FC 104/6(ii)


Finance Committee

Hundred fourth Session

Rome, 15-19 September 2003

Audited Accounts – FAO Commissary 2002

 

Attached for the information of the Finance Committee Members are the FAO Commissary’s Financial Statement for 2002

 

 

Office of External Auditor, FAO, Rome
(Comptroller and Auditor General Of India)

24 June 2003

OPINION OF THE EXTERNAL AUDITOR
FAO STAFF COMMISSARY FUND

FINANCIAL STATEMENT FOR THE PERIOD
1 JANUARY TO 31 DECEMBER 2002

I have examined the accompanying financial statements, as stated on the attached pages 3 to 11, comprising the income and expenditure statements, the balance sheet, the statement of cash flow and the notes to the statements of the Food and Agriculture Organisation’s Staff Commissary Fund for the year ended 31 December, 2002. These financial statements are the responsibility of the Staff Commissry’s management on behalf of the FAO Director-General. My responsibility is to express an opinion on these financial statements based on the audit.

The audit was conducted in accordance with the Common Auditing Standards of the Panel of External Auditors of the United Nations, the Specialised Agencies and the International Atomic Energy Agency. These standards require that the audit be planned and carried out to obtain reasonable assurance that the financial statements are free of material mis-statements. An audit also includes assessing the accounting principles used and evaluating the overall financial statement presentation.

As a result of my audit, I am of the opinion that the financial statements present fairly the financial position of the Staff Commissary Fund as at 31st December 2002, and the results of its operations for the period then ended, that they are prepared in accordance with the stated accounting policies and that the transactions were in accordance with the financial regulations and legislative authority.


Pranab K. Mukhopadhyay
Director, External Audit

 

     

FOOD AND AGRICULTURE ORGANIZATION
OF THE UNITED NATIONS

STAFF COMMISSARY FUND ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2002

 
  
  
 
 
 
  
Submitted by: Approved by:
   
………………………………….... ………………..………………….
M. Gauchon D. Alhéritière
Officer-in-Charge, AFSCM Director, AFS
15 July 2003
   

    

   

STAFF COMMISSARY FUND

I. Income and Expenditures Statement
for the year ended 31 December 2002

(all figures in € )

 

2002 2001
 
Sales 11,318,859 11,710,529
Less: Cost of Goods Sold (notes 1c and 12) 9,403,140 9,640,979
 
Gross Trading Surplus 1,915,719 2,069,550
 
Less: Operating Expenses
Personnel (note 2a and 2b)
Guard Services (note 2c)		 1,494,463
25,822		 1,611,203
24,790
Support Cost Reimbursement to FAO (note 3) 68,560 68,560
General Operating Expenses 113,499 110,314
Depreciation 86,573 66,848
Provision for Terminal Emoluments (note 4) 9,104 (11,555)
 
  1,798,021 1,870,160
 
Operating Surplus/(Deficit) 117,698 199,390
 
Add: Other income (note 5) 87,042 91,467
 
Less: Contribution to Staff Welfare Fund (note 6) 113,188 117,105
 
Net Surplus/(Deficit) 91,552 173,752
 
Transfers (To)/From Reserves
 
(To)/From Working Capital Fund (note 7) 50,917 (82,285)
(To)/From retained Surplus (note 8) (142,469) (91,467)


Notes 1 to 13 form an integral part of these accounts
 

STAFF COMMISSARY FUND

II. Balance Sheet at 31 December 2002)

(all figures in € )

 

2002 2001
 
CURRENT ASSETS
Cash at Bank and in Hand (note 9) 1,092,880 842,486
Stocks (note 10) 1,620,798 1,695,871
Sundry Debtors 54,826 41,735
 
FIXED ASSETS (note 11) 409,842 64,211
 
TOTAL 3,178,346 2,644,303
 
Less
CURRENT LIABILITIES
Creditors 1,113,848 681,133
Payable to Staff Welfare Fund (note 6) 37,209 36,538
  1,151,057 717,671
 
LONG TERM LIABILITIES
Terminal Emoluments Reserve (note 4) 193,930 184,826
 
TOTAL 1,344,987 902,497
 
NET ASSETS 1,833,358 1,741,806
 
Represented by:
Working Capital Fund (note 7) 1,471,452 1,522,369
Retained Surplus (note 8) 361,906 219,437
1,833,358 1,741,806
 


Notes 1 to 13 form an integral part of these accounts
 

STAFF COMMISSARY FUND

III. Statement of Cash Flow for the Year ended 31 December 2002

(all figures in € )

 

2002 2001
 
Net Cash Inflow/ (Outflow)
from Operating Activities (note 13a) 538,284 (7,518)
 
Return on Servicing of Finance
Interest Received
Exceptional Income ( note 5 ) 		35,371
500		 55,988
413
 
Investing Activities
Payments to Acquire Tangible Fixed Assets (323,761) (10,514)
 
Increase/ (Decrease) in Cash (note 13b) 250,394 38,369
 


Notes 1 to 13 form an integral part of these accounts
 

 

STAFF COMMISSARY FUND
ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2002
NOTES TO THE ACCOUNTS

 

1. Summary of Significant Accounting Policies
   
(a) Accounting Convention
The accounts have been prepared on an accrual basis under the historical cost convention.
 
(b) Depreciation
Depreciation is calculated using the straight-line method to write off the cost of fixed assets over their estimated useful life of five years. The first year’s depreciation of new assets is based on the actual number of months the asset has been in service.
 
Note: Recognising that the Organisation estimates a useful life of four years for all computer equipment, all of the Commissary's computer equipment has been depreciated using a four-year straight-line method in 2002.
 
(c) Cost of goods sold and stocks
Stocks are stated at the lower of cost and net realisable value. Cost is comprised of cost of goods, write-offs, transportation, customs clearance and insurance premiums. The cost of stocks is determined using the first-in, first-out (FIFO) method.
 
(d) Foreign currencies
Effective1st January 2002, Italian Lire assets and liabilities were converted into € at the fixed parity rate of Lira 1936.27. Comparative data as at 31 December 2001, where applicable has been reflected in these financial statement at the rounded Euro equivalent. Assets and liabilities in currencies other than Euro have been translated at the UN operational rate of exchange at 31 December 2002. Income and expenditure items have been recorded at the rate of exchange in effect at the date of transaction. Any eventual differences arising when payment is made are reflected under the income and expenditure statement.
 
2. Cost of Personnel
 
(a) The accounts reflect payroll cost as charged by FAO. Provisions for terminal emoluments are made separately as explained in Note 4.
Payroll cost includes compensation for Commissary staff including two General Service staff members dealing with car import privileges. Their cost is absorbed by mark-ups on petrol coupons, ensuring thereby that Commissary customers not entitled to petrol do not subsidise the services of the Car Import Office.
In line with their existing job descriptions, both the Commissary Manager and the Assistant Commissary Manager spend some time with the supervision of the FAO catering operations.
It should be noted that personnel costs decreased 7 % in 2002, due to the retirement of a senior General Service Staff, and the accrual to After Service Medical Plan was limited to the year 2002. Commissary Management has set-up an GS staff language factor accrual pending a decision by the ILO’s Administrative Tribunal
   
(b) Following is a breakdown of staff costs
  2002 2001
  € €
     
FAO Commissary Staff 1,089,204 1,202,553
Accrual FAO /After Service M.P. 24,422 53,640
Accrual GS Staff Language factor 41,571 56,266
FAO TAP Staff 176,997 148,996
COASE Staff 188,091 174,539
     
Balance at 31 December

1,520,285

1,635,994

 

(c)

 The Operating Expenses include a FAO back charge of € 25,822.00 for guard services received in 2002.
   
3 Support Cost Reimbursement to FAO
 
At the Twenty-fifth session of the FAO Conference held on 11 – 30 November 1989, it was decided that the Commissary should reimburse FAO in respect of all services provided to the Commissary and that the related actual costs should be charged to the Commissary on an estimated basis henceforward. The Support Cost Reimbursement to FAO was made up as follows:
 
  2002 2001
  € €
Electricity 10,629 10,629
Cleaning 12,509 12,509
Water 2,272 2,272
Heating 1,586 1,586
Garbage Collection 2,288 2,288
External Audit 13,092 13,092
Internal Audit 26,184 26,184
Total 68,560 68,560
 
4 Terminal Emoluments Fund
 
At the Eighteenth session of the Committee on Financial Control on 17 – 22 May 1954 it was decided to create a Reserve for costs for terminal indemnities. Further to this, at the Sixty-first session of the FAO Finance Committee held on 14 – 25 September 1987, it was decided that the level of the Terminal Emoluments Reserve should represent 75 percent of the calculated expenses for repatriation grants and unused annual leave. At the Seventy-fourth session of Finance Committee held on 14 – 22 September 1992 it was decided, as the Commissary is a self-sufficient unit and is requested to operate without cost of the Organisation, to accrue in full for known liabilities in accordance with generally accepted accounting principles applicable to commercial concerns.
The movements in the Terminal Emoluments Reserve during the year were as follows:
  2002 2001
  € €
 
Balance at 1 January 184,826 196,382
Annual Charge 9,104 (11,556)
 
Balance at 31 December 193,930 184,826
     
5 Income
Other Income
  2002 2001
  € €
 
Bank Interest 38,343 51,962
* Exceptional Income 500 413
Profit/(Loss) on Exchange 48,199 39,092
  
Total 87,042 91,467
  
* Trade-in value for exchanged salesroom equipment
6 Staff Welfare Fund
In accordance with Conference Resolution 18/93, effective with the year ending 31 December 1992, the equivalent of 1 per cent of total sales of the Staff Commissary is paid to the Staff Welfare Fund.
The composition of the account payable to the Staff Welfare Fund at 31 December 2002 and its movement for the year then ended were as follows:

2002

2001

 

€

€

Balance at 1 January 36,538 34,340
Add: Contribution to Staff Welfare Fund 113,188 117,105
  149,726 151,445
  
Less: Amount paid during the year 112,517 114,907
  
Balance at 31 December 37,209 36,538
  
7 Working Capital Fund
 
At the Sixth session of the FAO Conference held from 19 November – 6 December 1951 it was decided that the Commissary should establish a fund for the purchase of stocks for the Commissary, the fund to be reimbursed from the proceeds of sale of such stocks.
At the Ninety-second session of the Council held from 3 – 5 November 1987 it was decided that the Working Capital Fund should be maintained at a level of 12 percent of annual turnover. Subsequently at the Seventy-second session of the Finance Committee held from 16 – 26 September 1991, it was decided that the level of the Working Capital Fund should be increased from 12 percent to 13 percent of turnover.
  
The movements in the Working Capital Fund during the year were as follows:
  

2002

2001

€

€

  
Balance at 1 January 1,522,369 1440,084
Transfer To/(From) Working Capital Fund (50,917) 82,285
  
Balance at 31 December 1,471,452 1,522,369
  
8 Retained Surplus
  
The movements on the retained surplus during the year were as follows
2002 2001
€ €
 
Balance at 1 January 219,437 127,970
Transferred To/(From) Retained Surplus 142,469 91,467
 
Balance at 31 December 361,906 219,437
 
9 Cash at Bank and in Hand
 
Cash at bank and in hand are made up as follows
 

2002

2001

Description

€

€

 
Cash at bank, current account 1,011,592 652,437
Cash in hand 81,288 190,049
 
Total 1,092,880 842,486
 
10 Stocks
 
Stocks are made up as follows:
2002 2001
Description € €
 
Goods 1,535,415 1,448,452
Petrol/Oil coupons 85,383 234,419
 
Total 1,620,798 1,695,871
 
11 Fixed Assets
 

(Figures in € )

Cost: Improvements of Premises Furniture Equipment Motor Vehicle Total
At 1.1.2002 58,220 163,804 463,060 109,573 794,657
Additions 171,657 226,132 26,414 8,000 432,203
Disposals (116,673) (13,219) (2,978) (132,870)
At 31.12.2002 229,877 273,263 476,255 114,595 1,093,990
Depreciation:
At 1.1.2002 58,220 161,531 411,704 98,991 730,446
Charges for year 26,839 28,182 23,831 7,721 86,573
Disposals (116,673) (13,219) (2,978) (132,870)
At 31.12.2002 85,059 73,040 422,316 103,734 684,148
Net Book Amount
At 31.12.2002 144,818 200,223 53,939 10,861 409,842
At 31.12.2001 2,273 51,357 10,582 64,212
             
12 Write – Offs
   
The composition of the write-offs account at 31 December 2002 was as follows:
  2002 2001
  € €
 
Goods write-offs 9,940 7,921
 
Total 9,940 7,921
 
As of 31 December 1999, the write-offs have been included in the cost of goods sold as per Audit’s recommendation.
   
13 Statement of Cash Flows
   
(a) Reconciliation of Operating Surplus to Net Cash Inflow/(Outflow) from Operating Activities
 

2002

2001

 

€

€

Net Operating Surplus 117,698 199,390
Contribution to Staff Welfare Fund (113,188) (117,105)
Depreciation Charges 86,573 66,848
Profit/(Loss) on Exchange 48,199 39,092
(Increase)/Decrease in Stock 75,073 (254,011)
(Increase)/Decrease in Debtors (10,120) (23,322)
Increase/(Decrease) in Current Liabilities 324,945 93,145
Increase in Provision for Terminal Emoluments 9,104 (11,555)
 
Total 538,284 (7,518)
 
(b) Analysis of Changes in Cash
 

2002

2000

 

€

€

 
Cash at 1 January 2002 842,486 804,117
Net inflow 250,394 38,369
Cash at Bank and in Hand at 31.12.02 1,092,880 842,486