Accounting Policies for the ASOSAI

Transcription

1 Accounting Policies for the ASOSAI (Final Draft) February 2014 ASOSAI Secretariat

2 Table of Contents 1. Objective 1 2. Financial Accounting Principles 1 3. Preparation of the Financial Statements 3 4. Translation of Currencies 8 5. Comparability 9 6. Amendment 9 ADDENDA 9 <Appendices> 1. Preparation of the Financial Statements (Samples) 2. Notes to the Financial Statements (Samples)

3 1. Objective 1.1 The objective of the accounting policies for the ASOSAI, which is a not-for-profit organization, is to ensure the production of reliable and useful financial information by providing consistent accounting framework applicable to the Secretariat of ASOSAI. 2. Financial Accounting Principles 2.1 The accounting principles used by the Secretariat comply with these policies. The International Financial Reporting Standards (IFRS) and the International Public Sector Accounting Standards (IPSAS) shall be applied when there are no stipulations in these polices. 2.2 The accounting policies for the ASOSAI are based on four major assumptions related to the environment in which transactions take place. They provide the underlying basis for the accounting system, and they are as follows: 2.21 Economic Entity There exists only one economic entity within the ASOSAI. Accordingly, all transactions including training activities, shall be recognized, accounted for, and reported by the Secretariat Going Concern It is assumed that the entity will continue to operate in the foreseeable future. It means that the ASOSAI has neither the intention nor the necessity of liquidation or of curtailing materially the scale of its operations in the foreseeable future Monetary Unit It is assumed that money is an appropriate basis by which to measure economic activities The monetary unit of accounting for ASOSAI activities is the US dollar (USD) Periodicity It is assumed that the activities and, therefore, the financial flows of an entity can be divided into meaningful time periods For the financial statement purposes of the ASOSAI, the fiscal year begins on January 1 and ends on December The basic principles for recording financial transactions are the following: 2.31 Measurement Principle i

4 2.311 Generally, transactions will be recorded at historical cost, i.e., the exchange price on the date of the transaction When IFRS requires or permits fair value measurements or disclosures about fair value measurements for specific transactions, they will be recorded at fair value Despite item above, transactions that have insignificant difference between fair value and historical cost could be recorded at historical cost. For example, a term deposit whose maturity is within a year and whose interest rate is at ordinary level may be measured and recorded at historical cost Revenue Recognition Principle Revenue shall be recognized when it is earned and when it is realized or realizable Matching Principle Expenses are necessarily incurred to generate revenue. In accordance with the matching principle, all expenses incurred to generate a specific amount of revenue in a period shall be matched against that revenue. The matching principle does not govern the recognition of losses that are resulted from unusual events Accrual Accounting Revenues are recognized when they are earned, and expenses are recognized in the same period as the related revenue (matching or using a systematic and rational allocation), not necessarily in the period in which the cash is received or expended by the ASOSAI Consistency Accounting policies shall be applied consistently from one period to another This does not mean that a change in accounting methods cannot be made. If such a change is made, it shall be identified, and the effect on reported results shall be fully disclosed in accordance with IFRS Full Disclosure This requires the presentation of sufficient information to permit the reader to reach an informed understanding of the financial statements. 3. Preparation of the Financial Statements ii

5 3.1 The financial statements of the ASOSAI include the following: 3.11 Statement of Financial Position Previously called the balance sheet, this statement includes information about an organization's assets, liabilities, and net assets and about their relationships to each other at a moment in time Statement of Activities As one of the main financial statements of a not-for-profit organization, this includes information about contributions and other revenues, expenses, gains, losses, and the amount of change in net assets for the period Statement of Changes in Net Assets The statement of changes in net assets provides information about the ASOSAI Fund at the beginning of each fiscal year, excess of revenues over expenses (or excess over revenues) for the period, changes of Special Purpose Fund, and other item of revenues and expenses for the period that is recognized directly in net assets Cash Flow Statement The statement of cash flows provides relevant information about the relation between inflows and outflows of ASOSAI's resources during the reporting period. This must distinguish between resource flows that are related to operating activities and those that are not (investing activities and financing activities) Notes to the Financial Statements Any information necessary for the full understanding of the financial statements shall be included in a note if it is not included in the statements themselves. On the other hand, it is required not to include any note that is not needed for a full understanding of the financial statements. 3.2 The major titles of account and the associated accounting policies for each title of account to be presented on the Statement of Financial Position are as follows: 3.21 Items for the Statement of Financial Position - Assets Assets are reported by homogeneous groups such as cash and cash equivalents, accrued income, receivables, short-term loans, advance payments, inventories, deposits, prepaid expenses, marketable securities, other long-term investments, property, plant and equipment. Assets shall be sequenced according to their liquidity. iii

6 3.211 Cash and Cash Equivalents Cash and cash equivalents comprise cash on hand and cash equivalents that are readily convertible into cash. They mature in three months or less from the date of acquisition. But Cash and Cash equivalents received with contributor-imposed restrictions that limit their use to long-term purposes shall not be classified to Cash and Cash equivalents. This amount shall be reported as Special Purpose Fund of Net Assets Accrued Income Accrued Incomes represent revenue recognized or earned through the passage of time although payment has not yet been made. For financial assets such as a term deposit, interest is calculated and paid in set intervals. Therefore interest income which has been accumulated or accrued but cash not yet received shall be reported as an Accrued Interest Annual s Receivable Annual contributions the member SAIs are required to pay annually to the Secretariat are recognized as revenue at the beginning of each fiscal year. Likewise, the annual contributions recognized as revenue but not yet received in cash shall be reported as Annual s Receivable. Upon receipt of the payment of an annual contribution in the appropriate bank account of the ASOSAI, the amount received shall be offset against the Annual s Receivable Advance Payment for Training Activities If the Secretariat remits estimated costs for training activities to the host SAI in advance, then the remitted amount shall be reported as an Advance Payment for Training Activities. When the host SAI settles the total expenses and sends a financial report to the Secretariat, the Advance Payment for Training Activities shall be offset against the ASOSAI Training Activities Expenses and refund balance Term Deposit A deposit, the maturity of which is more than three months, shall be reported as a Term Deposit, not Cash and Cash equivalents. The cash flow, in accordance with the acquisition and the disposal of a Term Deposit, shall be reported on the Statement of Cash Flows as iv

7 Cash Flows from investing activities. However, if the purpose of investment in Term Deposit is based on maturities of one year or less, then the cash flow of the acquisition and the disposal of the Term Deposit could be classified as a Cash Flow from operating activities Other Assets Other assets other than the aforementioned items shall be reported as Other Assets. But the transactions that are deemed material shall be reported as an appropriate line item in conformity with the IFRS Items for the Statement of Financial Position - Liabilities Liabilities are reported by groups such as accounts payable, accrued expenses, deferred and unearned revenues, short-term loans and long-term liabilities. Liabilities shall be sequenced according to the nearness of their maturity Advances on Annual s Advances on annual contributions are the amounts that have been paid by member SAIs for annual contributions in advance of the imputed fiscal year. For example, prior to the year-end, the Secretariat may receive annual contributions for the next fiscal year. If these annual contributions are to cover the next fiscal year, then these contributions shall not be recorded as revenues when received but shall be deferred on the Statement of Financial Position as liabilities Advances on Voluntary s Advances on voluntary contributions are the amounts that have been paid by member SAIs for voluntary contributions in advance of the imputed fiscal year Other Liabilities Other liabilities other than the aforementioned items shall be recorded as Other Liabilities. But the transactions that are deemed material shall be reported as the appropriate line item in conformity with the IFRS Items for the Statement of Financial Position - Net Assets Net Assets for the ASOSAI are the residual interest in the assets of the ASOSAI that remain after deducting its liabilities, and they consist of the following: The ASOSAI Fund at the beginning of each fiscal year This represents excess revenues over expenses of the ASOSAI Fund, v

8 cumulative up to the prior period Excess of revenues over expenses (or excess expenses over revenues) This represents excess of revenues over expenses in the current fiscal year, which corresponds to the revenues and expenses for the current term in the Statement of Activities Special purpose fund If member SAIs pay voluntary contributions with restrictions in use, the amounts shall be reported as a separate line item, Special Purpose Fund. This fund cannot be used for any other purposes, and the detailed explanation shall be described in the Notes. 3.3 The major titles of account and the associated accounting policies for each title of account to be presented on the Statement of Activities are as follows: 3.31 Items for the Statement of Activities - Revenues Admission Fee Admission fee is a fee that a member SAI shall pay upon its entry into the ASOSAI in accordance with Section 3-a, Article 8 of the ASOSAI Charter. The Admission fee shall be recognized at the time of approval of the membership by the Governing Board Annual Revenues Annual contribution revenues represent the contributions that the member SAIs are required to pay annually to the Secretariat in accordance with Section 3-b, Article 8 of the ASOSAI Charter. Annual contribution revenues shall be recognized at the beginning of each fiscal year, regardless of cash being received or not Voluntary Revenues Voluntary contribution revenues refer to the contributions that the member SAIs pay separately from their annual contributions for a special purpose or not. Voluntary contributions may be designated for specific activities of the ASOSAI or may be unrestricted as to use. Such a voluntary contribution that is of restricted use shall be separately presented on the Statement of Financial Position. Voluntary contribution revenues are recognized when members make voluntary contributions. But voluntary contributions paid in advance of the designated fiscal year shall be reported as Advances on voluntary contributions, not as revenues Interest Income vi

9 Interest Income is recognized with the passage of time Miscellaneous Incomes Other incomes other than the aforementioned items shall be recognized as Miscellaneous Incomes. But the transactions that are deemed material shall be reported as an appropriate line item in conformity with the IFRS Items for the Statement of Activities - Expenses Publication Expenses 3.4 Disclosure Publication Expenses refer to the costs incurred by the publication of the ASOSAI Journal, reports of ASOSAI activities, etc. Since the total expense is determined when a member SAI (e.g. the ASOSAI Journal publisher) requests settlement of the expense of the publication, it is recognized as a publication expense upon the request of settlement by the member SAI ASOSAI Training Activities Expenses ASOSAI Training Activities Expenses represent the costs incurred by the ASOSAI workshops, seminars, and other training activities of the ASOSAI. They are recognized when the host SAI settles the total expenses and sends the financial report to the Secretariat Bank Commissions Bank Commissions represent the costs incurred in the process of transfer of the annual contributions and voluntary contributions or in the process of currency exchange Communication Expenses Communication Expenses represent the costs of courier services or postal mail services Miscellaneous Expenses Other expenses other than the aforementioned items shall be recognized as Miscellaneous Expenses. But the transactions that are deemed material shall be reported as an appropriate line item in conformity with the IFRS The notes to the financial statements shall: present information about the basis of preparation of the financial statements and the specific accounting policies used; vii

10 3.412 disclose the information required by the IFRS that is not presented elsewhere in the financial statements; and provide information that is not presented elsewhere in the financial statements but that is relevant to the understanding of any of them The Secretariat normally presents notes in the following order, for the purpose of assisting users in understanding the financial statements, and of comparing them with the financial statements of other entities: a. statement of compliance with the IFRS; b. summary of significant accounting policies applied; c. supporting information for the financial statements presented in the order in which each statement and each line item is presented; and d. other disclosures, including: - contingent liabilities and unrecognized contractual commitments - non-financial disclosures 3.5 The financial statements will be prepared using the samples in Appendix1 as references. Those matters which are not stipulated in these policies shall comply with the IFRS. 4. Translation of Currencies 4.1 Since the monetary unit of account of the ASOSAI is the US dollars (USD), the accounts of the ASOSAI are expressed in the US dollars. The policies for the translation of currencies for the financial statements are as follows: 4.11 The exchange rate for the preparation of the financial statements complies with the basic exchange rate prevailing in the country where the Secretariat has its seat A transaction in a currency other than ASOSAI's monetary unit of account shall be recorded in ASOSAI's monetary unit of account translated at the market rate of exchange on the date of the transaction However, it is an acceptable practice that operating revenues and expenses in the other currencies are recorded at an average rate of exchange at the time of the accounting period Current assets and liabilities in currencies other than US dollars are translated at the market rate of exchange at the end of the year Exchange differences arising from the settlement of monetary items or translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements shall be recognized in profit or loss in the period in which they arise. viii

11 5. Comparability 5.1 The financial statements of the current year shall be presented together with those of the preceding two years to enhance comparability. 6. Amendment 6.1 These policies are amended by the approval of the Governing Board of the ASOSAI. ADDENDA 1.1 These policies shall enter into force on January 1, ix

12 <Appendix 1> Preparation of the Financial Statements (Samples) Statement of Financial Position As of December 31, 20X2, 20X1 and 20X0 20X2 20X1 20X0 Assets Cash and cash equivalents (Note 2) Accrued interest (Note 10) Annual contributions receivable (Note 3, 8) Advance payment for training activities (Note 11) Term deposits (Note 4) Liabilities Advances on annual contributions (Note 5) Advances on voluntary contributions (Note 6) Other liabilities (Note 7) Net Assets (ASOSAI Fund) ASOSAI fund as of January 1, 20X2 Excess of revenues over expenses Total Liabilities and Net Assets x

13 Statement of Activities For the Year ended December 31, 20X2, 20X1 and 20X0 Revenues Admission fee 20X2 20X1 20X0 Annual contribution revenues (Note 8) Voluntary contribution revenues (Note 9) Interest incomes (Note 10) Miscellaneous income Expenses Publication expenses ASOSAI training activities expenses (Note 11) Communication expenses Bank commissions Net Excess of Revenues over Expenses xi

14 Statement of Changes in Net Assets For the year ended December 31, 20X2, 20X1 and 20X0 20X2 20X1 20X0 Ⅰ ASOSAI Fund as of January 1 Ⅱ Excess of revenues over expenses Ⅲ Special Purpose Funds Accumulation of funds Release of funds Ⅳ Balance at End of Year (Ⅰ+Ⅱ+Ⅲ) xii

15 Statement of Cash Flows For the year ended December 31, 20X2, 20X1 and 20X0 20X2 20X1 20X0 Ⅰ Opening Cash Balance Ⅱ Cash Flows from Operating Activities Receipts Advance for training recovered Annual contributions 20X0 and before 20X1 20X2 20x3 in advance Voluntary contributions Miscellaneous receipts Interest on deposits Withdrawal of term deposits Payments Payment for training activities Publication and communication expenses Bank commissions Term deposits Ⅲ Cash Balance at End of Year (Ⅰ+Ⅱ) xiii

16 <Appendix 2> Notes to the Financial Statements (Samples) For the Year ended December 31, 20X2, 20X1 and 20X0 The Secretariat of the Asian Organization of Supreme Audit Institutions (ASOSAI) General Introduction According to the Charter for the ASOSAI, the Secretariat performs administrative and financial functions that include: the keeping of all accounts, records, and files; the dissemination of necessary information by providing continuing contact among Supreme Audit Institutions of member countries; the preparation and submission of the financial statements of accounts for audit not later than three months after the close of each financial year; and the performance of other related duties that may be assigned to it. The Secretariat of ASOSAI is located at the Board of Audit and Inspection of Korea. It is a not-for-profit organization regulated by the Korean civil law. Note 1 Accounting Principles The accounting principles used by the Secretariat of the ASOSAI comply with the Accounting Policies for the ASOSAI which are based on the International Financial Reporting Standards(IFRS) and the International Public Sector Accounting Standards (IPSAS), and the Financial Rules for the ASOSAI. 1. Accruals The financial statements of the ASOSAI are presented using the accrual basis of accounting. The accrual basis of accounting is the recognition of transactions and other events xiv

17 and circumstances at the time when they affect the entity rather than only when cash is received or paid. Therefore, the accrual basis of accounting provides a more appropriate record of an entity's transactions over a given period of time, e.g. the cost of goods and services received during the year but not paid for by the year end must be incorporated in the year's expenses. 2. Revenue Recognition (1) Admission fee Admission fee is recognized as revenue at the time of approval of the membership by the Governing Board. (2) Annual membership contribution Annual membership contribution which shall be remitted to the Secretariat by the member is recognized as revenue at the beginning of each financial year. (3) Voluntary contribution When a member makes a voluntary contribution, it is recognized as revenue. (4) Other revenue Other revenue, such as incomes from the sale of publications of the ASOSAI and interests earned on liquidity investments, is recognized in the period in which it is earned. 3. Expense Recognition Expenses are reported as incurred and will be matched against revenues, even if no cash outflow has occurred. This is the rationale for the accrual basis of accounting. 4. Translation of Currencies Since the unit of account is the US dollars (USD), ASOSAI's accounts are maintained in the US dollars. The policies for translation of financial statements are as follows: (1) The exchange rate for the presentation of financial statements complies with xv

18 the basic exchange rate prevailing in the country of the Secretariat. (2) A transaction in a currency other than ASOSAI's currency of account shall be recorded in the currency of account at the market rates of exchange on the dates of the transactions. However, it is an acceptable practice that operating expenses and revenues in other currencies are recorded at an average or at a standard rate of exchange at the time of the accounting period. (3) Current assets and liabilities in currencies other than US dollars are translated at the market rates of exchange at the end of the year. Note 2 Cash and Cash Equivalents 20X2 20X1 20X0 Cash on hand Demand deposits 69, , , Term deposits with maturities of 3 month or less Total 69, , , Note 3 Annual s Receivable No SAI 20X2 20X1 20X0 1 country A , country B country C country D 3, , country E 1, , , country F country G country H country I - 1, country J - 1, Total 5, , , Note 4 xvi

19 Term Deposits As of December 31, 20X2 Amount Interest rate(%) Maturity Due date Account 1 608, Month Mar-22-20X3 Account 2 150, Month Mar-14-20X3 Account 3 120, Month Feb-02-20X3 Total 878, Term Deposits As of December 31, 20X1 Amount Interest rate(%) Maturity Due date Account 1 600, Month Mar-21-20X2 Account 2 50, Month Mar-31-20X2 Account 3 100, Month Jan-07-20X2 Account 4 60, Month Jan-07-20X2 Account 5 60, Month Jan-31-20X2 Total 870, Term Deposits As of December 31, 20X0 Amount Interest rate(%) Maturity Due date Account 1 52, Month Nov-16-20X1 Account 2 387, Month Dec-24-20X1 Account 3 117, Month Feb-03-20X1 Account 4 116, Month Nov-15-20X1 Total 673, Note 5 xvii

20 Advances on Annual s No SAI 20X2 20X1 20X0 1 country A 7, country B country C country D country E country F country G country H country I - - 1, country J country K - - 1, Total 7, , Note 6 Advances on Voluntary s No SAI 20X2 20X1 20X0 1 country A 4, , country B 10, country C - 13, , Total 14, , , Note 7 Other liabilities No SAI 20X2 20X1 20X0 1 country A country B country C country D country E country F country G Total - 1, , xviii

21 Note 8 Statement of Annual s with Balance As of December 31, 20X2 No. SAI ASOSAI Annual R e ce ivable 31/12/20X1 Received in Adva nce Total Due 01/01/20X2 Amount Received in 20X2 Adjustment R e ce iva ble 31/12/20X2 in Advance 31/12/20X2 (A) (B) (C) (A+B-C)=(D) (E) (F) (D-E-F)=(G) 1 country , , , country , , country 3 7, , , country country country country country , country country 10 7, , , , country country country 13 3, , , country 14 3, , , country 15 3, , , country , , , country 17 3, , , country 18 23, , , country , , country country 21 7, , , xix

22 No. SAI ASOSAI Annual R e ce iva ble 31/12/20X1 Received in Adva nce Total Due 01/01/20X2 Amount Received in 20X2 Adjustment R e ce iva ble 31/12/20X2 in Advance 31/12/20X2 (A) (B) (C) (A+B-C)=(D) (E) (F) (D-E-F)=(G) 22 country 22 3, , , country country country 25 3, , , country country country country country country 31 3, , , country country country , , , country country , , , country 37 7, , , country 38 3, , , country 39 3, , , country country 41 3, , , country 42 3, , , country 43 3, , , country country Total 111, , , , , , , xx

23 Statement of Annual s with Balance As of December 31, 20X1 No. SAI ASOSAI Annual R e ce ivable 31/12/20X0 Received in Adva nce Total Due 01/01/20X1 Amount Received in 20X1 Adjustment R e ce iva ble 31/12/20X1 in Advance 31/12/20X1 (A) (B) (C) (A+B-C)=(D) (E) (F) (D-E-F)=(G) 1 country , , country country 3 7, , , country country country country country country country 10 7, , , country country , , country 13 3, , , country 14 3, , , country 15 3, , , , country , , , , country 17 3, , , country 18 23, , , country country country 21 7, , , xxi

24 No. SAI ASOSAI Annual R e ce iva ble 31/12/20X0 Received in Adva nce Total Due 01/01/20X1 Amount Received in 20X1 Adjustment R e ce iva ble 31/12/20X1 in Advance 31/12/20X1 (A) (B) (C) (A+B-C)=(D) (E) (F) (D-E-F)=(G) 22 country 22 3, , , country country country 25 3, , , country country country country , , country , country 31 3, , , , country , , country country , , country country , , country 37 7, , , country 38 3, , , country 39 3, , , country country 41 3, , , , country 42 3, , , country 43 3, , , country country Total 111, , , , , , xxii

25 Statement of Annual s with Balance As of December 31, 20X0 No. SAI ASOSAI Annual R e ce ivable 31/12/20x9 Received in Adva nce Total Due 01/01/20X0 Amount Received in 20X0 Adjustment R e ce iva ble 31/12/20X0 in Advance 31/12/20X0 (A) (B) (C) (A+B-C)=(D) (E) (F) (D-E-F)=(G) 1 country , , , country country 3 7, , , country country country country country country country 10 7, , , , country country , country 13 3, , , country 14 3, , , country 15 3, , , , country , , , country 17 3, , , country 18 23, , , country , , country , country 21 7, , , country 22 3, , , xxiii

26 No. SAI ASOSAI Annual R e ce iva ble 31/12/20x9 Received in Adva nce Total Due 01/01/20X0 Amount Received in 20X0 Adjustment R e ce iva ble 31/12/20X0 in Advance 31/12/20X0 (A) (B) (C) (A+B-C)=(D) (E) (F) (D-E-F)=(G) 23 country country , , country 25 3, , , country country country country country country 31 3, , , , , country country country , country country , country 37 7, , , country 38 3, , , country 39 3, , , country , , country 41 3, , , , , country 42 3, , , country 43 3, , , country country Total 111, , , , , , , xxiv

27 Note 9 Voluntary s No. SAI 20X2 20X1 20X0 1 Country A 4, , , Country B 20, , Country C 10, , , Country D 2, Country E 45, , , Country F 20, , , Country G 13, , , Country H 2, , , Country I Country J 1, Country K Country L 5, , , Country M - 3, Country N 5, , , Total 129, , , Note 10 Interest Incomes 20X2 20X1 20X0 Interest on Term Deposits 11, , , Interest on Demand Deposits Total 11, , , Accrued Interest 7, , , Note 11 Training Activities For the year ended December 31, 20X2 Training Activities Expenditure Balance (Advance Payment) Instructors' Design Meeting for ASOSAI-sponsored Workshop 20X2 in Country 1 35, ASOSAI-sponsored Seminar 20X2 in Country 2 41, ASOSAI-sponsored Workshop 20X2 in Country 3 166, , Total 243, , xxv

28 Training Activities For the year ended December 31, 20X1 Training Activities Expenditure Balance (Advance Payment) Instructors' Design Meeting for ASOSAI-sponsored Workshop 20X1 in Country 1 27, ASOSAI-sponsored Workshop 20X1 in Country 1 148, Total 176, Training Activities For the year ended December 31, 20X0 Training Activities Expenditure Balance (Advance Payment) Instructors' Design Meeting for ASOSAI-sponsored Workshop 20X0 in Country 1 31, , ASOSAI-sponsored Workshop 20X0 in Country 2 73, ASOSAI-sponsored Seminar 20X0 in Country 3 12, , Total 117, , Note 12 Statement of Comparison of Budgeted and Actual Amounts For the year ended December 31, 20X2 Budgeted Amount Actual Amount Difference Revenues (A) 242, , , Annual contributions 111, , Voluntary contributions 119, , , Interest income 11, , Miscellaneous income Expenses (B) 260, , , Training activities 253, , , Instructors' design meeting 37, , , Workshop 172, , , Seminar 42, , , Publications 4, , , Postage and banking fees 1, , (A) - (B) -18, , , xxvi