Audit KEP Financiall 2002

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KOSOVO ENTERPRISE PROGRAM A MICRO FINANCE INSTITUTION FINANCIAL STATEMENTS 31 DECEMBER 2002 KOSOVO ENTERPRISE PROGRAM: A MICRO FINANCE INSTITUTION FINANCIAL STATEMENTS 31 DECEMBER 2002 CONTENTS PAGES General information - Report of the independent auditors - Balance sheet 1 Statement of operations 2 Statement of cash flows 3 Statement of changes in capital 4 Notes to the financial statements 5 - 22 KOSOVO ENTERPRISE PROGRAM: A MICRO FINANCE INSTITUTION STATEMENT OF OPERATIONS 31 DECEMBER 2002 GENERAL INFORMATION Organisation’s operations The Micro Finance Institution - Kosovo Enterprise Program (‘KEP’) was founded by the humanitarian organization International Catholic Migration Commission – Switzerland (‘ICMC’) in August 1999, obtaining authority to operate as a Micro Finance Institution from the Banking and Payments Authority of Kosovo (‘BPK’) on 19 May 2000 when new regulations on financial institutions came into effect in Kosovo. The KEP registered as a separate local legal entity on 4 March 2002 and is registered with the BPK as a non-bank micro financial institution as defined in section 2 of Regulation 1999/21. The KEP’s principal activity is to provide financial services to the people of Kosovo. At 31 December 2002, the KEP employed 55 employees (31 December 2001: 44). Board of directors The KEP is governed by the following people: Muriithi Kagai KEP Albert ...

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• Publié par: Zoif
• Nombre de lectures: 25
• Langue: English

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KOSOVO ENTERPRISE PROGRAM

A MICRO FINANCE INSTITUTION

FINANCIAL STATEMENTS

31 DECEMBER 2002

KOSOVO ENTERPRISE PROGRAM: A MICRO FINANCE INSTITUTION   FINANCIAL STATEMENTS   31 DECEMBER 2002

  CONTENTS       General information   Report of the independent auditors   Balance sheet   Statement of operations   Statement of cash flows   Statement of changes in capital   Notes to the financial statements  

 

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KOSOVO ENTERPRISE PROGRAM: A MICRO FINANCE INSTITUTION   STATEMENT OF OPERATIONS   31 DECEMBER 2002  

GENERAL INFORMATION   Organisation’s operations     The Micro Finance Institution - Kosovo Enterprise Program (‘KEP’) was founded by the humanitarian organization International Catholic Migration Commission – Switzerland (‘ICMC’) in August 1999, obtaining authority to operate as a Micro Finance Institution from the Banking and Payments Authority of Kosovo (‘BPK’) on 19 May 2000 when new regulations on financial institutions came into effect in Kosovo.   The KEP registered as a separate local legal entity on 4 March 2002 and is registered with the BPK as a non-bank micro financial institution as defined in section 2 of Regulation 1999/21. The KEP’s principal activity is to provide financial services to the people of Kosovo.   At 31 December 2002, the KEP employed 55 employees (31 December 2001: 44).   Board of directors The KEP is governed by the following people:   Muriithi Kagai KEP Albert Ramirez ICMC Kristen Downey UNDP Philippo Papaphilippou UNHCR Vjollca Gjonbalaj UNHCR   Management    The Management of the KEP comprises of the following persons:   Muriithi Kagai Executive Director Charles Njoroge Operations Manager Cindy Jakovac Finance and Administration Manager   Number of authorised offices and registered addresses   The activities of the KEP are distributed over 3 regions covering 7 branch offices throughout Kosovo:   a)   Southern Region located in Prizren, Branch offices – Prizren, Suhareka b)   Western Region located in Peja, Branch offices – Peje, Gjakova c)   Eastern Region located in Pristina, Branch offices – Pristina, Gjilan, Mitrovica The head office is located in Pristina, Uck 32, Kosovo.

 

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  INDEPENDENT AUDITORS’ REPORT TO THE BOARD OF DIRECTORS OF THE KOSOVO ENTERPRISE PROGRAM         We have audited the accompanying balance sheet of the Kosovo Enterprise Program (the ‘KEP’) as at 31 December 2002 and the related statements of operations, of cash flows and of changes in capital for the year then ended. These financial statements are the responsibility of the KEP’s management. Our responsibility is to express an opinion on these financial statements based on our audit.   We conducted our audit in accordance with International Standards on Auditing. 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, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.   In our opinion, the financial statements present fairly, in all material respects, the financial position of the Kosovo Enterprise Program as at 31 December 2002, and the results of its operations and cash flows for the year then ended, in conformity with International Financial Reporting Standards including International Accounting Standards and interpretations issued by the International Accounting Standards Board.         PricewaterhouseCoopers Audit SRL  

 

Bucharest, xxxxx

Note 31 December 2002  Euro 6 196,054 7 7,030 3 135,054 4 24,841  362,979 5 476,632 6 4,986,544 7 87,956  5,551,132     5,914,111

31 December 2001 Euro 576,386   - 156,207 -                   732,593 329,190 2,997,192  422,117 3,748,499   4,481,092  

KOSOVO ENTERPRISE PROGRAM: A MICRO FINANCE INSTITUTION   BALANCE SHEET         ASSETS Non-current assets   Net loans to customers Other receivables Tangible fixed assets Intangible assets   Total non-current assets     Current assets   Cash and cash equivalents Net loans to customers Other receivables and prepayments   Total current assets     Total assets   CAPITAL & LIABILITIES     Capital   Fund balance 8 3,625,489 3,625,489 Retained surplus 1,332,135 683,777   Total capital 4,309,266 4,957,624     Non-current liabilities     Deferred income 11 - 110,354 Long term borrowings 9 610 334 -,        Total non-current liabilities 110,354 610,334   Current liabilities   Accruals and other short term liabilities 10 43,276 15,618 Short term borrowings 9 76,669 - Deferred income 11 226,208 45,854   Total current liabilities 61,472 346,153   Total liabilities 956,487 171,826     Total capital and liabilities 5,914,111 4,481,092     Authorised for issue by the Board of Directors, on 19 May 2003 and signed by:     Albert Ramirez Cindy Jakovac President, KEP Board Finance and Administrative Manager   The accompanying notes on pages 5 to 22 are an integral part of these financial statements.

 

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KOSOVO ENTERPRISE PROGRAM: A MICRO FINANCE INSTITUTION   STATEMENT OF OPERATIONS   31 DECEMBER 2002

   Year ended Year ended  Note 31 December 2002 31 December 2001    Euro Euro   Net interest income   12   1,115,905 625,594   Fee income 13 217,594 159,098 Other operating income 3,999 455   Gross operating surplus1,337,498 785,147     Net bad and doubtful debts (release)/  expense 6 (59,240) 71,582 Personnel costs 14 527,415 459,540 Administration expenses 15 300,965 385,727   Operating expenses769,140 916,849     Operating surplus/(deficit) for the  year before contributions 568,358 (131,702)     Contributions against operating expenses   16 - 641,980 Current period recognition of contributions  for the purchase of fixed assets 80,000 39,140   Net surplus for the year 549,418 648,358                           The accompanying notes on pages 5 to 22 are an integral part of these financial statements.  

 

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KOSOVO ENTERPRISE PROGRAM: A MICRO FINANCE INSTITUTION   STATEMENT OF CASH FLOWS   31 DECEMBER 2002

 Year ended Note 31 December 2002 Euro

Year ended 31 December 2001 Euro

        Cash flows from operating activities     Net surplus/(deficit) from operating activities  before contributions   Adjustments for depreciation and  amortisation 3,4 Adjustments for doubtful debts 6 Adjustments for interest income Loss on disposal of tangible fixed assets   Operating cash flows before working capital  changes Net increase in loans and advances to customers Net decrease in other assets   Net increase in other liabilities     Net cash from operating activities      Cash flows from investing activities Purchase of tangible and intangible assets   Net cash used in investing activities      Cash flows from financing activities Proceeds from borrowings 9 Loan fund contributions presented as capital  resulting from contributions from  ICMC donors Contributions to purchase tangible fixed assets Contributions against operating expenses   Net cash from financing activities      Net increase/(decrease) in cash and cash  equivalents   Cash and cash equivalents at beginning of the year   Cash and cash equivalents at end of the year       The accompanying notes on pages 5 to 22 are an integral part of these financial statements.  

 

568,358 50,583 (61,672) (19,862) 1,908 539,315 (1,547,348) 346,993        27,658 (633,382) (56,179)      (56,179) 687,003 -     -  150,000     837,003 147,442  329,190  476,632

(131,702) 39,140 66,827 (36,856)   - (62,591) (2,219,186) 222,864  8,645 (2,050,268) (76,219)  (76,219) -   1,044,512 76,219  641,980 1,762,711 (363,777)    692,966  329,190  

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KOSOVO ENTERPRISE PROGRAM: A MICRO FINANCE INSTITUTION   STATEMENT OF CHANGES IN CAPITAL   31 DECEMBER 2002

Fund  balance Euro 2,580,977 1,044,512 -                  3,625,489   -                 3,625,489

Retained  surplus Euro 134,359   -  549,418 683,777  648,358 1,332,135 

 Total Euro 2,715,336   1,044,512   549,418 4,309,266   648,358 4,957,624 

        Balance at 31 December 2000   Contributions from ICMC Donors Net surplus for the year   Balance at 31 December 2001     Net surplus for the year   Balance at 31 December 2002                                                               The accompanying notes on pages 5 to 22 are an integral part of these financial statements.  

 

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KOSOVO ENTERPRISE PROGRAM: A MICRO FINANCE INSTITUTION   NOTES TO THE FINANCIAL STATEMENTS

BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS These financial statements have been prepared in accordance with, and comply with, International Financial Reporting Standards (“IFRS”), including International Accounting Standards (“IAS”) and interpretations issuedby the International Accounting Standards Board (“IASB”). Where applicable, guidance from the Consultative Group to Assist the Poorest (CGAP), which is a consortium of donor agencies that provide recommendations of best practices for micro finance institutions, has been applied.   The accompanying financial statements are based on the accounting records of the KEP which are maintained on a going concern basis under the historical cost convention, with adjustments and reclassifications for the purpose of fair presentation in accordance with International Financial Reporting Standards, including International Accounting Standards and interpretations issued by the International Accounting Standards Board. The preparation of financial statements in conformity with IFRS requires management to make prudent estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements preparation and the reported amounts of surpluses and expenses during the reporting period. Estimates have principally been made in respect of the provision for loan losses. Actual results could differ from these estimates.    The measurement currency of the KEP and the presentation currency for these financial statements is the Euro.   With effect from 1 January 2001, the KEP has adopted IAS39 – Financial Instruments: Recognition and Measurement. Further information is disclosed in the notes to these financial statments.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES   a)   Cash and cash equivalents   Cash and cash equivalents are carried in the balance sheet at cost. The KEP considers all cash at bank and in hand to be cash and cash equivalents.   b)   Tangible fixed assets   Tangible assets are recorded at purchase cost less accumulated depreciation. At each reporting date the Management assess whether there are any indicators of impairment of tangible assets. If any such indication exists, the management estimates the recoverable amount which is determined as the higher of the net selling price and its value in use. The carrying amount is reduced to the recoverable

 

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KOSOVO ENTERPRISE PROGRAM: A MICRO FINANCE INSTITUTION   NOTES TO THE FINANCIAL STATEMENTS

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)   amount and the difference is recognized as an expense (impairment loss) in the Statement of Operations. An impairment loss recognized for an asset in prior years is reversed if there has been a change in the estimates used to determine the assets recoverable amount.   Depreciation is calculated on a straight-line basis. The depreciation periods, which approximate to the estimated useful economic lives of the respective assets are as follows:   Office equipment: 4-10 years Motor vehicles: 5 years   Gains and losses on disposal of property and equipment are determined by reference to their carrying amount and are taken into account in determining operating surplus. Repairs and renewals are charged to the Statement of Operations when the expenditure is incurred.   Intangible assets   Intangible assets includes software which is amortised over a four year period. Where an indication of impairment exists, the carrying amount of any intangible asset is assessed and when impaired, the asset is written down immediately to its recoverable amount.   Foreign currency transactions     Monetary assets and liabilities, which are held by KEP and denominated in foreign currencies at 31 December 2002, are translated into Euro at the exchange rate prevailing at that date. Foreign currency transactions are accounted for at the exchange rates prevailing at the date of the transactions. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Operations. In accordance with the regulations of the European Monetary Union and instructions issued by the BPK, the Euro was adopted as the single legal currency in Kosovo from 1 January 2002, and, consequently, DEM denominated amounts were converted into Euro at 1 January 2002 using the 5 year fixed exchange rate of 1 Euro = DEM 1.95583.    

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KOSOVO ENTERPRISE PROGRAM: A MICRO FINANCE INSTITUTION   NOTES TO THE FINANCIAL STATEMENTS

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)   e)   Originated loans and provisions for loan impairment     Loans originated by the KEP by providing money directly to the borrower are categorised as loans originated by the KEP and are carried at amortised cost. A credit risk provision for loan impairment is established if there is objective evidence that the KEP will not be able to collect all amounts due. The amount of the provision is the difference between the carrying amount and the recoverable amount, being the present value of expected cash flows discounted based on the interest rate at inception. The loan loss provision also covers losses where there is objective evidence that probable losses are present in components of the loan portfolio at the balance sheet date. These have been estimated based on historical patterns of losses in each component and reflecting the current economic climate in which the borrowers operate. When a loan is not recoverable, it is written off against the related provision for impairments; subsequent recoveries are credited to the bad and doubtful debt expense in the Statement of Operations. In calculating such provision, consideration is also given to CGAP recommended guidelines and local BPK rules. Interest income and expense   Interest income, fee income and expense in the Statement of Operations are recognised for all interest bearing instruments on an accrual basis using the fixed rate method based on the actual purchase price. Interest income is suspended when loans become doubtful of collection or as soon as the borrower defaults if earlier. Such interest income is excluded from interest income until received. Interest income (and fee income) in excess of operating expenditure is generally used in the form of loans.   Fee income   Fee income is generally recognised on an accrual basis.   Employee benefits     Savings scheme The KEP contributes with the employee’s toward a savings scheme for all staff who continue to work with KEP for at least a two year period commencing 1 January 2003. Accruals by the KEP were backdated in 2002 to employee commencement date for all employees who commenced with the KEP prior to 1 January 2003. The

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