Annual Report 2006

Notes to the Financial Statements

1. REGISTRATION AND PRINCIPAL ACTIVITY
   
   The Credit Union was registered on 19th October, 1965 under the Co-operative Societies Ordinance as amended by the Co-operative Societies Act No. 20 of 1996 for the purpose of affording members of the Credit Union the opportunity to accumulate savings and to obtain credit for provident or productive purposes at reasonable rates of interest.
   
   
2. SIGNIFICANT ACCOUNTING POLICIES
   
   (a) Basis of Accounting
   These financial statements have been prepared under the historical cost convention and in accordance with International Financial Reporting Standards (IFRS).
   
   (b) Fixed Assets and Depreciation
   Fixed assets are stated at historical cost.  Depreciation has been provided on all fixed assets at rates estimated to be sufficient to write off the cost of these assets over the period of their estimated useful lives.
   
   (c) Investments
   
   i) Investments classified as held-to-maturity are non-derivative financial assets with fixed or determinable payments and fixed maturities that the credit union has both the intent and the ability to hold to maturity.
   
   ii) Investments classified as available for sale are those intended to be held for an indefinite period of time which may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices.
   
   Held-to-maturity investments comprise Government bonds and fixed deposits and are stated at cost.
   
   Available-for-sale investments are stated at cost as fair market values are not available.
   
   (d) Foreign Currencies
   Foreign currency transactions during the year have been effected at the rates of exchange ruling at the dates of the transactions. 
   
   (e) Financial instruments
   Financial instruments consist of cash and cash equivalents, loans to members, accounts receivable, members’ deposits and accounts payable.  The credit union does not engage in any significant transactions which are speculative in nature.
   
   (f) Use of Estimates
   The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and related notes to the financial statements.  Actual results may differ from the estimates and assumptions used.
   
   
3. LOANS
   

4. INVESTMENTS – HELD TO MATURITY
   

5. INVESTMENTS - HELD TO MATURITY
   
   
   
6. FIXED ASSETS
   
   
   
7. ACCOUNTS RECEIVABLE AND PREPAYMENTS
   
   
   
8. CASH AND BANK BALANCES
   
   
   

9. SHARES
   These shares are of a nominal value of $5.00 when fully paid up.  Each member is required to hold a minimum of twenty (20) fully paid up shares.
   
   

10. MICRO-CAPITAL GRANT
    This amount represents undisbursed grant funds under an agreement between the Organisation of Eastern Caribbean States Secretariat, The United Nations Development Programme and the Credit Union.  The grant was terminated on 31^st March, 2004.
    
    

11. FINANCIAL INSTRUMENTS                                   

    i)               Credit Risk

    Credit risk arises from the possibility that counter parties may default on their obligation to the credit union. The maximum credit risk exposure of financial assets recognized in the balance sheet is represented by the carrying amount of the financial assets.

     

    Concentration of credit risk exists if a number of clients are engaged in similar activities or are located in the same industry sector or have similar economic characteristics such that their ability to meet contractural obligations would be similarly affected by changes in economic, political or other conditions.  Concentration of credit risk indicates the relative sensitivity of the credit unions performance to developments affecting a particular industry or geographical location.  Management does not believe that the concentration is unusual or provide undue risk.

     

    ii)             Interest rate risk

     

    Interest rate risk mainly arises through interest bearing liabilities and assets.  Fluctuations in interest rates on the credit union’s financial assets may expose it to interest rate risk.

     

    iii)            Fair Value

     

    Fair value amounts represent the approximate values at which financial instruments could be exchanged in current transactions between willing parties.  However, the Credit Union’s financial instruments lack an available trading market and therefore it is not possible to determine independently the estimated fair values.  The fair values of the financial instruments are therefore considered to approximate their book value.
    
    
    

12. INCOME TAX
    The Credit Union is exempt from the payment of Income Tax under Section 25 (P) of the Income Tax Act 1994.

General and Administrative Expenses - >