FinDev Audit Report 2004
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AUDIT OPINION on audit examination of the data presented in financial-accounting statements of “Finance for Development” LLC as of January 1, 2005 Baku city March 28, 2005 According to the agreement AP #015628 dated March 22, 2005 between “M&J Accuracy Consulting” LLC acting on the basis of license #AT\029 dated October 19, 2001 of the Audit Chamber of Azerbaijan Republic and “Finance for Development” LLC, the audit examination of accuracy of the data presented in the company’s financial-accounting statements as of January 1, 2005 was carried out by the auditor Avazov Kamil Sherail. Audit commenced on March 23, 2005 and ended on March 28, 2005. The management of the ordering company bears the responsibility for the accuracy of documents submitted for audit examination. My duty is to give an evaluation to the customer’s financial position and accuracy of items in annual accounting reports as a result of audit examination of the submitted documents. I am responsible for the considerations expressed in this opinion. I have fulfilled audit procedures in order to make these considerations. During audit examination, confirmative materials were checked according to the submitted documents, also accounting principles of the ordering organization were estimated. In regard with my official duty, as a result of the audit examination it was defined that the accounting and annual balance-sheet correspond to legislative guidelines and the Charter. ...
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AUDIT OPINION on audit examination of the data presented in financial-accounting statements of “Finance for Development” LLC as of January 1, 2005 Baku cityMarch 28, 2005 According to the agreement AP #015628 dated March 22, 2005between “M&J Accuracy Consulting” LLC acting on the basis of license #AT\029 dated October 19, 2001 of the Audit Chamber of Azerbaijan Republic and “Finance for Development” LLC,the audit examination of accuracy of the data presented in the companys financial-accounting statements as of January 1, 2005 was carried out by the auditor Avazov Kamil Sherail. Audit commenced on March 23, 2005 and ended on March 28, 2005. The management of the ordering company bears the responsibility for the accuracy of documents submitted for audit examination. My duty is to give an evaluation to the customers financial position and accuracy of items in annual accounting reports as a result of audit examination of the submitted documents. I am responsible for the considerations expressed in this opinion. I have fulfilled audit procedures in order to make these considerations. During audit examination, confirmative materials were checked according to the submitted documents, also accounting principles of the ordering organization were estimated. In regard with my official duty, as a result of the audit examination it was defined that the accounting and annual balance-sheet correspond to legislative guidelines and the Charter. In accounting view, annual balance-sheet describes the juridical persons asset, financial position and income in proper manner with reality. I consider that enough audit proofs were gathered in order to form an audit opinion as a result of the conducted audit examination. Opinion is compiled on March 28, 2004 in two copies with equal validity. One of the copies remains with the ordering organization, the other is held with the audit company. Audit companys address: J.Jabbarly 40, Baku Director of “M&J Accuracy Consulting” LLC E.Jafarov
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REPORT on audit examination of the accuracy of the data presented on balance-sheet and tax statement as of January 1, 2005 of “Finance for Development” LLC Baku cityMarch 25, 2005 We, Avazov Kamil Sherail - the auditor, and Shikhaliyeva Lala Rauf – the chief specialist of the “M&J Accuracy Consulting” LLC audit company acting on the basis of license #AT\029 dated October 19, 2001 of the Audit Chamber of Azerbaijan Republic conducted audit examination of the accuracy of the data presented in the balance-sheet and tax statement as of January 1, 2005 according to the agreement # AP 015628 of March 22, 2005 signed with “Finance for Development” LLC non-banking credit organization (referred to as “Company” hereinafter). Audit commenced on March 23, 2005 and ended on March 28, 2005. Below-mentioned persons carried the responsibility for the companys operations during the audited period: Chair of Board of Directors – Aliyev Jalal Sadig Chief Accountant– Maharov Abulfaz Kamran The audit examinationwas conducted on the basis of the auditing programs approved by the Audit Chamber of the Azerbaijan Republic, and the documents submitted by the company, with the consent of the Chair of Board of Directors and in presence of the Chief Accountant. Previous audit examination of the company has been held by Avazov Kamil Sherail - the auditor, and Shikhaliyeva Lala Rauf - the chief specialist of the “M&J Accuracy Consulting” LLC acting on the basis of license #AT\029 dated October 19, 2001 of the Audit Chamber of Azerbaijan Republic. Findings of the previous audit Previous audit examination of the company for the results of the year 2003 according to the agreement AP # 010410 was conducted by Avazov Kamil Sherail – the director of the auditing company “M&J Accuracy Consulting” LLC, acting on the basis of license #AT/029 dated October 19, 2001 issued by the Audit Chamber of Azerbaijan Republic. The audit examination was held during June 18, 2004 and June 24, 2004 and a positive audit opinion was expressed to the company. General information about the company “Finance for Development” limited-liability non-banking credit organization was registered at the Ministry of Justice of Azerbaijan Republic on September 23, 2002 with certificate #1067, and its Charter was confirmed. The founder of the organization is “OXFAM” International; Humanitarian Organization registered in the Charity Committee of England and Wales. “Finance for Development” is a not-for-profit financial institution established to provide financial support to low-income persons, small entrepreneurs, internally displaced persons and refugees by issuing them micro loans or in other form stipulated in the Charter. Financial sources necessary for “Finance for Development” to carry out its activities consist of legally received grants and donations, as well as receipts from own micro credit operations. The Charter Capital of “Finance for Development” forms 34,237.0 thousand manats, 24,455.0 thousand manats out of which was deposited in cash as monetary contribution and 9,782.0 thousand manats as in-kind contribution consisted of fixed assets. 2
In order to conduct limited bank operation in both local and foreign currency “Finance for Development” was given a special agreement (license) with the letter 02-10/110by the National Bank of Azerbaijan Republic on April 11, 2003. The special agreement was registered with 133-GBon April 10, 2003, in the Central list of the National Bank. The Centre was entered into state registration at the Ministry of Justice of Azerbaijan Republic with certificate # D-1 005 on February 15, 1996. On April 15, 2003 by the resolution of Sh.Alizade, the Founders representative, “Finance for Development – Barda” and “Finance for Development - Mingechevir”Branches were established. On May 6, 2003 Barda Branch was given a permission #133-GB/1 “for issuing loans” by the National Bank. On January 28, 2004 Mingechevir Branch was given a permission #133-GB/2 “for issuing loans” by the National Bank. Going through registration at the Nasimi District Tax Department on November 26, 2002, “Finance for Development” has received IIN(taxpayers ID number) #140112276. On October, 2004 the Baku city Tax Departments Branch #2 issued the company a new INN #1400194461. Certificate #0076291 dated November 26, 2002 and identification number 3194182 was given to the company by the State Statistical Committee of Azerbaijan Republic over the entry of economic entities into State List. Juridical address of the company is: H.Aslanov 115/8, Baku Monetary funds, bank and cash transactions The company has current bank account #735042AZM3409-01 and dollar account 735402USD3419-01 with Azerbaijan International Bank Yevlakh Branch, and current bank account #360113AZM3803-01 and dollar account 360113USD3813-01 with ABB Sahil Branch. While examining bank transactions of the company, it was revealed that these transactions were carried out in compliance with existing normative documents. At the beginning of the audited period the bank accounts balance of the company formed 128,552.9 thousand manats. It was revealed due to submitted bank documents, that after payments to suppliers, treasury, budgetary and non-budgetary foundations and different expenditure at the expense of the receipts from various sources during the year, the bank accounts balance as of January 1, 2005 totalled 9,120.7 thousand manats. While examining the appropriateness of cash transactions the following was revealed: Analytical records of the companys cash transactions are kept in the Treasure Ledger. Cash balance as of January 1, 2004 formed 85,785.8 thousand manats. At the end of the report period the cash balance totalled 25,986.8 thousand manats after reeiving cash from various sources and making expenditures on prescribed purposes during the year. Loan transactions and loan loss reserves Loans are issued in manat to groups consisting of several persons that unite on mutual guarantee. Loans are granted for up to 12 months and have monthly installments. In certain instanses, considering the charecteristics of the specific activity grace period for repayment of principal is defined. During the year loans at amount of 6,578,480.0 thousand manats were disbursed and repayments at amount of 6,219,020.0 thousands were made. For January 1, 2005 the companys net outstanding loan portfolio (total outstanding loan portfolio minus loan reserves) amounted 2,729,863.0 thousand manats. Loan loss reserves were established in accordance with National Bank standards. Loan write-off did not occur during the audited period. 3
Changes in loan accounts (in manats) 01.01.200501.01.2004 Loan portfolio2,845,400,772 1,985,851,250 Loan loss reserves(115,537,815) (97,575,025) Write-offs 00 Net loan portfolio2,729,862,957 1,888,276,225 Salary settlements Salaries fund totals 423,767.2 thousand manats with companys employees annual number being 15 on average. As salaries for January-February were funded due to grant, social deductions to State Social Protection Fund were not calculated. For other months deductions to State Social Protection Fund were calculated at 27% at amount of 97,065.4 thousand manats. Payroll tax was calculated on the employees salaries at amount of 48,230.0 thousand manats and paid out on destination. Fixed assets At the beginning of the audited period the balance value of companys fixed assets was 40,492.4 thousand manats. During the year fixed assets were purchased at amount of 23,044.8 thousand manats, depreciation in accordance with relevant norms was calculated on the balance value of the fixed assets at amount of 19,733.1 thousand manats (inclusive of difference amount as a result of underestimated depreciation in 2002 and 2003) and the residual value of the fixed assets formed 43,804.4 thousand manats at the end of the year. According to appropriate norms property tax on average value of the fixed assets in 2004 was calculated at amount of 421.5 thousand manats. Loans received In 2002 the company singed agreement with the Social Fund for the Development of Internally displaced persons on granting 3-year interest-free loan and disbursed the received loan amount of 490,000.0 thousand manats for the provision of internally displaced persons with financial resources in accordance with the terms and conditions of the agreement. Financial results The company received interest income on disbursed loans at amount of 1,082,793.2thousand manats, incomefrom other sales at amount of 4,657.1 thousand manats, total of 1,082,790.3 thousand manats.During the year the company spent expenses at amount of 765,174.9 thousand manats to this effect and ended the year 2004 with profit of 322,275.4 thousand manats. The profit earned by the company was invested in expansion of the credit portfolio according to the Charter. During the year the company received donation from its founder Oxfam international humanitarian organization at amount of 198,471.0 thousand manats which was directed to credit fund extension. No in-kind donations were received during the audited period. The composition of the expenditure is presented in the profit tax declaration. Stock and material valuables The company does not possess any as of January1, 2005. Settlements with debtors and creditors
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The company had accounts receivable of 365.2 thousand manats and accounts payable of 104,856.5 thousand manats as of January1, 2005. The list of receivable and payable accounts is attached to the act. The state of accounting The financial statements were prepared in accordance with local tax legislation requirements on accounting and National Bank guidelines. Interest income and expenses were recorded on accrual basis, other income and expenses were recordedas they occurred. The company did not face gain or lossdue to exchange rate differences for all of its settlements are stated in manat. The company uses journal – voucher system in accounting. Data on the original documents are posted to accounts in general ledgers and circulation sheets. It was defined as a result, accounting records examined selectively during audit process were kept in compliance with the Law on Accounting. Suggestions on audit findings A positive audit opinion is expressed to the company and it is suggested to keep accounting records with taking into consideration the amendments to relevant legislative acts. Enclosures Copies of the balance-sheet statement, relevant declarations, reference on the movement of assets accounts, list of debtors and creditors. Our signatures confirm the correctness of the act. Auditor of “M&J Accuracy”K.Avazov Chief specialist of “M&J Accuracy”L.Shikhaliyeva Chair of Board of Directors Finance for Development J.Aliyev Chief Accountant Finance for Development A.Maharov I received a copy of the act ___________________ A.Maharov
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