MOLDAUDITING SRL A U D I T AND C O N S U L T I N G NGO In d epen d en t Analytical Ce n t e r EXPERT-GRUP" Financial STATEMENTS fo r THE y e a r en d ed 31.12.2014 MOLDAUDITING SRL str. A. M ateevici, 84/1, Chişinău, Republica M oldova Tel (+ 37322) 23-25-51, Fax (+ 37322) 23-25-54 e-mail: office@m oldauditing.m d www.moldauditing.md
CONTENTS: Independent auditor's report Financial statements 1 Balance sheet as of 31.12.2014 1 Statement of profit and loss for the year 2014 2 Statement of changes in equity for the year 2014 3 Statement of cash flow for the year 2014 4 II. LEGAL STATUS AND CORE BUSINESS 5 III. PRESENTATION PRINCIPLES 6 IV. ACCOUNTING PRINCIPLES 7 V. No t e s to t h e Fin an cial s t a t e m e n t s 13 VI. ADDITIONAL d isclo su re 20 VII. Lia b il it ie s and c o n tin g en t c o m m itm en ts 20 VIII. RIGHTS OF EMPLOYEES 21
INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS NGO INDEPENDENT ANALYTICAL CEN TER EXPERT-GRUP" FOR THE YEAR 2 0 1 4 To Bo a r d o f Dir e c t o r s o f NGO INDEPENDENT ANALYTICAL CEN TER EXPERT-GRUP" Re p o r t on F in a n c ia l St a t e m e n t s We have audited the balance sheet of NGO Independent Analytical Center Expert Grup" (hereinafter referred to as NGO EXPERT-GRUP or Entity) for the year ended 31.12.2014 as well as the statem ent of profit and loss, statem ent of changes in equity, statem ent of cash flow, as well as significant accounting policies and other explanatory notes for the period then ended. Ma n a g e m e n t r e s p o n s ib il it y f o r t h e Fin a n c ia l s t a t e m e n t s The Entity's management is responsible for the preparation of these financial statem ents. Au d it o r's r e s p o n s ib il it y Our responsibility is to express an opinion on these financial statem ents based on our audits. T h e s c o p e o f a u d it 1. We conducted our audit in accordance with International Audit Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the Consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. I n d e p e n d e n t a u d it o r 's o pin io n In our opinion, the financial statements of the Entity present fairly in all material aspects the financial position of NGO EXPERT-GRUP as of 31.12.2014 and the result of their operations and their cash flows and movements in equity or the years then ended in accordance with Methodical guidelines on peculiarities of accounting of non-commercial organizations no. 158 dated 06.12.2010 and National Accounting Standards. O t h e r a s p e c t s The financial statements of the Entity for the year ended 31.12.2013 have not been audited. P a v e l B o d a r e v REGISTERED AT MINISTER OF FlNANCES of R epublic of M oldova u n d e r # 000006
I. FINANCIAL STATEMENTS Ba l a n c e s h e e t a s o f 3 1.1 2.2 0 1 4 2 0 1 4 2 0 1 3 Items of balance-sheet Note Assets Long-term assets Intangible assets 1 263 0 3 4 135 477 Long-term intangible assets 2 107 422 49 790 Total long-term assets 3 7 0 4 5 6 1 8 5 2 6 7 C urrent assets Inventories 3 23 962 7 5 1 1 3 6 Short-term receivables 4 130 805 193 287 Cash and cash equivalents 5 3 402 293 1 902 708 Other current assets 6 5 919 1 511 Total cu rren t assets 3 5 6 2 9 7 9 2 8 4 8 6 4 2 Total assets : 3 9 3 3 4 3 5 3 0 3 3 9 0 9 Liabilities and equity Equity Retained earnings (uncovered loss) of prior periods (179 540) (53 4 81) Net profit (uncovered loss) of current period 752 810 - Grants 370 482 185 295 Total equity 9 4 3 7 5 2 1 3 1 8 1 4 Long-term liabilities Special purpose financing and proceeds 7 2 8 1 7 5 3 9 1 415 984 Total long-term liabilities 2 8 1 7 5 39 1 4 1 5 9 8 4 Short-term liabilities Other short-term financial liabilities 8 164 588 195 689 Short-term trade liabilities 8 1 786 2 215 Prepayments made 8 0 1 288207 Other short-term liabilities 8 5 770 0 Total sh ort-term liabilities 1 7 2 1 4 4 1 4 8 6 1 1 1 Total liabilities and equity 3 9 3 3 4 3 5 3 0 3 3 9 0 9 The financial statements, accounting policies applied and notes presented on pages 17-25 which are integral part of these financial statements have been approved by management of NGO EXPERT-GRUP as of 31.03.2015 and signed on behalf of the Entity by: A d m in istrator Adrian Lupuşor Chief-A ccountant Sergiu Tornea
s t a t e m e n t o f p r o f it o r l o s s f o r THE y e a r 2 0 1 4 Note 2014 2013 Net sales 9 2 814992 755 037 Cost of sales 10 1 963 749 599 157 Gross profit (comprehensive loss) 851 243 155 880 Other operating income 11 6 521 404 3 290 006 Trade expenses 1 180 0 General and administrative expenses 12 83 842 63 240 Other operating expenses 13 6 521 404 3 290 006 Result from operating activity, profit (loss) 766 221 92 640 Result from investing activity, profit (loss) 0 0 Result from financial activity, profit (loss) 14 (13 411) (3 135) Result from economic and financial activity profit (loss) 752 810 89 505 Extraordinary result, profit (loss) 0 0 Profit (loss) of reporting period before tax 752 810 89 505 Expenses (savings ) on income tax 0 0 Profit net (net loss) 752 810 89 505
STATEMENT o f CHANGES IN EQUITY f o r THE YEAR 2 0 1 4 At the end of the previous reporting period Received (calculated) Spent (transferred) At the end of reporting period S tatutory and additional capital - - - - Reserves - - - - Retained earnings (uncovered loss) (5 3 4 8 1 ) 6 2 6 7 5 1 0 5 7 3 2 7 0 Adjustment of results of prior periods 0 0 0 0 Retained profit (uncovered loss) of prior periods (53 4 81) (126 059) 0 (179 540) Net profit (loss) of reporting period 752 810 0 752 810 Profit used of the reporting period 0 0 0 0 Secondary capital 1 8 5 2 9 5 4 3 0 2 7 6 2 4 5 0 8 9 3 7 0 4 8 2 t o t a l g e n e r a l 1 3 1 8 1 4 1 0 5 7 0 2 7 2 4 5 0 8 9 9 4 3 7 5 2
Ca s h F l o w St a t e m e n t F o r t h e Ye a r 2014 2014 2013 Cash flow by types of activity Operating activity Cash receipts from sales 1 513 690 1 038273 Cash payments to suppliers and contractors 3 5 6 0 0 1 7 1 381985 Cash paid to employees and social insurance contributions 3 784 572 2 4 2 0 6 7 0 Interest payment 0 0 Income tax payment 0 0 Other cash receipts 8 498 224 4 037 189 Other cash payments 861 605 3 5 1 9 9 4 Net cash from operating activities 1 805 720 920 813 Investing activities Cash receipts from disposal of long-term assets 0 0 Cash payments to acquire long-term assets 302 192 105 037 Interest received 0 0 Dividends received 0 0 Other cash flow (payments) 0 0 Net cash from investing activity (302 192) (105 037) Financing activity Cash receipts as loans and borrowings 0 0 Cash payments on loans and borrowings 0 0 Dividends payments 0 0 Proceeds from issuance of share 0 0 Cash payments from redemption of own stock 0 0 Other cash proceeds (payments) 0 0 Net cash from financing activity 0 0 Net cash from economic and financial activity 1 503 528 815 776 Positive (negative) exchange differences (3 943) 1 849 Balance of cash at the beginning of reporting period 1 902 708 1 0 8 5 0 8 3 Balance of cash at the end of reporting period 3 402 293 1 902 708
II. LEGAL STATUS AND CORE BUSINESS NGO Independent Analytic Center EXPERT-GRUP was registered as a non- politic, non-for profit, nongovernmental organization at Ministry of Justice under no. 626 on 15.07.1998 (Registration certificate No.03008). Headquarters of the Association: Republic of Moldova, Chisinau, 45/B Puskin Str. Governing Bodies of the Entity are as follows: 1. Executive D irector; 2. President of Board of Directors; 3. Members of Board of Directors; 4. Censor. The main goal of the Organization is to contribute to the overall and sustainable development of Republic of Moldova throughout research activities, expertize, and promotion of knowledge in different areas like social science, public and economic policies. Development concept of the Entity means qualitative and quantitative process achieved on economic, social, cultural and democratic plan which shall contribute to the harmonious incorporation of country into the global modern processes and tendencies. As of 31.12.2014 NGO EXPERT-GRUP had 8 employees and as of 31.12.2013-9 full-time employees.
III. p r e s e n ta tio n p rin cip le s g e n e r a l p r in c ip l e s The financial statements have been prepared in accordance with the National Accounting Standards (NAS), Law on Accounting of Republic of Moldova Nr.113- X V I dated 16.03.2007 and Order of the Minister of Finances No.158 dated 06.12.2010 on approval of Methodical guidelines on particularities of accounting of non-com m ercial organizations. p r e s e n t a t io n c u r r e n c y Items included in the given financial statements are presented in Moldavian lei (), unless specified otherwise. GOING CONCERN The financial statements of the Entity were prepared in compliance with the going concern concept NGO EXPERT-GRUP.
IV. ACCOUNTING PRINCIPLES Ge n e r a l p r in c ip l e s The financial statem ents are based on accounting records, the evaluation of presented items is performed according the following concepts: going concern principle, accrual principle, consistency principle, prudence principle, intangibility principle, offsetting principle, substance over form principle. The financial statements, except the Cash flow statem ent are prepared based on accrual method of accounting. The reporting year starts at 1of January and ends at 31 of December. i n t a n g i b l e a s s e t s Intangible assets are recorded in financial accounting at acquisition cost which includes the acquisition price, unrecoverable taxes and duties according to the effective legislation, and other costs of bringing the asset in operating condition for its intended use. Intangible assets costs are amortized using the straight-line method over their useful lives. L o n g -t e r m t a n g i b l e a s s e t s The entry value of an object of long-term assets consists of acquisition value including all customs duties and import taxes and other duties, taxes on imported objects provided for in legislation, expenses on bringing the acquired asset in working condition for further exploitation.
Depreciation of fixed assets is calculated on a straight line basis, based on useful lives thereof starting with the next month of period in which the object was placed in commission. The depreciable value of fixed assets is calculated as a difference between initial value and estimated residual value, which is equal to 0. Classifier of Fixed Assets and Intangible Assets serves as guidance for establishing the useful life of fixed assets and of intangible assets INVENTORIES General method of accounting for inventories is performed in accordance with NAS 2 Inventories, while aspects specific to inventories related to specialpurpose funds are accounted for according to mentioned above Methodical indications. Initial value of inventories includes acquisition value and amount of the costs related to procurement and preparation of asset for use according to its intended destination. The disposed inventories are assessed according to FIFO method excepting for material values and similar LVSTI periodically acquired, in assortm ent and at various prices and insignificant costs which are to be evaluated in accounting according to the weighted average cost method. Low-value and short-term items are presented in the balance sheet at amount of acquisition value of item stored. Accounting for LVSTI which unitary value exceeds %2 of ceiling value provided for in legislation is kept on 213.2 account of the balance-sheet. The depreciation is calculated in amount of 100% of their value at moment of their putting into operation. Initial value of LVSTI which does not exceed % of set out limit is changed to expenses to the extent of their
putting into operation and is recorded on an off-balance account only quantitatively. Re c e iv a b l e s Receivables include liabilities of other entities and individuals based on invoices, calculated income, prepayments made. Accounting for receivables and their presentation in the balance-sheet is performed at nominal value. Ca s h Relating the financial statements, the cash comprises cash on hand, settlement accounts opened with banks and other cash means. The balance of cash on hand and on current bank accounts (in national currency) is reflected in the balance sheet at nominal value. Cash on hand and cash on current bank accounts in national currency are accounted according to financing sources applying abbreviation for the project. The balance of cash on hand and cash on current bank accounts (in foreign currency) are kept separately per financing sources using project abbreviation and are reflected at nominal value. Balances of cash on foreign currency bank accounts are reflected in national currency at the exchange rate of National Bank of Moldova acting on the last day of the reporting period or at the date of transaction performance. Favorable and unfavorable exchange differences related to special-purpose funds received in foreign currency are recorded simultaneously as increase or decrease of special-purpose funds and of cash of foreign currency accounts.
En t it y's Fu n d s NGO EXPERT-GRUP constitutes the following funds: assets related fund, self- financing fund and other funds. Assets related fund comprises special-purpose financing related to fixed assets and intangible assets acquired, created, in process, including further capitalized costs. Assets funds are diminished by monthly accrued depreciation and am ortization and by assets disposals. Self-financing funds are formed out of result of statutory economic activity and can be designed for financing special programs set out by the governing body of the Entity. Lia b il it ie s Liabilities of NGO EXPERT-GRUP include long-term liabilities and short-term liabilities. Out of the long-term liabilities the Entity uses the account related to special-purpose financing which is intended for generalizing the information on existence and movements of special-purpose financing and proceeds by applying an abbreviation for each p roject apart. NGO EXPERT-GRUP records to deferred income the amounts charged-off from analytical sub-accounts of special-purpose funds, which are used to procure, create the current assets and make prepayments. Amounts from the deferred income are charged to current income upon inventories utilization /w rite-off and upon prepaym ents charge-off. Liabilities are reflected in balance-sheet at nominal value.
Sp e c ia l-p u r p o s e F in an cing At NGO "Expert-Grup" the special-purpose funds are recorded by types of funding and source of funding by applying an abbreviation of the implemented project. The purpose funds are originally recognized in the accounts on a cash basis. The funds used to cover current expenses are recorded as decrease in special purpose financing and increase in current income. The funds used to purchase inventories and other current assets and making prepayments are recorded as decrease of special-purpose financing and increase of deferred current revenues in total amount. To the extent inventories are used and prepayments are write-off, deferred income is charged to current income. Special-purpose funds used for acquisitions/creation are recorded as decrease of special-purpose financing and proceeds and increase in assets fund. INCOME AND EXPENSES Income and expenses are recognized in the financial statements on accrual basis. Depending on the type of financing, income and expenses of non-profit organization is divided into revenue and expenditure related to special-purpose funds and related statutory economic activity. Income and expenses resulting from the use of special-purpose funds shall be recognized and accounted simultaneously in identical size on sources of funding applying abbreviation for the said project.
t a x a t io n Considering that the organization is a non-commercial, civic and does not deal with entrepreneurial activity, there are no taxable sources of income. In case statutory economic activity shall start, this activity will be accounted for in accordance with NAS and income tax shall be determined under the Tax Code.
V. NOTES TO THE FINANCIAL STATEMENTS (1 ) In t a n g ib l e a s s e t s Intangible assets in process Foundation expenses Trade marks Software Other intangible assets Cost as of 01.01.2014 0 285 11 137 254 867 0 266 289 Additions 202 746 0 0 32 978 0 235 724 Disposals /sales 32 978 0 0 1 676 0 34 654 Cost as of 31.12.2014 169 768 285 11 137 286 169 0 4 67 359 Total Amortization as of 01.01.2014-285 1 591 128 936 0 130 812 Accrued during year - 0 1 469 73 720 0 75 189 Disposals /sales _ 0 0 1 676 0 1 676 Amortization as of 31.12.2014-285 3 060 200 980 0 204 325 Book value as of 01.01.2014 - - 9 546 125 931 0 135 477 Book value as of 31.12.2014 169 768 0 8 077 85 188 0 263 034
(2 ) LONG-TERM TANGIBLE ASSETS Entity's long-term tangible assets consist of the following: Assets in process Buildings Special constructions Machinery and equipment Transportation means Other fixed assets Cost as of 01.01.2014 0 0 0 134 084 0 21 704 155 788 Additions 99 446 0 0 99 446 0 0 198 892 Disposals/sales 99 446 0 0 16 071 0 4 000 119 517 Cost as of 31.12.2014 0 0 0 217 4 59 0 17 704 235 163 Depreciation as of 01.01.2014 0 0 0 91 997 0 14 001 105 998 Accrued during year 0 0 0 39 793 0 2 022 41 814 Disposals /sales 0 0 0 16 071 0 4 000 20 071 Depreciation as of 31.12.2014 0 0 0 115 719 0 12 022 1 2 7 7 4 1 Total Book value as of 01.01.2014 0 0 0 42 087 0 7 703 49 790 Book value as of 31.12.2014 0 0 0 101 740 0 5 682 1 0 7 4 2 2
(3 ) In v e n t o r ie s 31.12.2014 31.12.2013 Raw materials and basic materials 0 0 Fuel 0 0 Materials for packaging 99 99 Other materials related to special features 23 863 6 238 Building materials 0 0 Low-value and short-term items 29 372 25 900 Depreciations of low-value and short-term items (29 372) (25 900) Production in progress 0 744 798 Total 23 962 751 136 Balance of inventories accounted for as of 31.12.2014 represents the stock of raw materials necessary for continuous development of Entity's activity. The opening balance amount of 744 798 of production in process represents the expenses incurred by Entity until the moment of conveyance of works to the limited partner (expenses related to experts rem uneration). (4 ) SHORT-TERM RECEIVABLES 31.12.2014 31.12.2013 Short-term trade receivables 0 0 Prepayments made 80 635 172 460 Receivables on settlements with budget 24 790 2 150 Short-term receivables of staff 0 0 Short-term receivables on accrued income 7 556 2 215 Other short-term receivables 17 824 16 462 Total 130 805 193 287
(5 ) CASH AND CASH EQUIVALENTS 31.12.2014 31.12.2013 Cash on hand, 31 920 0 Settlement account, 1 177065 1 219 738 Settlement account, foreign currency 2 1 9 3 3 0 8 682 970 Total 3 402 293 1 902 708 (6 ) Ot h e r c u r r e n t a s s e t s Other current assets represent deferred short-term expenses incurred in year 2014 but which are to be accounted for on profit or loss account for the future periods. This balance includes expenses related to domain maintenance expertgrup.org- 1 006. As of 31.12.2014 the balance thereof constitutes 5919.02. (7 ) Sp e c ia l-p u r p o s e Fin an cin g a n d Pr o c e e d s 31.12.2014 31.12.2013 BOOST 0 1 014 Center for Economic Development 7 300 7 300 CNP 0 4 EM-13 0 9 591 EM-14 40 429 0 Expert-Grup (EURO) 469 064 446 403 Expert-Grup () 84 465 32 928 Expert-Grup (USD) 48 688 0 FAA_U.S. Embassy Public Affairs Section Chisinau 133 679 0 FPOS_Foundation to Promote Open Society 258 444 0 Est-European Foundation 2 2 0 7 5 6 80 470 International Development Association (The World Bank) 9 4 8 2 2 5 0 MATRA 1 0 8 9 2 3 0 MTB3 0 302 565 MTB4 8 245 0 OSI2013 37 435 223 094 United National fund for children UNICEF_ 451 886 312 615 Total 2 817 539 1 415 984 Out of overall financing as of 31.12.2014 the amount of 602 217 represents the NGO EXPERT-GRUP funds which ar used for statutory activities of the association.
(8 ) Short-term liabilities 31.12.2014 31.12.2013 Current deferred income 164 588 195 688 Short-term trade liabilities 1 786 2 215 Short-term prepayments received 0 1 2 8 8 2 0 8 Payables to employees related to other operations 3 010 0 Liabilities on settlements with budget 260 0 Other short-term liabilities 2 500 0 Total 172 144 1 486 111 Liabilities of NGO EXPERT-GRUP in year 2014 had significantly decreased from 1.4 million to 0.17 million. The received prepayments at the beginning of period represent the prepayments made by UNDP Moldova pursuant to Agreement RNDU-2014 which during the period were closed for the service was rendered. (9 ) Incom e from sales 2014 2013 Income from service rendering 2 814 992 755 037 Total 2 814 992 7 5 5 0 3 7 The income is the result of provision of services related to economic and financial analysis for UNDP Moldova according to Agreem ent RNDU-2014. (1 0 ) Cost of sales 2014 2013 Other expenses related to rendered services 925 159 0 OECD 391 661 0 RNDU 6 4 6 9 2 8 0 CNPM 0 187 338 Europrofile 0 73 914 HAS 0 8 590 Post-2015 0 329 315 Total 1 963 749 599 157
Cost of sale represents the resources used to obtain income from sale. In year 2014 this indicator raised due to increase in income from service rendering. (1 1 ) Other operating incom e 2014 2013 Other operating income 6521404 3290006 Total 6 521 404 3 290 006 Income related to special-purpose funds doubled in year 2014 as compared to year 2013, increasing by 3 231 398. (12)G eneral and adm inistrative expenses 2014 2013 Communal services 0 4 482 Other types of services 0 1 820 Office rent 0 20 062 Other taxes and fees 236 0 Other services 32 350 10 116 Bank fees 6 936 3 916 Consumptions and expenses on wages 44 098 22 845 RNDU14 222 0 Total 83 842 63 240
(1 3 ) Other operating expenses 2014 2013 Subscription to periodicals 864 1 910 Other consumptions and material expenditures 105 670 52 978 Other taxes and duties 596 1 212 Other services 1 155 346 448 817 Bank fees 39 014 27 673 Water, sewage, garbage disposal, elevator, etc. 2 700 22 095 Detachment 31 838 3 359 Expenditures and expenses on wages 4 145 645 2 214555 Audit 0 22 000 Communication 15 845 18 125 Fire and security services 0 7 794 Advertising 18 655 0 Fixed asset repair 3 093 3 628 Transportation 33 875 26 812 Energy 12 739 4 947 Legal and notary 0 1 262 Low-value and short-term items 34 617 14 085 For staff training and professional development 42 614 8 568 Current operational lease payment 420 155 294842 Local taxes 1 000 800 Depreciation of fixed assets 0 13 577 Other expenses 457 136 100967 Total 6 521 404 3 2 9 0 0 0 6 (1 4 ) Net resu lt from financial activity 2014 2013 Income from financing activity 9 535 3 820 Income from foreign exchange differences related to statutory economic activity 9 535 3 820 Expenses of financial activity 22 946 6 955 Expenses related to foreign exchange differences 22 946 6 955 Income (loss) from financing activity (13 411) (3 135)
VI. a d d itio n a l d is c lo s u r e Re l a t e d Pa r t ie s T r a n sa c t io n s The related parties are considered to be individual persons or legal entities, one of whom controls the other or exercises significant influence over its financial and economic decisions-making or which subject to the common supervision of the main company. During year 2014 related parties transactions were as follows: Adrian Lupuşor - Executive Director and m em ber of Board of Director: - W ages- 564 483 - Royalty payments (agreements on copyright assignment) - 677 180. During year 2014 neither payments of any kinds have been made nor contractual relations have been established between NGO EXPERT-GRUP and persons related to accountant, executive director and administrative, financial and communication director. Lit ig a t io n s Currently the Entity is not a party to any pending lawsuits. EVENTS AFTER BALANCE-SHEET DATE There are no events after the balance-sheet date requiring adjustments in financial statem ent for year 2014.
VII. COMMITMENTS AND CONTIGENT LIABILITES The auditors detected no contingent liabilities, acquisitions or contingent tax aspects which could significantly influence the financial position of the Company. VIII. RIGHTS OF EMPLOYEES The Company pays deductions to social and health insurance calculated based on rates determined by the effective legislation for the respective year from employees accrued wages. The deductions to social and health insurance are charged to expenses in the periods that correspond to employees wage calculation. The Company has no other liabilities to similar payments on higher rates other than those provided for in the legislation. The company does not take part in other similar projects.