Iawpartners FINANCIAL STATEMENTS Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized TE., 78 2 9 FAx +-78 23 665 LAW PARTNERS HOUSE PO BOX 212 ww2 variujtu-com PORT VILA! VANUATU
GENERAL MANAGER'S REPORT TO THE COUNCIL OF REPRESENTATIVES Your General Manager presents this report on the financial statements of the Organisation for the year ended 31 December 2014. The following held offices in the Council of Representatives at the date of this audit report are as follows: Date apointed Date re$igned Wilson Sagati, PNG - Chairman 2003 Benitera Tabokai, Kiribati - Member 2005 Bill MacGregor, Niue - Member 2006 Melaney Bill, New Zealand - Member 2011 Joseph Niel, Vanuatu - Member 2011 Uigaese Paelate, Tuvalu - Member 2011 Darin Cusack, TFSU - Observer Member 2012 Chris de Serio, World Bank - Observer Member 2013 George Satu, Solomon Islands - Member 2013 Ned Howard, Cook Islands - Member 2013 Michelle Poyser, Australia - Member 2013 Netava Waqa, Fiji - Member 2014 Mark Everitt, New Zealand - Member 2014 Nanal Saaga, Samoa - Co-deputy Chairman 2014 Ringo Fa'oliu, Tonga - Co-deputy Chairman 2014 Felicity Steel, New Zealand - Member 2006 2014 Magele Hoe Viali, Samoa - Deputy Chairman 2007 2014 William Cocker, Tonga - Member 2011 2014 State of affairs The result of the organisation's operations for the financial year was a surplus of AUD 189,733 (2013: deficit AUD 468,817). Activities The principal and continuing activity of the organisation is the conduct of aviation oversight and safety in the Pacific Region. Property, plant and equipment During the financial year the organisation purchased AUD 49,715 worth of plant and equipment (2013: Nil). Events subsequent to balance date There does not exist at the date of this report any other contingent liability or any charge on the organisation's assets securing the liability of any other person which has arisen since 31 December 2014. No contingent or other liability has become enforceable on or before the date of this report which, in the General Manager's opinion, will or may substantially affect the ability of the organisation to meet its obligations as and when they fall due. Loan and Grant covenants The following have been produced in accordance with: (i) Section 4.02 of the ADB Loan Agreement (ii) Section 311.B. 3 of the WB Financing Agreement IDA-H883 (iii) Article 24 of the Government Hosting Agreement (iv) Dedicated Bank accounts (a) In Australian Dollars for the ADB loan related funds (b) In USD Dollars for WB Grant funds (v) (vi) Audited financial statements have been furnished to ADB no later than 6 months following the end of the financial year; and Furnish ADB such other information concerning such accounts and financial statements and the audit thereof. 1
GENERAL MANAGER'S REPORT TO THE COUNCIL OF REPRESENTATIVES Other circumstances At the date of this report the General Manager is not aware of any circumstances which would render any amount stated in the accounts misleading. Place of business The Pacific Aviation Safety Office is a non-profit International Organisation set up under the Pacific Islands Civil Aviation Safety and Security Treaty and operated for the benefit of member states. PASO is currently headquartered in Port Vila, Vanuatu. Distributions Any surpluses are used in the furtherance of its objectives and no distributions are made to members. Signed on behalf of the Council of Representatives. al Manager Date Councillor ~~~............ Date 2
law F arlners independent Auditors' Report to the Council Representatives of Pacific Aviation Safety Office We have audited the accompanying financial statements of Pacific Aviation Safety Office which comprise the statement of financial position as at 31 December 2014, the statement of comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes set out on pages 5 to 14, Council of Representatives' responsibility for the financial statements The Council of Representatives of the Organisation are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error; selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances. Auditors' responsibility 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. These standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free of 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 our judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Organisation'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 principles 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 opinion. Opinion In our opinion, the financial statements have been properly prepared in accordance with the provisions of the Charities Association (Consolidation) Act [CAP 140] and give a true and fair view of the financial position of the Organisation as at 31 December 2014, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards. Emphasis of matter Without qualification to the opinion expressed above, we draw attention to Note 2 to the financial statements concerning the preparation of the financial statements on a going concern basis. LAW PARTNERS Chartered Accountants (Qualified auditors under Section 130 of the Port Vila Companies Act No. 25 of 2012 of the Dated at this 24th day of September 2015 Republic of Vanuatu) TEL.678 22 091 rax.6-s 23 665 3 rnadlldapartr nrsvanuatucom PRINCIPALS LAW PARTNERS HOUSE JONATHAN LAW PO BOX 212 ww la uj var-uatu-com VICKI JOE PORT VILA VANUATU
FINANCIAL STATEMENTS INDEPENDENT AUDIT REPORT TO THE MEMBERS Audit Findings In addition to our opinion on the statutory audit, as auditors of PASO we are required to form an opinion for the following items: (a) (b) Repayment of ADB Loan Funds In our opinion PASO fully utilised ADB funds for purposes as indicated in the loan agreement, as at 31 December 2014 and currently conforms with the repayment schedule. Compliance with Specific and Financial ADB Covenants In our opinion PASO has complied with the Particular Covenants set out in Article IV of the loan agreement. In our opinion PASO has adhered to the requirements of the Financial Covenants in Schedule 5 paragraphs 13, 14, 18-20 of the loan agreement, except that PASO has not complied with paragraph 21 of the loan agreement which requires PASO to ensure its member countries to provide, in a timely manner, all necessary counterpart funds and in-kind contributions for successful project implementation. The main reason for PASO not being able to comply with this particular covenant is due to the failure by some member countries to comply with their treaty obligations with regards to payment of subscriptions and consulting services. (c) (d) (e) Utilisation of Designated Funds under the WB Grant Funds In our opinion PASO was compliant with the operation of the Designated Account as indicated in the Finance Agreement. Statement of Expenditure Procedures We are unable to form an opinion on the Statement of Expenditure (SOE) Procedures as they are not currently applicable to PASO. Conformity with WB Procurement Guidelines In our opinion PASO adhered to the WB Procurement Guidelines. 4
STATEMENT OF COMPREFIENSIVE INCOME Note 2014 2013 Revenue Operating revenue 1,076,797 749,324 Interest income 1,865 4,121 Total revenue 3 1,078,662 753,445 Expenses Operating expenses 3 (888,929) (1,222,262) Net surplus / (deficit) 189,733 (468,817) The income statement is to be read in conjunction with the notes to the financial statements set out on pages 9 to 14, 5
STATEMENT OF CHANGES IN EQUITY 2014 2013 Accumulated deficit at the beginning of the financial year (1,917,488) (1,448,671) Net surplus/(deficit) for the financial year 189,733 (468.817) Accumulated deficit at the end of the financial year (1,727,755) (1.917.488) The statement ofchanges in equity is to be read in conjunclion with the notes to the financial statements set out on pages 9 to 14. 6
BALANCE SHEET AS AT 31 DECEMBER 2014 Note 2014 2013 Current assets Cash 4 464,846 59.011 Receivables 5 106,663 303,975 Other assets 6-4.198 WB Grant Receivable 207,198 - Total current assets 778,707 367,184 Non-current assets Property, plant and equipment 7 52,528 26.117 Total non-current assets 52,528 26, 117 Total assets 831,235 393.301 Current liabilities Creditors 8 138,461 118,987 Prepaid subscriptions - 280,000 Provisions 10 7,538 37.845 Deferred revenue 56,348 91,275 Loan - Asian Development Bank 9 80,903 74.372 Total current liabilities 283,250 602.479 Non-current liabilities Loan -Asian Development Bank 9 1,644,817 1,692,166 Provisions 10 21,254 16.144 WB Grant Reimbursable 207,198 - WB Revolving Fund 4 402.471 - Total non-current liabilities 2,275,740 1,708,310 Total liabilities 2.558,990 2.310.789 Excess of liabilities over assets (1,727,755) (1,917.488) Accumulated deficit (1,727,755) (1.917,488) Total accumulated deficit (L727,755) (1,917,488) The balance sheet is to be read in conjunction with the notes to the financial statements set out on pages 9 to 14. Counci rgeral Manager Date 7
STATEMENT OF CASH FLOWS Note 2014 2013 Cash flows from operating activities Cash receipts in the course of operations 751,573 626,175 Cash payments in the course of operations (246,049) (1,109,357) Interest received 1,865 4,234 Interest expense (24,699) (9) Net cash used in operating activities I1(b) 482,692 (478.957) Cash flows from investing activities Purchase of property, plant and equipment (36,449) Proceeds on sale from property, plant and equipment 411 411 Net cash used in investing activities (367038) 411 Cash flows from financing activities Movement in borrowing (40,819) 204.017 Net cash used in financing activities (40,819) 204.017 Net cash decrease 405,835 (274.529) Cash and cash equivalents at the beginning of the financial year 59,011 333,540 Cash and cash equivalents at the end of the financial year 11 a) 464,846 59.011 The statement of cash flows is to be read in conjunction with the notes to thefinancial statements set out on pages 9 to 14. 8
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS Statement of significant accounting policies Pacific Aviation Safety Office is a non-profit International Organisation set up under the Pacific Islands Civil Aviation Safety and Security Treaty and operated for the benefit of member states. The significant policies which have been adopted in the preparation of these financial statements are: (a) (b) Statement of compliance The financial statements of the organisation are drawn up in accordance with International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board (IASB) and interpretations issued by the International Financial Reporting Interpretation Committee (IFRIC) of the IASB and the requirements of the Charities Association (Consolidation) Act [CAP 140]. Basis of preparation They are prepared on the basis of historical costs and do not take into account changing money values or, except where stated, current valuations of non-current assets. The financial statements are presented in Australian dollars (AUD). The accounting policies are consistently applied and, except where there is a change in accounting policy, are consistent with those of the previous year. There were no changes in accounting policies during the current financial year. (c) Revenue recognition Grant revenue Grants are recognised in the income statement principally on an accrual basis. Grants that compensate the organisation for expenses incurred are recognized as revenue in the income statement in the same periods in which the expenses are incurred. Service revenue Income from services are recognized in the income statement upon completion of the service. (d) Foreign currency Transactions Foreign currency transactions are translated to Australian dollars at the rates of exchange ruling at the dates of the transactions. Amounts receivable and payable in foreign currencies at balance date are translated at the rates of exchange ruling on that date. Exchange differences relating to amounts payable and receivable in foreign currencies are brought to account in the profit and loss account in the financial year in which the exchange rates change. (e) Property, plant and equipment Acquisitions Items of property, plant and equipment are recorded at cost and depreciated as outlined on the next page. 9
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (e) Property, plant and equipment (cont.) Disposal of assets The gain or loss on disposal of assets is calculated as the difference between the carrying amount of the assets at the time of disposal and the proceeds on disposal, and is included in the result in the year of disposal. Depreciation Depreciation is charged on a straight line basis and the following rates are used: * Office furniture 20% * IT and office equipment 20% * Motor vehicles 20% Assets arc depreciated from the date of acquisition. (f) Employee entitlements Wages, salaries and annual leave The provision for employees' entitlements to wages, salaries and annual leave represents the amount that the organisation has a present obligation to pay resulting from employees' services provided up to balance date. The provision has been calculated at nominal amounts based on current wage and salary rates and includes related on-costs. Severance allowance Severance allowance is calculated at the rate of a month's salary for each year of service. It is assumed that employees will remain in the organisation employment for the period necessary to qualify for the respective entitlements. Vanuat National Provident Fund Contributions to the Vanuatu National Provident Fund are recognized as an expense in the income statement in the period in which they are incurred. (g) (h) Receivables Receivables are stated at nominal values, less write-downs for any amounts expected to be irrecoverable. Value Added Tax (VAT) Under the Host State Agreement between the Government of the Republic of Vanuatu and the Organisation, its assets, income and property, owned or occupied in Vanuatu shall be exempt from all forms of taxation including Customs duties and Value Added Tax. (i) Impairment The carrying amounts of the company's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement. (j) Comparatives Where necessary, comparative information has been reclassified to achieve consistency in disclosure with current financial year amounts and other disclosures. 10
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 2. Going concern The financial statements of the organisation have been prepared on a going concern basis, which assumes continuity of normal business activities and the settlement of liabilities in the ordinary course of business. The Council representatives consider the going concern principle to be applicable in the preparation of these financial statements given the ongoing financial support provided by the organisation's aid donors and member nations' utilisation of its services in generating income as well as yearly subscriptions of each member nations. 3. Net surplus/(deficit) 4. Cash Net deficit has been arrived at after including: Operating revenue 2014 2013 Service revenue 231,832 312,323 Members subscriptions 279,620 279,956 Grant income - Vanuatu government hosting 79,936 74,557 Grant income - Taiwan 25,861 - Grant income - AusAid 23,918 Grant Income - World Bank 345,832 General administration funds 40,175 66,335 Interest income 1,865 4,121 Net foreign exchange gain - unrealised 38,970 14,083 Proceeds on sale of fixed assets 9,947 411 Other revenue 707 1,659 Total operating revenue 1.078,662 753.445 Operating expenses Depreciation 10,038 14,145 Net foreign exchange loss - realised 38,888 219,831 VNPF contributions 4,246 3,742 Wages and salaries 351,266 661,307 Other expenses 484,491 323.237 Total operating expenses (888,929) (1,222,262) Net Surplus/ (deficit) 189,733 (468.817) Petty cash 235 228 Cash in bank - AUD account 26,267 38,845 Cash in bank - AUD ADB account 11,424 12,840 Cash in bank - NZD account - 455 Cash in bank - Vatu account 19,199 1,393 Cash in bank - USD account 402,471-459,596 53,761 Term deposits Term deposit - AUD 5,250 5,250 5,250 5.250 Total 464,846 59.011 I1
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 4. Cash (cont.) The cash balance in the USD account represents Revolving Funds due to the WB and are therefore reflected also as a liability. 2014 2013 5. Receivables Trade debtors 160,005 351,713 Less: Provision for doubtful debts (57,688) (57,688) 102,317 294,025 Sundry debtors 4,346 9,950 106,663 303,975 6. Other assets Prepayments - 4,198 7. Property, plant and equipment Office furniture At cost 14,983 15,768 Less: Accumulated depreciation (14,475) (15,012) 508 756 IT and office equipment At cost 138,105 145,431 Less: Accumulated depreciation 131,117) 136,145 6,988 9.286 Motor vehicles At cost 48,248 37,590 Less: Accumulated depreciation (3,216) (21,516) 45,032 16,074 Total property plant and equipment - at net book value 52,528 26,117 Movement in property, plant and equipment Opening net book value 26,117 40,262 Additions 49,715 Disposals (13,266) Depreciation (10,038) (14,145) Closing net book value 52,528 26,117 8. Creditors Trade creditors - AUD 30,846 16,656 Trade creditors - VUV 14,954 15,210 Trade creditors - NZD 74,572 87,121 Trade creditors - USD 18,089-138,461 118,987 12
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 2014 2013 9. Borrowings Current Loan - Asian Development Bank 80,903 74,372 Non-current Loan - Asian Development Bank 1,644,817 1,692,166 Bank loan details The loan from Asian Development Bank is for a Special Project, the objective of which is to ensure that the Pacific Aviation sector meets all international requirements for safety and security regulation and oversight. The loan facility is for USDI,500,000. PASO has fully exhausted its loan from ADB as at 31 December 2010 resulting in no drawdowns for the current year ended 31 December 2014. An interest rate of 1.5% per annum is charged on the amount of the loan withdrawn on the loan account and outstanding from time to time. 10. Provisions Current Employees' entitlements 7.538 37,845 Non-current Employees' entitlements 21,254 16.144 11. Notes to the statement of cash flows (a) Reconciliation of cash and cash equivalents For the purposes of the statement of cash flows, cash and cash equivalents includes cash on hand and at bank. net of outstanding bank overdrafts. Cash and cash equivalents as at the end of the financial year as shown in the statement of cash flows is reconciled to the related items in the balance sheet as follows: Cash in bank and on hand 464,846 59,011 (b) Reconciliation of net surplus/(deficit) to net cash provided by operating activities Net surplus/ (deficit) 189,732 (468.,817) Non-cash items - Depreciation 10,038 14,145 - Gain on sale of property, plant and equipment (411) (411) Net cash used in operating activities before change in assets and liabilities 199,359 (455,083) Change in assels and liabilities during the financial year - (Increase) / decrease in receivables (9,885) (47.119) - (Increase) / decrease in other assets 4,198 (3.943) - Increase / (decrease) in payables 349,142 80.348 - (Decrease) / increase in deferred revenue (34.927) (75,548) - increase in provisions (25,197) 22.388 Net cash used in operating activities 482.692 (478.957) 13
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 12. Principal activities Pacific Aviation Safety Office's primary activity is providing technical services for aviation safety in compliance with international requirements for safety and security regulation and oversight within the 13 member South Pacific nations. The organisation receives income as follows: (a) (b) (c) Annual subscription fees from member nations and income from services rendered to various Civil Aviation Authorities. Grants from the Government of Vanuatu and other organisations. A soft term loan from the Asian Development Bank. 13. Auditors' remuneration 2014 2013 Amounts received or due and receivable by the auditors of the company for: Auditing the financial statements 9,846 9,266 14. Contingent liabilities The Council of Representatives are aware of no contingent liabilities as at the date of signing the General Manager's report (2013: Nil). 1S. Post balance sheet events No events have occurred since the balance sheet date which would require adjustments or disclosure in the financial statements (2013: Nil). 16. Employees The number of full time permanent employees as at 31 December 2014 was 6 (2013: 8). 14
law arners ACCOUNTANTS STATEMENT The additional financial data presented on pages 16 to 19 are in accordance with the books and records of the Organisation which have been subjected to the auditing procedures applied in our audit of the Pacific Aviation Safety Oflice for the year ended 31 December 2014. It will be appreciated that our audit did not cover all details of the additional financial data. Accordingly we do not express an opinion on such financial data and no warranty of accuracy or reliability is given. In accordance with our firm's policy, we advise that neither the firm nor any member or employee of the firm undertakes responsibility arising in any way whatsoever to any person (other than the Pacific Aviation Safety Office) in respect of such data, including any errors or omissions therein, arising through negligence or otherwise however caused. LAW PARTNERS Port Vila Chartered Accountants 24 September 2015 15
INCOME AND EXPENDITURE ACCOUNT 2014 2013 Income Members subscriptions 279,620 279,956 Service revenue 231,832 312,323 Grant income - Vanuatu Government 79,936 74,557 Grant income - Taiwan 25,861 - Grant income - AusAID 23,918 Grant income - WB 345,832 - Sundry income - 40,882 67,881 1.027,881 734,717 Other income Foreign exchange gain - unrealised 38,970 14,083 Interest received 1,865 4,234 Proceeds on sale of fixed assets 9,946 411 1,078,664 753,445 Expenditure Accounting fees - 53 Advertising and promotion Auditor's remuneration 9,846 9,266 Bank charges 1,287 2,609 Communication expenses 7,101 8,005 Consultancy expenses 191,722 36.418 Council expenses 0 - Depreciation 10,038 14,145 Entertainment expenses 173 648 Foreign exchange loss - realised 38,888 219,831 Information technology expenses 17,417 12,550 Insurance 9,527 4.396 Interest paid 24,698 9 Late Charges 52 - Light and power 10,140 15,846 Motor vehicle expenses 2,818 3,759 Office expenses 2,213 3,260 Postage and freight 641 25 Printing and stationery 1,634 2,166 Provision for annual leave (26,653) 19.141 Provision for severance pay (77,751) 78,334 Rent 6,473 40,089 Repairs & maintenance 66 276 Salaries and wages - administration 186,266 195,352 16
INCOME AND EXPENDITURE ACCOUNT 2014 2013 Salaries and wages - operations 165,000 417355 Security costs - 4,098 Staff expenses 5,578 46,504 Staff recruitment and relocation 23,677 21,636 Superannuation 4,246 3,742 Transport - taxi/bus 169 472 Travel 59,263 61,119 Water expenses 162 138 World Bank Activities 194,691 Miscellaneous expenses 19548 27556 888,929 1,222,262 Net Surplus/(deficit) 189,733 (468.817) 17
INCOME AND EXPENDITURE ACCOUNT Account Name 2014 Total WB IDA 1883 Other Funding DR+) / CR(-) DR(+) / CR(-) DR(+) / CR(-) Income Members subscriptions 279,620-279,620 Service revenue 231.832 231,832 Grant income - Van Gov Host 79,936-79,936 Grant income - Taiwan 25,861 25,861 Grant income - AusAID 23.918-23,918 Grant income - WB Grant 345.832 345,832 Sundry income - 40.882 40,882 1,027,881 345,832 682.049 Other Income Foreign exchange gain - unrealised 38,970 38,970 Interest received 1,865 1865 Proceeds on sale of fixed assets 9,948 9,948 50,783-50.783 Total Income 1,078,664 345,832 732,832 Expense Advertising and promotion - Auditor's remuneration 9,846-9,846 Bank charges 1,287-1,287 Communication expenses 7,101-7,101 Consultancy Expenses 191,722-191,722 Council expenses - Depreciation 10,038-10,038 Entertainment expenses 173-173 Foreign exchange loss - realised 38,888-38,888 Information Technology 17,417-17.417 expenses Insurance 9,527-9,527 Interest paid 24,698-24,698 Late Charges 52-52 Light and power 10,140-10,140 Motor vehicle expenses 2,818-2,818 Office expenses 2,213-2.213 Postage and freight 641-641 Printing and stationery 1,634-1,634 Provision for annual leave (26,653) - (26.653) Provision for severance pay (77,751) - (77,751) 18
INCOME AND EXPENDITURE ACCOUNT Account Name 2014 Total WB IDA H883 Other Funding Rent 6,473-6.473 Repairs & maintenance 66-66 Salaries and wages - 186,266-186.266 administration Salaries and wages - 165,000-165,000 operations Staff expenses 5,578-5.578 Staff recruitment and relocation 23,677-23.677 Superannuation 4.246-4.246 Transport - taxi/bus 169-169 Travel 59,263-59.263 Water expenses 162-162 Miscellaneous expenses 19.548-19.548 World Bank Activities A02. I - Communication Planner 6,337 6,337 - A03. 2 - Workshop costs 11,579 11,579 A06 - Recruitment new staff 23.045 23,045 A07 - Training 7.665 7,665 A08. I - Project Coordinator 12.685 12,685 A09 - PASO Steering Committee 34,150 34,150 BO - Regulatory Specialist 52,227 52,227 - IOC - Incremental Operating Costs 46,160 46,160 Bank charges 844 844 - Total Expense 888,931 194,692 694,239 Net Surplus 189,734 151,141 38,593 19