FUNDACIÓN PARA EL AVANCE DE LAS REFORMAS Y OPORTUNIDADES GRUPOFARO. Report on the examination of the financial statements

Transcription

1 FUNDACIÓN PARA EL AVANCE DE LAS REFORMAS Y OPORTUNIDADES GRUPOFARO Report on the examination of the financial statements Year ended 31 December 2015

2 PKF & Co. INDEPENDENT AUDITOR S REPORT The Board of Directors Quito, Ecuador 1. We have audited the accompanying financial statements of FUNDACIÓN PARA EL AVANCE DE LAS REFORMAS Y OPORTUNIDADES, which comprise the statement of financial position as of 31 December 2015, and the statements of comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes (Expressed in US Dollars). Management s responsibility for the financial statements 1. Management is responsible for the preparation and fair presentation of these financial statements in accordance with the International Financial Reporting Standards - IFRS. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies, as well as accounting estimates that are reasonable under the circumstances. Auditor s responsibility 2. 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 comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatements. Our audit involves performing procedures to obtain audit evidence about the amounts and 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. In making those risk assessments, the auditor considers internal control relevant to the entity 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 entity s internal control. An audit also includes evaluating the appropriateness of accounting policies and the reasonableness of 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 opinion. PBX Fax pkf@pkfecuador.com PKF & Co. Av. 9 de Octubre 1911 y Los Ríos, Edif. Finansur, piso 12 Of. 2 P.O. Box Guayaquil Ecuador Tel Fax pkfuio@pkfecuador.com PKF & Co. Av. República de El Salvador 836 y Portugal, Edif. Prisma Norte, piso 4, Of. 404 Quito Ecuador PKF & Co. Cia. Ltda. es una firma miembro de PKF International Limited, red de firmas legalmente independientes. Ni PKF International Limited ni las otras firmas miembro son responsables o aceptan responsabilidad por el trabajo o asesoramiento que brinda PKF & CO. CIA. LTDA. a sus clientes.

3 2 Basis for qualified opinion: 4. The conceptual framework of the International Financial Reporting Standards - IFRS establishes that an asset is a resource controlled by the entity as a result of past events resource, and whose future economic benefits are expected to flow to the Foundation. At the date of issuance of the report, the Foundation has USD 44,831 corresponding to VAT for a period that is no longer recoverable, recorded as an asset, the refund procedure was performed by USD 22,952 but has not received a response from the Internal Revenue Service. 5. At the date of issuance of this report, we did not obtain necessary and sufficient evidence for the assessment of surplus of equipment registered in equity of the Statement of Financial Position. Opinion: 6. In our opinion, except for what is mentioned in "Basis for qualified opinion", the financial statements referred to in the first paragraph present fairly, in all material respects, the financial position of FUNDACIÓN PARA EL AVANCE DE LAS REFORMAS Y OPORTUNIDADES- as of 31 December 2015, and its financial performance and cash flows for the years then ended in accordance with the accounting standards described in Note C. Emphasis of Matter: 7. According to the conceptual framework of the International Financial Reporting Standards, the going concern hypothesis states that "The financial statements are normally prepared on the assumption that an entity is operating and will continue its activity within the foreseeable future". The Foundation reports a deficit of USD 118,867. The Administration s intention is to recover it in operations of March 31, 2016 Guayaquil, Ecuador

4 7 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2015 (Expressed in US Dollars) A. : The Foundation for the Advance of Reforms and Opportunities Grupo Faro is a non-profit, private legal entity. The Foundation was formed through the issue of Grant No. 4618, issued by the Ministry of Social Welfare on 17 December Grupo FARO is a center of public policies, independent, non-partisan, diverse and secular. The Group performs research to strengthen state and civil organizations and facilitates access and understanding of the social interest data. The financial statements for the year ended 31 December 2015 were issued by authorization of the Executive Director of the Foundation, will be placed for the consideration of the Board of Directors for its final approval. B. BASIS FOR THE PREPARATION OF THE FINANCIAL STATEMENTS: Basis for the preparation of the financial statements are described below: Statement of compliance: The Foundation maintains its accounting records in US Dollars in accordance with International Financial Reporting Standards issued by the International Accounting Standards Committee (IASB), although not mandatory for non-profit entities, it was decided to apply them in the preparation of financial statements. Basis of measurement: The financial statements have been prepared on a historical cost basis, except for retirement benefit obligations which are valued based on actuarial methods. According to historical cost, assets are recorded at the amount of cash and cash equivalents paid; liabilities are recorded at the amount of proceeds received in exchange for the obligation, and the amounts of cash or cash equivalents expected to be paid to satisfy the liabilities in the normal course of business. Local currency. Since January 10, 2000, the US Dollar is the official local currency in Ecuador. C. SUMMARY OF THE MOST SIGNIFICANT ACCOUNTING POLICIES: The following are the most significant accounting policies used by management in the preparation of the accompanying financial statements:

5 8 C. SUMMARY OF THE MOST SIGNIFICANT ACCOUNTING POLICIES: Cash and cash equivalents: These are immediately available funds. Cash comprises cash and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible into certain amounts of cash and which are subject to an insignificant risk of changes in value. An investment will be equivalent to cash having maturity in three months or less from the date of acquisition. Financial instruments: Financial assets Accounts and donors receivable: They are stated at their nominal value and are presented in the amount receivable under the agreements or commitments with third parties. In the account donor receivables, net is registered between donations committed to the signing of agreements and donations received to the receipt of funds on account; these funds are settled with the closing of the respective projects. Financial liabilities Funds to be executed: It is recorded as deferred tax liabilities and accumulating values received as running and then settle with the registration of the respective income. Equipment: They are recorded at cost value. Expenditures for maintenance and repairs are expensed as incurred them while major improvements are capitalized. Depreciation is calculated by the straight-line method, based on the estimated useful life related assets. The estimated property and equipment life is as follows: ASSETS YEARS Computer equipment 3 Furniture and fixtures 10 Office equipment 10 Financial investments held to maturity: Investments held to maturity are non-derivative financial assets whose payments are fixed or determinable and whose maturities are fixed, and also the entity has the positive intent and ability to hold to maturity. Current social benefits: Vacations are recorded on the accrual basis. The thirteenth and fourteenth salaries are accrued and paid according to current labor legislation.

6 9 C. SUMMARY OF THE MOST SIGNIFICANT ACCOUNTING POLICIES: Income: They are mainly made up of donations from national and international organizations. They are recorded initially as liabilities to be liquidated (Advance received for Programs and Projects) and then be recognized as income as the costs are running on each of projects. Expense: Are recognized under the accrual method, i.e. when they are incurred, costs incurred in the period are distributed to the different projects that the Foundation is running. International Financial Reporting Standards issued - New International Financial Reporting Standards and amendments: The accounting policies adopted are consistent with those used in the previous year. The following modifications to the International Financial Reporting Standards came into effect from January 1, 2014: IAS 36 Disclosure for recoverable amounts for non-financial assets IAS 39 - Novation of derivatives and continuation of hedge accounting IAS 19 - Defined benefit plans: Employee Contributions IFRS 2 - Share-based payments: Defining necessary condition for the vesting IFRS 3 - Business combinations: Accounting for contingent consideration in a business combination IFRS 8 Operating segments: Aggregation of operating segments and reconcilement of total assets for all segments which require to be reported with the Company s assets IFRS 13 - Fair Value Measurement: Short term receivables and payables IFRS 16 Property, plant and equipment: revaluation method - proportional restatement of accumulated depreciation. IAS 24 - Related party disclosures: Key management personnel IAS 38 - Intangible assets: Revaluation model and proportionate restatement of accumulated amortization IFRS 1 - First-time Adoption of International Financial Reporting Standards: Meant to "IFRS effective" IFRS 3 - Business Combinations: scope exceptions for joint ventures IFRS 13 - Fair Value Measurement: scope of paragraph 52. (except credit portfolio)

7 10 C. SUMMARY OF THE MOST SIGNIFICANT ACCOUNTING POLICIES: (Continued) IFRS 13 - Fair Value Measurement: scope of paragraph 52. (except credit portfolio) IAS 40 - Investment Property: Clarifying the interrelationship of IFRS 3 Business Combinations and IAS 40 Investment Property when classifying property as investment property or owner-occupied property The adoption of these standards had no significant impact on the operations of the Company. International Financial Reporting Standards issued - International Financial Reporting Standards and amendments issued and not yet effective: The following International Financial Reporting Standards amendments have been issued but are not in effect at December 31, 2015: Standards Effective date Amendment to IFRS 11 "Joint Arrangements", regarding accounting for acquisitions in joint operations January 1, 2016 Amendments to IAS 16 "Property, Plant and Equipment" and IAS 38 "Intangible Assets", in relation to the clarification of the acceptable methods of January 1, 2016 depreciation and amortization Amendment to IAS 41 "Agriculture", in relation to productive plants January 1, 2016 Amendment to IAS 27 "Separate Financial Statements" in relation to Equity Method in Separate Financial January 1, 2016 Statements Amendments to IFRS 10 "Consolidated Financial Statements" and IAS 28 "Investments in associates and joint ventures" with respect to the sale or transfer January 1, 2016 of assets between an investor and its associate or joint venture Amendments to IFRS 10 "Consolidated Financial Statements", IFRS 12 "Disclosure of interests in other entities" and IAS 28 "Investments in associates and January 1, 2016 joint ventures" with regard to the application of the exception of consolidation in the investment entities Amendment to IAS 1 "Presentation of financial statements" regarding the initiative on disclosure January 1, 2016 IFRS 9 "Financial Instruments" January 1, 2018 IFRS 14 "Accounts deferrals of regulated activities": This standard is applied to an entity s first annual IFRS financial statements for a period beginning on or after 1 January 1, 2016 January IFRS 15 - Revenue from contracts with customers January 1, 2017

8 11 D. ESTIMATES AND ACCOUNTING POLICIES: Management is required to make certain estimates and establish assumptions inherent in the economic activity of the Foundation in the preparation of the financial statements in accordance with International Financial Reporting Standards, for the purpose of determining the valuation and presentation of certain items that are part of the financial statements. In the opinion of management, these estimates and assumptions were based on the best use of information available at the time, which could reach their final effects differ. The underlying estimates and judgments are reviewed regularly. Changes to accounting estimates are recognized in the period and future periods, if the revision affects both the current and subsequent periods. The estimates and accounting judgments that management has used in the process of application of accounting criteria are presented: The following accounting estimates and Judgments Have Been used by the management in the preparation of the financial statements: Provision for employee retirement and bonus eviction: The amount of provisions for employee retirement and bonus eviction is determined using the method of Projected Credit Unit, conducted by a professional expert (actuary). Estimated useful life of property and equipment: The estimated useful life and residual values are reviewed as indicated in Note C. E. CASH AND CASH EQUIVALENTS: Petty cash Local banks (1) 80, ,332 (1) Local banks detail as follows: 80, ,782 Bank Type of account Account number Banco del Pichincha C.A. Corriente , ,194 Banco del Pichincha C.A. Corriente ,421 6,224 Banco Internacional S.A. Corriente ,756 1,760 Banco Internacional S.A. Corriente ,410 Banco del Pichincha C.A. Ahorros Banco del Pichincha C.A. Ahorros ,417 Banco Desarrollo de los Pueblos S.A. Ahorros ,325 80, ,332

9 12 F. NOTES AND ACCOUNTS RECEIVABLE NON-RELATED PARTIES: Donors receivables (1) 1,711,410 1,924,777 Partners and sub executors receivable 1,209 Funds to be liquidate contributors 2,994 2,638 Advances to suppliers 5, ,719,804 1,928,728 (1) Donations committed to the signing of agreements net from donations received to the receipt of funds; these funds are settled with the closing of the respective projects. Detail of this account as follows: Project Programa de Diálogo y Veeduría Ciudadana al Plan Decenal de Educación ,891 Project Evidence and Lessons from Latin America (ELLA) 165, ,751 Project "Fase 2 del Apoyo Institucional de la Iniciativa ThinkTank: Grupo FARO" 695, ,742 Project Component One under the Civil Society Assitance Program in Ecuador. 424, ,000 Consultoría TTI TTF Exchanges 4,200 Programa de diálogo y veeduría ciudadana al plan decenal de educación ,193 NED ,000 ILAIPP - IDRC 51,964 Strengthening CSOs to the promotion and defense of human rights 322,500 FARO 19,859 1,711,410 1,924,777 G. FINANCIAL ASSETS HELD TO MATURITY: Financial stability fund (1) 32,315 Labor contingency fund (2) 30,000 Long term deposit 3,125 65,440

10 13 G. FINANCIAL ASSETS HELD TO MATURITY: (Continued) (1) Correspond to an investment certificate in Diners Club Ecuador S.A., with an interest rate of 5.85%, for a period of 92 days. It was created with funds as a backup against the economic crisis in the country. (2) Correspond to an investment certificate in Diners Club Ecuador S.A. with an interest rate of 7.25% for a term of 361 days. It is a fund of labor contingency, created as a backup in case of lack of liquidity for recognition of salaries and social benefits, and was funded by the "TTIProyecto "Phase 2 of Institutional Support of the ThinkTank Initiative project: FARO Group"" according to the agreement signed on 28 November H. ASSETS FOR CURRENT TAXES: Value Added Tax on purchases (1) 87,869 84,869 87,869 84,869 (1) Corresponds to USD 3,000 of Value Added Tax generated in 2015 USD 485 in 2014, USD 3,905 in 2013, USD 35,648 in 2012 and USD 44,831 in previous years. I. NON-CURRENT ASSETS HELD FOR SALE: Trust rights CCPP (1) 77,993 77,993 (1) Corresponds to the rights to the Commercial Trust Estate called "CCPP Commercial Trust", created on 8 September The Foundation presented USD 13,000 as contribution in cash, and a plot of land located in Monteserrin. On 29 September 2014 through deed agrees the purchase - sale of land managed by the trust. On 7 January 2015, by public deed, the trust was liquidated and obtaining a profit of USD 49,777. J. PROPERTY AND EQUIPMENT: Balance at Balance at 31/12/2014 Additions Written-off 31/12/2015 Computer equipment 85,841 (1,871) 83,970 Furniture and fixtures 30, ,687 Office equipment 7,791 (2,123) 5,668 Vehicles (1) 32,000 32, ,156 32,163 (3,994) 152,325 (-) Accumulated depreciation 86,437 21, ,617 37,719 10,983 (3,994) 44,708 (1) Corresponds to the donation of a vehicle by the Embassy of the United States of America.

11 14 K. EQUITY INVESTMENTS: Shares investment in Banco Desarrollo de los Pueblos S.A. (1) 10,000 10,000 (1) Relates to an investment in the purchase of 80 shares in Banco Desarrollo de los Pueblos S.A. at par value of USD 125 each share which nominal value is USD 100. L. BORROWINGS WITH FINANCIAL INSTITUTIONS: Balance of this account as follows: Banco Desarrollo de los Pueblos S.A. 30,977 45,611 (-) Non-current portion 13,941 30,978 17,036 14,633 (1) Corresponds to a loan with Banco Desarrollo de los Pueblos S.A.: Operation Issuing date Maturity date Capital (USD) Annual nominal interest Balance 31/12/2015 Balance at 31/12/ /09/ /09/ ,000 11,20% 30,977 45,611 (-) Non-current portion 13,941 30,978 17,036 14,633 M. ACCOUNT AND NOTES PAYABLE NON-RELATED PARTIES: Local suppliers (1) 34,303 17,086 Foreign suppliers 4,179 34,303 21,265 (1) Corresponds to the following: Biodivecis Cia.Ltda. 553 Gabriel Ordoñez 574 Travel El Corte Ingles 2,391 Páez Juan Fernando 413 QBE Seguros Colonial 480 OtHERS 486

12 15 M. NOTES AND ACCOUNTS PAYABLE NON-RELATED PARTIES: (Continued) COUNTERPART Rivadeneira Méndez Bolívar Gabriel 6,615 5,625 Mafla Mantilla Edison 4,320 Others 394 TTI SECOND PHASE Duque Granizo Enrique Ernesto 3,970 Silva Delgado Jorge Patricio 6,750 Rivadeneira Méndez Bolívar Gabriel 2,205 ILAIIP Viajes El Corte Inglés 4,706 EUROPEAN UNION Godoy González Luis Argenis 446 2,233 Viteri Santamaría Oswaldo Patricio 2,300 Universidad Politécnica Salesiana 2,116 Others 4,812 34,303 17,086 N. OTHER CURRENT LIABILITIES: Ecuadorian Social Security Institute 7,328 6,102 Other accounts payable (1) 11,468 11,584 Deferred income 167,300 Fund to be executed (2) 66, ,658 Loans with individuals 46,000 Outstanding donations (3) 1,690,426 1,724,481 1,775,636 2,129,125 (1) Corresponds to USD 10,404 payable to Constructora Castelo from an USAID s project (USD 10,404 in 2014), USD 900 to Ms. Monica Roman from USAID and USD 164 to contributors. (2) Corresponds to advances received from programs and projects of resources provided by donors to cover running costs of the various projects. The detail of this account: Fondo para la rendición de Cuentas de la Confederación de fondos de la organización Civil 3,397 OnThinkTanksExchanges 4,244 Evidence and Lessons from Latin America (ELLA) (35,225) (4,321) "Fase 2 del Apoyo Institucional de la Iniciativa ThinkTank: Grupo FARO" (12,836) 124,501

13 16 N. OTHER CURRENT OBLIGATIONS: (Continued) Component One under the Civil Society Assistance Program in Ecuador. 1,181 (4,695) National Level implications of implementation of SDGS 7,124 Global standard for CSO accountability 1,619 Country analysis effects of the extractive boom social indicators 355 Fortalecimiento de las organizaciones de la sociedad civil y de sus capacidades de asociación para la promoción, ejercicio y defensa de los derechos humanos (10,950) NED ,925 ILAIPP ,596 Faro Institucional Operativo 1,625 50,532 66, ,658 (3) Correspond to donations received for projects still outstanding. The detail of this account: On Think Tanks Exchanges. 4,206 Programa de diálogo y veeduría ciudadana al plan decenal de educación ,891 Evidence and Lessons from Latin America (ELLA). 165, ,751 "Fase 2 del Apoyo Institucional de la Iniciativa Think Tank: Grupo FARO". 695, ,742 Component One under the Civil Society Assitance Program in Ecuador. 424, ,000 Faro Institucional Operativo. (1,125) (109) NED ,000 ILAIPP ,964 Fortalecimiento de OCS y de sus capacidades de asociación para la promoción y defensa de derechos humanos 322,500 1,690,426 1,724,481 O. LIABILITIES FOR CURRENT TAXES: Income tax and valued added tax withholdings payable 4,790 1,863 4,790 1,863

14 17 P. OTHER ACCRUED LIABILITIES: Thirteenth salary payable 1,503 2,523 Fourteenth salary payable 1,770 1,787 Vacations 7,778 9,205 Labor contingency payable (1) 32,175 Financial stability payable 1,100 44,326 13,515 (1) Correspond to a fund of labor contingency, created as a backup in case of lack of funding for recognition of salaries and social benefits, which is financed by the "TTI Project "Phase 2 Project Institutional Support of the Think Tank Initiative: Group FARO"" according to the agreement signed on 28 November Q. RETIREMENT BENEFIT OBLIGATIONS: Pension provision (1) 16,916 13,406 Provision for bonus eviction (2) 11,159 2,476 28,075 15,882 (1) The movement of the pension provision as follows: Balance at beginning of period 13,406 (+) Provision 3,510 13,406 Balance at end of period 16,916 13,406 (2) The movement of the provision for bonus eviction was: Balance at beginning of period 2,476 (+) Provision 8,683 2,476 Balance at end of period 11,159 2,476 To determine the liability for employee retirement and bonus eviction recorded as at 31 December 2015, an annual discount rate of 5.5%, a rate of salary increase of 4.00%, a rate of pension increase of 4.00% and mortality, handicapped and rotation rate taken from TM ISSE 2002 were considered.

15 18 R. EQUITY: Donations: Corresponds to assets contributed by the board of directors to the Foundation. Contributions: Corresponds to the contributions provided by various donors to implement projects of the Foundation. Valuation of property and equipment: Corresponds to the valuation of property and equipment of the Foundation. Retained earnings: It is the accumulated surplus or deficit as a result of the operations of the Foundation. S. DONOR CONTRIBUTIONS: Relates to donations received from national and international organizations received for the execution of Projects and Programs, including administrative and operational costs. Detail as follows: Years ended Description 31/12/ /12/2014 International Budget Partnership 4,344 GFLAC (Grupo de Financiamiento Climático para América Latina y el Caribe) 3,006 Accountability Confederación de OSC 3,585 1,003 Fundación AVINA Conversatorio sobre metodologías de Monitoreo 13,083 Manabí Será 8,615 Reveneu Watch Institud 15,000 IDRC (International Development Research Center) ILAIPP ,284 NED2014 National Endowment for Democracy 33,500 The SCHUMACHER CENTRE BOURTON-ON- DUNSMORE- Ella 90,023 16,593 IDRC (International Development Research Center)THINK THANK INICIATIVE Second Phase 270,048 32,663 Counterpart International Inc. 129,113 4,695 NED ,045 ILAIPP ,280 EUROPEAN UNION 10,950 21,401 IDRC On think tank Exchange 6,578 Institute of Popular and Solidarity Economy 25,407 Topics broadcast event Extractive Industries 7,358 NED2012 National Endowment for Democracy 28,329 European Union Observatory 124,792 GIZ German Technical Cooperation 1,699 FV - Fundo Vale 118,211 IDRC - International Development Research Centre TTI 144,072 IDRC - International Development Research Centre Matching Funds 25,685 IDRC - International Development Research Centre Universities 192, ,387 1,030,384

16 19 T. PROJECT COSTS: Years ended 31/12/ /12/2014 Research (1) 158, ,252 Development of capacities (2) 103,050 74,383 Communication (3) 22, ,071 Institutional development (4) 39,738 30,555 Management and general (5) 34, , , ,633 (1) Mainly includes USD 80,326 for salaries of research area and USD 77,882 (USD 179,895 in 2014) in consulting for research projects. (2) Mainly includes USD 56,187 (USD 11,994 in 2014) of expenses for salaries of staff in the area of capacity building (external), USD 46,863 (USD 24,468 in 2014) for workshops, events and meetings. (3) Mainly includes USD 22,046 (USD 41,866 in 2014) for performing communication materials, publications and consultancies for promotion and dissemination of projects. (4) Mainly includes USD 29,442 (USD 16,040 in 2014) trips, workshops, events and meetings aimed at promoting institutional development projects and USD 10,299 staff salaries linked to institutional development. (5) Includes USD 33,127 corresponding to payments of banking services, utilities and other administrative items needed for project management. U. PROJECTS EXPENDITURES: Years ended 31/12/ /12/2014 Research (1) 53,287 58,822 Development of capacities 707 Communication (2) 31,681 43,845 Institutional development (3) 74,376 82,733 Management and general (4) 122, , , ,751 (1) Corresponds to USD 53,287 (USD 58,822 in 2014) for salaries of research area. (2) Corresponds to USD 31,681 (USD 39,902 in 2014) for performing communication materials, publications and consultancies for promotion and dissemination of projects.

17 20 U. PROJECTS EXPENDITURES: (Continued) (3) Mainly includes USD 73,153 (USD 76,700 in 2014) of staff salaries linked to institutional development. (4) Correspond to USD 21,708 (USD 86,454 in 2014) of salaries and social benefits, USD 32,081 (USD 53,459 in 2014) of payment for banking services, basic services and USD 68,384 (USD 12,731 in 2015) for administrative items necessary for project management. V. INSTITUTIONAL EXPENDITURES: Years ended 31/12/ /12/2014 Research (1) 10,709 1,449 Development of capacities 2,161 3,488 Communication (2) 22,372 33,261 Institutional development (3) 14,436 15,823 Management and general (4) 183, , , ,379 (1) Mainly includes USD 10,638 (USD 1,449 in 2014) of salaries and social benefits for researching of projects. (2) Mainly includes USD 11,536 (USD 24,291 in 2014) of salaries and social benefits assigned to the communication of projects. (3) Mainly includes USD 10,833 (USD 11,849 in 2014) of salaries and social benefits assigned to the institutional development of projects. (4) Mainly includes USD 91,964 (USD 54,105 in 2013) of administrative salaries and USD 59,214 (USD 20,381 in 2013) of payment of banking services and basic services. W. EMPLOYEES PROFIT SHARING AND INCOME TAX: Paragraph 5 of Article 9 of the Law on Internal Taxation indicates that profit from non-profit institutions is exempt from income tax if they comply with their formal role and duties under the Law. According to Article 19 of the Regulation of the Organic Law on Internal Taxation, non-profit organizations are not required to pay income tax if donated income is equal to or exceeds the following levels:

18 21 W. EMPLOYEES PROFIT SHARING AND INCOME TAX: (Continued) % income from donations and Annual income in USD Dollars contributions over income De 0 to 50,000 5% De 50,001 to 500,000 10% De 500,001 and onwards 15% For the reporting period ended 31 December 2015, donations received add up to USD 639,387 (2014: USD 1,030,384) representing 85% of total income (2014: 98%). X. PROJECTS AND CONSULTING Main running projects at end of period as follows: DONOR Practical Action Consulting NED - National Endowment for Democracy European Union Counterpart International, Inc International Development Research Center NAME OF THE PROJECT Evidence and Lessons from Latin America (ELLA) Promoting Innovation al the Local Level Fortalecimiento de las Organizaciones de la Sociedad Civil y de sus capacidades de asociación para la promoción, ejercicio y defensa de derechos humanos Component one under the Civil Society Assitence Program Iniciativa Latinoamericana de Investigación para las Politicas Publicas Main consulting in execution at the end of period as follows: CLIENT Southern Voice On Pos Mdg Instituto de Comunicación y desarrollo ICD Natural Resource Governance Institute NAME OF CONSULTING National Level Implications of Implementation of SDGS Global Standard For CSO Accountability Country Analysis Effects Of The Extractive Boom On Social Indicators Y. TRANSFER PRICING CONTROL: Transfer pricing regulation in Ecuador requires that contributors who have had aggregated transactions within the same fiscal year exceeding US$3 million with local and/or external domiciled related parties, must submit the transactional annex with related parties to the Internal Revenue Service, disclosing revenue and expenses transactions with the related parties.

19 22 Y. TRANSFER PRICING CONTROL: (Continued) Those contributors who have incurred aggregated transactions within the same fiscal year exceeding US$15 million with local and/or external domiciled related parties, are required to additionally submit the comprehensive transfer pricing report. The Tax Authority, in accordance with statutory powers, can request disclosure of transactions with all related parties, to establish whether such operations are applied at an arm's length principle, in accordance with the law. For purposes of calculating the accumulated amount for the presentation of both the annex and the report, the amount of operations with related parties will be presented as a gross and not a net figure, except those corresponding to: Capital Contributions in cash in US$. Compensation or reclassifications of accounts of assets, liabilities or equity, provided they do not affect results; Cash payments in US$, of equity returns (dividends) or liabilities; Income specified in sections 27 and 31 of the Internal Tax Law, as well as assets, liabilities or expenses attributable to the activity generating of income. Transactions with other related parties undertaken in the same fiscal period, provided they do not present any of the following conditions: a. The related party undertakes operations generating revenue in accordance with sections 27 or 31 of Internal Tax Law. b. The passive taxpayer: Declares a tax rate lower to zero Has taken advantage of any benefits or tax incentives, including those established in the Code of Production, Trade and Investment; Participates in reinvesting profits to reduce the income tax rate applied to profits; Manages or operates in a Special Economic Development Zone; Is dedicated to the exploration and exploitation of nonrenewable natural resources; Has shareholders with rights in capital of the Company that are resident or are established in tax havens.

20 23 Y. TRANSFER PRICING CONTROL: (Continued) Amendments to the Internal Tax Law, which came into effect on January 1, 2010 established that tax contributors who performed transactions with related parties are exempted from the application of transfer pricing rules, provided that: Taxes generated are in excess of 3% of taxable income; There have been no transactions with entities who reside in tax havens, and; There are no signed contracts with the Government of Ecuador in relation to the exploration and exploitation of non-renewable resources. Z. SUBSEQUENT EVENTS: Between December 31, 2015 and the date of issuance of the accompanying financial statements, there are no events or circumstances that, in the opinion of the management of the Foundation may affect the presentation of financial statements or that are required to be disclosed.