Center for the Study of Democracy Financial Statements for the period ended
31 December 2002
I. Significant accounting policies
The Center for the Study of Democracy (CSD) is a non profit organization domiciled
in Bulgaria. The financial statements were authorized for issue by the Executive
Director on 4 March 2003.
(a) Activity 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) Statement of compliance
The financial statements of the Center for the Study of Democracy have been
prepared in accordance with International Financial Reporting Standards (IFRS)
adopted by the International Accounting Standards Board (LASB), and interpretations
issued by the Standing Interpretations Committee of the IASB.
(c) Basis of preparation
These financial statements have been drawn up in conformity with International
Financial Reporting Standards.
Hyperinflation adjustments have been made in order to show the effect of inflation
on the purchasing power of the equity interest as at 31 December 1998. Due to
the insignificant inflation growth in the financial year 1999, 2000, 2001 and
2002, the Statement of Revenues, Expenditures and Changes in Fund Balances for
that years and the Balance Sheet as at 31 December 1999, 31 December 2000, 31
December 2001 and 31 December 2002 have not been adjusted according the official
inflation index.
(d) Foreign currencies
Monetary assets and liabilities in foreign currencies have been revalued on
a monthly basis. As a result foreign exchange differences have arisen. The BNB
official exchange rates of the USD as at 31 December 1999 is 1.9469, as at 31
December 2000 is 2.1091 BGN/USD and as at 31 December 2001 is 2.21926 BGN/USD,
the average exchange rate for the year 2001 is 2.18467 BGN/USD and as at 31
December 2002 is 2.06604 BGN/USD.
(e) Property, plant and equipment
Items of Property plant and equipment and intangible assets are stated at a
cost less accumulated depreciation and impairment losses. They are reported
in the Balance Sheet applying International Accounting Standard 29 Financial
reporting in hyperinflationary economies. The monthly inflation indices have
been used. Their cost have been inflated as at 31 December 1998.
Property plant and equipment and intangible assets have not been inflated for
the years ended 31 December 1999, 31 December 2000, 31 December 2001 and 31
December 2002. The inflation rate for the twelve months ended 31 December 1999,
31 December 2000, 31 December 2001, 31 December 2002 of 6.4 %, 11.4%, 4,8% and
3,8% respectively are considered insignificant, and no restatement of the financial
statements as of and for the year ended 31 December 1999, 31 December 2000,
31 December 2001 and 31 December 2002 have been made.
Inflated values as at 31 December 1998 of property plant and equipment and
of intangible fixed assets have been depreciated using the straight - line method.
The rates of depreciation used are as follows:
Buildings |
4% |
Machines and equipment |
20%, 25% |
Fixtures and fittings |
20% |
Vehicles |
20% |
Computers and software |
33% |
Intangible assets |
20% |
(f) Investments in associates
Investments classified as long-term assets are carried at cost, less any amounts
written off to recognise a decline in the value of the investment. The subsidiaries
perform economic activity which is different from the activities performed by
the CSD. In relation to the stated above, the financial statements of the subsidiaries
are not consolidated and the management carries the investments at cost. In
the present report there is an information is disclosed (refer to note 8) for
the activities of these subsidiaries concerning their net assets and financial
results.
(g) Other investments
As other investments are classified held-to-maturity assets measured at amortised
cost less impairment losses. Amortised cost is calculated on the effective interest
rate method. Premiums and discounts, including initial transaction costs, are
included in the carrying amount of the related instrument and amortised based
on the effective interest rate of the instrument.
(h) Receivables
Receivables are stated at cost less any amounts, which are not expected to be
collected. The latter are presented as impairment losses on the basis of the
calculated recoverable amount of trade receivables (refer to accounting policy
(k)).
(j) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand and balances with banks.
(k) Impairment
The carrying amount of the Center's assets is reviewed at each balance sheet
to determine whether there is any indication of impairment. If any such indication
exists, the asset's recoverable amount is estimated. For intangible assets that
are not yet available for use, the recoverable amount is estimated at each balance
sheet date. An impairment loss is recognised whenever the carrying amount of
an asset or its cash-generating unit exceeds its recoverable amount. Impairment
losses are recognised in the income statement.
(l) Payables
Payables are stated at their cost.
(m) Revenue recognition and expense reporting
Revenue is recognized in the income and expenditure account on the basis of
completed stage as reported by the CSD to the commissioning bodies. Revenue
is recognized 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 BGN.
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 BGN are to be translated into the respective foreign currency.
Reports are prepared as contracted with financing organization. Respective amount
of BGN 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. Frequency is determined in the contract for
the project assignment.
(n) Taxation
CSD is a non - profit organization. No corporate tax is levied in accordance
with current Bulgarian legislation. For the period ended 31 December 2000 and
31 December 2001 there are no trade operations on which tax is due.
As at 31 December 2002 the Center has gained financial income from dealing with
securities under agreement for trading of securities and bonds. Under Bulgarian
tax legislation income and municipality tax is levied.
Center for the Study of Democracy Financial Statements for the period ended
31 December 2002
2. Revenue from grants, contributions and projects
In BGN |
2002
|
2001
|
Council of Europe - Information Centre on the Council of Europe |
122,004
|
113,970
|
The German Marshall Fund - Illegal Trafficking and Corruption
in Southeast Europe (2001-2002); |
60,460
|
49,412
|
Corruption Assessment in Southeast Europe (2002-2003) |
|
|
Royal Norwegian Embassy - Trafficking and Corruption:
Monitoring and Prevention |
224,282
|
-
|
Royal Norwegian Embassy - Reforming the Judiciary in Bulgaria:
Towards the Introduction of Modern Registration System |
46,811
|
-
|
InfoDev World Bank - Country Development Gateway |
-
|
159,677
|
SELDI phase I - Assessment and Introductory Training of Coalition
Building and Monitoring |
-
|
553,454
|
SELDI phase II - Coalition Building and Monitoring for Anti-Corruption |
586,740
|
307,826
|
CIPE - Balkan/Black Sea Anti-Corruption Workshop |
19,851
|
|
Conflict Management Group - Conflict Vulnerability in Bulgaria |
57,600
|
-
|
CIPE - Corporate Governance Reform and the Mass
Media |
-
|
34,597
|
IDLI - Implementing Anti-Corruption Action Plan for Bulgaria |
-
|
65,594
|
USAID, American Embassy, Sofia - International Conference
"Beyond Anticorruption Rhetoric" |
-
|
56,658
|
CIPE - Transforming Business Practice through Corporate Governance |
-
|
63,046
|
MSI - Support for Armenia Anti-Corruption Study
|
-
|
66,630
|
Tour Santander group - Phare Democracy |
|
80,986
|
Program - Citizen Participation and Public Hearings |
|
|
Other projects |
447,314
|
301,925
|
|
1,565,062
|
1,853,775
|
|
|
|
|
|
|
Income from financing for assets |
35,146
|
40,932
|
|
1,600,208
|
1,894,707
|
3. Expenses on grants,contributions and projects
In BGN |
2002
|
2001
|
Salaries and benefits |
92,002
|
71,741
|
Hired services |
747,313
|
928,492
|
Depreciation |
51,604
|
48,375
|
Supplies and consumable |
58,729
|
92,873
|
Other expenses |
360,253
|
379,379
|
|
1,309,901
|
1,520,860
|
Hired services are related particularly to undertaking of the projects activities
and reported to the grantors to the amount of BGN 47,313.They include expenses
for honoraria,communication and printing services.Substantial amount of honoraria
consist of payment for consulting services to outside and local consultants
and experts.
4. Foreign exchange gains or losses
In BGN |
2002
|
2001
|
Exchange rate gains |
128,527
|
328,576
|
Exchange rate losses |
(400,501)
|
(322,241)
|
|
(271,974)
|
6,335
|
5. Impairment of assets
In BGN |
2002
|
2001
|
Balance at the beginning of the year |
(19,611)
|
-
|
Losses on impairment of receivables incurred during the period |
-
|
(19,611)
|
Write off receivable against provisions
incurred in previous years
|
-
|
-
|
Balance at the end of the year |
(19,611)
|
(19,611)
|
Total (increase)/ decrease of bad debt allowance |
(19,611)
|
(19,611)
|
6. Property, plant and equipment
In BGN |
Land and buildings
|
Plant and equipment
|
Vehicles
|
Fixtures and fittings
|
Under
construction
|
Total
|
Cost |
|
|
|
|
|
|
Balance at 1 January 2002 |
229,662
|
182,877
|
175,116
|
95,820
|
335,923
|
1,019,398
|
|
|
|
|
|
|
|
Acquisitions |
-
|
19,983
|
-
|
32,028
|
-
|
52,011
|
Disposals |
_______-
|
(67,613)
|
_______-
|
(37,648)
|
_______-
|
(105,261)
|
Balance at 31 December 2002 |
229,662
|
135,247
|
175,116
|
90,200
|
335,923
|
966,148
|
|
|
|
|
|
|
|
Depreciation and impairment losses |
|
|
|
|
|
|
Balance at 1 January 2002 |
1,433
|
84,607
|
116,654
|
88,741
|
-
|
291,435
|
Depreciation charge for the year |
4,298
|
31,745
|
10,654
|
2,466
|
-
|
49,163
|
Depreciation of disposals |
_______-
|
(58,096)
|
_______-
|
(32,410)
|
|
(90,506)
|
Balance at 31 December 2002 |
5,731
|
58,256
|
127,308
|
58,797
|
_______-
|
250,092
|
|
|
|
|
|
|
|
Carrying amount |
|
|
|
|
|
|
At 1 January 2002 |
228,229
|
98,270
|
58,462
|
7,079
|
335,923
|
727,963
|
At 31 December 2002 |
223,931
|
76,991
|
47,808
|
31,403
|
335,923
|
716,056
|
7. Intangible assets
In BGN |
Software
|
Total
|
Cost |
13,228
|
13,228
|
Balance at 1 January 2002 |
_______-
|
_______-
|
Acquisitions |
13,228
|
13,228
|
Balance at 31 December 2002 |
|
|
|
|
|
Amortisation and impairment losses |
|
|
Balance at 1 January 2002 |
4,167
|
4,167
|
Amortisation charge for the year |
2,441
|
2,441
|
Balance at 31 December 2002 |
6,608
|
6,608
|
|
|
|
Carrying amount |
|
|
At 1 January 2002 |
9,061
|
9,061
|
At 31 December 2002 |
6,620
|
6,620
|
8. Investments in associates
In BGN |
2002
|
2001
|
Agency Vitosha EOOD |
5,006
|
5,006
|
Vitosha Research ROOD |
5,000
|
5,000
|
|
10,006
|
10,006
|
CSD is a non-profit organisation which has invested in two companies in prior
accounting periods. For the financial year 2002 the subsidiaries that perform
business activities in line with the overall goals and the mission of CSD have
received no further financial support. Their financial statements have been
audited by certified chartered accountants according to Bulgarian legislation,
for which some details are presented below:
|
Net Assets
|
Profit after tax
|
In BGN |
2002
|
2001
|
2002
|
2001
|
Agency Vitosha EOOD |
49 740
|
43 061
|
6 766
|
3 787
|
Vitosha Research EOOD |
67 525
|
27 016
|
40 609
|
18 222
|
|
117 265
|
70 077
|
47 375
|
22 009
|
9.Other investments
|
Maturity
|
Nominal value
|
Number of bonds
|
Balance as at 31 December 2002
|
31 December 2002 |
|
EUR
|
BGN
|
|
BGN
|
Bulgarian -American Bank |
28 March 2005 |
300,000
|
586,749
|
300
|
590,529
|
First Investment Bank |
24 October 2003 |
300,000
|
586,749
|
300
|
601,525
|
|
|
|
|
|
1,192,054
|
The financial assets held-to-maturity realise gains accounted for as financial
income in the Statement of revenues, expenditures and changes in fund balances
in the amount of BGN 30,433.
The Center has accrued income and municipality tax in the Statement of revenues,
expenditures and changes in fund balances in the amount of BGN 7,151.
10. Receivables
In BGN |
2002
|
2001
|
Completed Projects |
107,219
|
50,777
|
Other receivables |
66,394
|
23,863
|
Impairment of assets |
(19,611)
|
(19,611)
|
|
154,002
|
55,029
|
11. Cash and cash equivalents
In BGN |
2002
|
2001
|
In local currency |
5,114
|
50,050
|
In foreign currency |
1,342,928
|
2,280,695
|
Deposits |
2,560
|
800
|
At bank |
1,350,602
|
2,331,545
|
|
|
|
In local currency |
25,078
|
14,779
|
In foreign currency |
29,269
|
40,284
|
In hand |
54,347
|
55,063
|
|
1,404,949
|
2,386,608
|
12. Deferred expenses
In BGN |
2002
|
2001
|
USAID/DPK Consulting - Coalition 2000 Anti-Corruption
Program |
595,416
|
-
|
European Commission - Promoting European Standards in Human
Rights: Establishment of Ombudsman Institution in Bulgaria |
85,324
|
-
|
The German Marshall Fund - Illegal Trafficking
and Corruption in Southeast Europe (2001-2002); Corruption Assessment in
Southeast Europe (2002-2003) |
25,218
|
24,431
|
European Commission - The Informal Economy in the
EU Accession Countries (Inforec) |
38,117
|
-
|
British Embassy - Promoting European Standards
in Human Rights: Establishment of Ombudsman Institution in Bulgaria |
20,299
|
-
|
InterMedia - International Audience Research Program
|
4,942
|
-
|
GVG - Study on the Social Protection Systems in
the 13 Applicant Countries |
5,412
|
-
|
EC/Gallup Hungary - Eurobarometer Surveys in Countries
applying for EU Membership |
-
|
10,799
|
Office of Research - Public Opinion Survey in Bulgaria
|
-
|
6,150
|
Other projects |
2,587
|
353
|
|
777,315
|
41,733
|
Since revenue 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.
13. Payables
In BGN |
2002
|
2001
|
Payable to the budget |
36,159
|
11,577
|
Salaries,benefits and social security payable |
20,010
|
13,350
|
Payable to suppliers |
10,595
|
14,893
|
Other payable |
22,620
|
14,879
|
|
89,384
|
54,699
|
14. Deferred revenue
In BGN |
2002
|
2001
|
For project activities |
1,112,440
|
79,369
|
For fixed assets |
123,702
|
120,189
|
|
1,236,142
|
199,558
|
15. Financial instruments
Effective interest rates and repricing analysis
In respect of income-earning financial assets and interest-bearing financial
liabilities, the following table indicates their effective interest rates at
the balance sheet date and the periods in which they reprice.
In BGN |
Note
|
Effective Interest rate
|
Total
|
6 months or less
|
Cash and cash equivalents: |
|
|
|
|
Deposit in Bulgarian - American Bank -fixed rate per a.n. |
|
4,05% |
565,488
|
565,488
|
Cash in hand |
|
- |
25,078
|
25,078
|
Cash at bank |
|
0,2 -0,5% |
814,383
|
814,383
|
|
11 |
|
1,404,949
|
1,404,949
|
Bonds issued by the Bulgarian -American Bank |
|
6,67% |
590,529
|
590,529
|
Bonds issued by the First Investment Bank |
|
4,61% |
601,525
|
601,525
|
|
9 |
|
1,192,054
|
1,192,054
|
16. Related parties
Related party
payables
|
Nature of the
related party relationship
|
Transaction during the year
|
Amount
|
Outstanding balance 31 December 2002
|
|
|
|
|
|
ARC Fund
|
Management control
|
Partner organization within Coalition 2000 initiative
|
35,772 USD
|
67,251 BGN
|
17. Events subsequent to the balance sheet date
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 2002.
18. Contingencies
There are no contingencies to report on.
|