31 DECEMBER 1995
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, Hanns 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 the Bulgarian Accountancy Act, the Bulgarian
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:
&emdash; restricted funds, representing funding for
specific projects; and
&emdash; 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 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 estimated value of work performed in
excess of the amounts received is 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 and VAT on its not for profit
activities.
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 by using the
FIFO method.
USD to Leva foreign exchange rates were the
following for the respective periods:
At 31.12.1994
|
66.015
|
At 31.12.1995
|
70.704
|
Average for 1994
|
55
|
Average for 1995
|
68.4
|
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 1995 was 32.9%
(1994 121.9%).
Reclassifications
Certain balances and amounts in 1994 have been
reclassified to conform with the disclosures in the 1995
accounts.
Related party transactions
The Center for the Study of Democracy has had
transactions with the Applied Research and Communications Fund
(ARC) during 1995. The two have different members of the Board of
Directors, different operational employees but occupy the same
premises. Amounts receivable from and payable to the ARC as at 31
December 1995 were as follows:
|
31 December 1995
Leva'000
|
Amounts receivable from ARC
|
654
|
Amounts payable to ARC
|
46
|
3. Other income
Other income in Leva'000 for the period included the
following:
|
Realized
|
Unrealized
|
Total 1995
|
Total 1994
|
Foreign exchange gains
|
1,526
|
3,689
|
5,215
|
6,920
|
Foreign exchange losses
|
(181)
|
(3,004)
|
(3,185)
|
(1,160)
|
Interest income
|
698
|
-
|
698
|
291
|
Interest expense
|
-
|
-
|
-
|
(83)
|
Investment income
|
-
|
-
|
-
|
230
|
Other income (expense)
|
34
|
-
|
34
|
(426)
|
Total
|
2,077
|
685
|
2,762
|
5,772
|
4. Cash at bank and in hand
|
1995
Leva'000
|
1994
Leva'000
|
Deposits-foreign currency
|
7,682
|
6,677
|
Cash at bank-foreign currency
|
11,125
|
8,820
|
Cash at bank-Leva
|
1,400
|
962
|
Cash in hand-foreign currency
|
389
|
243
|
Cash in hand-Leva
|
20,771
|
16,813
|
Deposits represent amounts held by utility entities and other
institutions which can be converted to cash.
5. Receivables
|
1995
Leva'000
|
1994
Leva'000
|
Other receivables
|
3,015
|
1,438
|
Investment receivable
|
230
|
230
|
Project receivable
|
3,894
|
3,020
|
|
7,139
|
4,688
|
6. 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 assets for 1995 is as
follows:
|
1995
Leva'000
|
Cost or valuation
|
|
At 1 January 1995
|
5,545
|
Additions
|
7,142
|
Disposals
|
(271)
|
At 31 December 1995
|
12,416
|
Accumulated Depreciation
|
|
At 1 January 1995
|
1,978
|
Charge for the year
|
1,840
|
Less disposal
|
(137)
|
At 31 December 1995
|
3,681
|
Net book value
|
|
At 31 December 1995
|
8,735
|
7. Long-term liabilities
|
1995
Leva'000
|
1994
Leva'000
|
Deferred capital subsidies
|
395
|
595
|
Deferred capital subsidies consist of the remaining balance of
funds received for specific projects.
8. Reconciliation between local statutory reporting
and these financial statements
|
Leva '000
|
Surplus for the year per local statutory
reporting
|
11,821
|
Recognition of activity on accrual basis
|
(1,398)
|
Adjustments for recognition of unrealized gains
(losses) on amounts held in foreign currency as follows:
|
|
Cash
|
2,447
|
Receivables
|
123
|
Liabilities
|
(422)
|
Other
|
(65)
|
Surplus per IAS financial statements
|
12,506
|
|