NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 1997
1 |
Organisation and significant accounting
policies |
(a) |
Principal activities
The Center for the Study of Democracy (hereafter "CSD" or the
"Center") is an independent not for profit, public policy research
organisation founded in 1989 and registered in 1990.
Its main activities are concentrated in the organisation and
operation of programs including economic, law reform, sociological
and information resources aiming at speeding up the market oriented
development of the Bulgarian economy and democratisation of the
Bulgarian society. The programs are financed by West European and
American not for profit organisations, governmental institutions
and private companies such as, Center for International Private
Enterprise (U.S.A.), Commission of the European Communities,
Council of Europe, Hanns Seidel Foundation (Germany), US Agency for
International Development and World Bank.
Other activities include publishing of materials and
distribution.
|
(b) |
Basis of preparation
The accompanying financial statements were prepared in
accordance with International Accounting Standards, issued by the
International Accounting Standards Committee.
Reporting currency
Due to the local statutory regulations, CSD maintains its
statutory accounting records in Leva. However, management believes
that the functional currency of the Center is the US Dollar, for
the following reasons:
- The Center is funded internationally in US Dollars
and ECUs;
- Significant amounts of the assets and liabilities
of the Bank are denominated in US Dollars.
Because the functional currency is US dollar, the reporting
currency used in the financial statements in the US dollar.
The Center maintains US dollar listings for debtors, creditors
and fixed assets, and therefore is able to prepare its financial
statements as if the accounting records had been initially recorded
in US dollars. The conversion of the year-end balances from Leva to
US dollars is made as described below.
Monetary items have been converted to US Dollars at the
Bulgarian National Bank exchange rate as of the year end. The
exchange rate as of 31 December 1997 was Leva 1,776 = USD 1 (31
December 1996: Leva 487 = USD 1). Non-monetary items have been
converted into US Dollars at the historical exchange rates
prevailing on the date transactions were performed. The statement
of income has been converted into US Dollars at the average
exchange rate for each month except as applied to such non-monetary
items. The difference arising as a result of this method of
conversion is recognised in the income statement.
|
(c) |
Revenue recognition
The Center's revenue arises from its activities relating to
projects financed by third parties. Revenue is recognised based
upon stipulations and duration of the contract with the
organisation requesting specific projects. Revenue can be
recognised 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 and in anticipation of further fending are
recorded as deferred expenses thus matching concept is being
observed.
Revenue earned from the act of publishing and distributing of
books is recognised at the point of sale.
|
(d) |
Taxation
The CSD is a not for profit organisation and is exempt from
corporate taxation and VAT on its not for profit activities.
|
(e) |
Fixed assets and depreciation
Fixed assets are stated at cost less accumulated depreciation.
Depreciation is provided using the straight line method over the
estimated useful lives of the assets, as follows:
|
Years |
Fixtures and Fittings |
4 |
Equipment and vehicles |
5 |
Software |
5 |
|
(f) |
Consolidation
The Center has interests in two broadcasting organisations. Due
to the size of the broadcasting organisations, the results and net
assets have not been consolidated and additionally to separate
non-profit from other activities. There is no distribution of
profit from these activities.
|
(g) |
Cash and cash equivalents
Cash and cash equivalents consist of cash and amounts due from
banks with an original maturity of less than three months.
|
(h) |
Deferred expenses
Deferred expenses represent expenses incurred during 1997
related to projects for which funds have been received after year
end.
|
2 |
Other income/(expenses)
|
1997
USD
|
1996
USD
|
Net foreign exchange gains/(losses) |
(40,711) |
(187,695) |
Interest income |
22,132 |
9,691 |
Other income (expense) |
(5,581) |
(6,871) |
|
|
|
Total |
(24,160) |
(184,875) |
As explained in note 1(b), the conversion of Leva to US Dollars
results in foreign exchange rate differences which are recognised
in the income and expenditure account. The foreign exchange rate
difference in 1996 is only due to the exchange rate translation of
the 1996 financial statements into US Dollars.
|
3 |
Cash at bank and on hand
|
1997
USD
|
1996
USD
|
Deposits-foreign currency |
559,000 |
33,067 |
Deposits-Leva |
- |
507 |
Cash at bank-foreign currency |
43,833 |
371,035 |
Cash at bank-Leva |
5,526 |
895 |
Cash in hand-foreign currency |
17,364 |
16,436 |
Cash in hand-Leva |
1,259 |
2,094 |
|
|
|
Total |
626,982 |
424,034 |
|
4 |
Receivables
|
1997
USD
|
1996
USD
|
Other receivables |
14,255 |
29,499 |
Receivable from subsidies |
471 |
471 |
|
|
|
Total |
14,726 |
29,970 |
|
5 |
Fixed assets
|
1997
USD
|
1996
USD
|
Cost or valuation |
|
|
- At 1 January
|
276,238 |
256,391 |
- Additions
|
12,677 |
24,578 |
- Disposals
|
(2,197) |
(4,731) |
|
|
|
- At 31 December
|
286,718 |
276,238 |
Accumulated Depreciation |
|
|
- At 1 January
|
147,978 |
107,884 |
- Charge for the year
|
43,005 |
44,495 |
- Less disposal
|
(1,055) |
(4,402) |
|
|
|
- At 31 December
|
189,928 |
147,977 |
Net book value |
|
|
- At 31 December
|
96,790 |
128,261 |
|
6 |
Investments
|
% holding |
1997
USD
|
1996
USD
|
Radio Vitosha |
50 |
9,268 |
9,268 |
Provision for writedown |
|
(9,268) |
(9,268) |
Vitosha Agency EOOD |
100 |
882 |
882 |
|
|
|
|
Total |
|
882 |
882 |
Radio Vitosha is a joint-venture with Hotel Vitosha
(Kempinski/Zografski) and has not operated since 1995.
|
7 |
Deferred revenue
|
1997
USD
|
1996
USD
|
Deferred revenue |
113,330 |
69,354 |
Deferred capital subsidies |
9,746 |
3,174 |
|
|
|
Total |
123,076 |
72,528 |
|
8 |
Deferred revenue
The Center for the Study of Democracy has had transactions with
the Applied Research and Communications Fund (ARC) during 1997. 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 1997 are
Nil.
|
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