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GGEM-MFI Audit Report 2009

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14 pages
King Walker and Associates Grassroot Gender Empowerment Movement (GGEM) Chartered Accountants Micro Finance Services Audited Financial Statements For the year ended 31st December 2009 Grassroots Gender Empowerment Movement (GGEM) Micro Finance Services Ltd Audited Financial Statements stFor the year ended 31 December 2009 KWA ing Walker and Associates Chartered Accountants This report contains 12 pages Ref: mmk/shts/ia/ck of 19/4/10 King Walker and Associates Grassroot Gender Empowerment Movement (GGEM) Chartered Accountants Micro Finance Services Audited Financial Statements For the year ended 31st December 2009 Table of Contents Contents Page(s) General Information 1 Report of the Independent Auditors 2 Balance Sheet 3 Income Statement ...
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King Walker and Associates Chartered Accountants
 Grassroot Gender Empowerment Movement (GGEM) MicroFinanceServicesAuditedFinancialStatmeents For the year ended 31st December 2009
Grassroots Gender Empowerment Movement (GGEM) Micro Finance Services Ltd Audited Financial Statements st For the year ended 31 December 2009
KWA King Walker and Associates Chartered Accountants
This report contains 12 pages Ref: mmk/shts/ia/ck of 19/4/10
 Grassroot Gender Empowerment Movement (GGEM) MicroFinanceServicesAuditedFinancialStatmeents For the year ended 31st December 2009
 Page(s)
King Walker and Associates Chartered Accountants Table of Contents ContentsGeneral Information Report of the Independent Auditors Balance Sheet Income Statement Statement of Cash Flows Notes to the Financial Statements
 1 2 3 4 5 6
King Walker and Associates  Grassroot Gender Empowerment Movement (GGEM) CharteredAccountantsMicroFinanceServicesAuditedFinancialStatmeents For the year ended 31st December 2009 General Information Board of Trustees: Chairperson Jane G odwin (Ms.) Members Kenneth Kawa  Iris Juxon-Smith (Mrs.) Pearl Reffell (Ms.)  Catholic Mission Dev. Off.  St. Joseph Clunny Sisters Microfinance Board-Committee: Chairperson Iris Juxon-Smith (Mrs.) Members Kenneth Kawa  Alphonso Campbell  Frances Kondoh (Mrs.)  Jane Godwi n (Ms) Secretary Cecilia Decker Registered Office 57 John Street Freetown.BankersRokel Commercial Bank  Siaka Stevens Street,  Freetown.  Standard Chartered Bank  Lightfoot-Boston Street,  Freetown.  Eco Bank  Lightfoot-Boston Street,  Freetown.  S .L Commercial Ba nk  Siaka Stevens Street,  Freetown.  First Discount House Limited  Wallace Johnson Street  Freetown. Auditors King Walker and Associates  42B Siaka Stevens Street  P.O.Box 1173  Freetown. 1
King Walker and Associates  Grassroot Gender Empowerment Movement (GGEM) Chartered Accountants Micro FinancSeervices AuditedFinancialStatmeents For the year ended 31st December 2009 Report of the Independent Auditors, King Walker and Associates to the Board of Trustees for Grassroot Gender Empowerment Movement Microfinance Services Limited We have audited the Balance Sheet of Grassroot Gend er Empowerment Movement (GGEM) Microfinance Services Ltd as of 31 st  December 2009 and the accompanying related income and cash flows statements for the year then ended. Respective Responsibility of the Board of Trustees and Auditors The preparations of these Financial Statements are the responsibility of the Board of Trustees of GGEM. Our responsibility is to express an opinion regarding conclusion as to whether the Financial Statements of GGEM Microfinance Services Ltd comply with the Disclosure Guidelines for Financial Reporting by Microfinance Institutions. These guidelines are voluntary norms recommended by a consultative group of international donors. Thus an institution’s failure to comply with these guidelines would not imply that the institution or its financial statements are in violation of any legal or other authoritative accounting or reporting standards. We also conducted our audit in accordance with International Standards of Auditing as promulgated by the International Federation of Accountants where the Disclosure Guidelines for Financial Reporting by Microfinance Institutions do not cover as a normal practice. Those standards require that we plan and perform the audit to obtain reasonable assurance about 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 and as well as evaluating the overall Financial Statements presentation.OpinionIn our opinion, we conclude that the Financial Statements audited by us herein with accompanying notes comply with the Disclosure Guidelines in all material respects, for the year ended 31 st  December 2009 and the state of affairs of the microfinance programme as at that date. .............................................King Walker and Associates Date Chartered Accountants  Freetown
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King Walker and Associates  Grassroot Gender Empowerment Movement (GGEM) Chartered Accountants Micro FinancSeervices AuditedFinancialStatmeents For the year ended 31st December 2009 BALANCE SHEET AS AT 31 DECEMBER 2009 In thousand of Leones Notes2009 2008 ASSETSCash and cash equivalent 3 314,481 153,418 Short term deposits (Investments) 4 143,861 85, 787 Total loan portfolio 5 988,874 640,756 Loan loss reserve (52,970) (11,303) Net non-current assets 6 65,716 65,262 Other assets 7 9,377 4,258 Total Assets  1,469,339 938,178LIABILITIES AND EQUITY LIABILITIESAccounts Payable 8 231,607 185,987 Accruals9 29,778 11,438 Total Liabilities  261,385 197,425EQUITYCapital grants and donation 10 1,401,250 931,288 Retained loss (193,296) (190,535) Total equity 1,207,954740,753Total liabilities and equity 1,469,339938,178TheseFinancialStatementswereapprovedbytheBoardon..........2010and signed by : BoardChairmanBoard Member DirectorThe notes on pages 6 - 12 are an integral part of the Financial Statements 3
King Walker and Associates  Grassroot Gender Empowerment Movement (GGEM) Chartered Accountants Micro FinancSeervices AuditedFinancialStatmeents For the year ended 31st December 2009 INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2009 In thousand of Leones Notes2009 2008 INCOMEFinancial revenue form loan portfolio 11  516,698  152,354 Financial revenue from investments 12 10,190 19,585  526,888 171,939 EXPENSESFinancial expenses: - - -Provision for loan loss 13 59,662 31,303 Administrative expenses: -Personnel expenses 14 321,803 211,438 Other administrative expenses 15 149,021 122,643 Total financial, loan loss, and operating expenses 530,486 365,384 Net operating income/(loss)  (3,598) (193,445) NON OPERATING REVENUE AND EXPENSES Other non-operating  2,910 income 16 837 Net loss for the year  (2,761) (190,535)Retained earnings b/fwd (190,535) -Retained loss c/fwd (193,296)(190,535)The notes on pages 6 - 12 are an integral part of the Financial Statements 4
King Walker and Associates Chartered Accountants
 Grassroot Gender Empowerment Movement (GGEM)  Micro FinancSeervices AuditedFinancialStatmeents For the year ended 31st December 2009 Statement of Cash Flows f In thousand o Leones Note 2009 2008 Operating activities: Net cashflow from operating (232,92 ) (471,388) activities I 2 Capital expenditure: Purchase of non-current assets ( 7,903) (72,963)  1 Financing activities: Donated equity  469,962 458,041 Short term Deposit (investment)  (58,074) (85,787) Net cash inflow/(outflow) II  161,063 (172,097)Notes to the Cash Flow Statement I. Reconciliation of net loss to net cash out/inflow from operating activities Net loss for the year (2,761) (190,535) Depreciation charge 17,449 7,701 (Increase)/decrease in receivables 311,568 (387,648) Increase/(decrease) in payables 63,959 99,094 (232,921)(471,388)II. Cash and cash equivalent Cash as at 1st January 153,418 325,515 Change in the year 161,063 172,097) Cash and cash equivalent at the end of the year  314,481 153,418III. Analysis of balance of cash and cash equivalents as shown in the balance sheet Changein the year 161,063
 2009 2008 Cash at Bank and in Hand 314,481153,4185
King Walker and Associates  Grassroot Gender Empowerment Movement (GGEM) CharteredAccountantsMicroFinanceServicesAuditedFinancialStatmeents For the year ended 31st December 2009 Notes to the Financial Statements 1. Background Information The Grassroots Gender Empowerment Movement (GGEM Services) was initially established in 1979 as a Family Life Education Centre (FLEC) with a focus on the promotion of an integrated approach to family life values based on human sexuality. In 1993 the organization became more gender sensiti ve and its focus was shifted to improvement of gender and socioeconomic relations in respect of women’s position in deprived communities especially through support for the entrepreneurial poor. Since then until 2007 the organization with funds from CORAID Netherlands implemented the “Gender Grassroots Small Enterprise Loan Operations and Community Training” Program in the Western Area, Port Loko and Moyamba Districts. This program consisted of both community development and micro credit activities in one program. In line with a strategic plan GGEM now operates two departments; the Community Development Department and the Microfinance Department with separate financial and accounting systems. In 2008 GGEM secured funding from CORDAID Netherlands to support both departments. A Resident Technical Assistant was also hired by CORDAID on contract for one year to assist in putting the appropriate systems in place for the Microfinance Department and guide the process of transforming in to a Microfinance Institution.  2.  Principal Accounting Policies The following Accounting policies have been applied consistently in dealing with items, which are considered material in relation to the Mi crofinance Programme’s Financial Statements.i. Basis of Accounting The Income Statement is prepared on the basis of cash accounting whereby income is recognized on the receipt of cash and cash equiv alents, and expenditure is recognized on the disbursement of cash and cash equivalents.  The Microfinance Programme Financial Statements ha ve been prepared under the historical cost convention on an accrual basis. The basis for income recognition is described below. ii. IncomeInterests from loan and investments are accounted for in income account when received and are only recognised in the Progra mme’s Income Statement when realised. iii. ExpenditureExpenses are included in the income statement on an accruals basis.  6
King Walker and Associates  Grassroot Gender Empowerment Movement (GGEM) CharteredAccountantsMicroFinanceServicesAuditedFinancialStatmeents For the year ended 31st December 2009 iv.  Non-current assets The company’s fixed assets purchased and donated fixed assets are stated at cost less accumulated depreciation. Depreciation is computed so as to write off the cost of the assets over their estimated useful lives at the following rates: - Motor Vehicles and Bikes 20%  Computer and Accessories  25%  Furniture & Fittings 10 %  Plant & Equipment 20%  Office Equipment 2 0% GGEM amortizes the intangible assets e.g. computer software at the rate of 20% p.a. v.  Foreign currencies  Foreign currency transactions are accounted for at the rate of exchange prevailing on the date at which the transaction was recorded. vi.  Loan loss provision, allowance and write-offs  Loan loss provision is provided on the loan portfolio for possible and expected bad debts that will occur during the year. All bad debts (loan) that are due past 360 days are written-off. The provision is calculated as shown in the table below.  Days of Loan in Loan Portfolio at Rate for Loan Loan Loss Classification Arrears Risk Loss Provision Provision Current 1 – 30 Days X 1% X Watch 31 – 90 Days X 25% X Substandard 91 – 180 Days X 50% X Doubtful 180 – 360 Days X 75% X Loss > 360 Days X 100% X Total X X vii.  Loan and Interests  GGEM provides Group Loan, Individual Loan, Agriculture Loan and Wholesale Loan. It collects up-front service charge of 1.5% of loan amount in Group Loan, Agriculture Loan and Wholesale Loan whereas 2.0% of loan amount is collected in individual loan. All loans are given to clients with an interest rate of 36% (Flat) per annum. Most loans are given for 6 months period and therefore attract 18% (Flat) interest. To minimize the potential risk, GGEM collects up-front cash collateral of 15% on Group Loan and Agriculture Loan whereas it collects a up-front cash collateral of 25% on Individual Loan and Whole sale Loan. viii.  Delinquency Fee  A 3% fine is levied on all principal amounts that have past due for payment. 7