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Risk and audit committee report
Luis Villarroya, FIDIC treasurer and chair of the risk and audit committee.
The year 2021 has represented a certain return to normality after the anomaly experienced during 2020 due to the influence of the Covid-19 pandemic. However, all the key activity carried out by FIDIC during the year still took place virtually without carrying out face-to-face activities.
This concentration of online activities has had a positive impact on significant cost savings due to the absence of travel costs and face-to-face meetings, which has allowed FIDIC’s consolidated figures to end the year with a surplus and contributions to reserve of CHF 388,034, compared with the CHF 140,438 of losses of the budget approved at the 2020 general assembly meeting.
All the entities that were consolidated have ended positively, with CHF 153,595 corresponding to FIDIC, CHF 65,076 to FIDIC Credentialing Ltd and CHF 169,364 to FIDIC Consulting Services (Beijing) Ltd. The audit firm BDO, through its Geneva office, completed the FIDIC audit report on 4 April 2022, issuing a clean opinion without any qualifications. FIDIC’s income has been practically closed in budget with CHF 3,759k against CHF 3,797k budgeted. However, not all income concepts have behaved the same. Subscriptions have been lower than those budgeted, fundamentally due to the number of member associations that continue to suffer from the crisis caused by the pandemic.
However, revenue from sales and training performed better than expected, offsetting the dip in subscription income. Regarding expenditures, a total saving with respect to the budget of CHF 317,329 has been achieved, mainly due to the absence of travel expenses for the board and the committees.
After the end of the 2021 financial year, FIDIC has ended with a very considerable solid balance sheet. The cash position slightly exceeds CHF 2,000,000, a figure that represents two-thirds of the federation’s annual operating expenses, thus giving a high degree of stability to FIDIC’s viability and continuity in the face of any future negative events.
Likewise, the total capital of FIDIC, including reserves, reaches CHF 1,858k, which means a solvency ratio of 57.6%, a clear example of the financial solidity of the organisation.
39%37% 37%
1% 1%
IncomeIncome Income 20202021 2021 13%14% 14% 2% 6%4% 4%
11%
35%38% 38% ExpenditureExpenditure Expenditure 20202021 2021
2,500,000
2,000,000
1,500,000
1,000,000
500,000 2,979,321
1,858,734
1,364,798
0
Total liabilities Reserve fund Secretariat expenses
27%
Equity & Liabilities 2021 15%
58% 26%24% 24% 68%83% 83%
Events Publications Committee expenses Secretariat Other Subscriptions Events Publications Committee expenses Secretariat Other Subscriptions Events Publications Committee expenses Secretariat Other Subscriptions
45%
GAM Budget 2022 Income 32%
22%
25% 4% 5%
GAM Budget 2022 Expenditure 7%
59%
In relation to FIDIC Credentialing Limited (FCL), the Geneva office of our auditors BDO issued an unqualified report on 4 April 2022.
The improvement in the expected result in FCL has been fundamentally due to a significant effort in cost containment. In fact, the income has been closed with a figure of CHF 437k, being budgeted at CHF 516k, due to less activity in the accreditation of trainers. The expenditure finished CHF 174k below budget due to a lower cost in the activities carried out and a lower cost in the FIDIC staff team due to the delay in the incorporation of part of the planned staff.
In compliance with the best governance practices, I met in person in Geneva with the partner responsible for BDO to begin the FIDIC and FCL audit process. In both cases, the auditor conveyed to me the maximum collaboration and transparency on the part of the FIDIC team during the execution of the audit and his positive opinion regarding the accounting and internal control procedures at FIDIC.
The audit of FIDIC Consulting Services (Beijing) Ltd was completed on 21 January 2022 by the registered firm Beijing Puhong de CPA Co Ltd and they reported a clean and unqualified report like the previous two.
FCS activity has been affected by the restrictions imposed in China to contain the pandemic. In fact, income was budgeted at CHF 815k and reached CHF 679k. However, the adaptation of the expenditure to the real level of activity has made it possible to end the year with a saving of CHF 290k in real costs compared to budgeted costs, so it has ended with a very positive result.
In summary, it has been a very positive year from a financial point of view for FIDIC and one that allows us to strengthen the balance sheet by increasing our capital and reserves and also the net cash position, while dedicating all the necessary resources to achieve the objectives set for 2021 in our Strategic Plan 2020-2024.
