Audit Report Gandja.2003doc

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VIATOR MICRO CREDIT AZERBAIJAN GANDJA FINANCIAL STATEMENTS 31 DECEMBER 2003 VIATOR MICRO CREDIT AZERBAIJAN GANDJA TABLE OF CONTENTS Page Statement of management responsibilities 2 Report of independent auditors 3 Balance sheet 4 Statement of income 5 Statement of changes in equity 6 Statement of cash flows 7 Notes to financial statements 8 - 14 1 STATEMENT OF MANAGEMENT RESPONSIBILITIES Management has prepared and is responsible for the financial statements and related notes of Viator Micro Credit Azerbaijan Gandja ("the Institution"). They have been prepared in accordance with International Financial Reporting Standards and necessarily include amounts based on judgements and estimates by management. The Institution maintains internal accounting control systems and related policies and procedures designed to provide reasonable assurance that assets are safeguarded, that transactions are executed in accordance with management's authorisation and properly recorded, and that accounting records may be relied upon for the preparation of financial statements and other financial information. The system contains self-monitoring mechanisms that allow management to be reasonably confident that controls, as well as the ...

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• Publié par: Ustlo
• Nombre de lectures: 48
• Langue: English

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                          VIATOR MICRO CREDIT AZERBAIJAN GANDJA    FINANCIAL STATEMENTS   31 DECEMBER 2003                                                                                  

                          VIATOR MICRO CREDIT AZERBAIJAN GANDJA   TABLE OF CONTENTS      

  Statement of management responsibilities   Report of independent auditors   Balance sheet   Statement of income   Statement of changes in equity   Statement of cash flows   Notes to financial statements                                                

 

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                          STATEMENT OF MANAGEMENT RESPONSIBILITIES         Management has prepared and is responsible for the financial statements and related notes of Viator Micro Credit Azerbaijan Gandja ("the Institution"). They have been prepared in accordance with International Financial Reporting Standards and necessarily include amounts based on judgements and estimates by management.    The Institution maintains internal accounting control systems and related policies and procedures designed to provide reasonable assurance that assets are safeguarded, that transactions are executed in accordance with management's authorisation and properly recorded, and that accounting records may be relied upon for the preparation of financial statements and other financial information. The system contains self-monitoring mechanisms that allow management to be reasonably confident that controls, as well as the Institution's administrative procedures and internal reporting requirements operate effectively. There are inherent limitations in the effectiveness of any system of internal control, including the possibility of human error or the circumvention or overriding of controls. Accordingly, even an effective internal control system can provide only reasonable assurance with respect to financial statement preparation.             _____________________________ Adil Mahmudov Director            2004 ___________________   Gandja, Azerbaijan

 

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                        REPORT OF INDEPENDENT AUDITORS TO THE MANAGEMENT OF VIATOR MICRO CREDIT AZERBAIJAN     We have audited the accompanying balance sheet of Viator Micro Credit Azerbaijan Gandja (the Institution) as of 31 December 2003 and the related statements of income, changes in equity and cash flows for the years then ended as set out on pages 8 to 14. These financial statements are the responsibility of the Institution'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 so as 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 policies used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.   The Institutions loan tracking Management Information System does not allow extraction of summarised information on the maturity of its loans. Management has taken the decision not to present this information as it does not believe that the benefits of preparing it would outweigh the costs. In our opinion, disclosure of this information is required by International Financial Reporting Standards.   In our opinion, except for the omission of the information included in the preceding paragraph, the financial statements present fairly, in all material respects the financial position of the Institution as of 31 December 2003 and of the results of its operations and its cash flows for the year then ended in accordance with International Financial Reporting Standards.   In our opinion, as discussed in Note 2 (i) the financial statements as a whole have not been prepared in accordance with International Financial Reporting Standards due to the absence of comparative figures as required by IAS 1.             __ _________  2004

 

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Notes       3   4                       5                                  6                      7                    12    

      VIATOR MICRO CREDIT AZERBAIJAN GANDJA BALANCE SHEET at 31 December 2003 (Expressed in US$)       ASSETS  Current Assets Cash and cash equivalents Loans, net of allowance for losses Other debtors       Non-Current Assets Property and equipment, net of accumulated depreciation       Total Assets     LIABILITIES AND EQUITY LIABILITIES  Current Liabilities Other creditors       EQUITY  Capital and Reserves Retained earnings Accumulated grants   Total Equity   Total Equity and Liabilities   Commitments              _________________________   Adil Mahmudov, Director                     The accompanying notes on pages 8 to 14 form an integral part of these financial statements.  4

2003 255,487 812,967 1,898 1,070,352 20,068 20,068 1,090,420 14,200 14,200 295,914 780,306 1,076,220 1,090,420 32,487

      VIATOR MICRO CREDIT AZERBAIJAN GANDJA STATEMENT OF INCOME for the year ended 31 December 2003 (Expressed in US$)       Operating income Interest income Application and other fees Risk fee   Provision for loan losses   Net interest income after provision for loan losses   Non-interest expenses Salaries and benefits Administrative expenses Depreciation of property and equipment Bank fees   Total non-interest expense     Net income for the year

Notes                    4                 8   9     3                       

                                                                The accompanying notes on pages 8 to 14 form an integral part of these financial statements.  5

2003 240,604 10,200 8,750 (57,500) 202,054 76,527 34,039 6,975 4,338 121,879 80,175

Retained   earnings  215,739 - 80,175 295,914

  Grants     671,161    109,145        -    780,306  

      VIATOR MICRO CREDIT AZERBAIJAN GANDJA STATEMENT OF CHANGES IN EQUITY for the year ended 31 December 2003 (Expressed in US$)         Balance at 01 January 2003   Additions  Net income for the year   Balance at 31 December 2003                                                                                       The accompanying notes on pages 8 to 14 form an integral part of these financial statements.  6

Total 886,900 109,145 80,175 1,076,220

      VIATOR MICRO CREDIT AZERBAIJAN GANDJA STATEMENT OF CASH FLOWS for the year ended 31 December 2003 (Expressed in US$)         Cash flows from operating activities: Interest and fees received Cash payments to employees and suppliers       (Increase) decrease in operating assets & liabilities: Loans advanced to customers Change in other debtors & creditors   Net cash used in operating activities   Cash flows from investing activities: Purchase of property and equipment   Net cash used in investing activities   Cash flows from financing activities: Receipt of grants   Net cash provided by financing activities   Net decrease in cash and cash equivalents   Cash and cash equivalents at the beginning of the year   Cash and cash equivalents at the end of the year

Notes                                                                                               3

                                              The accompanying notes on pages 8 to 14 form an integral part of these financial statements.  7

2003 291,510 (114,904) 176,606 (288,113) (2,911) (114,418) (6,252) (6,252) 109,145 109,145 (11,525) 267,012 255,487

      VIATOR MICRO CREDIT AZERBAIJAN GANDJA NOTES TO FINANCIAL STATEMENTS at 31 December 2003 (Amounts expressed in US$)     Note 1 Organisation, Principal Activities and Operating Environment   (a) Organisation and Principal Activities   Viator Micro Credit Azerbaijan Gandja (the Institution) was founded as a Small Business Development in Gandja project by the Norwegian Humanitarian Enterprise in 1999. A license from the National bank of Azerbaijan to render lending services was obtained in December 2003. The Institution's primary source of income is derived from providing micro-loans to clients, located in Gandja and surrounding areas.   The Institution is not registered as a separate legal entity.   The general oversight function over the Institutions activities is the responsibility of Viator Micro Credit Azerbaijan located in Baku.   Number of employees in 2003 was 21.   The Institution's address and principal place of business is: 84 Ali Nazmi Street Gandja, Azerbaijan   (b) Operating Environment in Azerbaijan   The Azerbaijan economy outside the energy sector continues to display characteristics of an emerging market. These characteristics include lack of liquidity in the capital markets, and the existence of currency exchange control regulations which causes the manat to be non-convertible outside the Republic. The success and stability of the country's economy in the non-energy sector will be significantly influenced by the government's actions with regard to supervisory, legal, and economic reforms.   The Institution's operations and financial position will continue to be affected by political developments in Azerbaijan including the application of existing and future legislation. These factors could have a significant impact on the Institution's financial position, results of operations and its ability to continue operations. The Institution does not believe that these contingencies, as related to its operations, are any more significant than those of similar enterprises in Azerbaijan.     Note 2 Significant Accounting Policies   (a) Basis of accounting   These financial statements are prepared under the historical cost convention. Income and expenses are recognised on an accruals basis.   The Institution maintains its primary accounting records in accordance with internal regulations. These financial statements have been prepared from the Institution's primary records, and adjusted as necessary in order to conform in all material respects with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.   (b) Use of estimates   The preparation of the financial statements in conformity with IFRS requires management to make estimates and assumptions that affect reported assets and liabilities as well as reported income and expenses for each year. A material estimate that is particularly susceptible to significant change relates to the determination of provisions for loan losses.

 

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      VIATOR MICRO CREDIT AZERBAIJAN GANDJA NOTES TO FINANCIAL STATEMENTS (Continued) at 31 December 2003 (Amounts expressed in US$)     Note 2 Significant Accounting Policies (continued)   (c) Loans, loan loss allowance, interest accrual, and write-offs   Loans have been reduced by the allowance for loan losses.   The adequacy of the allowance for loan losses is evaluated regularly by management. Factors considered in evaluating the adequacy of the allowance include the size of the portfolio, previous loss experience, current economic conditions and their effect on clients, the financial condition of individual clients, and the performance of individual loans in relation to contract terms. The allowance for loan losses charged to expense is based on management's judgement of the amount necessary to maintain the allowance at a level adequate to absorb losses. A general provision of 5 percent is set against all loans not specifically reviewed. Loan losses (write-offs) are charged against the allowance for loan losses when management believes that the principal is unlikely to be collected.   The Institution accrues interest on its loans as it is earned on a time proportion basis taking into account the principal outstanding and the rate applicable and using the simple interest method. Other fee income is recognised when due. If a loan becomes delinquent on principal or interest for 90 days or more, the Institution automatically stops further accrual of interest and reverses from income any unpaid interest that may have been accrued. Interest received on a loan in non-accrual status is applied to reduce principal or, if management determines that the principal is collectible, applied to interest on a cash basis. A loan is returned to accrual status after the client has brought the loan current and demonstrated compliance with the loan terms for a sufficient period and management's doubts about collectibility have been removed.   (d) Property, equipment and depreciation   Property and equipment is stated at the lower of cost and recoverable amount in accordance with International Accounting Standard 36. Replacements and improvements, which materially extend the useful lives of the assets are capitalised, while routine maintenance repairs and minor replacement costs are charged to expense when incurred. Any diminution in recoverable amount is charged to the income statement.    Assets are depreciated when placed into service. Depreciation is provided using the straight-line method over the estimated useful lives of the related assets. The estimated useful life of computers is 3 years. For all other equipment it is 5 years.   (e) Grants   Grants both to finance lending operations and to subsidize operating and administrative expenses or the purchase of property and equipment are shown as direct additions to equity and the corresponding asset account.    (f) Deferred taxation   As discussed in Note 10, management believes that the Institution is exempt from profit tax and accordingly no deferred tax is accounted for in these financial statements.

 

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      VIATOR MICRO CREDIT AZERBAIJAN GANDJA NOTES TO FINANCIAL STATEMENTS (Continued) at 31 December 2003 (Amounts expressed in US$)     Note 2 Significant Accounting Policies (continued)   (g) Financial instruments   The carrying amounts of the Institution's financial assets (comprising cash and cash equivalents and loans to customers) approximate to their fair values at the date of the transaction. Where the fair value of a financial asset is materially below the carrying amount the carrying amount is written down to fair value.   (h) Currency translation   The financial statements are presented in US dollars (US$) as this is the principal functional currency of the Institution.    Current assets at the balance sheet date are translated into US$ at the relevant rates ruling on that date. For the purposes of these financial statements, current assets denominated in Azeri Manats have been translated at a rate of 4,923 = US$1.   Transactions during the period in Azeri Manats have been translated into US$ at the actual rates ruling on the date of the transaction. Property and equipment denominated in Azeri Manats has been translated into US$ at estimated historic rates.   Differences on exchange arising on the application of the above policy are dealt with in the Income Statement.    (i) Period of accounts   These financial statements cover the period from 1 January 2003 to 31 December 2003. Comparative figures are not presented. This is in contravention with IAS 1, which requires that comparative information for the comparable interim period should be presented together with information concerning the current period. Management has taken the decision not to present comparative financial information as it does not believe that the benefits of preparing information for the year ended 31 December 2002 (which was not prepared at the time) would outweigh the costs.  

 

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