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  1. Significant accounting policies

(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) Basis of preparation

These financial statements have been drawn up in conformity with International Accounting Standards.

Hyperinflation adjustments have been made in order to show the effect of inflation on the purchasing power of the equity interest. This is achieved by stating the current year non monetary assets of the Center, which operated in a hyperinflationary economy in 1996 and 1997, in terms comparable to the previous year balances of these items.

All items in the statement of changes in net assets for the year ended 31 December 1999 are expressed in terms of the measuring unit current at 31 December 1999.

(c) Foreign currencies

Monetary assets in foreign currencies have been revalued on a monthly basis as required by the Accountancy Act. As a result foreign exchange differences have arisen. Other liabilities denominated in foreign currencies are carried at their historical values. The BNB official exchange rates of the USD as at 31 December 1999 and the average for 1999 are 1.95 BGN/USD and 1.84 BGN/USD respectively.

(d) Property, plant and equipment

Tangible and intangible fixed were inflated for the year ended 31 December 1998 in accordance with International Accounting Standard 29, Financial reporting in hyperinflationary economies. The monthly inflation indices as officially published by the National Institute of Statistics have been used. Since these are computed using the month of December of the previous year as a basis, chain indices from the month of purchase to the end of the year under review, have been used to measure the cumulative effect of inflation.

The tangible and the intangible fixed assets for the year ended 31 December 1999 have not been inflated. Their inflated values as at 31 December 1998 have been depreciated using the straight line method. The inflation rate for the twelve months ended 31 December 1999 of 6.2 % is considered insignificant, and no restatement of the financial statements as of and for the year ended 31 December 1999 have been made.

The rates of depreciation used are as follows:

Buildings

4%

Machinery and equipment

20%

Fixtures and fittings

25%

Vehicles

15%

Intangible assets

20%

 

 

 

(e) Investments

Investments classified as long-term assets which are not considered to be material as compared to the overall balance sheet value of the CSD are carried at cost, less any amounts written off to recognise a decline in the value of the investment. As the subsidiaries perform economic activity the investments in them are not included in the parent’s separate financial statements because if included the statements will not give a true and fair presentation of the activity of the CSD. Due to the above mentioned reason the investments have not been consolidated.

(f) Revenue recognition and expense reporting

The income 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 instalments and the rates at which expenses incurred in BGN are to be translated into the respective foreign currency. The 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. These reports are prepared at a frequency determined by the contract for the project assignment.

Revenue is recognised in the income and expenditure account on the basis of completed stage as reported by the SCD to the commissioning bodies. Revenue is recognised 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. Expenses as revalued in foreign currency correspond to the revenues in the same foreign currency.

(g) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand and balances with banks.

(h) Taxation

SCD is a non profit organization. Therefore it has no tax liabilities.

Deferred tax has not been incurred in the financial statements due to the fact that this tax could not be levied on grants.

2. REVENUE FROM GRANTS, CONTRIBUTIONS AND PROJECTS

In BGN
1999

IDLI

517,420

ETF

197,906

CE

103,276

CIPE 98

40,441

SOCO

35,341

European Commission

97,469

Santander group - Phare Democracy Program

50,533

LMFI (Pension funds)

19,240

World bank

28,956

UNDP training

46,327

Other projects

356,621

 
1,493,530

3. EXPENSES ON GRANTS, CONTRIBUTIONS AND PROJECTS

In BGN
1999
1998
Salaries and benefits

411,213

441,653

Hired services

284,065

344,010

Depreciation

52,322

66,651

Supplies and consumable

44,141

51,870

Other expenses

324,828

249,079

 

1,116,569

1,153,263

4. FOREIGN EXCHANGE GAINS - NET

In BGN
1999
1998
Exchange rate gains from operations

244,154

224,604

Exchange rate losses from operations

(127,521)

(138,405)

 
116,633
86,199
    • Differences on exchange rates have arisen in the cases when debtors, cash and creditors denominated in foreign currencies have been revalued on a monthly basis.

5. EXTRAORDINARY INCOME AND EXPENSES

In BGN
1999
1998

Extraordinary income

15

34,768

Extraordinary expenses

(929)

(1,598)

Write down of investment

-

(229)

 
(914)
32,941

 

6. RECEIVABLES

In BGN
1999
1998

Completed Projects

49,257

32,822

Receivables from ARC Fund

75,613

134,008

Other receivables

44,459

70,695

Provision

(20,873)

-

 
148,456
237,525

    • Since revenue and expenses on projects are matched on a yearly basis to conform with the accruals principle, receivables consisting of expenses incurred on fully completed projects, arise.

7. CASH AND CASH EQUIVALENTS

In BGN
1999
1998

At bank

1,555,498

1,107,152

In local currency

9,042

4,709

In foreign currency

1,546,456

1,102,443

In hand

25,506

46,259

In local currency

9,877

15,563

In foreign currency

15,629

30,696

 
1,581,004
1,153,411

 

8. DEFERRED EXPENSES

In BGN
1999
1998

CIPE’98

-

39,837

CIPE’99

72,562

-

SOCO

-

9,651

ETF

-

7,240

Interrights

103

103

COLPI

8,756

2,747

CE edition

-

798

OSF

356

157

Phare Democracy (Santander)

85,601

22,549

Coalition 2000

563,747

-

McArthur Foundation

22,464

-

European commission

35,797

-

ICEG

1,853

-

 
791,239
83,082
    • 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 yet, arise.

9. PROPERTY, PLANT AND EQUIPMENT

In BGN

Land

Plant & equipment

Vehicles

Fixtures & fittings

Assets in construction

Total

Cost or valuation

           

At 1 January 1999

 

158,502

184,484

101,918

 

444,904

Additions

115,769

19,197

1,597

925

335,923

473,411

Disposals

           

At 31 December 1999

115,769

177,699

186,081

102,843

335,923

918,315

Accumulated depreciation

           

At 1 January 1999

 

78,330

130,214

85,812

 

294,356

Disposals

           

Charge for year

 

30,306

9,276

12,066

 

51,648

At 31 December 1999

 

108,636

139,490

97,878

 

346,004

Net book value as at 31 December 1999

115,769

69,063

46,591

4,965

335,924

572,311

Net book value as at 31 December 1998

-

80,172

54,270

16,106

-

150,548

 

10. INTANGIBLE FIXED ASSETS

In BGN

Software

Patents and licenses

Total

Cost or valuation

     

At 1 January 1999

9,639

412

10,051

Additions

     

At 31 December 1999

9,639

412

10,051

Accumulated depreciation

     

At 1 January 1999

8,614

261

8,875

Charge for year

591

83

674

At 31 December 1999

9,205

344

9,549

Net book value as at 31 December 1999

434

68

502

Net book value as at 31 December 1998

1,025

151

1,176

 

11. INVESTMENTS

In BGN
1999
1998
Agency Vitosha EOOD
5,006
5,006
Radio Vitosha
229
229
Provisions
(229)
(229)
 
5,006
5,006
    • Investments have not been consolidated. CSD is a not-profit organization but the subsidiaries perform economic activity. Thus if their separate financial statements are included in the parent’s separate financial statements, these will not give a true and fair presentation of the activity of the CSD

12. PAYABLES

In BGN
1999
1998
Payables to the budget
17,377
6,225
Salaries, benefits and social security payable
7,145
10,843
Payables to suppliers
-
8,873
Other payables
20,821
32,999
 
45,343
58,940

 

13. Deferred revenue

In BGN
1999
1998
For project activities
1,165,368
167,188
For fixed assets
69,068
54,759
 
1,234,436
221,947

 

14. UNRESTRICTED FUND BALANCE

In BGN
1999
1998
Balance at 1 January 1999
1,349,861
1,146,323
Revaluation for the period  
11,463
Excess of revenue over expenditure for the year
469,042
192,075
Balance at 31 December 1999
1,818,903
1,349,861

 

15. RELATED PARTIES

Related party receivables

Nature of the related party relationship

Transaction during the year

Outstanding balance

31 December 1999

Agency Vitosha

100% of the capital owned by CSD

none

BGN 19,120.95

USD 2,007.00

Radio Vitosha

Significant influence

none

BGN 504.43

USD 3,522.61

GBP 399.00

ARC Fund

CSD and ARC Fund are both represented by the Chairman of the Board of Trustees

 

USD 38,838.00

Related party payables

     

Agency Vitosha

100% of the capital owned by CSD

none

USD 273.92

16. 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 1999.

17. CONTINGENCIES

There are no contingencies to report on.

18. RECONCILIATION OF IAS RESULT

In BGN

1999

Description

 
   

NAS result

511,895

Write off of revaluation from 1997

(794)

Write off of statutory depreciation charge

31,136

Depreciation charge on inflated assets

(52,322)

Bad debt provisions

(20,873)

   

IAS result

469,042

 
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