Office of the Auditor General Victoria Hall 11 Victoria Street Hamilton HM 11, Bermuda Tel: (441)296-3148 Fax: (441)295-3849 Email: auditbda@gov.bm Website: www.oagbermuda.gov.bm AUDITOR'S REPORT To the Minister of Works and Engineering I have audited the balance sheet of the Board of Trustees of the Golf Courses as at March 31, 2000 and the statements of operations for the year then ended. These financial statements are the responsibility of the Board's management. My responsibility is to express an opinion on these financial statements based on my audit. Except as explained in the following paragraphs, I conducted my audit in accordance with auditing standards generally accepted in Bermuda and Canada. Those standards require that I plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Due to a lack of sufficient and appropriate audit evidence, I was unable to satisfy myself that membership revenues and accounts payable are fairly stated. Accordingly, my verification of these amounts was limited to the amounts recorded in the financial records of the Board and I was unable to determine whether any adjustments might be necessary to green fees and membership revenues, deferred revenues, accounts payable and accrued liabilities, due to the Government of Bermuda, net income from operations and distribution of net income to the Government of Bermuda. In addition, I did not receive confirmation that all available Board minutes were provided to me and therefore, there may be matters that would have a material effect on the financial statements that have not been identified, appropriately recorded or disclosed in these financial statements. In my opinion, except for the effect of adjustments, if any, which I might have determined to be necessary had I been able to satisfy myself concerning the accuracy and completeness of membership revenues and accounts payable and as a result of further information not received as referred to in the preceding paragraph, these financial statements present fairly, in all material respects, the financial position of the Board of Trustees of the Golf Courses as at March 31, 2000 and the results of its operations for the year then ended in accordance with accounting principles generally accepted in Bermuda and Canada. Schedules 1 to 3 are presented as supplementary information only. In this respect, they do not form part of the basic financial statements of the Board of Trustees of the Golf Courses for the year ended March 31, 2000 and therefore are excluded from my opinion on these financial statements. Schedules 1 to 3 were subject to audit procedures only to the extent necessary to express an opinion on the financial statements of the Board and, in my opinion, except for the effect of adjustments as explained above, if any, these supplementary schedules are fairly presented in relation to the basic financial statements. Hamilton, Bermuda January 30, 2002 Larry T. Dennis, C.A. Auditor General 318 BOARD OF TRUSTEES OF THE GOLF COURSES Balance Sheet March 31, 2000 (Expressed in Bermuda Dollars) 1999 2000 Assets Current assets Cash Accounts receivable Inventories Prepaid expenses i Total current assets 4,650 130,990 435,697 24,866 $ 4,150 134,713 525,867 24,390 596,203 10,504 Apprentice Training Fund (Note 4) Total assets 689,120 11,889 ; 606,707 $ 701,009 I 145,842 68,408 207,086 174,867 $ 190,621 110,789 209,163 178,547 Liabilities Current liabilities Due to Government of Bermuda (Note 3) Accounts payable and accrued liabilities Deferred revenues Accrued vacation pay Total current liabilities 596,203 10,504 Apprentice Training Fund (Note 4) Total liabilities ; See accompanying notes to financial statements 319 689,120 11,889 606,707 $ 701,009 BOARD OF TRUSTEES OF THE GOLF COURSES Statement of Operations Year Ended March 31, 2000 (Expressed in Bermuda Dollars) 2000 1999 4,212,461 1,516,407 133,394 37,920 4,161,549 1,582,858 186,425 43,040 5,900,182 5,973,872 3,022,057 594,453 476,578 251,331 219,658 178,031 58,700 11,593 2,508 2,613,647 450,120 283,624 213,215 220,884 231,945 86,973 12,986 - 4,814,909 4,113,394 1,085,273 Revenues Green fees and memberships Golf cart hire Rent Miscellaneous 1,860,478 (1,085,273) (1,860,478) Total revenues Expenses Salaries and wages Operational materials and supplies Repairs and maintenance Electricity and fuel General and administrative (Note 5) Professional services (Notes 6 and 7) Credit card charges Rentals Bad debts Total expenses Net income from operations Distribution of net income to Government of Bermuda Net income retained by Board See accompanying notes to financial statements 320 BOARD OF TRUSTEES OF THE GOLF COURSES Notes to Financial Statements March 31, 2000 1. General The Board of Trustees of the Golf Courses ("the Board") was established on April 3, 1998 under The Golf Courses (Consolidation) Act 1998 ("the Act"), which took effect that same day. Under section 5 of the Act, the functions of the Board are to have general control, management and administration over the Port Royal, Ocean View, and St. George's Golf Courses ("the Golf Courses") and to maintain the Golf Courses in good and proper condition. For the years ended March 31, 2000 and 1999 the financial statements of the Golf Courses under the Board's administration have been consolidated accordingly to reflect the spirit of the Act. In accordance with section 8 of the Act, the Board shall administer the Golf Courses and shall levy such fees and other charges as required to meet the expenses of the Trustees including depreciation and amortization charges and ensure that the earned surplus of the Board will not fall into a deficit position. All sums received by the Board as a result of fees or other charges are paid into the Consolidated Fund of the Government of Bermuda. Likewise, all disbursements approved by the Board are paid out of the same fund. 2. Accounting policies The financial statements have been prepared in conformity with accounting principles generally accepted in Bermuda and Canada and include the following significant accounting policies: a) Inventories Inventories are valued at the lower of cost and net realizable value. b) Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. c) Capital assets The Act vests the land, buildings and equipment of the Golf Courses with the Government of Bermuda. Since the Government of Bermuda retains legal ownership as well as all cash proceeds (net of cash disbursements) of the Golf Courses, capital assets are not recorded in the financial statements of the Board. Capital assets are considered economic resources whereby all future benefits are ultimately owned and controlled by the Government of Bermuda. All capital assets are expensed as capital acquisitions or capital development expenditures in the Consolidated Fund of the Government of Bermuda. Government intends to begin capitalization and amortization of land improvements, land development and buildings in 2002/03. 321 BOARD OF TRUSTEES OF THE GOLF COURSES Notes to Financial Statements March 31, 2000 3. Due to the Government of Bermuda The amount due to Government of Bermuda represents the net asset position of the Board, payable to the Consolidated Fund since all revenue is received and all expenses are paid by the Consolidated Fund on behalf of the Board. No interest is accrued on the outstanding amount. 4. Apprentice training fund The apprentice training fund was established to receive contributions from various donors to assist persons studying turf management. The movement during the year was as follows: 2000 1999 Balance, beginning of year Scholarships Interest $ Balance, end of year 5. 11,889 (2,217) 832 10,504 $ 11,111 778 11,889 General and administrative 2000 Printing, stationery and advertising Telephone and postage Audit and accounting Insurance Clothing and uniform Travel Cleaning Miscellaneous 1999 63,661 63,567 31,100 25,908 13,157 13,148 6,474 2,643 $ 68,888 60,291 20,000 34,781 16,291 6,987 8,550 5,096 219,658 $ 220,884 Professional services Professional services represents commissions paid on golf cart hire, the Golf range, tee time reservations systems and fees paid to the Ministry of Works and Engineering for management services. 7. Related party transaction The Government of Bermuda provides accounting and administrative services to the Board. This includes processing and payment of general and payroll expenditure, revenue processing, maintenance of accounting records and the production of management accounts. A management fee of $24,900 (1999 - $25,000) has been included as part of professional services expense. Government officials receive complimentary rounds of golf, The value of these complimentary rounds has not been reflected in the financial statements. 322 BOARD OF TRUSTEES OF THE GOLF COURSES Notes to Financial Statements March 31, 2000 8. Statement of cash flows A statement of cash flows has not been prepared as it would not provide any additional useful information. 9. Capital assets As explained in Note 2c, the Board does not record capital assets in the financial statements. The following capital asset information is provided as additional information for financial statement users. 2000 Cost Accumulated amortization 1999 Net book value Net book value $ 11,063,633 6,803,915 3,224,343 4,611,995 1,396,857 1,007,664 $ 2,094,262 2,641,608 2,295,847 985,953 673,317 $11,063,633 4,709,653 582,735 2,316,148 410,904 334,347 $ 11,063,633 4,879,477 688,212 2,431,448 507,891 278,798 $ 28,108,407 Land Buildings Equipment Land development Land improvements Fixtures and fittings $ 8,690,987 $19,417,420 $ 19,849,459 Initial costs for land were based on market value. All subsequent capital asset purchases are presented based on cost. Capital assets are amortized on a straight-line basis at the following rates: Buildings Equipment Land development Land improvements Fixtures and fittings 2.5% 25% 2.5% 10% 10% Total amortization for the year is calculated as $885,580 (1999 - $916,816). 10. Pension plan Employees of the Board are covered by the Public Service Superannuation Fund, which is a defined benefit plan administered by the Government of Bermuda. Contributions to the fund are required from both the employee and the Board. These contributions represent the total liability of the Board and are recognized in the accounts on a current basis. The Board is not required under present legislation to make contributions with respect to the actuarial deficiencies of the Public Service Superannuation Fund. 11. Comparative figures Certain comparative figures have been adjusted to conform to the current year's financial statement presentation. 323 Schedule 1 BOARD OF TRUSTEES OF THE GOLF COURSES Individual Course Statement of Operations March 31, 2000 2000 1999 (Note 11) 603,100 265,572 32,000 12,469 564,132 913,141 867,245 718,323 148,926 147,739 72,527 66,711 55,435 2,508 2,119 425 637,610 79,882 156,028 63,648 60,335 62,389 10,942 3,265 1,214,713 1,074,099 Ocean View Golf Course Revenues Green fees and membership Golf cart hire Rent Miscellaneous Total revenues Expenses Salaries and wages Repairs and maintenance Operational materials and supplies Electricity and fuel General and administrative Professional services Bad debts Credit and charges Rentals Total expenses Net loss $ 324 (301,572) 272,974 25,200 4,939 $ (206,854) BOARD OF TRUSTEES OF THE GOLF COURSES Schedule 2 Individual Course Statement of Operations March 31, 2000 2000 1999 $ 2,753,690 782,686 61,819 22,384 2,695,939 812,262 118,455 32,007 3,620,579 3,658,663 1,465,252 288,663 244,812 111,192 89,476 89,175 48,671 — 1,173,002 168,336 154,077 95,103 99,703 128,897 52,607 1,289 2,337,241 1,873,014 Port Royal Golf Course Revenues Green fees and membership Golf cart hire Rent Miscellaneous Total revenues Expenses Salaries and wages Repairs and maintenance Operational materials and supplies Electricity and fuel General and administrative Professional services Credit card charges Rentals Total expenses Net income $ 1,283,338 325 $ 1,785,649 BOARD OF TRUSTEES OF THE GOLF COURSES Schedule 3 Individual Course Statement of Operations March 31, 2000 2000 1999 (Note 11) 855,671 468,149 39,575 3,067 901,478 497,622 42,770 6,094 1,366,462 1,447,964 838,482 201,902 67,612 63,471 38,989 33,421 11,168 7,910 803,035 140,015 54,464 60,846 35,406 40,659 8,432 23,424 1,262,955 1,166,281 St. Georges Golf Course Revenues Green fees and membership Golf cart hire Rent Miscellaneous Total revenues Expenses Salaries and wages Operational materials and supplies Electricity and fuel General and administrative Repairs and maintenance Professional services Rentals Credit card charges Total expenses $ Net income 326 103,507 $ 281,683