Bethany Financial Statements For the Year Ended December 31, 2010 And Independent Auditors Report
Index Page No. Independent Auditors Report 2 Statement of Financial Position 3 Statement of Activities 4 Statement of Changes in Net Assets 5 Statement of Cash Flows 6 Notes to the Financial Statements 7 Appendix I- Donors list 13 1
Statement of Activities Notes Donations, revenues and other income Donations 295,777 180,787 In-kind donations 70,223 64,038 Activities income 7 30,442 41,264 Schools tuition and registration, net 8 17,952 14,119 Other income 656 - Total donations, revenues and other income 415,050 300,208 Net assets releases from restriction 5,972 56,800 Total donations, revenues, other income and releases 421,022 357,008 Expenditures Salaries and related benefits 178,308 155,113 Direct expenses 9 103,332 97,948 Activity expenses 10 7,536 9,094 General and administrative expenses 11 60,626 54,359 Financial expenses 153 1,235 Total expenditures 349,955 317,749 Net assets released from restriction Releases to expenses 5,972 50,399 Releases to fixed assets - 6,401 5,972 56,800 Total expenses and releases from restriction 355,927 374,549 Net changes in net assets (deficit) for the year 65,095 (17,541) The accompanying notes constitute an integral part of the financial statements. 4
Statement of Changes in Net Assets Unrestricted net assets Used for projects Restricted net assets Used for fixed assets Total Net assets as of January 1, 2009 (129,156) - 520,964 391,808 Changes for the year (596) 29,313 (6,976) 21,741 Net assets as of December 31, 2009 (129,752) 29,313 513,988 413,549 Additions Revenues 49,050 - - 49,050 Donations 366,000 12,086-378,086 415,050 12,086-427,136 Decreases Expenditure (349,955) - - (349,955) Releases from restriction - (5,972) - (5,972) Reclassification to fixed assets 698 - (698) - Foreign currency translation (6,553) - - (6,553) (355,810) (5,972) (698) (362,480) Changes for the year 59,240 6,114 (698) 64,656 Net assets as of December 31, 2010 (70,512) 35,427 513,290 478,205 The accompanying notes constitute an integral part of the financial statements 5
Statement of Cash Flows Cash flows from operating activities Changes in net assets for the year 64,656 21,741 Adjustments to reconcile changes in net assets to net cash (used in) operating activities Depreciation 14,787 13,123 (Increase) in accounts receivable (1,850) (2,703) (Increase) in ending inventories (4,549) (1,658) (Decrease) increase in accounts payable (41,265) (57,807) Reserve for severance pay, net 14,386 6,984 Net cash (used in) operating activities (18,491) (42,061) Cash flows from investing activities Capital expenditures (14,088) (6,148) Net Cash (used in) investing activities (14,088) (6,148) Net increase (decrease) in cash and banks 32,077 (26,468) Cash and banks at the beginning of year 36,063 62,531 Cash and banks at the end of year 68,140 36,063. The accompanying notes constitute an integral part of the financial statements. 6
Notes to the Financial Statements 1- General Jeel Al Amal Society was established in 1972 as a non profit institution located in Bethany, Palestine. The Society is registered with the Palestinian Ministry of Interior as a non-for-profit entity. Currently the Society operates a school and adopts Orphans. The School has 350 students and house 90 orphans, education, housing, clothing and other related needs are provided to the orphans. 2- Summary of Significant Accounting Policies The financial statements are prepared in accordance to non profit organizations accounting standards number FASB 116 and FASB 117 as published by the American Financial Accounting Standards Board, which require the classification of funds into: Unrestricted assets: net assets whose use by the Society is not subject to restrictions by the donor/funder; Restricted assets: net assets whose use by the Society is restricted by the donor as stipulated in the donors agreement. The significant accounting policies adopted by the Society are as follows: a. Cash and banks For the purposes of the cash flow statements, cash and banks include cash on hand, restricted cash, and bank balances in Arab Bank and Mercantile Bank. b. Accounts receivable Accounts receivable relates mainly to school tuitions and fees. An estimate for allowance for doubtful accounts is made when collection of the full amount is no longer probable. Bad debts, if any, are written off as incurred. c. Inventories Inventories are stated at the lower of cost and market value. Cost is determined as purchase cost on first in first out basis (FIFO). Inventories comprise of food and goods for consumption and handmade crafts for resale. d. Fixed assets Fixed assets are stated at cost less accumulated depreciation and any impairment in value. The cost less estimated residual value of the fixed assets is depreciated on a straight line basis over the estimated useful lives of the assets. Depreciation rates used are: Equipment and furniture 6% Building 2% Fixed assets that are related to restricted projects and programs are expensed when purchased and reclassified to fixed assets in the statement of changes in net assets. e. Provisions Provisions are recognized when the Society has an obligation (legal or constructive) arising from a past event, and the costs to settle the obligation are both probable and may be measured reliably. 7
Notes to the Financial Statements (Continued) f. Allowance for severance pay The allowance for severance consists of one month's salary for every year of services for employees to cover for future obligations. The future obligation is not covered for. g. Donations and revenues Donations are recorded when received; In-kind donations are recorded when received based on estimated market value; School tuition and fees are recorded when earned; Other revenues are recorded when also earned; Restricted donation are recognizes upon satisfaction of donor restriction. h. Income tax The Society is exempted from income tax since it is registered as non-for-profit organization. i. Currency differential The books of accounts are maintained in U.S. Dollar. Transactions which are denominated in other currencies are converted into USD as follows: Transactions which are expressed or denominated in other currencies are converted into USD at the exchange rate prevailing on transaction date; Monetary assets and liabilities which are denominated or expressed in other currencies are presented in USD equivalent using the exchange rate prevailing on December 31, 2010; Exchange differences arising from the conversion of foreign currency transactions and translation of year end balances are charged to the statement of activities. The exchange rates at the date of the statement of financial position were: New Israeli Shekel 0.281 0.264 Sterling Pound 1.547 1.618 Euro 1.334 1.441 8
Notes to the Financial Statements (Continued) 3- Cash and banks Cash in banks USD 47,786 35,455 Cash in banks NIS 20,354 105 Cash in banks EURO - 332 Checks box NIS - 127 Cash in hand NIS - 44 68,140 36,063 4- Fixed Assets Equipment and furniture Building Land Total 2010 Total 2009 Cost: At the beginning of the year 161,204 439,136 63,947 664,287 658,560 Additions - 14,088-14,088 5,727 161,204 453,224 63,947 678,375 664,287 Depreciation: At the beginning of the year 141,505 8,793-150,298 137,175 Charge for the year 4,394 10,393-14,787 13,123 145,899 19,186-165,085 150,298 At December 31, 2010 15,305 434,038 63,947 513,290 - At December 31, 2009 19,699 430,343 63,947-513,989 5- Accounts payable and accruals Accounts payable and accruals consist of: Accounts payable 6,055 9,648 Accrued expenses 12,047 49,543 Bank overdraft 7 181 18,109 59,372 6- Allowance for severance pay Allowance for severance pay consists of: Beginning balance 81,490 74,506 Provided during the year 15,899 2,965 Payment during the year (6,836) (1,844) Currency differential 5,323 5,863 95,876 81,490 9
Notes to the Financial Statements (Continued) 7- Activities income Activity income consists of: Sponsorship income 21,301 25,645 Income from souvenir sales 5,684 2,796 Open day 1,989 - Summer camp 1,468 - Ramadan party fund raising - 7,556 Christmas party fund raising - 5,267 30,442 41,264 8- Schools tuition and registration, net Tuition fees 28,955 22,622 Deductions and reductions (11,003) (8,503) 17,952 14,119 9- Direct expenses Direct expenses consist of: Food and beverage 82,253 77,896 Medical aid 6,792 2,201 Books, stationary and school needs 6,034 6,250 Clothing 2,850 1,287 Utensils and kitchen expense 2,663 6,132 Laundry 1,640 2,059 Student pocket money 450 1,874 Other 650 249 103,332 97,948 10- Activity expenses Activity expenses consist of: Fund raising souvenir expense 1,579 2,090 Summer camp 1,468 - Trip expense 3,955 - Open day 534 - Christmas fund raisin party expense - 3,627 Ramadan fund raising party expense - 3,377 7,536 9,094 Notes to the Financial Statements (Continued) 10
11- General and administrative expenses General and administrative expenses consist of: Electricity and water 20,157 17,400 Professional services 5,725 5,725 Repair and maintenance 4,912 6,515 Depreciation expense 14,787 13,123 Post and telephone 4,279 3,718 Scholarships 3,312 3,664 Computer and equipment supply 2,856 - Fuel for kitchen 2,026 1,990 Transportation 1,297 1,584 Other 433 640 Bad debt expense 842-60,626 54,359 12- Risk Management Interest rate risk Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in the market interest rates. The Society is subject to fluctuations in interest rates on its interest bearing liabilities, if any. Credit risk Credit risk is the risk that one party will fail to discharge an obligation and will cause the other party to incur a financial loss. At the balance sheet date, no significant concentrations of credit risk were identified by the Society's management. Currency risk The Society is subject to fluctuations in foreign exchange rates in the normal course of its operation. The Society did not undertake significant transactions in currencies other than New Israel Shekel during the year. Further, the Society does not hedge its currency exposure by means of hedging financial instruments. Other risk factors The Society is located in Bethany, Palestine and operates in a high risk political and economic area, which may increases the operational risk of the Society and consequently impact the Society's operation in a negative manner. Further, the Society's accumulated general deficit as of December 31, 2010 amounted to 70,512 US Dollar (2009: US Dollar 129,752). Notes to the Financial Statements (Continued) 11
13- Fair Value of Financial Instruments Fair value is the amount for which an asset could be exchanged, or a liability settled between knowledgeable willing parties in an arm s length transaction. Financial instruments comprise financial assets and financial liabilities. The Society s financial assets consist of cash and bank balances and receivables. Its financial liabilities consist of payables, accruals and bank overdrafts. The fair values of financial instruments are not materially different from their carrying values at the statement of financial position date. Appendix I- Donor's list 12
Individual donations 44,836 50,825 Main Dans La Main Foundation 18,450 26,979 McCabe Educational Trust 58,794 22,463 Un Enfant Une Promise 3,982 20,941 Saint Joseph Stichting 9,654 11,014 President Office- Jerusalem Unit - 10,500 The Association of Volunteers in International Services - 9,015 Arab Women's Society - London 7,884 7,539 John Richard Allan - 5,059 The Palestinian Group for Societies Development - 5,000 Ministry of Finance Palestine - 5,000 Lillemor Eriksson 2,400 3,800 Methodist Church - 2,384 Bible Land Society - 268 Stichting Jeel Alamal 1,485 - The Englefield Charitable Trust 1,590 - Ordering Church Council 1,790 - Victoria Gomez Trenor 144,912 - Donation In Kind 70,223 64,038 Total unrestricted 366,000 244,825 Victoria Gomez Trenor - 50,185 Un Enfant Une Promise 12,086 - World Vision - 23,854 Italy trip - 12,074 Total restricted 12,086 86,113 378,086 330,938 13