Financial Statements and IndependentAuditor's Report
Social Contract Institute
As of and for the year ended 31 December 2022
Filto Auditing Sh.p.k
Sheshi Wilson, Kulla Fati, Kati i VIII, Tiranƫ, Shqipƫri
E: contact@filtoauditing.com
Independent Auditor's Report
To the Board of Directors of Social Contract Institute (SCI) Rr. āReshit Ćollakuā Ndertesa 24, Kati III, ap.5 Tirana, Albania
Opinion
We have audited the financial statements of Social Contract Institute (SCI) (hereafter referred as the āOrganisationā), which comprise the statement of financial position as at 31 December 2022, and the statement of activities, and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the SCI as at 31 December 2022, its financial performance and its cash flows for the year then ended in accordance with the National Accounting Standard applicable on Non-Profit Organisations in Albania.
BasisforOpinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditorās Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountantsā Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Albania, and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion,
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with the National Accounting Standards on Non-Profit Organisations, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Organisationās ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Organisation or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Organisationās financial reporting process.
Auditorās Responsibilities 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 misstatement, whether due to fraud or error, and to issue an auditorās report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
ļ· Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
ļ· Obtain an understanding of internal control relevant to the audit 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 Organisationās internal control.
ļ· Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
ļ· Conclude on the appropriateness of managementās use of the going 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 Organisationās ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditorās report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditorās report. However, future events or conditions may cause the Organisation to cease to continue as a going concern.
ļ· Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Tirana, 28 September 2023
FILTO Auditing sh.p.k
Ares FILTO ACCA,
Statutory Auditor
Statements
As at and for the year ended 31 December 2022
Statement of Financial Position
Financial Statements of the Social Contract Institute were approved on 30 March 2023 and signed by:
OLDA CETA
LIDRA ELEZI Executive Director Finance Coordinator
Statement of Financial Position should be read together with the notes on pages 4-13 which are an integral part of the financial statements.
Statements
at and for the year ended 31 December 2022
Statement of Financial Activities
in Net Assets - - - -
Statement of Financial Activities should be read together with the notes on pages 4-13 which are an integral part of the financial statements.
Statement of Cash Flows
Cash Flow Statement should be read together with the notes on pages 4-13 which are integral part of the financial statements.
Financial Statements
As at and for the year ended 31 December 2022
Notes to the Financial Statements
1 Background information
āSocial Contract Instituteā (hereafter referred as the āOrganisationā or āSCIā) is established in Albania on July 16, 2015 and registered as a not for profit non-governmental organization with the decision Court number 1024 The mission of the Center is to promote policies, programs and political, economic and social practices for sustainable development in countries in transition, including South Eastern Europe, based on justice and the offering of equal opportunities. The center has as its priority: (a) strengthening the study of law; (b) sustainable development; (c) reforms in the political, economic and social development areas that promote justice and wide participation of citizens; (d) promotion of human rights; and (e) providing equal opportunities for the development of various marginalized groups, including women, girls, as well as ethnic and social minorities
Since inception, āSocial Contract Instituteā has implemented several programs where donation incomes have derived from the European Union, German Association for International Cooperation (GIZ), EWMI, Albanian Agency for the Support of Civil Society (AMShC), Western Balkans Fund, Action See, Civilisc/IDM, AWEN, Ministry of Culture, Save the Children, Leviz Albania, Netherlands Embassy, British Embassy.
2
Basis of Preparation of Financial Statements
2.1 Statement of Compliance
The Organisation maintains accounting records and prepares financial statements in accordance with accounting legislation in Albania. Financial Statements are prepared in accordance with Law no. 9228, dated 29 April 2014 on Accounting and Financial Statements and the National Accounting Standard (NSI) for Non-Profit Organizations.
2.2 Basis of Preparation
The Financial Statements are prepared on an accrual basis. This treatment is in compliance with the National Accounting Standards Guidelines for Non-Profit Organizations.
Reporting Currency and Functional Currency
The financial statements are presented in Albanian Lek (ALL), which is the reporting currency, and in Euro. All financial information is presented in Albanian Lek and Euro.
The functional currency of the Organization is the Albanian Lek.
2.3
Going Concern
The Organisation's financial statements have been prepared based on the principle of going concern, which means that Social Contract Institute activity will continue, and that the Organisation does not plan or will not need to stop its activity in Albania for the future, at least for the next 12 months from the reporting date.
Statements
As at and for the year ended 31 December 2022
3 Summary of significant accounting policies
A summary of significant accounting policies in the preparation of these financial statements is presented below:
3.1 Cash and cash equivalents
For the purpose of the cash flow statement, cash and cash equivalents are comprised of cash in banks, cash on hand and time deposits in banks less than three months maturity from the date of acquisition.
3.2 Foreign currencies
3.2.1
Foreign currency transactions
Transactions denominated in foreign currencies have been converted with the exchange rate at the date of the transaction. Assets and liabilities denominated in foreign currencies at the end of the period are converted with the exchange rate of that date. All gains and losses resulting from foreign currency translation or exchange are included in the Statement of Income as financial income or expenses in the period in which they arose.
The annual average rate of exchange established with the donors and the year-end spot exchange rates of the currencies used by the Organisation to ALL and Euro were as follows:
3.2.2
Translation of financial statements from functional currency to presentation currency
The financial statements have been translated into Euro for the convenience of the donors. The translation of financial statements from functional currency to Euro is done as follows:
ļ· assets and liabilities in the Statement of Financial Position (including comparatives) are presented in Euro and are translated at the closing rate as at 31 December 2022 of 1 Euro to 114.23 ALL (31 December 2021: 1 Euro to 120.76 ALL)
ļ· income and expenses for each income statement (i.e. including comparatives) have been translated at the rate of exchange established with the donors for reporting purposes for the year ended 31 December 2022, of 1 Euro to 118.9211 ALL, (for the year ended 31 December 2021: 1 Euro to 122.4423 ALL), which is the average rate of exchange over the year; and
ļ· resulting exchange differences are recognised as a separate component of net assets.
3.3 Property, plant and equipment
Recognition and measurement
Items of property and equipment are measured at historical cost less accumulated depreciation and accumulated impairment losses. Historical cost includes expenditures that are directly attributable to the acquisition of the items.
Financial Statements
As at and for the year ended 31 December 2022
3 Summary of significant accounting policies (continued)
3.3 Property, plant and equipment (continued)
Subsequent costs
The cost of replacing part of an item of property and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The costs of the day-to-day servicing of property and equipment are recognised in profit or loss as incurred.
Depreciation
Depreciation of property, plant and equipment is calculated and recognized in the Statement of Activities on a straight-line basis over the assetsā estimated useful life.
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. Losses on disposals are determined by comparing proceeds with carrying amount, and are included in the Statement of Activities.
3.4 Financial assets
Classification
The Organisation classifies its financial assets as loan and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. The Organisation has cash and cash equivalents as financial assets as at 31 December 2022 and 2021 (Note 4).
Recognition and measurement
Loans and receivables are subsequently carried at amortised cost using the effective interest method.
3.5 Impairment of financial assets
Assets carried at amortized cost
The Organisation assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired.
A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a āloss eventā) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
For loans and receivables category, the amount of the loss is measured as the difference between the assetās carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial assetās original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. As a practical expedient, the group may measure impairment on the basis of an instrumentās fair value using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the reversal of the previously recognised impairment loss is recognised in profit or loss.
Financial Statements
As at and for the year ended 31 December 2022
3 Summary of significant accounting policies (continued)
3.6 Accounts Payable
Accounts payable are stated at their fair value and subsequently at amortized cost using the effective interest method.
3.7
Funds and uses of funds
Funds are initially created by foundersā contributions made in monetary and/or kind assets carried at their fair values. Subsequently, funds are increased/ decreased through additional foundersā contributions, results (surplus/shortages) from operations during the period.
3.8
Revenue and expense recognition
The recognition criteria of the revenues and expenses of the Organisation are based on the accrual accounting principle.
Based on this principle, revenues are recognized in the accounting period in which they occur, in case they are measurable and available. Revenues are measurable if determinable in term of value. Revenues are available when they are generated in the accounting period when they have occurred provided that the revenues refer to that accounting period and are used to cover the liabilities for the respective accounting period.
Expenses are recognized in the accounting period in which they occurred provided that the related liability has occurred in that period.
3.9
Employee benefits
On behalf of its employees, the Organisation pays state social and health insurance which are calculated on the gross salary paid, as well as personal income tax on salaries which are calculated on the gross salary. In addition, meal allowances, and vacation bonuses are paid in accordance with the local legislation. These expenses are recorded in the profit or loss in the period in which the salary expense is incurred.
3.10 Taxes
The Organisationās non-for-profit activities are exempt from income tax. The organization respects the provisions of the law āOn Income Taxes in the Republic of Albaniaā in relation to personal income tax and withholding tax.
4 Cash and Cash Equivalents
Cash and Cash Equivalents in Albanian Lek and foreign currency as at 31 December 2022 and 2021 are detailed as follows:
Statements As at and for the year ended 31 December 2022
5 Property Plant and Equipment
6 Tax liabilities
Tax liabilities represent taxes and contributions payable to the tax authority as at 31 December 2022 and 2021 and are detailed as follows:
7 Grants
Deferred Grants as at 31 December 2022 and 31 December 2021 are detailed as follows:
Statements As at and for the year ended 31 December 2022
7 Grants (continued)
Grants Received for the year ended 31 December 2022 and 2021 are detailed as follows:
8 Activity Expenditures
Activity Expenditures for the year ended 31 December
Detailed information about Project Expenditures is presented as follows:
Financial Statements
As at and for the year ended 31 December 2022
8.1 East West Management Institute
Project expenses funded by the East West Management Institute (āEWMIā) for the year ended 31 December 2022 and 2021 are detailed as follows: Year ended
December 2022
Project No. 1793
1794
EWMI awarded a Grant in the amount of up to GBP 22,777.35 āto promote the role of equal partnerships among women and men to advance gender equality in the media sectorā with Project number: G-1793-20-100-7515-20 (āProject 1793ā) and an implementation period from 16 December 2020 to 31 March 2022.
EWMI awarded a Grant in the amount of up to GBP 71,449.55 āto assist in making logistical arrangements and cover all local directs costs associated with EWMIās implementation of a project entitled āStrengthening Media Integrity Standards in Albaniaā with Project number: G-1794-20-1007515-20 (here referred as āProject 1794ā) and an implementation period from 1 January 2021 to 31 March 2022. On 21 March 2022 the Grant contract was amended increasing the total budget of the project to GBP 74,444,60.
8.2 Agency for the Support of Civil Society Organisations
Project Expenditures for the Project āRegion and the EU at Our Home! ā Inclusion of Beratiās youth in the processes of regional and EU integrationā with Contract number A1/015/2022 for the year ended 31 December 2022 and 2021 are detailed as follows:
The project, with an implementation period from 4 August 2022 to 3 June 2023, is funded by the Grant Agreement between the āAgency for the Support of Civil Society Organisationsā and āSocial Contract Instituteā
āSocial Contract Instituteā
Financial Statements
As at and for the year ended 31 December 2022
8.3 Partners Albania
Project Expenditures for the Project āYoung Guidesā with Contract number IPA 2020/414-560 for the year ended 31 December 2022 and 2021 are detailed as follows: Year ended 31 December 2022
ended 31 December 2021
The project, with an implementation period from 10 March 2022 to 9 January 2023, is funded by the Grant Contract āWB&T for EmploYouth Grant Contract: IPA 2020/414-560ā between the āAgency for the Support of Civil Society Organisationsā and āSocial Contract Instituteā.
8.4 Ministry of Culture
Project Expenditures for the Project āHouse of Polyphonyā with Contract number 2499 for the year ended 31 December 2022 and 2021 are detailed as follows:
Year ended 31 December 2022
ended 31 December 2021
The project, implemented from 4 May 2022 to 31 July 2022, is funded by the Contract for Financial Assistance with Public Funds between the Ministry of Culture of Republic of Albania and āSocial Contract Instituteā
8.5 National Youth Congress
Project Expenditures of the Project āTirana Youth Powerā funded by the Grant Contract for āTirana European Youth Capital 2022ā between the National Youth Congress and āSocial Contract Instituteā for the year ended 31 December 2022 and 2021 are detailed as follows:
Year ended 31 December 2022 Year ended 31 December 2021
āSocial Contract Instituteā
Financial Statements
As at and for the year ended 31 December 2022
8.6 MATRA
Activity Expenditures for the Project āAlternative Sentences ā Alternative for a better lifeā with Project number 83336995 for the year ended 31 December 2022 and 2021 are detailed as follows:
Year ended 31 December 2022 Year ended 31 December 2021
The project, with implementation period from 1 September 2019 to 30 March 2021, is funded by the Contract between āThe State of Netherlandsā and the āSocial Contract Instituteā
8.7 GIZ
Activity Expenditures for the GIZ ProSEED Project āCreate a more conductive environment for youth initiatives in Albania through the power of positive role models and youth led initiativesā with Project number 83336995 for the year ended 31 December 2022 and 2021 are detailed as follows:
ended 31 December 2022
The project, with project implementation period from 30 September 2019 to 30 September 2020, is funded by the Contract between āDeutsche Gesellschaft fur Internationale Zusammenarbeitā (āGIZā) represented by the āGerman Development Cooperation GIZ office Albaniaā and āSCIā.
8.8 Tirana Cycle Project
Project Expenditures for the āTirana Cycle Projectā are detailed as follows:
ended 31 December 2022
ended 31 December 2021
āTirana Cycle Projectā, implemented from 01 July 2021 to 30 September 2021, was funded by the SubGrant Agreement between the āMASTERPEACEā and āSocial Contract Instituteā under the EUfunded project āAartivist StafetĆ« Projectā
Statements
As at and for the year ended 31 December 2022
9 Activity Expenditure by Nature
Activity Expenditures according to the nature of the expenses for the year ended 31 December 2022 and 2021 are detailed as follows:
10 Events after the Reporting Date
There are no events that occurred after the reporting date and that may require additional adjustments or information from the organization's management regarding these Financial Statements.