SECTION 130 PACK IN RELATION TO THE PROPOSED TRANSFER OF ENGAGEMENTS OF COMHAR CHREIDMHEASA CHORCA DHuIbHNE TEORANTA TO CARA CREDIT uNION LTD.
PACÁISTE - ALT 130 MAIDIR LEIS AN AISTRIÚ GEALLTANAIS ATÁ BEARTAITHE AG COMHAR CHREIDMHEASA CHORCA DHUIBHNE TEORANTA CHUIG COMHAR CREIDMHEASA CARA TEORANTA.
COMHAR CHREIDMHEASA CHORCA DHuIbHNE TEORANTA
SECTION 130 PACK
CONTENTS Proposed Transfer of Engagements Section 130 Notice
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Cara Credit union Annual Accounts
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Comhar Chreidmheasa Chorca Dhuibhne Annual Accounts
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We are pleased to inform you that, on the 1st November 2023, the Board of Directors of Comhar Chreidmheasa Chorca Dhuibhne Teoranta passed a resolution to transfer their engagements to Cara Credit Union Limited. The Board of Directors of Cara Credit Union Limited have also passed a resolution to accept the engagements of Comhar Chreidmheasa Chorca Dhuibhne Teoranta. The proposed transfer of engagements is subject to the approval of the Central Bank of Ireland. The original intention of both credit unions was that the Transfer of Engagements would be presented for approval to the respective memberships. However, given the decline in the capital position of Comhar Chreidmheasa Chorca Dhuibhne Teoranta, both credit unions, following consultations with the Central Bank, considered it prudent to proceed by Board resolution. This merger will bring the two Credit Unions together to form a Credit Union with over 65,000 members and in excess of €319 million in assets. The decision to come together was made so that we will be stronger as one and we can provide an enhanced range of services for all of our members. The Boards of Directors of both Credit Unions are confident that the enlarged Credit Union will strengthen our position as the most trusted, respected and preferred financial institution for all of our members. Four staff members from Comhar Chreidmheasa Chorca Dhuibhne Teoranta will transfer to Cara Credit Union Limited under the Transfer of Undertakings (protection of employment) regulations 2006. We would like to take this opportunity to thank you the members for your continued loyalty to your Credit Union. In particular, we would like to acknowledge the voluntary contribution of the members of the Board of Directors, Board Oversight Committee, and volunteers of Comhar Chreidmheasa Chorca Dhuibhne Teoranta over the years. Included for your information are our Board Resolutions approving the proposed transfer and also the statements required under Section 130 of the Credit Union Act, 1997 (as amended).
Eddie Enright, Chairperson, Cara Credit Union Limited Michael Dooley Cathaoirleach, Comhar Chreidmheasa Chorca Dhuibhne Teoranta 2
SECTION 130 PACK
Tá áthas orainn a chur in iúl daoibh gur rith Bord Stiúrthóirí Chomhar Chreidmheasa Chorca Dhuibhne Teoranta, rún ar an 1 Samhain 2023, chun a gcuid gníomhaíochtaí a aistriú chuig Comhar Creidmheasa Cara Teo. Tá rún rite ag Bord Stiúrthóirí Chomhar Creidmheasa Cara Teoranta chomh maith chun glacadh le rannpháirtíocht Chomhar Chreidmheasa Chorca Dhuibhne Teoranta. Tá an t-aistriú gealltanais atá beartaithe faoi réir cheadú Bhanc Ceannais na hÉireann. B’é aidhm bhunaidh an dá chomhar creidmheasa ná go gcuirfí Aistriú Rannpháirtíochta i láthair lena cheadú do na baill faoi seach. Mar gheall ar an laghdú ar staid chaipitil Chomhar Chreidmheasa Chorca Dhuibhne Teoranta, áfach, mheas an dá chomhar creidmheasa, tar éis dul i gcomhairle leis an mBanc Ceannais, go mbeadh sé stuama leanúint ar aghaidh le réiteach an Bhoird. Tabharfaidh an cumasc seo an dá Chomhar Creidmheasa le chéile chun Comhar Creidmheasa a bhunú ina mbeidh níos mó ná 65,000 ball agus os cionn €319 milliún i sócmhainní. Deineadh an cinneadh teacht le chéile ionas go mbeimid níos láidre mar aonad amháin agus go mbeimid in ann raon níos fearr seirbhísí a chur ar fáil dár mbaill go léir. Tá Boird Stiúrthóirí an dá Chomhair Chreidmheasa muiníneach go neartóidh an Comhar Creidmheasa méadaithe ár seasamh mar an institiúid airgeadais is iontaofa, is mó meas agus is fearr ar mhaithe leis na baill go léir. Aistreoidh ceathrar ball foirne ó Chomhar Chreidmheasa Chorca Dhuibhne Teoranta chuig Comhar Creidmheasa Cara Teoranta faoi na Rialacháin um Aistriú Gnóthas (cosaint fostaíochta) 2006. Ba mhaith linn an deis seo a thapú chun buíochas a ghabháil libh as bhur gcuid dílseachta leanúnaigh dod’ Chomhar Creidmheasa. Ba mhaith linn aitheantas a thabhairt do rannpháirtíocht dheonach bhaill an Bhoird Stiúrthóirí, Coiste Maoirseachta an Bhoird, agus oibrithe deonacha Chomhar Chreidmheasa Chorca Dhuibhne Teoranta thar na blianta. San áireamh mar eolas daoibh tá ár Rúin Bhoird a cheadaíonn an t-aistriú beartaithe agus na ráitis a éilítear faoi Alt 130 den Acht um Chomhar Creidmheasa, 1997 (arna leasú).
Eddie Enright, Cathaoirleach, Comhar Creidmheasa Cara Teoranta Michael Dooley Cathaoirleach, Comhar Chreidmheasa Chorca Dhuibhne Teoranta 3
SECTION 130 PACK
PROPOSED TRANSFER OF ENGAGEMENTS
PASSED BOArD rESOluTION - CArA CrEDIT uNION lIMITED That at its meeting of the 1st November 2023, the Board of Directors of Cara Credit Union Limited resolved to undertake the engagements of Comhar Chreidmheasa Chorca Dhuibhne Teoranta in accordance with the relevant provisions of the Credit Union Act 1997 (as amended). Sean roche, Secretary, Cara Credit Union Limited
Cara Credit union limited statement required under section 130 of the Credit union Act 1997 (as amended) in respect of Comhar Chreidmheasa Chorca Dhuibhne Teoranta In accordance with Section 130 of the Credit Union Act, 1997 (as amended), the following matters are required to be stated: 1. The financial position of Cara Credit Union Limited and of Comhar Chreidmheasa Chorca Dhuibhne Teoranta is set out in the form of the audited annual accounts for Cara Credit Union limited as at 30th September 2022 and the most recent unaudited Income and Expenditure Account and Balance Sheet as at 31st August 2023, and the audited annual accounts for Comhar Chreidmheasa Chorca Dhuibhne Teoranta as at 30th September 2022 and the most recent unaudited Income and Expenditure Account and Balance Sheet as at 31st August 2023. 2. No payment is proposed to be made to the members of Comhar Chreidmheasa Chorca Dhuibhne Teoranta or Cara Credit Union Limited in consideration of the proposed transfer. 3. There will be no change to the terms governing outstanding loans currently held by members in Comhar Chreidmheasa Chorca Dhuibhne Teoranta or Cara Credit Union Limited. Members with current loans in Cara Credit Union and Comhar Chreidmheasa Chorca Dhuibhne will continue to repay loans under the existing terms of their credit agreements. New loans issued after the transfer of engagements will be at the then prevailing loan rate in Cara Credit Union Limited. 4. Staff at Comhar Chreidmheasa Chorca Dhuibhne Teoranta and Cara Credit Union Limited have been fully appraised of all aspects of the transfer of engagements and are very much involved in the transfer of engagements process. The staff of Comhar Chreidmheasa Chorca Dhuibhne Teoranta will transfer to Cara Credit Union Limited under the Transfer of Undertakings (Protection of Employment) Regulations 2003. 4
SECTION 130 PACK
PASSED BOArD rESOluTION - COMhAr ChrEIDMhEASA ChOrCA DhuIBhNE TEOrANTA That at its meeting of the 1st November 2023, the Board of Directors of Comhar Chreidmheasa Chorca Dhuibhne Teoranta resolved that the Credit Union transfers its engagements to Cara Credit Union Limited in accordance with the relevant provisions of the Credit Union Act 1997 (as amended). Dermot Cahill, Secretary, Comhar Chreidmheasa Chorca Dhuibhne Teoranta
Comhar Chreidmheasa Chorca Dhuibhne Teoranta statement required under section 130 of the Credit union Act 1997 (as amended) 1. The financial position of Cara Credit Union Limited and of Comhar Chreidmheasa Chorca Dhuibhne Teoranta is set out in the form of the audited annual accounts for Cara Credit Union Limited as at 30th September 2022 and the most recent unaudited Income and Expenditure Account and Balance Sheet as at 31st August 2023, and the audited annual accounts for Comhar Chreidmheasa Chorca Dhuibhne Teoranta as at 30th September 2022 and the most recent unaudited Income and expenditure account and Balance sheet as at 31st August 2023. 2. No payment is proposed to be made to the members of Comhar Chreidmheasa Chorca Dhuibhne Teoranta or Cara Credit Union Limited in consideration of the proposed transfer. 3. There will be no change to the terms governing outstanding loans currently held by members in Comhar Chreidmheasa Chorca Dhuibhne Teoranta or Cara Credit Union Limited. Members with current loans in Cara Credit Union and Comhar Chreidmheasa Chorca Dhuibhne will continue to repay loans under the existing terms of their credit agreements. New loans issued after the transfer of engagements will be at the then prevailing loan rate in Cara Credit Union Limited. 4. Staff at Comhar Chreidmheasa Chorca Dhuibhne Teoranta and Cara Credit Union Limited have been fully appraised of all aspects of the transfer of engagements and are very much involved in the transfer of engagements process.
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SECTION 130 PACK
RÚIN BHOIRD A RITHEADH - COMHAR CHREIDMHEASA CHORCA DHUIBHNE TEORANTA Gur chinn Bord Stiúrthóirí Chomhar Chreidmheasa Chorca Dhuibhne Teoranta, ag a chruinniú an 1 Samhain 2023, go n-aistreodh an Comhar Creidmheasa a ghealltanais chuig Comhar Creidmheasa Cara Teoranta de réir fhorálacha iomchuí an Achta um Chomhar Creidmheasa 1997 (arna leasú). Dermot Cahill, Rúnaí, Comhar Chreidmheasa Chorca Dhuibhne Teoranta
Ráiteas a éilítear ó Chomhar Chreidmheasa Chorca Dhuibhne Teoranta faoi alt 130 den Acht um Chomhar Creidmheasa 1997 (arna leasú) 1. Tá staid airgeadais Chomhar Creidmheasa Cara Teoranta agus Chomhar Chreidmheasa Chorca Dhuibhne Teoranta leagtha amach i bhfoirm na gcuntas iniúchta bliantúil do Chomhar Creidmheasa Cara Teoranta amhail an 30 Meán Fómhair 2022 agus na cuntais ioncaim agus caiteachais neamhiniúchta is déanaí agus an clár comhardaithe is déanaí amhail an 31 Iúil 2023, agus cuntais bhliantúla iniúchta Chomhar Chreidmheasa Chorca Dhuibhne Teoranta amhail an 30 Meán Fómhair 2022 agus an cuntas ioncaim agus caiteachais agus an clár comhardaithe neamhiniúchta is déanaí amhail ar an 31 Iúil 2023. 2. Ní bheartaítear aon íocaíocht a dhéanamh le baill Chomhar Chreidmheasa Chorca Dhuibhne Teoranta ná le Comhar Creidmheasa Cara Teoranta i gcomaoin an aistrithe bheartaithe. 3. Ní dhéanfar aon athrú ar na téarmaí a rialaíonn iasachtaí gan íoc atá ag baill i gComhar Chreidmheasa Chorca Dhuibhne Teoranta nó i gComhar Creidmheasa Cara Teoranta faoi láthair. Leanfaidh baill le hiasachtaí reatha i gComhar Creidmheasa Cara agus Comhar Chreidmheasa Chorca Dhuibhne ar aghaidh ag aisíoc iasachtaí faoi théarmaí reatha a gcomhaontuithe creidmheasa. Beidh iasachtaí nua a eiseofar tar éis aistriú gealltanais ag an ráta iasachta atá i bhfeidhm ag an am sin i gComhar Creidmheasa Cara Teoranta. 4. Tá an fhoireann ag Comhar Chreidmheasa Chorca Dhuibhne Teoranta agus ag Comhar Creidmheasa Cara Teoranta tar éis breithmheas iomlán a dhéanamh ar gach gné d’aistriú na n-oibríochtaí agus tá baint mhór acu leis an bpróiseas aistrithe gealltanais.
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SECTION 130 PACK
A NEW PARTNERSHIP Why is this necessary? The Board of Comhar Chreidmheasa Chorca Dhuibhne Teoranta has spent considerable time examining how their members could be better served into the future. Being a smaller credit union inevitably restricts the range and access to services that we can offer to members. The decision to seek a transfer of engagements was made in order to offer additional services to the members whilst ensuring compliance with all relevant legislation and regulations. There is also increased financial strength in combining with a larger credit union. What does a transfer of engagements mean? A transfer of engagement means that Comhar Chreidmheasa Chorca Dhuibhne Teoranta will transfer their assets and liabilities to Cara Credit Union limited. Members in Cara Credit Union and Comhar Chreidmheasa Chorca Dhuibhne can continue in exactly the same way as before with the added advantage of access to all of the services that the combined Credit Union can offer. What will happen next? We envisage that, if the transfer of engagements is approved by the Central Bank, the affairs of Comhar Chreidmheasa Chorca Dhuibhne Teoranta will be transferred to Cara Credit Union Limited before the end of November 2023. All credit union offices may need to close for one business day in order to facilitate the transfer, and members will be kept informed of developments closer to the time. Until then, it is business as usual at both credit unions.
members will have the added advantage of being able to transact their business, if it is convenient for them to do so, in all 6 offices when the transfer takes operational effect. • If you are a member of Comhar Chreidmheasa Corca Dhuibhne Teoranta, a new account number will be issued to you. All of your account balances and information will remain exactly the same. • Members with current loans in Cara Credit Union Limited and Comhar Chreidmheasa Corca Dhuibhne Teoranta will continue to repay loans under the existing terms of their credit agreements. New loans issued after the transfer of engagements will be at the then prevailing loan rate in Cara Credit Union Limited. • If you are a member of Comhar Chreidmheasa Corca Dhuibhne Teoranta once the transfer of engagement takes effect, your savings may attract a lump sum payment towards your funeral expenses, this is called Death Benefit Insurance. Currently this amounts to €1,000 (terms and conditions apply). • If you are a member of Comhar Chreidmheasa Corca Dhuibhne Teoranta, you can now avail of additional products and services, including a globally accepted Mastercard Debit Card for member aged 12 or over. Do I have to do anything? We welcome any comments or queries that members may have on the proposed Transfer of Engagements. Members may write to the Secretary of either credit union, or email them at info@caracreditunion.ie or eolas@cccdteo.ie.
how will this change affect me? For existing members there will be no noticeable change. The offices in Tralee, Castleisland, Killorglin, Ballyduff, Causeway and Corca Dhuibhne will remain open for members. All 7
SECTION 130 PACK
COMHPHÁIRTÍOCHT NUA Cad ina thaobh go bhfuil sé seo riachtanach? Tá go leor ama caite ag Bord Chomhar Chreidmheasa Chorca Dhuibhne Teoranta ag déanamh iniúchadh ar an tslí go bhféadfaí freastal i slí níos fearr ar na baill amach anseo. Is cinnte go gcuirtear srian ar an réimse seirbhísí agus ar an rochtain ar sheirbhísí gur féidir linn a thairiscint do bhaill, toisc gur comhar creidmheasa beag sinn. Glacadh le cinneadh go lorgófaí aistriú gealltanais d’fhonn seirbhísí breise a thairiscint do na baill agus ag an am céanna, a chinntiú go mbeadh an reachtaíocht agus na rialachán ábhartha comhlíonta. Tá neart airgeadais níos láidre ann chomh maith agus an dá chomhar creidmheasa cónasctha le chéile. Cad is brí le haistriú gealltanais? Ciallaíonn aistriú gealltanais go n-aistreoidh Comhar Chreidmheasa Chorca Dhuibhne Teoranta a sócmhainní agus a ndliteanais chuig Comhar Creidmheasa Cara Teoranta. Is féidir le baill i gComhar Creidmheasa Cara agus i gComhar Chreidmheasa Chorca Dhuibhne leanúint ar aghaidh mar a bhí roimhe seo leis an mbuntáiste breise chomh maith a bhaineann le rochtain ar na seirbhísí ar fad atá ar fáil ag Comhar Creidmheasa cónasctha. Cad a tharlóidh anois? Tuigtear dúinn go n-aistreofar gnóthaí Chomhar Chreidmheasa Chorca Dhuibhne Teoranta chuig Comhar Creidmheasa Cara Teoranta roimh dheireadh mhí na Samhna 2023 má cheadaíonn an Banc Ceannais an t-aistriú gealltanais. Tharlódh sé go mbeadh ar gach oifig den gcomhair creidmheasa dúnadh i gcomhair lá gnó amháin chun an t-aistriú a éascú, agus coimeádfar baill ar an eolas faoi fhorbairtí níos gaire don am. Go dtí sin, leanfar leis an ngnó mar is gnách ag an dá chomhar creidmheasa.
Oileán Ciarraí, Cill Orglan, An Baile Dubh, an Tóchar agus Corca Dhuibhne oscailte do na baill. Beidh sé mar bhuntáiste breise ag gach ball go mbeidh siad in ann a ngnó a dhéanamh, más mian leo, in aon cheann de na sé oifig nuair a thiocfaidh an t-aistriú i bhfeidhm. • Má tá tú i do bhall de Chomhar Chreidmheasa Chorca Dhuibhne Teoranta, eiseofar uimhir nua cuntais chugat. Fanfaidh an t-eolas ar fad a bhaineann leat agus do chuid iarmhéideanna cuntais díreach mar an gcéanna. • Leanfaidh baill go bhfuil iasachtaí reatha acu i gComhar Creidmheasa Cara Teoranta agus Comhar Chreidmheasa Chorca Dhuibhne Teoranta ar aghaidh ag aisíoc iasachtaí faoi théarmaí reatha a gcomhaontuithe creidmheasa. Beidh iasachtaí nua a eiseofar tar éis aistriú gealltanais ag an ráta iasachta atá i bhfeidhm ag an am sin i gComhar Creidmheasa Cara Teoranta. • Má tá tú i do bhall de Chomhar Chreidmheasa Chorca Dhuibhne Teoranta, a luaithe a thagann an t-aistriú gealltanais i bhfeidhm, d’fhéadfadh do chuid taiscí íocaíocht chnapshuime a mhealladh i dtreo do chostais sochraide, ar a dtugtar Árachas Sochar Báis. Faoi láthair is ionann an méid sin agus €1,000 (tá téarmaí agus coinníollacha i bhfeidhm). • Má tá tú i do bhall de Chomhar Chreidmheasa Chorca Dhuibhne Teoranta, is féidir leat anois leas a bhaint as táirgí agus seirbhísí breise, lena n-áirítear Mastercard Debit Card do bhall atá 12 bhliain d’aois nó níos sine.
An gcaithfidh mé aon rud a dhéanamh? Cuirimid fáilte roimh aon tuairimí a d’fhéadfadh a bheith ag aon bhall ar an aistriú gealltanais atá beartaithe. Is féidir le baill scríobh chuig rúnaí ceachtar den dá chomhar creidmheasa nó ríomhphost a sheoladh chuig info@caracreditunion.ie nó eolas@cccdteo.ie le Cén tionchar a bheidh ag an aistriú seo ormsa? haon tuairimí, moltaí nó ceisteanna a d’fhéadfadh a I gcás na mball atá ann cheana fein, ní bheidh aon bheith acu. athrú suntasach ann. Fanfaidh na hoifigí i dTrá Lí,
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ACCOUNTS & NOTICE OF AGM 2022
Cara CREDIT UNION
Credit Unions voted No. 1 for Customer Experience in Ireland 8 years in a row.
CARA CREDIT UNION //
DIRECTORS’ RESPONSIBILITIES STATEMENT FOR THE FINANCIAL yEAR ENDED 30 SEPTEMbER 2022
The directors are responsible for preparing the financial statements in accordance with applicable Irish law and regulations. The directors have elected to prepare the financial statements in accordance with FRS102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ (FRS102). The directors are also responsible for preparing the other information included in the annual report. The Credit Union Act, 1997 (as amended) requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the credit union and of the income and expenditure of the credit union for that period. In preparing those financial statements the directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and estimates that are reasonable and prudent; • state whether the financial statements have been prepared in accordance with applicable accounting standards, identify those standards, and note the effect and reason for any material departure from those standards; and • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the credit union will continue in business.
BOArD OvErSIghT COMMITTEE'S rESPONSIBIlITIES STATEMENT FOR THE FINANCIAL yEAR ENDED 30th SEPTEMbER 2022 10
The Directors are responsible for ensuring that the credit union keeps or causes to be kept adequate accounting records which correctly explain and record the transactions of the credit union, enable at any time the assets, liabilities, financial position and income and expenditure of the credit union to be determined with reasonable accuracy, enable them to ensure that the financial statements comply with the Credit Union Act, 1997 (as amended) and enable the financial statements to be audited. They are also responsible for safeguarding the assets of the credit union and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors are responsible for the maintenance and integrity of the corporate and financial information included on the credit union’s website. On behalf of the Board: Eddie Enright Chairperson of the Board of Directors John O’regan Member of the Board of Directors 15th November 2022
The Credit Union Act, 1997 (as amended) requires the appointment of a board oversight committee to assess whether the board of directors has operated in accordance with part iv, part iv(a) and any regulations made for the purposes of part iv or part iv(a) of the Credit Union Act, 1997 (as amended) and any other matter prescribed by the Central Bank of Ireland in respect of which they are to have regard to in relation to the board of directors. Ann-Marie Brosnan Chairperson of the Board Oversight Committee 15th November 2022
INDEPENDENT AUDITOR’S REPORT OF CARA CREDIT UNION LIMITED Opinion We have audited the financial statements of Cara Credit Union Limited, which comprise the income and expenditure account, the statement of other comprehensive income, the balance sheet, the statement of changes in reserves and the statement of cash flows for the financial year ended 30 September 2022, and the related notes to the financial statements, including the summary of significant accounting policies. The financial reporting framework that has been applied in the preparation of the financial statements is Irish law including the Credit Union Act, 1997 (as amended) and accounting standards issued by the Financial Reporting Council including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (Generally Accepted Accounting Practice in Ireland). In our opinion, Cara Credit Union Limited’s financial statements: • give a true and fair view in accordance with Generally Accepted Accounting Practice in Ireland of the state of the credit union’s affairs as at 30 September 2022 and of its income and expenditure and cash flows for the year then ended; and • have been properly prepared so as to conform with the requirements of the Credit Union Act, 1997 (as amended). Basis for opinion We conducted our audit in accordance with International Standards on Auditing (Ireland) (‘ISAs (Ireland)’) and applicable law. Our responsibilities under those standards are further described in the ‘responsibilities of the auditor for the audit of the financial statements’ section of our report. We are independent of the
credit union in accordance with the ethical requirements that are relevant to our audit of the financial statements in Ireland, including the Ethical Standard for Auditors (Ireland) issued by the Irish Auditing and Accounting Supervisory Authority (IAASA), and the ethical pronouncements established by Chartered Accountants Ireland, applied as determined to be appropriate in the circumstances for the entity. We have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Conclusions relating to going concern In auditing the financial statements, we have concluded that the directors’ use of going concern basis of accounting in the preparation of the financial statements is appropriate. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the credit union’s ability to continue as a going concern for a period of at least twelve months from the date when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. Other information Other information comprises information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information. Our opinion on the financial 11
CARA CREDIT UNION //
INDEPENDENT AUDITOR’S REPORT TO MEMBERS contd.
statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Matters on which we are required to report by the Credit union Act, 1997 (as amended) Based solely on the work undertaken in the course of the audit, we report that: • we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; • in our opinion proper accounting records have been kept by the credit union; • the financial statements are in agreement with the accounting records of the credit union; and • the financial statements contain all primary statements, notes and significant accounting policies required to be included in accordance with section 111(1)(c) of the Act.
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responsibilities of directors for the financial statements As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the financial statements which give a true and fair view in accordance with Generally Accepted Accounting Practice in Ireland, including FRS 102, and for such internal control as they determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the credit union’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 directors either intends to liquidate the credit union or to cease operations, or has no realistic alternative but to do so. responsibilities of the auditor for the audit of the financial statements The auditor’s objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes their opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (Ireland) 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 these financial statements.
INDEPENDENT AUDITOR’S REPORT TO MEMBERS contd.
As part of an audit in accordance with ISAs (Ireland), the auditor will exercise professional judgement and maintain professional scepticism throughout the audit. The auditor will also: • Identify and assess the risks of material misstatement of the financial statements, 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 their 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 credit union’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. • Conclude on the appropriateness of the directors’ 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 credit union’s ability to continue as a going concern. If they conclude that a material uncertainty exists, they are required to draw attention in the auditor’s report to the related disclosures in the financial statements or, if such disclosures are
inadequate, to modify their opinion. Their conclusions are based on the audit evidence obtained up to the date of the auditor’s report. However, future events or conditions may cause the credit union to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves a true and fair view. The auditor communicates 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 may be identified during the audit. The purpose of our audit work and to whom we owe our responsibilities This report is made solely to the credit union’s members, as a body, in accordance with section 120 of the Credit Union Act, 1997 (as amended). Our audit work has been undertaken so that we might state to the credit union’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the credit union and the credit union’s members as a body, for our audit work, for this report, or for the opinions we have formed. Denise O’Connell FCA for and on behalf of Grant Thornton Chartered Accountants & Statutory Audit Firm Limerick 15th November 2022 13
CARA CREDIT UNION //
INCOME & EXPENDITURE ACCOUNT FOR THE FINANCIAL yEAR ENDED 30th SEPTEMbER 2022 2022 €
2021 €
7,254,478 1,473,721 8,728,199 1,546,842 10,275,041
6,752,191 1,347,270 8,099,461 346,768 8,446,229
Employment costs 3 Other management expenses Depreciation Net impairment losses/(gains) on loans to members (note 5) TOTAl ExPENDITurE
3,085,933 4,105,124 174,943 41,290 7,407,290
2,777,429 3,788,185 146,755 (104,203) 6,608,166
SurPluS FOr ThE FINANCIAl yEAr
2,867,751
1,838,063
INCOME Interest on members’ loans Other interest income and similar income NET INTErEST INCOME Other income TOTAl INCOME
Schedule 1 2
ExPENDITurE
STATEMENT OF OTHER COMPREHENSIVE INCOME FOR THE FINANCIAL yEAR ENDED 30th SEPTEMbER 2022
Surplus for the financial year Other comprehensive income TOTAl COMPrEhENSIvE INCOME FOr ThE FINANCIAl yEAr
2022 €
2021 €
2,867,751 2,867,751
1,838,063 1,838,063
The financial statements were approved and authorised for issue by the Board and signed on behalf of the credit union by: CEO: Chairperson Board of Directors: Chairperson Board Oversight Committee:
The notes on pages 18 to 33 form part of these financial statements. 14
Patrick Laide 15th Nov. 2022 Eddie Enright 15th Nov. 2022 Ann-Marie Brosnan 15th Nov. 2022
BALANCE SHEET AS AT 30th SEPTEMbER 2022 2022 ASSETS
2021
Notes
€
€
7 7 8 9 14 10 11 12
8,121,394 45,556,999 138,074,848 107,278,154 (7,950,137) 5,492 2,373,887 265,000 721,582 294,447,219
5,675,461 48,576,873 136,900,261 98,824,435 (7,713,548) 7,318 2,196,327 265,000 695,529 285,427,656
13 13 14 15 16
245,162,024 5,014,306 1,029,298 53,578 251,259,206
240,724,795 199,533 3,149,067 977,079 56,920 245,107,394
18 18
36,820,000 1,638,163
28,684,000 1,588,282
18 18
4,360,319 369,531 43,188,013
9,837,839 210,141 40,320,262
294,447,219
285,427,656
Cash and balances at bank Deposits and investments – cash equivalents Deposits and investments – other Loans to members Provision for bad debts Members’ current accounts overdrawn Tangible fixed assets Investments in associates Debtors, prepayments and accrued income TOTAl ASSETS lIABIlITIES Members’ shares Members’ deposits Members’ current accounts Other liabilities, creditors, accruals and charges Other provisions TOTAl lIABIlITIES rESErvES Regulatory reserve Operational risk reserve Other reserves - Realised reserves - Unrealised reserves TOTAL RESERVES TOTAL LIABILITIES AND RESERVES
The financial statements were approved and authorised for issue by the Board and signed on behalf of the credit union by: CEO: Chairperson Board of Directors: Chairperson Board Oversight Committee:
Patrick Laide 15th Nov. 2022 Eddie Enright 15th Nov. 2022 Ann-Marie Brosnan 15th Nov. 2022
The notes on pages 18 to 33 form part of these financial statements. 15
CARA CREDIT UNION //
STATEMENT OF CHANGES IN RESERVES FOR THE FINANCIAL yEAR ENDED 30 SEPTEMbER 2022 regulatory reserve €
Operational risk reserve €
As at 1 October 2020 26,132,529 Surplus for the financial year Transfers of engagements 2,000,000 Transfers between reserves 551,471 As at 1 October 2021 28,684,000 Surplus for the financial year Transfers between reserves 8,136,000 As at 30 September 2022 36,820,000
1,426,386 161,896 1,588,282 49,881 1,638,163
realised unrealised reserve reserves € € 8,468,061 1,830,287 66,993 (527,502) 9,837,839 2,705,565 (8,183,085) 4,360,319
212,005 7,776 14,329 (23,969) 210,141 162,186 (2,796) 369,531
Total € 36,238,981 1,838,063 2,243,218 40,320,262 2,867,751 43,188,013
• The regulatory reserve of the credit union as a percentage of total assets as at 30 September 2022 was 12.50% (2021: 10.05%). • The operational risk reserve of the credit union as a percentage of total assets as at 30 September 2022 was 0.56% (2021: 0.56%).
The notes on pages 18 to 33 form part of these financial statements.
16
STATEMENT OF CASH FLOWS FOR THE FINANCIAL yEAR ENDED 30 SEPTEMbER 2022 2022 €
2021 €
54,252,334
40,176,681
39,051,979 (47,977,878) 7,254,478 1,473,721 667,479 1,546,842 71,139,154 (69,272,089) (7,191,057) 22,824 (3,284,547)
38,414,086 (42,165,338) 6,752,191 1,347,270 745,879 346,768 47,662,303 (46,202,038) (6,565,614) (1,282,171) (946,664)
(352,503) (1,174,587) (1,527,090)
14,379,829 (47,285) (14,198,229) 134,315
192,280,035 (188,042,339) 4,237,696
187,857,354 (172,969,352) 14,888,002
(573,941)
14,075,653
53,678,393
54,252,334
Notes OPENINg CASh AND CASh EquIvAlENTS Cash flows from operating activities Loans repaid by members Loans granted to members Interest on members’ loans Other interest income and similar income Bad debts recovered and recoveries Other income Members' current accounts lodgements Members' current accounts withdrawals Operating expenses Movement in other assets and liabilities Net cash flows from operating activities
8 8
14 14
CASh FlOWS FrOM INvESTINg ACTIvITIES Cash and investments introduced from transfers of engagements Fixed asset (purchases)/disposals Net cash flow from other investing activities Net cash flows from investing activities CASh FlOWS FrOM FINANCINg ACTIvITIES Members’ savings received Members’ savings withdrawn Net cash flow from financing activities
13 13
Net (decrease)/increase in cash and cash equivalents ClOSINg CASh AND CASh EquIvAlENTS
6
The notes on pages 18 to 33 form part of these financial statements.
17
CARA CREDIT UNION //
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL yEAR ENDED 30 SEPTEMbER 2022
1. lEgAl AND rEgulATOry FrAMEWOrK Cara Credit Union Limited is registered with the Registry of Credit Unions and is regulated by the Central Bank of Ireland. The registered office of the credit union is located at 45-47 Ashe Street, Tralee, Co. Kerry. 2. ACCOuNTINg POlICIES 2.1 Basis of Preparation of Financial Statements The financial statements have been prepared in accordance with applicable Irish accounting standards, including Financial Reporting Standard 102, the Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland and Irish statute comprising of the Credit Union Act, 1997 (as amended). The financial statements have been prepared on the historical cost basis. The financial statements are presented in Euro (€) which is also the functional currency of the credit union. The following principal accounting policies have been applied: 2.2 Statement of Compliance The financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (FRS 102). 2.3 going Concern After reviewing the credit union’s projections, the directors have reasonable expectation that the credit union has adequate resources to continue in operational existence for the foreseeable future. The credit union therefore continues to adopt the going concern basis in preparing its financial statements.
18
2.4 Income Interest on Members’ loans Interest on members’ loans is recognised on an accruals basis using the effective interest method. Deposit and investment income Deposit and investment income is recognised on an accruals basis using the effective interest method. Other Income Other income is recognised on an accruals basis. 2.5 Cash and Cash Equivalents Cash and cash equivalents comprise cash on hand and deposits and investments with a maturity of less than or equal to three months. 2.6 Deposits and investments held at Amortised Cost Investments designated on initial recognition as held at amortised cost are measured at amortised cost using the effective interest method less impairment. This means that the investment is measured at the amount paid for the investment, minus any repayments of the principal; plus or minus the cumulative amortisation using the effective interest method of any difference between the amount at initial recognition and the maturity amount, minus, in the case of a financial asset, any reduction for impairment or uncollectability. Central Bank Deposits Credit unions are obliged to maintain certain minimum deposits with the Central Bank but may also hold an excess over the regulatory minimum. The regulatory minimum deposits are technically assets of the credit union but to which the credit union has restricted access. The regulatory minimum portion will not ordinarily be returned to the credit union while it is a going concern and is
NOTES TO THE FINANCIAL STATEMENTS contd.
separately identified in note 7, Deposits and investments - other. Funds held with the Central Bank in excess of the regulatory minimum requirements are fully available to the credit union and are therefore treated as cash equivalents and are separately identified in note 7, Deposits and investments – cash equivalents. The amounts held on deposit with the Central Bank are not subject to impairment reviews. Investments at Fair value Investments designated on initial recognition as non basic are recognised at fair value. They are subsequently measured at fair value (market value) at the year-end date and all gains and losses are taken to the income and expenditure account. 2.7 Financial Assets - loans to Members Loans are financial assets with fixed or determinable payments. Loans are recognised when cash is advanced to members and measured at amortised cost using the effective interest method. Loans are derecognised when the right to receive cash flows from the asset has expired, usually when all amounts outstanding have been repaid by the member. 2.8 Provision for Bad Debts The credit union assesses if there is objective evidence that any of its loans are impaired with due consideration of environmental factors. The loans are assessed collectively in groups that share similar credit risk characteristics. Individually significant loans are assessed on a loan by loan basis. In addition, if there is objective evidence that any individual loan is impaired, a specific loss will be recognised. Bad debt provisioning is monitored by the credit union, and the credit union assesses and approves its provisions and the adequacy of same on a regular basis.
Any bad debts/impairment losses are recognised in the income and expenditure account. If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in the income and expenditure account. 2.9 Tangible Fixed Assets Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. The credit union adds to the carrying amount of an item of fixed assets the cost of replacing part of such an item when that cost is incurred, if the replacement part is expected to provide incremental future benefits to the credit union. The carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to the income and expenditure account during the period in which they are incurred. Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
1919
CARA CREDIT UNION //
NOTES TO THE FINANCIAL STATEMENTS contd.
Depreciation is provided on the following basis: Depreciation is provided on the following basis: Freehold premises 2% straight line per annum Fixtures and fittings 10% straight line per annum Leasehold improvements Over the lesser of the useful economic life and the remaining term of the lease Computer equipment 25% straight line per annum The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within ‘other gains’ or ‘other losses’ in the income and expenditure account. 2.10 Impairment of Assets At each reporting date, assets are reviewed to determine whether there is any indication that those assets have suffered an impairment loss. If there is an indication of possible impairment, the recoverable amount of any affected asset is estimated and compared with its carrying amount. If the estimated recoverable amount is lower, the carrying amount is reduced to its estimated recoverable amount, and an impairment loss is recognised immediately in the income and expenditure account. If an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but not in excess of the amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in the income and expenditure account. 20
2.11 Investments in Associates Investments in associates are accounted for at cost less impairment. 2.12 Other receivables Other receivables such as prepayments are initially measured at transaction price including transaction costs and are subsequently measured at amortised cost using the effective interest method. 2.13 Financial liabilities - members’ shares and members’ deposits Members’ shares and members’ deposits are redeemable and therefore are classified as financial liabilities. They are initially recognised at the amount of cash deposited and subsequently measured at amortised cost. 2.14 Members’ Deposits Interest on members’ deposits is recognised on an accruals basis using the effective interest method. 2.15 Members’ Current Accounts The credit union provides Member Personal Current Account Services in accordance with Section 49(3) of the Credit Union Act, 1997 (as amended). 2.16 Other Payables Short term other liabilities, creditors, accruals and charges are measured at the transaction price. 2.17 Pension Costs The credit union operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the credit union pays fixed contributions into a separate entity. Once the contributions have been paid, the credit union has no further payments obligations.
NOTES TO THE FINANCIAL STATEMENTS contd.
The contributions are recognised as an expense in the income and expenditure account when they fall due. Amounts not paid are shown in accruals as a liability on the balance sheet. The assets of the plan are held separately from the credit union in independently administered funds. The amount payable at the year end in respect of same was €36,467 (2021: €7,866). 2.18 holiday Pay A liability is recognised to the extent of any unused holiday pay entitlement which is accrued at the balance sheet date and carried forward to future periods. This is measured at the undiscounted salary cost of the future holiday entitlement so accrued at the balance sheet date. 2.19 Operating leases Rentals payable under operating leases are charged to the income and expenditure account on a straight line basis over the lease term. 2.20 Derecognition of Financial liabilities Financial liabilities are derecognised when the obligations of the credit union specified in the contract are discharged, cancelled or expired. 2.21 regulatory reserve The Credit Union Act 1997 (Regulatory Requirements) Regulations 2016 requires credit unions to establish and maintain a minimum regulatory reserve requirement of at least 10 per cent of the assets of the credit union. This reserve is to be perpetual in nature, freely available to absorb losses, realised financial reserves that are unrestricted and non-distributable. 2.22 Operational risk reserve Section 45(5)(a) of the Credit Union Act, 1997 (as amended) requires each credit union to maintain an additional reserve that it has assessed is required for operational risk having regard to the
nature, scale and complexity of the credit union. Credit unions are required to maintain a minimum operational risk reserve having due regard for the sophistication of the business model. The definition of operational risk is the risk of losses stemming from inadequate or failed internal processes, people and systems or from external events. The directors have considered the requirements of the Act and have considered an approach to the calculation of the operational risk reserve. The credit union uses the Basic Indicator Approach as set out in the operational risk measurements techniques proposed under Basel II capital adequacy rules for banking institutions in calculating the operational risk reserve. Therefore the credit union will hold an operational risk reserve which will at a minimum equal 15% of the average positive gross income for the previous three years. For any year in which there was a deficit, this will be excluded from the calculation. In addition, the credit union has included in its operational risk reserve a Member Personal Current Account Service operational risk reserve, in accordance with Section 49(3) of the Credit Union Act, 1997 (as amended). 2.23 Other reserves Other reserves are the accumulated surpluses to date that have not been declared as dividends returnable to members. The other reserves are subdivided into realised and unrealised. In accordance with the Central Bank guidance note for credit unions on matters relating to accounting for investments and distribution policy, investment income that has been recognised but will not be received within 12 months of the balance sheet date is classified as unrealised and is not distributable. A reclassification between unrealised and realised is made as investments come to within 12 months of maturity date. The directors have 21
CARA CREDIT UNION //
NOTES TO THE FINANCIAL STATEMENTS contd.
deemed it appropriate that interest on loans receivable at the balance sheet date and the balance of the SPS refund receivable is also classified as unrealised and is not distributable. All other income is classified as realised. 2.24 Distribution Policy Dividends are made from the current year’s surplus or reserves set aside for that purpose. The board’s proposed dividends to members each year is based on the distribution policy of the credit union. The rate of dividends recommended by the board will reflect: • the risk profile of the credit union, particularly in its loan and investments portfolios; • the board’s desire to maintain a stable rather than a volatile rate of dividend each year; and • members’ legitimate dividend expectations; all dominated by prudence and the need to sustain the long-term welfare of the credit union. For this reason the board will seek to build up its reserves to absorb unexpected shocks and still remain above minimum regulatory requirements. The credit union accounts for dividends when members ratify such payments at the Annual General Meeting. 2.25 Taxation The credit union is not subject to income tax or corporation tax on its activities. 3. JuDgEMENTS IN APPlyINg ACCOuNTINg POlICIES AND KEy SOurCE OF ESTIMATION uNCErTAINTy Preparation of the financial statements requires the directors to make significant judgements and estimates. The items in the financial statements where these judgements and estimates have been made include: 22
Determination of depreciation, useful economic life and residual value of tangible assets The annual depreciation charge depends primarily on the estimated lives of each type of asset and, in certain circumstances, estimates of residual values. The directors regularly review these useful lives and change them if necessary to reflect current conditions. In determining these useful lives management consider technological change, patterns of consumption, physical condition and expected economic utilisation of the assets. Changes in the useful lives can have a significant impact on the depreciation charge for the financial year. The net book value of tangible fixed assets subject to depreciation at the year end was €2,373,887 (2021: €2,196,327). Provision for bad debts The credit union’s accounting policy for impairment of loans is set out in note 2.8. The estimation of loan losses is inherently uncertain and depends upon many factors, including loan loss trends, credit risk characteristics in loan classes, local and international economic climates, conditions in various sectors of the economy to which the credit union is exposed, and, other external factors such as legal and regulatory requirements. The provision for bad debts in the financial statements at the year end was €7,950,137 (2021: €7,713,548) representing 7.41% (2021: 7.81%) of the total gross loan book. Investments in Associates The investments in associates represents the credit union’s investment in Metacu Management Designated Activity Company. This investment was made for operational purposes. The credit union holds 6.25% Redeemable A Ordinary shares in the company and through the terms of the shareholders agreement agreed between each of the participating credit unions, the credit union is deemed to have influence over the operations of
NOTES TO THE FINANCIAL STATEMENTS contd.
this company. Therefore the investment has been accounted for as an investment in an associate. Operational risk reserve The directors have considered the requirements of the Credit Union Act, 1997 (as amended) and have developed an approach to the calculation of the operational risk reserve. The credit union uses the basic indicator approach as set out in the operational risk measurements techniques proposed under Basel II capital adequacy rules for banking institutions in calculating the minimum operational risk reserve. In addition, the credit union has included in its operational risk reserve a Member Personal Current Account Service operational risk reserve, in accordance with Section 49(3) of the Credit Union Act, 1997 (as amended). The operational risk reserve of the credit union at the year end was €1,638,163 (2021: €1,588,282). Adoption of going concern basis for financial statements preparation The credit union continue to closely monitor developments within the global macro-economic environment. The directors have prepared projections and cash flows for a period of at least twelve months from the date of the approval of the financial statements which demonstrate that there is no material uncertainty regarding the credit union’s ability to meet its liabilities as they fall due, and to continue as a going concern. On this basis, the directors consider it appropriate to prepare the financial statements on a going concern basis. Accordingly, these financial statements do not include any adjustments to the carrying amounts and classification of assets and liabilities that may arise if the credit union was unable to continue as a going concern.
23
CARA CREDIT UNION //
NOTES TO THE FINANCIAL STATEMENTS contd. € 2022
€ 2021
4. KEy MANAgEMENT PErSONNEl COMPENSATION The directors of Cara Credit Union Limited are all unpaid volunteers. The key management personnel compensation is as follows: Short term employee benefits paid to key management Payments to pension schemes Total key management personnel compensation
1,104,035 77,172 1,181,207
970,847 71,119 1,041,966
(543,335) (124,144) 236,589 472,180 41,290
(609,446) (136,433) 133,801 507,875 (104,203)
8,121,394 45,556,999 53,678,393
5,675,461 48,576,873 54,252,334
Deposits and investments - cash equivalents Accounts in authorised credit institutions (Irish and non-Irish based) Central Bank deposits Total deposits and investments - cash equivalents
15,731,801 29,825,198 45,556,999
22,272,883 26,303,990 48,576,873
Deposits and investments - other Accounts in authorised credit institutions (Irish and non-Irish based) Bank bonds Irish and EEA state securities Central Bank deposits Other investments Total deposits and investments - other
64,599,692 50,064,871 20,319,276 2,274,802 816,207 138,074,848
73,067,892 38,419,422 20,357,006 2,230,757 2,825,184 136,900,261
TOTAl DEPOSITS AND INvESTMENTS
183,631,847
185,477,134
5. NET IMPAIrMENT lOSSES/(gAINS) ON lOANS TO MEMBErS Bad debts recovered Impairment of loan interest reclassed as bad debt recoveries Movement in bad debts provision during the year Loans written off during the year Net impairment losses/(gains) on loans to members 6. CASh AND CASh EquIvAlENTS Cash and balances at bank Deposits and investments - cash equivalents (note 7) Total cash and cash equivalents 7. DEPOSITS AND INvESTMENTS
24
NOTES TO THE FINANCIAL STATEMENTS contd. € 2022
€ 2021
8. FINANCIAl ASSETS – lOANS TO MEMBErS As at 1 October Loans arising on transfer of engagements Loans granted during the year Loans repaid during the year gross loans and advances
98,824,435 47,977,878 (39,051,979) 107,750,334
90,347,488 5,233,570 42,165,338 (38,414,086) 99,332,310
Bad debts Loans written off during the year As at 30 September
(472,180) 107,278,154
(507,875) 98,824,435
9. PrOvISION FOr BAD DEBTS As at 1 October Provision arising on transfer of engagements Movement in bad debts provision during the year As at 30 September
7,713,548 236,589 7,950,137
7,168,641 411,106 133,801 7,713,548
The provision for bad debts is analysed as follows: Grouped assessed loans Provision for bad debts
7,950,137 7,950,137
7,713,548 7,713,548
10. TANgIBlE FIxED ASSETS € Freehold Premises
€ Fixtures & Fittings
€ Leasehold Improvement
€ Computer Equipment
€ Total
COST 1 October 2021 Additions At 30 September 2022
3,326,756 3,326,756
816,613 163,442 980,055
78,016 78,016
611,419 189,061 800,480
4,832,804 352,503 5,185,307
DEPrECIATION 1 October 2021 Charge for the year At 30 September 2022
1,448,181 60,885 1,509,066
625,529 48,709 674,238
38,763 14,278 53,041
524,004 51,071 575,075
2,636,477 174,943 2,811,420
NET BOOK vAluE 30 September 2022 30 September 2021
1,817,690 1,878,575
305,817 191,084
24,975 39,253
225,405 87,415
2,373,887 2,196,327
25
CARA CREDIT UNION //
NOTES TO THE FINANCIAL STATEMENTS contd. 11. INvESTMENTS IN ASSOCIATES
€
COST At 1 October 2021 and 30 September 2022
265,000
ACCuMulATED IMPAIrMENT At 1 October 2021 and 30 September 2022
-
NET BOOK vAluE At 30 September 2022 At 30 September 2021
265,000 265,000
INTErESTS IN ASSOCIATE The credit union has interests in the following associate: Associate Metacu Management Designated Activity Company
Type of shares held
Proportion held (%)
Net Assets €
Profit or loss €
Redeemable A Ordinary
6.25%
4,030,007
4,607
Registered Address: 14 Ely Place, Dublin 2, Ireland The above financial information in respect of Metacu Management Designated Activity Company was extracted from the audited financial statements for the year ended 31 December 2021. The effect of including this investment as if it had been accounted for using the equity method would be as follows: € Share of net assets At 1 October 2021 Share of profit/(loss) for the financial year after tax At 30 September 2022
26
251,587 288 251,875
NOTES TO THE FINANCIAL STATEMENTS contd. € 2022
€ 2021
79,647 197,271 324,657 120,007 721,582
217,555 200,067 277,907 695,529
As at 1 October Members' savings arising on transfer of engagements Received during the year Withdrawn during the year As at 30 September
240,924,328 192,280,035 (188,042,339) 245,162,024
208,844,083 17,192,243 187,857,354 (172,969,352) 240,924,328
Members’ savings are analysed as follows: Members’ shares Members’ deposits Total members’ savings
245,162,024 245,162,024
240,724,795 199,533 240,924,328
3,141,749 71,139,154 (69,272,089) 5,008,814
1,681,484 47,662,303 (46,202,038) 3,141,749
No. of Accounts
Balance of Accounts €
200 4,811 45
5,492 5,014,306 27,450
933,456 95,842 1,029,298
906,847 70,232 977,079
12. DEBTOrS, PrEPAyMENTS AND ACCruED INCOME Prepayments Loan interest receivable Accrued income on investments Other debtors – SPS refund As at 30 September 13. MEMBErS’ SAvINgS
14. MEMBErS’ CurrENT ACCOuNTS As at 1 October Lodgements during the year Withdrawals during the year As at 30 September
Debit Credit Permitted overdrafts 15. OThEr lIABIlITIES, CrEDITOrS, ACCruAlS & ChArgES Accruals and other liabilities PAYE/PRSI As at 30 September
27
CARA CREDIT UNION //
NOTES TO THE FINANCIAL STATEMENTS contd. € 2022
€ 2021
56,920 (3,342) 53,578
62,508 (5,588) 56,920
16. OThEr PrOvISIONS holiday Pay Accrual At 1 October Charged to the income and expenditure account At 30 September
17. FINANCIAl INSTruMENTS 17a. Financial Instruments - measured at amortised cost Financial assets Financial assets measured at amortised cost
€ 2022
€ 2021
292,424,165
283,204,869
Financial liabilities Financial liabilities measured at amortised cost
€ 2022 251,259,206
€ 2021 245,107,394
Financial assets measured at amortised cost comprise of cash and balances at bank, deposits and investments, loans, members’ current accounts overdrawn, investments in associates, accrued income on investments and other debtors. Financial liabilities measured at amortised cost comprise of member savings, members’ current accounts, other liabilities, creditors, accruals and charges and other provisions.
17b. Financial Instruments - Fair value Measurements FRS 102 requires fair value measurements to be disclosed by the source of inputs, using a three level hierarchy: • Quoted prices for identical instruments in active market (level 1); • Prices of recent transactions for identical instruments and valuation techniques using observable market data (level 2), and • Valuation techniques using unobservable market data (level 3).
28
NOTES TO THE FINANCIAL STATEMENTS contd.
The table below sets out fair value measurements using the fair value hierarchy: At 30 September 2022 Bank bonds Total
€ Total 7,322,386 7,322,386
€ level 1 -
€ level 2 7,322,386 7,322,386
€ level 3 -
At 30 September 2021 Bank bonds Total
€ Total 7,322,386 7,322,386
€ level 1 -
€ level 2 7,322,386 7,322,386
€ level 3 -
There was no fair value movement recognised in the income and expenditure account for the year ended 30 September 2022 (2021: €nil).
18. rESErvES balance 1/10/21
Appropriation of current year surplus
Transfers between Reserves
balance 30/09/22
€
€
€
€
regulatory reserve
28,684,000
-
8,136,000
36,820,000
Operational risk reserve
1,588,282
-
49,881
1,638,163
Other reserves realised General reserve Total realised reserves
9,837,839 9,837,839
2,705,565 2,705,565
(8,183,085) (8,183,085)
4,360,319 4,360,319
unrealised Interest on loans reserve 200,067 Investment income reserve 10,074 SPS reserve Total unrealised reserves 210,141 Total reserves 40,320,262
42,179 120,007 162,186 2,867,751
(2,796) (2,796) -
197,271 52,253 120,007 369,531 43,188,013
29
CARA CREDIT UNION //
NOTES TO THE FINANCIAL STATEMENTS contd. 19. CrEDIT rISK DISClOSurES In line with regulatory requirements, the credit union: • restricts the concentration of lending by the credit union within certain sectors or to connected persons or groups (concentration limits); • restricts the absolute amount of lending to certain sectors to a set percentages of the regulatory reserve (large exposure limit); • restricts the loan duration of certain loans to specified limits (maturity limits); and • requires specified lending practices to be in place where loans are made to certain sectors such as business loans, community loans or loans to another credit union. The carrying amount of the loans to members represents the credit union’s maximum exposure to credit risk. The following provides information on the credit quality of loan repayments. Where loans are not impaired, it is expected that the amounts repayable will be received in full.
2022 %
€
%
lOANS NOT IMPAIrED Total loans not impaired, not past due
84,415,187
78.69%
76,775,445
77.69%
IMPAIrED lOANS: Not past due Up to 9 weeks past due Between 10 and 18 weeks past due Between 19 and 26 weeks past due Between 27 and 39 weeks past due Between 40 and 52 weeks past due 53 or more weeks past due Total impaired loans
2,910,920 16,284,269 1,582,486 610,191 712,642 241,685 520,774 22,862,967
2.71% 15.18% 1.48% 0.57% 0.66% 0.23% 0.48% 21.31%
1,682,958 15,901,763 1,614,247 785,566 825,151 401,807 837,498 22,048,990
1.70% 16.09% 1.63% 0.80% 0.83% 0.41% 0.85% 22.31%
107,278,154
100.00%
98,824,435
100.00%
TOTAl lOANS
30
2021
€
NOTES TO THE FINANCIAL STATEMENTS contd. 2022 No. of loans
2021 €
No. of loans
€
20. rElATED PArTy TrANSACTIONS 20a. lOANS Loans advanced to related parties during the year
18
184,940
18
330,736
Total loans outstanding to related parties at the year end
40
604,406
43
613,079
Total provision for loans outstanding to related parties
26,792
30,122
The related party loans stated above comprise of loans outstanding to directors and the management team (to include their family members or any business in which the directors or management team had a significant shareholding). Total loans outstanding to related parties represents 0.56% of the total loans outstanding at 30 September 2022 (2021: 0.62%). 20b. SAvINgS The total amount of savings held by related parties at the year end was €780,744 (2021: €828,755). 20c. TrANSACTIONS INvOlvINg DIrECTOrS Cara Credit Union Limited incurred expenditure from Ticcbox in respect of buildings and facilities monitoring of health and safety matters of €5,444 during the financial year ended 30 September 2022 (2021: €7,743). Caroline Sugrue (director of Cara Credit Union) is a director of Ticcbox. Cara Credit Union Limited incurred expenditure from Transition Solutions Limited for the provision of coaching/mentoring services to a member of the senior management of €2,850 during the financial year ended 30 September 2022 (2021: €nil). Danny Kerins (director of Cara Credit Union Limited) is a director of Transition Solutions Limited. 21. ADDITIONAl FINANCIAl INSTruMENTS DISClOSurES 21a. FINANCIAl rISK MANAgEMENT The credit union manages its members’ savings and loans so that it earns income from the margin between interest receivable and interest payable. The main financial risks arising from the credit union’s activities are credit risk, market risk, liquidity risk and interest rate risk. The board of directors reviews and agrees policies for managing each of these risks, which are summarised below. Credit risk: Credit risk is the risk that a borrower will default on their contractual obligations relating to repayments to the credit union, resulting in financial loss. In order to manage this risk, the board of directors regularly reviews and approves the credit union’s credit policy. Credit risk mitigation may include the requirement to obtain collateral as set out in the credit union’s loan policy. Where collateral or guarantees are required, they are usually taken as a secondary source of repayment in the event of
31
CARA CREDIT UNION //
NOTES TO THE FINANCIAL STATEMENTS contd.
the borrower’s default. The credit union maintains policies which detail the acceptability of specific classes of collateral. The principal collateral types for loans are: an attachment over members’ pledged shares; personal guarantees; and charges over assets. The nature and level of collateral required depends on a number of factors such as the term of the loan and the amount of exposure. All loan applications are assessed with reference to the credit policy in force at the time. Subsequently loans are regularly reviewed for any factors that may indicate that the likelihood of repayment has changed. Market risk: Market risk is the risk that the value of an investment will decrease. This risk can arise from fluctuations in values of, or income from, assets or changes in interest rates. The board of directors regularly reviews and approves the credit union’s investment policy and funds are invested in compliance with this policy and regulatory guidance. liquidity risk: Liquidity risk is the risk that the credit union will not have sufficient cash resources to meet day to day running costs and repay members’ savings when demanded. The credit union’s policy is to maintain sufficient funds in liquid form at all times to ensure that it can meet its liabilities as they fall due. Interest rate risk: The credit union’s main interest rate risk arises from adverse movements in interest rates receivable which would affect investment income. The credit union reviews any potential new investment product carefully to ensure that minimum funds are locked in low yielding long term investments yet at the same time maximising investment income receivable. 21b. lIquIDITy rISK DISClOSurES The credit union’s policy is to maintain sufficient funds in liquid form at all times to ensure that it can meet its liabilities as they fall due. The credit union adheres on an ongoing basis to the minimum liquidity ratio and minimum short term liquidity ratio as set out in regulatory requirements. 21c. INTErEST rATE rISK DISClOSurES The following shows the average interest rates applicable to relevant financial assets and financial liabilities. 2022 2021 € Average € Average interest rate % interest rate % gross loans to members
107,278,154
7.20%
98,824,435
7.30%
Any dividend payable is at the discretion of the directors and is therefore not a financial liability of the credit union until declared and approved at the AGM.
32
NOTES TO THE FINANCIAL STATEMENTS contd. 22. DIvIDENDS The following distributions were paid during the year: % Dividend on shares
2022
0.00%
€
%
-
0.00%
2021
€ -
The directors are not proposing a dividend in respect of the financial year ended 30 September 2022 (2021: The directors did not propose a dividend). 23. EvENTS AFTEr ThE END OF ThE FINANCIAl yEAr There have been no significant events affecting the credit union since the year end. 24. INSurANCE AgAINST FrAuD The credit union has Insurance against fraud in the amount of €5,200,000 (2021: €5,200,000) in compliance with Section 47 of the Credit Union Act, 1997 (as amended). 25. CAPITAl COMMITMENTS The credit union had capital commitments as follows: Committed for but not provided in these financial statements As at 30 September
2022 €
2021 €
-
114,611 114,611
26. lEASINg COMMITMENTS The credit union’s future minimum lease payments at the balance sheet date were as follows:
Less than 1 year 1 to 5 years At 30 September
2022 €
2021 €
10,000 10,000
10,000 10,000 20,000
27. COMPArATIvE INFOrMATION Comparative information has been reclassified where necessary to conform to current year presentation.
28. APPrOvAl OF FINANCIAl STATEMENTS The Board of Directors approved these financial statements for issue on 15th November 2022.
33
CARA CREDIT UNION //
SCHEDULES TO THE INCOME & EXPENDITURE ACCOUNT FOR THE FINANCIAL yEAR ENDED 30 SEPTEMbER 2022 The following schedules do not form part of the statutory financial statements which are the subject of the Independent Auditor’s Report on pages 19 - 21. SChEDulE 1 - OThEr INTErEST INCOME AND SIMIlAr INCOME
€ 2022
€ 2021
1,431,542 42,179 1,473,721
1,339,494 7,776 1,347,270
€ 2022
€ 2021
32,876 36,201 175,207 102,486 1,200,072 1,546,842
33,487 28,923 120,843 163,515 346,768
SChEDulE 3 - OThEr MANAgEMENT ExPENSES
€ 2022
€ 2021
Rent and rates Light and heat Repairs, maintenance and cleaning Security costs Printing and stationery Postage and telephone Marketing and sponsorship Chapter dues AGM and convention expenses Travel and subsistence Bank charges Central Credit Register costs Audit fee General insurance Share and loan insurance and DBI Office expenses Board expenses Staff training Professional body membership Legal, professional fees and repayment costs Computer maintenance, technology and IT costs Miscellaneous expenses Affiliation fees and trade subscriptions Regulatory levies Member initiatives MPCAS costs Total per income and expenditure account
38,145 73,707 114,731 48,499 52,406 57,799 271,138 13,145 51,061 13,509 213,618 41,279 33,825 102,540 1,171,535 66,853 3,197 46,137 13,975 217,903 739,621 (641) 15,883 435,323 267,862 2,074 4,105,124
51,342 45,245 108,065 48,350 55,579 93,143 262,912 9,540 65,590 9,178 169,800 59,364 33,825 94,813 1,095,794 57,315 791 41,116 9,270 131,441 653,822 6,640 21,818 422,870 238,500 2,062 3,788,185
Investment income received/receivable within 1 year Investment income receivable outside of 1 year Total per income and expenditure account SChEDulE 2 - OThEr INCOME Sundry income Commissions MPCAS fees ECCU rebate SPS refund Total per income and expenditure account
34
UNAUDITED ACCOUNTS
INCOME & EXPENDITURE ACCOUNT MONTHLy MANAGEMENT ACCOuNTS | 30th SEPTEMbER 2023
INCOME Interest Income Investment Income
€
Rec'd/Receivable within 1 year Other
Investment Gains Investment Losses Bad Debts Recovered Other Income Exceptional Gains Financial Support TOTAl INCOME
7,874,078 2,339,616 248,619 0 0 497,670 299,546 0 0 11,259,529
ExPENDITurE Net Loan Protection / Life Savings Insurance Salaries and Related Expenses Interest on Borrowings Interest on Deposits Bad Debts Written Off Bad Debts Provision Other Expenses Exceptional Losses TOTAl ExPENDITurE
858,884 3,524,964 0 0 421,683 897,749 3,809,102 0 9,512,382
yTD SurPluS (DEFICIT)
1,747,147
35
CARA CREDIT UNION //
UNAUDITED ACCOUNTS
BALANCE SHEET MONTHLy MANAGEMENT ACCOuNTS | 30th SEPTEMbER 2023 ASSETS
€
Cash and Current Accounts Minimum Reserve Deposit Held Deposit Protection Account Investments Irish and EEA State Securities Accounts in Authorised Credit Institutions Bank Bonds Collective Investment Schemes Investments in other Credit Unions Investments in Societies Other Total Investments Loans Less Provision For Bad Debts Fixed Assets less Depreciation Other Assets TOTAl ASSETS lIABIlITIES Member Shares
24,536,035 98,419,350 61,587,786 0 0 0 0 184,543,171 114,760,535 8,847,886 2,239,460 3,295,546 306,955,950
Member Deposits Other Member Funds Borrowings from other Credit Unions Other Borrowings Other Liabilities TOTAl lIABIlITIES
255,023,353 0 0 0 5,620,361 0 0 1,377,069 262,020,783
NET WOrTh
44,935,167
Represented By: rESErvES Regulatory Reserve Operational Risk Reserve Undistributed Surplus Brought Forward YTD Surplus (Deficit) Other Reserves Proposed Dividend and Interest Rebate TOTAl rESErvES 36
8,412,121 2,553,003 0
Regular Special Term
Realised Unrealised
38,380,000 1,797,154 0 1,747,147 2,398,136 612,730 0 44,935,167
COMhAr ChrEIDMhEASA ChOrCA DhuIBhNE TEOrANTA FINANCIAL STATEMENTS 2022
37
COMHAR CHREIDMHEASA CHORCA DHUIBHNE TEORANTA
DIRECTORS’ RESPONSIBILITIES STATEMENT FOR THE FINANCIAL yEAR ENDED 30 SEPTEMbER 2022
The Credit Union Act, 1997 as amended requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Credit Union and the Income and Expenditure Account of the Credit Union for that period. In preparing those financial statements, the directors are required to : • select suitable accounting policies and then apply them consistently ; • make judgements and estimates that are reasonable and prudent ; • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the credit union will continue in business.
FRS102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”. They are also responsible for safeguarding the assets of the Credit Union and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the credit union and to enable them to ensure that the financial statements are prepared in accordance with applicable Irish law and Generally Accepted Accounting Practice in Ireland, including the standards issued by the Financial Reporting Council, and in particular
3 February 2023
On behalf of the Board of Directors: Michael Dooley Cathaoirleach Padraig Ó’Muircheartaigh leas Cathaoirleach
BOArD OvErSIghT COMMITTEE'S rESPONSIBIlITIES STATEMENT
The Credit Union Act 1997 as amended require the appointment of a Board Oversight Committee to assess whether the Board of Directors has operated in accordance with Part IV, Part IV (a) and any regulations made for the purposes of Part IV or Part IV (a) of the Credit Union Act 1997, as amended and any other matter prescribed by the Central Bank in respect of which they are to have regard in relation to the Board.
FOR THE FINANCIAL yEAR ENDED 30th SEPTEMbER 2022
Eilín uí lúing Cathaoirleach an Choiste Maoirseachta 3 February 2023
38
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF COMHAR CHREIDMHEASA CHORCA DHUIBHNE TEORANTA We have audited the financial statements of Comhar Chreidmheasa Chorca Dhuibhne Teoranta for the year ended 30 September 2022, which comprise the Income and Expenditure Account, the Balance Sheet, the Statement of Changes in Reserves, the Cash Flow Statement and the related notes to the financial statements, including the summary of significant accounting policies set out in note 2. The financial reporting framework that has been applied in their preparation is Irish Law and FRS 102. The Financial Reporting Standard applicable in the UK and Republic of Ireland. Opinion In our opinion the financial statements: • give a true and fair view of the state of the Credit Union’s affairs as at 30 September 2022 and its income and expenditure and cash flows for the year then ended; • have been properly prepared in accordance with FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland; and • have been properly prepared in accordance with the requirements of the Credit Union Act 1997, as amended. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (Ireland) (ISAs (Ireland)) and applicable law. Our responsibilities under those standards are described below in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Credit Union in accordance with ethical requirements that are relevant to our audit of financial statements in Ireland, including the Ethical Standard issued by the Irish Auditing and Accounting Supervisory Authority (IAASA), and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Conclusions relating to going concern We have nothing to report in respect of the following matters in relation to which ISAs (Ireland) require us to report to you where: • the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate: or • the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Credit Union’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue. Other information The directors are responsible for the other information. The other information comprises the information included in the annual report other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement 39
COMHAR CHREIDMHEASA CHORCA DHUIBHNE TEORANTA
of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Opinions on other matters prescribed by the Credit union Act 1997, as amended Based solely on the work undertaken in the course of the audit, we report that: • We have obtained all the information and explanations which we consider necessary for the purposes of our audit. • In our opinion proper accounting records have been kept by the Credit Union, and • The financial statements are in agreement with the accounting records. responsibilities of directors for the financial statements As explained more fully in the directors’ responsibilities statement set on page 5, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the Credit Union’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 management either intends to liquidate the Credit Union or to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable 40
assurance about whether the financial statements as a whole are 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 ISAs (Ireland) 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 these financial statements. Further details relating to our work as auditor is set out in the Scope of Responsibilities Statement contained in the appendix of this report, which is to be read as an integral part of our report. The purpose of our audit work and to whom we owe our responsibilities Our report is made solely to the Credit Union’s members, as a body, in accordance with section 120 of the Credit Union Act 1997, as amended. Our audit work has been undertaken so that we might state to the Credit Union’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Credit Union and the Credit Union’s members, as a body, for our audit work, for this report, or for the opinions we have formed.
Eóin Barrett For and on behalf of Seán O’Sullivan & Co., Chartered Accountants and Statutory Audit Firm, Chorca Dhuibhne, Co. Kerry. Date: 3 February 2023
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF COMHAR CHREIDMHEASA CHORCA DHUIBHNE TEORANTA
Further information regarding the scope of our responsibilities as auditor As part of an audit in accordance with ISAs (Ireland), we exercise professional judgment and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, 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 Credit Union’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. • Conclude on the appropriateness of the director’s 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 Credit Union’s ability to continue as going concerns. 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 statements 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 Credit Union to cease to continue as going concerns. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 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.
41
COMHAR CHREIDMHEASA CHORCA DHUIBHNE TEORANTA
INCOME & EXPENDITURE ACCOUNT FOR THE FINANCIAL yEAR ENDED 30th SEPTEMbER 2022
INCOME Interest on members’ loans Other interest income and similar income Net interest income Other income Other gains Total income
Schedule 5 7 24
2022 €
2021 €
489,789 (18,118) 471,671 20,136 81,319 573,126
470,062 115,549 585,611 22,913 608,524
228,840 337,300 2,963 15,997 276,201 (14,349) 856,952 (283,826) (283,826)
271,626 13,790 262,072 (4,954) 542,534 65,990 65,990
ExPENDITurE Employment costs Pension funding deficit Depreciation Impairment Charge on Fixed Assets Other management expenses Net recoveries or losses on loans to members Total expenditure (Deficit) Surplus for the financial year Other comprehensive income Total comprehensive income
9b 22 11 11 Schedule 1 12d
The financial statements were approved, and authorised for issue, by the board of directors on the 3 February 2023 and signed on its behalf by: Bainisteoir: Cathaoirleach an Bhoird: Cathaoirleach an Choiste Maoirseachta:
42
Donal Scannell Michael Dooley Eilín Uí Lúing
BALANCE SHEET AS AT 30th SEPTEMbER 2022
ASSETS Cash and cash equivalents Tangible fixed assets Loans to members Prepayments and accrued income Deposits and investments - cash equivalents Deposits and investments - other Total assets
2022
2021
Notes
€
€
10 11 12 13 14 14
3,531,745 345,000 5,734,442 93,774 2,239,062 6,947,095 18,891,118
2,979,988 367,146 5,580,443 100,133 2,132,361 8,181,050 19,341,121
15 16
16,375,317 372,938 16,748,255
16,786,545 127,887 16,914,432
2,142,863
2,426,689
2,000,000 42,863 100,000 2,142,863
2,000,000 50,000 100,000 276,689 2,426,689
lIABIlITIES Members Shares Other payables Total liabilities ASSETS lESS lIABIlITIES rESErvES Regulatory Reserve Operational risk reserve Bad Debt Reserve Other distributable reserves TOTAl rESErvES
The financial statements were approved, and authorised for issue, by the board of directors on the 3 February 2023 and signed on its behalf by: Bainisteoir: Cathaoirleach an Bhoird: Cathaoirleach an Choiste Maoirseachta:
Donal Scannell Michael Dooley Eilín Uí Lúing
43
COMHAR CHREIDMHEASA CHORCA DHUIBHNE TEORANTA
STATEMENT OF CHANGES IN RESERVES FOR THE FINANCIAL yEAR ENDED 30 SEPTEMbER 2022
Opening balance at 1 October 2020 Total comprehensive income for the year Dividends paid during the year Transfer between reserves Closing balance at 30 September 2021
Opening balance at 1 October 2021 Total comprehensive income for the year Dividends paid during the year Transfer between reserves Closing balance at 30 September 2022
regulatory reserve
Operational risk reserve
Bad Debt Other reserve Distributable reserves € €
Total reserves
€
€
2,000,000
50,000
100,000
210,699
2,360,699
-
-
-
65,990
65,990
-
-
-
-
-
2,000,000
50,000
100,000
276,689
2,426,689
2,000,000
50,000
100,000
276,689
2,426,689
-
(7,137)
-
(276,689)
(283,826)
-
-
-
-
-
2,000,000
42,863
100,000
-
2,142,863
€
1. The Regulatory reserve of the Credit Union as a % of total assets as at 30 September 2022 was 10.59%. (2021: 10.3%). 2. In accordance with S45 of the Credit Union Act 1997 (as amended) Comhar Chreidmheasa Chorca Dhuibhne Teoranta has put in place an Operational Risk Reserve. The Operational Risk reserve has been reduced by €7,137 (2021: €0) to account for a reduction in total reserves for the year. The Operational Risk reserve as a % of the total assets as at 30th September 2022 was 0.23%. (2021: 0.26%). 3. The Board of Comhar Chreidmheasa Chorca Dhuibhne Teoranta has maintained the Regulatory Reserve at €2,000,000 (2021 €2,000,000) so that the reserve would stand at 10.59% at year end. 4. Notwithstanding the specific provision set aside on the balance sheet to provide for potential bad and doubtful debts the board of directors have established a bad debt reserve of €100,000 to further safeguard the assets of the credit union in the event of unforeseen circumstances which may increase the risk of member loan default.
44
STATEMENT OF CASH FLOWS FOR THE FINANCIAL yEAR ENDED 30 SEPTEMbER 2022
Notes
2022 €
2021 €
Cash flows from operating activities Loans repaid by members 12a Loans granted to members 12a Loan Interest Received 4 Investment income received Other income received Other gains 24 Bad Debts Recovered 12d Dividends Paid 6 Operating expenses paid to include employment costs Pension funding deficit Net cash flows from operating activities
2,812,177 (2,960,465) 489,789 (11,607) 11,913 81,319 14,349 (555,689) (39,240) (157,454)
2,864,107 (2,848,666) 470,062 162,327 9,135 4,954 (504,195) 157,724
Purchase of property, plant and equipment Net cash flow from investing activities
(6,814) 1,127,253
(807) (599,400)
Net cash flows from investing activities
1,120,439
(600,207)
11,404,485 (11,815,713) (411,228) 551,757 2,979,988 3,531,745
11,229,981 (10,993,665) 236,316 (206,167) 3,186,155 2,979,988
1,292,683 2,239,062 3,531,745
847,627 2,132,361 2,979,988
CASh FlOWS FrOM INvESTINg ACTIvITIES
CASh FlOWS FrOM FINANCINg ACTIvITIES Members’ shares received Members’ shares withdrawn Net cash flows from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Analysis of net funds Cash and balances at bank Investments
45
COMHAR CHREIDMHEASA CHORCA DHUIBHNE TEORANTA
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL yEAR ENDED 30 SEPTEMbER 2022
1. legal and regulatory Framework Comhar Chreidmheasa Chorca Dhuibhne Teoranta is established under the Credit Union Act 1997, as amended. The Credit Union is registered with the Registrar of Credit Unions and is regulated by the Central Bank of Ireland. The principal place of business is Main Street, Chorca Dhuibhne, Co. Kerry. 2. Accounting Policies 2.1 Statement of compliance and basis of preparation These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”). The financial statements have been prepared on the historical cost basis. 2.2 Currency The financial statements are prepared in Euro, which is the functional currency of the Credit Union. Monetary amounts in these financial statements are rounded to the nearest Euro. 2.3 going Concern The financial statements are prepared on the going concern basis. The directors of Comhar Chreidmheasa Chorca Dhuibhne Teoranta believe this is appropriate as the Credit Union: • Is generating annual surpluses; • Maintains an appropriate level of liquidity; and • Has reserves that are currently above the minimum requirements of the Central Bank. 2.4 Income Interest on members’ loans Interest on loans to members is recognised using the effective interest method, and is calculated and accrued on a daily basis. Investment income The Credit Union currently only has investments 46
that are valued at amortised cost, and use the effective interest method to recognise investment income. Other income Other income such as commissions receivable on insurance products and foreign exchange services arises in connection to specific transactions. Income relating to individual transactions is recognised when the transaction is completed. 2.5 Dividends to Members Dividends on Shares Dividends are made from current year’s surplus or the dividend reserves set aside for that purpose. The Board’s proposed distribution to members each year is based on the dividend policy of the Credit Union. The rate of dividend recommended by the Board will reflect: • the risk profile of the Credit Union, particularly in its loan and investment portfolios; • the Board’s desire to maintain a stable rather than a volatile rate of dividend each year; and • members’ legitimate dividend expectations; all dominated by prudence and the need to sustain the long-term welfare of the Credit Union For this reason the Board will seek to build up its reserves to absorb unexpected shocks and still remain above minimum regulatory requirements. The Credit Union accounts for dividends when members ratify such payments at the Annual General Meeting. 2.6 Taxation The Credit Union is not subject to income tax or corporation tax on its activities as a Credit Union. 2.7 Cash and Cash Equivalents Cash and cash equivalents comprise operating cash on hand and cash deposited with banks with
NOTES TO THE FINANCIAL STATEMENTS contd.
original maturity of less than or equal to three months. 2.8 Financial Instruments The Credit Union has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments. Financial instruments are recognised when the Credit Union becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when, and only when, there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously. Financial assets and liabilities are classified according to the substance of the contractual arrangements entered into. 2.9 Basic Financial Assets Basic financial assets are initially measured at the transaction price, including transaction costs, and are subsequently carried at amortised cost using the effective interest method. Basic financial instruments include the following: loans to members Loans to members are financial assets with fixed or determinable payments. Loans are recognised when cash is advanced to members and measured at amortised cost using the effective interest method. Investments held at amortised cost Investments held at amortised cost are measured at amortised cost using the effective interest method less impairment. This means that the investment is measured at the amount paid for the
investment, minus any repayments of the principal; plus or minus the cumulative amortisation using the effective interest method of any difference between the amount at initial recognition and the maturity amount; minus, in the case of a financial asset, any reduction for impairment or uncollectability. This effectively spreads out the return on such investments over time, but does take account immediately of any impairment in the value of the investment. 2.10 Other receivables Other receivables such as prepayments are initially measured at transaction price including transaction costs and are subsequently measured at amortised cost using the effective interest method. 2.11 Impairment of financial assets Financial assets, other than those held at fair value, are assessed for indicators of impairment at each reporting end date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the expected cash flows discounted at the asset’s original effective interest rate. In the case of impairment of loans to members, the loans are assessed collectively in groups that share similar credit risk characteristics except for individually significant loans which are assessed on a loan by loan basis for impairment. Any impairment losses are recognised in the income and expenditure account.
47
COMHAR CHREIDMHEASA CHORCA DHUIBHNE TEORANTA
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in the Income and Expenditure account. 2.12 De-recognition of Financial Assets Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the Credit Union transfers to another party substantially all of the risks and rewards of ownership of the financial asset, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party. In the case of loans to members, loans are derecognised, when the right to receive cash flows from the loans have expired, usually when all amounts outstanding have been repaid by the member. Comhar Chreidmheasa Chorca Dhuibhne Teoranta does not transfer loans to third parties. 2.13 Basic Financial liabilities Basic financial liabilities are initially recognised at the transaction price, including transaction costs, unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities are subsequently carried at amortised cost using the effective interest method. Financial liabilities Members’ Shares Members’ shares are redeemable and therefore are classified as financial liabilities.
48
Other Payables Other payables are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Other payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method. 2.14 De-recognition of Financial liabilities Financial liabilities are derecognised when the obligations of the Credit Union specified in the contract are discharged, cancelled or expire. 2.15 Tangible Fixed Assets Tangible fixed assets comprises items of property, plant and equipment, which are stated at cost, less accumulated depreciation and any accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. Depreciation is provided to write off the cost of each item of property, plant and equipment, less its estimated residual value over its estimated useful life. The categories of property, plant and equipment are depreciated as follows: Land and Premises Equipment& Fixtures
Not depreciated 5 years straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the Income and Expenditure account. 2.16 Impairment of Tangible Fixed Assets At each reporting end date, the Credit Union reviews the carrying value of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the
extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Credit Union estimates the recoverable amount of the cash-generating unit to which the asset belongs.
funded defined benefit scheme with assets managed by the scheme’s trustees. The ILCU is the principal employer of the Scheme and Comhar Chreidmheasa Chorca Dhuibhne Teoranta is a participating employer.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
The scheme is a multi-employer defined benefit Scheme and there is insufficient information for Comhar Chreidmheasa Chorca Dhuibhne Teoranta to separately identify its share of the Scheme’s underlying assets and liabilities. Consequently, the Scheme is currently accounted for as a defined contribution plan.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in the Income and Expenditure account. Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in the Income and Expenditure aacount. 2.17 Employee Benefits Post-employment Benefits The staff Pension Scheme Comhar Chreidmheasa Chorca Dhuibhne Teoranta participates in an industry-wide pension scheme for employees (The Irish League of Credit Unions Republic of Ireland Pension Scheme). This is a
If an agreement is entered into with the Scheme that determines how Comhar Chreidmheasa Chorca Dhuibhne Teoranta will fund a past service deficit, Comhar Chreidmheasa Chorca Dhuibhne Teoranta shall recognise a liability for the contributions payable that arise from the agreement (to the extent that they relate to the deficit). Other Employee Benefits The costs of short-term employee benefits, including holiday pay, are recognised as a liability and as an expense (unless those costs are required to be recognised as part of the cost of fixed assets) over the period they are earned. 2.18 reserves regulatory reserve The Credit Union is required to maintain and establish a minimum regulatory reserve of at least 10% of the assets of the Credit Union in accordance with Credit Union Act 1997 (Regulatory Requirements) Regulations 2016. Operational risk reserve The Credit Union has established an operational risk reserve which is separate, distinct and in addition to the reserves the Credit Union is required 49
COMHAR CHREIDMHEASA CHORCA DHUIBHNE TEORANTA
to hold in its regulatory reserve. The amount held in the operational risk reserve is the predicted impact of operational risk events that may have a material impact on the Credit Union’s business. Dividend reserve Dividend reserves are the accumulated surpluses to date that have not been declared as dividends to members or set aside to the regulatory, operational risk or other distributable reserve. Other Distributable reserve Other distributable reserves are the accumulated surpluses to date that have not been declared as dividends to members or set aside to the regulatory, operational risk or dividend reserve. Bad Debt reserve The Credit Union has established a bad debt reserve which is separate, distinct and in addition to the loan provision that has been provided for under Note 12c. Estimation of loan losses is inherently uncertain and the purpose of the reserve is to provide for an additional amount in the event of an unforeseen event arising where the loan provision may be insufficient. 3. use of Estimates and Judgements The preparation of financial statements requires the use of certain accounting estimates. It also requires the Directors to exercise judgement in applying Comhar Chreidmheasa Chorca Dhuibhne Teoranta accounting policies. The areas requiring a higher degree of judgement, or complexity, and areas where assumptions or estimates are most significant to the financial statements are disclosed below: Impairment losses on loans to Members The accounting policy for impairment of financial assets is set out in accounting policy in Note 2.11. 50
The estimation of loan losses is inherently uncertain and depends upon many factors, including loan loss trends, credit risk characteristics in loan classes, local and international economic climates, conditions in various sectors of the economy to which the Credit Union is exposed, and, other external factors such as legal and regulatory requirements. Credit risk is identified, assessed and measured through the use of rating and scoring tools with emphasis on weeks in arrears and other observable credit risk metrics. The ratings influence the management of individual loans. The credit rating triggers the impairment assessment and if relevant the raising of specific provisions on individual loans where there is doubt about their recoverability. Loan loss provisioning is monitored by the Credit Union, and the Credit Union assesses and approves its provisions and provision adequacy on a quarterly basis. Key assumptions underpinning the estimates of collective provisions for loans with similar credit risk characteristics, and, Incurred But Not Reported provisions (“IBNR”) are based on the historical experiences of the Credit Union’s allied to the Credit Union’s judgement of relevant conditions in the wider technological, market, economic or legal environment in which the Credit Union operates. If a loan is impaired, the impairment loss is the difference between the carrying amount of the loan and the present value of the expected cash flows discounted at the asset’s original effective interest rate taking account of pledged shares and other security as appropriate. Assumptions are back tested with the benefit of experience. After a period of time, when it is concluded that there is no real prospect of recovery of loans/part of loans which have been subjected to a specific provision, the
Credit Union writes off that amount of the loan deemed irrecoverable against the specific provision held against the loan. Pensions Comhar Chreidmheasa Chorca Dhuibhne Teoranta participates in an industry-wide pension scheme for employees (The Irish League of Credit Unions Republic of Ireland Pension Scheme). This is a funded scheme of the defined benefit type, with assets invested in separate trustee administered funds. Judgement is required to assess whether Comhar Chreidmheasa Chorca Dhuibhne Teoranta has sufficient information to enable it to account for the plan as a defined benefit plan. An assessment has been performed of the information currently available and Comhar Chreidmheasa Chorca Dhuibhne Teoranta has determined that there is currently insufficient information available to provide an appropriate allocation of pension assets and liabilities.
51
COMHAR CHREIDMHEASA CHORCA DHUIBHNE TEORANTA
NOTES TO THE FINANCIAL STATEMENTS contd. € 2022
€ 2021
489,789 489,789
470,062 470,062
54,419 47,184 (119,721) (18,118)
61,323 51,153 3,073 115,549
4. INTErEST ON MEMBErS lOANS Loan interest received in year Total interest on members loans 5. OThEr INTErEST INCOME AND SIMIlAr INCOME Investment income and gains received by the balance sheet date Receivable within 12 months of balance sheet date Unrealised (Losses) Gains on Investments Total investment income 6. DIvIDENDS The dividend is formally proposed by the directors after the year end and is confirmed at an AGM of the members. As a result the proposed dividend for the current year does not represent a liability at the balance sheet date and the dividend included in the statement of reserves in the current year relates to dividends paid to members for the prior year. The dividends for the current and prior year periods were as follows: € 2022 € 2021 Dividend paid during the year Dividend rate: Members shares Dividend proposed, but not recognised Dividend rate: Members shares
0.00%
0.00%
-
-
0.00%
0.00%
8,282 11,737 177 150 (210) 20,136
16,442 5,840 319 164 148 22,913
228,840 37,300 28,960 276,201 871,301
271,626 13,790 262,072 547,488
7. OThEr INCOME LP/LS Insurance Rebate Commissions on Foreign Exchange/Drafts Insurance Commission Entrance Fees Cash Over (Short) Total other income 8. ExPENSES Employment costs Pension funding deficit Depreciation and impairment charges Other management expenses (Schedule 1)
52
9b 22 11
NOTES TO THE FINANCIAL STATEMENTS contd.
9. EMPlOyEES AND EMPlOyMENT COSTS 9a NuMBEr OF EMPlOyEES The average monthly number of employees during the year was: Number/2022
Number/2021
1 5 6
1 5 6
9b EMPlOyMENT COSTS
€ 2022
€ 2021
Wages and salaries Social security costs Payments to defined contribution pension scheme Pension funding deficit Total employment costs
186,467 19,857 22,516 337,300 566,140
213,625 23,732 34,269 271,626
9c KEy MANAgEMENT PErSONNEl
€ 2022
€ 2021
The management of key management personnel was as follows: Short term employee benefits Payments to defined benefit contribution schemes Pension funding deficit Total key management personnel compensation
206,324 22,516 337,300 566,140
237,357 34,269 271,626
Manager Other staff Total
Short-term employee benefits include wages, salaries, social security contributions and paid annual leave. 10. CASh AND CASh EquIvAlENTS
Cash and balances at bank Deposits and investments Less: Deposit and investment amounts maturing after three months Total cash and cash equivalents
€ 2022
€ 2021
1,292,683 11,425,219
847,627 12,445,772
(9,186,157) 3,531,745
(10,313,411) 2,979,988
Short term deposits with banks are deposits with original maturity of less than or equal to three months. All other deposits with banks are included under Investments in the Balance Sheet and disclosed in Note 14.
53
COMHAR CHREIDMHEASA CHORCA DHUIBHNE TEORANTA
NOTES TO THE FINANCIAL STATEMENTS contd. 11. TANgIBlE FIxED ASSETS € Land
€ Premises
€ Equipment Fixtures
€ Total
COST/vAluATION 1 October 2021 Additions At 30 September 2022
125,000 125,000
462,472 462,472
110,252 6,814 117,066
697,724 6,814 704,538
DEPrECIATION At 1 October 2021 Charge for the year Impairment charge At 30 September 2022
-
242,472 242,472
88,106 12,963 15,997 117,066
330,578 12,963 15,997 359,538
NET BOOK vAluE At 30 September 2022 At 30 September 2021
125,000 125,000
220,000 220,000
22,146
345,000 367,146
An independent valuation of the Credit Unions land and buildings was carried out by Fitzgerald Auctioneers, Estate Agents and Valuers, No. 1 The Tracks, Chorca Dhuibhne Co. Kerry in November 2022. Fitzgerald’s valued the property at Main Street, Chorca Dhuibhne, Co. Kerry at €375,000. In accordance with FRS102 the directors carried out an impairment review and considered it appropriate to recognise the carrying value of the land and buildings at Main Street, Chorca Dhuibhne, Co. Kerry at €345,000. The directors reviewed the valuation of all other tangible fixed assets and determined there were indicators of impairment. In accordance with FRS102 an impairment charge of €15,997 has been applied to equipment and fixtures to reflect the impairment of fixed assets. 12. lOANS TO MEMBErS - FINANCIAl ASSETS
54
12a lOANS TO MEMBErS
€ 2022
€ 2021
As at 1 October Advanced during the year Repaid during the year Loans written off Gross loans to members
5,711,172 2,960,465 (2,812,177) 5,859,460
5,726,877 2,848,666 (2,864,107) (264) 5,711,172
Impairment allowances Individual loans
(125,018)
(130,729)
Loan provision
(125,018)
(130,729)
As at 30 September
5,734,442
5,580,443
NOTES TO THE FINANCIAL STATEMENTS contd.
12b Credit risk Disclosures Comhar Chreidmheasa Chorca Dhuibhne Teoranta has a limited number of secured loans. Mostly loans to members are unsecured, except that there are restrictions on the extent to which borrowers may withdraw their savings whilst loans are outstanding. There are maximum amounts set down by the Central Bank in terms of what amount a member can borrow from the Credit Union. The carrying amount of the loans to members represents Comhar Chreidmheasa Chorca Dhuibhne Teoranta’s maximum exposure to credit risk. The following table provides information on the credit quality of loan repayments. Where loans are not impaired it is expected that the amounts repayable will be received in full.
Not impaired: Neither past due or impaired Up to 9 weeks past due
AMOuNT €
2022 PrOPOrTION %
AMOuNT €
2021 PrOPOrTION %
5,699,340
97.3%
5,593,974
97.9%
116,035
2.0%
99,069
1.8%
Between 10 and 18 weeks past due
9,025
0.1%
5,605
0.1%
Between 19 and 26 weeks past due
18,165
0.3%
191
0.003%
Between 27 and 39 weeks past due
9,376
0.2%
4,083
0.1%
Between 40 and 52 weeks past due
7,415
0.1%
-
0.0%
-
0.0%
-
0.0%
5,859,356
100.0%
5,702,922
99.9%
104
0.002%
8,250
0.1%
53 or more weeks due Gross loans not impaired Gross loans individually impaired Gross loans collectively impaired
-
-
-
-
5,859,460
100.0%
5,711,172
100.0%
125,018
2.1%
130,729
2.3%
Non-specific provision
-
-
-
0.0%
Total carrying value
5,734,442
Total gross loans Impairment allowance Individual loans
5,580,443
Factors that are considered in determining whether loans are impaired are discussed in Note 3, dealing with estimates.
55
COMHAR CHREIDMHEASA CHORCA DHUIBHNE TEORANTA
NOTES TO THE FINANCIAL STATEMENTS contd.
€ 2022 12c loan Provision Account for Impairment losses As at 1 October Allowances reversed during the year As at 30 September 12d Net recoveries or losses recognised for the year Bad debts recovered Decrease (Increase) in loan provisions during the year
Loans written off Net recoveries on loans to members recognised in the year
€ 2021
130,729 (5,711) 125,018
125,489 5,240 130,729
8,638 5,711 14,349
10,458 (5,240) 5,218
14,349
(264) 4,954
12e Analysis of gross loans Outstanding 2022 Less than one year Greater than 1 year < 3 years Greater than 3 years < 5 years Greater than 5 years < 10 years Greater than 10 years < 20 years
2021
NO OF lOANS
€
NO OF lOANS
€
155
262,957
129
180,586
334
1,928,190
286
1,521,325
162
1,761,598
208
2,261,135
54
1,622,462
44
1,349,695
4 709
284,253 5,859,460
6 673
398,430 5,711,172
13. PrEPAyMENTS AND ACCruED INCOME
Prepayments Accrued investments and loan interest income Accrued Loan Interest on members loans
56
€ 2022
€ 2021
23,112 50,200 20,462 93,774
22,960 54,180 22,993 100,133
NOTES TO THE FINANCIAL STATEMENTS contd.
14. DEPOSITS AND INvESTMENTS Investments at the current and prior balance sheet date were all measured at amortised cost as appropriate and comprised of the following: € 2022 € 2021 Cash equivalents (Original maturity within 3 months) Fixed term deposits with banks 2,239,062 2,132,361 Total cash equivalents 2,239,062 2,132,361 Other (Original maturity after 3 months) Fixed term deposits with banks Structured Products Collective Investment Scheme Irish Government bonds Central Bank minimum deposits Total other 15. MEMBErS ShArES - FINANCIAl lIABIlITIES As at 1 October Received during the year Repaid during the year As at 30 September
5,551,674 1,982,078 580,279 709,162 362,964 9,186,157
6,550,000 1,985,648 703,150 711,648 362,965 10,313,411
€ 2022
€ 2021
16,786,545 11,404,485 (11,815,713) 16,375,317
16,550,229 11,229,981 (10,993,665) 16,786,545
Members’ shares are repayable on demand except for shares attached to loans. The breakdown of the shares between attached and unattached is as follows: € 2022
€ 2021
Unattached shares Attached shares Total members shares
14,761,189 1,614,128 16,375,317
15,101,817 1,684,728 16,786,545
16. OThEr PAyABlES
€ 2022
€ 2021
Creditors and other accruals Payroll and short term payroll accruals PAYE / PRSI Pension Deficit
70,544 4,554 (220) 298,060 372,938
69,355 45,594 12,938 127,887
57
COMHAR CHREIDMHEASA CHORCA DHUIBHNE TEORANTA
NOTES TO THE FINANCIAL STATEMENTS contd. 17. ADDITIONAl FINANCIAl INSTruMENTS DISClOSurES 17a FINANCIAl rISK MANAgEMENT Comhar Chreidmheasa Chorca Dhuibhne Teoranta is a provider of personal and business loans and also provides savings products to its members. The Credit Union invests excess funds with a view to ensuring that the return from members’ loans and investments is adequate to meet the overheads of the Credit Union and provide a reasonable return to members on shares and deposits. The Credit Union has a risk register in place to help the directors manage the various risks arising from its activities to include the issuing of loans to members and investing the excess funds of the Credit Union. The main financial risks arising from Comhar Chreidmheasa Chorca Dhuibhne Teoranta activities are credit risk, liquidity risk and interest rate risk. The Board reviews and agrees policies for managing each of these risks, which are summarised below. Credit risk: Credit risk is the risk that a borrower will default on their contractual obligations relating to repayments to Comhar Chreidmheasa Chorca Dhuibhne Teoranta, resulting in financial loss to the Credit Union. In order to manage this risk the Board approves the Credit Union’s credit policy, and all changes to it. All loan applications are assessed with reference to the credit policy in force at the time. Subsequently loans are regularly reviewed for any factors that may indicate that the likelihood of repayment has changed. The credit risk on members’ loans is disclosed in Note 12b. The Credit Union’s investments are also exposed to credit risk and the Credit Union mitigates the risk by only placing investments with financial institutions where the counterparties have strong credit ratings and using investment products authorised by the Central Bank. liquidity risk: The Credit Union’s policy is to maintain sufficient funds in liquid form at all times to ensure that it can meet its liabilities as they fall due. The Credit Union adheres on an ongoing basis to the minimum liquidity ratio and minimum short term liquidity ratio as set out in the Credit Union Act 1997 (Regulatory Requirements) Regulations 2016. Market risk: Market risk is generally comprised of interest rate risk, currency risk and other price risk. Comhar Chreidmheasa Chorca Dhuibhne Teoranta conducts all its transactions in Euro and does not deal in derivatives or commodity markets. Therefore, the Credit Union is not exposed to any form of currency risk or other price risk. Interest rate risk: The Credit Union’s main interest rate risk arises from differences between the interest rate exposures on the receivables and payables that form an integral part of a Credit Union’s operations. The Credit Union considers rates of interest receivable on investments and members’ loans when deciding on the dividend rate payable.
58
NOTES TO THE FINANCIAL STATEMENTS contd.
17b INTErEST rATE rISK DISClOSurES The following table shows the average interest rates applicable to relevant financial assets and financial liabilities. 2022
2021
AMOuNT €
AvErAgE INTErEST rATE
AMOuNT €
AvErAgE INTErEST rATE
Financial assets Gross loans to members
5,734,442
8.3%
5,580,443
8.11%
Financial liabilities Members shares
16,375,317
0%
16,786,545
0%
The interest rates applicable to loans to members are variable and range from 5.5% to 9.5%. The dividend on shares is determined on the basis of income less administrative expenses and, as can be seen above, a consistent margin is maintained between interest receivable and dividend on shares. As a result, the surplus for the year is not particularly sensitive to interest rate risk and no sensitivity analysis is presented. 17c lIquIDITy rISK DISClOSurES All of the financial liabilities of the Credit Union are repayable on demand except for some members’ shares attached to loans which have a fixed maturity date. 17d CAPITAl The Credit Union maintains sufficient reserves to buffer the Credit Union against any losses on its members’ loans and also its investments. The current regulatory reserves stand at 10.53% of the total assets of the Credit Union at the balance sheet date.
18. POST BAlANCE ShEET EvENTS There are no material events after the Balance Sheet date to disclose. 19. CONTINgENT lIABIlITIES Comhar Chreidmheasa Chorca Dhuibhne Teoranta had no contingent liabilities at the current or prior balance sheet date. 20. CAPITAl COMMITMENTS There were no capital commitments either contracted for or approved by the board at the year end. 21. INSurANCE AgAINST FrAuD The Credit Union has insurance against fraud in the amount of €2,600,000 (2021: €2,600,000) in compliance with Section 47 of the Credit Union Act 1997 as amended.
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COMHAR CHREIDMHEASA CHORCA DHUIBHNE TEORANTA
NOTES TO THE FINANCIAL STATEMENTS contd. 22. PENSION SChEME – IrISh lEAguE OF CrEDIT uNIONS Comhar Chreidmheasa Chorca Dhuibhne Teoranta participates in an industry-wide pension scheme for employees (The Irish League of Credit Unions Republic of Ireland Pension Scheme). This is a funded defined benefit scheme with assets managed by the Scheme’s trustees. On 31 March 2022, the defined benefit scheme closed to future accrual and although staff retained all the benefits that they had earned in the scheme to that date, Comhar Chreidmheasa Chorca Dhuibhne Teoranta and its employees ceased making regular contributions to the scheme and ceased earning any additional benefits from the scheme. At the date of closure of the scheme, there was a past service deficit which was allocated to each individual credit union based on the total benefits earned by staff in each credit union. Comhar Chreidmheasa Chorca Dhuibhne Teranga’s allocation of that past service deficit is €337,300. This total cost is included in the Income & Expenditure account for the year ended 30 September 2022. Comhar Chreidmheasa Chorca Dhuibhne Teoranta has entered a 10 year funding plan to pay the deficit of which the first year was paid in 2022. As this is a pooled pension scheme, Comhar Chreidmheasa Chorca Dhuibhne Teoranta remains liable to cover the cost of their share of any future increase in the total cost of providing the pension payments to credit union employees who were part of the scheme. Comhar Chreidmheasa Chorca Dhuibhne Teoranta could exit the scheme and therefore never have to make a potential additional payment requirement but exiting the scheme would incur a substantial additional cost. If credit unions exit the Scheme, they are required to pay to the trustees the exit amount which the trustees determine is required to fund benefits in respect of their active, deferred and pensioner members on a “no risk” basis. The exiting credit union thereby settles any liability they have to contribute to the Scheme in the future without increasing the risk for remaining credit unions. In January 2023, Comhar Chreidmheasa Chorca Dhuibhne Teoranta exited the scheme at an additional cost of €66,200 thereby extinguishing all future liability to contribute to the defined benefit scheme. This additional cost will be reflected in the income and expenditure account year ended 30 September 2023. In January 2023, Comhar Chreidmheasa Chorca Dhuibhne Teoranta has paid in full all liabilities associated with exiting the scheme and is no longer liable to anymore charges.
60
NOTES TO THE FINANCIAL STATEMENTS contd. 23. rElATED PArTy TrANSACTIONS No. of loans 2 6
Loans advanced to Related Parties during the year ended Total loans outstanding to related parties at the year end Total provisions for loans outstanding to related parties Total provision charge during the year for loans outstanding to related parties
2022 € 28,000 133,291 -
The related party loans stated above comprise of loans to members of the board of directors, the management team and members of the family of a member of the board of directors and the management team of Comhar Chreidmheasa Chorca Dhuibhne Teoranta. The total of loans outstanding to related parties amounted to 1.4% of total gross loans as at 30 September 2022 (2021 3.2%). There were no provisions against the loans due from the directors and the management team at the balance sheet date. The directors and management team share balances stood at €45,573 at 30 September 2022. 24. OThEr gAINS The ILCU Annual General Meeting 2022 Resolution No. 13 approved an amendment to Rule 4 of the Rules of the Stabilisation Protection Scheme (“SPS”) 2020 which permitted a payment from the SPS Fund to be made to the Credit Union to stabilise the Credit Union as a result of the deficit in the ILCU pension fund and other recent environmental factors. The amount due to Comhar Chreidmheasa Chorca Dhuibhne Teoranta from the SPS Fund is €81,319. 90% of this amount was paid during year ended 30 September 2022. The remaining 10% is payable before 31 December 2025 and has been account for as a receivable at 30 September 2022. 25. APPrOvAl OF FINANCIAl STATEMENTS The financial statements were approved, and authorised for issue, by the board of directors on the 3 February 2023.
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COMHAR CHREIDMHEASA CHORCA DHUIBHNE TEORANTA
SCHEDULES TO THE FINANCIAL ACCOUNTS FOR THE FINANCIAL yEAR ENDED 30 SEPTEMbER 2022
SChEDulE 1
62
OThEr MANAgEMENT ExPENSES
€ 2022
€ 2021
Local Authority Charges Light & Heat Repairs & Maintenance Printing and Stationery Postage & Telephone Promotions & Advertising Training Staff AGM Expenses Travelling Bank Charges/Stamp duty Audit General Insurance LP/LS Insurance Legal & Professional Fees Computer Maintenance/Consultancy League Affiliation fees ILCU Fees Regulatory & Other Levies Risk Management Internal Audit Sundry Total other management expenses
4,675 5,523 3,271 5,687 5,943 7,314 2,972 7,666 4,971 18,828 11,000 16,452 49,245 2,299 55,316 1,369 1,864 32,596 18,617 11,875 8,718 276,201
6,211 4,044 2,207 4,420 4,976 7,996 5,055 8,556 0 29,129 10,500 13,678 53,755 5,451 37,613 2,424 2,049 28,902 22,062 9,500 3,544 262,072
UNAUDITED ACCOUNTS
INCOME & EXPENDITURE ACCOUNT COMHAR CHREIDMHEASA CHORCA DHuIbHNE | 30th SEPTEMbER 2023
INCOME Interest Income Investment Income Investment Gains/(Loss) Bad Debts Recovered Other Income TOTAl INCOME
€
Rec’d/Receivable within 1 year
498,291 149,163 (113,973) 6,052 12,637 552,170
ExPENDITurE Net Loan Protection / Life Savings Insurance Salaries and Related Expenses Bad Debts Written Off Bad Debts Provision Other Expenses Exceptional Losses TOTAl ExPENDITurE
52,140 146,893 2,818 122,504 362,896 105,440 792,691
yTD SurPluS (DEFICIT)
(240,521)
As part of the Transfer of Engagements, and in order to comply with the principles of acquisition accounting, Comhar Chreidmheasa Chorca Dhuibhne Teoranta crystalised a loss on two bank bonds to the value of €129,877. This represents the difference between the carrying value in the audited accounts of the bonds and the market value as at 30th September 2023 and is included in the Income and Expenditure Account above. Mar chuid den Aistriú Gealltanas, agus chun cloí le prionsabail na cuntasaíochta fála, dhein Comhar Chreidmheasa Chorca Dhuibhne Teoranta caillteanas ar dhá bhanna bainc dar luach €129,877 a chriostalú. Léiríonn sé seo an difríocht idir luach tugtha anonn i gcuntais iniúchta na mbannaí agus luach an mhargaidh amhail an 30 Meán Fómhair 2023 agus tá sé san áireamh sa Chuntas Ioncaim agus Caiteachais thuas.
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COMHAR CHREIDMHEASA CHORCA DHUIBHNE TEORANTA
UNAUDITED ACCOUNTS
BALANCE SHEET | 30th SEPTEMbER 2023 ASSETS
€
Cash and Current Accounts Minimum Reserve Deposit Held Investments Accounts in Authorised Credit Institutions Bank Bonds Collective Investment Schemes Total Investments Loans Less Provision For Bad Debts Fixed Assets less Depreciation Other Assets TOTAl ASSETS
1,250,618 364,457 8,200,594 1,848,644 596,183 12,260,496 6,169,789 247,522 376,985 93,804 18,653,552
lIABIlITIES Member Shares Other Member Funds Other Liabilities TOTAl lIABIlITIES
Regular
NET WOrTh l Represented By:
16,658,417 1,868 90,924 16,751,209 1,902,343
rESErvES Regulatory Reserve Operational Risk Reserve YTD Surplus (Deficit) Other Reserves TOTAl rESErvES
64
Realised
2,000,000 42,864 (240,521) 100,000 1,902,343
NOTES
65
NOTES
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COMHAR CHREIDMHEASA CHORCA DHuIbHNE TEORANTA