Finance and Audit Committee Annual Report
The Quarterly 2014
I am pleased to table the Annual Report for 2012-2013. With respect to the 2012-13 Financial Report consolidated audited accounts, I am pleased to report that the College’s Auditor, Morton, Watson and Young, has provided an unqualified audit report for the year which was received by the Finance and Audit Committee on 31st July, 2014 and subsequently circulated to the Board and posted on the College website. I trust that you have had the chance to review the report on the website.
The Finance and Audit Committee has continued to meet on a quarterly basis during the year, reporting to the elected Board. The RACMA Financial Statement for 2012-13 highlights are a profit of $594,930 which is a little less than that of $629,531 in the previous financial year, with the Total Equity increasing from $3.86m as at June 30, 2013 to $4.45m at June 30, 2014. There were significant increases in revenue in relation to Membership Subscriptions and Training Fees based on increased membership numbers and increased enrolment in training programs, from $1.235m to $1.577m an increase of $341,571 which represents an increase of 27.6%, notably the Associate Fellowship Training Program. Membership Fees increases had been only 3%.
Project revenue declined by $175,874 from $471,918 to $296,044. There was no AMC Levy in 2012-13 which had raised $55,250 in the previous financial year. Total Operating Expenses increased from $1.45m to $1.55m representing an increase of 6.5%. Overall Income increased from $2.082m to $2.143m resulting in a profit for the year.
In my Annual Report at the 2013 AGM I provided a summary of the achievements over the previous five years which came from a Financial Strategic Plan agreed in 2008. Since then the Board has revisited the College’s Strategic Plan based on the several key themes to promote the College, namely, Presence, Advocacy, Courses, and Expansion (PACE).
Within each Strategic Objective there were a number of actions to be taken over the three year time horizon. Cost estimates were prepared for those Strategic Initiatives agreed by the Board, which are over and above the Operating Budget, and a Financial Forecast was prepared for the 2014-2018 time period, identifying the potential impact on the College’s financial bottom line.
The total cost of implementing these strategic initiatives is estimated at $325,000 in 2014-15, and $431,800 in 2015-16 of which $200,000 might be invested as part of an NHMRC Research Project. Without that eventuation, the additional expenditures would total $231,800 in 2015-16.
These were considered against the potential revenue sources. The potential revenue sources include estimates of project recovery monies based on current contracts with the Commonwealth and an indicative figure of other sources of revenue that the College might pursue. Up until 2014-15 the project recovery monies were not included in the Operating Budget, and essentially added to the College’s Unrestricted Reserves.
The Board has agreed to invest such recoveries in 2014-15, and 2015-16 in the activities which support the College’s Strategic Plan. RACMA Equity as of June 30, 2014 would remain as the reserve.
The following charts highlight key areas impacting the financial position of the College:
1. Australasian Membership Profile
2. Operating Profit: 2008-2014
3. Equity Position: 2008-2014
4. Key Areas of Revenue: 2008-2014
5. Membership Fees as a % of Revenue
As regards the Operating Budget (Core business of Education and Training excluding Project Recoveries and Management Fees) for 2014-15 it is based conservatively at $1.95M, as a balanced budget with a profit estimate of $480.
The AMC Levy is discontinued. Provision has been made for further support for Faculty Education and Training to meet accreditation, curriculum, and robust assessment of Candidate and Trainees training outcomes.
The Board is committed to the implementation of its Investment Strategy for the 2014-2018 period. Investments over the four year period are estimated at $1.07M which includes the potential transfer of $0.5M to a College related Research Foundation, and participation in a major NHMRC Research Project of $200,000 p.a. for three years. In 2014-15 the Strategic Initiatives include maintaining the Research Training Fellow, and the Dean of the Faculty of Education, recruitment of external Faculty, initiation of the Minimex Trial, and Evaluation of the Training Programs.
I wish to thank the Members of the Finance and Audit Committee, Drs Michael Walsh, Kevin Morris and Lee Gruner. I also wish to thank the Chief Executive Dr Karen Owen for her ongoing commitment and efforts on behalf of the College. It is largely due to her efforts that the College is now recognised as a project resource by the Commonwealth.
In addition I wish every success to Dr Humsha Naidoo as the incoming Chair of the Finance and Audit Committee in the Committee’s future endeavours. I commend the Annual Financial Report for 2013-14 to Fellows and Members for endorsement.
Dr Draginja Kasap
Chair, Finance and Audit Committee