Kythe, Inc. (A Nonstock, Nonprofit Corporation)

Transcription

1 Kythe, Inc. (A Nonstock, Nonprofit Corporation) Financial Statements December 31, 2012 (With Comparative Figures for 2011) and Independent Auditors Report

2 SyCip Gorres Velayo & Co Ayala Avenue 1226 Makati City Philippines Tel: (632) Fax: (632) ey.com/ph BOA/PRC Reg. No. 0001, December 28, 2012, valid until December 31, 2015 SEC Accreditation No FR-3 (Group A), November 15, 2012, valid until November 16, 2015 INDEPENDENT AUDITORS REPORT The Board of Trustees Kythe, Inc. Report on the Financial Statements We have audited the accompanying financial statements of Kythe, Inc. (a nonstock, nonprofit corporation), which comprise the statement of assets, liabilities and fund balance as at December 31, 2012, and the statement of revenues and expenses, statement of changes in fund balance and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Philippine Financial Reporting Standard for Small and Medium-sized Entities, and for such internal control as management determines is necessary to enable the preparation of statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Philippine Standards on Auditing. 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 involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. 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. A member firm of Ernst & Young Global Limited

3 - 2 - Opinion In our opinion, the financial statements present fairly, in all material respects, the assets, liabilities and fund balance of Kythe, Inc. as at December 31, 2012, its revenues and expenses and its cash flows for the year then ended in accordance with Philippine Financial Reporting Standard for Small and Medium-sized Entities. Other Matter The financial statements of Kythe, Inc. as at December 31, 2011 and for the year then ended were audited by other auditors whose report dated April 12, 2012, expressed an unqualified opinion on those statements. Report on the Supplementary Information Required Under Revenue Regulations and Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information required under Revenue Regulations and in Note 12 to the financial statements is presented for purposes of filing with the Bureau of Internal Revenue and is not a required part of the basic financial statements. Such information is the responsibility of the Board of Trustees of Kythe, Inc. The information has been subjected to the auditing procedures applied in our audit of the basic financial statements. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements taken as a whole. SYCIP GORRES VELAYO & CO. John Nai Peng C. Ong Partner CPA Certificate No SEC Accreditation No AR-2 (Group A), March 29, 2012, valid until March 28, 2015 Tax Identification No BIR Accreditation No , April 11, 2012, valid until April 10, 2015 PTR No , January 2, 2013, Makati City October 3, 2013 A member firm of Ernst & Young Global Limited

4 KYTHE, INC. (A Nonstock, Nonprofit Corporation) STATEMENT OF ASSETS, LIABILITIES AND FUND BALANCE December 31, 2012 (With Comparative Figures for 2011) ASSETS December (as restated; 2012 Note 2) Current Assets Cash and cash equivalents (Note 4) P=25,267,367 P=20,211,031 Other current assets (Note 5) 212, ,318 Total Current Assets 25,480,054 20,424,349 Noncurrent Assets Property and equipment (Note 6) 260, ,382 TOTAL ASSETS P=25,740,532 P=20,579,731 LIABILITIES AND FUND BALANCE Current Liabilities Accrued expenses and other payables (Note 7) P=33,089 P=49,536 Noncurrent Liability Retirement benefit obligation (Notes 8) 798, ,955 Fund Balance 24,909,302 19,920,240 TOTAL LIABILITIES AND FUND BALANCE P=25,740,532 P=20,579,731 See accompanying Notes to Financial Statements.

5 KYTHE, INC. (A Nonstock, Nonprofit Corporation) STATEMENT OF REVENUES AND EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2012 (With Comparative Figures for 2011) Years Ended December (as restated; 2012 Note 2) REVENUES Donations and contributions (Note 9) P=15,416,097 P=14,742,533 Interest income (Note 4) 332,900 15,748,997 14,742,533 EXPENSES Program costs (Note 9) 8,088,618 5,209,838 General and administrative expenses (Note 10) 2,413,843 2,160,605 10,502,461 7,370,443 EXCESS OF REVENUES OVER EXPENSES 5,246,536 7,372,090 OTHER COMPREHENSIVE INCOME Actuarial loss (Note 8) (257,475) TOTAL COMPREHENSIVE INCOME P=4,989,061 P=7,372,090 See accompanying Notes to Financial Statements.

6 KYTHE, INC. (A Nonstock, Nonprofit Corporation) STATEMENT OF CHANGES IN FUND BALANCE FOR THE YEAR ENDED DECEMBER 31, 2012 (With Comparative Figures for 2011) Member s Fund General Fund Actuarial loss (see Note 8) Total Balances at January 1, 2011 P=20,000 P=12,528,150 P= P=12,548,150 Excess of revenues over expenses (Note 2) 7,372,090 7,372,090 Balances at December 31, 2011, as restated 20,000 19,900,240 19,920,240 Balances at December 31, 2011, as previously reported 20,000 20,510,195 20,530,195 Effect of restatement (Note 2) (609,955) (609,955) Balances at December 31, 2011, as restated 20,000 19,900,240 19,920,240 Excess of revenues over expenses 5,246,537 (257,475) 4,989,062 Balances at December 31, 2012 P=20,000 P=25,146,777 (P=257,475) P=24,909,302 See accompanying Notes to Financial Statements.

7 KYTHE, INC. (A Nonstock, Nonprofit Corporation) STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2012 (With Comparative Figures for 2011) Year Ended December (as restated; 2012 Note 2) CASH FLOWS FROM OPERATING ACTIVITIES Excess of revenues over expenses P=5,246,537 P=7,372,090 Adjustments for: Retirement benefit expense (Note 8) 130, ,955 Depreciation and amortization (Note 6) 26,224 21,241 Interest income (Note 4) (332,900) Operating income before working capital changes 5,070,572 8,003,286 Decrease in other current assets 631 8,664,411 Increase (decrease) in accrued expenses and other payables (16,447) 27,735 Net cash generated from operations 5,054,756 16,695,432 Benefits paid (200,000) Interest received 332,900 Net cash flows from operating activities 5,187,656 16,695,432 CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of property and equipment (Note 6) (131,320) (163,583) Proceeds from transfer of investment in shares of stock 1,242,671 Net cash flows from (used in) investing activities (131,320) 1,079,088 NET INCREASE IN CASH AND CASH EQUIVALENTS 5,056,336 17,774,520 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 20,211,031 2,436,511 CASH AND CASH EQUIVALENTS AT END OF YEAR P=25,267,367 P=20,211,031 See accompanying Notes to Financial Statements.

8 KYTHE, INC. (A Nonstock, Nonprofit Corporation) NOTES TO FINANCIAL STATEMENTS (With Comparative Figures for 2011) 1. Corporate Information The Kythe, Inc. (the Foundation ) was registered with the Philippine Securities and Exchange Commission (SEC) as a nonstock, nonprofit corporation on June 28, 1994 primarily to help the poor families deal with crisis of having handicapped or chronically ill child on psychological and spiritual levels, to provide a more total and holistic and interdisciplinary approach to treatment and rehabilitation. The registered office address of the Foundation is 3/F Korben Place, No.91 Roces Avenue Cor. Sct. Tobias, Quezon City. The Foundation currently holds office at Room 201 FSS 1 Bldg. #20 Sct. Tuason corner Sct. Castor Streets Brgy. Laging Handa, Quezon City. The Foundation, being a nonstock, nonprofit corporation, falls under Section 30 (E), of Republic Act No entitled An Act of Amending the National Internal Revenue Code as Amended, and For Other Purposes. The income from activities conducted in pursuit of the objectives for which the Foundation was established is exempt from income tax. However, any income on any of its properties, real or personal, or from any activity conducted for profit regardless of the disposition of such income, is subject to income tax. The Foundation s financial statements as at and for the year ended December 31, 2012 (with comparative figures for 2011) were authorized for issue by the Board of Trustees (BOT) on October 3, Summary of Significant Accounting Policies Basis of Preparation The accompanying financial statements of the Foundation have been prepared under the historical cost basis and presented in Philippine peso, which is the Foundation s functional currency. The Foundation restated its 2011 financial statements to recognize retirement benefit obligation in accordance with Paragraph 28 of Philippine Financial Reporting Standard for Small and Mediumsized Entities (PFRS for SMEs), Employee Benefits. This restatement resulted to an increase in retirement benefit obligation and employee benefit expense amounting to P=609,955 as at and for the year ended December 31, Statement of Compliance The Foundation s financial statements have been prepared in accordance with PFRS for SMEs. Revenue Recognition Revenue is recognized when it is probable that the economic benefit associated with the transaction will flow to the Foundation and the amount of revenue can be measured reliably. The following specific recognition criteria must also be met before revenue is recognized:

9 - 2 - Donations and Contributions Donations and contributions are recorded when received. Interest Interest is recognized as it accrues using the effective interest method. Expenses Expenses are decreases in economic benefits during the accounting period in the form of outflows or decrease of assets or incurrence of liabilities that result in decreases in equity, other than those relating to distributions to equity participants. Expenses are generally recognized when the services are used or the expenses arise. Cash and Cash Equivalents Cash includes cash on hand and cash in banks. Cash in banks earn interest at the respective bank deposit rates. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash with original maturities of three months or less from date of placement and that are subject to an insignificant risk of change in value. Financial Instruments Classification The following are basic financial instruments: Cash A debt instrument that satisfies specific criteria A commitment to receive a loan that Cannot be settled net in cash, and When the commitment is executed, is expected to meet the conditions of a debt instrument above An investment in non-convertible preference shares and non-puttable ordinary shares or preference shares. Other financial instruments would include instruments that are not within the scope of basic financial instruments. Recognition Basic and other financial instruments are recognized in the statement of assets, liabilities and fund balances when the entity becomes a party to the contracts. Initial Measurement of Financial Instruments Basic financial instruments are measured at their transaction price including transactions costs. If the contract constitutes a financing arrangement it is measured at the present value of future payments discounted at a market rate of interest for a similar instrument (this is not applicable to assets and liabilities classified as current, unless they incorporate a finance arrangement). If interest is not at a market rate, the fair value would be future payments discounted at a market rate of interest. Other financial instruments are initially measured at fair value, which is usually their transaction price. This will exclude transaction costs.

10 - 3 - Subsequent Measurement Investments in non-convertible preference shares and non-puttable ordinary, and preference shares that are publically traded or their fair value can otherwise be reliably measured, are measured at fair value through profit or loss if a public market exists, otherwise at cost less impairment. Debt instruments are measured at amortized cost using the effective interest rate. Commitments to receive a loan are measured at cost less impairment. All other financial instruments are measured at fair value at reporting date. The only exception are equity instruments (and related contracts that would result in delivery of such instruments) that are not publicly traded and whose fair value cannot be reliably determined are measured at cost less impairment. Impairment of Financial Instruments At each reporting date, an assessment is made by the Foundation whether there is objective evidence of a possible impairment. The impairment loss of financial instruments at amortized cost is the difference between carrying value and the revised cash flows discounted at the original effective interest rate. The impairment of financial instruments at cost less impairment is the difference between the carrying value and best estimate of the amount that would be received if the asset was sold at the reporting date. Fair Value The standard makes use of a fair value hierarchy. This is quoted prices in an active market, prices in recent transactions for the identical assets (adjusted if necessary), and use of a valuation technique (that reflects how the market would expect to price the asset and the inputs reasonably represent market expectations). Fair value, where there is no active market, is only considered reliable if the variability in the range of fair values is not significant and the probabilities of various estimates can be reasonably assessed. Derecognition The Foundation derecognizes a financial asset when: The contractual rights to the cash flows from the financial asset expire or are settled; The Foundation transfers to another party substantially all of the risks and rewards of ownership of the financial asset; or The Foundation, despite having retained some significant risks and rewards of ownership, has transferred control of the asset to another party and the other party has the practical ability to sell the asset in its entirety to an unrelated third party. The Foundation derecognizes a financial liability when extinguished. Property and Equipment Property and equipment are stated at cost less accumulated depreciation and amortization and any impairment loss. The initial cost of property and equipment consists of its purchase price, including import duties, taxes and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Such cost includes the cost of replacing part of such property and equipment when that cost is incurred if the recognition criteria are met. Expenditures incurred after the

11 - 4 - property and equipment have been put into operation, such as repairs and maintenance, are normally charged against income in the period in which the costs are incurred. In situations where it can be clearly demonstrated that the expenditures have resulted in an increase in the future economic benefits expected to be obtained from the use of an item of property and equipment beyond its originally assessed standard of performance, the expenditures are capitalized as an additional cost of property and equipment. Depreciation and amortization are calculated on a straight-line basis over the estimated useful lives as follows: Number of Category Years Office equipment 5 Computer software 5 The useful lives and depreciation and amortization methods are reviewed periodically to ensure that the periods and method of depreciation and amortization are consistent with the expected pattern of economic benefits from items of property and equipment. When assets are retired or otherwise disposed of, the cost and the related accumulated depreciation and amortization and any allowance for impairment losses are removed from the accounts and any resulting gain or loss is credited to or charged against current operations. Impairment of Property and Equipment The carrying values of property and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written-down to their estimated recoverable amount. The estimated recoverable amount is the greater of fair value less costs to sell and value in use. The fair value less costs to sell is the amount obtainable from the sale of an asset in an arm s length transaction less the costs of disposal while value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the estimated recoverable amount is determined for the cash-generating unit to which the asset belongs. Impairment losses, if any, are recognized in profit or loss. Reversal of impairment losses recognized in prior years is recorded when there is an indication that the impairment losses recognized for the asset no longer exist or have decreased. The reversal is recorded in profit or loss. However, the increased carrying amount of an asset due to reversal of an impairment loss is recognized to the extent it does not exceed the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognized for that asset in prior years. Operating Leases Operating leases represent leases under which substantially all the risks and rewards of ownership of the leased assets remain with the lessor. Operating lease payments are recognized as an expense in the statements of revenues and expenses on a straight-line basis over the lease term.

12 - 5 - Provisions Provisions are recognized when the Foundation has a present obligation (legal or constructive) as a result of a past event, 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 the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as interest expense. Retirement Benefit Obligation The Foundation has an unfunded, non-contributory retirement benefit obligation plan covering all regular employees. Retirement costs are actuarially determined using the projected unit credit method and incorporates assumptions concerning employees projected salaries. The employee benefits expense is recognized during employee s period of service and discounted using the market yields on government bonds. Actuarial gains and losses are recognized in other comprehensive income. Fund Balance The fund balance includes accumulated excess of revenues over expenses from the Foundation s activities. Fund balances may also include effect of changes in accounting policy. Foreign Currency Transactions Transactions in foreign currencies are recorded in Philippine peso using the exchange rates at prevailing transaction dates. Monetary assets and liabilities denominated in foreign currencies are restated using the closing exchange rate prevailing at the reporting date. Foreign exchange gains and losses resulting from foreign currency transactions and translations are charged against current operations. Contingencies Contingent liabilities are not recognized in the financial statements. They are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognized in the financial statements but are disclosed in the notes to financial statements when an inflow of economic benefits is probable. Events After the Reporting Date Post year-end events that provide additional information about the Foundation s position at the reporting date (adjusting events) are reflected in the financial statements. Post year-end events that are not adjusting events are disclosed in the notes to the financial statements when material. 3. Significant Accounting Judgments and Estimates The preparation of the Foundation s financial statements requires management to make judgments and estimates that affect the amounts reported in the financial statements and related notes. However, uncertainty about these estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

13 - 6 - Judgments Management makes judgments in the process of applying the Foundation s accounting policies. Judgments that have the most significant effect on the reported amounts in the financial statements are discussed below. Determining Functional Currency The functional currency of the Foundation has been determined to be the Philippine peso. Based on the Foundation s evaluation, the Philippine peso is the currency that faithfully represents the economic substance of the Foundations underlying transactions, events and conditions. It is the currency that mainly influences its operations. Operating Leases - The Foundation as Lessee The Foundation rents office space under non-cancellable operating leases as a lessee. The Foundation has determined that it does not retain all the significant risks and rewards Estimating Useful Lives of Property and Equipment The Foundation estimates the useful lives of property and equipment based on the period over which the property and equipment are expected to be available for use and on the collective assessment of industry practice, internal technical evaluation and experience with similar assets. The amounts and timing of recording of expenses for any period would be affected by changes in these factors and circumstances. A reduction in the estimated useful lives of property and equipment would increase recorded depreciation expenses and decrease noncurrent assets. Depreciation and amortization charged to operations amounted to P=26,224 and P=21,241 in 2012 and 2011, respectively (see Note 10). As of December 31, 2012 and 2011, the net book values of property and equipment amounted to P=260,478 and P=155,382, respectively (see Note 6). Estimating Impairment Losses on Property and Equipment The Foundation assesses impairment on its property and equipment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The factors that the Foundation considers important which could trigger an impairment review include significant underperformance relative to expected historical or projected future operating results and significant changes in the manner of use of the acquired assets or the strategy for overall operations. The carrying values of property and equipment amounted to P=260,478 and P=155,382 as of December 31, 2012 and 2011, respectively. No provision for impairment losses was recognized in 2012 and Determining Retirement Benefit Obligation The determination of the liability and Employee benefit expense is dependent on the selection of certain assumptions by management. Those assumptions used in the calculation of pension cost are described in Note 8 to the financial statements. The Foundation s retirement benefit obligation amounted to P=798,141 and P=609,955 as of December 31, 2012 and 2011, respectively (see Note 8).

14 - 7 - Provisions and Contingencies The estimate of the probable costs for the resolution of possible claims has been developed in consultation with outside counsel handling the Foundation s defense in these matters and is based upon an analysis of potential results. The Foundation s management and legal counsel believe that the eventual liabilities under these lawsuits or claims, if any, will not have a material effect on the financial statements. Accordingly, no provision for probable losses arising from contingencies was recognized by the Foundation in 2012 and Cash and cash equivalents Cash on hand P=10,000 P=10,000 Cash with banks 12,972,567 8,249,131 Cash equivalents 12,284,800 11,951,900 P=25,267,367 P=20,211,031 Cash in banks earn interests at the respective bank deposit rates. Cash equivalents are made for varying periods of up to three months depending on the immediate requirements of the Foundation and earn interest at the respective short-term deposits rates. Interest income earned on cash equivalents amounted to P=332,900 in Other Current Assets Advances to officers and employees P=38,000 P=18,631 Security deposit (Note 11) 174, ,687 P=212,687 P=213,318 Advances to officers and employees represent cash advances to officers and employees for their fieldwork and on site events which remained unliquidated and outstanding as of yearend. 6. Property and Equipment Office Equipment Computer Software Cost Beginning balances P=520,182 P= P=580,182 P=416,599 Additions 71,320 60, , ,583 Ending balances 591,502 60, , ,182 Accumulated Depreciation Beginning balances 424, , ,559 Depreciation and amortization (see Note 8) 14,224 12,000 26,224 21,241 Ending balances 439,024 12, , ,800 Net Book Value P=152,478 P=48,000 P=260,478 P=155,382

15 - 8 - In 2011, Property and equipment consisted of office equipment. amounting to P=416,599 are currently used by the Foundation. Fully depreciated assets at cost 7. Accrued expenses and other payables Accrued utilities P=12,271 P= Government payables 20,818 49,536 P=33,089 P=49,536 Government payables consist of withholding tax, SSS, Philhealth, and Pag-ibig payables. 8. Retirement Benefit Obligation The Foundation has an unfunded non-contributory defined benefit plan covering all its officers and regular employees. The benefits are based on the years of service and percentage of latest monthly salary. The independent actuarial valuation of the plan as of December 31, 2012 was determined using the projected unit credit method. The following table summarize the funded status and amounts recognized in the statement of assets, liabilities and fund balances, and the components of the retirement benefit expense recognized in the statements of revenues and expenses as part of General and administrative expenses. The Foundation s retirement benefit obligation is based on the actuarial valuation as of December 31, 2012 as follows: 2011 (as restated) 2012 Present value of defined benefit obligation P=609,955 P= Retirement benefits cost 130, ,955 Actuarial loss in OCI 257,475 Benefits paid (200,000) P=798,141 P=609,955 In January 2012, the Foundation paid benefits amounting to P=200,000 to one of its officer for early retirement. Actuarial gains and losses are recognized in other comprehensive income. The principal actuarial assumptions used to determine retirement benefit obligations are as follows: Discount rate 6.5% Expected rate of return on plan assets 4.0% Future salary increase 7.0% Average expected remaining working lives in years 13.3

16 Donations and contributions and Program Costs The Foundation received donations and contributions which were used to finance program costs and are presented as Donations and contributions in the statement of revenues and expenses. Total donations and contributions amounted to P=15,416,097 and P=14,742,533 in 2012 and 2011, respectively. The Foundation has various programs and projects related to its advocacy. follows: Program costs are as Child life program P=3,562,010 P=2,761,710 Family support program 2,939,929 1,606,303 Special projects 1,586, ,825 P=8,088,618 P=5,209,838 Child life program provides psycho-social support that alleviates the anxiety of pediatric patients who suffer from illness such as cancer, heart condition, kidney disease, and blood disorders. Family support program provides medicine supplies to chemotherapy patients. Special projects are events held by the Foundation for patients throughout the year. Details of the Program costs incurred are as follows: Salaries and wages P=2,562,018 P=2,031,492 Chemotherapy medicine 1,372, ,299 General medicine and laboratory expenses 1,302, ,527 Events and activities 870, ,484 Communications and resource mobilization 528, ,048 Program expenses 700, ,026 Miscellaneous 750, ,962 P=8,088,618 P=5,209, General and Administrative Expenses Salaries and wages P=736,023 P=520,458 Rent (see Note 11) 528, ,298 Health insurance 174, ,463 Communication, light and water 139,531 94,816 Employee benefits (see Note 8) 130, ,955 Professional fees 103,960 70,644 Meetings expenses 33,164 22,536 Depreciation and amortization (see Note 6) 26,224 21,241 Membership and seminar expenses 19,699 13,386 Office supplies 15,270 10,376 Miscellaneous 506, ,432 P=2,413,843 P=2,160,605

17 Miscellaneous expenses include bank charges, dues and fees, and transportation expense. 11. Lease Commitment The Foundation (the Lessee ) entered into a lease agreement with FSS Realty Corporation (the Lessor ). The lease agreement is for a period of two (2) years from November 16, 2011 to November 15, Furthermore, the leasing agreement stipulates that the lessee will deposit with the lessor, a security deposit of three (3) months rent amounting to P=174,687 which will be refunded at the end of the lease term. Rent expense amounted to P=528,744 and P=359,298 in 2012 and 2011, respectively (see Note 10). 12. Supplementary Tax Information Under Revenue Regulations and On November 25, 2010, Revenue Regulation (RR) No became effective and amended certain provisions of RR No prescribing the manner of compliance with any documentary and/or procedural requirements in connection with the preparation and submission of financial statements and income tax returns. Section 2 of RR No was further amended to include in the Notes to Financial Statements information on taxes, duties and license fees paid or accrued during the year in addition to what is mandated by the standards. Moreover, on December 9, 2011, RR No became effective where it prescribes the new income tax forms to be used effective December 31, The Foundation is now required to include as part of the notes to the financial statements the schedules and information on taxable income and deductions. Below is the additional information required by Revenue Regulations and This information is presented for purposes of filing with the BIR and is not a required part of the basic financial statements. RR No Exempt Revenues The Foundation s exempt revenues in 2012 consist of donations and contributions amounting to P=15,416,097. Exempt Non-Operating and Other Income The Foundation s exempt revenue consists of interest income aggregating to P=332,900 in 2012.

18 Exempt Itemized Deductions Details of the Organization s exempt itemized deductions for the year: Salaries and wages P=736,023 Rent 528,744 Health insurance 174,330 Communication, light and water 139,531 Employee benefits 130,711 Professional fees 103,960 Meetings expenses 33,164 Depreciation and amortization 26,224 Membership and seminar expenses 19,699 Office supplies 15,270 Miscellaneous 506,187 P=2,413,842 RR No Withholding Taxes The Foundation s withholding taxes on compensation and benefits and expanded withholding taxes amounted to P=223,066 and P=36,064, respectively in Other Taxes and Licenses The Foundation paid license and permit fees amounted to P=8,832 in Tax Assessments and cases The Foundation has no tax assessments and outstanding tax cases in any other court or bodies outside of the BIR as of December 31, 2012.