(a) Background
Founded in late 1989, the Center for Study of
Democracy (CSD) is an interdisciplinary public policy institute
dedicated to the values of democracy and market economy. CSD is a
non-partisan, independent organization fostering the reform process
in Bulgaria through impact on policy and civil society.
CSD objectives are:
-
to provide an enhanced institutional and policy
capacity for a successful European Integration process;
to promote institutional reform and the practical
implementation of democratic values in legal and economic
practice;
to monitor public attitudes and serve as well as to
monitor the institutional reform process in the country;
to strengthen the institutional and management
capacity of NGOs in Bulgaria, and reform the legal framework for
their operation.
CSD encourages an open dialogue between scholars and
policy makers and promotes public-private coalition building. As a
full-service think tank, the Center achieves its objectives through
policy research, process monitoring, drafting of legislation,
dissemination and advocacy activities, building partnerships, local
and international networks.
(b) Basis of preparation
These financial statements have been drawn up in
conformity with International Accounting Standards.
The financial statements are presented in BGL, after
taking into consideration the fact that during the last several
years the fund has operated in a hyper-inflationary environment.
The officially published inflation indices for 1996, 1997 and 1998
are 410.8%, 678.6% and 101% respectively. For the financial period
ended 31 December 1997 no financial statements in accordance with
IAS 29, “Financial reporting in hyperinflationary economies”, have
been prepared. Since this is the first financial year that such
audited financial statements are prepared, no comparative figures
are presented.
(c) Foreign currencies
Monetary assets in foreign currencies have been
revalued on a monthly basis as required by the Accountancy Act. As
a result foreign exchange differences have arisen. Deferred revenue
and other liabilities denominated in foreign currencies are carried
at their historical values.
The exchange rate as of 31 December 1998 was BGL
1675.10 = USD 1. (Closing rate for 1997 - BGL 1765,5 = USD 1).
(d) Property, plant and equipment
Tangible and intangible fixed assets are inflated in
accordance with International Accounting Standard 29, “Financial
reporting in hyperinflationary economies”. The monthly inflation
indices as officially published by the National Institute of
Statistics are used. Since these are computed using the month of
December of the previous year as a basis, chain indices from the
month of purchase to the end of the year under review, have been
used to measure the cumulative effect of inflation.
The tangible and the intangible fixed assets have
then been depreciated using the straight line method over their
estimated useful lives. The accumulated depreciation and the charge
for the current year have been inflated using the above described
method.
The following annual rates have been used:
Fixtures and fittings 25%
Machines and equipment 20%
Vehicles 20%
Software 20%
(e) Investments
Investments classified as long-term assets which are
not considered to be material as compared to the overall balance
sheet value of the CSD are carried at cost, less any amounts
written off to recognise a decline in the value of the investment.
As the subsidiaries perform economic activity the investments in
them are not included in the parent’s separate financial statements
because if included the statements will not give a true and fair
presentation of the activity of the CSD. Due to the above mentioned
reason the investments have not been consolidated.
(f) Revenue recognition and expense
reporting
The revenue of the Center for the Study of Democracy
consists of funds extended by international financing bodies for
the completion of accepted projects. The amounts are carried in the
balance sheet as deferred revenue at their historic values. Every
project is commenced with a signing of a contract where the
financing body determines the budget, payment installments and the
rates at which expenses incurred in BGL are to be translated into
the respective foreign currency. The amount of BGL expenses are
translated at the specified rate and an expense report in foreign
currency is produced. It is used to report on the progress of the
project before the financing organization. These reports are
prepared at a frequency determined by the contract for the project
assignment.
Revenue is recognised on the basis of completed
stage as reported by the CSD to the commissioning bodies.
Revenue is recognised as income for the period to
match the related costs, on a systematic basis. Project contracts
are denominated in foreign currency, while the related expenses are
incurred in BGL. Expenses as revalued in foreign currency
correspond to the revenues in the same foreign currency.
(g) Change of the accounting policy
There has been a change in the principle of revenue
recognition as compared to the previous financial period. In 1997
revenue has been recognized in the year of the project completion,
although it may not be the year when all expenses have been
incurred.
In 1998 income is recognized on accrual basis at the
year end for completed and continuing projects. The maximum amount
of revenue that can be recognised is the amount of expenses
incurred. The deferred revenue is depreciated on a project basis.
The relevant amounts are recognized as income. The difference to
the total amount of BGL expenses is also recognised. Since this
amount must correspond to the currency amount from the expense
report, which is booked at another rate, an exchange rate
difference occurs.
The effect of the change of the accounting policy
could not be calculated.
(h) Cash and cash equivalents
Cash and cash equivalents consist of cash in hand
and balances with banks.
(i) Taxation
CSD is a non-profit organization Therefore it has no
tax liabilities.
Deferred tax has not been incurred in the financial
statements due to the fact that this tax could not be levied on
grants.
1.Revenue from grants, contributions and
donations
For the
year ended 31 December 1998 |
|
BGL’000 |
IDLI |
343,058 |
ETF |
64,372 |
CE |
90,503 |
CIPE 98 |
57,670 |
CED |
57,008 |
IBF Pr. Str. |
65,190 |
PHARE |
50,452 |
IBF for Imp. Studies |
67,204 |
NEI |
48,754 |
GMF |
40,794 |
BTC Institutional Development |
34,882 |
Ministry of Foreign Affairs - European
Integr. |
33,857 |
Other projects |
269,174 |
|
1,222,918 |
The item Other projects includes revenue from 35
projects, and the revenue of each these projects does not exceed
BGL 25 million.
2. Expenses on grants, contributions and
projects
For the year ended 31
December 1998 |
|
BGL’000 |
Salaries and benefits |
379,221 |
Hired services |
295,381 |
Depreciation |
66,651 |
Supplies and consumable |
44,538 |
Other expenses |
213,869 |
Decrease in deferred expenses |
153,603 |
|
1,153,263 |
3. Foreign exchange gains
For the year ended 31 December
1998
|
|
BGL’000 |
Exchange rate gains from
operations |
224,604 |
Exchange rate losses from
operations |
(138,405) |
|
86,199 |
Differences on exchange rates have arisen in the
cases when debtors, cash and creditors denominated in foreign
currencies have been revalued on a monthly basis.
Differences on exchange rates have arisen when
income and expenses have been matched. Since deferred revenue is
received in foreign currencies and expenses are incurred in BGL
when they are matched at every reporting period foreign exchange
rate differences occur.
4. Extraordinary income and expenses
For the year
ended 31 December 1998 |
|
BGL’000 |
Extraordinary income |
34,768 |
Extraordinary expenses |
(1,598) |
Write down of investments |
(229) |
|
32,941 |
5. Receivables
For
the year ended 31 December 1998 |
Completed Projects |
32,822 |
Receivables from ARC
Fund |
134,008 |
Other receivables |
70,695 |
|
237,525
|
Since revenue and expenses on projects are matched
on a yearly basis to conform with the accruals principle,
receivables consisting of expenses incurred on fully completed
projects arise.
6. Cash and cash equivalents
For the year
ended 31 December 1998 |
|
BGL’000 |
At bank |
1,107,152 |
In local currency |
4,709 |
In foreign currency |
1,102,443 |
In hand |
46,259 |
In local currency |
15,563 |
In foreign currency |
30,696 |
|
1,153,411 |
7. Deferred expenses
For
the year ended31 December 1998 |
|
BGL’000 |
CIPE’98 |
39,837 |
SOCO |
9,651 |
ETF |
7,240 |
Interrights |
103 |
COLPI |
2,747 |
CE edition |
798 |
OSF |
157 |
Phare democracy (Santander) |
22,549 |
|
83,082 |
Since income and expenses on projects are matched on
a yearly basis to conform with the accruals principle, deferred
expenses consisting of expenses incurred on projects that have not
been completed yet, arise.
8. Property plant and equipment
|
Plant and equipment
|
Vehicles |
Fixtures and
fittings |
Total |
Cost or
valuation |
|
BGL’000 |
BGL’000 |
BGL’000 |
BGL’000 |
At 1 January 1998
|
345,696 |
122,477 |
193,932 |
662,105 |
Additions |
41,798 |
62,407 |
664 |
104,869 |
Disposals |
(230,068) |
- |
(93,680) |
(323,748) |
Inflationary adj. (+) |
3,377 |
1,225 |
1,939 |
6,541 |
Inflationary adj. (-
) |
(2,301) |
(1,625) |
(937) |
(4,863) |
At 31 December 1998
|
158,502 |
184,484 |
101,918 |
444,904 |
Accumulated
depreciation |
At 1 January 1998
|
272,958 |
122,191 |
156,017 |
551,166 |
Charge for the year |
34,677 |
6,975 |
22,625 |
64,277 |
Disposals |
(230,068) |
- |
(93,680) |
(323,748) |
Inflationary adj. (+) |
3,010 |
1,222 |
1,771 |
6,003 |
Inflationary adj. (-
) |
(2,247) |
(174) |
(921) |
(3,342) |
At 31 December 1998
|
78,330 |
130,214 |
85,812 |
294,356 |
Net book value as
at At 31 December 1998 |
80,172 |
54,270 |
16,106 |
150,548 |
Net book value as at 31
December 1997 |
72,738 |
286
|
37,915 |
110,939 |
9. Intangible fixed assets
|
Patents,
license,trade marks |
Software |
Total |
|
BGL’000 |
BGL’000 |
BGL’000 |
Cost or valuation
|
At 1 January 1998 |
408 |
9,543 |
9,951 |
Additions |
|
- |
|
Disposals |
|
- |
|
Inflationary adj. (+) |
4 |
96 |
100 |
At 31 December 1998 |
412 |
9,639 |
10,051 |
Accumulated
depreciation |
At 1 January 1998 |
177 |
6,746 |
6,923 |
Charge for the year |
81 |
1,782 |
1,863 |
Disposals |
- |
- |
- |
Inflationary adj. (+) |
3 |
86 |
89 |
At 31 December 1998 |
261 |
8,614 |
8,875 |
Net book value as at At 31
December 1998 |
151 |
1,025 |
1,176 |
Net book value as at 31 December
1997 |
231 |
2,797 |
3,028 |
10. Investments
For the year
ended 31 December1998 |
|
BGL’000 |
Agency “Vitosha”EOOD |
5,006 |
Radio “Vitosha” |
229 |
Provisions |
(229) |
|
5,006 |
Investments have not been inflated. CSD is a
not-profit organization but the subsidiaries perform economic
activity. Thus if their separate financial statements are included
in the parent’s separate financial statements, these will not give
a true and fair presentation of the activity of the CSD
11. Payables
For the year
ended 31 December 1998 |
|
BGL’000 |
Payables to the budget |
6,225 |
Salaries, benefits and social security
payable |
10,843 |
Payables to suppliers |
8,873 |
Other payables |
32,999 |
|
58,940 |
The payables to the budget consist of income tax
levied on salaries for the month of December 1998.
12. Deferred revenue
For the year ended 31
December 1998 |
|
BGL’000 |
For project activities |
167,188 |
For fixed assets |
54,759 |
|
221,947 |
13.Funds balance
Accumulated fund |
|
BGL’000 |
Balance at 1 January 1998 |
1,146,323 |
Revaluation for the period |
11,463 |
Excess of revenue over expenditure for
the year |
192,075 |
Balance at 31 December 1998
|
1,349,861 |
Contingent liabilities
There are no contingent liabilities to report
on.
Related parties
Related party |
Nature of the related party
relationship |
Type of transaction |
Transaction during the year
|
Outstanding balance 31
December 1998 |
Receivables |
Agency Vitosha |
100% of the capital owned by CSD |
Financing |
BGL 18,739,493 |
BGL 19,060,945 |
|
|
Financing |
|
USD 2,007 |
|
|
|
|
|
Radio Vitosha |
Significant influence |
Financing |
|
USD 3,522 |
|
|
Financing |
|
BGL 564,431 |
|
|
|
|
GBP 399 |
Center for the Study of Democracy |
CSD and ARC Fund are both represented
by the President of the Governing Board |
Financing |
USD 80,000 |
USD 80,000 |
Payables |
Agency Vitosha |
100% of the capital owned by CSD |
Financing |
|
BGL 273,920 |
Post balance sheet events
There have been no material changes or transactions
subsequent to the balance sheet date that require adjustment or
disclosure in the financial statements prepared for the period
ended 31 December 1998.
|