Grant Thornton. ANJUM ASIM SHAHID RAHMAN Chartered Accountants

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1 ANJUM ASIM SHAHID RAHMAN Chartered Accountants Grant Thornton An instinct for growth MOUNTAIN AND GLACIER PROTECTION ORGANIZATION FINANCIAL STATEMENT FOR THE YEAR ENDED JUNE 30, 2014

2 Grant Thornton TM An Instinct for growth Anjum Asim Shahid Rahman 1st Floor, 2 Ali Plaza 1-E, Jinnah Avenue Blue Area, Islamabad Pakistan T: , , F: W: AUDITORS' REPORT TO THE BOARD OF DIRECTORS We have audited the annexed Balance Sheet of Mountain and Glacier Protection Organization ("MGPO") as at June 30, 2014 and the related income and expenditure account and cash flow statement together with the notes forming part thereof (here-in-after referred to as "the financial statements") for the year then ended. It is the responsibility of the MGPO's management to establish and maintain a system of internal control, and prepare and present the abovesaid statements in conformity with the accounting policies as mentioned in note 2 to the financial statements. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards as applicable in Pakistan. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit also includes, evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. In our opinion the financial statements present fairly in all material respects, the financial position of MGPO as at June 30, 2014 and of its deficit and cash flows for the year then ended, in accordance with the accounting policies mentioned in note 2 to the financial statements..a'ri C A m Asim Shahid Rahman tered Accountants t Engagement Partner: Nadeem Tirmizi January 21, 2015 Islamabad Chartered Accountants Member of Grant Thornton International Ltd Other offices in Lahore and Karachi

3 BALANCE SHEET AS AT JUNE 30, 2014 Note ASSETS CURRENT ASSETS Advances, deposits and prepayments 3 13,529,708 21,629,297 Other receivables 4 449, ,825 Cash and bank balances 5 36,787,004 44,594,878 50,766,020 66,622,000 FUNDS AND LIABILITIES General fund 6 31,552,462 45,069,454 LIABILITIES CURRENT LIABILITIES Accrued and other payables 7 19,213,558 21,552,546 50,766,020 66,622,000 The annexed notes 1 to 19 form an integral part of these financial statements. \

4 INCOME AND EXPENDITURE ACCOUNT Note Income Programme donors' grant Donations Other income Exchange gain Expenditure 9 118,101, ,399, , , ,763,145 4,060,188 34, , ,087, ,068,623 Programme expenditures Reconstruction cost Refurbishment cost Training cost Capital cost Logistic and supervisory cost ,148,500 45,907, , ,915,964 2,468, ,630 3,353, ,414,147 22,048, ,704,241 74,557,835 Administrative cost Net Surplus/ (deficit) for the year 16 2,900,031 3,895,970 (13,516,992) ==5=7'=61=4=,8=18= The annexed notes 1 to 19 form an integral part of these financial statements.

5 CASH FLOW STATEMENT CASH FLOWS FROM OPERATING ACTIVITIES Net Surplus/ (deficit) for the year (13,516,992) 57,614,818 Adjustment for: Interest income (2,763,145) (4,060,188) Changes in working capital (16,280,137) 53,554,630 (Increase)/ decrease in current assets: Advances, deposits and prepayments Other receivables Intrease in mrrent liabilities: 8,099,589 (8,452,117) '------'-(5_1"--,4_83-'-J) L ;_(1-'0,98 8.:.._,5 61-LJ) 8,048,106 (19,440,678) Accrued and other payables (2,338,988) (31,356,930) Refund of unspent grant Membership income received during the year Net cash (used in)/generated from operating activities (97,772) 61,000 (10,571,019) 2,720,250 CASH FLOWS FROM INVESTING ACTIVITIES Interest income 2,763,145 4,060,188 Cash generated from investing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year The annexed notes 1 to 19 form an integral part of these financial statements. 2,763,145 4,060,188 (7,807,874) 6,780,438 44,594,878 37,814,440 36,787,004 44,594,878 \lv CHIEF EXEC DIRECTOR

6 NOTES TO THE FINANCIAL STATEMENTS 1. LEGAL STATUS AND OPERATIONS Mountain and Glacier Protection Organization (MGPO) is a Non Government Organization (NGO) registered on August 18, 2001 under the Voluntary Social Welfare Agencies (Registration and Control) Ordinance 1961 (XLV of 1961). MGPO is a social welfare non-profit organization certified by the Pakistan Centre for Philanthropy. MGPO programmes are designed to enhance the quality of life of disadvantaged communities by providing them with improved access to education and healthcare services, and building physical infrastructure and water management systems that contribute to social, economic and environmental security. Social mobilization and gender mainstreaming remain cross cutting themes in all programme areas. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The following accounting policies have been applied in dealing with items that are considered material to the organization's financial statements: 2.1 Income Income is recognized when accrued except for grants and donations which are recognized on receipt basis. 2.2 Expenses These are recorded in the financial statement on accrual basis 2.3 Capital expenditure Capital expenditure incurred by MGPO for project purposes is fully charged to income and expenditure account as and when incurred. 2.4 Taxation The income of MGPO is exempt from tax under section 2(36) of Income Tax Ordinance Provisions Provisions are recognized when MGPO has a present legal or constructive obligations as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of obligation. 2.6 Trade and other payable Liabilities for trade and other payable are carried at cost, which is the fr value of the consideration to be paid in the future for goods and services received, whether or not billed to MGPO. 2.7 Foreign currencies Transactions in foreign currency are accounted for at the exchange rates prevailing on the date of transactions. All monetary assets and liabilities denominated in foreign currencies at the year end are translated at exchange rates prevailing at the balance sheet date. Non monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transactions. Exchange differences are included in income and expenditure account for the year. 2.8 Functional Currency MGPO's functional currency in Pakistan Rupee (PKR), Figures in these financial statements have been rounded off to the nearest PKR, unless otherwise stated.

7 NOTES TO THE FINANCIAL STATEMENTS 3. ADVANCES, DEPOSITS AND PREPAYMENTS Advances to: -Employees -Projects Prepayments: -Rent -Fee - Insurance Security deposits 3.1 For personal expenses For official expenses , ,588 12,513,701 20,246, , ,820 78,915 72,388 27,359 27, , ,500 13,529,708 21,629, ,000 90, , , , , OTHER RECEIVABLES Other receivables -MSP Project -TSP Project -Talis Project -HRE Project -Pakistan Poverty Alleviation Fund 111,117 69, , , , , , CASH AND BANK BALANCES Cash in hand 76, ,233 Cash at banks -Current accounts -Local currency -Foreign currency -Saving accounts -Local currency -Foreign currency , ,331 35,763,610 43,499, , ,204 36,710,994 44,411,645 36,787,004 44,594, These carry effective profit rates are 7.0% (2013: 6.5%) per annum in respect of local and foreign currency account respectively.

8 NOTES TO THE FINANCIAL STATEMENTS 6. GENERAL FUND Balance as at July 01 45,069,454 (12,508,592) Net surplus/ (deficit) for the year (13,516,992) 57,614,818 Membership income 61,000 Refund of unspent grant 97,772d Balance as at June 30 31,552,462 45,069, ACCRUED AND OTHER PAYABLES Payable to contractors 12,929,371 12,929,371 Retention money payable 3,026,503 5,774,972 Payable against project expenditures 772,804 2,772,803 Other payables 2,414,880 5,400 Accrued expense 70,000 70,000 19,213,558 21,552, CONTINGENCIES AND COMMITMENTS MGPO has a dispute with M/s Ideas Web Pakistan ("the contractor") regarding delay and faults in construction of Government High School ("GHS"), Chatter Plain and Basic Health Unit ("BH U"), Kathai, District Ma.nsehra. According to the lawyers of MGPO, appeals have been filed by MGPO for equitable set-off against the contractor amounting to 4,032,059 payable on account of GHS, Chatter Plain and 1,129,376 payable on account of BHU, Kathai, District Mansehra. Both appeals are pending before Honourable Peshawar High Court, Abbottabad Bench and have been made against judgments/decrees passed by Civil Judge, Mansehra for payment of 8,468,284 and 17,975,728 for construction of GHS, Chatter Plain and BHU, K.athai, District Mansehra respectively. Against this claim, 11,464,118 has already been provided for in the books of accounts relating to payment due to the contractor under the terms and conditions of the contract. Management is confident of favourable output on said appeals as indicated by legal counsel. 9. PROGRAMME DONORS' GRANTS 2014 Pakistan Poverty Alleviation Fund -Buner Project 81,116,761 30,202,886 -Community Physical Infrastructure 6,875,818 7,354,000 -WMC 20,609, ,669,167 Department for International Development (DFID) 60,920,538 SEED Project Management Unit 9,500,000 10,252, ,101, ,399, OTHER INCOME Interest income on saving accounts 2,763,145 4,060,188 2,763,145 4,060,

9 NOTES TO THE FINANCIAL STATEMENTS 11. RECONSTRUCTION COST I High School (GBHS-Pilot 1) DFID 1,893,829 Water Supply Scheme 44,728,323 9,533,197 Boundary wall & fence 40,583 Main Gate 79,212 Common Room 858,480 8,186,568 GHS Kb.un Bandway DFID 649,459 GHS Chattar Kalas 1,823,545 GHS Ali Akbar Awan DFID 21,375,177 Bath Rooms 8, ,515 Roads & Bridges 6,974,691 1,253,470 Infrastructure/Construction Cost 26,640,943 4,848,173 Flood Protection 14,642,694 Tourist Toilets 767,190 Link Roads 10,985,155 Improvement of Camp Site 2,542, ,148,500 49,907, REFURBISHMENT COST I Education 779, TRAINING COST Education 4,915,964 2,468,779 4,915,964 2,468, CAPITAL COST Furniture 215,600 Office equipment 225, ,650 Computers and accessories 421,500 Vehicles 2,025, ,630 3,353,501 \v

10 NOTES TO THE FINANCIAL STATEMENTS 15. LOGISTIC AND SUPERVISORY COST Salaries 14,711,923 16,526,531 Office rental 560, ,700 Bank charges 101,155 53,504 Printing and stationery 196, ,890 Office supplies 293, ,479 Legal and professional charges 37, ,986 POL 709, ,798 Communication 390, ,654 Field visits 896,901 1,499,232 Office maintenance 112, ,451 Utilities 366, ,271 Camp maintenance and repairs 37,470 1,047, ADMINISTRATIVE COST 18,414,147 22,052,879 Office rental 1,298,918 2,112,500 Printing and stationery 208,620 11,990 POL 133, ,002 Office maintenance 284,890 98,290 Audit fee 70,000 70,000 Legal and professional charges 118, ,572 Insurance 39,618 52,687 Medical supplies 33,933 Tax withheld on bank profits 259, ,216 Zakat deducted at source 6,042 Field Visit 84,701 Miscellaneous Expenses 401,905 62,133 2,900,031 3,891, DATE OF AUTHORIZATION These financial statements have been authorized by the Board of Directors of MGPO on :S'--.- :1...\, 2cl CORRESPONDING FIGURES Corresponding figures, wherever necessary, have been rearranged and reclassified for the purposes of comparison and better presentation. However, these are not considered material enough to be disclosed 19. GENERAL Figures have been rounded off to the nearest -- rupee. DIRECTOR c::::::::;: