FC 108/6 iii)


Finance Committee

Hundred and eighth Session

Rome, 27 September – 1 October 2004

Audited Accounts – FAO Commissary 2003

 

Attached for the approval of the Finance Committee are the FAO Commissary’s Financial Statements for 2003.

 

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

Food and Agriculture Organisation of the United Nations
Viale delleTerme di Caracalla, 00100, Rome, Italy
Email [email protected]
Tel: +39.06.570-ext 55780and 57135
Fax: + 39.06570-55867
18 June 2004

 

OPINION OF THE EXTERNAL AUDITOR
FAO STAFF COMMISSARY FUND

FINANCIAL STATEMENTS FOR THE PERIOD
1 JANUARY TO 31 DECEMBER 2003

I have examined the accompanying financial statements, as stated on the attached pages 1 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, 2003. These financial statements are the responsibility of the Staff Commissry’s management on behalf of the Director-General, FAO. 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 for 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 and that the financial statements are free of material mis-statement. The 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 31 December 2003 and the results of its operations for the period then ended, they are prepared in accordance with stated accounting policies and the transactions were in accordance with the financial regulations and legislative authority.

Pranab Kumar Mukhopadhyay
Director, External Audit

 

FOOD AND AGRICULTURE ORGANIZATION
OF THE UNITED NATIONS

STAFF COMMISSARY FUND ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2003

 

 

Submitted by: Approved by:
    
………………………………….
 		 ………………………………….
 
J.P. Decraene
Commissary Manager, AFSCM
05 July 2004		 D. Alhéritière
Director, AFS

 

STAFF COMMISSARY FUND

I. Income and Expenditures Statement
for the year ended 31 December 2003
(all figures in € )

 

2003 2002
 
Sales 11,718,117 11,318,859
Less: Cost of Goods Sold (notes 1c and 12) 9,710,102 9,403,140
 
Gross Trading Surplus 2,008,015 1,915,719
 
Less: Operating Expenses
Personnel (note 2a and 2b)
Guard Services (note 2c)		 1,538,416
25,822		 1,494,463
 25822
Support Cost Reimbursement to FAO (note 3) 78,780 68,560
General Operating Expenses 98,601 113,499
Depreciation 105,577 86,573
Provision for Terminal Emoluments (note 4) (24,875) 9,104
 
1,822,321 1,798,021
 
Operating Surplus/(Deficit) 185,694 117,698
 
Add: Other income (note 5) 182,823 87,042
 
Less: Contribution to Staff Welfare Fund (note 6) 247,181 113,188
 
Net Surplus/(Deficit) 121,336 91,552
 
Transfers (To)/From Reserves
 
(To)/From Working Capital Fund (note 7) (51,904) 50,917
(To)/From retained Surplus (note 8) (69,432) (142,469)
     

Notes 1 to 13 form an integral part of these accounts

 

STAFF COMMISSARY FUND

II. Balance Sheet at 31 December 2003
(all figures in € )

 

2003 2002
 
CURRENT ASSETS
Cash at Bank and in Hand (note 9) 1,001,371 1,092,880
Stocks (note 10) 1,855,520 1,620,798
Sundry Debtors 12,816 54,826
 
FIXED ASSETS (note 11) 310,179 409,842
 
TOTAL 3,179,886 3,178,346
 
Less
CURRENT LIABILITIES
Creditors 889,457 1,113,848
Payable to Staff Welfare Fund (note 6) 166,680 37,209
  1,056,137 1,151,057
 
LONG TERM LIABILITIES
Terminal Emoluments Reserve (note 4) 169,055 193,930
 
TOTAL 1,225,192 1,344,987
 
NET ASSETS 1,954,694 1,833,358
 
Represented by:
Working Capital Fund (note 7) 1,523,355 1,471,452
Retained Surplus (note 8) 431,339 361,906
 
1,954,694 1,833,358
 

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 2003
(all figures in € )

 

2003 2002
 
Net Cash Inflow/ (Outflow)
from Operating Activities (note 13a) (218,979) 538,284
 
Return on Servicing of Finance
Interest Received
Exceptional Income ( note 5 ) 		35,547
97,838		 35,371
500
 
Investing Activities
Payments to Acquire Tangible Fixed Assets (5,915) (323,761)
Increase/ (Decrease) in Cash (note 13b) (91,509) 250,394
 

Notes 1 to 13 form an integral part of these accounts

 

STAFF COMMISSARY FUND
ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2003

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 2003
(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
Assets and liabilities in currencies other than Euro have been translated at the UN operational rate of exchange at 31 December 2003. 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 one Professional and one GS 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 increased 2.9 % in 2003.
(b) Following is a breakdown of staff costs
 
2003 2002
€ €
FAO Commissary Staff 1,201,184 1,089,204
Accrual FAO /After Service M.P. 23,875 24,422
Accrual GS Staff Language factor ----- 41,571
FAO TAP Staff 129,187 176,997
COASE Staff 209,992 188,091
Balance at 31 December 1,564,238 1,520,285
 
(c) The Operating Expenses include a FAO back charge of € 25,822.00 for guard services received in 2003.
   
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:
 
2003 2002
€ €
Utilities & Maintenance 30,870 29,284
External Audit 13,830 13,092
Internal Audit 34,080 26,184
Total 78,780 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:
 
2003 2002
€ €
Balance at 1 January 193,930 184,826
Annual Charge (24,875) 9,104
Balance at 31 December 169,055 193,930
 
5 Income
   
Other Income
2003 2002
€ €
 
Bank Interest 24,642 38,343
* Exceptional Income 97,838 500
Profit/(Loss) on Exchange 60,343 48,199
 
Total 182,823 87,042
 
* GS staff language factor accrual from November 2000 to December 2002 transferred to P & L Account after the decision of the ILO’S Administrative Tribunal
    
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 2003 and its movement for the year then ended were as follows:
     

2003

2002

€

€

Balance at 1 January 37,209 36,538
Add: Contribution to Staff Welfare Fund 117,181 113,188
Add: Profit 2003 to Staff Welfare Fund 130,000 ----------
284,390 149,726
Less: Amount paid during the year 117,710 112,517
 
Balance at 31 December 166,680 37,209
 
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:
         

2003

2002

€

€

 
Balance at 1 January 1,471,452 1,522,369
Transfer To/(From) Working Capital Fund 51,904 (50,917)
 
Balance at 31 December 1,523,355 1,471,452
 
8 Retained Surplus
   
The movements on the retained surplus during the year were as follows
 
2003 2002
€ €
 
Balance at 1 January 361,907 219,437
Transferred To/(From) Retained Surplus 69,432 142,469
 
Balance at 31 December 431,339 361,906
 
9 Cash at Bank and in Hand
   
Cash at bank and in hand are made up as follows
 

2003

2002

Description

€

€

Cash at bank, current account 964,667 1,011,592
Cash in hand 36,704 81,288
Total 1,001,371 1,092,880
 
10 Stocks
   
Stocks are made up as follows:
 
2003 2002
Description € €
Goods 1,446,263 1,535,415
Petrol/Oil coupons 409,257 85,383
 
Total 1,855,520 1,620,798
 
11 Fixed Assets
   

(Figures in € )

Cost: Improvements of Premises Furniture Equipment Motor Vehicle Total
At 1.1.2003 229,877 273,263 476,255 114,595 1,093,990
Additions 5,915 5,915
Disposals (26,674) (26,674)
 
At 31.12.2003 229,877 273,263 455,496 114,595 1,073,231
Depreciation:
At 1.1.2003 85,059 73,040 422,316 103,734 684,149
Charges for year 34,332 46,771 19,347 5,127 105,577
Disposals (26,674) (26,674)
   
At 31.12.2003 119,391 119,811 414,989 108,861 763,052
Net Book Amount
At 31.12.2003 110,486 153,452 40,507 5,734 310,179
At 31.12.2002 144,818 200,223 53,939 10,861 409,842
   
12 Write – Offs
   
The composition of the write-offs account at 31 December 2003 was as follows:
 
2003 2002
€ €
Goods write-offs 11,496 9,940
Total 11,496 9,940
 
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
 

2003

2002

€

€

Net Operating Surplus 185,694 117,698
Contribution to Staff Welfare Fund (247,181) (113,188)
Depreciation Charges 105,577 86,573
Profit/(Loss) on Exchange 60,343 48,199
(Increase)/Decrease in Stock (234,722) 75,073
(Increase)/Decrease in Debtors 31,105 (10,120)
Increase/(Decrease) in Current Liabilities (94,920) 324,945
Increase in Provision for Terminal Emoluments (24,875) 9,104
 
Total (218,979) 538,284
 
(b) Analysis of Changes in Cash
 

2003

2002

€

€

 
Cash at 1 January 2003 1,092,880 842,486
Net inflow (91,509) 250,394
Cash at Bank and in Hand at 31.12.03 1,001,371 1,092,880