Accounting principles for the balance sheet

Fixed assets

The intangible assets, buildings, refurbishments, fixtures, equipment, and means of transportation in programme areas are valued at acquisition or manufacturing cost, minus the cumulative depreciations and/or accumulated impairment losses, where relevant.

Partially or fully depreciated fixed assets are removed from the fixed assets registers only once they have been sold or officially decommissioned. Maintenance expenses will only be capitalized as assets if they extend the economic life of the object. Expenses regarding major maintenance of buildings will not be accrued for in a provision. These costs will be registered directly in the statement of income and expenditure.

Depreciations are calculated as a percentage of the acquisition price according to the straight-line method and are based on the estimated useful life of the assets. Land and tangible fixed assets for sale are not depreciated.

Intangible fixed assets:

Software 25%

Tangible fixed assets:

Land 0%

Building 3⅓%

Refurbishment 10%

Inventory and equipment 25%

Vehicles in programme areas 33⅓%

Financial fixed assets are stated at cost, less any provisions for permanent impairment, if necessary.

Inventories

Stocks are valued at acquisition price. The acquisition price comprises the purchase price and additional costs, such as import duties, costs of transportation, and other costs that can be directly allocated to the acquisition of stocks. The valuation of stocks takes account of any downward value adjustments on the balance sheet date.

Receivables, prepayments, and accrued income

Receivables are valued at fair value, including a provision for non-recoverability, if needed. Provisions are determined according to individual assessment of the collectability of debts. No receivables are included that extend beyond one year after the balance date.

Securities

Securities are valued at fair value.

Cash and cash equivalents

Cash and bank balances are valued at face value. Non-euro cash and bank balances are converted against actual rates at the year’s end based on international EU rates.

Reserves and funds

ZOA’s reserves and funds exist to achieve ZOA’s objectives. They can be summarized as follows:

Continuity reserves

The general continuity reserve enables the organisation to meet its commitments during an unforeseen stagnation of income. Restrictions on spending continuity reserves are determined by the Executive Board.

Designated reserves

The designated reserves are earmarked by the Executive Board and consist of two groups: reserves for (pre-) financing and particular risks and reserves for future project spending. The first group consists of the designated reserves to pre-finance projects (to enable the start or continuation of projects in countries before donor instalments are received), to finance exchange rate risks, and to finance assets. The second group consists of programme financing (risk of unrecoverable expenses), country programme reserves, programme development and innovation reserves, and reserves for disaster response activities.

Programme Funds

Programme funds concern funding acquired with a specific use designated by the donor, but not yet spent on these designations in the financial year.

Provisions

Provisions are recognized for legally enforceable obligations that exist at the balance sheet date, for which an outflow of resources will be required, and a reasonable estimate can be made. Provisions are measured at the best estimate of the amount necessary to settle the obligation as per the balance sheet date.

Obligations relating to contributions to pension schemes based on defined contributions are presented as expenditures in the statement of income and expenditures in the period that the contributions are due. In addition, a provision is included for existing additional commitments to employees, provided it is likely that there will be an outflow of funds for the settlements of the commitments and provided that it is possible to make a reliable estimate of the amounts required to cover these commitments.

Liabilities

ZOA enters into obligations to donors in countries in which ZOA implements programmes. A donor obligation is recognised once the Executive Board passes the resolution and communicates this to the donor and grant recipient, leading to a legally enforceable or actual obligation to spend funds on the agreed project. On the balance sheet, the remaining obligation is presented as a liability. Liabilities are valued at fair value. Obligations that extend beyond one year after the balance date are registered as long-term liabilities.

Leasing

When entering into a contract, the economic reality –including all facts and circumstances – will determine whether a contract is a lease contract. A lease contract is applicable when the fulfilment of the contract depends on the particular use of an asset or on the rights to use the asset. In the case of a financial lease, the asset is activated and depreciated as part of the fixed assets. ZOA does not normally engage in operational leases. However, in cases of an operational lease, the lease terms are charged to the expenditure statement linear to the lease period. At ZOA, this applies to some office equipment in the Netherlands (value future lease terms less than €15,000).