REPORT ON THE FINANCIAL STATEMENTS OF OPERATIONS FOR THE KENYA NATIONAL UNION OF TEACHERS RESERVE FUND FOR THE YEARS 2014 TO 2017

Transcription

1 REPORT ON THE FINANCIAL STATEMENTS OF OPERATIONS FOR THE FOR THE YEARS 2014 TO 2017 INTRODUCTION: I wish to take this opportunity to present to you the report on the financial statements of operations for Kenya National Union of Teachers Reserve Fund. Mr. Chairman, we are all aware that the Reserve Fund was established to transform and protect the welfare and prosperity of the Kenyan Teachers and the education sector at large. The Reserve Fund was set up to ensure dedication to the protection of Teachers claimed rights and their membership in an education system which is fully accessible, equal and qualitative. Mr. Chairman, allow me to touch and expound on the fundamental aspects of the financial operations of the Reserve Fund since inception to date. 1. RECEIPTS (TRANSFERS FROM TSC): The Reserve Fund rules and Regulations entail that members shall contribute funds as set by the National Executive Council and ratified by the Annual Delegates Conference. FINANCIAL STATEMENTS OF OPERATIONS KNUT RESERVED FUND

2 Mr. Chairman, the Reserve Fund received remittances from the employer as follows: YEAR AMOUNT RECEIVED ,520, ,538, Total Received 369,059, The TSC discontinued the Reserve Fund deductions in the month of August No further remittances were received thereafter. 2. EXPENDITURE (ON OPERATIONS): The teachers of Kenya, through their Union (KNUT) continue to agitate and press for better Terms of Service from their Government through the employer, the TSC. Teachers were called out to participate in the Industrial action in the month of September The employer, Teachers Service Commission, in blatant disregard of Teachers welfare and rights, failed to deduct and remit union dues in the period September to December The employer also embarked on the validation exercise that negatively impacted on Union membership. FINANCIAL STATEMENTS OF OPERATIONS KNUT RESERVED FUND

3 Despite the above foregoing, the Union had to try to sustain its activities and mitigate on the effects of the strike by drawing funds from the Reserve Fund. This was done as follows:- YEAR 2014: The Union paid Commission to Branches of Kshs.66,707, and drew cash for other operations amounting to Kshs. 5,000, Out of this amount borrowed, Kshs. 69,781, was refunded to the Reserve Fund account on 15 th December, YEAR 2015: This is the year when Teachers were called out to participate in the Industrial Action. The TSC did not deduct union dues for the months of September, October, November and December The Union was left with no option but to borrow heavily from the Reserve Fund to sustain some of its operations. Amounts were drawn from the Reserve Fund account as follows: KSHS (i) Commissions paid to Branches 133,231, (ii) Amount drawn to pay legal fees 14,000, (iii) Amount transferred to current accounts to clear overdrafts 19,832, (iv) Loan and Interest repayment Equity 4,669, (v) Amount borrowed for ADC expenses 1,000, (vi) Cash withdrawals for operations 15,022, ,757, FINANCIAL STATEMENTS OF OPERATIONS KNUT RESERVED FUND

4 Out of this amount borrowed, Kshs. 33,384, was refunded on 10th December, YEAR 2016: The Union continued to face financial challenges. The employer after failing to pay Teachers salaries and failing to remit Union dues, embarked on members validation exercise. This resulted in a drastic reduction in membership for the Union. To sustain a few of its operations, the Union had to borrow from the Reserve Fund as follows:- (i) Commission paid to Branches KSHS (Equity Accounts) 3,915, (ii) Cash withdrawals for operations 29,779, (iii) UAP Insurance (Medical Cover) 2,390, ,086, In the year 2016, total amount borrowed from the Reserve Fund account amounted to Kshs. 36,506, This includes the unutilized amount that was retained in the Bank account. Mr. Chairman allow me to mention here that as at the end of the year 2017, the Reserve Fund amount was held as follows:- Kshs. 75, Held by the Bank as security for loan Kshs. 294,059, Due from KNUT Kshs. 369,059, Total Reserve Fund as at FINANCIAL STATEMENTS OF OPERATIONS KNUT RESERVED FUND

5 I wish to emphasize here that all the amount of money borrowed from the Reserve Fund to facilitate Union activities during the Industrial Action period should be paid back to the Reserve Fund account, subject to the recommendation of the National Executive Council. The Union is in the process of working out a suitable formula on how much will be remitted to the Reserve Fund account on a monthly basis to reinstate the fund back to its original position without impacting on the day-to-day operations of the Union. The Kshs. 75,000, held as collateral by the bank together with interest earned will be credited back to the account of the Reserve Fund once the Union clears the existing facility to which it is pegged. Mr. Chairman, it is now my humble pleasure to move this report for adoption, subsequent discussion and approval. FINANCIAL STATEMENTS OF OPERATIONS KNUT RESERVED FUND

6

7 2017

8 Page 1 STATEMENT OF OPERATIONS FOR THE YEAR ENDED 31 ST DECEMBER 2017 GENERAL INFORMATION (I) NATIONAL MANAGEMENT COMMITTEE (NRFMC) This comprises of:- i). National Chairman ii). Secretary General iii). National Treasurer iv). National Woman Representative v). National Trustees vi). Regional Representatives (8) vii). Fund Manager viii). Executive Officer (II) EXECUTIVE COMMITTEE OF THE FUND This comprises of:- i). National Chairman ii). Secretary General iii). National Treasurer iv). National Woman Representative v). Fund Manager vi). Executive Officer (III) REGISTERED OFFICE The registered office of the fund is located at KNUT House Mfangano Street NAIROBI (IV) BANKERS Equity Bank (Kenya) Ltd KNUT House Branch P.O. Box Mfangano Street NAIROBI (V) AUDITORS Onyancha & Associates Certified Public Accountants of Kenya P.O. Box NAIROBI

9 Page 2 REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF We have audited the statement of operations set out on page 4 to 9 which have been prepared on the basis of the accounting policies set out under note 2. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and to provide a reasonable basis of our opinion. The statement of operations is in agreement with the books of accounts. Respective Responsibilities of Management Committee and Independent Auditors The Management Committee is responsible for the preparation of statement of operations which give a true and fair view of the Fund s state of affairs and its operating results for the year. Our responsibility is to express an independent opinion on the statement of operations based on our audit and to report our opinion to you. Basis of Opinion We conducted our audit in accordance with the International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance as to whether the statement of operations is free from material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement of operations, assessing of the accounting policies used and significant estimates made by the Union Officials and evaluating the overall statement of operations presentation. Opinion In our opinion, proper books of accounts have been kept and the statement of operations give a true and fair view of the state of the Fund s affairs as at 31 December 2017 and of its surplus/(deficit) and cashflows for the year then ended in accordance with International Financial Reporting Standards (IFRS) and comply with the Reserve Fund Rules and the Trade Union's Act.

10 Page 3 STATEMENT OF OPERATIONS FOR THE YEAR ENDED 31 ST DECEMBER 2017 MANAGEMENT COMMITTEE RESPONSIBILITY The Management Committee has the responsibility of preparation of the statement of operations for the Reserve Fund for each financial year which gives a true and fair view of the state of affairs of the Fund as at the end of the financial year and of the operating results of the fund for that year. It is also a requirement for the Management Committee to ensure the fund keeps proper accounting records which disclose with reasonable accuracy at any time the financial position of the fund. They are also responsible for safeguarding the assets of the fund. The Management Committee accepts responsibility for the annual statement of operations which have been prepared using appropriate accounting policies supported by reasonable and prudent judgments and estimates, in conformity with International Financial Reporting Standards, and in the manner required by the Regulations of the Fund. The Management Committee are of the opinion that the statement of operations gives a true and fair view of the state of the financial affairs of the fund and its operating results. The Management Committee further accepts responsibility for the maintenance of accounting records which may be relied upon in the preparation of statement of operations as well as adequate systems of internal financial control. Nothing has come to the attention of the Management Committee to indicate that the fund will not be in operation for at least the next twelve months from the date of this statement.

11 Page 4 STATEMENT OF COMPREHENSIVE FOR THE YEAR ENDED 31 DECEMBER 2017 Notes COMPREHENSIVE INCOME REVENUE RECEIPTS [6] SUNDRY RECEIPTS - - TOTAL COMPREHENSIVE INCOME - - EXPENDITURE [7] Commissions to Branches - - KNUT Salaries / Commissions - - Cash withdrawals - KNUT - - Audit and Accountancy fees 75,000 75,000 Bank charges Loan repayment - KNUT 2,070,868 - Transfers - KNUT - 36,506,182 TOTAL EXPENDITURE [7] 2,145,868 36,581,292 SURPLUS /(DEFICIT) FOR THE YEAR (2,145,868) (36,581,292)

12 Page 5 STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2017 NON-CURRENT ASSETS Notes Property, Plant and Equipment [2c] - - CURRENT ASSETS Deposits - Security 75,000,000 75,000,000 Accounts receivables [3] 294,059, ,988,735 Cash and bank balance - 2,070,868 TOTAL CURRENT ASSETS 369,059, ,059,603 TOTAL ASSETS 369,059, ,059,600 FUND ACCOUNT AND LIABILITIES FUND ACCOUNT ACCUMULATED FUND [5] 368,609, ,684, ,609, ,684,600 CURRENT LIABILITIES Account payables and accruals [4] 450, ,000 TOTAL CURRENT LIABILITIES 450, ,000 TOTAL FUND ACCOUNT AND LIABILITIES 369,059, ,059,600

13 Page 6 STATEMENT OF CHANGES IN FUND ACCOUNT FOR THE YEAR ENDED 31 DECEMBER Notes Accumulated Accumulated Fund Fund As at 1st January ,684, ,759,600 Surplus/(Deficit) for the year (2,145,868) (36,581,292) Adustement on Fund balance {9] 2,070,868 36,506,292 As at 31st December ,609, ,684,600

14 Page 7 STATEMENT OF CASHFLOWS FOR THE YEAR ENDED 31 DECEMBER Surplus/(Deficit) for the year (2,145,868) (36,581,292) Adjustment for : Depreciation - - Interest expense - - (2,145,868) (36,581,292) Changes in Working Capital (Increase) / Decrease in account receivables - - Increase / (Decrease) in account payables 75,000 75,000 Increase / (Decrease) in taxation - - Net cash generated from operations (2,070,868) (36,506,292) Investing Activities Purchase of Property and Equipment - - Proceeds from sale of property and Equipment - - Financing Activities Interest paid - - Loans received - - Loan repaid Net Increase/(Decrease) in cash and cash equivalent (2,070,868) (36,506,292) Movement in cash and cash equivalents - - Adjustment on opening balance - - Cash and cash equivalent at beginning of the year 77,070, ,577,160 Cash and cash equivalents at end of year 75,000,000 77,070,868

15 Page 8 NOTES TO THE FINANCIAL STATEMENT OF OPERATIONS FOR THE YEAR ENDED 31 DECEMBER 2017 [1] The Reserve Fund The Kenya Nationa Union of Teachers Reserve Fund was established by the National Executive Council and adopted by the Annual Delegates Conference in December The Fund was established in the spirit of transformation and protection of the welfare and prosperity of the Teachers and the Education sector at large. The Fund was set up to ensure dedication to the protection of Teachers' claimed rights and membership of an education system which is fully accessible, equal and qualitative and a just expression of the will of the people as enshrined in the constitution of Kenya 2010 and the KNUT constitution. [2] Accounting Policies [a] Basis of Accounting The Fund's financial statement of operations is prepared on the basis of historical cost convention as adjusted by the revaluation of the Fund. [b] Revenue Revenue comprises of funds contributed by members through payroll deductions at a percentage as proposed by the National Executive Council and ratified by the Annual Delegates Conference. [c] Depreciation There is no depreciationi charge in this statement of operations as the fund did not own any property and equipment. [3] Account Receivables Balance b/f 291,988, ,482,440 Received from TSC not remitted - - Amount spent on operations not re-funded 2,070,868 36,506, ,059, ,988,732 [4] Account Payables Accrued audit and accountancy fees 450, , , ,000 [5] Accummulated Fund At 1st January 368,684, ,759,600 Surplus / (Deficit) for the year (page 4) (2,145,868) (36,581,292) Adjustment on fund balance 2,070,868 36,506, ,609, ,684,600

16 Page 9 NOTES TO THE FINANCIAL STATEMENT OF OPERATIONS FOR THE YEAR ENDED 31 DECEMBER [6] Transfers from Teachers Service Comission January - - February - - March - - April - - May - - June - - July - - August - - September - - October - - November - - December [7] Expenditure Commissions to branches - - KNUT salaries - - Cash withdrawals - KNUT - - Audit and accountancy fees 75,000 75,000 Bank charges Loan repayment - KNUT 2,070,868 - Transfers - KNUT - 36,506,182 2,145,868 36,581,292 [8] Currency This statement of operations is presented in Kenya Shillings as the reporting currency. [9] Fund balance adjustment The adjustment on the fund balance in the statement of changes in fund account (page 6) relates to fund amounts withdrawn/transferred and spent on operations but not refunded i.e. ammounts taken / transferred out of the Fund now being reinstated to the fund balance.

17 2016

18 Page 1 STATEMENT OF OPERATIONS FOR THE YEAR ENDED 31 ST DECEMBER 2016 GENERAL INFORMATION (I) NATIONAL MANAGEMENT COMMITTEE (NRFMC) This comprises of:- i). National Chairman ii). Secretary General iii). National Treasurer iv). National Woman Representative v). National Trustees vi). Regional Representatives (8) vii). Fund Manager viii). Executive Officer (II) EXECUTIVE COMMITTEE OF THE FUND This comprises of:- i). National Chairman ii). Secretary General iii). National Treasurer iv). National Woman Representative v). Fund Manager vi). Executive Officer (III) REGISTERED OFFICE The registered office of the fund is located at KNUT House Mfangano Street NAIROBI (IV) BANKERS Equity Bank (Kenya) Ltd KNUT House Branch P.O. Box Mfangano Street NAIROBI (V) AUDITORS Onyancha & Associates Certified Public Accountants of Kenya P.O. Box NAIROBI

19 Page 2 REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF We have audited the statement of operations set out on page 4 to 9 which have been prepared on the basis of the accounting policies set out under note 2. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and to provide a reasonable basis of our opinion. The statement of operations is in agreement with the books of accounts. Respective Responsibilities of Management Committee and Independent Auditors The Management Committee is responsible for the preparation of statement of operations which give a true and fair view of the Fund s state of affairs and its operating results for the year. Our responsibility is to express an independent opinion on the statement of operations based on our audit and to report our opinion to you. Basis of Opinion We conducted our audit in accordance with the International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance as to whether the statement of operations is free from material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement of operations, assessing of the accounting policies used and significant estimates made by the Union Officials and evaluating the overall statement of operations presentation. Opinion In our opinion, proper books of accounts have been kept and the statement of operations give a true and fair view of the state of the Fund s affairs as at 31 December 2016 and of its surplus/(deficit) and cashflows for the year then ended in accordance with International Financial Reporting Standards (IFRS) and comply with the Reserve Fund Rules and the Trade Union's Act.

20 Page 3 STATEMENT OF OPERATIONS FOR THE YEAR ENDED 31 ST DECEMBER 2016 MANAGEMENT COMMITTEE RESPONSIBILITY The Management Committee has the responsibility of preparation of the statement of operations for the Reserve Fund for each financial year which gives a true and fair view of the state of affairs of the Fund as at the end of the financial year and of the operating results of the fund for that year. It is also a requirement for the Management Committee to ensure the fund keeps proper accounting records which disclose with reasonable accuracy at any time the financial position of the fund. They are also responsible for safeguarding the assets of the fund. The Management Committee accepts responsibility for the annual statement of operations which have been prepared using appropriate accounting policies supported by reasonable and prudent judgments and estimates, in conformity with International Financial Reporting Standards, and in the manner required by the Regulations of the Fund. The Management Committee are of the opinion that the statement of operations gives a true and fair view of the state of the financial affairs of the fund and its operating results. The Management Committee further accepts responsibility for the maintenance of accounting records which may be relied upon in the preparation of statement of operations as well as adequate systems of internal financial control. Nothing has come to the attention of the Management Committee to indicate that the fund will not be in operation for at least the next twelve months from the date of this statement.

21 Page 4 STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2016 Notes COMPREHENSIVE INCOME REVENUE RECEIPTS [6] - 156,538, ,538,957 SUNDRY RECEIPTS - 33,384,884 TOTAL COMPREHENSIVE INCOME - 189,923,841 EXPENDITURE [7] Commissions to Branches - 97,031,274 KNUT Salaries / Commissions - 36,200,522 Cash withdrawals - KNUT - 15,022,616 Legal fees - 14,000,000 Audit and Accountancy fees 75, ,000 Bank charges 110 2,862 Loan repayment - KNUT - 14,500,000 Transfers - KNUT 36,506,182 10,000,000 ADC Expenses - 1,000,000 TOTAL EXPENDITURE [7] 36,581, ,907,274 SURPLUS /(DEFICIT) FOR THE YEAR (36,556,292) 2,016,567

22 Page 5 STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2016 NON-CURRENT ASSETS Notes Property, Plant and Equipment [2c] - - CURRENT ASSETS Deposits - Security 75,000,000 75,000,000 Accounts receivables [3] 291,988, ,482,440 Cash and bank balance 2,070,868 38,577,160 TOTAL CURRENT ASSETS 369,059, ,059,600 TOTAL ASSETS 369,059, ,059,600 FUND ACCOUNT AND LIABILITIES FUND ACCOUNT ACCUMULATED FUND [5] 368,684, ,759, ,684, ,759,600 CURRENT LIABILITIES Account payables and accruals [4] 375, ,000 TOTAL CURRENT LIABILITIES 375, ,000 TOTAL FUND ACCOUNT AND LIABILITIES 369,059, ,059,600

23 Page 6 STATEMENT OF CHANGES IN FUND ACCOUNT FOR THE YEAR ENDED 31 DECEMBER Notes Accumulated Accumulated Fund Fund As at 1st January ,759, ,370,700 Surplus/(Deficit) for the year (36,581,292) 2,016,567 Adustement on fund balance [9] 36,506, ,372,333 As at 31st December ,684, ,759,600

24 Page 7 STATEMENT OF CASHFLOWS FOR THE YEAR ENDED 31 DECEMBER Surplus/(Deficit) for the year (36,581,292) 2,016,567 Adjustment for : Depreciation - - Interest expense - - (36,581,292) 2,016,567 Changes in Working Capital (Increase) / Decrease in account receivables - (188,544,110) Increase / (Decrease) in account payables 75, ,000 Increase / (Decrease) in taxation - - Net cash generated from operations (36,506,292) (186,377,543) Investing Activities Purchase of Property and Equipment - - Proceeds from sale of property and Equipment - - Financing Activities Interest paid - - Loans received - - Loan repaid Net Increase/(Decrease) in cash and cash equivalent (36,506,292) (186,377,543) Movement in cash and cash equivalents - - Adjustment on opening balance - 154,372,333 Cash and cash equivalent at beginning of the year 113,577, ,582,370 Cash and cash equivalents at end of year 77,070, ,577,160

25 Page 8 NOTES TO THE FINANCIAL STATEMENT OF OPERATIONS FOR THE YEAR ENDED 31 DECEMBER 2016 [1] The Reserve Fund The Kenya Nationa Union of Teachers Reserve Fund was established by the National Executive Council and adopted by the Annual Delegates Conference in December The Fund was established in the spirit of transformation and protection of the welfare and prosperity of the Teachers and the Education sector at large. The Fund was set up to ensure dedication to the protection of Teachers' claimed rights and membership of an education system which is fully accessible, equal and qualitative and a just expression of the will of the people as enshrined in the constitution of Kenya 2010 and the KNUT constitution. [2] Accounting Policies [a] Basis of Accounting The Fund's financial statement of operations is prepared on the basis of historical cost convention as adjusted by the revaluation of the Fund. [b] Revenue Revenue comprises of funds contributed by members through payroll deductions at a percentage as proposed by the National Executive Council and ratified by the Annual Delegates Conference. [c] Depreciation There is no depreciationi charge in this statement of operations as the fund did not own any property and equipment. [3] Account Receivables Balance b/f 255,482,440 66,938,330 Received from TSC not remitted - 48,751,700 Amount spent on operations/transferred not refunded 36,506, ,792, ,988, ,482,440 [4] Account Payables Accrued audit and accountancy fees 375, , , ,000 [5] Accummulated Fund At 1st January 368,759, ,370,700 Surplus / (Deficit) for the year (page 4) (36,581,292) 2,016,567 Adjustment on fund balance 36,506, ,372, ,684, ,759,600

26 Page 9 NOTES TO THE FINANCIAL STATEMENT OF OPERATIONS FOR THE YEAR ENDED 31 DECEMBER 2016 [6] Transfers from Teachers Service Commission January - 19,531,300 February - 19,457,900 March - 19,536,500 April - 19,575,000 May - 19,576,100 June - 19,671,500 July - 19,407,200 August - 19,381,657 September - - October - - November - - December - - Executive secretaries - 253,000 Head office staff - 148, ,538,957 [7] Expenditure Commissions to branches - 97,031,274 KNUT salaries - 36,200,522 Cash withdrawals - KNUT - 15,022,616 Legal fees - 14,000,000 Audit and accountancy fees 75, ,000 Bank charges 110 2,862 Loan repayment - KNUT - 14,500,000 Transfers - KNUT 36,506,182 10,000,000 ADC Expenses - 1,000,000 Total Expenditure 36,581, ,907,274 [8] Currency This statement of operations is presented in Kenya Shillings as the reporting currency. [9] Fund balance adjustment The adjustment on the fund balance in the statement of changes in fund account (page 6) relates to fund amounts withdrawn/transferred and spent on operations but not refunded i.e. ammounts taken / transferred out of the Fund now being reinstated to the fund balance.

27 2015

28 Page 1 STATEMENT OF OPERATIONS FOR THE YEAR ENDED 31 ST DECEMBER 2015 GENERAL INFORMATION (I) NATIONAL MANAGEMENT COMMITTEE (NRFMC) This comprises of:- i). National Chairman ii). Secretary General iii). National Treasurer iv). National Woman Representative v). National Trustees vi). Regional Representatives (8) vii). Fund Manager viii). Executive Officer (II) EXECUTIVE COMMITTEE OF THE FUND This comprises of:- i). National Chairman ii). Secretary General iii). National Treasurer iv). National Woman Representative v). Fund Manager vi). Executive Officer (III) REGISTERED OFFICE The registered office of the fund is located at KNUT House Mfangano Street NAIROBI (IV) BANKERS Equity Bank (Kenya) Ltd KNUT House Branch P.O. Box Mfangano Street NAIROBI (V) AUDITORS Onyancha & Associates Certified Public Accountants of Kenya P.O. Box NAIROBI

29 Page 2 REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF We have audited the statement of operations set out on page 4 to 9 which have been prepared on the basis of the accounting policies set out under note 2. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and to provide a reasonable basis of our opinion. The statement of operations is in agreement with the books of accounts. Respective Responsibilities of Management Committee and Independent Auditors The Management Committee is responsible for the preparation of statement of operations which give a true and fair view of the Fund s state of affairs and its operating results for the year. Our responsibility is to express an independent opinion on the statement of operations based on our audit and to report our opinion to you. Basis of Opinion We conducted our audit in accordance with the International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance as to whether the statement of operations is free from material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement of operations, assessing of the accounting policies used and significant estimates made by the Union Officials and evaluating the overall statement of operations presentation. Opinion In our opinion, proper books of accounts have been kept and the statement of operations give a true and fair view of the state of the Fund s affairs as at 31 December 2015 and of its surplus/(deficit) and cashflows for the year then ended in accordance with International Financial Reporting Standards (IFRS) and comply with the Reserve Fund Rules and the Trade Union's Act.

30 Page 3 STATEMENT OF OPERATIONS FOR THE YEAR ENDED 31 ST DECEMBER 2015 MANAGEMENT COMMITTEE RESPONSIBILITY The Management Committee has the responsibility of preparation of the statement of operations for the Reserve Fund for each financial year which gives a true and fair view of the state of affairs of the Fund as at the end of the financial year and of the operating results of the fund for that year. It is also a requirement for the Management Committee to ensure the fund keeps proper accounting records which disclose with reasonable accuracy at any time the financial position of the fund. They are also responsible for safeguarding the assets of the fund. The Management Committee accepts responsibility for the annual statement of operations which have been prepared using appropriate accounting policies supported by reasonable and prudent judgments and estimates, in conformity with International Financial Reporting Standards, and in the manner required by the Regulations of the Fund. The Management Committee are of the opinion that the statement of operations gives a true and fair view of the state of the financial affairs of the fund and its operating results. The Management Committee further accepts responsibility for the maintenance of accounting records which may be relied upon in the preparation of statement of operations as well as adequate systems of internal financial control. Nothing has come to the attention of the Management Committee to indicate that the fund will not be in operation for at least the next twelve months from the date of this statement.

31 Page 4 STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2015 Notes COMPREHENSIVE INCOME REVENUE RECEIPTS [6] 156,538, ,520, ,538, ,520,700 SUNDRY RECEIPTS 33,384,884 69,781,655 TOTAL COMPREHENSIVE INCOME 189,923, ,302,355 EXPENDITURE [7] Commissions to Branches 97,031,274 57,739,777 KNUT Salaries / Commissions 36,200,522 8,968,188 Cash withdrawals - KNUT 15,022,616 5,000,000 Legal fees 14,000,000 - Audit and Accountancy fees 150, ,000 Bank charges 2,862 66,220 Loan repayment - KNUT 14,500,000 - Transfers - KNUT 10,000,000 - ADC Expenses 1,000,000 - TOTAL EXPENDITURE [7] 187,907,274 71,924,185 SURPLUS /(DEFICIT) FOR THE YEAR 2,016, ,378,170

32 Page 5 STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2015 NON-CURRENT ASSETS Notes Property, Plant and Equipment [2c] - - CURRENT ASSETS Deposits - Security 75,000,000 75,000,000 Accounts receivables [3] 255,482,440 66,938,330 Other receivables - - Cash and bank balance 38,577,160 70,582,370 TOTAL CURRENT ASSETS 369,059, ,520,700 TOTAL ASSETS 369,059, ,520,700 FUND ACCOUNT AND LIABILITIES FUND ACCOUNT ACCUMULATED FUND [5] 368,759, ,370, ,759, ,370,700 CURRENT LIABILITIES Account payables and accruals [4] 300, ,000 TOTAL CURRENT LIABILITIES 300, ,000 TOTAL FUND ACCOUNT AND LIABILITIES 369,059, ,520,700

33 Page 6 STATEMENT OF CHANGES IN FUND ACCOUNT FOR THE YEAR ENDED 31 DECEMBER Notes Accumulated Accumulated Fund Fund As at 1st January ,370,700 - Surplus/(Deficit) for the year 2,016, ,378,170 Adustement on fund balance [9] 154,372,333 1,992,530 As at 31st December ,759, ,370,700

34 Page 7 STATEMENT OF CASHFLOWS FOR THE YEAR ENDED 31 DECEMBER Surplus/(Deficit) for the year Notes 2,016, ,378,170 Adjustment for : Depreciation - - Interest expense - - 2,016, ,378,170 Changes in Working Capital (Increase) / Decrease in account receivables (188,544,110) (66,938,330) Increase / (Decrease) in account payables 150, ,000 Increase / (Decrease) in taxation - - Net cash generated from operations (186,377,543) 143,589,840 Investing Activities Purchase of Property and Equipment - - Proceeds from sale of property and Equipment - - Financing Activities Interest paid - - Loans received - - Loan repaid Net Increase/(Decrease) in cash and cash equivalent (186,377,543) 143,589,840 Movement in cash and cash equivalents - - Adjustment on opening balance [9] 154,372,333 1,992,530 Cash and cash equivalent at beginning of the year 145,582,370 - Cash and cash equivalents at end of year 113,577, ,582,370

35 Page 8 NOTES TO THE FINANCIAL STATEMENT OF OPERATIONS FOR THE YEAR ENDED 31 DECEMBER 2015 [1] The Reserve Fund The Kenya Nationa Union of Teachers Reserve Fund was established by the National Executive Council and adopted by the Annual Delegates Conference in December The Fund was established in the spirit of transformation and protection of the welfare and prosperity of the Teachers and the Education sector at large. The Fund was set up to ensure dedication to the protection of Teachers' claimed rights and membership of an education system which is fully accessible, equal and qualitative and a just expression of the will of the people as enshrined in the constitution of Kenya 2010 and the KNUT constitution. [2] Accounting Policies [a] Basis of Accounting The Fund's statement of operations is prepared on the basis of historical cost convention as adjusted by the revaluation of the Fund. [b] Revenue Revenue comprises of funds contributed by members through payroll deductions at a percentage as proposed by the National Executive Council and ratified by the Annual Delegates Conference. [c] Depreciation There is no depreciationi charge in this statement of operations as the fund did not own any property and equipment. [3] Account Receivables Balance b/f 66,938,330 - Received from TSC not remitted 48,751,700 64,945,800 Amount spent on operations not refunded 139,792,410 1,992, ,482,440 66,938,330 [4] Account Payables Accrued audit and accountancy fees 300, , , ,000 [5] Accummulated Fund At 1st January 212,370,700 - Surplus / (Deficit) for the year (page 4) 2,016, ,378,170 Adustment on fund balance 154,372,333 1,992, ,759, ,370,700

36 Page 9 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 [6] Transfers from Teachers Service Commission January 19,531,300 - February 19,457,900 18,841,400 March 19,536,500 19,050,500 April 19,575,000 19,157,000 May 19,576,100 19,165,400 June 19,671,500 19,303,800 July 19,407,200 19,303,800 August 19,381,657 19,744,300 September - 19,240,900 October - 19,588,200 November - 19,474,900 December - 19,650,500 Excutive secretaries 253,000 - Head office staff 148,800 - Total 156,538, ,520,700 [7] Expenditure Commissions to branches 97,031,274 57,739,777 KNUT salaries / commissions 36,200,522 8,968,188 Cash withdrawals - KNUT 15,022,616 5,000,000 Legal fees 14,000,000 - Audit and accountancy fees 150, ,000 Bank charges 2,862 66,220 Loan repayment - KNUT 14,500,000 - Tranfers - KNUT 10,000,000 - ADC expenses 1,000,000 - Total Expenditure 187,907,274 71,924,185 [8] Currency This statement of operations is presented in Kenya Shillings as the reporting currency. [9] Fund balance adjustment The adjustment on the fund balance in the statement of changes in fund account (page 6) relates to fund amounts withdrawn/transferred and spent on operations but not refunded i.e. ammounts taken / transferred out of the Fund now being reinstated to the fund balance.

37 2014

38 Page 1 STATEMENT OF OPERATIONS FOR THE YEAR ENDED 31 ST DECEMBER 2014 GENERAL INFORMATION (I) NATIONAL MANAGEMENT COMMITTEE (NRFMC) This comprises of:- i). National Chairman ii). Secretary General iii). National Treasurer iv). National Woman Representative v). National Trustees vi). Regional Representatives (8) vii). Fund Manager viii). Executive Officer (II) EXECUTIVE COMMITTEE OF THE FUND This comprises of:- i). National Chairman ii). Secretary General iii). National Treasurer iv). National Woman Representative v). Fund Manager vi). Executive Officer (III) REGISTERED OFFICE The registered office of the fund is located at KNUT House Mfangano Street NAIROBI (IV) BANKERS Equity Bank (Kenya) Ltd KNUT House Branch P.O. Box Mfangano Street NAIROBI (V) AUDITORS Onyancha & Associates Certified Public Accountants of Kenya P.O. Box NAIROBI

39 Page 2 REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF We have audited the statement of operations set out on page 4 to 9 which have been prepared on the basis of the accounting policies set out under note 2. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and to provide a reasonable basis of our opinion. The statement of operations is in agreement with the books of accounts. Respective Responsibilities of Management Committee and Independent Auditors The Management Committee is responsible for the preparation of statement of operations which give a true and fair view of the Fund s state of affairs and its operating results for the year. Our responsibility is to express an independent opinion on the statement of operations based on our audit and to report our opinion to you. Basis of Opinion We conducted our audit in accordance with the International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance as to whether the statement of operations is free from material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement of operations, assessing of the accounting policies used and significant estimates made by the Union Officials and evaluating the overall statement of operations presentation. Opinion In our opinion, proper books of accounts have been kept and the statement of operations give a true and fair view of the state of the Fund s affairs as at 31 December 2014 and of its surplus/(deficit) and cashflows for the year then ended in accordance with International Financial Reporting Standards (IFRS) and comply with the Reserve Fund Rules and the Trade Union's Act.

40 Page 3 STATEMENT OF OPERATIONS FOR THE YEAR ENDED 31 ST DECEMBER 2014 MANAGEMENT COMMITTEE RESPONSIBILITY The Management Committee has the responsibility of preparation of the statement of operations for the Reserve Fund for each financial year which gives a true and fair view of the state of affairs of the Fund as at the end of the financial year and of the operating results of the fund for that year. It is also a requirement for the Management Committee to ensure the fund keeps proper accounting records which disclose with reasonable accuracy at any time the financial position of the fund. They are also responsible for safeguarding the assets of the fund. The Management Committee accepts responsibility for the annual statement of operations which have been prepared using appropriate accounting policies supported by reasonable and prudent judgments and estimates, in conformity with International Financial Reporting Standards, and in the manner required by the Regulations of the Fund. The Management Committee are of the opinion that the statement of operations gives a true and fair view of the state of the financial affairs of the fund and its operating results. The Management Committee further accepts responsibility for the maintenance of accounting records which may be relied upon in the preparation of statement of operations as well as adequate systems of internal financial control. Nothing has come to the attention of the Management Committee to indicate that the fund will not be in operation for at least the next twelve months from the date of this statement.

41 Page 4 STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2014 Notes 2014 COMPREHENSIVE INCOME REVENUE RECEIPTS [6] 212,520, ,520,700 SUNDRY RECEIPTS 69,781,655 TOTAL COMPREHENSIVE INCOME 282,302,355 EXPENDITURE [7] Commissions to Branches 57,739,777 KNUT Salaries / Commissions 8,968,188 Cash withdrawals - KNUT 5,000,000 Audit and Accountancy fees 150,000 Bank charges 66,220 TOTAL EXPENDITURE [7] 71,924,185 SURPLUS /(DEFICIT) FOR THE YEAR 210,378,170

42 Page 5 STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2014 NON-CURRENT ASSETS Notes 2014 Property, Plant and Equipment [2c] - CURRENT ASSETS Deposits - Security 75,000,000 Accounts receivables [3] 66,938,330 Cash and bank balance 70,582,370 TOTAL CURRENT ASSETS 212,520,700 TOTAL ASSETS 212,520,700 FUND ACCOUNT AND LIABILITIES FUND ACCOUNT ACCUMULATED FUND [5] 212,370, ,370,700 CURRENT LIABILITIES Account payables and accruals [4] 150,000 TOTAL CURRENT LIABILITIES 150,000 TOTAL FUND ACCOUNT AND LIABILITIES 212,520,700

43 Page 6 STATEMENT OF CHANGES IN FUND ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2014 Notes 2014 Accumulated Fund As at 1st January Surplus/(Deficit) for the year 210,378,170 Adustement on fund balance [9] 1,992,530 As at 31st December ,370,700

44 Page 7 STATEMENT OF CASHFLOWS FOR THE YEAR ENDED 31 DECEMBER Notes Surplus/(Deficit) for the year 210,378,170 Adjustment for : Depreciation - Interest expense - 210,378,170 Changes in Working Capital (Increase) / Decrease in account receivables (66,938,330) Increase / (Decrease) in account payables 150,000 Increase / (Decrease) in taxation - Net cash generated from operations 143,589,840 Investing Activities Purchase of Property and Equipment - Proceeds from sale of property and Equipment - Financing Activities Interest paid - Loans received - Loan repaid - - Net Increase/(Decrease) in cash and cash equivalent 143,589,840 Movement in cash and cash equivalents - Adjustment on opening balance [9] 1,992,530 Cash and cash equivalent at beginning of the year - Cash and cash equivalents at end of year 145,582,370

45 Page 8 NOTES TO THE FINANCIAL STATEMENT OF OPERATIONS FOR THE YEAR ENDED 31 DECEMBER 2014 [1] The Reserve Fund The Kenya Nationa Union of Teachers Reserve Fund was established by the National Executive Council and adopted by the Annual Delegates Conference in December The Fund was established in the spirit of transformation and protection of the welfare and prosperity of the Teachers and the Education sector at large. The Fund was set up to ensure dedication to the protection of Teachers' claimed rights and membership of an education system which is fully accessible, equal and qualitative and a just expression of the will of the people as enshrined I the constitution of Kenya 2010 and the KNUT constitution. [2] Accounting Policies [a] Basis of Accounting The Fund's statement of operations is prepared on the basis of historical cost convention as adjusted by the revaluation of the Fund. [b] Revenue Revenue comprises of funds contributed by members through payroll deductions at a percentage as proposed by the National Executive Council and ratified by the Annual Delegates Conference. [c] Depreciation There is no depreciationi charge in this statement of operations as the fund did not own any property and equipment. [3] Account Receivables 2014 Balance b/f - Received from TSC not remitted 64,945,800 Amount spent on operations not refunded 1,992,530 66,938,330 [4] Account Payables 2014 Accrued audit and accountancy fees 150, ,000 [5] Accummulated Fund 2014 At 1st January - Surplus / (Deficit) for the year (page 4) 210,378,170 Adjustment on fund balance 1,992, ,370,700

46 Page 9 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 [6] Transfers from Teachers Service Commission 2014 February 18,841,400 March 19,050,500 April 19,157,000 May 19,165,400 June 19,303,800 July 19,303,800 August 19,744,300 September 19,240,900 October 19,588,200 November 19,474,900 December 19,650, ,520,700 [7] Expenditure 2014 Commissions to branches 57,739,777 KNUT salaries / commissions 8,968,188 Cash withdrawals - KNUT 5,000,000 Audit and accountancy fees 150,000 Bank charges 66,220 Total Expenditure 71,924,185 [8] Currency This statement of operations is presented in Kenya Shillings as the reporting currency. [9] Fund balance adjustment The adjustment on the fund balance in the statement of changes in fund account (page 6) relates to fund amounts withdrawn/transferred and spent on operations but not refunded i.e. ammounts taken / transferred out of the Fund now being reinstated to the fund balance.