Annual Report 2009 - Asian Productivity Organization

employee, of which the beneficiary is the APO. The purpose of this insurance is to pay for the severance
payments, and approximately 57% of the liability for severance payments was insured as of the balance
sheet date. In addition, the Organization manages a money market fund in Japanese yen for the purpose
of severance payments. Net gains on the fund for severance payments for the years ended 31 December
2009 and 2008 were $30,602 and $36,250, respectively, and were included in miscellaneous revenues.
8. Liability for severance payments
The Organization applied actuarial valuations of the present value of the defined benefit obligation as of
31 December 2009, and the calculation was carried out by an external certified actuary consultant. For
the purposes of the actuarial valuations, the Organization adopted the discount rate of 1.5% per annum
for the years ended 31 December 2009 and 2008. The expected rate of salary increases was not applied
in determining the projected benefit obligation, because the benefit obligations were determined using
the table of fixed salaries and the benefit formulas of the Organization’s plan did not contain factors
relating to compensation levels.
Amounts recognized in profit or loss in respect of the defined benefit plan were as follows:
2009
Current service cost $318,028
Interest on obligation 42,081
Amortization of unrecognized transitional liability 102,379
Net periodic pension cost $462,488
Movements in the present value of the defined benefit obligation in the current period, and the amount
included in the balance sheets arising from the Organization’s obligation in respect of its defined benefit
plan were as follows:
2009 2008
Opening defined benefit obligation $2,928,704
Current service cost 318,028
Interest cost 42,081
Actuarial gains (58,623)
Benefits paid (62,192)
Foreign currency translation adjustments (26,733)
Closing defined benefit obligation $3,141,265 $2,928,704
Unrecognized transitional liability (105,717) (213,758)
Unrecognized actuarial gains 60,533
Net liability arising from defined benefit obligation $3,096,081 $2,714,946
9. Operating leases
The Organization leases office space under a cancelable lease agreement. The lease was extended for
another two years on the expiration date of 31 December 2009, and it can be terminated at any time by
either party with six-month advance notice in writing. No rental deposit for the lease has been paid to
the building owner. Rental expenses under operating leases for the years ended 31 December 2009 and
2008 were $766,450 and $689,660, respectively.
FINANCIAL REPORT
APO ANNUAL REPORT 2009 113