Report of the Audit & Control Committee to the General Assembly (1997)

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This document has been made available in electronic format
by the International Co-operative Alliance (ICA)
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July, 1997
(Source: ICA Review, Vol. 90 No.2 - Annual Report 1996-1997,
pp.75-79)

Report of the Audit & Control Committee
to the General Assembly
For the years 1995 and 1996
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1.	Members of the Committee
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	Dr M. Schelker (Chairman)
	Dr P. Bartus
	W. Kaltenborn 
	I. Hansen
	J. Moreau

2.	Meetings
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Four meetings have been held:
20 September 1995 in Manchester
13 May 1996 in Geneva
28 October 1996 in Budapest
12 May 1997 in Geneva

3.	Organisation
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The Organisation Chart for the Secretariat in Geneva for the year
1995 remained the same as for the year 1994, i.e. based on the three
sections of Information, Development & Administration and 
Policy/Member Services. 

Following the Manchester General Assembly/Congress several structural
changes were made to the organisational chart of the Secretariat in 
order to reflect the new approved priorities of work. The chart now 
includes four sections: Information & Communications, UN & NGO 
Relations, European Office and Development Programme, plus two 
support functions -- Administration and Special Projects. 

The staff changes during the period were the following: At the 
closing of the Coop Network, its director was hired by the Secretariat 
for special projects on member relations/services, a secondment from 
NACF of Korea was received in Geneva for special attention to 
agricultural issues, the part-time Administrative Assistant to the 
Development Section left and a Development Director was contracted 
to join ICA at the very beginning of 1997.

The current organisation has been both proper and functional. Given 
the current amount of tasks, the Secretariat staff cannot be smaller
 than it is now. 

In keeping with the practice over the last four years, each 
individual Section is producing detailed annual Workplans, which are
directly linked to and reconciled with the Budget for the year. 
Reports on progress in relation to the Workplans are produced by 
each member of staff on a quarterly basis. These reports are 
reviewed together with corresponding budget reports in joint staff 
meetings.


4.	Financial Situation
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4.1	Routine Control:
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A financial report for the head office is compiled monthly, giving 
information on revenue and expenses compared to the Budget for the 
current month. The accumulation from the start of the year is 
compared to both the accumulated Budget and the corresponding 
period in the previous year. The report also includes a regularly 
updated projection for the full year.

As is the current practice, there have been several meetings and 
discussions between the Secretariat, the Auditors and the Chairman 
of the Committee during the year. On these occasions organisational 
and control issues have been dealt with.


4.2	Membership Subscriptions:
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In accordance with the scale for gradual increase of the minimum 
subscription, the 1995 minimum amount was CHF 3,500. For 1996 this 
minimum was CHF 4,000, to reach CHF 4,500 in 1997.

For the year 1995 the total membership subscription reached 
CHF 2,038,278, which was a small increase of CHF 35,362 over 1994. 
This increase was basically a result of the increase in the minimum
amount. In 1996 the subscriptions decreased CHF 69,679 to 
CHF 1,968,599, which was CHF 231,401 below the budget for the year.

The major variances in 1996 were:
- Increases from the members in Canada, France, Norway, 
- Republic of Korea, Singapore and  Slovak Republic.
-	 Decreases from Kazakhstan, Russia, Uzbekistan, Sweden and 
United Kingdom. The two last  ones were particularly affected by
currency fluctuation.

A total of 20 organisations were admitted as new members and 17 were 
deleted for non-payment of subscriptions or due to voluntary 
departure in 1995 and 1996. 


4.3	1995 and 1996 Annual Accounts:
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Details of the 1995 Results were presented in the Financial Statements, 
31 December 1995, and its Schedules I - IIIb and were enclosed in the 
ICA Annual Report for 1995/1996.

The corresponding Financial Statements, 31 December 1996, and the 
accompanying Schedules I - IIIb, are provided in the meeting
documentation for the General Assembly, 15-16 September 1997.
		
An important step, starting from the 1995 Accounts, has been made 
in terms of implementing the International Accounting Standards, 
IAS, in all ICA offices. As seen from the Report of the Auditors 
nd1995 and 1996.

The Committee is pleased to report that the overall result for 1995
was a good surplus, of CHF 225,019, which should be compared to the 
small surplus of CHF 5,957 in 1994. The good result was to a large
extent due to the overwhelming participation at the Centennial
Celebrations in Manchester.

The result for 1996 was reduced to a small surplus of CHF 1,298 as
a consequence of the substantial negative variance for the subscription
 income, as stated above.

In summary, the situation is as follows:


	 	 	Actual 1996		Budget 1996
	 		 CHF     		%  	CHF         	% 
Head Office 
Operational	 	1,815,046 	22 	2,171,100 	24 1
Development
Programme Cost 	6,338,374	 78 	6,746,500 	76 

Total Costs  	8,153,420	100 	8,917,600 	100		 		

Covered by:
Direct Development
Support		5,761,825 	70.7	6,067,000 	68	
Member Subscip.	1,968,599 	24.1 	2,200,000 	24.7
Interest       	   63,701 	 0.8	85,000  	0.9
Sales of Publ/Serv    111,312	 1.4	45,000	0.5
Other Revenue-net	    249,281	 3.0	623,600	7.0

Remaining Surplus	      1,298	0.0	103,000	1.1
	
			Actual 1995		Budget 1995
			CHF		%	CHF		%
Head Office
Operational		1,868,677	23	1,803,500	21
Development
Programme Cost	6,142,683	77	6,776,500	79

Total Costs		8,011,360	100	8,580,000	100

Covered by:		
Direct Development
Support		5,313,138	66.3	5,897,000	68.7
Member Subscrip.	2,038,278	25.4	2,100,000	24.5
Interest		   70,374	  0.9	  70,000	  0.8
Sales of Pub./Serv   92,409	  1.2	  55,000	  0.7
Other Revenue - net 722,180	  9.0	 568,000	  6.6

Remaining Surplus	    225,019	   2.8 110,000	  1.3


The expected expansion of activities, and the accompanying costs for
the Head Office operations in 1996 could not be realised as a 
consequence of the reduced income . This restriction in activities 
is also evident in the reduction in operational costs between the 
two years.

The appreciation of the value of the CHF compared to most other 
currencies, which were related to Development Programme agreements, 
continued during 1995 and a large part of 1996. This is reflected 
in the lower than budget actuals, for the two years, both in 
Development Programme Cost and in Direct Development Support 
together with Other Income. Although mobilisation of funding for 
development is generally increasingly difficult, we would see a 
small but constant increase in the volume of the ICA Development 
Programme if the volume had been expressed in USD or other 
currencies where the spending had been made.

It should be noted that all the Regional Offices remained within 
their respective support budgets in both 1995 and 1996. In fact, 
the support to the Regional Office for East, Central and Southern 
Africa turned out CHF 10,000 lower in 1996 compared to both the 
budget for the year and the actual of 1995.

We have discussed the 1995 Accounts and the 1996 Accounts - 
activities and results -- with the Auditors of ATAG Ernst & Young SA
 and on the basis of their findings, in both years, we can conclude that 
the 1995 and the 1996 Financial Statements are correct and complete.


5.	Development Programme
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We have been informed by the Secretariat about the current projects.
		
In the years 1995 and 1996, ICA has been collaborating with more 
than twenty development organisations from Australia, Austria,
Canada, Finland, Germany, Italy, Japan, Netherlands, Norway and 
Sweden, plus six international organisations.

The projects, which are carried out by the Regional Offices and 
co-ordinated by HO, are covering the following fields: Research &
Planning, Human Resource Development, Gender Integration,
Agriculture, Fishery, Insurance, Banking, Consumer, Co-operative Trade, 
Co-operative Legislation, Industry and Handicraft.

In 1996 a separate legal entity, ICA Development Trust a.s.b.l., 
was created for the specific purpose of executing the Development 
Programme. This body in governed by the ICA Board and supervised by 
the Audit & Control Committee. The formal changes will take place 
in 1997 and will mean that, from then on, the reports on the
Development Programme will appear separately.

6.	The General Reserves
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The Audit and Control Committee is of the opinion that the basic
policy of building up the General Reserve to a level equal to the 
subscription income for one year remains valid. However, under the 
circumstances of the recent creation of the ICA Development Trust
and with the special, and non-recurrent, need for restructuring the 
office space at the Head Office in Geneva, the Committee is fully 
supporting the proposal, as approved by the Board, to divide the 
total surplus of CHF 226,317 in the following way: 

1. CHF 150,000 is donated to the Corpus Fund of the ICA 
Development Trust, becoming its initial capital.

2.	A maximum of CHF 50,000 is allocated to investments in the 
restructuring of the offices in Geneva.

3.	The remaining minimum of CHF 26,317 is transferred to the 
ICA General Reserve.

7.	1997 Budget
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The Audit & Control Committee has reviewed both early versions and 
the final version of the 1997 Budget. The documents include a proper 
operational break-down by section, by activity and by office with 
comparisons to budget and actuals from 1996 and projections for 
budget gives the necessary tool for a detailed budget control and 
good transparency of the organisation. The agreed Budget reflects a 
surplus of CHF 45,400 for the year 1997 and foresees a surplus of 
CHF 100,000 for 1998.

8.	Summary
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As a result of our entire examinations and findings, the Audit & 
Control Committee submits the recommendation to the General Assembly 
that the audited accounts for the years 1995 and 1996 be approved.