We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Transcription

1 INDEPENDENT AUDITOR S REPORT TO THE MEMBERS OF NWABIAGYA RURAL BANK LIMITED Report on the Financial Statements We have audited the accompanying financial statements of Nwabiagya Rural Bank Limited, which comprise the balance sheet as at 31 st December 2010, and the Income Statement, Statement of Changes in Equity and Cash Flow Statement for the year then ended, and notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes, as set out on pages 10 to 17. Directors Responsibility for the Financial Statements The bank s directors are responsible for the preparation and fair presentation of these financial statements in accordance with Ghana and International Accounting Standards and in the manner required by the Companies Code, 1963 (Act 179) of Ghana and the Banking Act, 2004 (Act 673). The 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; and making accounting estimates that are reasonable in the circumstances. Auditor s Responsibility Our responsibility is to express an independent opinion on these financial statements based on our audit. We conducted our audit in accordance with Ghana and International Accounting Standards on Auditing. These standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance that the financial statements are free from material misstatement. An 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 judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making these risk assessments, the auditor considers internal controls 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 controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by 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. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of Nwabiagya Rural Bank Limited at 31 st December, 2010 and of its financial performance and its cash flows for the year then ended in accordance with Ghana and International Accounting Standards and in the manner required by the Companies Code, 1963 (Act 179) of Ghana and Section 78 of the Banking Act, 2004 (Act 673) and Banking (Amendment) Act 2007 (Act 738) of Ghana. 1

2 INDEPENDENT AUDITOR S REPORT TO THE MEMBERS OF NWABIAGYA RURAL BANK LIMITED Report on Other Legal and Regulatory Requirements. Compliance with the requirements of the Companies Code, 1963 (Act 179) of Ghana The Ghana Companies Code, 1963 (Act 179) requires that in carrying out our audit, we consider and report to you on the following matters. We confirm that: i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit, ii) in our opinion proper books of account have been kept by the bank, so far as appears from our examination of those books, and iii) the Balance Sheet and Income Statement of the bank are in agreement with the books of account. Compliance with the requirements of the Banking Act 2004 (Act 673) and the Banking (Amendment) Act 2007 (Act 738). The Banking Act 2004 (Act 673) Section 78(2) requires that we state certain matters in our report. We hereby state that: i) the accounts give a true and fair view of the state of affairs of the bank and its results for the period under review. ii) we were able to obtain all the information and explanation required for the efficient performance of our duties as auditors, iii) the bank s transactions are within its powers, and iv) the bank has complied with the provisions of the Banking Act, 2004 (Act 673) and the Banking (Amendment) Act 2007 (Act 738). Paul Sagoe Lane, Adum P. O. Box AH 9139 Ahinsan- Kumasi. Richard Owusu- Afriyie Associates Chartered Accountants 28th March

3 INCOME STATEMENT YEAR ENDED 31ST DECEMBER, 2010 (NOTES) Interest Income (5) 4,136,855 3,319,119 Interest Expenses (6) (693,779) (563,721) Net Interest Income 3,443,076 2,755,398 Commissions and Fees (7) 858, ,635 Total Income 4,301,274 3,441,033 Provision for Bad & Doubtful Debts (77,200) (125,852) Operating Expenses (8) (3,004,666) (2,313,083) Net Operating Profit Before Taxation 1,219,408 1,002,098 Profit on Disposal of Property & Equipment - 4,332 Provision for Taxation (9) (110,985) (94,364) Net Profit After Taxation Transferred to Income Surplus Account 1,108, ,066 INCOME SURPLUS ACCOUNT YEAR ENDED 31 DECEMBER, Balance as at 1 January 2,060,583 1,326,792 Profit for the year transferred from Income Statement 1,108, ,066 3,169,006 2,238,858 Transfers to: Stated Capital (105,000) - Statutory Reserve Fund (138,553) (114,008) Other Reserve Funds (10) (70,000) (100,000) Dividend Paid (219,074) - 2,636,379 2,024,849 Other Reserves Utilization transferred (11) 57,330 35,734 Balance as at 31st December Per Balance Sheet 2,693,709 2,060,583 Earnings per Share (Cedi per Share)

4 BALANCE SHEET AS AT 31ST DECEMBER, 2010 (NOTES) ASSETS Cash and Balances with ARB Apex Bank (12) 1,959,735 1,700,147 Due from Other Banks 622, ,150 Investments - (Short Term) (13) 10,900,100 6,600,000 Loans and Advances (14) 11,030,407 9,159,209 Other Assets Accounts (15) 1,442,474 1,068,904 Investments - (Long Term) (16) 115,725 40,312 Property & Equipment (17) 699, ,899 TOTAL ASSETS 26,770,023 19,739,620 LIABILITIES Deposits and Current Accounts (18) 21,301,423 14,851,617 Loans from Other Financial Institutions (19b) 407, ,716 Interest Payable and Other Liabilities (19a) 900, ,500 Current Corporate Tax Liabilities (9) 22,803 29,293 TOTAL LIABILITIES 22,631,874 16,551,126 SHAREHOLDERS FUNDS Stated Capital (20) 506, ,315 Statutory Reserve Fund (21) 565, ,929 Income Surplus 2,693,709 2,060,583 Capital Surplus (22) 24,590 24,590 Development Fund (23) 180, ,514 Scholarship Fund (24) 21,316 23,316 Staff Pension Fund (25) 119, ,390 Community Development Fund (26) 26,527 51,857 TOTAL SHAREHOLDER FUNDS 4,138,149 3,188,494 TOTAL SHAREHOLDERS FUNDS AND LIABILITIES 26,770,023 19,739,620 Approved by the Board on 25th March 2011 DIRECTOR DIRECTOR 4

5 CASH FLOW STATEMENT YEAR ENDED 31ST DECEMBER, NET CASH INFLOWS FROM OPERATING ACTIVITIES Net Profit Before Taxation 1,219,408 1,002,098 Depreciation Charge 150, ,682 Provision for Bad and Doubtful debts 77, ,852 Pension Fund utilisation - (7,105) Profit before Changes in Working Capital 1,446,673 1,240,527 CHANGES ON OPERATING ASSETS AND LIABILITIES (Increase) /Decrease in Loans & Advances to Customers (1,948,398) (569,122) (Increase) /Decrease in Other Assets Accounts (373,570) (177,065) Increase /(Decrease) in Customers Deposits 6,449,806 3,153,853 Increase /(Decrease) in Interest Payable and Other Liabilities (60,241) 499,275 5,514,270 4,147,467 Tax Paid (117,475) (90,427) Net cash from /(used in) Operation Activities 5,396,795 4,057,040 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of Property and Equipment (127,761) (174,685) Work in Progress Property and Equipment (136,429) (178,468) Proceeds from disposal of Property & Equipment - 5,500 Dividend Paid (219,074) (167,926) Investment (75,413) (38,302) Net cash used in Investing Activities (558,677) (553,881) CASH FLOWS FROM FINANCING ACTIVITIES Loans (302,327) 117,708 Transfer from Income Surplus (105,000) - Issue of Shares 165, ,280 Proceeds from Bonus Shares Issue - 24,590 Net cash from Financing Activities (242,021) 251,578 Net Increase /(Decrease) in Cash and Cash Equivalents 4,596,096 3,754,736 Cash and Cash Equipment at Start 8,886,297 5,131,561 Cash and Cash Equipment at Close 13,482,393 8,886,297 ANALYSIS OF CASH AND CASH EQUIVALENTS Cash and Balances with ARB Apex Bank 1,959,735 1,700,147 Balances with Other Banks 622, ,150 Short Term Investments 10,900,100 6,600,000 13,482,393 8,886,297 5

6 NOTES FORMING PART OF THE FINANCIAL STATEMENTS YEAR ENDED 31ST DECEMBER, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies adopted by the Bank and which have been used in preparing these Financial Statements are as follows: a) Basis of Accounting The Financial Statements have been prepared under the historical cost convention and in accordance with Ghana and International Accounting Standards. b) Investments Investment in securities redeemable at fixed dates are stated at cost and are adjusted to give effect to amortisation of premiums and discounts on purchase over the period of redemption on a straight line basis. c) Interest on Loans and Advances Interest on Loans and Advances is accrued to Profits until such time as reasonable doubt exists with regard to its collectibility. d) Bad and Doubtful Debts Loans and Advances are stated after the deductions of an amount which is considered adequate for bad and doubtful debts. e) Commission and Fees Income Loan fees and commission are credited to income in the year the loan is granted. f) Loans and Advances Advances are stated in the balance sheet at the amount of principal and interest outstanding less any provision for bad and doubtful debts and interest held in suspense. g) Taxation The Bank provides for income taxes at the current rates on its taxable profits. h) Property & Equipment and Depreciation Propery and Equipment owned by the bank are stated at cost less accumulated depreciation Depreciation is calculated on a Straight Line Basis to write off the cost over their estimated useful lives. The principal rates used for this purpose and which are consistent with those of the previous years are as follows:- Office Furniture and Fittings 20% Land & Building 2% Office Equipment 20% Electrical Installation 20% Motor Vehicles 20% Computers 25% Agency Rented Building Renovation 2% 6

7 GROSS NON - PERFORMING LOANS RATIO The percentage of gross non - performing loans and advances to total credit portfolio (gross) was 4.79% ( %) 3. SOCIAL RESPONSIBILITY OBLIGATION The amount spent on fulfilling social responsibility obligation was 57,330 ( ,734) 4. COMMITMENTS AND CONTIGENCIES (a) Commitment - Banking Business The Bank enters into various Commitments in the normal course of banking. (b) Contigent Liabilities Contigent Liabilities at the year end were Nil ( Nil) (c) Commitments for Capital Expenditure Commitments for Capital Expenditure at the year end were Nil ( Nil) 7