Pleasant words are as a honeycomb, sweet to the soul
This week I was in the final stages of agreeing to an implementation program for a new program we will use to manage our policies, procedures and information management systems. The program will support our systems to remain compliant as we move through this period of huge post Royal Commission change in aged care laws and regulations. I was deeply connected to the conversation and really enjoying the planning process until one simple comment threw me out of orbit … ok, you will need to engage your SME to check .. I sat puzzled and concerned as to why I needed to engage a small to medium enterprise – another business, to check something when I had already engaged this company to provide me with the service… the conversation no longer felt ‘sweet’. My confused look prompted the presenter to stop and ask me if everything was ok and we quickly realised that her reference to SME as a person in the software implementation field meant a manager who is a ‘subject matter expert’ whereas in my world as an Accountant – SME means ‘small to medium enterprise’. We were able to laugh and quickly move on, however on the drive home I reflected further on the power of words and the 9380 words I had just been poring over in our Annual Company Accounts.
This month we will hold our Annual General Meeting of Residents. By the time this edition of Village Voice goes to print you will already have been issued with your Notice of Meeting and the audited financial statements for service fee income and expenses. If you choose to also download and read the full 32-page Company Accounts, please note that the segment information does not reflect the service fee areas. For Village Baxter and Rosebud Village service fee revenue and expenses, you received separate Audited Accounts for these as required by the Retirement Villages Act.
Financial Year 2022 has been an exceptionally difficult year for companies across the world as the full impact of the Pandemic was felt. The Village has weathered this storm well and in terms of demand for Units, both Villages have their highest ever waiting list numbers and lowest number of units under refurbishment. Even with the costs of closing the Lodge, the significant amount of sick leave wages and replacement staff costs, service delivery restrictions and shutdowns in sales and homecare, vacancies in Manor and Lodge, Covid related protective equipment purchases etc. we have, in practical terms, not spent more than we earned.
However, the words in the Accounting Standards that we must adhere to in our Audited Annual Accounts, produce what some may see as a different result. We are required to recognise the annual change in the share portfolio value as an income or expense even though we still hold the shares and don’t intend to sell them. Last year’s ‘gain’ was offset by a similar size ‘loss’ this year but in reality, the Stock Market was at a low point on 30th June this year and we still hold the same shares – no doubt next year this will swing back the other way and we will report a ‘gain’ again. The words of Accounting standard AASB16 classify the refundable Aged Care bond monies we hold as ‘operating leases’, so we also have to recognise a notional interest income and interest expense on the value of these ‘operating leases’ that 100% offset each other, which makes no sense to anyone. We have no discretion in applying this rule, we only have to explain that the AASB16 interest income and expense did not occur in cash terms, and are only a reporting requirement in our Audited Accounts.
If you have any questions on the Audited Statements that were sent to you at the end of August or on the full set of Company Accounts, please just ask so I can provide you with an answer and also update the Annual General Meeting presentation if needed.
Have a great month.
Cheers, Kim Jackson, CEO