the financial statements

Significant accounting policies (continued)

(l) Revenue

(i) Goods sold and services rendered Revenue from the sale of goods is recognised in the statement of surplus or deficit and other comprehensive income when the significant risks and rewards of ownership have been transferred to the buyer.

(ii) Interest income

Interest revenue is recognised as it accrues.

(iii) Contributions Fundraising, donations and bequests are recognised as revenue when the National Spiritual Assembly obtains control of the contributions, it is probable that the economic benefits comprising the contribution will flow to the National Spiritual Assembly and the amount of the contribution can be measured reliably.

(m) Foreign currency transactions Foreign currency transactions are translated to Australian currency at rates of exchange ruling at the dates of the transactions. Amount receivable and payable in foreign currencies at reporting date are translated at the rates of exchange ruling on that date. Exchange differences relating to amounts payable and receivable in foreign currencies are brought to account as exchange gains or losses in the statement of financial performance in the financial year in which the exchange rates change.

(n) Income tax The National Spiritual Assembly of the Bahá’ís of Australia Incorporated, being a religious body, is registered as an Income Tax Exempt Charity. The Yerrinbool School Building Fund, the BCL Building Fund SA, the BCL Building Fund VIC and the Bahá’í Education in State Schools Fund, BCL Building Fund for TAS and Ancillary Fund have all received endorsement from the Australian Taxation Office in 1984, 2004, 2003, 2010, 2010 and 2013 respectively as Deductible Gift Recipients (“DGR”). This implies that income tax deductions are available when gifts are made to these funds.

(o) Goods and services tax Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated with the amount of GST excluded. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the statement of financial position. Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.

(p) Loans receivable Loans are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition, these are measured at amortised cost using the effective interest method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial.

(q) Loans payable The loans with Baha’i Institutions have been considered to meet the definition of a liability in that the full amount is payable. There is uncertainty regarding the repayment date of the loan which is determined by an independent advisory panel. The loan has therefore been stated at its principle amount and not discounted given this uncertainty. The figures of the National Spiritual Assembly in the Statement of surplus or deficit and other comprehensive income, the Statement of Financial Position, the Statement of changes in equity, and the Statement of Cash Flows, include amounts which relate to a non-interest bearing loan from the Bahá’í World Centre to the National Spiritual Assembly for a maximum period of thirty years.

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(r) Significant management judgement in applying accounting policies When preparing the financial statements, management undertakes a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses.

(s) New and revised accounting standards that are effective for these financial statements: A number of new and revised standards became effective for the first time to annual periods beginning on or after 1 January 2018. Information on the more significant standard(s) is presented below.

AASB 9 Financial Instruments

AASB 9 Financial Instruments replaces AASB 139 Financial Instruments: Recognition and Measurement. It makes major changes to the previous guidance on the classification and measurement of financial assets and introduces an ‘expected credit loss’ model for impairment of financial assets.

When adopting AASB 9, the National Spiritual Assembly has applied transitional relief and opted not to restate prior periods. There are no differences arising from the adoption of AASB 9 in relation to classification, measurement, and impairment recognised as at 1 January 2018. On the date of initial application, 1 January 2018, National Spiritual Assembly held financial assets of cash and cash equivalents, trade and other receivables, and loans to Bahá’ís and Bahá’í Institutions, and financial liabilities of trade and other payables, call deposits from Bahá’ís and Bahá’í institutions and borrowings from Bahá’í institutions.

Under AASB 139, these financial instruments were classified and measured at amortised cost and remain consistent under AASB 9. Further, reclassifications under AASB 9 of held to maturity financial assets under AASB 139 were reclassified at amortised cost, and available-for-sale financial assets have been reclassified to fair value through other comprehensive income (FVOCI). No restatement was required because of these reclassifications.

The financial assets are considered low credit risk and therefore the impairment allowance is determined as 12 months expected credit losses.

The National Spiritual Assembly of the Bahá’ís of Australia Incorporated Notes to the financial statements

Loans payable (continued)

The loan amount has been provided by the Bahá’í World Centre for the purposes of investment activity in Australia. All income generated from the investment activity is to be used to fund charitable projects.

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The National Spiritual Assembly of the Bahá’ís of Australia Incorporated Notes to the Financial Statements 02(a) Other expenses Consolidated NSA

Note 2018$

2017 $

2018$

2017$

Other expense from ordinary activities 4,558,688 5,040,601 4,521,446 4,065,860

The ordinary expense is arrived after

charging (crediting) the following items:

Amortisation on loan - - - -

Depreciation

- Buildings 810,903 789,600 810,903 789,600

- Improvements 461,242 461,242 461,242 461,242 - Plant and equipment 133,594 140,228 133,594 140,228

Total 1,405,739 1,391,070 1,405,739 1,391,070

Bad debts and allowance for expected credit losses 6(a) 900 (1,614) 900 (1,614)

Provisions - Diminution of the value of inventory (46,966) 69,479 (46,966) 69,479 - Employee benefits 11 73,202 45,285 73,202 45,285

26,236 114,764 26,236 114,764

02(b) Borrowing Costs Borrowing costs - Bahá’ís and Bahá’í Institutions 150,065 188,494 150,065 188,494

150,065 188,494 150,065 188,494

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The National Spiritual Assembly of the Bahá’ís of Australia Incorporated Notes to the Financial Statements 02(c) Revenue from ordinary activities Consolidated NSA

Note 2018$

2017 2018 $

2017$

Revenue from sale of goods 229,357 183,357 229,357 183,357

Contributions 10,665,597 6,748,015 10,009,638 5,868,263

Other revenues from ordinary activities Fees and payment for services 212,498 229,157 212,498 229,157 Interest received 442,911 336,591 379,196 297,847 Rent received 2,043,267 1,838,861 2,043,267 1,838,861 Profit/(Loss) on Sale of Assets 1,259,081 (208) 1,259,081 (208) Other revenue 136,142 97,513 136,142 97,513

4,093,899 2,501,914 4,030,184 2,463,170

03. Audit services Auditors of the National Spiritual Assembly Grant Thornton: Audit and review of financial reports 35,300 28,300 35,300 28,300

35,300 28,300 35,300 28,300

04. Cash and cash equivalents Cash at bank 24,873,614 9,583,295 21,598,281 8,314,066 Cash on hand 26,164 10,547 26,164 10,547

24,899,778 9,593,842 21,624,445 8,324,613

05. Other financial assets Term deposits 298,248 2,938,714 - 1,316,795 Security deposits 38,726 25,066 38,726 25,066

336,974 2,963,780 38,726 1,341,861

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06. Trade and other receivables Note Consolidated NSA

2018$

2017 $

2018$

2017$

Current

Trade receivables 38,122 62,095 38,122 62,095

Less: Provision for expected credit losses - - - -

38,122 62,095 38,122 62,095

Goods and Services Tax Receivable 16,176 14,914 16,176 14,914

54,298 77,009 54,298 77,009

Non-current

Loans to Bahá’ís and Bahá’í Institutions 576,611 629,611 576,611 629,611

576,611 629,611 576,611 629,611

The non-current receivable includes a loan of $570,185 to The Spiritual Assembly of the Bahá’ís of Hornsby Limited. The loan is secured against freehold property and attracts interest at the market rate at which the National Spiritual Assembly could have invested the funds, plus a small amount to cover administrative costs. The non-current receivable also includes an interest free loan of $6,426 to The Spiritual Assembly of the Bahá’ís of Manningham Limited for the purposes of establishing a book shop.

06(a) Bad debts and provision for expected

credit losses

Bad Debts written off to Profit and Loss

Account

- Trade Debtors 900 141 900 141 Transfers to provisions for expected credit losses - Trade Debtor - (1,755) - (1,755)

900 (1,614) 900 (1,614)

07. Inventories

Goods on hand at cost 364,375 404,835 364,375 404,835

Less: Provision for diminution in value of inventory

(26,363) (73,329) (26,363) (73,329)

338,012 331,506 338,012 331,506

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The National Spiritual Assembly of the Bahá’ís of Australia Incorporated Notes to the Financial Statements 08. Property, plant and equipment Note Consolidated NSA

2018$

2017 $

2018$

2017$

FREEHOLD LAND At Independent Valuation 8(a) 22,500,000 22,500,000 22,500,000 22,500,000 At Cost 21,606,038 24,429,223 21,606,038 24,429,223 Total Land 44,106,038 46,929,223 44,106,038 46,929,223

BUILDINGS At Independent Valuation 8(a) 23,580,018 23,769,235 23,580,018 23,769,235 Less Accumulated Depreciation (6,568,977) (5,888,394) (6,568,977) (5,888,394)

17,011,041 17,880,841 17,011,041 17,880,841 At Cost 4,753,165 5,291,680 4,753,165 5,291,680 Less Accumulated Depreciation (329,164) (283,095) (329,164) (283,095) 4,424,001 5,008,585 4,424,001 5,008,585 Total Buildings 21,435,042 22,889,426 21,435,042 22,889,426

IMPROVEMENTS IN PROGRESS At Cost 8(b) 5,118,106 5,118,106 5,118,106 5,118,106 Less Accumulated Depreciation (3,000,039) (2,538,797) (3,000,039) (2,538,797) Total Improvements 2,118,067 2,579,309 2,118,067 2,579,309

PLANT AND EQUIPMENT FURNITURE AND FITTINGS

Carpets and Antiques

At Independent Valuation 8(c) 281,580 294,530 281,580 294,530 Plant and Equipment At Cost 2,031,098 1,996,467 2,031,098 1,996,467 Less Accumulated Depreciation (1,615,997) (1,507,756) (1,615,997) (1,507,756)

415,101 488,711 415,101 488,711

Total Plant & Equipment, Furniture & Fittings 696,681 783,241 696,681 783,241

Total Property, Plant and Equipment 68,355,828 73,181,199 68,355,828 73,181,199

08(a) The valuation of Land & Buildings owned by the National Spiritual Assembly, was based on market value. The independent valuations were carried out on 17 December 2014 by Propell National Valuers. The revaluation increments have been transferred to an Asset Revaluation Reserve.

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08(b) Property, plant and equipment (continued)

The National Spiritual Assembly has continued since 2002 with major new developments at the National Bahá’í Centre properties at Ingleside. These developments include landscaping and development of the grounds, upgrading of the House of Worship, the Information Centre, and other buildings. These developments represent capital expenditure as they are improvements to the value of the National Bahá’í Centre. They are recorded in the accounts as capital improvements at cost, with work in progress to be allocated to the various projects at completion. Following completion, each improvement is depreciated over its estimated useful life. Firm commitments for the new developments, including contracts signed for such works, not recognised as liabilities at the reporting date are:

Note Consolidated NSA

2018$

2017 $

2018$

2017$

Within one year - - - -

- - - -

08(c) The valuation of Persian Carpets, including antiques, was based on replacement value. The valuations were made by

Mr Sirous Master and Mr Mehran Karimian of Rahmani’s Rug Gallery, Carpet Merchants, in January 2019.

08(d) Note Consolidated NSA

2018$

2017 $

2018$

2017$

Reconciliations of the carrying amounts for each class of property, plant and equipment are set out below:

Total

Carrying amount at beginning 73,181,199 62,851,467 73,181,199 62,851,467

Adjustments to opening balance 632,458 - 632,458 - Additions 131,000 11,721,008 131,000 11,721,008 Asset Revaluations (32,970) - (32,970) - Depreciation (1,405,739) (1,391,070) (1,405,739) (1,391,070) Disposals (4,150,120) (206) (4,150,120) (206)

68,355,828 73,181,199 68,355,828 73,181,199

Freehold Land


Adjustments to opening balance 632,458 - 632,458 -

Additions - 9,500,000 - 9,500,000

Disposals (3,455,643) - (3,455,643) -

44,106,038 46,929,223 44,106,038 46,929,223

The adjustment to the opening balance for land was made to take up into the value of the land, the amounts of stamp duty and other smaller adjustments, paid at the time of settlement of the purchase of the Smithfield property.

Buildings


Adjustment to opening balance - 251,528 - 251,528

Additions 22,268 2,065,177 22,268 2,065,177

Depreciation (810,903) (789,600) (810,903) (789,600)

Disposals (665,749) - (665,749) -

21,435,042 22,889,426 21,435,042 22,889,426

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08(d) Property, plant and equipment (continued)


2018$

2017 $

2018$

2017$

Improvements


Adjustment to opening balance - (251,528) - (251,528)

Depreciation (461,242) (461,242) (461,242) (461,242)

2,118,067 2,579,309 2,118,067 2,579,309

Plant and Equipment, Furniture and Fittings

Carrying amount at beginning 783,241 767,844 783,241 767,844

Additions 108,732 155,831 108,732 155,831 Asset Revaluations (32,970) - (32,970) -

Depreciation (133,594) (206) (133,594) (206)

Disposals (28,728) (140,228) (28,728) (140,228)

696,681 783,241 696,681 783,241

09. Other assets

Prepaid expenses 85,132 66,258 85,132 66,258

85,132 66,258 85,132 66,258

10. Creditors and Borrowings

Current

Trade Creditors 71,723 53,026 71,723 53,026

Borrowings External 32,290 30,090 32,290 30,090

Call Deposits from Bahá’ís and Bahá’í Institutions

3,082,294 7,462,291 3,082,294 7,462,291

3,186,307 7,545,407 3,186,307 7,545,407

Call Deposits constitute deposits made by individual Bahá’ís, with a 31 day call period, and Bahá’í Institutions, with a

14 day call period, to the Bahá’í Investment Fund. Interest is paid monthly and calculated on daily balances with rates varying between 0% and market rate.

Non-current

Borrowing from Bahá’í Institutions 34,380,000 30,000,000 34,380,000 30,000,000

34,380,000 30,000,000 34,380,000 30,000,000

The long term borrowing comprises a loan from the Bahá’í World Centre made during the 2014 financial year. The loan is unsecured, interest free and not subject to a fixed date of repayment. Repayment of the loan will not be sought for a period of at least 12 months after 28 March 2019 provided The National Spiritual Assembly of the Bahá’ís of Australia Incorporated complies with the loan covenants by continuing with its normal activities. For the purposes of this financial report the loan is denominated in Australian Dollars. In April 2018 a Deed of Amendment was signed Increasing the amount of the loan.

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11. Provisions

Consolidated NSA

Note 2018$

2017 $

2018$

2017 $

Current

Employees

- Annual Leave 204,095 158,763 204,095 158,763

- Long Service Leave 78,666 61,846 78,666 61,846

- Staff Provident Fund 48,066 53,079 48,066 53,079

Other 45,000 45,000 45,000 45,000

375,827 318,688 375,827 318,688

Non-current

Employees

- Long Service Leave 40,587 24,523 40,587 24,523

Other - - - -

40,587 24,523 40,587 24,523

12. Other liabilities

Current

Accrued Expenses 35,300 28,300 35,300 28,300

Prepaid orders and subscriptions 1,695 2,892 1,695 2,892

36,995 31,192 36,995 31,192

Earmarked Contributions - Teaching 4,768 4,768 4,768 4,768

- Other 5,579 131,216 5,579 131,216

10,347 135,984 10,347 135,984

47,342 167,176 47,342 167,176

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The National Spiritual Assembly of the Bahá’ís of Australia Incorporated Notes to the Financial Statements 13. Reserves

Consolidated NSA

Note 2018$

2017 $

2018$

2017 $

Asset Revaluation

- Balance at the beginning of the financial year

20,663,643 20,663,643 20,663,643 20,663,643

- Additions (32,970) - (32,970) -

- Balance at the end of the financial year 20,630,673 20,663,643 20,630,673 20,663,643

Earmarked Funds


2,931,166 2,749,800 1,480,161 1,749,800

- Utilised (163,364) (263,093) (163,364) (281,094)

- Additions 1,357,293 444,459 1,336,810 11,455

- Balance at the end of the financial year 4,125,095 2,931,166 2,653,607 1,480,161

The Earmarked Funds reserve was created in 2016 to reflect the decision of the National Spiritual Assembly to set

aside funds from the sale of land at 315-317 Canterbury Road Canterbury Victoria, as an earmark for use for current and future Baha’i properties in Victoria. In 2017 the funds earmarked for Bahá’í Children’s Classes that arose from the reassignment of the surplus BESS Fund contributions were also added to this reserve, and some of those funds were utilised in 2017. In 2018 all of the funds earmarked for Bahá’í Children’s Classes were utilised, and a contribution earmarked for the Tasmanian Bahá’í Centre of Learning was added to the reserve.

Acquisitions


166,232 166,232 166,232 166,232

- Additions - - - -

- Balance at the end of the financial year 166,232 166,232 166,232 166,232

The Acquisitions reserve was created in 2016 to reflect the acquisition of the net assets of YBCL Ltd by the National

Spiritual Assembly.

Total Reserves 24,922,000 23,761,041 23,450,512 22,310,036

14. Endowments Endowments


109,000 109,000 109,000 109,000

Transferred to retained earnings on death of grantee

(34,000) - (34,000) -

- Balance at the end of the financial year 75,000 109,000 75,000 109,000

These represent capital amounts granted to the National Spiritual Assembly by members of the Bahá’í Faith in Australia, which were accepted by the National Spiritual Assembly on the understanding that during the lifetime of the grantee they may be used only for specific purposes. On the death of the grantee, the National Spiritual Assembly may use the capital as it sees fit.

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15. Statement of cash flows Reconciliation of the operating surplus to net cash flow from operations

Consolidated NSA

Note 2018$

2017 $

2018$

2017 $

Operating Surplus/Deficit 7,229,671 1,497,112 6,547,239 1,553,357

Depreciation

- Buildings 02(a) 810,903 789,600 810,903 789,600

- Improvements 02(a) 461,242 461,242 461,242 461,242

- Plant and Equipment 02(a) 133,594 140,228 133,594 140,228

(Profit)/loss on sale of fixed asset (1,259,081) 208 (1,259,081) 208

Contribution of fixed assets (23,100) (2,000) (23,100) (2,000)

Provisions

- Expected Credit Losses 06(a) - (1,755) - (1,755)

- Diminution of Inventory Value (46,966) 69,479 (46,966) 69,479

- Employees 73,202 45,285 73,202 45,285

- Other (125,637) (27,965) (125,637) (27,965)

Changes in Assets and Liabilities

- Trade Receivables 2,561 89,981 2,561 89,981

- Inventory 40,462 55,747 40,462 55,747

- Pre-paid Subscriptions 734 2,260 734 2,260

- Trade Creditors 27,243 (190,908) 27,243 (190,908)

Net Cash Flow from Operating activities 7,324,828 2,928,514 6,642,396 2,984,759

16. Regional Bahá’í Councils and National Agencies The National Spiritual Assembly appoints Regional Bahá’í Councils and a number of executive and advisory agencies

located throughout Australia. These agencies all receive at least some funding directly from the National Spiritual Assembly. Some of these agencies are also partly self-funded, receiving income from contributions or by charging for the services they provide to the community.

17. Related party disclosures Remuneration received or due and

receivable by members of the National

Spiritual Assembly and staff

2,626,689 2,327,884 2,626,689 2,327,884

Superannuation payments for the provision

of retirement benefits for members of the

National Spiritual Assembly and staff

198,442 184,097 198,442 184,097

2,825,131 2,511,981 2,825,131 2,511,981

22


18. Finance facilities Note Consolidated NSA

2018$

2017 $

2018$

2017$

Standby arrangement to provide funds and

support facilities.

Credit Facility - 500,000 - 500,000 Amount Utilised - - - - Unused Credit Facility - 500,000 - 500,000 The finance facility comprised of a Line of Credit with Westpac Banking Corporation for $500,000. The facility was

terminated in 2018.

19. Retained earnings


2018$

2017 $

2018$

2017$

Retained surplus at the beginning of the year 24,917,370 23,601,624 23,477,227 21,654,231 Transfer to earmarked funds reserve and (527,471) (181,366) (506,989) 269,639 adjustment to opening balance Operating surplus/(deficit) for the year 7,229,671 1,497,112 6,547,239 1,553,357

Retained surplus at the end of the year 31,619,570 24,917,370 29,517,477 23,477,227

20. Operating lease commitments Non-cancellable operating leases contracted for but not capitalised in the financial statements.


2018

$ 2017

$ 2018

$ 2017

$ Payable – minimum lease payments: - Not later than twelve (12) months 423,267 464,248 423,267 464,248

- Between twelve (12) months and five

(5) years

- - - -

- Greater than five (5) years - - - - Total operating lease commitments 423,267 464,248 423,267 464,248

21. Contingent assets and liabilities and commitments There are no contingent assets, liabilities or commitments as at 31 December 2018.

23

Declaration by the Responsible Entities of the National Spiritual Assembly The National Spiritual Assembly members in office for the year ending 31 December 2018 are: Mrs Saloomeh Mohebbaty (Chairperson), Dr Shayan Tai (Vice-Chairperson), Mr Mathew James (Secretary), Dr Kia Manouchehri (Treasurer), Mrs Fiona McDonald, Mr Anton Jones, Dr Fiona Scott, Professor Fariborz Moshirian, and Mr Christopher Heggie. In the opinion of the Responsible Entities of the National Spiritual Assembly of the Bahá’ís of Australia Incorporated - 1) the financial statements and notes of National Spiritual Assembly of the Bahá’ís of Australia Incorporated

are in accordance with the requirements of the Associations Incorporation Act 1991 (ACT) and the Australian Charities and Not-for-profits Commission Act 2012, including:

a) giving a true and fair view of the National Spiritual Assembly of the Bahá’ís of Australia Incorporated

financial position as at 31 December 2018 and of its performance for the financial year ended on that date; and

b) complying with Australian Accounting Standards – Reduced Disclosure Requirements, Section 73(1) of the Associations Incorporation Act 1991 (ACT) and Australian Charities and Not-for-profits Commission Regulation 2013.

2) There are reasonable grounds to believe that the National Spiritual Assembly of the Bahá’ís of Australia

Incorporated will be able to pay its debts as and when they become due and payable.

Dated at Sydney 31 March 2019. Signed in accordance with a resolution of the Responsible Entities and is signed on behalf of the Responsible Entities by:

__________________________________ __________________________________ Mathew James Kia Manouchehri National Secretary National Treasurer

24

Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389 ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited. Liability limited by a scheme approved under Professional Standards Legislation.

www.grantthornton.com.au

Level 17, 383 Kent Street Sydney NSW 2000 Correspondence to: Locked Bag Q800 QVB Post Office Sydney NSW 1230 T +61 2 8297 2400 F +61 2 9299 445 E [email protected] W www.grantthornton.com.au

Independent Auditor’s Report

To the Members of The National Spiritual Assembly of the Bahá’ís of Australia Incorporated

Report on the audit of the financial report

Opinion

We have audited the financial report of The National Spiritual Assembly of the Bahá’ís of Australia Incorporated (the “Registered Entity”), which comprises the statement of financial position as at 31 December 2018, and the statement of surplus or deficit and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and Statement by Members of the Registered Entity.

In our opinion, the financial report of The National Spiritual Assembly of the Bahá’ís of Australia Incorporated has been prepared in accordance with Division 60 of the Australian Charities and Not-for-profits Commission Act 2012, including:

a giving a true and fair view of the Registered Entity’s financial position as at 31 December 2018 and of its financial performance for the year then ended; and

b complying with Australian Accounting Standards (Reduced Disclosure) and Division 60 of the Australian Charities and Not-for-profits Commission Regulation 2013.

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Registered Entity in accordance with the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

25

Responsibilities of the Responsible Entities for the financial report

The Responsible Entities of the Registered Entity are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards and the ACNC Act, and for such internal control as the Responsible Entities determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the Responsible Entities are responsible for assessing the Registered Entity’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Responsible Entities either intend to liquidate the Registered Entity or to cease operations, or have no realistic alternative but to do so.

The Responsible Entities are responsible for overseeing the Registered Entity’s financial reporting process.

Auditor’s responsibilities for the audit of the financial report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Registered Entity’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Responsible Entities.

• Conclude on the appropriateness of the Responsible Entities’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Registered Entity’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Registered Entity to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision, and performance of the Group audit. We remain solely responsible for our audit opinion.

26

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Grant Thornton Audit Pty Ltd

Chartered Accountants

A G Rigele

Partner – Audit & Assurance

Sydney, 31 March 2019

27

Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389 ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited. Liability limited by a scheme approved under Professional Standards Legislation.

www.grantthornton.com.au

Level 17, 383 Kent Street Sydney NSW 2000 Correspondence to: Locked Bag Q800 QVB Post Office Sydney NSW 1230 T +61 2 8297 2400 F +61 2 9299 4445 E [email protected] W www.grantthornton.com.au

Auditor’s Independence Declaration

To the Members of The National Spiritual Assembly of the Bahá’ís of Australia Incorporated

In accordance with the requirements of section 60-40 of the Australian Charities and Not-for-profits Commission Act 2012, as lead auditor for the audit of National Spiritual Assembly of the Bahá’ís of Australia Incorporated for the year ended 31 December 2018, I declare that, to the best of my knowledge and belief, there have been no contraventions of any applicable code of professional conduct in relation to the audit.

Grant Thornton Audit Pty Ltd Chartered Accountants A G Rigele Partner – Audit & Assurance Sydney, 31 March 2019

Documents

Annual Financial Report · surplus of the National Spiritual Assembly (“NSA”) for the year ending 31 December 2018 was $6,547,239 compared to a surplus of $1,553,357 for the year