1. Principal activities
The Center for the Study of Democracy (hereafter
"CSD" or the "Center") is an independent not for profit, public
policy research organization founded in late 1989.
Its main activities are concentrated in the
organization and operation of programs including economic, law
reform, sociological, information resources and ethnic relations
aiming at speeding up the market oriented development of the
Bulgarian economy and democratization of the Bulgarian society. The
programs are financed by West European and American not for profit
organizations, governmental institutions and private companies such
as American Bar Association, Center for International Private
Enterprise (U.S.A.), Commission of the European Communities,
Council of Europe, C. S. Mott Foundation, Manns Seidel Foundation
(Germany), International Center for Economic Growth, International
Development Law Institute (Italy), US Agency for International
Development and World Bank.
Other activities include publishing of materials and
distribution.
2. Principal Accounting Policies
CSD's accounting policies are established in
compliance with theAccountancy Act, the National Accounting
Standards, and the United States Circular A-133 Standard concerning
"grants and agreements with Institutions of Higher education,
Hospitals and other Nonprofit Organizations", as well as with the
requirements set under Standard A-122 (Cost Principles for
Nonprofit Organizations).
Revenue recognition
The Center's revenue arises from its activities
relating to projects financed by third parties. The activity can be
divided into the following types:
- restricted funds, representing funding for specific
projects; and
- unrestricted funds for general expenditures
and maintenance.
Project revenue is recognized based upon
stipulations and duration of the contract with the organization
requesting the project. Project revenue can be recognized upon
completion of a stage in the project or upon completion of the
project and submission of the final report.
At the end of the each year a review of each project
is performed. Amounts received in excess of the estimated work
performed are deferred and disclosed in the balance sheet as part
of deferred revenue. The estimate of work performed in excess of
the amounts received are recorded as project receivables and
disclosed as part of prepayments at the balance sheet date.
Revenue earned from the act of publishing and distributing of
books is recognized at the point of sale.
Taxation
The CSD is a not for profit organisation and
is exempt from corporate taxation on its not for profit activities.
In addition the Center is exempt from VAT on its not for profit
activities.
2. Principal Accounting Policies
Foreign currency
Transactions in other currencies have been
translated into Bulgarian Leva at the rate of exchange ruling at
the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are
translated into Bulgarian Leva at the exchange rate ruling at that
date. All resulting exchange differences are recognised in arriving
at the result for the year and are disclosed in other income
(expense). Foreign currency accounts are maintained manually using
the FIFO method.
USD to Leva foreign exchange rates were the
following for the respective periods:
At 31.12.1993 |
32,711
|
At 31.12.1994 |
66,015
|
Average for 1993 |
27,5
|
Average for 1994 |
55
|
Inflation accounting
Consistent with other entities operating in Bulgaria International
Accounting Standard No 29 "Financial Reporting in
Hyper-inflationary Economics" has not been applied despite the
hyper-inflationary environment, as defined by IAS 29, in Bulgaria.
The annualized rate of inflation for 1994 was 121.9% (1993
63.9%).
Reclassifications
Certain balances and amounts in 1993 have been reclassified to
conform with the disclosures in the 1994 accounts.
3. Other income
Other income for the period included the
following:
|
Realized
|
Unrealized
|
Total
|
Foreign exchange gains |
6,795
|
2,506
|
9,301
|
Foreign exchange losses |
(51)
|
(1,109)
|
(1,160)
|
Interest income |
291
|
-
|
291
|
Interest expense |
(83)
|
-
|
(83)
|
Investment income |
230
|
-
|
230
|
Other |
(425)
|
-
|
(425)
|
Total |
6.757
|
1,397
|
8,154
|
Investment income primarily represents amounts
received from its activity with Radio Vitosha. The Center
participates in the ownership of Radio Vitosha and had the
following activity:
- Initial contribution for a radio licence;
- Payments of annual government and licence
fees;
The transactions are accounted for as long term
investments with the exception of advances for the payment of some
current expenses which are recorded as receivables. As a result of
the Center's involvement in the radio's operations, the Center
received a contribution of Leva 230,000 which has been accounted
for as revenue.
4. Cash at bank and in hand
|
1994 Leva '000
|
1993 Leva '000
|
Deposits-foreign currency |
6,677
|
-
|
Deposits-Leva |
54
|
-
|
Cash at bank-foreign currency |
8,820
|
3,880
|
Cash at bank-Leva |
962
|
195
|
Cash in hand-foreign currency |
243
|
31
|
Cash in hand-Leva |
57
|
12
|
|
16,813
|
4,118
|
Deposits represent amounts held by utility entities
and other institutions which can converted to cash in a relatively
short period of time.
5. Receivables
|
1994 Leva '000
|
1993 Leva '000
|
Advances to suppliers |
1,438
|
1,505
|
Investment receivable |
230
|
-
|
Project receivable |
3,020
|
-
|
|
4,688
|
1,505
|
6. Tangible fixed assets
The Center acquires its fixed assets through
purchases with its own funds or by obtaining the fixed assets upon
the completion of projects. Assets are valued on the basis of
acquisition cost and are shown at cost less accumulated
depreciation. Depreciation is charged on a straight-line basis and
the following rates are applied:
Machinery and equipment |
20% |
Vehicles |
20% |
Office furniture and equipment |
25% |
Software |
20% |
The activity for tangible fixed assets for 1994 is
as follows:
|
1994 Leva '000
|
Cost or valuation |
|
At 1 January 1994
|
2,745
|
Additions
|
2,691
|
At 31 December 1994
|
5,436
|
Depreciation |
|
Charge for the year |
1,978
|
At 31 December 1994 |
1,978
|
Net book value |
|
At 31 December 1994 |
3,458
|
7. Long-term liabilities
|
1994 Leva '000
|
1993 Leva '000
|
Deferred capital subsidies |
595
|
1,399
|
8. Reconciliation between local statutory
reporting and these financial statements
|
Leva '000
|
Surplus for the year per local
statutory reporting |
12,910
|
Adjustments for recognition of
unrealized gains (losses) on amounts held in foreign currency as
follows: |
|
Cash |
2,381
|
Receivables |
125
|
Liabilities |
(1,109)
|
Other |
(452)
|
Surplus per IAS financial
statements |
13,855
|
|