Form of Political Party Financial Statements Regulations, 2016

B

L.N. 282 of 2016

FINANCING OF POLITICAL PARTIES ACT

(CAP. 544)

Form of Political Party Financial Statements Regulations, 2016

IN EXERCISE of the powers conferred by article 26 of the

Financing of Political Parties Act, the Minister for Justice, Culture

and Local Government has made the following regulations

The title of these regulations is the Form of Political Party Citation.

Financial Statements Regulations, 2016.

THE POLITICAL PARTY

Annual Report and Financial Statements

31 December 2016

(The dates mentioned in this document are

only quoted by way of example for guidance)

Party Registration Number .................

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

CONTENTS

General Information

Administrators report

Statement of Administrators responsibilities

Independent Party Auditors’ Report

Income and Expenditure Account

Statement of Financial Position

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

GENERAL INFORMATION

Governance of the Party

(Identify the authority by which the Party adopts the financial statements [(e.g. Executive

Committee or similar body elected by the Party)].

Members of the Executive Committee (or similar body elected by the Party)

(Name 1) (Chairman)

(Name 2) (Vice Chairman)

(Name 3)

(Name 4)

(Name 5)

Registered address

(Address 1)

(Address 2)

(Address 3)

(Address 4)

Auditors

(Name of auditor/audit firm)

(Address 1)

(Address 2)

(Address 3)

(Address 4)

Structure of the Party

Explain the structure of the party. This should include a summary description of the head

office operations, central units of the party and the branch/constituency organisation. The

geographical areas in which the party and/or units are operating should also be explained

e.g. if restricted to certain constituencies, national units, cross-border. Relationships with

foundations/bodies raising funds exclusively for party purposes (if they exist) should be

explained.

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

GENERAL INFORMATION - continued

Scope of the financial statements

The scope of the financial statements (the parts of the party to which the financial

statements relate) should be defined in this section. Reference may be made to the manner

of accounting by accounting units not included within the scope of the financial

statements.

Approved by the Executive Committee (or similar body elected by the Party) and signed

on its behalf by

(Name 1)

(Name 2)

(Name 3)

(Denomination)

(Denomination)

(Treasurer)

(Date)

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

ADMINISTRATORS REPORT

<<The annual report of corporate entities generally include a report in the form of

statement from the governing body, which provides an overview of the year under review,

in terms of operations and financial results. Such report also provides scope for outlining

the strategy of the organisation in the immediate and longer term. Typically, such

statement is penned and signed by the Chairman and/or the Secretary of the governing

body.>>

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

STATEMENT OF RESPONSIBILITIES OF THE ADMINISTRATORS

The administrators are required by the Financing of the Political Parties Act (Cap. 544) to

prepare financial statements which give a true and fair view of the state of affairs of the

Party as at the end of each reporting period and of the surplus or deficit for that period.

In preparing the financial statements, the administrators are responsible for

▪

ensuring that the financial statements have been drawn up in accordance with the

Accountancy Profession (General Principles for Small and Medium-Sized

Entities) Regulations (S.L. 281.03) and the Schedule accompanying and

forming an integral part of those Regulations as amended by the notes in these

financial statements;

▪

selecting and applying appropriate accounting policies;

▪

making accounting estimates that are reasonable in the circumstances;

▪

ensuring that the financial statements are prepared on the going concern basis

unless it is inappropriate to presume that the Party will continue in business as a

going concern.

The administrators are also responsible for designing, implementing and maintaining

internal control as the administrators determine is necessary to enable the preparation of

financial statements that are free from material misstatement, whether due to fraud or

error, and that comply with the Act. They are also responsible for safeguarding the assets

of the Party and hence for taking reasonable steps for the prevention and detection of

fraud and other irregularities.

The financial statements of the General Party for the year ended 31 December XXXX are

included in the Annual Report XXX, which is published in hard-copy printed form and

may be made available on the Party’s website. The administrators are responsible for the

maintenance and integrity of the Annual Report on the website in view of their

responsibility for the controls over, and the security of, the website. Access to information

published on the party’s website is available in other countries and jurisdictions, where

legislation governing the preparation and dissemination of financial statements may differ

from requirements or practice in Malta.

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

INDEPENDENT AUDITORS’ REPORT

B

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

STATEMENT OF INCOME AND EXPENDITURE ACCOUNT

€

Income

Membership and subscriptions

Monetary donations

Sponsorships

Income from fundraising activities

Income from commercial activities

Net fundraising income from ancillary events

Other amounts remitted by branches

Interest income

Dividend income

Income from legacies

Share of results of controlled entities

Gross fundraising income

Other income

Total income before notional income

Notional income

Total income

Expenditure

Staff costs

Administrative expenses

Cost of fundraising activities

Cost of commercial activities

Campaign and election costs

Depreciation and amortisation

Miscellaneous expenses

Transfer expenses

Interest payable

Total expenditure before donations in kind

Donations in kind and notional donations

Total Expenditure

Surplus/(deficit) for the financial year

Transfers (to)/from controlled entities

Amount transferred to accumulated fund

The notes on pages x to xx are an integral part of these financial statements.

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

STATEMENT OF FINANCIAL POSITION

At 31 December

€

€

ASSETS

Non-current assets

Intangible assets

Property, plant and equipment

Investment property

Investment in controlled entities

Financial investments

Current assets

Inventories

Other receivables

Cash and cash equivalents

TOTAL ASSETS

EQUITY AND LIABILITIES

Equity

Revaluation reserve

Other reserves

Accumulated fund

Total equity

Non-current liabilities

Borrowings

Provisions

Current liabilities

Borrowings

Other payables

Total liabilities

TOTAL EQUITY AND LIABILITIES

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

STATEMENT OF FINANCIAL POSITION - continued

The financial statements in this document have been authorised for issue by the Executive

Committee (or similar body elected by the Party) on (Date) and were signed on its behalf

by

(Name 1)

(Name 2)

(Name 3)

(Denomination)

(Denomination)

(Treasurer)

(Date)

The notes on pages x to xx are an integral part of these financial statements.

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

STATEMENT OF CHANGES IN EQUITY

Revaluation

Other

Accumulated

reserve

reserve

fund

€

€

€

Financial year ending 31 December 2015

Surplus/(deficit) for the year

Transfers (to)/from controlled entities

Balance at 31 December 2015

Financial year ending 31 December 2016

Surplus/(deficit) for the year

Transfers (to)/from controlled entities

Balance at 31 December 2016

The notes on pages x to xx are an integral part of these financial statements.

B

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

STATEMENT OF CASHFLOWS

Year ended 31 December

Notes

€

Cash flows from operating activities

Cash generated (from/(used in) operations

Interest received

Interest paid

Income tax paid

Net cash generated from/(used in) operating activities

Cash flows from investing activities

Purchases of intangible assets

Purchases of property, plant and equipment

Proceeds from disposal of property, plant and equipment

Purchases of investment property

Loan to controller entities

Purchases of other financial investments

Proceeds from disposal of financial investments

Dividends received from controlled entities

Dividends received from investments

Net cash used in investing activities

Cash flows from financing activities

Repayment of borrowings

Net cash used in financing activities

Net movement in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

The notes on pages x to xx are an integral part of these financial statements.

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

NOTES TO THE FINANCIAL STATEMENTS

Summary of significant accounting policies

The principal accounting policies applied in the preparation of these individual

financial statements are set out below. These policies have been consistently applied

to all the years presented, unless otherwise stated.

1.1 Basis of preparation

These financial statements are prepared in accordance with the provisions of the

Financing of Political Parties Act (Cap. 544) enacted in Malta, the guidelines issued

by the Electoral Commission and in accordance with the Accountancy Profession

(General Principles for Small and Medium-Sized Entities) Regulations (S.L.

281.03) and the Schedule accompanying and forming an integral part of those

Regulations as amended by the notes in these financial statements

1.2 Functional and presentation currency

(a) Functional and presentation currency

Items included in the financial statements are measured using the currency of the

primary economic environment in which the entity operates (‘the functional

currency’). The financial statements are presented in euro, which is the Party’s

functional and presentation currency.

( b)

Transactions and balances

Foreign currency transactions are translated into the functional currency using the

exchange rates prevailing at the dates of the transactions or valuation where items

are remeasured. Foreign exchange gains and losses resulting from the settlement of

such transactions and from the translation at year-end exchange rates of monetary

assets and liabilities denominated in foreign currencies are recognised in income

and expenditure.

1.3 Property, plant and equipment

All property, plant and equipment is initially recorded at historical cost. Land and

buildings, comprising mainly the party headquarters, offices and clubs, are shown at

fair value based on periodic, but at least triennial, valuations by external

independent valuers, less subsequent depreciation for buildings. Valuations are

carried out on a regular basis such that the carrying amount of property does not

differ materially from that which would be determined using fair values at the end

of the reporting period. Any accumulated depreciation at the date of revaluation is

eliminated against the gross carrying amount of the asset, and the net amount is

restated to the revalued amount of the asset. All other property, plant and equipment

is stated at historical cost less depreciation and impairment losses. Historical cost

includes expenditure that is directly attributable to the acquisition of the items.

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

Summary of significant accounting policies - continued

Subsequent costs are included in the asset’s carrying amount or recognised as a

separate asset, as appropriate, only when it is probable that future economic benefits

associated with the item will flow to the Party and the cost of the item can be

measured reliably. The carrying amount of the replaced part is derecognised. All

other repairs and maintenance are charged to income or loss during the financial

period in which they are incurred.

Increases in the carrying amount arising on revaluation of land and buildings are

credited directly to a revaluation reserve in shareholders’ equity. Decreases that

offset previous increases of the same asset are charged against the revaluation

reserve directly in equity; all other decreases are charged to income or loss. Each

year the difference between depreciation based on the revalued carrying amount of

the asset charged to income or loss and depreciation based on the asset’s original

cost is transferred from the revaluation reserve to retained earnings.

Land is not depreciated as it is deemed to have an indefinite life. Depreciation on

other assets is calculated using the straight-line method to allocate their cost or

revalued amounts to their residual values over their estimated useful lives, as

follows

%

Buildings

x

Garage tools and equipment

xx - xx

Office furniture and equipment

xx - xx

Motor vehicles

xx

The assets’ residual values and useful lives are reviewed, and adjusted if

appropriate, at the end of each reporting period.

An asset’s carrying amount is written down immediately to its recoverable amount

if the asset’s carrying amount is greater than its estimated recoverable amount (note

XX).

Gains and losses on disposals are determined by comparing the proceeds with

carrying amount and are recognised in income or loss. When revalued assets are

sold, the amounts included in the revaluation reserve relating to the assets are

transferred to retained earnings.

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

Summary of significant accounting policies - continued

1. 4 Investment property

Investment property, principally comprising freehold office buildings, is held for

long-term rental yields or for capital appreciation or both, and is not occupied by the

Party. Property that is being constructed or developed for future use as investment

property is classified as property, plant and equipment and stated at cost until

construction or development is complete, at which time it is reclassified and

subsequently accounted for as investment property.

Investment property is measured initially at its historical cost, including related

transaction costs (and borrowing costs). Historical cost includes expenditure that is

directly attributable to the acquisition of the items. Borrowing costs which are

incurred for the purpose of acquiring or constructing a qualifying investment

property are capitalised as part of its cost in accordance with accounting policy

1.15. After initial recognition, investment property is carried at fair value,

representing open market value determined annually, less subsequent depreciation

for buildings. Fair value is based on active market prices, adjusted, if necessary, for

any difference in the nature, location or condition of the specific asset. If the

information is not available, the Party uses alternative valuation methods such as

recent prices on less active markets or discounted cash flow projections.

1. 4 Investment property

These valuations are reviewed annually by professional valuers. Investment

property that is being redeveloped for continuing use as investment property or for

which the market has become less active continues to be measured at fair value. The

fair value of investment property reflects, among other things, rental income from

current leases and assumptions about rental income from future leases in the light of

current market conditions. The fair value also reflects, on a similar basis, any cash

outflows that could be expected in respect of the property.

The fair value of investment property does not reflect future capital expenditure that

will improve or enhance the property and does not reflect the related future benefits

from this future expenditure other than those a rational market participant would

take into account when determining the value of the property.

Subsequent expenditure is capitalised to the asset’s carrying amount only when it is

probable that future economic benefits associated with the expenditure will flow to

the Party and the cost of the item can be measured reliably. All other repairs and

maintenance costs are charged to income or loss during the financial period in

which they are incurred. When part of an investment property is replaced, the

carrying amount of the replaced part is derecognised.

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

Summary of significant accounting policies - continued

Increases in the carrying amount arising on revaluation of investment property are

credited directly in equity and shown as a revaluation reserve in the accumulated

fund. Decreases that offset previous increases of the same asset are debited against

the revaluation reserve directly in equity; all other decreases are charged to income

or loss. Each year the difference between depreciation based on the revalued

carrying amount of the asset charged to income or loss and depreciation based on

the asset’s original cost is transferred from the revaluation reserve to retained

earnings.

Land is not depreciated as it is deemed to have an indefinite life. The capitalised

cost of buildings is amortised using the straight-line method over a maximum of

XXX years, in accordance with their useful lives. Useful lives are reviewed, and

adjusted if appropriate, at the end of each reporting period.

Investment properties are derecognised either when they have been disposed of or

when the investment property is permanently withdrawn from use and no future

economic benefit is expected from its disposal.

If an investment property becomes owner-occupied, it is reclassified as property,

plant and equipment. Its fair value at the date of the reclassification becomes its cost

for subsequent accounting purposes. When the Party decides to dispose of an

investment property without development, the Party continues to treat the property

as an investment property. Similarly, if the Party begins to redevelop an existing

investment property for continued future use as investment property, it remains an

investment property during the redevelopment.

1.5 Investments in controlled and jointly controlled entities

Investments in controlled entities are accounted for by the equity method of

accounting and are initially recognised at cost.

Equity accounting involves recognising in the statement of income and expenditure,

the controlled entity’s share of the associate’s profit or loss for the year and the

share of post-acquisition movements in reserves is recognised in reserves. The

cumulative post-acquisition movements are adjusted against the cost of the

investment.

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

Summary of significant accounting policies - continued

The Party’s investment in associated undertaking is carried in the balance sheet at

an amount that reflects its share of the net assets of the associate and includes

goodwill (net of any accumulated impairment loss) on acquisition. Equity

accounting is discontinued when the carrying amount of an investment in an

associated undertaking reaches zero, unless the Party has incurred obligations or

guaranteed obligations in respect of the associated undertaking. On disposal of an

investment, the difference between the net disposal proceeds and the carrying

amount is charged or credited to the profit and loss account.

1.6 Financial instruments

Financial instruments, other than investments in controlled entities, are classified in

the following categories: loans and receivables and available-for-sale. The

classification depends on the purpose for which the financial assets were acquired.

The Administrators determine the classification of its financial assets at initial

recognition and re-evaluates this designation at every reporting date.

(a)

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable

payments that are not quoted in an active market. They are included in current

assets, except for maturities greater than 12 months after the reporting date. These

are classified as non-current assets.

(b)

Available-for-sale financial assets

Investments 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, are classified as

available-for-sale. They are included in non-current assets unless management

intends to dispose of the investment within 12 months of the reporting date. In the

latter instance, the investment is classified within current assets.

1.6.1 Recognition and measurement

All investment securities are initially recognised at cost. Available-for-sale

securities are subsequently re-measured at fair value based on the price appearing to

be the latest available dealing price based on market quotations. Gains and losses

arising from changes in the fair value of securities classified as available-for-sale

are recognised in equity. When the securities are disposed of or impaired, the related

accumulated fair value adjustments, are included in the income and expenditure

statement as gains and losses from investment securities.

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

Summary of significant accounting policies - continued

All purchases and sales of investments are recognised on the trade date, which is the

date that the entity commits itself to purchase or sell the asset. Cost of purchase

includes transaction costs. A financial asset is impaired if its carrying amount is

greater than its estimated recoverable amount. The amount of the impairment loss

for assets carried at fair value is calculated as the difference between the asset’s

carrying amount and the present value of expected future cash flows discounted at

the current market rate of interest of similar financial assets.

1.6 Financial instruments

1.6.2 Impairment of financial assets

A financial asset or a group of financial assets is impaired and impairment losses are

incurred if there is objective evidence of impairment as a result of one or more

events that occurred after the initial recognition of the asset (a ‘loss event’) and that

loss event (or events) has an impact on the estimated future cash flows of the

financial asset or group of financial assets that can be reliably estimated.

If there is objective evidence that an impairment loss on financial assets carried at

amortised cost has been incurred, the amount of the loss is measured as the

difference between the asset’s carrying amount and the present value of estimated

future cash flows (excluding future credit losses that have not been incurred)

discounted at the financial asset’s original effective interest rate (i.e. the effective

interest rate computed at initial recognition). The amount of the loss shall be

recognised in the income and expenditure account. If, in a subsequent period, the

amount of the impairment loss decreases and the decrease can be related objectively

to an event occurring after the impairment was recognised, the previously

recognised impairment loss shall be reversed. The reversal shall not result in a

carrying amount of the financial asset that exceeds what the amortised cost would

have been had the impairment not been recognised at the date the impairment is

reversed. The amount of the reversal shall be recognised in the income and

expenditure account.

If there is objective evidence that an impairment loss has been incurred on an

unquoted equity instrument that is not carried at fair value because its fair value

cannot be reliably measured, the amount of the impairment loss is measured as the

difference between the carrying amount of the financial asset and the present value

of estimated future cash flows discounted at the current market rate of return for a

similar financial asset. Such impairment losses shall not be reversed.

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

Summary of significant accounting policies - continued

When a decline in the fair value of an available-for- sale financial asset has been

recognised directly in equity and there is objective evidence that the asset is

impaired, the cumulative loss that had been recognised directly in equity shall be

reclassified from equity to the income and expenditure account as a reclassification

adjustment even though the financial asset has not been derecognised.

The amount of the cumulative loss that is removed from equity and recognised in

the income and expenditure account shall be the difference between the acquisition

cost (net of any principal repayment and amortisation) and current fair value, less

any impairment loss on that financial asset previously recognised in the income and

expenditure account.

Impairment losses recognised in the income and expenditure account for an

investment in an equity instrument classified as available- for-sale shall not be

reversed through the income and expenditure account. If, in a subsequent period, the

fair value of a debt instrument classified as available- for-sale increases and the

increase can be objectively related to an event occurring after the impairment loss

was recognised in the income and expenditure account, the impairment loss shall be

reversed, with the amount of the reversal recognised in the income and expenditure

account.

1.7

Inventories

Inventories are measured at the lower of cost and net realisable value. Cost

comprises all costs of purchase and other costs incurred in bringing the inventories

to their present location and condition. Net realisable value represents the estimated

selling price in the ordinary course of business less the estimated costs necessary to

make the sale

1.8

Receivables and loan to controlled entities

Receivables comprise amounts due for merchandise sold or services performed in

the ordinary course of operations. If collection is expected in one year or less (or in

the normal operating cycle of the business if longer), they are classified as current

assets. If not, they are presented as non-current assets.

Receivables and the loan to controlled entities are recognised initially at cost. After

initial recognition, these are accounted for at amortised cost and remeasured to take

cognisance of impairment losses. Amortised cost is the initial measurement amount

adjusted for the amortisation of any difference between the initial and maturity

amounts using the effective interest method.

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

Summary of significant accounting policies - continued

A provision for impairment is established when there is objective evidence that the

party will not be able to collect all amounts due according to the original terms of

the receivables. Significant financial difficulties of the debtor, probability that the

debtor will enter bankruptcy or financial reorganisation, and default or delinquency

in payments are considered indicators that the receivable is impaired. The amount of

the provision is the difference between the asset’s carrying amount and the present

value of estimated future cash flows, discounted at the original effective interest

rate. The carrying amount of the asset is reduced through the use of an allowance

account, and the amount of the loss is recognised in income and expenditure. When

a receivable is uncollectible, it is written off against the allowance account for trade

and other receivables. Subsequent recoveries of amounts previously written off are

credited against income and expenditure.

1.9

Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short-term

investments that are held to meet short-term cash commitments rather than for

investment or other purposes. Bank overdrafts, which are repayable on demand and

form an integral part of the Party’s cash management, are a component of cash and

cash equivalents.

1.10 Financial liabilities

The Party recognises a financial liability in its statement of financial position when

it becomes a party to the contractual provisions of the instrument. Financial

liabilities are recognised initially at cost, net of transaction costs. These liabilities

are subsequently measured at amortised cost. The Party derecognises a financial

liability from its statement of financial position when the obligation specified in the

contract or arrangement is discharged, is cancelled or expires.

1.11 Other Payables

Payables are obligations to pay for goods or services that have been acquired in the

ordinary course of operations from suppliers. Accounts payable are classified as

current liabilities if payment is due within one year or less (or in the normal

operating cycle of the business if longer). If not, they are presented as non-current

liabilities.

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

Summary of significant accounting policies - continued

Trade and other payables are recognised initially at cost, net of transaction costs

incurred, and subsequently measured in accordance with the policy described

above. On derecognition, any difference between the carrying amount and the

redemption or settlement amount is recognised in income and expenditure.

1.12 Borrowings

Borrowings are recognised initially at cost, net of transaction costs incurred, and

subsequently measured in accordance with the policy described in note Financial

Liabilities. On derecognition, any difference between the carrying amount and the

redemption or settlement amount is recognised in profit or loss.

Borrowings are classified as current liabilities unless the Party has an unconditional

right to defer settlement of the liability for at least twelve months after the end of

the reporting period.

1.13 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the

statement of financial position when there is a legally enforceable right to set off the

recognised amounts and there is an intention to settle on a net basis, or realise the

asset and settle the liability simultaneously.

1.14 Leases

(a)

The Party is the lessee

Leases of assets in which a significant portion of the risks and rewards of ownership

are effectively retained by the lessor are classified as operating leases. Payments

made under operating leases (net of any incentives received from the lessor) are

charged to profit or loss on a straight-line basis over the period of the lease.

(b)

The Party is the lessor

Assets leased out under operating leases are included in property, plant and

equipment in the statement of financial position and are accounted for in accordance

with accounting policy Property Plant and Equipment. They are depreciated over

their expected useful lives on a basis consistent with similar owned property, plant

and equipment. Rental income from operating leases is recognised in profit or loss

on a straight-line basis over the lease term.

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

Summary of significant accounting policies - continued

1.15 Borrowing costs

Borrowing costs which are incurred for the purpose of acquiring or constructing

qualifying property, plant and equipment, investment property or property held for

development and resale are capitalised as part of its cost. Qualifying assets are

assets that necessarily take a substantial period of time to get ready for their

intended use or sale. Borrowing costs are capitalised while acquisition or

construction is actively underway, during the period of time that is required to

complete and prepare the asset for its intended use. Capitalisation of borrowing

costs is ceased once the asset is substantially ready for its intended use or sale is

complete and is suspended if the development of the asset is suspended. All other

borrowing costs are expensed. Borrowing costs are recognised for all interest-

bearing instruments on an accrual basis using the effective interest method. Interest

costs include the effect of amortising any difference between initial net proceeds

and redemption value in respect of the Party’s interest-bearing borrowings.

1.16 Income recognition

Income is recognised in the financial statements when there is reasonable certainty

that particular resource is receivable, the Party’s right to it becomes legally

enforceable and when its monetary value can be determined.

Monetary donations and membership income are accounted for when the funds are

received which, in view of the nature of such income, is determined by the Party to

be the point in time when there is a probability that the economic benefits associated

with the revenue will flow to the entity.

When the risk and rewards pertaining to events of a fundraising nature do not attach

to the Party, only the net surplus or deficit is accounted under the respective title in

the financial statements.

Legacies are accounted for as income, during the period when the right to the asset

transferred to the party by way of legacy becomes enforceable by the Party.

Loans payable that are waived are accounted for as donations in the period when

such waiver becomes effective and enforceable by the party.

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

Summary of significant accounting policies - continued

When a third party bears the cost or refrains from charging part or all the fees

connected to a commercial supply of a good or service that the Party would

otherwise been liable for, the fair value attached to the commercial transaction

which does not constitute an obligation for payment to the Party, is deemed as

notional income and accounted under income in the Statement of Income and

Expenditure. Services of volunteers and party members who provide the services

free of charge is not treated as notional income, and accordingly not accounted for.

Interest income is recognised on a time-proportion basis using the effective interest

method.

Dividend income is recognised when the right to receive payment is established.

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

2. MEMBERSHIP AND SUBSCRIPTIONS

Membership and subscriptions is made up of

€

€

Corporate memberships

Individual subscriptions

The annual audited statements of accounts of political Form of

parties shall be made, and shall in terms of articles 28 and 29 of the Political

Accounts.

Financing of Political Parties Act be presented to the Electoral Cap. 544.

Commission to be made available for public inspection and posted on

the website of the Electoral Commission, in general, in the form

stipulated in the Schedule.

MONETARY DONATIONS

Total donations reported comprise

€

€

Corporate donations

Individual donations

All donations, including donations in kind, are subject to further reporting

requirements as described in the Financing of Political Parties Act (Cap. 544).

NOTIONAL DONATIONS

Total notional donations reported comprise

€

€

Type 1

Type 2

Type 3

Type 4

As stated in the note 1.16 Income recognition, notional donations are valued at the

equivalent commercial value.

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

FUNDRAISING

Total main sources of fundraising income in the year were as follows

€

€

Income

Category 1

Category 2

Category 3

Category 4

€

€

Expenditure

Category 1

Category 2

Category 3

Category 4

COMMERCIAL ACTIVITIES

Total main sources of commercial income organised by the Party in the year were as

follows

€

€

Income

Category 1

Category 2

Category 3

Category 4

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

€

€

Expenditure

Category 1

Category 2

Category 3

Category 4

OTHER AMOUNTS REMITTED BY BRANCHES

Membership and subscriptions remitted by branches are included in Note 2 to these

financial statements. The balance of funding transferred to Head office by branches

comprises

€

€

Expenditure

Category 1

Category 2

Category 3

(Note: the above table should categorise key components of income, if material. If not

material, the above wording and table may be replaced with the words “The balance

comprises miscellaneous amounts remitted to Head office by branches of the Party.”)

FINANCE INCOME

€

€

Interest receivable on bank deposits

Investment income

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

MISCELLANEOUS INCOME

€

€

Rental income

Service income

Other income

SURPLUS/(DEFICIT)

The surplus/(deficit) is stated after charging

€

€

Staff costs (Note 11)

Auditors’ remuneration

Depreciation of tangible fixed assets (Note 16)

Depreciation of investment property (Note 17)

STAFF COSTS

The staff costs incurred during the year were as follows

€

€

Wages and salaries

Social security costs

The average number of persons employed by the Party during the year was XX

(2015: YY).

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

ADMINISTRATIVE EXPENSES

€

€

Communication expenses

Travelling and entertainment

Legal and professional expenses

Rental charges

Water and electricity

Auditors’ remuneration

Postages, printing and stationery

General expenses (other categories as appropriate)

Other administrative expenses

TRANSFERS TO BRANCHES

Transfers to branches were made for the following purposes

(Note: provide description, or categorise transfers by purpose if material)

CAMPAIGN AND ELECTION COSTS

Campaign costs include election expenses and other expenses incurred in relation to

elections or referendum campaigns, or party/policy promotion and comprise

(Note: details should be given for each different election, bye-election, referendum,

etc.)

€

€

General Election, 20XX

Election expenses

Other campaign expenses

Donations in kind

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

General party/policy promotion (conferences, publications, etc.)

Expenses

Donations in kind

MISCELLANEOUS EXPENDITURE

Expense Category 1

Expense Category 2

Expense Category 3

PROPERTY, PLANT AND EQUIPMENT

Land &

Office

Motor

Buildings

fixtures &

vehicles

fittings

€

€

At 31 December 2016

Opening net book

Additions

Depreciation charge

Closing net book

At 31 December 2016

Cost or valuation

Accumulated

Net book amount

At 31 December 2015

Cost or valuation

Accumulated

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

INVESTMENT PROPERTY

Total

€

At 31 December 2016

Opening net book amount

Additions

Depreciation charge

Closing net book amount

At 31 December 2016

Cost or valuation

Accumulated depreciation

Net book amount

At 31 December 2015

Cost or valuation

Accumulated depreciation

INVESTMENT IN CONTROLLED ENTITIES

As at 31 December 2015 and 2016, the Party held the following investment in

controlled entities.

Registration

Registered

Class of Percentage of

Number

office

shares held

shares held

€

€

€

€

Entity

Entity 1

Entity 2

Entity 3

The following financial information available to the Party relates to the investment

in controlled entities as at the balance sheet date.

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

Assets

Liabilities

Profit for the year

€

€

€

Entity 1

Entity 2

Entity 1

Entity 2

Entity 1

€

€

Year ended 31 December

At the beginning of year

Share of results of controlled entity

At the end of the year

At 31 December

Cost

Share of results

Closing cost and net book amount

Entity 2

€

€

Year ended 31 December

At the beginning of year

Share of results of controlled entity

At the end of the year

At 31 December

Cost

Share of results

Closing cost and net book amount

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

FINANCIAL INVESTMENTS

The movements in investments which are classified as available for sale are

summarised as follows

€

€

Year ended 31 December

At the beginning of year

Additions

Disposals (sale and redemptions)

Net fair value (losses)/gains

At the end of the year

At 31 December

Cost

Accumulated net fair value gains

Net book amount

OTHER RECEIVABLES

€

€

VAT recoverable

Prepayments

Amounts owed by related undertaking

Other receivables

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash in hand and balances with banks. Cash and cash

equivalents reconcile to the amounts shown in the balance sheet as follows

€

€

Cash at bank and in hand

Bank overdraft

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

RESERVES

Revaluation reserve

The revaluation reserve comprises revaluation gains and losses on the Party’s

property, net of any attributable taxation element.

Other reserve

The other reserve represents a reserve of a general nature.

BORROWINGS

€

€

Falling due within one year

Bank overdraft

Bank loan

Borrowings from third parties

Falling due after one year

Bank loan (Note ii)

Borrowings from third parties

Total Borrowings

i. The bank overdraft facility was obtained to finance (state reason). It bears interest

at 4.0% per annum and is secured by general and special hypothecs over the Party’s

property.

ii. The Party has two bank loans as follows

Loan 1: The bank loan was obtained to (state reason). The loan bears interest at

6.2% per annum and is secured by general and special hypothecs over the Party’s

property. It is repayable over quarterly instalments of €XXX inclusive of interest

over a period of seven years from first drawdown. The loan is to be settled by April

2019. Loan 2: The Party obtained this loan to (state reason). The loan bears interest at

6.0% per annum and is secured by general and special hypothecs over the Party’s

property. It is repayable by monthly instalments of €XXX inclusive of interest over

a period of three years from its first drawdown.

The average interest rate on the bank loans was XXX (2015: XXX)

Other loans have been obtained from third parties for the purpose of (state reason)

The average interest rate on the other borrowings was (2015: XXX)

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

€

€

Maturity of bank loans falling due after one year

Between 1 and 2 years

Later than 2 years but not later than 5 years

Later than 5 years

PROVISIONS

The provision amounting to €XXX. relates to an amount that the Party has

determined is likely to be settled in the next accounting period, following a claim

made against it by one of its former employees.

OTHER PAYABLES

€

€

Falling due within one year

Creditors

Accruals

Social security contributions and indirect taxes

Deferred income

THE POLITICAL PARTY

Annual Report & Financial Statements - 31st December, 2016

CASH GENERATED FROM OPERATIONS

Reconciliation of surplus to cash generated from operations

%

%

Surplus for the year

Adjustments for

Investment income

Amortisation

Depreciation

Profit on disposal of property, plant and equipment

Impairment of debtors

Movements in

Debtors and prepayments

Creditors and accruals

Cash generated from operations

COMMITMENTS AND CONTINGENCIES

As at 31 December 2016, the amount of contractual commitments for the

acquisition of property, plant and equipment amounted to €XXX (2015: €XXX).

As of the same date, there were no contingent liabilities.

RELATED PARTY TRANSACTIONS

The following are related parties to the Party

(Note: Provide names and relationship details. Furthermore, details of transactions

as per below, if applicable, need to be disclosed.)

The Party has a related party relationship with XYZ Limited, a company owned by

a key member of the Party’s Executive Committee. During the year under review

the Party forwarded advances of €X,XXX to this entity.

The outstanding amounts arising from transactions with XYZ Limited, and the

terms relating to these balances are disclosed in Note XX to these financial

statements.

B

€3.24