FC 97/11(ii)
|
Ninety-seventh Session |
Rome, 17 - 22 September 2001 |
Audited Accounts - FAO Commissary 2000 |
STAFF COMMISSARY FUND
- I. Income and Expenditures Statement For the year ended 31 December 2000
STAFF COMMISSARY FUND
- II. Balance Sheet at 31 December 2000
STAFF COMMISSARY FUND
- III. Statement of Cash Flow for the Year ended 31 December 2000
Attached for the information of the Finance Committee Members are the FAO Commissary's
Financial Statements for 2000.
F.A.O. STAFF COMMISSARY FUND
OPINION OF THE EXTERNAL AUDITOR
FINANCIAL STATEMENTS FOR THE PERIOD
1 JANUARY TO 31 DECEMBER 2000
I have examined the accompanying financial statements, as stated on attached pages 1 to 10, comprising the income and expenditure statement, the balance sheet, the statement of cash flow and the notes to the statements of the Food and Agriculture Organization's Staff Commissary Fund for the year ended 31 December 2000. These financial statements are the responsibility of the Staff Commissary'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-statement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial 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 31 December 2000 and the results of its operations for the period then ended, that they were prepared in accordance with the stated accounting policies and that the transactions were in accordance with the financial regulations and legislative authority.
Michèle Coudurier
Directrice
pour le Premier Président de la Cour des Comptes
de la République Française
Commissaire aux Comptes
12 July 2001
FOOD AND AGRICULTURE ORGANIZATION
OF THE UNITED NATIONS
STAFF COMMISSARY FUND
ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2000
Submitted by:
.........................................
C.I. Denny
Commissary Manager, AFSCMApproved by:
.........................................
M. Gauchon
Officer-in-Charge, AFS
11 July 2001
I. Income and Expenditures Statement
For the year ended 31 December 2000
(all figures in Lit. `000)
2000 |
1999 |
|
21,449,162 | 20,726,960 | |
Less: Cost of Goods Sold (notes 1c and 12) | 17,808,636 | 17,213,537 |
3,640,526 | 3,513,423 | |
Personnel (note 2a and 2b) Guard Services (note 2c) |
2,923,993 46,000 |
2,702,130 42,332 |
Support Cost Reimbursement to FAO (note 3) | 132,750 | 132,750 |
General Operating Expenses | 191,238 | 168,820 |
Depreciation | 162,465 | 192,581 |
Provision for Terminal Emoluments (note 4) | 12,199 | 39,880 |
3,468,645 | 3,278,493 | |
Operating Surplus/(Deficit) | 171,880 | 234,930 |
Add: Other income (note 5) | 72,734 | 43,184 |
Less: Contribution to Staff Welfare Fund (note 6) | 214,492 | 207,270 |
Net Surplus/(Deficit) | 30,122 | 70,844 |
(To)/From Working Capital Fund (note 7) | (93,886) | (29,530) |
(To)/From retained Surplus (note 8) | 63,764 | (41,314) |
Notes 1 to 13 form an integral part of these accounts
II. Balance Sheet at 31 December 2000
(all figures in Lit. `000)
2000 |
1999 |
|
CURRENT ASSETS | ||
Cash at Bank and in Hand (note 9) | 1,556,988 |
1,358,213 |
Stocks (note 10) | 2,791,830 |
3,044,585 |
Sundry Debtors | 43,447 |
72,920 |
FIXED ASSETS (note 11) | 233,409 |
363,805 |
TOTAL | 4,625,674 |
4,839,523 |
Less | ||
CURRENT LIABILITIES | ||
Creditors | 1,142,758 |
1,400,151 |
Payable to Staff Welfare Fund (note 6) | 66,492 |
65,270 |
1,209,250 |
1,465,421 |
|
LONG TERM LIABILITIES | ||
Terminal Emoluments Reserve (note 4) | 380,248 |
368,048 |
TOTAL | 1,589,498 |
1,833,469 |
NET ASSETS | 3,036,176 |
3,006,054 |
Represented by: | ||
Working Capital Fund (note 7) | 2,788,391 |
2,694,505 |
Retained Surplus (note 8) | 247,785 |
311,549 |
3,036,176 |
3,006,054 |
Notes 1 to 13 form an integral part of these accounts
III. Statement of Cash Flow for the Year ended 31 December 2000
(all figures in Lit. `000)
2000 |
1999 |
|
134,179 |
327,541 |
|
96,665 |
71,291
|
|
(32,069) |
(86,470) |
|
198,775 |
312,362 |
Notes 1 to 13 form an integral part of these accounts
STAFF COMMISSARY FUND
ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2000
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 2000.
(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 Italian Lira have been translated at the UN operational rate of exchange at 31 December 2000. Income and expenditure items have been recorded at the rate of exchange in effect at the date of transaction. Any eventual exchange rate differences that occurred when payments were made are reflected in the income and expenditure statement.
2. Cost of Personnel
(a) The accounts reflect actual payroll costs as charged by FAO. Provisions for terminal emoluments are made separately as explained in Note 6.
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 a considerable time with the supervision of the FAO catering operations.
It should be noted that personnel costs increased 8.2% in 2000, despite any increase in the size of the Commissary's workforce. This increase is mainly attributed to additional reliance on costly FAO temporary assistance personnel (TAP) provided by AFPO (and charged in USD) in order to replace AFSCM employees that were temporarily transferred to other divisions, up-grading of staff members, an increase in FAO salaries at the end of 1999, and depreciation of the Euro against the US Dollar in 2000.On the other hand, temporary contract staff costs (COASE) remained constant.
(b) Following is a breakdown of staff costs:
2000 |
1999 |
|
Lit. `000 |
Lit. `000 |
|
FAO Commissary Staff | 2,256,538 |
2,230,789 |
FAO TAP Staff COASE Staff |
338,113 |
142,963 328,378 |
Balance at 31 December | 2,923,993 |
2,702,130 |
(c) The Operating Expenses include a FAO back charge of Lit. 46,000,000 for guard services received in 2000.
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:
2000 |
1999 |
|
Lit. `000 |
Lit. `000 |
|
Electricity | 20,580 |
20,580 |
Cleaning | 24,220 |
24,220 |
Water | 4,400 |
4,400 |
Heating | 3,070 |
3,070 |
Garbage Collection | 4,430 |
4,430 |
External Audit | 25,350 |
25,350 |
Internal Audit | 50,700 |
50,700 |
Total | 132,750 |
132,750 |
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:
2000 |
1999 |
|
Lit. `000 |
Lit. `000 |
|
Balance at 1 January | 368,049 | 328,169 |
Annual Charge | 12,199 | 39,880 |
Balance at 31 December | 380,248 | 368,049 |
5. Other Income
2000 |
1999 |
|
Lit. `000 |
Lit. `000 |
|
Bank Interest | 78,167 |
41,653 |
Profit/(Loss) on Exchange | (5,433) | 1,530 |
Total | 72,734 |
43,183 |
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 2000 and its movement for the year then ended were as follows:
2000 |
1999 |
|
Lit. `000 |
Lit. `000 |
|
Balance at 1 January | 65,270 |
61998 |
Add: Contribution to Staff Welfare Fund | 214,492 |
207,270 |
279,762 |
269,268 |
|
Less: Amount paid during the year | 213,270 |
203,998 |
Balance at 31 December | 66,492 |
65,270 |
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 and that the sum to cover this increase in respect of the years 1988 and 1989 should be transferred from the Unappropriated Surplus at 31 December 1988 and 1989.
The movements in the Working Capital Fund during the year were as follows:
2000 |
1999 |
|
Lit. `000 |
Lit. `000 |
|
Balance at 1 January | 2,694,505 | 2,664,975 |
Transfer To/(From) Working Capital Fund | 93,886 | 29,530 |
Balance at 31 December | 2,788,391 | 2,694,505 |
8. Retained Surplus
The movements on the retained surplus during the year were as follows:
2000 |
1999 |
|
Lit. `000 |
Lit. `000 |
|
Balance at 1 January | 311,549 |
270,235 |
Transferred To/(From) Retained Surplus | (63,764) |
41,314 |
Balance at 31 December | 247,785 |
311,549 |
9. Cash in Bank and in Hand
Cash in bank and in hand are made up as follows;
2000 |
1999 |
|
Description | Lit. `000 |
Lit. `000 |
Cash in bank, current account | 1,374,813 |
1,247,902 |
Cash in hand | 182,175 |
110,311 |
Total | 1,556,988 | 1,358,213 |
10. Stocks
Stocks are made up as follows:
2000 |
1999 |
|
Description | Lit. `000 |
Lit. `000 |
Goods | 2,490,357 |
2,852,188 |
Petrol/Oil coupons | 301473 |
192,397 |
Total | 2,791,830 |
3,044,585 |
11. Fixed Assets
Figures in Lit. `000 |
|||||
Cost: |
Improvements of Premises |
Furniture |
Equipment |
Motor Vehicles |
Total |
At 1.1.2000 | 112,730 | 317,168 | 888,012 | 212,163 | 1,530,073 |
Additions | 32,069 | 32,069 | |||
Disposals | _______ | ______ | (26,709) | _______ |
(26,709) |
At 31.12.2000 | 112,730 | 317,168 | 920,081 | 212,163 | 1,535,433 |
Depreciation: | |||||
At 1.1.2000 | 67,552 | 295,881 | 638,482 | 164,353 | 1,166,268 |
Charge for year | 29,016 | 14,945 | 104,844 | 13,660 | 162,465 |
Disposals |
|
______ | (26,709) |
|
(26,709) |
At 31.12.2000 | 96,568 | 310,826 | 716,617 | 178,013 | 1,302,024 |
Net Book Amount: | |||||
At 31.12.2000 | 16,162 | 6,342 | 203,464 | 34,150 | 233,409 |
At 31.12.1999 | 45,178 | 21,287 | 249,530 | 47,810 | 363,805 |
12. Write - Offs
The composition of the write-offs account at 31 December 2000 was as follows:
2000 |
1999 |
|
Lit. `000 |
Lit. `000 |
|
Goods write-offs | 13,296 | 14,058 |
_____ | _____ | |
Total | 13,296 | 14,058 |
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
2000 |
1999 |
|
Lit. `000 |
Lit. `000 |
|
Net Operating Surplus | 171,880 | 234,930 |
Contribution to Staff Welfare Fund | (214,492) | (207,270) |
Depreciation Charges | 162,465 | 192,581 |
Profit/(Loss) on Exchange | (5,433) | 1,530 |
(Increase)/Decrease in Stock | 252,755 | (364,347) |
(Increase)/Decrease in Debtors | 10,976 | 8,610 |
Increase/(Decrease) in Current Liabilities | (256,171) | 421,627 |
Increase in Provision for Terminal Emoluments | 12,199 | 39,880 |
Total | 134,179 | 327,541 |
(b) Analysis of Changes in Cash
2000 |
1999 |
|
Lit. `000 |
Lit. `000 |
|
Cash at 1 January 2000 | 1,358,213 | 1,045,851 |
Net inflow | 198,775 | 312,362 |
Cash at Bank and in Hand at 31.12.00 | 1,556,988 | 1,358,213 |
REPORT OF THE EXTERNAL AUDITOR
THE F.A.O. STAFF COMMISSARY FUND
FINANCIAL STATEMENTS 2000
Background
1. - The FAO Staff Commissary was established in 1951 to facilitate duty free importation of goods by international staff under Article XII, Section 27 (j) (ii), and Annex D of the Headquarters' Agreement between the Government of the Italian Republic and the FAO. Access to the Commissary was given to all FAO staff members as of 1 December 1971, following an exchange of letters with the Italian Government, which stated that the agreed quantities of goods to be imported would be computed according to the total number of FAO staff.2. - Although the Commissary is part of the FAO, its accounts are not consolidated with the ones of the Organization for the biennium. They are in fact reported separately on a yearly basis and are presented in Italian Lire (Lit.). These financial statements are the responsibility of the Staff Commissary's management on behalf of the FAO Director-General. My responsibility is to express an opinion on these financial statements based on the audit carried out 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
Turnover
3. - In 2000, the Commissary had a turnover of Lit.21.4 billion, which represented an increase of Lit.0.7 billion compared to last year, or 3.5%.Duty Free Purchase of Italian Products
4. - Statistics provided to me showed that in 2000 the total number of Italian articles sold by the Commissary represented 10% of all articles sold, which was the same as in 1999 (it was 11% in 1998). This was in line with the objective, stated in 1994, "to reduce the level of Italian products from 17 [in 1993] to 10-12 per cent of the total purchase volume of the Commissary in favour of products from other countries that were not readily available locally". The value of the sales of Italian articles amounted to Lit.7.0 billion, which accounted for 33% of the total sales (compared to 30% in 1999 and 43% in 1998). Their share in the Commissary's gross profit was 38% (compared to 37% in 1999 and 59% in 1998). If fuel coupon sales were removed from the list of Italian articles, the total number of Italian articles sold by the Commissary would still represent 10% of all articles sold, but their share in the turnover and in the gross profit would drop to 23% and 30%, respectively.Operating expenses
5. - Personnel operating expenses amounted to Lit.2.9 billion in 2000, which represented an increase of 8.2% compared to 1999. As disclosed in note 2a to the financial statements this was not due to an increase of the Commissary's workforce, but to the following factors: up-grading of staff members, increase in FAO salaries at the end of 1999 and depreciation of the Euro against the US dollar in 20006. - The FAO considers that the costs of services such as the administration of the car import privileges granted under the Headquarters' Agreement and the supervision of catering activities should be borne by the Commissary. This long-standing practice is disclosed in note 2a to the financial statements. Furthermore, since 1998, the Organization has been charging costs of security services to the Commissary. I concurred with this decision since it was made in accordance with the principle that in the UN system non-mainstream activities (including commissaries) should disclose full costs and should not be subsidised from regular budget services, and also with Resolution No 16/89 of the FAO Conference adopted on 28 November 1989.
Presentation of the Balance Sheet
7. - As recommended last year, Assets are now presented in terms of decreasing liquidity, which is in line with the United Nations Accounting Standards (UNAS). They amounted to Lit.4.6 billion as at 31 December 2000, which represented a decrease of Lit.0.2 billion compared to last year.Stocks
8. - Stocks amounted to Lit.2.79 billion at the end of 2000 and represented 60% of total assets. The physical stock count as at 31 December 2000 disclosed that the actual stock was Lit.23.5 million below what it should have been according to the permanent inventory. The stock losses in 2000 remained approximately the same as that of 1999 (Lit.22.4 million).Funding of Working Capital Fund
9. - In 2000, operations resulted in a net surplus of Lit.30.1 million. As the working capital fund had to be credited with Lit.93.9 million in 2000, to be maintained at a level of 13% of the annual turnover, according to a decision of the seventy-second Session of the Finance Committee, the transfer from the retained surplus amounted to Lit.63.8 million. As a result, the retained surplus reserve decreased from Lit.312 million as at 31 December 1999 to Lit.248 million as at 31 December 2000.Acknowledgement
10. - I wish to record my appreciation for the cooperation and assistance extended by the Director-General and the staff of the Organization during my audit.
Michèle Coudurier
Directrice
pour le Premier Président de la Cour des Comptes
de la République Française
Commissaire aux Comptes
12 July 2001