PACIFIC REGIONAL ENVIRONMENT PROGRAMME (SPREP) …...secretariat of the pacific regional environment...

19SM/Officials/WP.5.3.2/Att.1

PACIFIC REGIONAL ENVIRONMENT PROGRAMME (SPREP) FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007

uC«tiljsd A1Nr

AUDfiURS' REPORT

TO mE MEMBERS OF mE

P AaFlC REGIONAL ENVIRONMENT

2007

ManagemeJd responsibilities1re management is re5JK>nsible for ~ preparation and p-esentation of ~ financialstatements that comply with ~y 8a:epted KCOUnting practk:e, am that giV5 atrue and fair view of ~ finarK:ial position of SPREP as at 31 December 2007, and itsfinaOOal perfuru-.aIK'e am cash flows for ~ year ended on that date.

AuditmB responsI"bilitiesIt is our responsibility to express an in(presen red by mana ~ and to report

Basis «OpinionAn audit iocludes examining on a test basis, eviderK:e relevant to the amounts, anddisclosures in ~ fuaaJOl statements. It also iocludes ~~g:

~ significant estimates and judgemelrts made by mana~t in the preparationof the finaI¥:ia1 statl!ll\ents; aOOWrede' the accounting policies are appropriate to the circumstalM:es of theorganisation, consistently applied aOO adequately disclosed.

.

.

We conducted our audit in accordaIv;e with International StaMards on Auditing. Wep~ and per{\)fil1ed our audit so as to obtain an ~ information and explanations,which we considered ~ to provide us with sufficient evidelk:e, to givereasonable assurarK::e that ~ finaocial statements are free from material misstatements,w~ caused by fraud and error. In forming our opinion, we also evaluated ~overall adequacy of ~ pre8elttation of ~tion in ~ finaOOal statements.

F ugalei Sarm ~ tIM: Bridge

FugaleiPO Box 1599Apia. Samoa

(685)20322Fa.x: (685) 23722

(685)21335Email: l~iI~.ws

in ~ preparation

1

s pedfic reporting requirementsIn accordance with the specific audit reporting requirements of SPREP's FinaIrialRegulation 32 (a) to (f), we report as follows:

(b) matters affecting the comp~ and accuracy of the aa:ounts, refer to ourreport to managenet~ which is atladm, titled Mal1agen8\t report.

(c) the accuracy or otherwise of the supplies and equipment records as determinedby stocktaking and examination of the~. 1re fixed assets register has beencompleted following ~ physical count of an SPREP assets carried out in~~ 2007.

(d) tlte Draft Financial Rules and Procedures Manual (DFRPM) has been finalizedand approved by Management in 2007.

(e) the adequacy of insuraIK:e cover for the buildings, stores, furniture, equipmentand other property of SPREP. Insurance cover for buildings, furniture,equipment and other property is adequate.

We also examined on a test basis, evidence su~g ~ amounts of funds received bythe Organization from NZAID and AUSAID. We confirD1 that funds were spent inaccordaoce with the Memorandum Of Understanding (MOU) signed between therespective parties.

Unqualified OpinionIn our opinion. ~ ~ statements gives a true and fair view of the financialposition of the Secretariat of d\e P.-:ific Regional Environment Programme (SPREP) as of31 December 2007, and of ~ results of its operations for the year then ended inaccordalKe with get~1y M:i:epIe<1 -=counting principles and in accordance with ~SPREP Finaocial Regulations as amended.

Our audit was completed on 11 April 2008 and our opinion

Apia, Samoa

~L~sa m4 P~nn

is expressed as at that date.

;t...c~- ~~ K""

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ARIAT OF THE PACIFIC

BALANCE SHEETAS AT 31 DECEMBER 2007

2006 NON-CURRENT ASSETS 2007 NotesS $

4.733,920 Property, Plant and Equipment 4.932,975 3

4.733.920 Total Non-Current Assets 4.932.975

CURRENT ASSETS61.728 Cash at Bank and on Hand 292.700 4

3,861,147 Bank Term Deposits 3.078.201 5142.387 Accounts Receivables 197.766 6

4,065,262

$8,799,182 TOTAL ASSETS

REPRESENTED BY:

FUNDS AND RESERVESReserve FundCapital ReserveMedical Evacuation ReserveExchange Variation Reserve

501,4254,591,313

700,615

5,793,353

70,805

70.805

Deferred

CURRENT LIABILITIESCreditors and AccrualsProgramme & Core Funds

555.5092.379.515

2,935,024

$8,799,182

The balance sheet should be read in conjunction with the notes to theform an integral part of the financial statements.

REGIONAL

3,568,667

$8,501,642

501,425 74,591,313 8

140,000845,448 9

6,078,186

70,805 10

70,805

NON CURRENT LIABILITIESIncome

560,7591,791,892

2,352,651

$8,501,642

1112

financial statements, which

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SECRETARIAT OF THE PACIFIC REGIONAL ENVIRONMENT PROGRAMME

INCOME AND EXPENDITURE STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2007

2,006 2007Actual CORE FUNDS Actual Notes

$ INCOME $878,306 Members Contribution 917,496 463,270 Programme Management Charge 455,451 294,564 Interest 362,875

- Exchange Gain 17,138 115,686 Other income 35,364 1351,883 Donor Funds 80,000

1,803,709 TOTAL INCOME 1,868,325

EXPENDITURE(1,867,919) Executive Management & Corporate Support (1,962,694) 14/15

(1,867,919) TOTAL EXPENDITURE (1,962,694)

(64,210) EXCESS OF INCOME/(EXPENDITURE) (94,369) 613,207 Executive Mgt & Corp Support funds from prior years 548,997

548,997 Funds to be carried forward 454,628

PROGRAMME FUNDS5,429,666 Funds received during the year 4,216,496

EXPENDITURE(5,598,054) Programme Implementation (4,709,749) 14/15

(5,598,054) TOTAL EXPENDITURE (4,709,749)

(168,388) Excess of expenditure over funds received (493,253) 1,998,906 Programme funds brought forward from prior year 1,830,518

1,830,518 Programme Funds at year end 1,337,265 548,997 Core Funds at year end 454,628

$2,379,515 TOTAL FUNDS TO BE CARRIED FORWARD $1,791,892

The income and expenditure statement should be read in conjunction with the notes to financialstatement, which form an integral part of the financial statements.

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STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 31 DECEMBER 2007

2,006 CASH FLOWS FROM/(TO) OPERATING ACTIVITIES 2,007 $ $

INFLOWS5,481,549 Donor Funds 4,296,496

878,306 Members Contributions 917,496 463,270 Program Management Charge 455,451 258,984 Interest receipts 321,289 189,689 Miscellaneous receipts 183,542

7,271,798 6,174,274

OUTFLOWS(2,579,974) Salaries and related costs (3,051,537) (5,010,916) Other operating expenses (3,615,656)

(319,092) Net Cash Flows provided to Operating Activities (492,919)

CASH FLOWS FROM/(TO) INVESTING ACTIVITIES

INFLOWS- Proceeds from sale of property, plant & equipment -

OUTFLOWS(50,213) Purchase of property, plant and equipment (59,055)

(50,213) Net Cash Flows provided to Investing Activities (59,055)

(369,305) Net (Decrease)/Increase in cash held (551,974)

4,292,180 Cash at beginning of the year 3,922,875

$3,922,875 Cash and cash equivalents at year end $3,370,901

Represented By:61,728 Cash on hand and at banks 292,700

3,861,147 Term deposits 3,078,201

$3,922,875 Cash at end of year $3,370,901

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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2007

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following summary of significant accounting policies is given in order to assist in understanding (a) Accounting System

(i) The financial statements are prepared on the basis of historical costs and do not take into account current valuation of non-current assets.

(ii) The concepts of the accrual method and going concern basis of accounting are applied.

(iii) The financial statements are prepared in accordance with the accounting standards and disclosure requirements of the International Accounting Standards, except where stated otherwise.

(iv) All amount shown in the financial statements are expressed in US dollars.

(b) The Secretariat has adopted a fund accounting system, as considerable part of itsannual fund, comprises of aid funds for specified projects and programmes.

The identification of funds is maintained throughout the accounting system thusproviding the control necessary to ensure that each fund is used only for the purpose,which it is received.

(c) DepreciationFixed Assets are not being depreciated as from 2003 to coincide with the FundAccounting policy and to recognise the fact that to replace and maintain the fixedassets expenditure, provisions are included in the annual budget.

(d) Foreign Currency TransactionsAll foreign currency transactions during 2007 have been brought to account usingthe bank exchange rate in effect at the date of the transaction. Realised exchangegain/losses on term deposits matured during the year have been taken to the statement of income and expenditure. Foreign currency monetary items at balance date are translated at the closing exchange rate existing at that date.Unrealised exchange gains and losses, arising on translation of monetary itemsat balance sheet date are taken to the Exchange Variation Reserve to accommodatefuture losses or gains due to fluctuation of rates in the foreign currency market. Theincrease in the exchange variation reserve in 2007-year was due to the strengtheningof various currencies used for operations against the United States currency.

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(e) Revenue Recognition

(f) Donor FundsDonations from Aid Agencies are usually for specified purposes. These funds are separatelyidentified in the accounting system and expenditure recorded against each fund. Donor Funds,which are applied to capital items of programmes are charged to expenditure at time of acquisition and are brought into the accounts as fixed assets at the completion of programmesand are valued at their carrying value.

(g) Commitment AccountingThe Secretariat operates a system of commitment accounting for its non-salary expenditure.Expenditure is recognised when purchase orders are placed and charged against the appropriatecode.

(h) Donor Funded AssetsAssets acquired by programmes during the year are not included in SPREP's balance sheet asthe ownership of these assets remains with the donor. The treatment at this level is to expensethese assets in the Income Statement as the disbursement is incurred. At the completion ofthese programmes, donors generally donate these assets to SPREP, at which time the assetswill be included on the Balance Sheet at their carrying value.

NOTE 2. CHANGE IN ACCOUNTING POLICYThere have been no significant changes in the Accounting Policies

NOTES 3. NON-CURRENT ASSETS - PROPERTY, PLANT AND EQUIPMENT

WDV Description Cost/Valuation

31-Dec-05 31-Dec-06 Addition Disposal Adj 31-Dec-07

3,968,308 Property 4,231,375 4,688 - 4,236,063

177,253 Computer Equip 217,812 31,266 249,078

492,016 Equipment 560,657 21,305 581,962

33,441 Furniture 126,445 1,796 128,241

62,902 Vehicles 70,148 - - 70,148

$4,733,920 $5,206,437 $59,055 $0 $0 $5,265,492

Description Accumulated Depreciation WDV

1-Jan-07 Adj Disposal 31-Dec-07 31-Dec-07

Property (263,067) 140,000 (123,067) 4,112,996

Computer Equip (40,559) (40,559) 208,519

Equipment (68,641) (68,641) 513,321

Furniture (93,004) (93,004) 35,237

Vehicles (7,246) - (7,246) 62,902

($472,517) $140,000 $0 ($332,517) $4,932,975

Fixed assets are not being depreciated in 2007 in accordance with the Secretariat policyadopted in 2003. Assets are shown at the balance sheet at their written down value at31 December 2002 while assets purchased since 2003 are recorded at their historical value.

Revenue is recognised in the accounts using the cash basis concept of accounting exceptfor interest income. Expenditure is accounted for on an accrual basis.

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2,006 2,007

NOTE 4. CASH AT BANK AND ON HANDLocal Currency

(65,973) ANZ - SAT Account 133,951 (13,238) WBC - Int Waters SAT Account 4,833 38,339 WBC - EU PEIN SAT Account 73,555

- ANZ - JICA SAT Account 7,322 186 Petty Cash 196

(40,686) 219,857

Foreign Currency42,801 ANZ - USD Account 29,306 25,252 ANZ - AUD Account 28,562 13,860 ANZ - NZD Account 19,670

(25,628) WBC - USD Account (57,544) 12,677 WBC - Int Waters USD Account - 8,938 WBC - Int Maritime Org Account 13,640

24,514 WBC - NZD Call Account 39,209 102,414 72,843

$61,728 Closing Balances as at 31 December 2007 $292,700

NOTE 5. BANK TERM DEPOSITS

Local Currency201,540 WBC - SAT Account 626,885

1,038,625 SCB - SAT Account 1,415,045 829,675 NBS - SAT Account 195,600 373,200 ANZ - SAT Account 214,182

2,443,040 2,451,712

Foreign Currency477,101 WBC - AUD Account 550,009 941,006 WBC - NZD Account 76,480

1,418,107 626,489

$3,861,147 Closing Balance as at 31 December 2007 $3,078,201

NOTE 6. ACCOUNTS RECEIVABLE

3,860 Debtors 26,208 349 Credit cards 7,798

99,489 Accrued Interest 141,075 1,350 Withholding tax -

15,000 Interbank 887 22,339 Prepayments 21,798

$142,387 Closing Balance as at 31 December 2007 $197,766

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2,006 2,007

NOTE 7. RESERVE FUND448,558 Opening balances as at 1 January 2007 501,425 52,867 Add: Capital Funds balance

$501,425 Closing balance as at 31 December 2007 $501,425

The General Reserve Fund represents the sum total of accumulated results arising from PrimaryFunction and Project Management activities for the purpose of covering the organisation in casesof emergencies or unforeseen circumstances and unexpected budget shortfalls.

NOTE 8. CAPITAL RESERVECapital Reserve is represented by the following capital donations:

1,870,480 SPREP Complex by Donor Governments 1,870,480 2,370,833 Training and Education Centre Project by Japan 2,370,833

350,000 Information Resource Centre by European Union 350,000 $4,591,313 Closing Balance as at 31 December 2007 $4,591,313

NOTE 9. EXCHANGE VARIATION RESERVE583,468 Opening Balances as at 1 January 2007 700,615 117,147 Plus: Exchange difference arising from translation 144,833

$700,615 Closing Balances as at 31 December 2007 $845,448

NOTE 10. DEFERRED INCOME LIABILITY88,506 Represents Deferred Income andAssets acquired through Donor Funds 88,506

(17,701) Less: Accumulated Amortisation (17,701) $70,805 Closing Balances as at 31 December 2007 $70,805

NOTE 11. CREDITORS AND ACCRUALS130,788 Provision for Leave Entitlement 143,220 114,379 Provision for Repatriation 169,037 279,797 Trade Creditors 244,462

1,673 Payroll Creditors 440 28,872 Other Creditors and Accruals 3,600

$555,509 Closing Balance as at 31 December 2007 $560,759

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NOTE 12 DONOR FUNDS & OTHERSBalance Income Expenses Other Balance

DETAILS 1-Jan-07 Adjs 31-Dec-07Asian Development Bank (4,508) (4,508) AusAID Extra Budget 267,696 921,445 (1,105,315) 2,000 85,826 AusAID Extra Extra Budget 13,317 205,118 (125,905) 92,530 Commonwealth Secretariat 8,932 20,225 (15,112) 14,045 Conservation International Development (6,776) 40,000 (16,208) 17,016 Department of International Development 8,136 (6,749) 1,387 European Union 33,116 92,381 (68,981) 56,516 Government of France 244,869 74,643 (122,245) (146) 197,121 Government of Japan 12,332 153,100 (153,810) 11,622 Government of the United Kingdom 8,806 8,806 International Maritime Organisation 3,540 40,332 (44,238) (366) John D & Catherine T MacArthur Foundation 37,538 (18,293) 19,245 Multiple Donors (18,884) 87,869 (702,638) 146 (633,507) National Fish & Wildlife Foundation - 80,000 (81,106) (1,106) Netherlands Red Cross Society 7,746 (1,828) 5,918 NZ Aid PIE 13,176 (2,955) 10,221 NZ Aid Extra Budget 122,669 600,085 (732,796) (10,042) NZAid Extra Extra Budget 189,585 358,473 (482,999) 65,059 Pacific Development & Conservation Trust 6,869 42,509 (48,099) 1,279 Packard Foundation - 40,000 (40,209) (209) People's Republic of China 160,000 80,000 240,000 Other Funds (include core) 815,877 1,831,914 (1,466,300) 1,181,490 Ramsar Secretariat 13,070 84,236 (88,692) 8,614 The Nature Conservancy (7,146) 59,900 (36,524) 16,230 The Christensen Foundation 50,000 (21,630) 28,370 United Nations Convention to Combat Desertification 1,592 1,592 United Nations Development Program 295,704 168,338 (354,401) 109,641 United Nations Environment Program 72,776 555,039 (473,677) (2,000) 152,138 United Nations Tech Co-Op Activities (part of UNDESA) (20,668) 20,668 - United Nations Institute of Training & Research - 59,819 (20,904) 38,915 UN Economics & Social Commission for Asia & the Pacific (UNESCAP) 6,646 6,646 UN Office of Project Services 6,091 101,262 (109,739) (2,386) US Additional Member Contributions 2,577 2,577 US Dept of Energy/Los Alamos University 4,801 4,801 US Fish & Wildlife 14,625 14,625 US Forest Service - 10,000 10,000 US National Oceanic Atmospheric Administration 27,633 177,627 (179,902) 25,358 US Western Pacific Regional Fisheries Management Council 37,778 80,000 (105,060) 12,718 World Conservation Union (IUCN) Regional Office for Oceania - 29,838 (28,584) 1,254 World Health Organisation - 20,000 (17,544) 2,456

$2,379,515 $6,084,821 ($6,672,443) $0 $1,791,892

Core funds income/expenditure 1,868,325 1,962,694 Programme funds income/expenditure 4,216,496 4,709,749

6,084,821 $6,672,443

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2006 2007

NOTE 13. OTHER INCOME396 Publication Sale 731

29,252 Rental income 28,582 11,277 Miscellaneous 9,864 61,545 Prior Year adjustments (9,416) 1,336 Commission 615

11,880 Travel & Other Recoveries 4,988 $115,686 Total $35,364

NOTE 14. EXPENDITURE SUMMARYPersonnel Operating Total

Cost Costs3,826,907 Island Ecosystem Programme 866,694 1,667,757 2,534,451 1,771,147 Pacific Futures Programme 943,500 1,231,798 2,175,298 1,867,919 Executive Mgt & Corp Support 1,308,433 654,261 1,962,694

$7,465,973 Total $3,118,627 $3,553,816 $6,672,443

NOTE 15. ACTUAL VS BUDGET EXPENDITURESPersonnel Cost Operating Cost Capital Costs

Budget Actual Budget Actual Budget Actual3,826,907 Island Ecosystem Programme 850,140 866,694 1,601,135 1,650,303 10,300 17,454 1,771,147 Pacific Futures Programme 1,026,634 943,500 1,777,404 1,221,986 24,000 9,812 1,867,919 Executive Mgt & Corp Support 1,205,296 1,308,433 659,200 654,261 36,500 59,055

$7,465,973 Total $3,082,070 $3,118,627 $4,037,739 . $70,800 $86,321

NOTE 16. CONTINGENT LIABILITIES

The Secretariat has no contingent liabilities as at 31 December 2007.

NOTE 17. CAPITAL COMMITMENTS

The Secretariat has no commitments with respect to capital expenditure.

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SECRETARIAT OF THE PACIFIC REGIONAL ENVIRONMENTPROGRAMME

MEMORANDUM ON INTERNAL CONTROLS AND ACCOUNTINGPROCEDURES

FOR YEAR ENDED 31 DECEMBER 2007

30 April ~

~ Director&!cretariat of ~ Pacific Regional Environment Programme (SPREP)ro Box 240VailimaAPIA

Dear Sir,

MANAGEMENT L£rrER REPORT RJR THE YEAR ENDm 31 DECEMBER 'lJ:X17

During ~ course of our audit of SPREP's accounting records for ~ year ended 31December 2007, we examined certain aspects of ~ Organisation's system of internalcontrols and accounting procedures.

Accompanying this letter are ~ matters noted during our audit examination, togetle

We are pleased to note that the issues raised in our prior year report have been

It must be appreciated that the matters dealtduring the conduct of our norn1al auditwith a view to the expression of ourorganisation. Our comments thereforeimprovement in internal control, which

develop.

We would like to take this opportunity to express our appreciation to Management andstaff for the cooperation and assistarK:e rendered to us during the course of our work.

Yours faithfullyLesa ma Penn

J],J~

\)~-'t...~~Matataualiitia A LesaPartner

Fugalci Street by the BridgeFugaleiPO Box 1599Apia. Samoa

with in this report came to our noticeprocedures, which were designed primarilyopinion on the ~ s1atements of ~cannot be expected to ioclude all possiblea more extensive special examination might

SECRETARIAT OF THE P AOFIC REGIONAL ENVIRONMENTMEMORANDUM ON INTERNAL CONTROLSAND ACCOUNTING PROCEDURES31 DECEMBER 2007

1. TRADE CREDITORS

These are the same balances that were outstanding from previous year's accountsand it still remains as of 31 December 2007. There have been no payment(s) duringthe financial period and/or any subsequent payments up to the month of March 2008as verified.

RecommendationThese accounts should be reviewed by Management to consider whether they arestill made payable, or else should be written off from the accounts in order to reflecta true and fair view of Trade creditors at year end.

Oient comment and corrective actionThe recommendation is accepted. Trade creditors are reviewed every six months and are only

written off on confirmation from Programme Officers that the accounts would not be payable.

Vendor Number 2 and 4 as per list above were paid in 2008 as co~finnations were received

_from g,[ticers that services would be provided in 2008.

PROGRAMME

(SPREP)

PACIFIC REGIONAL ENVIRONMENT PROGRAMME (SPREP) …...secretariat of the pacific regional environment...

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