FC 110/5b)  |
|
FC 110/5b) |
Hundred and tenth Session |
Rome, 19 – 23 September 2005 |
Audited Accounts - FAO Commissary 2004 |
Attached for the approval of the Finance Committee Members are the FAO Commissary’s Financial Statements for 2004.
Office of External Auditor, FAO, Rome
(Comptroller and Auditor General Of India)
Food and Agriculture Organisation of the United Nations
Viale delleTerme di Caracalla,00100, Rome
Email [email protected]
Tel 06570-ext 55780 and 57135
Fax (FAO Headquarters):06-570-55867
21 July 2005
OPINION OF THE EXTERNAL AUDITOR
FAO STAFF COMMISSARY FUND
FINANCIAL STATEMENTS FOR THE PERIOD
1 JANUARY TO 31 DECEMBER 2004
I have examined the accompanying financial statements, as stated on the attached pages 3 to 12, comprising the income and expenditure statements, the balance sheet, the statement of cash flow and the notes to the statements of the Food and Agriculture Organisation’s Staff Commissary Fund for the year ended 31 December, 2004. These financial statements are the responsibility of the Staff Commissary’s management on behalf of the Director-General, FAO. My responsibility is to express an opinion on these financial statements based on the audit.
The audit was conducted in accordance with the Common Auditing Standards for the Panel of External Auditors of the United Nations, the Specialised Agencies and the International Atomic Energy Agency. These standards require that the audit be planned and carried out to obtain reasonable assurance and that the financial statements are free of material misstatement. The audit also includes assessing the accounting principles used and evaluating the overall financial statement presentation.
As a result of my audit, I am of the opinion that the financial statements present fairly the financial position of the Staff Commissary Fund as at 31 December 2004 and the results of its operations for the period then ended, they are prepared in accordance with stated accounting policies and the transactions were in accordance with the financial regulations and legislative authority.
Gautam Guha
Director, External Audit
Background:
The FAO Staff Commissary was established in 1951 to facilitate duty free importation of goods by international staff under Article XII, Section 27(j) (ii), and Annex D of the Headquarters’ Agreement between the Government of the Italian Republic and the FAO. Access to the Commissary was given to all FAO staff members as of 1 December 1971, following an exchange of letters with the Italian Government, which stated that the agreed quantities of goods to be imported would be computed according to the total number of FAO staff.
Commissary is part of the FAO and preparation of its financial statements is the responsibility of the management of the Staff Commissary on behalf of the Director General FAO.
| Submitted by: | Approved by: |
| …………………………………. | …………………………………. |
| J.P. Decraene | D. Alhéritière |
| Commissary Manager, AFSCM | Director, AFS |
| 06 July 2005 |
| 2004 | 2003 | |
| Sales | 11,948,725 | 11,718,117 |
| Less: Cost of Goods Sold (notes 1c and 12) | 9,919,554 | 9,710,102 |
| Gross Trading Surplus | 2,029,171 | 2,008,015 |
| Less: Operating Expenses | ||
| Personnel (note 2a and 2b) Guard Services (note 2c) |
1,578,735 27,300 |
1,538,416 25,822 |
| Support Cost Reimbursement to FAO (note 3) | 66,324 | 78,780 |
| General Operating Expenses | 96,521 | 98,601 |
| Depreciation | 101,036 | 105,577 |
| Provision for Terminal Emoluments (note 4) | 63,059 | (24,875) |
| 1,932,975 | 1,822,321 | |
| Operating Surplus/(Deficit) | 96,196 | 185,694 |
| Add: Other income (note 5) | 32,465 | 182,823 |
| Less: Contribution to Staff Welfare Fund (note 6) | 119,487 | 247,181 |
| Net Surplus/(Deficit) | 9,174 | 121,336 |
| Transfers (To)/From Reserves | ||
| (To)/From Working Capital Fund (note 7) | (29,979) | (51,904) |
| (To)/From retained Surplus (note 8) | 20,805 | (69,432) |
Notes 1 to 13 form an integral part of these accounts
| 2004 | 2003 | |
| CURRENT ASSETS | ||
| Cash at Bank and in Hand (note 9) | 730,911 | 1,001,371 |
| Stocks (note 10) | 1,646,939 | 1,855,520 |
| Sundry Debtors | 70,881 | 12,816 |
| FIXED ASSETS (note 11) | 267,971 | 310,179 |
| TOTAL | 2,716,702 | 3,179,886 |
| Less | ||
| CURRENT LIABILITIES | ||
| Creditors | 481,333 | 889,457 |
| Payable to Staff Welfare Fund (note 6) | 39,387 | 166,680 |
| 520,720 | 1,056,137 | |
| LONG TERM LIABILITIES | ||
| Terminal Emoluments Reserve (note 4) | 232,114 | 169,055 |
| TOTAL | 752,834 | 1,225,192 |
| NET ASSETS | 1,963,868 | 1,954,694 |
| Represented by: | ||
| Working Capital Fund (note 7) | 1,553,334 | 1,523,355 |
| Retained Surplus (note 8) | 410,534 | 431,339 |
| 1,963,868 | 1,954,694 | |
Notes 1 to 13 form an integral part of these accounts
| 2004 | 2003 | |
| Net Cash Inflow/ (Outflow) | ||
| from Operating Activities (note 13a) | (281,171) | (218,979) |
| Return on Servicing of Finance | ||
| Interest Received | 13,038 | 35,547 |
| Exceptional Income ( note 5 ) | 6,160 | ---- |
| Exceptional Income | ---- | 97,838 |
| Investing Activities | ||
| Payments to Acquire Tangible Fixed Assets | (8,487) | (5,915) |
| Increase/ (Decrease) in Cash (note 13b) | (270,460) | (91,509) |
Notes 1 to 13 form an integral part of these accounts
| 1. | Summary of Significant Accounting Policies | |||||||||
| (a) | Accounting Convention | |||||||||
| The accounts have been prepared on an accrual basis under the historical cost convention. | ||||||||||
| (b) | Depreciation | |||||||||
| Depreciation is calculated using the straight-line method to write off the cost of fixed assets over their estimated useful life of five years. The first year’s depreciation of new assets is based on the actual number of months the asset has been in service. | ||||||||||
| Note: Recognising that the Organisation estimates a useful life of four years for all computer equipment, all of the Commissary's computer equipment has been depreciated using a four-year straight-line method in 2004 | ||||||||||
| (c) | Cost of goods sold and stocks | |||||||||
| Stocks are stated at the lower of cost and net realisable value. Cost is comprised of cost of goods, write-offs, transportation, customs clearance and insurance premiums. The cost of stocks is determined using the first-in, first-out (FIFO) method. | ||||||||||
| (d) | Foreign currencies | |||||||||
| Assets and liabilities in currencies other than Euro have been translated at the UN operational rate of exchange at 31 December 2004. Income and expenditure items have been recorded at the rate of exchange in effect at the date of transaction. Any eventual differences arising when payment is made are reflected under the income and expenditure statement. | ||||||||||
| 2. | Cost of Personnel | |||||||||
| (a) | The accounts reflect payroll cost as charged by FAO. Provisions for terminal emoluments are made separately as explained in Note 4. | |||||||||
| Payroll cost includes compensation for Commissary staff including one Professional and one GS staff members dealing with car import privileges. Their cost is absorbed by mark-ups on petrol coupons, ensuring thereby that Commissary customers not entitled to petrol do not subsidise the services of the Car Import Office. | ||||||||||
| In line with their existing job descriptions, both the Commissary Manager and the Assistant Commissary Manager spend some time with the supervision of the FAO catering operations. | ||||||||||
| It should be noted that personnel costs increased 2.7 % in 2004. | ||||||||||
| (b) | Following is a breakdown of staff costs | |||||||||
| 2004 | 2003 | |||||||||
| € | € | |||||||||
| FAO Commissary Staff | 1,143,675 | 1,201,184 | ||||||||
| Accrual FAO /After Service M.P. | 25,078 | 23,875 | ||||||||
| FAO TAP Staff | 203,100 | 129,187 | ||||||||
| PULI-COOP Staff | 234,182 | 209,992 | ||||||||
| Balance at 31 December | 1,606,035 | 1,564,238 | ||||||||
(c) |
The FAO Commissary Staff include a FAO back charge of € 27,300.00 for guard services received in 2004. | |||||||||
| 3 | Support Cost Reimbursement to FAO | |||||||||
| At the Twenty-fifth session of the FAO Conference held on 11 – 30 November 1989, it was decided that the Commissary should reimburse FAO in respect of all services provided to the Commissary and that the related actual costs should be charged to the Commissary on an estimated basis henceforward. The Support Cost Reimbursement to FAO was made up as follows: | ||||||||||
| 2004 | 2003 | |||||||||
| € | € | |||||||||
| Utilities & Maintenance | 30,870 | 30,870 | ||||||||
| External Audit | 10,240 | 13,830 | ||||||||
| Internal Audit | 25,214 | 34,080 | ||||||||
| Total | 66,324 | 78,780 | ||||||||
| 4 | Terminal Emoluments Fund | |||||||||
| At the Eighteenth session of the Committee on Financial Control on 17 – 22 May 1954 it was decided to create a Reserve for costs for terminal indemnities. Further to this, at the Sixty-first session of the FAO Finance Committee held on 14 – 25 September 1987, it was decided that the level of the Terminal Emoluments Reserve should represent 75 percent of the calculated expenses for repatriation grants and unused annual leave. At the Seventy-fourth session of Finance Committee held on 14 – 22 September 1992 it was decided, as the Commissary is a self-sufficient unit and is requested to operate without cost of the Organisation, to accrue in full for known liabilities in accordance with generally accepted | ||||||||||
| accounting principles applicable to commercial concerns. | ||||||||||
| The movements in the Terminal Emoluments Reserve during the year were as follows: | ||||||||||
| 2004 | 2003 | |||||||||
| € | € | |||||||||
| Balance at 1 January | 169,055 | 193,930 | ||||||||
| Annual Charge | 63,059 | (24,875) | ||||||||
| Balance at 31 December | 232,114 | 169,055 | ||||||||
| 5 | Income | |||||||||
| Other Income | ||||||||||
| 2004 | 2003 | |||||||||
| € | € | |||||||||
| Bank Interest | 18,405 | 24,642 | ||||||||
| *Exceptional Income | 6,160 | ----- | ||||||||
| Exceptional Income | ----- | 97,838 | ||||||||
| Profit/(Loss) on Exchange | ___7,899 | 60,343 | ||||||||
| Total | __32,464 | 182,823 | ||||||||
| * Commissary truck IVECO sold in March. | ||||||||||
| 6 | Staff Welfare Fund | |||||||||
| In accordance with Conference Resolution 18/93, effective with the year ending 31 December 1992, the equivalent of 1 per cent of total sales of the Staff Commissary is paid to the Staff Welfare Fund. | ||||||||||
| The composition of the account payable to the Staff Welfare Fund at 31 December 2004 and its movement for the year then ended were as follows: | ||||||||||
2004 |
2003 | |||||||||
€ |
€ | |||||||||
| Balance at 1 January | 166,680 | 37,209 | ||||||||
| Add: Contribution to Staff Welfare Fund | 119,487 | 117,181 | ||||||||
| Add: Profit 2004 to Staff Welfare Fund | ---------- | 130,000 | ||||||||
| 286,167 | 284,390 | |||||||||
| Less: Amount paid during the year | 246,780 | 117,710 | ||||||||
| Balance at 31 December | 39,387 | 166,680 | ||||||||
| 7 | Working Capital Fund | |||||||||
| At the Sixth session of the FAO Conference held from 19 November – 6 December 1951 it was decided that the Commissary should establish a fund for the purchase of stocks for the Commissary, the fund to be reimbursed from the proceeds of sale of such stocks. | ||||||||||
| At the Ninety-second session of the Council held from 3 – 5 November 1987 it was decided that the Working Capital Fund should be maintained at a level of 12 percent of annual turnover. Subsequently at the Seventy-second session of the Finance Committee held from 16 – 26 September 1991, it was decided that the level of the Working Capital Fund should be increased from 12 percent to 13 percent of turnover. | ||||||||||
| The movements in the Working Capital Fund during the year were as follows: | ||||||||||
2004 |
2003 | |||||||||
€ |
€ | |||||||||
| Balance at 1 January | 1,523,355 | 1,471,452 | ||||||||
| Transfer To/(From) Working Capital Fund | __29,979 | ___51,904 | ||||||||
| Balance at 31 December | 1,553,334 | 1,523,355 | ||||||||
| 8 | Retained Surplus | |||||||||
| The movements on the retained surplus during the year were as follows | ||||||||||
| 2004 | 2003 | |||||||||
| € | € | |||||||||
| Balance at 1 January | 431,339 | 361,907 | ||||||||
| Transferred To/(From) Retained Surplus | (20,806) | _69,432 | ||||||||
| Balance at 31 December | 410,533 | 431,339 | ||||||||
| 9 | Cash at Bank and in Hand | |||||||||
| Cash at bank and in hand are made up as follows | ||||||||||
2004 |
2003 | |||||||||
| Description | € |
€ | ||||||||
| Cash at bank, current account | 686,449 | 964,667 | ||||||||
| Cash in hand | ___44,463 | ___36,704 | ||||||||
| Total | 730,912 | 1,001,371 | ||||||||
| 10 | Stocks | |||||||||
| Stocks are made up as follows: | ||||||||||
| 2004 | 2003 | |||||||||
| Description | € | € | ||||||||
| Goods | 1,468,040 | 1,446,263 | ||||||||
| Petrol/Oil coupons | __178,899 | 409,257 | ||||||||
| Total | 1,646,939 | 1,855,520 | ||||||||
| Stocks represent net value after Year-end Physical Stock Adjustment of € 25,979.90, which is adjusted under Cost of Goods Sold. | ||||||||||
| 11 | Fixed Assets | |||||||||
| (Figures in € ) | ||||||||||
| Cost: | Improvements of Premises | Furniture | Equipment | Motor Vehicle | Total | |||||
| At 1.1.2004 | 229,877 | 273,263 | 455,496 | 114,595 | 1,073,231 | |||||
| Additions | 50,340 | 8,487 | 58,827 | |||||||
| Disposals | (27,396) | (27,396) | ||||||||
| At 31.12.2004 | 229,877 | 296,207 | 463,983 | 114,595 | 1,104,662 | |||||
| Depreciation: | ||||||||||
| At 1.1.2004 | 119,391 | 119,811 | 414,989 | 108,861 | 763,052 | |||||
| Charges for year | 34,331 | 50,260 | 14,844 | 1,600 | 101,035 | |||||
| Disposals | (27,396) | (27,396) | ||||||||
| At 31.12.2004 | 153,722 | 142,675 | 429,833 | 110,461 | 836,691 | |||||
| Net Book Amount | ||||||||||
| At 31.12.2004 | 76,155 | 153,532 | 34,150 | 4,134 | 267,971 | |||||
| At 31.12.2003 | 110,486 | 153,452 | 40,507 | 5,734 | 310,179 | |||||
| 12 | Write – Offs | |||||||||
| The composition of the write-offs account at 31 December 2004 was as follows: | ||||||||||
| 2004 | 2003 | |||||||||
| € | € | |||||||||
| Goods write-offs | 9,430 | 11,496 | ||||||||
| Total | 9,430 | 11,496 | ||||||||
| As of 31 December 1999, the write-offs have been included in the cost of goods sold as per Audit’s recommendation. | ||||||||||
| 13 | Statement of Cash Flows | |||||||||
| (a) | Reconciliation of Operating Surplus to Net Cash Inflow/(Outflow) from Operating Activities | |||||||||
2004 |
2003 | |||||||||
€ |
€ | |||||||||
| Net Operating Surplus | 96,196 | 185,694 | ||||||||
| Contribution to Staff Welfare Fund | (119,487) | (247,181) | ||||||||
| Depreciation Charges | 101,036 | 105,577 | ||||||||
| Profit/(Loss) on Exchange | 7,899 | 60,343 | ||||||||
| (Increase)/Decrease in Stock | 208,581 | (234,722) | ||||||||
| (Increase)/Decrease in Debtors | (52,698) | 31,105 | ||||||||
| Increase/(Decrease) in Current Liabilities | (585,757) | (94,920) | ||||||||
| Increase in Provision for Terminal Emoluments | 63,059 | (24,875) | ||||||||
| Total | (281,171) | (218,979) | ||||||||
| (b) | Analysis of Changes in Cash | |||||||||
2004 |
2003 | |||||||||
€ |
€ | |||||||||
| Cash at 1 January 2004 | 1,001,371 | 1,092,880 | ||||||||
| Net inflow | _(270,460) | (91,509) | ||||||||
| Cash at Bank and in Hand at 31.12.04 | __730,911 | 1,001,371 | ||||||||