THE RIPPLE EFFECT DEVELOPMENT ASSOCIATION INC.

ABN 65 336 600 687

Charitable Collections License 21067

Annual Financial Report

For the year ended

30 June 2017

Annual Report 2017

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CORPORATE INFORMATION

The Ripple Effect Development Association Inc.

ABN 65 336 600 687

Charitable Collections License 21067

Committee

Paige Muhling - President – (resigned 31 March 2017)

Lindsay McInnes – Vice President (appointed 30 October 2016)

Susan Phillips – Vice President (resigned 30 October 2016)

Judith McInnes – Treasurer (appointed 30 October 2016)

Michael Muhling – Treasurer (resigned 30 October 2016)

Barrie Johnston – Secretary

Lyn Johnston – Committee Member

Pat Davey – Committee Member

Eleanor Stone – Committee Member

Helen Wallace – Committee Member

Dave Wallace – Committee Member

Committee members were in office throughout the year and until the date of this report unless indicated otherwise.

Registered and Principal office

5 Gwynne Corner

Jane Brook, Western Australia 6056

Bankers

Westpac

1257-1261 Hay Street

West Perth WA 6005

Auditor

Sindy Rogers (H&R Block)

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COMMITTEE’S REPORT Your committee members of The Ripple Effect Development Association Inc. (TREDA) submit the annual financial report of the Association for the year ended 30 June 2017 as follows:

Projects

During 2016 TREDA major focus has been on the Manila Missions project throughout the year. Support for the Sumapi Project in the Philippines was discontinued due to dissatisfaction with the accountability and reporting employed by its in-country partner.

The Manila Missions and Sumapi projects are executed independently, but overseen by the TREDA Committee to strengthen the governance for both projects and broaden TREDA’s combined knowledge and experience operating in the Philippines.

Manila Missions (MM) Project (Philippines)

MM project was started with a vision of seeing lives transformed by helping poor families to start a business and thus become independent. Our desire is to effect a real and lasting change in a whole community by giving the opportunity to those without a job or on a very low income the opportunity to start their own livelihood business.

Thousands of people live in very poor living conditions in squatter communities in homes made from anything they can find such tarps, cardboard boxes, timber, shade cloth and other building products. There is usually no toilet, no electricity, no running water, no fridge or any luxuries that we usually enjoy in the western world. Our heart is to help these people and over the years we have developed our project to help multiple families per year. Manila Missions core activities are:

1) To help poor families start a livelihood business. 2) Distribute clothing to those in the most need 3) Provide donated laptops and computers to schools, students, churches, teachers etc. 4) Community support for schools, kindergartens, churches and for individuals

MM provides the initial livelihood business start-up supplies. Once the family can provide financially for themselves then we ask that family to help others. This is a once off opportunity for the family. Our aim is to see transformation in the lives of these families through livelihood. It is usually not long before the family can start to be able to provide for their own needs such as food, medicines, schooling for the children etc.

In the years prior to joining TREDA MM had helped sixteen (16) families in the Philippines to start a livelihood business. Also many computers and laptops had been donated to various students, churches and schools for the poor to be able to have access to learn new skills and use the computers for work or school.

Last financial year MM had a total of eighty four (84) families assisted with starting a livelihood business in the Philippines while receiving notification of two of these businesses had closed down.

Livelihood Approvals this Financial Year

In July 2016 Miss Santos from Los Banos who was awarded an accessory making business including receiving a donated sewing machine and jewellery supplies to make and sell craft products and a mother located in Teresa, Rizal Province received a business start-up kit to use for a manicure livelihood business.

In October 2016 a former recipient of sponsorship through Sumapi was awarded a food business selling food products in Isabela province. Also MM had eleven (11) other new livelihood businesses started. The livelihood approvals are as follows:

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• Miss Dela Cruz Buena – hot food business • Mrs Dimanarig - buy and sell (soap, dishwashing liquid etc) • Mrs Endrano - rice dealer • Mrs Alaban - sideline income by growing vegetables • Mrs Gamoyao - sideline income by growing vegetables • Mr Apostadero – sideline business doing hair styling and colouring • Mrs Garcia - balut eggs • Mrs Vicente - buy and sell biscuits, kahoy, mineral water • Mrs Martinez - jewellery and accessory making • Mrs Esguerra - buy and sell biscuits and silver dealer • Mr Rose - buy and sell biscuits

In January 2017 MM provided start-up funds for an urgent food business for Mrs Cruz to help feed her five (5) grandchildren as she had become their carer.

MM now has a total of one hundred and eleven (111) families assisted with starting a livelihood business in the Philippines.

Other Manila Missions project work

In July 2016 Mrs Antonio received a donated semi-high speed sewing machine and bulk lot of fabrics to help her increase sales in her sewing livelihood business. Also a donated laptop was given to a missionary to Cambodia to be used for ministry work in Cambodia.

In August 2016 Fresh Start Ministries in Los Banos were given six (6) donated desktop computers, two tables, 20 plastic chairs and other equipment to be used as a computer training centre and for local children to do their homework.

In September we donated three desktop computers to JRM church Binangonan.

In October we purchased two portable heavy duty tents for JRM church Binangonan and gave out a number of bibles to various churches and other individuals.

Approximately 40 pairs of donated prescription glasses were given to people in Binangonan Rizal who were needing them to read.

Donated laptops were given to Miss Lofamia, pastor Ramos and three laptops to JRM Binangonan to be allocated to members through our partnership with JRM.

In January 2017 two donated laptops were given to JRM Binangonan for the new Hillside and Halung outreaches and a donated laptop and desktop computer were donated to JRM San Pablo.

In May 2017 a laptop was donated to JRM Hulo to replace their broken laptop. Also nearly 500 bibles were given to various churches and individuals.

Also a number of boxes containing clothing were shipped to the Philippines and donated to various groups. Some of these boxes were sponsored by a sponsor from Australia.

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Sumapi Project (Philippines)

Sumapi Land

The Sumapi Project was started with the vision of creating a financially self-sustainable village for widows and children in need. To achieve this vision TREDA assisted SMI to acquire over 15 hectares of land and a seven year plan was created to build eight houses for 48 children and eight house mothers, plus school rooms, a multi-purpose centre, offices and two guest houses. TREDA has discontinued its support for the Sumapi Project and the project has been made inactive. Sponsored Youth

TREDA discontinued its sponsorship of at-risk youth under the banner of Sumapi Project early in the financial year.

Key Financials

The Association’s operating surplus for the year ended 30 June 2017 was $1,065.54.

At 30 June 2017, the Association had $6705.09 cash on hand.

Significant events after balance date

There were no significant events after balance date.

Likely developments and expected results

TREDA currently remains focused on helping more families in the Philippines to do a livelihood business through the Manila Missions project.

Manila Missions raised more funds through fundraising activities this year.

Corporate

Nothing to report.

Remuneration

TREDA is a small Association run by a small team of volunteers. Additional committee members have joined to bolster our capacity to do fundraising and increase our activities in the Philippines.

No committee member received any salary, fees or any other form of remuneration during the year ended 30 June 2017, or until the date of this report. TREDA did not pay or commit to paying for any travel costs during the year or subsequent to it to any of its members with the potential exception of minor in-country expenses. The Association currently has no intention to introduce any remuneration for its committee or to employ any staff for the foreseeable future.

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Committee Meetings

The number of committee meetings held during the period and the number of meetings attended by each committee member was as follows:

Number of meetings eligible to attend Number of meetings attended

Paige Muhling 5 2

Michael Muhling 5 2

Susan Phillips 5 0

Barrie Johnson 5 5

Lyn Johnson 5 5

Lindsay McInnes 3 3

Judith McInnes 3 3

Pat Davey 3 2

Eleanor Stone 3 3

Helen Wallace 3 3

Dave Wallace 3 2

Auditor

The accounts were audited by Sindy Rogers from H&R Block in compliance with the requirements of the Association’s Charitable Collections License.

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INCOME STATEMENT

For the year ended 30 June 2017

Notes 2017 2016

$ $ Revenue

General Donations

9,595.10 8,585.00

Specified Donations - 3,530.00

Sale of Goods 2 1,515.00 1,264.00

School Visits - -

Interest received 6.29 5.13

Total Revenue 11,116.39 13,384.13

Expenses

Administration (573.66) -

Refunds - (500.00)

Programs – Sumapi (Philippines) 3 (1,960.98)) (7,442.05)

Programs – Manila Missions (Philippines) 4 (7,485.21) (1,529.41)

Total Expenses (10,019.85) (9,471.46)

Operating Surplus (Deficit) 1,096.54 3,912.67

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BALANCE SHEET

As at 30 June 2017

Notes 2017 2016

$ $

Assets

Current assets

Cash and cash equivalents 6,705.09 5,608.55

Total current assets 6,705.09 5,608.55

Equipment 5 - 1,265.47

Total non-current assets - 1,265.47

Total assets 6,705.09 6,874.02

Liabilities

Current liabilities - -

Total liabilities - -

Net assets 6,705.09 6,874.02

Equity

Retained earnings 6,705.09 6,874.02

Total equity 6,705.09 6,874.02

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NOTES TO THE FINANCIAL STATEMENTS

1. Summary of significant accounting policies

Accounting procedures

TREDA will produce accurate information relating to public fundraising to ensure accountability to donors. Records will be kept in such a manner as will ensure that funds raised from the public are properly accounted for and the results of fundraising activities are verifiable. We adopt accounting procedures and methods that comply with Australian Accounting Standards.

Information contained in the financial statements is an important factor in determining estimates of fundraising returns to be used in promotional materials for future fundraising campaigns, as well as to satisfy public enquiries into the organization’s fundraising costs.

An audit will be performed annually to ensure compliance with Australian Accounting Standards.

Accounting Method

Report on a cash basis.

Reporting Fundraising Income and Expenditure

Financial statements will include:

a. Income statement; and b. A balance sheet

The income section of the income and expenditure statement will:

a. describe each type of activity conducted such as "sale of goods”, “fundraising” etc. b. Will not list separately each different type of fundraising activity conducted. Fundraising

activities this year included functions, stalls and a garage sale.

The expenditure section of the income and expenditure statement will:

a. separately list the expenses for each type of fundraising activity listed in the income section;

b. include all direct costs of fundraising in addition to a fair apportionment of relevant and identifiable indirect costs and overheads.

The apportionment method must be clearly stated in the notes to the accounts and remain consistent from year to year. Where a change in the apportionment method occurs, this must also be clearly stated in the notes.

Disclosure

Make annual accounts publicly available.

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Receipting Donations

Receipt and record all donations.

Reimbursement Policy

1. Only reimburse/pay back members who have paid for expenses on behalf of the Association.

2. Expense claims with detailed break up needs to be completed and signed by a member who wants to be reimbursed for an organization-related expense or who wants an advance to pay for such an expense. Expenses must be related to legitimate organizational activities.

3. Documentation required for a claim:

Keep all dockets and/or receipts for petty cash expenses as proof of payment.

Attach dockets and/or receipts to your written claim.

Check at the point of purchase that dockets/receipts are clear and correct.

Obtain two executive members’ authorization in writing for amounts over $50.

Advances

Members:

Request in writing if money is needed, in advance, to pay an organization-related expense.

Get two executive members’ approval for the advance. Give the Treasurer the docket/receipt for the money spent, as well as any change from the advance, within thirty (30) working days of receiving the money.

Cash Handling

Cash handling procedures:

1. Two persons to be present for the processing of all un-receipted cash donations and money boxes;

2. Do not keep petty cash; 3. The issue of a receipt and the retention of a duplicate, regardless of the amount

involved, for any donations made in face to face fundraising outside the organization’s offices;

4. Money boxes to be sealed in a tamper proof manner, and a record kept of where they are placed.

Cheques

All cheques must be signed by not less than two executive members.

Auditing

Prepare annual accounts and have them audited and submitted to the committee within 4 months. of the end of the financial year.

Use an independent approved auditor to audit accounts. The audit will be undertaken by any independent person.

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Ensure accounts are signed by the auditor as well as a person responsible for their preparation.

Comply with any conditions attached to licences issued under the Act in relation to approved auditors.

Retention of Accounting Records

Retain records for not less than 5 years.

GST Status

Operate on a Non-GST registered basis.

Cash Management Policy

TREDA and its project partners, including Sumapi Ministries Inc., adhere to the following policies and procedures regarding the management of its funds. These policies and procedures are based on three principles:

1. That all funds are to be applied as effectively as possible. 2. That funds will be applied rather than held wherever reasonably possible. 3. That when specified, funds will be applied towards a designated purpose. 4. That the Sumapi project is to be self-sustainable (now discontinued).

Designated Funds

Funds donated for a specific purpose will be accounted to a Funding Pool and applied to that purpose. However, those charged with the Governance of the funds may temporarily use those funds for other purposes. Should this happen then the entity(s) will remain indebted to fulfil the designated purpose of the Funding Pool.

2. Sale of Goods and other Fundraising Activities

Gift Cards

Two varieties of gift cards are sold to raise funds for Manila Missions. Funds raised from selling the gift cards will be used as follows.

1. Sewing livelihood businesses 2. Training Courses

Should a Gift Card purchaser request, or is advised, formally or informally, that their gift is to be used for the specific item on their card then that pledge will be honoured.

Clothes, Gifts, Toys, Stationery

TREDA may receive donated items such as clothes, gifts, toys, stationery and other such useful and practical things. Wherever possible and effective these items are transported to the project. If this is not practical for any reason then the item will either be donated to another worthy cause or sold and the money deposited into TREDA’s bank account.

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Laptops and Computers

TREDA may receive donated laptops, computers and other electronic goods. Wherever possible and effective these items are transported to the project. If this is not practical for any reason then the item will either be donated to another worthy cause or sold and the money deposited into TREDA’s bank account.

Financial Self-Sustainability

Financial self-sustainability is a key goal of the Sumapi Project. Financial self-sustainability means that the Project can operate on its own without any external injections of cash such as donations and sponsorships.

TREDA will make comment in their annual report and website regarding the degree to which we has achieved financial self-sustainability, and any plans or expectations regarding this in the near future.

Administration, Remuneration and Travel Costs

TREDA and its project partners are committed to applying the highest possible proportion of the funds they have received to actual project delivery.

TREDA is managed and operated entirely by volunteers and pays no wages, salaries or other forms of remuneration.

TREDA does not pay travel costs including international flights and vehicle reimbursement expenses. Project related minor and infrequent travel expenses may be reimbursed at the discretion of the Committee.

Project partners must invariably incur costs in-country to deliver project objectives. Up to 2% of the funds designated for a particular purpose may be used for costs incurred such as traveling expenses, printing, postage, stationery etc. Any costs incurred beyond this, if any, will be disclosed separately in the accounts.

Audit Policy

Sumapi expenditure will be accounted for and substantiated by doing the following:

1. Revenues and expenditures will be detailed, reconciled to bank statements and attested by the President, Treasurer and Internal Auditor (if applicable).

2. Sponsorship funds will be signed as received by the Sponsee/guardian. 3. TREDA will gather outcome based evidence to support material expenditures, such as:

a. Receipts if available b. Land Titles. c. Child commentary and photos. d. Photos of items purchased or supplied.

Religion

TREDA and its Sumapi Project partner, Sumapi Ministries Inc. (SMI), are non-denominational Christian ministries, meaning that its objectives include sharing and teaching the Christian Faith. This is done in practical ways such as by caring for widows, orphans and others who are in need in accordance with the teachings of Jesus Christ. Ministry is not biased towards those who respond to, live or embrace this Faith.

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3. Programs - Sumapi (Philippines)

The key expenditures made by the Sumapi Project during the year was school sponsorships.

4. Commitments

TREDA’s cash management policies commit the Association to spending its funds as effectively as possible, and as required rather than holding cash. However, it also remains committed to fulfilling the purpose for which any funds it raises are given. TREDA may therefore spend its available funds for necessary purposes at its discretion however it remains committed to fulfilling those purposes at the earliest reasonable opportunity.

At 30 June 2017 TREDA had the following commitments:

Commitment Opening Balance

Receipts Expenditures Closing Balance

$ $ $ $

Sponsorship1 0.00 1,200.00 1,200.00 0.00 Education2 653.78 0.00 653.78 0.00

Music Ministry3 734.54 0.00 734.54 0.00 Manila Missions4 4,826.98 9,915.55 8,058.87 6,683.66

Total 6,215.30 11,115.55 10,647.19 6,683.66

At 30 June 2016 TREDA had $5,608.55 in its bank accounts available towards meeting these commitments.

1. Sponsorships ceased during 2016/17 financial year. 2. A specified donation to for education was made in 2014/15 and used in 2016/17. 3. A specified donation to for a music ministry made in 2014/15 was used in 2016/17. 4. A dedicated bank account holds funds provided specifically for the Manila Missions Project.

5. Equipment

Sumapi music equipment was donated to a charitable cause.

6. Related Parties

Secured Loan to SMI

The Sumapi land has been acquired by SMI by accessing a secured loan from the Aurum Superannuation Fund (the “Fund”), a private superannuation fund in which Michael and Paige Muhling have a controlling interest. Michael and Paige Muhling were executive committee members of TREDA.

The key terms of the loan provided by the Fund are as follows:

The loan was for 95% of the cost of the Sumapi land (2,024,742 Php or $51,520.15 AUD). SMI was required to pay the remaining 5% which it did through funds raised by TREDA.

The loan is for ten years and interest free, but the amount repayable is the market value of any portion on the land for which payment remains outstanding.

SMI has the option to pay the market value of any portion of the land at any time, at its discretion.

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The parties at their discretion may choose to extend the life of the loan. The loan is fully secured by the land acquired by SMI. The Fund has the absolute right to demand payment of the loan at any time and for any

reason by giving thirteen months’ notice in writing. SMI cannot build permanent structures on the land without the express written

permission of the Fund.

The loan was structured so that it would be of mutual benefit to both parties as follows:

1. SMI had access to and control of 16 hectares of land despite having minimal funds and no existing security assets. It has the option to repay the loan as and when it has the opportunity. If it cannot raise sufficient funds to do so within ten years it may be able to extend the loan, and if it cannot SMI is not exposed to risk as its liability is tied to the value of the asset it owns. In this case it has still had ownership and use of the land with minimal costs for ten years, and it should retain its ownership of the 5% it had paid for.

2. The Fund benefits by providing a fully secured loan that will earn a commercial rate of return. The Fund is exposed to both the risk and return associated with any change in the value of the land.

The loan repayment value was made equal to the market value of the loan as this:

1. Is a just, fair and independent method to determine a commercial rate of return for the loan.

2. Protects SMI from being exposed to a rate of return that will consume its financial resources and may prove beyond its ability to repay.

3. Gives confidence to the Fund that its investment return will be achieved.

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COMMITTEE’S DECLARATION

1. In the opinion of the committee:

a. the financial statements and notes of the Association:

i. give a true and fair view of the Association’s financial position as at 30 June 2017 and of its performance for the period then ended; and

ii. complies with Accounting Standards; and

b. there are reasonable grounds to believe that the Association will be able to pay its debts as and when they become due and payable.

This declaration is signed in accordance with a resolution of the committee.

Barrie Johnston Secretary Dated this 22 October 2017