SafeSave audit June 30 2005

SafeSave audit June 30 2005

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SafeSave Multipurpose Co-operative Society Limited (SafeSave) (Known as Nirapad Sahaj Sanchay Prokalpo Bohumukhi Samabay Samity Ltd up to 18.01.2005) Financial Statements together with Auditor’s Report For the year ended 30 June 2005 AUDITOR'S REPORT To the Executive Committee of SafeSave Multipurpose Co-operative Society Limited (SafeSave) We have audited the accompanying Balance Sheet of SafeSave Multipurpose Co-operative Society Limited (SafeSave) as of 30 June 2005 and the related Profit and Loss Account and Receipts and Payments Account for the year then ended. These Financial Statements are the responsibility of SafeSave’s management. Our responsibility is to express an opinion on these Financial Statements based on our audit. We conducted our audit in accordance with International Standards on Auditing as adopted in Bangladesh. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Financial Statements are free of material misstatement. 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 significant estimates made by management, as well as evaluating the overall financial presentation. We believe that our audit provides a reasonable basis for our opinion. We report that: (a) we have ...

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Safe
Save Multipurpose Co-operative Society Limited
(
Safe
Save)
(Known as Nirapad Sahaj Sanchay Prokalpo Bohumukhi Samabay Samity Ltd up to
18.01.2005)
Financial Statements together with
Auditor’s Report
For the year ended 30 June 2005
AUDITOR'S REPORT
To the Executive Committee of
Safe
Save Multipurpose Co-operative Society Limited (
Safe
Save)
We have audited the accompanying Balance Sheet of
Safe
Save Multipurpose Co-operative
Society Limited (
Safe
Save) as of 30 June 2005 and the related Profit and Loss Account and
Receipts and Payments Account for the year then ended. These Financial Statements are the
responsibility of SafeSave’s management. Our responsibility is to express an opinion on
these Financial Statements based on our audit.
We conducted our audit in accordance with International Standards on Auditing as adopted
in Bangladesh. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the Financial Statements are free of material
misstatement. 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 significant estimates made by management, as well as
evaluating the overall financial presentation. We believe that our audit provides a reasonable
basis for our opinion.
We report that:
(a)
we have obtained all the information and explanations which we required;
(b)
the Balance Sheet and the Profit and Loss account referred to in the report are
drawn up in conformity with the law;
(c)
such Balance Sheet exhibits a true and correct account of the state of the co-
operative society’s affairs according to the best of our information and explanations
given to us and as shown by the books of the Society;
(d)
the books of accounts have been kept by
Safe
Save as required under the Act, the
rules and the bye-laws;
(e)
there has been no material impropriety or irregularity in the expenditure or in the
realisation of moneys due to
Safe
Save;
Dhaka,
ACNABIN & Co.
28 July 2005
Chartered Accountants
Safe
Save Multipurpose Co-operative Society Limited (
Safe
Save)
(Known as Nirapad Sahaj Sanchay Prokalpo Bohumukhi Samabay Samity Ltd. upto 18.01.05)
Balance Sheet
As on 30 June 2005
Notes
30.06.2005
30.06.2004
Taka
Taka
ASSETS
Cash & bank current accounts
3
1,580,781
1,663,827
Interest bearing deposits
4
3,400,000
1,735,787
Loan outstanding
5
20,957,156
14,634,561
Advance & deposits
176,737
107,500
Accrued interest on fixed deposits
226,213
61,900
Total current assets
26,340,887
18,203,575
Fixed assets
6
673,515
589,719
Total assets
27,014,402
18,793,294
LIABILITIES AND NET WORTH
Liabilities
Client savings
7
13,559,834
9,327,056
Interest on client savings
455,112
309,750
Member savings
8
1,003,300
3,300
Interest on member savings
29,997
-
Staff savings
595,842
520,810
Interest on staff savings
34,770
29,490
Other liabilities
9
388,514
230,773
Advance from Plan International Bangladesh
10
114,892
24,133
Total current liabilities
16,182,261
10,445,312
Borrowings
11
-
8,149,559
Total liabilities
16,182,261
18,594,871
Net worth
Accumulated profit/ (loss)
12
(217,686)
(597,877)
Grant for capital loan fund
11
9,953,559
-
Reserves
223,968
-
Statutory
186,640
-
Co-operative development fund
37,328
-
Member shares
13
872,300
796,300
Total net worth
10,832,141
198,423
Total liabilities and net worth
27,014,402
18,793,294
The accompanying notes form an integral part of the balance sheet
Stuart Rutherford
Dr. Imran Matin
Dr. Maniruzzaman
Nipun Sangma
Md. Hossin Islam
Chairman
Vice Chairman
Secretary
Director
(Ripon)
General Manager
Dhaka,
28 July 2005
2
Safe
Save Multipurpose Co-operative Society Limited (
Safe
Save)
(Known as Nirapad Sahaj Sanchay Prokalpo Bohumukhi Samabay Samity Ltd. upto 18.01.05)
Profit and Loss Account
For the year ended 30 June 2005
2004-2005
2003-2004
Taka
Taka
Financial income
Fee from loans
7,406,231
5,269,357
Service charge fee
216,780
175,350
Admission fee
44,370
33,560
Loan processing
e
fe
49,300
-
Bank interest
175,905
259,402
Total financial income
7,892,586
5,737,669
Financial cost of lending funds
Interest on client savings
627,385
348,969
Interest on staff savings
63,897
63,516
Interest on member savings
29,997
-
Rebate on fee from loans
30,815
-
Total financial cost
752,094
412,485
Gross financial margin
7,140,492
5,325,184
Loan loss provision
5.1
640,108
1,589,192
Net financial margin
6,500,384
3,735,992
Operating expenses
Staff salary
3,974,732
3,376,931
Performance bonus
542,521
365,903
Rent
480,890
430,048
Travelling and entertainment
135,306
157,833
Advertising, p
g
y
rintin and stationer
311,609
255,077
Telephone and e-mail
75,014
63,083
Bank charges
5,186
5,380
Audit fee
67,899
87,000
Insurance premium
17,888
-
Depreciation
215,012
175,700
Research and MIS develop
t
men
356,958
644,554
Miscellaneous
90,081
88,534
Total op
g
p
s
eratin ex ense
6,273,096
5,650,043
Net income from operations
227,288
(1,914,051)
Non-operating income
Grant from Plan International
356,958
1,740,446
Fee from consultancy
-
3,000
Other income
19,913
1,000
Total non-op
g
eratin income
376,871
1,744,446
Net profit/(
)
loss
604,159
(169,605)
Appropriation:
Statutory reserve
14
186,640
-
Coop
p
erative develo ment fund
14
37,328
-
Accumulated p
(
)
rofit/ loss
380,191
(169,605)
604,159
(169,605)
The accompanying notes form an integral part of the profit and loss account.
3
Safe
Save Multipurpose Co-operative Society Limited (
Safe
Save)
(Known as Nirapad Sahaj Sanchay Prokalpo Bohumukhi Samabay Samity Ltd. upto 18.01.05)
Statement of changes in equity
For the year ended 30 June 2005
Member
shares
Statutory
reserve
Cooperative
development
fund
Grant for
capital loan
fund
Accumulated
profit/(loss)
Total
Balance at 1 July 2003
24,300
-
-
(428,272)
(403,972)
Member shares
772,000
772,000
Net profit/(loss)
p
t
as er Profit and Loss Accoun
(169,605)
(169,605)
Balance at 30 June 2004
796,300
-
-
-
(597,877)
198,423
Balance at 1 July 2004
796,300
-
-
(597,877)
198,423
Net profit/(loss)
p
t
as er Profit and Loss Accoun
604,159
604,159
Member shares
76,000
76,000
Grant for capital loan fund
9,953,559
9,953,559
Reserve Fund
a. Statutory
y
p
t
@15% of current ear's rofi
186,640
(186,640)
-
b. Coop
p
erative Develo ment Fund
37,328
(37,328)
-
@3% of current year's profit
Balance at 30 June 2005
872,300
186,640
37,328
9,953,559
(217,686)
10,832,141
4
Safe
Save Multipurpose Co-operative Society Limited (
Safe
Save)
(Known as Nirapad Sahaj Sanchay Prokalpo Bohumukhi Samabay Samity Ltd. upto 18.01.05)
Receipts and Payments Account
For the year ended 30 June 2005
2004-2005
2003-2004
RECEIPTS:
Taka
Taka
Opening Balance
1,663,827
1,254,304
Cash in hand
771,800
341,322
Cash at bank
892,027
912,982
Fees from loans
7,406,231
5,269,357
Service charge fees
216,780
175,350
Fees from admission
44,370
33,560
Loan processing fee
49,300
-
Interest on fixed deposits
11,592
197,002
Borrowings
1,804,000
1,200,000
Received during the period
6,679,571
8,045,300
Payment during the period
4,875,571
6,845,300
Savings deposit
3,908,822
729,320
Received during the period
13,355,526
9,545,060
Payment during the period
9,446,704
8,815,740
Staff savings deposit
17,902
104,789
Received during the period
1,018,433
464,132
Payment during the period
1,000,531
359,343
Long term Savings deposit
(142,395)
(177,404)
Received during the period
163,225
250,861
Payment during the period
305,620
428,265
Plan Advanced
90,759
24,133
Received during the period
447,717
668,687
payment during the period
356,958
644,554
Member share
76,000
772,000
Member savings
1,000,000
-
Received during the period
1,000,000
-
payment during the period
-
-
Grant received for capital fund
-
87,666
Other income:
Fees from consultancy
-
3,000
Miscellaneous income
11,110
1,000
16,158,298
9,674,077
PAYMENTS:
Staff salary
3,857,962
3,376,931
Rent
532,240
439,048
Paper & office supplies
311,609
255,077
Communications
75,014
63,083
Travel
88,289
109,780
Bank charges
5,186
5,380
Interest paid to outgoing Staff
1,487
5,477
Fixed assets purchase
298,808
246,073
Fixed deposits
1,664,213
(2,141,723)
Savers' interest
6,869
27,758
Performance bonus
552,595
256,475
Loan:
6,962,703
5,174,649
Disbursement during the year
31,423,500
23,860,200
Repayment during the year
24,460,797
18,685,551
Miscellaneous
90,081
88,534
Refreshment
47,017
48,053
Audit fees
83,444
55,655
Closing Balance
1,580,781
1,663,827
Cash in hand
597,406
771,800
Cash at bank
983,375
892,027
16,158,298
9,674,077
5
Safe
Save Multipurpose Co-operative Society Limited (
Safe
Save)
(Known as Nirapad Sahaj Sanchay Prokalpo Bohumukhi Samabay Samity Ltd. upto 18.01.05)
Notes to the Accounts
For the period from 01 July 2004 to 30 June 2005
1.
Introduction
SafeSave is a savings based financial services provider for poor slum dwellers registered under Co-operative Societies Act, 2001 Reg.#
Dhaka-119. It began working in August, 1996 by opening a simple saving scheme with loan for the poor urban people in two unlicensed
slums at Mohammadpur, Dhaka. Subsequently it expanded its program and at present has four savings and loan products in seven
branches in the slum areas of Bauniaband, Beriband, Geneva Camp, Tikkapara, Kurmitola, Millat and Muslim in and around Dhaka city.
Muslim branch transaction was started on March 2005.
2.
Significant accounting policies
2.1
Financial statements are prepared under historical cost convention and have been prepared in accordance with applicable accounting
standards.
2.2
Fee from loans are collected in four branches monthly @ 3% per month and in three branches quarterly @ 10% per quarter and is
accounted for on cash basis.
2.3
Interest payable on savings is accrued every month and transferred to client account quarterly in three branches and annually in
remaining four.
2.4
Fixed assets
Fixed assets are stated at cost, less accumulated depreciation. A full year's depreciation is charged in the year of acquisition and none in
the year of disposal using the reducing balance method at rates shown below:
July-Dec 2004
January-June 2005
Furniture and Fittings
20%
33.33%
Computer Equipment
25%
33.33%
2.5
Previously SafeSave's financial year ended in December and accordingly audit was completed up to December 2004. As per by laws
amended on 19 January 2005 SafeSave decided to change their financial year end to June.
30.06.05
30.06.04
Taka
Taka
3.
Cash & bank current account :
Cash at bank
983,375
892,027
Cash in hand
597,406
771,800
1,580,781
1,663,827
4.
Interest bearing deposits :
These are fixed deposits with Uttara Bank, Shamoli branch, Dhaka. Interest is accounted for on cash basis for three months deposits and
accrual basis for two and three years deposits.
Period
Rate %
3 months
8.25 - 8.75
-
735,787
2 years
7.50
2,400,000
-
3 years
9.50
1,000,000
1,000,000
3,400,000
1,735,787
30.06.05
30.06.04
Taka
Taka
5.
Loan outstanding :
Opening balance
16,318,245
11,307,668
Add: disbursed during the year
31,423,500
23,860,200
Less: recovered during the year
(24,460,797)
(18,685,551)
Less: write off during the year
(1,032,704)
(164,072)
22,248,244
16,318,245
Less: Loan loss provision
(Note-5.1)
(1,291,088)
(1,683,684)
Closing balance
20,957,156
14,634,561
6
Product-wise analysis of the closing balance is shown below:
30.06.05
30.06.04
Number of
Taka
Number of
Taka
clients
clients
Second and third Product
4,491
15,804,924
3,583
11,336,378
Fourth Product
-
-
1,163
2,901,948
Sixth Product
2,158
6,443,320
1,780
2,079,919
6,649
22,248,244
6,526
16,318,245
Under second and third product a client can take loan 3 times of savings balance and must keep 1/3 of loan balance as savings all time
in three branches, and in the fourth branch (Beriband br.) a client can take loan double of savings balance and must keep 1/2 of loan
balance as savings all time. There is no fixed repayment schedule and the fee rate is 3% per month on outstanding balance. No
collateral is required for loan.
Under sixth product only one member of a household can take a loan. The loan processing fee is Tk. 50. The fee rate is 10% per
quarter on outstanding balance. Anyone paying interest for the quarter in the first month gets 10% rebate on 10%.
5.1
Provision for doubtful loans:
For 2004
Loan loss provision expense is created every month on the basis of the ratio of previous month's loan loss provision amount in the
balance sheet to the overdue loan amount. Loans with fees overdue equal to or more than 10% of the outstanding balance are treated
as overdue loans. The monthly provision rate is as follows:
Ratio of LLP to overdue loans
Monthly provision rate
Greater than one - half
0.0015
Less than one - half but greater than one - third
0.0020
Less than one - third
0.0030
For January to June 2005
Loan loss provision expense is created every month on the basis of percent of loan accounts overdue and the R2 coverage ratio of
previous month. Percent of loan overdue means ratio of number of accounts overdue to number of loans outstanding. Loans with any
amount of fees overdue are treated as overdue loans. R2 coverage ratio means ratio of loan loss reserve balance in the balance sheet to
R2. R2 means total of net capital at risk in all loan account having a fees due balance equal to 10% or more of loan balance. The
monthly provision is calculated according to the following table:
R2 coverage ratio
100%+
80-100%
60-80%
Under 60%
Percent Loan
0-5%
0.0010
0.0015
0.0020
0.0025
Accounts
5-10%
0.0015
0.0020
0.0025
0.0030
Overdue
Over 10%
0.0025
0.0030
0.0035
0.0040
Opening balance
1,683,684
258,564
Add: Provision made during the year
640,108
1,589,192
-
normal
640,108
469,192
-
additional provision of Tk. 820,000 for Kallyanpur loan loss due to slum eviction in
December 2003 and Tk. 100,000 each for Geneva, Tikkapara and Beriband branches.
-
1,120,000
2,323,792
1,847,756
Less: Bad loan written off (Kallyanpur branch closed in 2004 Tk. 841,314)
(1,032,704)
(164,072)
Closing balance
1,291,088
1,683,684
Loans are written off on death of a client and if interest payments are overdue for twelve months.
6.
Fixed assets:
Computer
Furniture
Total
Cost:
Opening balance
971,761
357,370
1,329,131
Addition during the year
262,698
36,110
298,808
Closing balance
1,234,459
393,480
1,627,939
Depreciation:
Opening balance
564,195
175,217
739,412
Addition during the year
215,012
Closing balance
564,195
175,217
954,424
Written down value 30.06.05
670,264
218,263
673,515
Written down value 30.06.04
391,345
145,102
589,719
7
7.
Client savings:
Opening balance
9,327,056
7,855,782
Add: received during the year
13,518,751
9,795,921
Add: interest transferred during the year
475,154
919,358
Less: repaid during the year
(9,761,127)
(9,244,005)
Closing balance
13,559,834
9,327,056
To ensure protection of savings SafeSave policy is to keep reserve 30% of client deposits, 10% of staff deposits, 10% of member
deposits in fixed deposits with a scheduled bank. At June 2005 there was a shortfall of Tk. 827,864 in this reserve.
Term-wise analysis of the closing balance is shown below:
30.06.05
30.06.04
Number of
Taka
Number of
Taka
Clients
Clients
Current savings
9,960
12,955,050
8,239
8,585,527
Long term savings
252
604,784
433
741,529
9,960
13,559,834
8,239
9,327,056
Current savings:
A client can deposit savings whenever s/he likes and subject to loan conditions withdraw whenever s/he likes. Interest is paid at the rate
of 6% per annum on the month-end balance. If anyone's balance is less than Tk. 1,000 s/he will not get any interest for that month and
if a client closes his/her account before 6 months s/he will not get any interest.
Interest is transferred to client's account of Kurmitola, Millat and Muslim branch (P6 br.)on every quarter end and all other branches in
January.
Long-term savings:
A member deposits a fixed amount of at least Tk.50 or multiple there of each month for period of five years. After expiry of five years
satisfactorily SafeSave will deposit the same amount every month in the account of the client. A member can close the account any time
and withdraw the account balance. No additional interest is paid on this savings.
For accounting purpose interest is calculated at the rate of 6% per annum on the month-end total savings. Reversal of accrued interest
for closed accounts is being considered.
8.
Member savings
Opening balance
3,300
3,300
Add: Received during the year from Chairman
1,000,000
-
Closing balance
1,003,300
3,300
From April 2005 interest is calculated at the rate of 8% per annum on the month-end balance and is to be transferred to members
account annually in January.
9.
Other liabilities
Provision for audit fee
51,575
31,345
Provision for performance bonus
306,124
199,428
Provision for rebate on fee from loans
30,815
-
388,514
230,773
10.
Advance from Plan International Bangladesh
Opening balance
24,133
-
Add: Received during the year
447,717
668,687
471,850
668,687
Less: Transferred to Income
(356,958)
(644,554)
Closing balance
114,892
24,133
As per Agreement with Plan International Bangladesh dated 29 September 2003 SafeSave received the fund for research and MIS
development. On 30.06.05 SafeSave has a liability of Tk. 68,600 for the 'Outreach Study' and of Tk. 85,000 for 'Software Development'.
The duration of the Agreement with plan ends on 30 June 2005, but SafeSave will approach plan for extension of Agreement period.
8
11.
Borrowings:
Opening balance
8,061,893
7,957,785
Add: Received during the year
1,804,000
1,200,000
9,865,893
9,157,785
Transferred to Income
-
(1,095,892)
Transferred to Grant capital
(9,865,893)
-
-
8,061,893
As per agreement signed on 25 August 2001 the above amount was interest free loan from Plan. Subsequently a new agreement was
signed on 29 June 2005 whereby the above amount will be considered as property of SafeSave for its use as revolving loan fund.
12.
Accumulated profit/ (loss)
Opening balance
(597,877)
(428,272)
Add: Transferred from appropriation of profit
380,191
(169,605)
Closing balance
(217,686)
(597,877)
13.
Member shares:
Name
Designation
30.06.05
30.06.04
Taka
Taka
Stuart Rutherford
Chairman
504,900
501,300
Imran Matin
Vice-chairman
10,000
1,300
Md. Maniruzzaman
Secretary
22,600
11,300
Mark Staehle
EC Member
50,000
10,000
Mosharrof Hossain
EC Member
11,300
11,300
Nazmus Sakeba
EC Member
11,000
1,000
Rabeya Islam
Member
112,300
111,300
S.K. Sinha
Member
112,300
111,300
Md. Javed Sakawat
Member
21,300
21,300
Edward M Abbey
Member
11,300
11,300
S M Rahman
Member
2,000
-
Ziauddin Ahmed
Member
2,000
1,000
Dr. Ahsan Ali
Director
1,300
1,300
Firoza Begum
Member
-
1,300
Shafiqul Haque Chowdhury
Member
-
1,300
872,300
796,300
14.
Appropriation of Net profit:
Net profit as per Profit & Loss Accounts
604,159
Add: Loan loss provision
640,108
Profit as per Cooperative Act (Section 34)
A
1,244,267
Less: Statutory Reserve (15% of A, Section 34.1 ka)
186,640
Loan loss provision
640,108
Cooperative Development fund (3% of A, Section 34.1 Ga)
37,328
864,076
Profit available for distribution before adjustment for loss b/f
B
380,191
Less: Adjustment for opening loss (50% of B, Section 34.4)
190,095
Profit available for distribution
190,095
15.
Tax status:
SafeSave has received the approval of its savings project from the District Co-operative Registrar. Under the savings project approval,
SafeSave as well as the District Co-operative Registrar considers all participants of the savings project as savings project members. With
this understanding District Co-operative Registrar refers that SafeSave will be tax exempt.
9