Annual Report 2009 - Asian Productivity Organization

FINANCIAL REPORT 110
(3) Fixed assets
Fixed assets purchased by the Organization are principally automobiles, furniture, and equipment.
It is a policy that such assets are charged to expenses when acquired. Had such assets been capitalized
and had depreciation been provided based on their estimated useful lives, the effect on the
result of operations and the financial position of the Organization would not be material.
(4) Fund for severance payments
The fund for severance payments consists of an insurance endowment fund and money market
fund and is stated at fair value. The fair values of the fund for severance payments are estimated
based on values quoted by financial institutions.
(5) Liability for severance payments
Staff members terminating their employment with the Organization are entitled, under most
circumstances, to severance payments based upon rates of pay at the time of termination of
employment and years of service. The liability for severance payments as of 31 December 2007 was
stated on the vested benefit obligation basis, which was the amount required to be paid if all staff
members voluntarily terminated their services as of the balance sheet date. The amounts charged
to expenses for severance payments totaled $392,948 for the year ended 31 December 2008. The
Organization has introduced actuarial valuations of the present value of the defined benefit obligation
since 31 December 2008. Actuarial gains and losses that exceed ten percent of the greater of
the present value of the Organization’s defined benefit obligation as at the end of the prior year are
amortized over the expected average remaining working lives of the participating staff members.
(6) Accrued annual leave
Based on Rule 5.01 of APO Staff Regulation V, annual leave is accumulated up to 90 days, which
does not expire until leaving the Organization. In 2009, the Organization recorded accrued annual
leave of 71 days (72 days in 2008) for staff members who have annual leave more than 71 days as a
liability, since the unused accrued annual leave up to 60 days is paid by a sum of money equivalent
to their salary for the period of the accrued annual leave upon separation from the Organization,
and in consideration of the possible utilization of unused accrued annual leave in excess of 60 days
upon separation.
(7) Revenue recognition
Major sources of revenues of the Organization are membership contributions, special cash grants,
and project implementation grants, among others. Membership contributions, which are approved
by the Governing Body, are recognized as revenues on 1 January of each fiscal year. Special cash
grants are recognized as revenues upon the receipt of actual amounts by the Organization. The
Organization recognizes project implementation grants based on the actual amounts granted for
project implementation by the hosting countries, according to the information furnished by them.
(8) Appropriation for working capital fund
Based on Regulation 7 of the Financial Regulations, a working capital fund is established from
which advances may be made to finance budgetary appropriations to the extent that this is necessary
in anticipation of pledged but unpaid contributions.
(9) Appropriation for continuing projects
The outstanding balance of commitments for continuing projects at year-end, which has been
funded mainly from membership contributions and special cash grants, is appropriated for continuing
projects. The balance for continuing projects funded from special cash grants includes unspent
balances of special cash grants, which are balances generated from completion of some projects
prior to the year-end being reallocated for the following year’s projects in the same programs.
(10) Translation of foreign currencies
For the purpose of the financial statements, the results and financial position of the Organization
are expressed in US dollars, which is the functional currency of the Organization and presentation
currency for the financial statements. The Organization’s books of account are maintained both in
Japanese yen and US dollars. Assets and liabilities denominated in Japanese yen are translated into