INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF INSTITUTE FOR FINANCIAL MANAGEMENT AND RESEARCH

Transcription

1 Chartered Accountants Fraser &. Ross ASV N Ramana Tower 52. Venkatnarayana Road T. Nagar. Chennai Tel: +91 (44) Fax: +91 (44) NDEPENDENT AUDTORS' REPORT TO THE MEMBERS OF NSTTUTE FOR FNANCAL MANAGEMENT AND RESEARCH We have audited the accompanying financial statements of NSTTUTE FOR FNANCAL MANAGEMENT AND RESEARCH ("the nstitute"), a society registered under the Societies Registration Act XX of 1860, which comprise the Balance Sheet as at 3 March 20] 4, the ncome and Expenditure account and Cash Flow Statement of the nstitute for the. year then ended, and a summary of the significant accounting policies and other explanatory information. The Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position and financial performance of the nstitute in accordance with the Accounting Standards issued by the nstitute of Chartered Accountants of ndia and in accordance with the accounting principles generally accepted in ndia. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the nstitute of Chartered Accountants of ndia. Those Standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. n making those risk assessments, the auditor considers the internal controls relevant to the nstitute's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the nstitute's internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

2 n our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give a true and fair view in conformity with the accounting principles generally accepted in ndia: (i) in the case of the Balance Sheet, of the state of affairs of the nstitute as at 31 March 2014; (ii) in the case of the ncome and Expenditure Account, the excess of ncome over Expenditure of the nstitute for the year ended on that date; (iii) in the case of the Cash Flow Statement, of the cash flows of the nstitute for the year ended on that date. We did not audit the financial information of the funds transferred directly by donors to the Centre for Economic Research in Pakistan (CERP), a consultant of the nstitute more specifically explained in Note 11.6 and the corresponding expenses incurred amounting to Rs.2,089,969 as at 31 March, 2014, as considered in these financial statements. These financial information have been incorporated in the financial statements based on a certificate provided by the auditors of CERP that has been furnished to us by the Management on which we have placed reliance, and our opinion, in so far as it relates to the amounts and disclosures included in respect of the financial information, is based solely on the certificate of the other auditors. (a) 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. (b) (c) n our opinion, proper books of account as required by law have been kept by the nstitute so far as it appears from our examination of those books. The Balance Sheet, the ncome and Expenditure Account and Cash Flow Statement dealt with by this Report are in agreement with the books of account.

3 (d) n our opinion, the Balance Sheet, the ncome and Expenditure Account and Cash Flow Statement comply with the Accounting Standards applicable to non corporate entities issued by the nstitute of Chartered Accountants of ndia. For Fraser & Ross Chartered Accountants (Firm's Registration No S) Bhavani Balasubramanian. Partner Membership No

4 nstitute for Financial Management and Research (Registered under the Societies RegistrJtioll Act XX of 1860) Balance Sheet as at 31st ' larch 2014 As at As at SOURCESOF FUNDS Schedules 31 r"'arch March 2013 Rs. Rs. Unrestricted funds General fund 1 840,126, ,814,417 Restricted funds Research project funds 2 442,476, ,220,134 Current liabilities and provisions 3 162,759, ,362,142 TOTAL 1,445,362,410 ~73,396,693 APPLCATON OF FUNDS Fixed assets Tangible assets 4 124,523, ,594,112 Capital vlork in progress 624,890, ,692,22' current assets 5 604,492,189 5':J6,J~2,3';Li Loans, advances and deposits 6 91,456,491 [05 7'~8 'J [" ';'CTAL 1,445,362, ,396;693=1 Votesfo,min0 part of the financial statements 10 & 11 - r ).~ n terms of our repolt 0Lti'klku. i For FRASER & ROS~, Chaltered ACCOU~l,,'ll"..P~~_ Chenna, Date 2:> llam.q lcla ' N.Vaghul Chairman C.V.Krishnan President Nachil<et Mol' Governer

5 nstitute for Financial Management and Research (Registered under the Societies Registration Act XX of 1860) ncome and Expenditure Account for the Year ended 31st March 2014 Particulars Schedule Year ended 31 March 2014 Yei'tr ended 31 March 2013 Research project Research project General Fund funds Total General Fund funds Total Rs. Rs. Rs. Rs. Rs. Rs. NCOME Course and Seminar fees 149,060, , , ,125,411 PrOject Grants transferred from Research project Fund 159,841, , Project reimbursements 2, ,099, ,237 1,828, ,460,/03 284,289,420 Other income 7 25,013,893 18,457, ,698 25,778,643 16,822, ,475 TOTAL A 176,742, ,397, ,140, ,732, ,222, ,955,509 EXPENDTURE Course and Seminar expenses 56,899,815 56,899, , Research project expenses 3,172, ,391,617 4"18,564,580 3,US9,o} ,:'08 4C:.>,CS~,lE Employee benefit expenses 8 65,324,719 8,630,304 73,955,023 62,563,843 10,228,049 /2,791,892 Admintstratlve and general expenses 9 16,790,499 15,025,918 31,816,417 37,653,513 2,829,278 40,482,791 - nterest 266, ,054 DepreCiation and amortsation expenses 3,883,163 5,387,769 9,270,932 6,474,471 4,098,640 10,573,111 Less: Stlare of expenses absorbed under project expenses (18,492,024 ) (18,492,024) (35,759,153),35,759,150) TOTAL B 127,579, ,435, ,014, ,730, ,154, ,884,703...;xcess0 ncome over expenolture ~expenalture over 49,163,608 23,962,272 73,125,880 31,002, ). c2d70,806 ncome) ~"'"' ~ '0,," ",,"' '0' "","00 ''''" 'om "" 387,148, ,148, ,430, ,430,615 Excess of ncome over Expenditure transferred to :- 436,312,028 23,962, ,274, ,433,158 1 (8,931,737) 412,501,421 Genera; 'l.!'1d 436,312, ,312, ,433, ,433,158 Research project fund 23,962,272 23,962,272 -, (8,931,737) (8.931,737 Note~ forming part of the renanclal statements 10 & 11 n lerms of our report allached. Chenna rr l Date 2.3 w W\t 1D14- ) For FRASER & ROSS Chartered ACCOU"l.Jnl~ "..,, ~ 0rJdh" k.d.1!

6 NSTTUTE FOR FNANCAL MANAGEMENT & RESEARCH (Registered under the Societies Registration Act XX/ of 1860) Cashflow from operating activities Surplus for the year Adjustments for the non - operating income/expenses Depreciation Loss on sale of asset (net) Surplus on sale of land and building nterest income 9,270,932 1,026,192 (387,148420) (40,895;496\ Surplus before changes in Current Assets / Current Liabilities: (ncrease) / Decrease in Current Assets ncrease (Decrease) in Current Liabilities Cash generated from Operations ,508 11,702,837 (9,602,975) 44,627,370 Net ncome tax paid (refunds) Net Cash Flow From Operating Activities (8,245,820) 36,381,550 Cash Flow From nvesting Activities nterest on Deposits Proceeds from sale of fixed assets Purchase of fixed assets and capital work in progress Net Cash Flow used in nvesting Activities 40,895, ,389,591 (454,665,689) (20,380,602) Cash Flow From Financing Activities Contibution to General Fund nvestment in fixed deposits Grants received in advance Net Cash Flow used in Financing Activities ,000 ( ,879) 6,294,392 ( ) Net Decrease in Cash Equivalents Cash & Cash Equivalents at the beginning of the year Cash & Cash Equivalents at the end of the year (293,751,539) , ,969,435 Reconciliation of Cash & Cash equivalents: Cash & bank balances as per Balance Sheet (Refer Schedule 5) Less: Deposits maturing beyond period of three months 516, , Cash and cash equivalents at the end of the year comprises of (a) Cheques in Hand (a) Balances with banks - in"current account - in savings account - n deposit accounts (maturing within three months) 3.772, , ,000, ,969,435 n terrns of our report attached For FRASER & ROSS, Chartered Accountant Chennai N.Vaghul Nachiket Mar C.V. Krishnan Bhavani Balasubramanian Date:l3J~4Chairrnan Governor President Partner

7 Gross Block Accumulated Deprecation/ Amortisation Net Block Particulars Balance as at Balance as at Balance as at Elimination on Balance as at Balance as at Balance as at Additions Deletions For the year 1 April March April 2013 disposal of assets 31 March March March 2013 Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Freehold land ,281,962 Leasehold land 84,271,987 84, ,633 1,914,556 82,357,431 83,164,064 Bt,llidings 20,082,696 12,126,923 7,955,773 11,425, ,235 8,321,741 3,838,572 4,117,201 8,657,618 Electrical fitting!:> 539, , ,442 18, ,887 56,743 75,188 Furniture and oft ce equpment ,479 1,427, ,035 28,476,548 19,400,835 1,424,190 58,090 20,766,935 7,709,613 7,761,644 Computers 43,199,732 10,888,763 4,643,354 49,445,141 32,672,396 3,883,929 2,855,932 33,700,393 15,744,748 10,527,336 Air -conditioners 3,749, ,182 90,600 3,869,130 3,155, ,118 90,600 3,379, , ,135 Miscellaneous and other equipment ~, 136,356 3,545, ,393 8,134,436 2,089,999 1,4'1, ,432 3,218,865 4,915,571 3,046,357 Vehicle 989, , , , ,800 87, ,846 Lll)rary books 9,444, ,832 16,031 9,823,803 8,488, ,467 8,827, , ,936 Software 532, , , , , , ,027 TOTAL Prevous veal , ,GJ? 35864, ,390,930 92, Jl ,

8 As at 31 March 2014 Rs. As at 31 March 2013 Rs. Schedule 1 - General fund Opening balance Add: Contribution to General Fund Add: Excess of income over expenditure! (expenditure over income) 388,814,417 15,000, ,312, ,433, Schedule 2 - Research project funds Opening balance Add: Grant received during the year Less: Transferred to ncome and Expenditure account in respect of current year utilisation Add: Excess of income over expenditure! (expenditure over income) 412,220, ,135,452 (159,841,060) 23,962, ,080, ,010,995 ( 110,939,203) (8,931,737) Current liabilities Sundry creditors Payables on purchilse! construction of fixed assets Library deposits Funds received in advance for projects Fees received in advance Other liabilities Provision for compensated absences Provision for Gratuity 38,81~,947 41,572,106 25,202,644 48,849,020 3,817,388 3,562,388 46,116,260 27,940,524 31,265,257 25,791,069 9,406,624 15,065,084 6,832,867 9,581,951 1,302, ~9, ,916,699 25,696,127 Accounts receivable Fees! program income receivable Amounts receivable from donors against reimbursement of project expenses (Refer Note No 11.8) Cash and bank balances Cheques in Hand Balances with banks - in current account - in savings account - in deposit accounts 3,636,992 3,488,392 63,922,184 48,436, ,596-3,772, ,377 10,688,685 8,263, ,046, ,600, Advances recoverable n cash or in kind Capital advances Amounts to be billed to donors against reimbursement of project expenses (Refer Note no 11.8) ncome tax deducted at source Prepaid expenses Sundry deposits 5,930,024 5,806, ,338 36,787,386 45,066,559 32,417,985 14,087,642 5,841,822 11,439,344 10,811,921 14,735,584 14,102,

9 For the year ended 31 March 2014 Rs, Research project funds For the year ended 31 March 2013 Rs. Research project funds nterest on Deposits - Savings bank account - ncome tax refund - Staff advances Miscellaneous receipts Profit on sale of Assets Royalty 56,732 2,448,199 41,133 56,732 2,478,337 41,133 23,711, , ,059 93, , , ,697 16,312,286 :?31,18! ,314 40,024, , , , Establishment expenses Contribution to Provident and other funds Staff welfare expenses 59,256,181 4,475,696 1,592,842 67,854,130 4,475,696 1,625,197 56,869,735 4,179,431 1,514,677 66,802,417 4,179,431 1,810,044 Auditors remuneraton Advertisement expenses Books and periodicals Postage and telegrams Printing and stationery Legal & Plofesslonal Fees Travelling expenses Miscellaneous expenses Shortfall on service tax and interest Security charges Faculty EduCJtlon Grant Loss on :iale of assets Rent Electncily and water ct1arges Rates and tdxes nsurance Repairs and malnteroance -Buildings -Computers! website! software -vehcles 1\1eetlngexpenses 1,112, ,925 2,713, , , , ,040 68,457 2,197, ,048 56,065 2,506,394 1,662, , ,723 17, ,648 54,226 1,112, ,925 2,730, , , ,824 1,841, , ,071 1,503,726 1,067,325 11,570, /14 ' 2,197, , ,527 2,506,394 2,241, , , , ,02S 2,392, , , , ,859 13, , ,741 2,599, , ,352 3,098,525 1,837, , ,284 : 4, , ,910 tio.),.".2,391, S ,750,258 1,408, ,134 97,829 21, ,599, ,352 3,098,525 1,841, ,

10 NSTTUTE FOR FNANCAL MANAGErJlENT AND RESEARCH (Registered under the Societies Registration Act XX of 1860) The financial statements are prepared in all material aspects with reference to generally accepted accounting principles followed in ndia and in compliance with the Accounting Standards issued and other guidance notes by the nstitute of Chartered Accountants of ndia. The financial statements are prepared under historical cost convention and on an accrual basis. The nstitute was classified as a Small and Medium-Sized Enterprise (SME) during the previous period as per the criteria mentioned in the accounting standards and hence there were relaxation in respect of certain disclosures in the accounting standards. During the financial year the nstitute has been classified as a non SME. Accordingly, the nstitute by virtue of being a non SME, is required to comply with all mandatory accounting standards issued by nstitute of Chartered Accountants of ndia. Consequent to the applicability of certain mandatory accounting standards from the current year and considering the exemptions to disclose previous period figures in those standards, the previous period figures have not been furnished. a) All Donations, Grants, Endowments and monies received towards project funds are accounted on receipt basis. b) General donations and grants are treated as capital receipts and taken to General Fund. c) Fellowships, endowments and grants received for specific purposes are kept in the respective funds. d) Monies received towards joint research project are taken to project fund. e) Reimbursements receivable for project expenses are treated as income on accrual basis.. f) nterest income is accounted on a time proportion basis g) Royalty income is recognised in accordance with terms of the agreement. Assets are recorded at cost of acquisition. Depreciation on fixed assets is charged on the straight-line method at the following rates: Asset Cate or Rate 0/0 Leasehold land Over the lease eriod Buildin s 5 Electrical fittin s and furniture 10 Air-conditioners and cold stor~_--_ =- 15 Other miscellaneous ~~ent _ 1_5 _ Com uter icludin software vehicles and librar books 20 ~

11 NSTTUTE FOR FNANCAL MANAGEMENT AND RESEARCH (Registered under the Societies Registration Act XX of 1860) 10.4 Cash and cash equivalents (for purposes of cash flow statement): Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value Cash flow statement: Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of noncash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.. Defined contribution plans: a. Provident Fund: Contributions are made to the recognized Provident Fund Trust (PF Trust) and are expensed to the ncome and Expenditure account. The interest rate payable by the PF Trust is notified by the Government. The nstitute has an obligation to make good the shortfall, if any, between the return from investments and the notified interest rate and recognizes such obligation as an expense. b. Super Annuation Fund: The nstitute makes contribution to a scheme administered by the Life nsurance Corporation of ndia (Le) to discharge ts liabilities towards super annuation to the employees. The nstitute has no other liability other than its contribution. Defined benefit plans (Long term employee benefits): Gratuity: The nstitute makes its contribution to a Gratuity fund administered by the Life nsurance Corporation of ndia (Le) to discharge gratuity liability to the employees. The nstitute accounts for its liability for future gratuity benefits based on actuarial valuation, as at the balance sheet date, determined by actuary consultant using the projected unit credit method. Effects of changes in actuarial valuation are immediately recognized in the income and expenditure account. Compensated absences: The nstitute records its liability for compensated absences based on actuarial valuation as at the balance sheet date using the projected unit credit method. Effects of changes in actuarial valuation are immediately recognised in the income and expenditure account. Short term employee benefits are recognised as an expense as per the nstitute's scheme based on expected obligations on an undiscounted basis. a. All foreign contributions received as grants are recorded at the rates prevailing on the date when the credit is given by the bank, to the nstitute's account. Transactions in foreign currencies are accounted at the exchange rates prevailing on the date of the transactions and the realised exchange loss/ gain are dealt with in the ncome and Expenditure account.

12 NSTTUTE FOR FNANCAL MANAGEMENT AND RESEARCH (Registered under the Societies Registration Act XX of 1860) b. Monetary assets and liabilities denominated in foreign currency are restated at the rates of exchange as on the Balance Sheet date and tile exchange gain/loss is suitably dealt with in the ncome and Expenditure account. a. The nstitute operates in two segments namely Business School & Research Centers. The Segment reporting is given on this classification. b. Revenue & Expenses have been identified to segments on the basis of their relationship to the Operating activities of the segment. c. nter Segment revenue for services rendered are determined on pre-approved basis. Particulars B School For the year ended 31 March, 2014 Business segments Eliminations Total Research Centers Segment Revenue 151,728, ,940, , nter-seg ment revenue 18,492, ,492,024 Total 170,220, ,940, ,160,949 Segment Expense 146,071, ,435, ,767 Segment Result 24,149,715 5,504,467 29,654,182 Operating income 24,149,715 5,504,467-29,654,182 Other income 412,162,313 18,457, ,620,118 Surplus for the year 436,312,028 23,962, ,2",?4,300 Particulars For the year ended 31 March, 2014 Business segments Total B School Research Centers Segment assets 1,299,402,769 J 45, 959'~5'362'41 0 Segment liabilities 88,594,858 74,164, ,759,167 Other information Capital expenditure 637,697 15,829,657 16,467,354 Depreciation and amortization 3,883,163 5,387,769 9,270,9321 ~. Note: This being the first year of applicability of Segment Reporting, the Rrevious year figures have not been furnished.

13 NSTTUTE FOR FNANCAL MANAGEMENT AND RESEARCH (Registered under the Societies Registration Act XX of 1860) i. Projected benefit obligation as at the beginning of the year Service cost nterest cost Actuarial Losses/ (Gains) Benefits paid Projected benefit obligation as at the end of the year ii. Fair value of plan assets as at the beginning of the year Expected return on plan assets Contributions Benefits paid Actuarial Gain! (losses) on plan assets Fair value of plan assets as at the end of the year iii. Amount recognized in the balance sheet: Projected benefit obligation at the end of the year Fair value of the plan assets at the end of the year (Liability)/Asset recognized in the Balance sheet iv. Cost of the defined plan of the year: Current service cost nterest on obligation Expected return on plan assets ~et actuarial losses recognized in the year Net cost recognized in the income and expenditure account v. Assumptions: Discount rate Expected rate of return Salary escalation Mortality (4.08) (12.42) (12.42) (13.02) (8.07) (4.15) % /0 8.00% ALM ( ) Note: During the previous year ended March 31, 2013, the nstitute was a SME. The disclosure as applicable for the nstitute as per AS15 have been made Pursuant to the approval of the Board of Directors in their meeting dated 7 th October, 2013, a portion of the land and building at Kothari Road campus has been sold for a total consideration of RS lakhs in November The nstitute is constructing a new campus at Sri City in Chitoor District, Andhra Pradesh. Construction is currently on-going. The proceeds from the sale of land and buildings situated at Kothari Road are being used to fund the project. The amount shown under capital work in progress for the same as of March 31, 2014 is Rs. 6,249 lakhs. The nstitute has outstanding commitments towards capital expenditure amounting to Rs. 827 lakhs as at March 31, On a request from Centre for Development Finance (CDF) for Environmentally Sustainable Finance (ESF) projects, the Donor (CC Bank) approved utilization of balance fund of Rs lakhs as on March, 2013 for similar projects relating to environmental matters till May 2015.

14 NSTTUTE FOR FNANCAL MANAGEMENT AND RESEARCH (Registered under the Societies Registration Act XX of 1860) 11.6 n addition to expenditure incurred by the project for which payments have been made under the CLEAR Grant, the World Bank made direct payments amounting to USD 33,790 (Rs. 2,089,969) as per the agreement, to the Centre for Economic Research in Pakistan (CERP) towards projects carried out in December 2012 for which the invoices have been received in July Tile payments have been accounted under the head Project ncome and expenditure based on the project report, the statement for receipts and payments for the project submitted by CERP and certificate received from the auditors of CERP The nstitute has filed a plaint in the Honourable City Civil Court of Madras against a former employee for recovering an amount of Rs. 7,42,107 being retirement benefits claimed and paid in excess of his entitlement The nstitute accrues the reimbursements recoverable from donors towards expenses incurred on projects. These reimbursements have been included under Accounts Receivable to the extent invoiced to donors and have been included under Loans and Advances to the extent they are yet to be billed Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure. Chennai Date 2'5Jl.U\.Q,'Mt..->~ N.Vaghul Chairman C.V.Krishnan President ~"'\\ NachiketMor Governor