I ETHIOPIAN ECONOMICS ASSOCIATION (EEA) T AUDITOR'S REPORT AND ATEMENTS: AS AT AND FOR THE YEAR ENDED JUNE 30, 2021 "AYE GEDLU MEBRATE CERTIFIED AUDIT FIRM DFCHE PHODNLAFOPLADAPRPES PHL PLAT OR RACE MUM Queen Bl #° Floor, Room No.401 ‘Addis Ababa CUARTERED CERTIFIED ACCOENEANTS (UK) AND AUTHORIZED AUDITORS (E11) Un 2.0.BOX 14848 Tel. O11 154 0634 Mobile 093 001 4496 E-mail: ugedtu7@gumal.coms migedu(ayahoo.comEthiopian Eeonomie Association Cont As of June 30, 2021 Contents M agement, Professional Advisors, and Registered Office Statement of Management Responsibility Auditors Opinion Statement of Financial Position Statement of Financial Perforn nee Statement of Changes in Net Assets Statement of Cash General Background Signi Notes to the Adoption of IPSAS ant Accounting Policies Note to the Financial Statements pageEthiopian Economies Associ Management, Professi As of June 30, 207 rs, Registered Office Organization Ethiopian Economies Association Registered office:~ Addis Ababa, Ethiopia: Registration: Registe for Civil Society Organization Rey ‘Address:- Yeka Sub City, Woreda 11, House No , New ‘Velephone +251 116453200 email: info@ stration No 1373 Executive Management Name ma Position Prof. Mengistu Ketemia Chief Executive Officer Dr, Degeye Goshu Director, Research and Policy Analyisis Dr. Semench Bessie Director, Comm. & Partenership [2020/2021 [Ato Woubeshet Amerga Director, Admin & Finance [2020/2021 fAwo Demirew Getachew Research Project Coordinator 020/2021 Independent Auditors ‘Tesfaye Gedlu Mebrate Certified Audit Chartered Certified Accountants [UK] Authhorized Auditors [ETH] P.O.BOX 14848 Addis Ababa, Ethiopia Bankers Commercial Bank of Ethiopia Hiibret Bank SC Bank of Abyssiniancial Statements Statement of Management Responsibility for F The management representations contained in the financial statements for the years ended June 30, 2021, This financial statement is prepared in accordance with International Public Sector Accountis Standards (IPSAS) based on the requirements of IPSAS and reflect amounts that are based on the best estimates and informed judgment of management with an appropriate consideration to materiality. As IPSAS standards are basically designed for public sectors, some of IPSAS. standards may not be applicable to EEA and hence, applied IPSAS sta this report. In addition, other national laws that are applicable to the organization is consider the preparation of the financial statements thiopian Economic Association is responsible for all information and rds are only covered in In this regard, management maintains a system of accounting and reporting which provides for the necessary intern are safeguarded against unauthorized use or disposition and liabilities are recognized. controls to ensure that transaetions are properly authorized andl recorded, assets Name Wubeshet Amerga Position Director, Adpfinjpfration & Finance Signature Signature a Date Date OCHRE, m E ne “AY Econonncs a nasTNE ISM BNd-t Tesfaye Gedlu Mebrate PtaAhcat ALE LCEE Certified Audit Firm Chartered Certified Accountant (UK) Authorized Auditor (ETH) Independent Auditor's Repo ‘To Ethiopian Economies Associ Opinion We have audited the accompanying financial statements of Ethiopian Economies Association set out on pages 7 10.9 which comprise the statement of financial postion as at 30th June 2021, the Statement of Financial Performance, Statement of ehange the ended, and notes to the financial statements, including a summary of significant accounting policies. in net assets and the Cash flowa statement for the year In our opinion, the financial statements give a true and fair view ofthe financial position of the organization as at 30th June 2021 and of its financial performance and its cash flows for the year then ended in accordance with International Public Sector Accounting St andar, Basis of Opinion ‘We conducted our audit in aceordance with International Standards on Auditing (IS/\). Our responsibilities under those standards are further described in the Auditors’ Responsibiliti statements section of our report, We are independent of the ory International Ethics Standards Board for Accountants’ Code of Eth (IESBA Code), together with other ethical requirements that are relevant to our audit of the financial statements in Ethiopia, and we have fulfilled our other ethical responsibilities in accordance with these requirements, We belie wwe have obtained is sufficient and appropri provide a basis for our opinion, for the audit of Financial ization in accordance with the for Professional Accountants ¢ that the audit eviden eto Management Responsibility for the Financial Statements Management is responsible for the preparation of fina Intern: {al statements that give you in accordance with the jonal Public Sector Accounting Standards and for such internal controls as Manage are necessary to enable the preparation of financial statements that are free rom material misstatem whether due to fraud or error ¢ determing In preparing the financial statements, management is responsible for assessing continue as a going concem, disclosing , as applicable, matters related toAuditor's responsibility for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatements, whehter due (o fraud or error, aud 10 issue includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISA will Misstatements can arise from fraud or error and are considered material if, individually o in aggregate, n auditor's report that Iways dotect a material misstatement when it exists they could reasonably be expected to influence the economic decisions oF users taken on the basis of of these financial statements. SA, we exet As part of an audit in accordance with professiosl sceptickism throughout the audit, We also: i) Identify and assess the risks of material misstatement of the Finaneal statement, due to fraud or error, design procedures responsive to the risks, and obtain audit evidence that is sufficient approp resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepres ternal control ii) Obtain an understanding of internal control relevant to the audit procedures that are appropriate in the circumstances, but not for the purpose of expressin, the organization's internal control Evaluate the appropriateness accounting polic estimates and related disclosures made by management, iv) conclude on the appropriateness of the mane k of not detecting a material misstatement we to provide a basis for our opinion, The r entations, or the override of ntei an opinion on the effectiveness of xed and the reasonablness oF'aecounting ment use of th ing concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events ‘or conditions that may cast significant doubt on the organization's ability to continue as @ going concer, If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disteosure: nts or, fsuch disclosure adequate, to modify our opinion. Our conclusions are based on the audit evidence obtained upto the date of our auditor's report. However, future events or conditons may’ cause the organization to cease to continue as a going concern. the fina ¥) Evaluate the overall presentation, structure and eont of the financial statements, ineluding the disclosu transactions and events cs and whether the financial statements represent the under ina manner that achieve fair presentation. We communicate with 1 of the audit and significant deficiencies in internal control that we identify through our audit at re urding, among other matters, the planned scope and timing We also provide those charged with management with a statement that we have complied with the relevant ethical requirements regarding independence, and to communicate with them all relationsh and other matters that may reasonably be thought to bear on our independence, and where applica related safeguards, 5) Tesfaye Gedlu Mebrate Certified Audit FirmStatements of Financial Performace For the Year Ended June 30,2021 Income Donation Other Income Expenditures Program Expenditures Administrative Expenditures Excess (Deficit) of Income over Expenditure Note 49 4.10 2024 2020 59,199,962.77 23,923,660.00 7,512,427.74 4,907,872.00. 66,712,390. 28,831,532.00 36,317.420.59 10,346,456.80 8,678,171.01 3,650,065.38 44,995,591.60, 13,996,522.18 21,716,798.91 14,835,009.82Statements of Financial Position As ye 30, 2021 Note Assets Non Current Assets Property, Plant and Equipment 4a 829,108 28.406.233 Investment in IGA, S63 Right co Use Assos 42 0 28,400,667, 28,746,801 Current Assets Detvors 43 76.969 $98,398 (Cash snd Bank Balances ‘Total assets [Not Asset / Equity Fund Balance 6.391.262 4,760,349. ‘Total equity / net assets 6331.20 4,760,389) Non-Current Liabilities Lease payables = 351,048 Employee Benefits 342 3.263.016 1,383,320 aa. 06 176368 Current Liabilities Creditors as 93.191 302,008 “Tax Payables 46 622,363 384,518 Employee Benefts- Annual leave 340 1.206 279.250 Deferred Revenue 0 1507.21 4.770467 71101729 27,030 Prof Mengisin Ketema Chief Execmive Officer Ato Woubeshet Amerger Director, Administration & FinanceEthiopian Economics Association atements of Changes in Equity / Net Assets For the years ent ne 30, 2021 Fund Balance (IPSAS) as of June 30,2019 Excess of Revenue over Expenditure Fixed Assets fund balance Adjustment Prior year adjustment Fund Balance (IPSAS) as of June 30, 2020 Fund Balance as of July 1, 2020 Prior year adjustment Excess of Income over expenditure Fund Balance as of June 30, 2021 31,953,040.71 14,835,009.82 (1,666,321.00) (361,378.00) 44,760,.351,53 44, 760,351.53 (145,888.02) 21,716,798.91 66,331,202.42onomies Association Statements of Cash Flows Fs 1d June 30,2021 (Cash ows trom operating et Excess of Income over expedite Depreciation Lease Amorisation Transfer Prior year adjustment Working Capital changes ‘Changes in Debtors Changes in Creditors ‘Change in Tas Liabilities ‘Changes in Deferred Revenue (Change in Employee B Change in Employee Benefits vacation [Net eash provided by operating activities nefits Severance Cash fow from Lavesting Activities Acquisition of properties and equipment PE Adjusines Net cash us investing activities Cash flow From Finan Lease Paid [Net Cash flow from financing ativtes ng Aetivities Increase (deere) in cash and cash equivalents ‘Cash and cash equivalents: ‘At bepining of perc Aven of perio er Nate 24,716,79891 Las3s.010 197.903.00, 7818 5.2039 (9,500,000 00) (145,888.02), 0137), 801,129.48 (76533) (408,211.70), aly 2578IS.57 20) (27,030.00), 27.030 Lsr.2604 sa 279236 512,010.38 (7.812.015 00) 306,785.63), 351.01.66) e510 (351,087.60) (25.710) 90747384 13.480.68mies Association Notes to the Financial Statements ‘For the Year Ended June 30,2021 1. GENERAL BACKGORUND. 1.1 Introduction ce with International Public Sector Accounting 30 June 2020. ndards required for publie This financial statement is prepared in accorda Standards (IPSAS) based on the requirements of IPSAS for financial year endin ‘Though IPSAS standards are fully meant for public sector, some of the st sectors may not applicable to ition, hereinafter referred as BEA and may not be covered in this report Ethiopian Feanomies Associa EEA is a first-time preparer of IPSAS financial statements, The transitio accounting standard have therefore been covered. AS a first-time adopter of IPSAS, EEA provide full disclosure in the accounting policies and in the notes to the financial st use of the transitional provisions. | provisions of each ments when it has made 1.2 About EEA ‘The Ethiopian Economic Association (EEA) is a non-profit and independent professional organization established on 25 November 1991. The association promotes the study of economies in Ethiopia, promotes economic research and assists in its dissemination and facilitating contact with Ethiopian and foreign Policy Research Institute (EEPRI research and in organizing short term trainings on Ethiopia's economic development. Key objectives of the association is to contribute to the economic sonomists. The Association has established, under i, the Ethiopian Economie in July 2000 as its research wing, ‘The Institute is involved in ous issues that are of critical importance to policy formulation capability and broadly to the economic advancement of Ethiopia. Principal activity of EEA includes +10 promote the professional interest of its I + to promote the study of economies in the country's educational institutions + fo promote economic research and assist in the dissemination of the findings of such Ethiopia: + to provide fora for the discussion of economic issues, and +0 promote professional contacts between Ethiopian economists and those of other countries. onomists; research, A (80820 5; ES 1.4, OS 140. ne ‘Jey ment ely MeOr era keg 5 Audit 10The General Assembly is the highest decision-making body with the responsibility of providing an overall policy framework. An Executive Committee elected by the General ‘Assembly and serving for three years provides leadership. It has a secretariat with employed staff who manages the day to day activitics of the Association. ‘The Ethiopian Economic Policy Research Institute, which is a subsidiary of the Association is oreanized under four research divisions namely, Agriculture and Rural Development Division, rade and Industry Division, Social and Human Resource Division and Macroeconomic Division. Each division is staffed with at least one full time senior researcher and one searcher. sociation in Africa by 2030.” envisioned to become a premier economi on: The mission of EEA is to provide a platform for networking, access to information and learning; to contribute to a better understanding of the glob: and investment decision; to offer training national and local economic issues; to inform and influence economic policymaki and foster the advancement of discipline of economics. Values: Professionalism, integrity, independent inclusiveness, teamwork, accountability and transparency. quality, efficiency, Motto: Professionalism and Economic Thinking for Development! SV ecuency AFEthiopian Economies Association Notes (o the Financial Statements For the Year Ended June 30,2021 1.3 Statement of Compliance and Basis of Preparation adopting IPSAS for the first time in July 1, 2019, eleeted and applied the following transitional prov ption allowed under IPSAS 33 paragraph 63 to 134 that do not affect fair presentation and complianes sis of IPSAS. and ex with accrual IPSAS 17, Property, Plant and Equipment EEA applied the accounting policy under IPSAS for property, plant and equipment on historical cost IPSAS 39, Employee Benefits EEA applied the accounting policy under IPSAS 39 for employee benefits. L:mployce benefit labilities are measured based on the salary at th ied approach projection in line with the calculation provided under the Ethiopia Labour Law | of the reporting period with a simpli New standards and Interpretation not yet adopted -EA didn't adopt IPSAS 4 - Financial Instruments and IPSAS 42 - Social Benefits, which will be effective from January 1, 2022. EEA didn’t have complex financial instruments. Its receivables and payables are short terms and doesn't have other debt and equity instruments and the adoption of PSAS 41 will not have sig impact. The management of EEA considered [PSAS 42 less applicable to 1PSAS.For the Year Ended June 30, 2021 Ethiopian Eeonomies Association Notes to the Finaneial Statements ACCOUNTING POLICIES 2 SUMMARY OF SIGNIFICAN icies applied in the preparation of these financial statements are set out The significant a below. These policies have been consistently applied to all the years presented, unless otherwise stated. 2.1 Basis of preparation The financial statements for the period ended 30 June 2021 have been prepared in accordance with International Public Sector Accounting Standards ("IPSAS") as issued by the International Public Sector Accounting Standards Board ("IPSASB"). Additional information requited regulations is included where appropriate py National ‘The Financial Statements of EEA have been prepared in accordance with and comply with International Public Sector Accounting Standards (IPSAS). The Financial Stat Birr (ETB) whieh is also the funa donors is convereted in to ETB equivalent on the date of receipt by the bank at an exchange rate yents are presented in Ethiopi nal currency. Cash transferred in foregin currency from prevailing on the date of re ‘years presented. iting policies have been consistently applied to all the he financial and Other Comprehensive ments comprise the Statement of Surplus and Defi ‘The F in accordance with IPSAS. incial Statements for the period ended 30 June 2021 are the second for ELA has been prepared All values are presented without roundit otherwise indicated. fen’ rounded to the nearest thousands), except when reney is Ethiopian Bier (ETB) IEA’s funetional and reporting cu ‘The Financial Statements provide comparativ addition, EEA presents an additional Statem period when there is retrospective application of ‘reclassification of items in financial statements information in respect of the previous period, In The financial statements have been prepared on a going concern basis. ‘he management has no doubt2.3 Key Judgements and Sources of Estimation Uncerta ty 3, estimates and assumptions that affect the I statements requires Judgemes application of policies and reported amounts of assets and liabilities, ineome and expenses. ‘The key judgements management have made in preparing the financial statements are as follows: cful life of Property, Plant and Equipment (PPE) based on judgement tthe condition of the ind also the start-up estimated useful life of new assets though EEA estimated the r of the management taking into ace threshold for the determination of PPE the useful life is subject to revision annually, Accounting policy on PPE sels. AS.a policy BEA set out the stated under Note 2.11.3, Key estimates and underlying assumptions are reviewed on an ongoing basis, Revisions to accounting estimates are recongnised in the period in whieh the estimate is revised, if the revision affeets only that period, or in the period of the revision and future periods if the revision afleets both the period of revision and future periods. 2.4 Foreign Curreney Transactions EEA’s functional and reporting currency is Ethiopian Birr (EB), ELA translate its foreign euereney accounts into ETB at the prevailing exchage rate on the date of reporting, ‘rhe result yin oF loss on translation are dealt with the Statement of surplus and deficit. 2.5 Changes in accounting policies and est The effets of changes in 1s of counting policy retrospectiv ing policy are applied prospectively if retrospective application is impractical, the eff in surplus or deficit EEA recognizes the effects of changes i changes in accounting esti s reflected prospectively by inchudi 2.6 snt versus Non-current classific EEA presents assets and liabilities in the statement of fi urrent ication, An asset is current when it is: rancial position based on current/no Expected to be realized or intended to sold or consumed in the normal operating. eyele held primarily for the purpose of the operation Expected to be realized within twelve months Cash or cash equivalent unless restricted from being exchanged or w twelve months after the reporting period. All other assets are classi the reporting period, or ed to seule a liability for at least as non-current A liabil is current when:It is expected to be settled in the normal operating eyete Itis held primarily for the purpose of the opration. Itis due to be settled within twelve months after the reporting period, or ‘There is no unconditional right to defer the settlement of the liability for at least twelve m the reporting period, all other liabilities as non-current2.7 Cash and cash equivalents Cash and cash equivalents comprise cash on hand and cash at bank, high liqquid investments with a maturity less than 90 days from the date of aquisition and which are readily convertible to known amounts of eash and are subject 10 insignificant risk of changes in value 2.8 Loan and Receivables Receivables from exchange transaction are mainly resulted from sales of rental services on credit Receivables from exchange transactions are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for iinpairment Receivables from non-exchange transactions comprises as « result of non-irrevocuble pledye received from a donor. aif repaid on installment bi and! deer Loan disbursed to stalT are recorded as receivabll ses as ‘Advance to contractors and consultants are recorded as receivable when paid and shall be settled against evidence of delivery of services or goods. {of receivables is established when there is objective evidence that EEA due according to the original terms of the receivables. A provision for impair will not be able to colk amo Inventory is measured at cost upon initial recognition, To the extent that inventory was received through nonexchange transactions (for no cost or for'a nominal cost), the cost of the inventory is its fair value at the date of acquisition. Cost is determined using Wieghted Average method Inventories held for distribution for members and to the public for free are recorded at cost, adjusted where applicable for any loss of service potential. Anni ied at lower of cost and Netrealisable value (or replacement cost). When the value of inventories counted at the end of reporting period are insignificant, EEA does not recognise them. inventory on hand are 2.10 Other Recei bles and Current Assets ged when transaction Prepayment and deposits are stated at cost (at fair value of consideration exh occurred) and transferred to the appropriate expenditure account on a monthly basis with the equivalent value services rendered by the vendor. transferred to the appropriate expenditu assignment EEA assesses at each statement of finaneial position date whether the financial asset or a group of financial assets is impaired,21 Property, Pint and Equip 21 Recognition and Measurement 4 impairment All property, plant and equipment are stated at eost less accumulated depreciation 3 losses. Cost includes expenditure that is direetly attributable to the acquisition of the items, When significant parts of property, plant and equipment are required to be replaced at intervals, EEA recognizes such parts as individual assets with specific useful lives and depreciates them accordingly Likewise, when a major inspection is performed, i the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied, All other repair and maintenance costs are recognized in surplus or deficit as incurred, Where an asset is aequired in a no exc “The materiality threshold for the reco; is cost is recognized in \ge transaction for nil or nominal consideration the asset is initially measured al its fair value. ition of PPEs is ETB 30,000. rying amount or recognized as 4 separate asse Subsequent costs are included in the asset's appropriate, only when itis probable that future economic benefits or service potential associated with the item will flow to EEA and the cost of the item can be measured reliably. The carrying amount of a replaced part is derecognized. All repair and maintenance are charged to the statement ancial performance during the financial period in which it is incurred, of fi 2.11.2 Dereeognition {An item of property, plant and equipment is derecognized upon disposal or when ns future economic benefits are expected from its use or disposal. 2.11.3 Depreciation Depreciation on assets is charged on a straight-line basis at rates calculated to allocate the cost or valuation of the asset less any estimated residual value over its cee | Depreciation | Useful tite in years Building Straight Line 40 Equipment Sirsight Line 10 10 Fur ure [Generator [Computers and Accessories [Vehele Straight Line 10 The assets’ residual values and uselul lives are reviewed, snd adjusted if appropriate atthe end of each reporting period. An a amount or recoverable service amount if the recoverable amount or recoverable servie 's carrying amount is written down immediately to its recoverable 18 amount is greater than its estimated ssets carry! 2.12. Payables under exchange trans Payables and accruals are fmancial liabilities for goods or services that have been received bl paid by the reporting date. Payables are recognized initially at fair value and subsequently me amortized cost using the effective interest method. Payables and accruals are of a short-term na and are recognized at cost as the effect of discounting is not considered material2.13 Provisions A has a present obligation (legal or constructive) as a result of a past event, itis probable that an outflow of resources embodying economic benefits or service potential will be required to settle the ‘obligation and a reliable estimate ca mount of the obligation. EEA expects some or all of a provision to be reimbursed, for example, under an is recognized as a separate asset only wher bbe made of the a surance contract, the reimbursement is bursement is virtually certain, ‘The expense relating to any provision is presented in the statement of financial performance net of any reimbursement a le s based on 2.14 Leases ‘The de the substance of the arrangement and requires, dependent on the use of a spec asset nation of whether an arrangement is _ oF contains a lease assessment of whether the fulfillment of the -ment conveys a right to use the ment ie asset or assets or whether the arra EBA asalessee Leases that do not trans incidental to ownership of the leased items are operating leases. Operating lease payments are recognized as an expense in the statement of finan term. fer to the Company substantially all of the risks and benefits performance on a straight-line basis over the lease EE of ownership of the asset are classified as operating leases. Rental income is recorded as earned based on the contractual terms of the lease. Initial direct costs incurred in negotiating operatiny the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income, as alessor Leases where the Company does not transtir substantially all of the risk and b lcases are added to Ri {-to-use arrangements Where EEA has signed an agreement for the right-to-use assets without legal ttle/ownership of the assets, e.g., through donated use granted EEA at no cost, the transaction is @ non-exchange transaction. In this case, an asset and revenue is recognized at the point the agreement is entered into. Recognition of an asset is contingent upon satisfying criteria or jon ofan asset, Valuation of the asset will bet of the resource for which the right to use was acquired at the date of acquisition. The asset is depreciated over the shorter of the asset's. useful life and the right-to-use term, Revenue is also recognized at the same amount as the asset, except to the extent that a liability is also recognized. 2S Net Asset /Equity EA's equity comprises the initial cash and assets received from its member oryaniation subsequent transfers of eash and assets from the organization and donors as revenue and are recongnised as revenues in the Statement of Financial Performance. The surplus trom the rf expenditure will add up to the total 2.16 Revenue Revenue is recognized to the extent that itis probable that the economic benefits oF service po flow to BEA and the revenue ean be reliably measured, Ww (Revenue from Exehange ‘Transactions / Cot Revenues from non-es donors, from local and international charitable organizations and Local and Foreign government entities are measured at fair value and recognized on obtaining control of th services and property). However, Ifthe transfer is attached wi legally enforceable, revenue is recognized to the extent of Ti recognized to the extent that a present obligation his not bee jange transactions with entities such as transfers or contribution from private set (cash, goods, condition and the conditions are filled conditions and a liability is, satistied Revenue from exchange transactions ions for LEA includes membership fees; revenue from sales of ie comprises the fair Revenue from Exchange Tr publications, gains/losses on disposal of property, plant and equipment, Rever value of consideration received or receivab le for the sale of goods and services. Revenue is shown net of retums and discounts, Revenue is recognized when it ean be rel iably measured, when the inflow of future economic benefits is probable and when specific eriteria have been met 2.16 Expenditure BEA expenditure is recognized on accrual basis. Expenditures are classified as program expenditure and administration expenditures. According to the Organization of Civil Societies Proclamation 1113/2020, EEA’s administration expenditure should not execed above 20% of the total Income for the reporting period. The classification of expenditure between administration and program is, provided in the guideline issued by the Ageney for Civil Society Organizations 2.17 Employee Benefits and obligat EEA has short term employee benefits that includes defined contribution plans, defined contribution has plan is a pension. fund plan under which EEA pays fixed contributions in to a separate entity no legal or constructive obligations to pay further contributions, Obligations for contributions to defined contribution schemes are recognized a which the services are rendered by employees. ‘expense in surplus and deficit in the period during, 2.17.1 Pension and Provident fund Short term benefit PEA\s Pension fund contribution is 11 EEA makes pension fund contribution on behalf of its employ % on the basic salary of the employees employed in accordnace with Private Organi Pension Contribution Proclamation (2011). Employees contribute 7% of their basi salary for provident fund (7% those who are in the Pension Scheme). ‘The Private Organization 1 Proclamation No 715/201 requires a pension contribution is tions Ei nployees! ‘and 11% by the emp und employers respectively to be deposited every month within 30 days from the end of each month, The is administered by the Private Organization Pension Fund Ageney other EEA other than the above stated monthly contribution. Ch EEA nd there is no an sase of « provident pension fi liability to _— fund account to employees is granted when employees resig 2.17.2 Vacation or Leave pay_Short term benefit Unused annual leave are accrued. Employees are entitled to get the equivalent salary for u leaves up on employment contract termination,2.17.3 Severance Payable_Long-1 ince pay in aceordanee with Labour Proclamation No month salary for the for employ mployer acerues future liabilities on sever 1156/2020. ‘The Proclamation requires employers to pay a severance pay of on first year of services and 1/3 of monthly salary for each additional year of servi served more than five years or those who have been terminated by the will of the ‘computed the severance payable to the extent of employees service year to the date of reporting based ‘on the salary on the date of reporting taking into account stalf turnover rates. FEA will not pay severance pay if staf member leave the organization by his own will before the fifth year aniversary of employment , Due to the lack of reliable data on mortal rate y rate, salary growth rate, discount and other parameters, the management opted a simplified but more reasonable estinration approach for severance pay comput inimize its exposure to financial risk. It receive from its intenational donors on th transfer to partners is made on of previous advances hes in its account, C: EEA maintain some of its eash order to ensure fore payments on demand. n curreney 2.18 Related Parti EEA regards a related party as a person or an entity with the ability to exert control individually oF jointly, or to exercise significant influence over the entity, or vice versa, Members of key manayement are regarded as related parties, ‘A established a separate business unit to manage the income of the realestate business units and other services. The separation of the income generating unit is a result of EEA board decision to comply with the Civil Society laws of Ethiopia which requires charitable aivit ing activities including managment organization to manage income generating, accordnace with relevant commercial codes. ss under a seprate business unit established inEthiopian Economics Associati Notes to the 3 Notes to the Adoption of IPSAS ‘The financial statements for the year ended 30 June 2021 are the second time EEA financial statements prepared in accordance with IPSAS Accordingly, EEA has prepared financial statements that comply with IPSAS applicable as at 30 June 2021, together with the comparative period data for the year ended 30 June 2070, us described in the summary of significant accounting policies. 31 in requirements under jement of IPSAS 33 allows certain exemptions from the retrospective application of ce IPSAS. EEA. didn’t apply exemptions and opted for the preparation of comparative sta e Revenue and Expenditure. 3.2 Property, Plant and Eq ‘The Management raised the materiality threshold to ETB 30,000. Asa result, the carrying value of certain PPEs which doesnt mect the threshold are derecognised. he useful life of the assets were reassessed on the date of IPSAS adoption 3.4 Employee Benefit q EEA provide for employce benefit in accordance with IPSAS 39. The adoption resulted a Jong term ‘employee benefits of ETB 3.263.046 (Jun 30, 2021). ETB 791,266 recognised as a short term employee benefit as at June 30, 2021 3.4 Short term Employee Bene! Short term employee benefit is Annual leave payable, pension payables and other short term staf? payables which will be settled within 12 months. 20 a ere Annual Leave payable 279.256 n 3.4.2 Long Term Employee Benefit Payable Long term employee benefit represents severance pay payable 22 2020 ETB EIB 263,046 1,383,320 Severance Payabale3.5 Reconciliation of Financial Position as of June 30, 2021 Assets Non Current Assets Property, plant Investement in Right to Use Assets id equipment Current Assets Debtors Cash and Bank Balances ‘Total assets. Lease Payables Employee Benefits (Current Laibil Creditors ‘Tax Payables Employee Benetits-Annual leave Defered Revenue ‘Total Liabilities ‘Total Net Assets/Equities & Ree rama 7 2020 ETB 28,406,233 0 898.398 18,042,327 18,940,725 7,526 14,760,349 44,760,349 351.018 1,383,320 “1734308 302,003, 384,518, 219. eae 2,927,175 47,687,524 2 dit Fin stiments ETB (27,577,129) 27,571,563 (340,569) (346,135) (821,429) 24,581,766 23,760,338 23,414,203 913 0,913 21, (51,018) 1,879,126 1,528, (408,212) 237,845 512,010 On 0) 314,613.50 1,843,292 23,414,205 2021 ere 829,104 27,571,563 oO "28,400,667 76,910 412,624,093, 42,701,063 71,101,729 66,331,262 66,331,262 3,263,046 93,792 622363 791.266 0 15071 4,770,407 T1101,729Ethiopian Economies Assocaition Notes to the Financial Statements For the Year Ended June 30, 2021 4. NOTE TO THE FINANCIAL STATEM 4.1 Property, Plant and Equipment Balance as of June| Balance as of 30,2020 as per Addition in vesas | orsvosaus | “ananat "| aspertts eos a | = Buiings Terao | Giemsa) fics Ep 269.50 Wisoo0| emo Office Furniture 30,000 oer _ 30,000, Vehicl 2,355,908 z 7,500,000.00, 9,855,908 Generator riess | 700530) : Compu 7.5 oo | 8365 | nurs S75H181 | GLITI6820) 7.812.015] _12see8 [Accumulated Depreciation Buildings 132.717 | (6.432.717 on Oifce Equipment 269.500) ia 7 ‘omiee Furniture 30.00 : 30,000 Vehicle 1,995,323 216K OS Gencrator sao | 235.110.00) : ‘Computers 380.9985 a ans 9.109.918 | (6,668.127.00) 790s | 2009724 [Book Valute a E Buildings ED _— ‘Office Equipment — | sie2s.00 Ofte Furniture : Vehicle ons | mas Generaior aos | _ ci : ‘Computers 37407 360.205 Tout 2m A235 529,108Ethiopian Economies Association Notes to the Financial Statements For the Year Ended Jume 30, 2021 4.2 Leasehold Land The Associations obtained a 2011 meter square land at a lease cost of ETB 642,903.29 from Addis Ababa City Si ity for the lease life of 99 years, starting from June 23, 2003, The lease right ment is ETB 25,716.13 for a period of 20 ling bank iterest rate, This has been istration Autho inistratio granted with a 20% advance payment of lease price . The annual lease pa ‘years. Interest also shall be paid on the outstanding unpaid lease amount at a pre: wholly transferred to the IGA unit of the Association, 4.3, Debtors Debtors includes advances to contractors, partners and staf’ members. The management didn’t forsee any credit losses in connection with the outstanding balances. Advance to a contract represents a significant part of the debtors balance. The advance payment shall be transferred to Construct fonce a payment te is received from the contractor n in progress account 2021 2020 Staff Debtors 22,170 363,564 Sundry Debtors 19,000 182,922 Withholding Receivables 35,221 VAT Receivables 08 16,691 76,969 898,398 44° Cash and cash equivalents All cash and bank balances are represented by largely by cash in bank with small amount of petty cash fund, The cash and cash equivalents balance as of June 30, 2021 as Cash on Hand : 1,369.00 Cash at Bank 42,624,094 18,040,958 42,624,094 18,042,327Ethiopian Economies Associaton Notes to the Financial Statements For the Year Ended June 30, 2021 4.5 Payables 4.5.1 Creditors Grant and Contract payables are unrestricted yrant r to Profit and loss account when spent. Provident Fund Payable Sundry payables Staff Payable Retention payable Deposit Payables 4.5.2 Tax Payables ‘Tax payables are witholds from employees incon collected from vendors to be settled within 30 da Income ‘Tax Payables Withholding Tax Payables Pension Fund Payable VAT Payable 4.6 Employee Benefits 4.6.1 Short term Employee Benefit p Short term employee benefit is vacation le les which will be settled within 12 months. Annual Leave Payable 4.6.2 Long’Term Employee Benefit Payable Long term employee benefit represents severance pay payable Severance Payabale veived from donors. The balance will be transferred 2020 ETB 82,348 15,102 93 40 68,475 = 404, 93,791 tax and pension contribution and witholding, tax from the date of collection 2021 2020 ELE E 139,954 177.231 5,613 51,788 177,196 52,996 : 102,503, ee, 1 payable, pension payables and other short term stall 791,266 2021 1B 3,263,0464.7 Related Party Transactions 4.7.1 Related Ent Related party transactions represent transactions with senior management of BEA. The EEA Board of Directors approved the establishment of an Income Generating Unit, which is fully owned by EEA which has been established from Ist of July 2020, 4.7.2 : Key Management Personnel Key management personnel in 2020/21, comprise the Chief Executive Officer, Director, Research and Policy Analyisis, Director,Communication & Partenership, Research Project Coordinator and Director, Admin & Finance. The remuneration of key management personnels is. as follows: 4.7.3 Compensation of key management personnel Salaries Employee benefits wement personnel 5 4 74.9.4 Related Party ‘Tr: ‘The IGA unit of the Association has been approved by the Board to operate with its own management structure and reports its financial statements in accordance with business accounting, principles sicne July 1,2020. As of the reporting date it has not declared the tax duc and the net result has not been incorporated in these Financial stauments . actionsEthiopian Economics Association Notes to the Financial Statements For the Year Ended June 30,2021 48 Revenue 48.1 Grnats Grants 4.8.2 Other Income Membership Fee Sales of publications Rent Gain on Sale of assets Gain on Foreign Exchange Deferred revenue Interest Income Sundry 4.9 Expenditures 4.9.1 Program Progam service Salaries and Way Printing and Publishing Workshops, Contere Assembly Project Expenditures EEA Chapters Employee Benefits - Sever Employee Bene and General 59,199,963 461 2021, are Say 35,949 608.679 6630.48 2,108,269 27.030 : 1766222 16,695 934,902 ont ene 868,251.00 : 8.137.230 1324145.31 155.146 230,881 1,474,148 23,170,984 4,581,095 500 136,459 1AL9 574,370 6 216,423.00 10,341,2174.9.2 Administration Salaries and Wages Employee Benefits Printing, Stationeries and supplies Building maintenance Repair and Maintenance Vehicle Running Costs Bank Charges Building Tax ‘Advertisement and Promotion Interest on land lease ‘Travel and Perdiem Cleaning and San Subscripti Professional Fee Audit Fee Legal Fee Staff meeting & training Uniforms and Outfits Vehicle donated Fixed Assets Computers and Electrical Materials Miscellaneous. mployee Benefits Employee Benefits - annual leave tation tion Severance Pay 57,049 B9,D1 59,715 19410 2,739,010 377415 68,550 16,220 4,674 329,737 148.901 0 17,375 40393 1,863 84,088 19,953 124,118 39,799 Is 328,160 372.914 34,768 22.477 685,120 M1 8,678,171 7 2020 2,595,380. 499,032 223,871 64,887 115,950 223,814 48,961 87,864 2415 11,095 158,190 20,888 4.928 21,308.00 3.243, 182,352 18,228.00 46,477 26,570 o 16,687 110,736.00 23,056 3044.9.3 Percentage of Program & Ad Exp In accordance with the civil society proctamation No 1113/2020 civil societies are required to present its expenditure report by classifying as program and administration expenditures. tive expenditure should not exceed 20% of the total Income in the reporting period, Accordingly, EEA program expenditure is 84% of the total expenditure. Administration Expenditure comprises 16% of the total expenditure. vil societies’ adm the year Ended ne 30, 2021 Expenditure Categories mage of Revenue Program Expenses 36,317.420,59 54.4% ‘Admin Expenses 8,678,171.01 13.0% 449 674% ‘The total revenue of the Association during the year was 66,712391.51 4.10 Contingencies and Commitm There were no contingent liabilities at the reporting date of 30 June.2021. tn addition, there were no commitment for capital expenditure in the reporting date. 4.11 Byents after the reporting period Events subsequent to the reporting date are reflected in the financial statements only nder consideration and the effe ial, Major significant event is the transfer of the role of me generating activities to a newly established business unit of EEA. The event doesn't result in an adjustment to the hagement oF statements,