attenrion: mr. robert degraft-hru1son

Forum for Agricultural Research in Africa

June 06, 2017

The World Bank 1818 H Street, N.W. Washington, D .C. 20433 United States of America

Attenrion: Mr. Robert deGraft-Hru1son Senior Financial Management Specialist Ghana Country Office, Accra

Dear Bob, Grant No. TF95129 - Submission of Audited Financial Statements

for the financial year ended 31"t December 2016

In line with Section 2.09c of the above Grant Agreement, please find enclosed our audited financial statements for the year ended 31 st December 2016 as audited by KPMG Ghana. Also enclosed is the Management Letter issued in respect of the above audit.

This is for your record. Kindly acknowledge receipt.

Thank you and regards. Yours truly,

~ !D erru arru10, ; . Executive Director

FORUM FOR AGRICULTURAL RESEARCH IN AFRICA (FARA) (Forum pour la recherche agricole en Afrique) Headquarters 12 Anmeda Street. Roman Ridge PMB CT 173 Accra, Ghana Tel ~ 233 (0) 302 772823 i 779421 Fax + 233 (0) 302 773676 Email ,nfo(ci: faraafnca.org Website www.faraafrica.org

Innovating for Africa's Wellbeing

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FORUM FOR AGRICULTURAL RESEARCH IN AFRICA (FARA) (A Company Limited by Guarantee)

ANNUAL REPORTS AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016

Forum for Agricultural Research in Africa (A Company Limited by Guarantee) Annual Report for the year ended 31 December 201 6

Table of Contents

Corporate Information

Report of the Board of Directors

Independent auditor's report

Financial statements:

Statement of Financial Position

Statement of Financial Performance

Statement of Changes in Net Assets

Cash Flows Statement

Statement of Comparison of Budget and Actual Amounts

Notes to the Financial Statements

Annex 1 - List of abreviations and acronyms

Pages

2

3

4-6

7

8

9

10

11

12-27

Forum/or Agricultural Research in Africa (A Company Limited by Guarantee) Annual Report for the year ended 31 December 2016

CORPORA TE INFORMATION

BOARD OF DIRECTORS

AUDITOR

REGISTERED OFFICE

BANKERS

Ephraim Mukisira - Chairperson (Appointed: June 2016) Alioune Fall - Vice Chairperson Yemi Akinbamijo - Executive Director Francis Wachira - ASARECA Rabeharisoa Lilia -ASARECA Abdou Tenkouano - CORAF/WECARD Adb El Moneim El Banna - NASRO Mahmoud Medany - NASRO Simon Mwale - CCARDESA Fanuel Tagwira - CCARDESA Philip Kiriro - Farmers Organisation -Maurice Lorka - African Union Bakari Traore - Governance Expert Samuel Adam - Finance Expert Marie Helene NOV AK (EC) - Development Partners representative Willem Janssen (The World Bank)- Observer Jimmy Smith - Scientific Organisations (Appointed: June 2016) Paul Mafpuka- Vice Chairperson (Resigned: June 2016) Nteranya Sanginga - Scientific Organisations (Resigned: June 2016) Charity Kruger - Chairperson (Resigned: June 2016)

KPMG

Marlin House, 13 Yiyiwa Drive

Abelenkpe

P.O.Box GP 242, Accra

Ghana

Forum for Agricultural Research in Africa 12 Anmeda Street Roman Ridge Accra, Ghana

Barclays Bank of Ghana Limited Citibank N A, New York Ecobank Ghana Limited UT Bank Ghana Limited Zenith Bank Ghana Limited

2


REPORT OF THE DIRECTORS TO MEMBERS OF FORUM FOR AGRICULTURAL RESEARCH IN AFRICA

The Directors present their report and financial statements of Forum for Agricultural Research in Africa (FARA) for the year ended 31 December 2016.

DIRECTOR'S RESPONSIBILITY STATEMENT

The directors are responsible for the preparation of financial statements that give a true and fair view of Forum for Agricultural Research in Africa (FARA), comprising the statement of financial position at 31 December 2016, and the statements of financial performance, changes in net assets, cash flows and comparison of budget and actual for the year then ended, and the notes to the financial statements which include a summary of significant accounting policies and other explanatory notes, in accordance with International Public Sector Accounting Standards (IPSAS) and in the manner required by the Companies Act, 1963 (Act 179). In addition, the directors are responsible for the preparation of the directors ' report.

The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and for maintaining adequate accounting records and an effective system of risk management.

The directors have made an assessment of the ability of the entity to continue as a going concern and have no reason to believe that the business will not be a going concern in the year ahead .

The auditor is responsible for reporting on whether the financial statements give a true and fair view in accordance with the applicable financial reporting framework.

RESULTS REVIEW

The Statement of financial performance on page 7 shows a surplus for the year of US$45,266 for Core activities (2015: US$2,268,889 deficit). The result has increased the accumulated fund balance from US$999,686 as at 31 December 2015 to US$1 ,044,952 as at 31 December 2016 and net assets of US$3,352,984 as at 31 December 2015 increased to US$3 ,398,250 as at 31 December 2016.

PRINCIPAL ACTIVITIES

Forum for Agricultural Research in Africa (FARA) is an umbrella organization bringing together and forming coalitions of major stakeholders in agricultural research and development in Africa. The principal activity of FARA is to facilitate and coordinate agricultural research by playing a major advocacy role in agricultural research and development, developing functional partnerships and strategic alliance and facilitating exchange and dissemination of information and knowledge in Africa.

APPROVAL OF THE FINANCIAL STATEMENTS

The financial statements of Forum for Agricultural Research in Afr~·ca FARA), as identified in the first paragraph, were approved by the board of directors on .. .. rzF... . .. ...... , 2011 and signed on their behalf by:

~ BO CHAIR -

EXECUTIVE DIRECTOR

3

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF

FORUM FOR AGRICULTURAL RESEARCH IN AFRICA (FARA)

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Forum for Agricultural Research in Africa ("the Company"), which comprise the statement of financial position at 31 December 2016, and the statements of financial performance, changes in net assets, cash flows and comparison of budget and actual for the year then ended, and the notes to the financial statements which include a summary of significant accounting policies and other explanatory notes, as set out on pages 7 to 27.

In our opinion, these financial statements give a true and fair view of the financial position of Forum for Agricultural Research in Africa (FARA) at 31 December 2016, and of its financial performance and cash flows for the year then ended in accordance with International Public Sector Accounting Standards (IPSAS) and in the manner required by the Companies Act, 1963 (Act 179).

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other Information

The Directors are responsible for the other information. The other information comprises the information included in the Annual Report and the Directors' Report as required by the Companies Act, 1963 (Act 179) but does not include the financial statements and our auditor's report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors for the Financial Statements

The Directors are responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards and in the manner required by the Companies Act, 1963 (Act 179), and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

KPMG, a partnership established under Ghanaian law, is a member of the KPMG network of independent member firms affiliated with KPMG International Coorperative ("KPMG International"), a Swiss entity.

N.A. Dodoo A. K. Sarpong N.A. Ayivor J. Coleman

4

E.0 . Asiedu N.D. Harlley D.S. Adoteye A.O. Akoto K. Frempong-Kore F. N. Dennis


FORUM FOR AGRICULTURAL RESEARCH IN AFRICA (FARA}- CONT'D

In preparing the financial statements, the Directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

The Directors are responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of the Directors' use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. ·


NA Dodoo A.K. Sarpong NAAyivor J. Coleman

5

E.0 . Asiedu N.D. Harlley D.S. Adoteye A.O. Akoto K. Frempong-Kore F. N. Dennis


FORUM FOR AGRICULTURAL RESEARCH IN AFRICA (FARA)- CONT'D

Report on Other Legal and Regulatory Requirements

Compliance with the requirements of Section 133 of the Companies Act, 1963 (Act 179)

We have obtained all the information and explanations which, to the best of our knowledge and belief were necessary for the purpose of our audit. In our opinion, proper books of account have been kept, and the statements of financial position and profit or loss and other comprehensive income are in agreement with the books of account.

The engagement partner on the audit resulting in this independent auditor's report is Nathaniel D. Harlley (ICAG/P/I056).

0. ... t .. r.:E.: ........................................... . For and on behalf of: KPMG: (ICAG/F/2017/038) CHARTERED ACCOUNTANTS 13 YIYIWA DRIVE, ABELENKPE

.:?:-.f ... ~ .............. , 2017


N.A. Dodoo A.K. Sarpong N.A. Ayivor J . Coleman

E.O. Asiedu N.D. Harlley D.S. Adoteye A.O. Akoto K. Frempong-Kore F. N. Dennis

6


STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2016 (All amounts are expressed in US dollars unless otherwise stated)

Note 2016 2015 Non-current assets Property, plant and equipment 9 42,735 l 04,523

Current assets Inventories 13 14,617 14,687

Receivables from non-exchange transactions 11 41,402 1,714,162

Prepayment 14 110,250 138,500

Advances 12 1,156,574 2,086,469

Cash and cash equivalents 10 5,107,808 6,774,847

Total current assets 6,430,651 10,728,665

Total assets 6,473,386 I 0,833,188

Current liabilities Accrued expenses and payables 15 1,415,790 2,465 ,706

Temporary Restricted Funds 16 1,659,346 5,014,498

3,075,136 7,480,204

Net assets 17 3,398,250 3,352,984

Represented by:

Reserves 17 2,353,298 2,353,298

Accumulated Funds 17 1,044,952 999,686

3,328,25Q 3,352,281

EXECUTIVE DIRECTOR

7


STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 31 DECEMBER 2015 (All amounts are expressed in US dollars unless otherwise stated)

Revenue Donor Grants Secretariat activities

Programmes activities

Sub-total

Other revenue

Total revenue

Less Expenditure Secretariat activities

Programmes activities

Total expenditure

Surplus/(Deficit)

Note

4

5

6

7

8

2016

2,265,623

5,990,686

8,256,309

482,771

8,739,080

2,703,128

5,990,686

8,693,814

The notes on pages 12 to 27 are an integral part of these financial statements

2015

1,812,558

10,545,054

12,357,612

662,985

13,020,597

4,744,432

I 0,545,054

15,289,486

(2,268,889)

8

Forum for Agricultural Research in Africa (A Company Limited by Guarantee) Annual Report for the year ended 31 December 2016

STATEMENT OF CHANGES IN NET ASSETS FOR THE YEAR ENDED 31 DECEMBER 2015 (All amounts are expressed in US dollars unless otherwise stated)

2016 Note

Reserves Accumulated fund Total

Balance at 1 January 2016 2,353,298 999,686 3,352,984

Changes in net assets for the year Surplus for year ended 45,266 45,266

Balance at 31 December 2016 2,353,298 1,044,952 3,398,250

2015 Note Reserves Accumulated fund Total

Balance at 1 January 2015 2,353,298 3,268,575 5,621,873

Changes in net assets for the year Deficit for year ended (2,268,889) (2,268,889)

Balance at 31 December 2015 2,353,298 999,686 3,352,984


9


CASH FLOWS STATEMENT THE YEAR ENDED 31 DECEMBER 2016 (All amounts are expressed in US dollars unless otherwise stated)

Surplus/(Deficit) for the year

Depreciation for the year

Write off of property, plant and equipment

Gain on disposal of property, plant and equipment

Decrease in inventory

Decrease/(lncrease) in receivables

Decrease in advances

(Decrease) in payables and accruals

Net cash used in operating activities

Cash flows used in investing activities Acquisition of property, plant and equipment

Proceeds from sales of property, plant and equipment

Decrease in cash and cash equivalents

Movement in cash and cash equivalents

Cash and cash equivalents at beginning of the year

Decrease in cash and cash equivalents

Cash and cash equivalents at end of the year

Analysis of Cash and Cash Equivalent

Cash and bank balance

Note

9 (c)

9 (b)

10

2016

45,266

.58,348

9,818

(683)

70

1,701 ,010

929,895

(4,405,068)

---------------

(1 ,661 ,344)

------------

(6,378)

683

---------(5,695)

----------

(1 ,661,032)

6,774,847

(1,667,039)

5,1Q7,8Q8

5,1_07,808


2015

(2,268,889)

91,395

(10,872)

3,244

(1 ,258,046)

887,736

(6,663,201)

---------------

(9,218,632)

------------

(30,782)

10,872

---------(19,910)

----------

(2,238,5~2)

16,013,389

(9,238,542)

6,174,841

6,774,847

10


STATEMENT OF COMPARISON OF BUDGET AND ACTUAL FOR THE YEAR ENDED 31 DECEMBER 2016

Below is the analysis of budget and actual expenditure for the year ended 31 December 2016. The budget and actual analysis provide the key projects undertaken by FARA. These projects drive the business of the Organisation

Description Budget Actual Variance Budget 2016 2016 2016 Spent

Secretariat Activities US$ US$ US$ % Strategic Priorities activities 579,640 241,358 332,282 43

Secretariat Support Functions & Operations 895 ,770 893 ,557 2,213 100

Staff Costs 1,1 89,998 1,221 ,752 -31 ,754 103

Sub total - MDTF 2,665,408 2,362,667 302,741 89

Secretariat (Non-MDTF) 363,514 340,460 23,054 94 -

Total Secretariat 3,028,922 2,703,127 325,795 89

Programme Activities (by Project)

CRP 1.2 Humid Tropics 992,526 1,000,773 -8,247 101

PARI 1,022,144 1,121 ,625 -99,481 110

Prointense Africa 77,568 19,3 85 58,183 25

UniBRAIN 1,649,755 1,664,441 -14,686 101

Building Platform for African-European 2,275,500 1,533,736 741 ,764 67

Partnership for ARD (PAEPARD)

ECoSIB 389,222 370,317 18,905 95

YPARD 4,148 318 3,830 8

Africa Brazil Agric Innovation Marketplace 150,000 27,466 122,534 18

Biomass Web 236,106 127,513 108,593 54

Building Nuitritious Food Basket (BNFB) 80,742 35,120 45,622 44

CCARDESA Grant 6,855 6,855 - 100

Innovation Systems 83,137 83 ,137 - 100

Total Programme Activities 6,967,703 5,990,686 977,017 86

GRAND TOTAL 9,996,625 8,693,813 886,353 87


Additional information about the budget and a reconciliation of amounts as per the above statement is disclosed in note 24 to the financial statements.

Budget compared to actual spend is only required to be disclosed by IPSAS 24 when budgets are publically available. FARA has chosen to disclose this information voluntarily to enhance the transparency of its financial statements and the accountabi I ity of management for de! ivering the FARA services.

11

Forum/or Agricultural Research in Africa (A Company Limited by Guarantee) Annual Report/or the year ended 31 December 201 6

NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016

1. GENERAL INFORMATION

The Forum for Agricultural Research in Africa (FARA) is a not-for-profit public international institution in accordance with international public law and is incorporated under the Laws of Ghana. FARA is the apex continental organization responsible for coordinating and advocating for agricultural research for development (AR4D). It serves as the technical arm of the Africa Union Commission on matters concerning agriculture science, technology and innovation. FARA maintains offices in the United Kingdom and the United States of America.

FARA is a Company registered and domiciled in Ghana. The address of the Company ' s registered office can be found on page 2 of the annual report. The principal activity of FARA is to facilitate and coordinate agricultural research by playing a major advocacy role in agricultural research and development, developing functional partnerships and strategic alliance and facilitating exchange and dissemination of information and knowledge in Africa.

2. STATEMENT OF COMPLIANCE AND BASIS OF PREPARATION

a. Statement of compliance

The financial statements have been prepared in accordance with International Public Sector Accounting Standards (IPSAS) and its interpretations adopted by the International Accounting Standards Board (IASB) and the rules of the FARA.

b. Basis of preparation

The financial statements have been prepared under the historical cost convention except where otherwise stated in the accounting policies below. The financial statements are prepared on an accrual basis. The cashflow statement is prepared using the indirect method. The accounting ·policies have been consistently applied to all the years presented. In the absence of an International Public Sector Accounting Standard that specifically applies to a transaction, other event or condition, management uses its judgement in developing and applying an accounting policy that results in information that is relevant to the decision-making needs of users so that the financial statements:

(i) represent faithfully the financial position, financial performance and cash flows of the entity; (ii) reflect the economic substance of transactions, other events and conditions and not merely the legal

form ; (iii) are neutral , i.e. free from bias; (iv) are prudent; and (v) are complete in all material respects.

The financial statements are prepared on an accrual basis. The cash flow statement is prepared using the indirect method. The accounting policies have been consistently applied to all the years presented.

The financial statements are presented in US dollars (US$), which is the company' s functional and presentational currency.

12


(All amounts in the notes are expressed in US dollars unless otherwise stated)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of these financial statements are set out below.

a. Use of estimates and judgement

The preparation of financial statements in conformity with IPSAS requires management to make judgements, estimates and assumptions that affect the application of po I icies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

Key estimates management has made in preparing the financial statements concerns the lives property, plant and equipment which are at least that set out in the relevant notes

b. Revenue

Grants received are recognized at their gross basis over the period necessary to match them with the costs that they are intended to compensate, and when there is reasonable assurance that the organization will comply with the conditions attached to the grants, but not prior to the formal grant approval. These grants are separately presented in the statement of financial performance as revenue. Grants may be restricted (specific purposes) or unrestricted (general or administrative purposes). Restricted grants attached to specific projects and programmes are recognised as revenue when actually expended and the unspent portion is deferred as donors' payable for the future year depending on the duration of the project or activity.

Unrestricted grants are recognised as revenue from donations when the amount is confirmed or received. Any excess ofrevenue over expenditure arising from unrestricted grant is transferred the Accumulated fund. Other revenues are recognised at the time ofreceipt. Such revenues include revenue generated by providing services to third parties, interest earned from the Secretariat' s fund in Bank accounts, administrative overhead charges on time-bound projects, proceeds from the sale of the FARA 's properties and any other miscellaneous items.

c. Expenditure

Expenditure comprises of costs incurred directly for the activities of FARA. Expenses are recognised when incurred Secretariat expenses are unrestricted core funded minty by the MDTF while Programme expenses are those bilateral restricted activities.

d. Foreign currency translation

Functional and presentation currency The financial statements are presented in United States Dollars (US$) which is the company ' s functional currency.

Transactions and balances Transactions during the year in currencies other than the reporting currency are converted into United States Dollars at the approximate rates of exchange prevailing at the date of the transactions. Monetary assets and liabilities denominated in currencies other than US dollars at the reporting date are translated into US Dollars at the rates of exchange ruling as at that date. The resulting gains or losses are recognised in the statement of financial performance.

13

Forum for Agricultural Research in Africa (A Company Limited by Guarantee) Annual Report/or the year ended 31 December 2016

(All amounts in the notes are expressed in US dollars unless otherwise stated)-

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONT'D

e. Property, plant and equipment

Property, plant and equipment are measured at acqu1s1hon cost less acc~mulated depreciation and any accumulated impairment losses. Costs include expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management..

Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to company and the cost of the item can be measured reliably. The carrying amount of a replaced part is derecognized. The costs of day-to-day maintenance, repair and servicing expenditures incurred on property and equipment is charged to the statement of financial performance during the financial period in which they are incurred

Depreciation is calculated on a straight-line basis at rates estimated to write off the cost of each asset over the estimated term of its useful life. No depreciation is charged in the year of disposal. The annual rates used for this purpose are as follows:

Computers Furniture and fittings Office equipment Motor vehicles

33.33% 20% 20% 25%

Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to company and the cost of the item can be measured reliably. The carrying amount of a replaced part is derecognized. The costs of day-to-day maintenance, repair and servicing expenditures incurred on property and equipment is charged to the statement of financial performance during the financial period in which they are incurred

f. Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short term highly liquid investments with original maturities of three months or less, which are readily convertible to known amounts of cash and are subject to insignificant risk of changes in value .

g. Receivables from exchange and non-exchange transactions

Accounts receivable represent receivables from exchange transactions and recoverable from non-exchange transactions.

Receivables from exchange transactions are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. A provision for impairment of receivables is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables.

Receivables from non-exchange transactions comprises receivables from donors based on signed agreements for which it is probable that the inflow will occur and future economic benefits or service potential will flow to the entity and the fair value of the assets can be measured reliably.

Receivables/recoverable are recorded at their estimated realizable value after providing for doubtful and uncollectible debts.

14




h. Advances and prepayments

Advances represent disbursements to implementing partners which have not been retired as at the year end and staff personal Joans and advances not yet repaid or retired. Prepayments represent payments for rent which have not been fully utilised at the year end.

i. Inventories

Inventories are measured at the lower of cost and current replacement cost. Inventories include office supplies, and other office consumables. Cost is determined using actual cost. Current replacement cost is the cost the entity would incur to acquire the inventory at the reporting date.

j. Financial Instruments

• Classification

All financial assets of the organisation are classified as loans and receivables, based on the purpose for which the financial assets were acquired.

• Recognition and measurement

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market . These are initially recognised at fair value plus transaction costs and subsequently carried at amortised cost using the effective interest method.

Financial liabilities are measured at amortised cost.

• 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 offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Income and expenses are presented on a net basis when permitted by the accounting standards, or for gains and losses arising from a group of similar transactions.

• Impairment

The organisation assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only 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. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. 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. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or Joss.

15




• Impairment

If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. 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 reversal of the previously recognised impairment loss is recognised in profit or loss.

k. Accounts payable and accruals

FARA payables include payables to donors, accruals, provisions and others. Payables are recognized initially at fair value and subsequently measured at amortised cost using the effective interest method.

Accounts payables to donors (Restricted Funds)

This includes grants received from donors during the year but unexpended at year end. This may be as a result of donations received in advance for operations but yet to start and unexpended grant balances in cases of specific project funding

Accruals FARA accruals and provisions are made up of the following:

• Accruals represent amounts due at the year-end as a result of services already received but for which payment has not been made.

1. Others

Others represents staff provisions and amounts due to third parties for services they rendered or materials they supplied for which payments have not been made. Provision is made for unutilised leave entitlements of all staff and a proportion of the repatriation cost for international stliff, based on the percentage of each individual staff member's contracts covered up to the date of the statement of financial position.

Accounts payables 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.

m. Employee benefits

FARA has defined contribution plans. A defined contribution plan is a pension plan under which the entity pays fixed contributions into a separate entity and has no legal or constructive obligations to pay further contributions. Obligations for contributions to defined contribution schemes are recognised as an expense in profit or loss in periods during which services are rendered by employee .. Funds contributed by FARA in addition to staff voluntary contribution are managed by Carey Pensions and Benefit Limited as Trustees of the Global Umbrella Retirement Plan. For professional staff, FARA contributes a percentage of the staff's basic salary to the Retirement benefit scheme depending on the age of the respective staff as follows: • 45 years and above 20% • 40 - 44 years 16% • 35 - 39 years 12% • Below 35 years 8%

For general staff category, FARA contributes 14.1 % while the staff contributes 7.9%.

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n. Overhead cost recovery

FARA's administration cost recovery rates are as follows:

• Services provided to Partners and Hosted Programmes - a rate of 20% on the actual transactions handled by the Secretariat.

• Services provided to programmes directly managed by FARA - a rate of 18% on the actual transactions handled by the Secretariat.

• Pass-through funds - a rate of 5% on all pass-through funds. However, negotiated overhead rates with donors on specific projects include:

• PAEPARD- 7% • UniBRAIN - 7% • CSA-7%

o. Leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases sue~ as rentals are charged to the statement of financial performance on a straight-line basis over the period of the lease. FARA does not have any finance leases

p. Events after the Reporting Period

Events subsequent to the reporting date are reflected in the financial statements only to the extent that they relate to the year under consideration and the effect is material.

q. Comparatives

Where necessary the comparative information has been changed to agree to the current year presentation.

r. Financial risk management

-FARA seeks to minimise its exposure to financial risk. It uses only non-derivative financial instruments as part of its normal operations. These financial instruments include bank accounts, certificates of deposit, accounts receivable and accounts payable.

Market risks

Market risk is the risk that changes in market prices, such as foreign excha!)ge rates and interest rates will affect the company's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Foreign currency risk

The company's exposure to currency risk on purchases other than the functional currency is not significant. The currencies in which these transactions primarily are denominated is Ghana cedi. Foreign exchange gains and losses resulting from settlement, or translation of year end monetary balances denominated in foreign currencies are recognized in the statement of financial performance.

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(All amounts in the notes are expressed in US dollars unless otherwise stated)'


Interest rate risk

Interest rate risk arises from possible impact of changes in the interest rates on the value of financial instruments. The company's exposure to the risk of changes in market interest rates relates primarily to its fixed deposit with floating interest rates.

All financial instruments are recognised in the statement of financial position at their fair values.

4. DONOR GRANTS - SECRETARIAT CORE ACTIVITIES

Multi Donor Trust Fund

USDA

5. DONOR GRANTS - PROGRAMME ACTIVITIES

Funding received during the year SSACP/Humidtropics

PARI

PAEPARD

PSTAD

ProlntenseAfrica

ECoSIB

Biomass Web

Africa Brazil (EMBRAPA)

NORAD CSA

YPARD-GFAR

BMZ/ZEF - TIGA

Total Funding received during the year Add Net change in unutilised grant (Note 16)

TOT AL REVENUE

2016

2,265,623

2,265.623

2016

654,082

1,453,990

18,000

269,500

190,023

5,500

64,593

2,655,688

3,334,998

5,990,686

=======

2015

1,788,074

24,484

1,812,558

2015

2,764,275

899,080

1,115,554

641,312

53,414

99,200

94,854

151 ,930

320,285

12,000

20,000

6,171,904

4,373,150

10,545,054 =======

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6. OTHER REVENUE

Sundry income*

Overhead cost recovery

Interest income

2016

257,714

221,182

3,875

482,771

2015

117,281

543,991

1,713

662,285

*Sundry income includes revenue generated from activities such as renting of conference room to partners, sales of conference materials to participants among others.

7. SECRETARIAT ACTIVITIES EXPENSES

2016

Core Functions/Strategic Priorities 247,358 Secretariat Support Functions/Operation 893 ,557

Staff Costs 1,221,753

Other Non-MDTF 340,460

2.703,-128


8. PROGRAMME EXPENSES

2016

PSTAD

PARI 1,121,625

UniBRAIN 1,664,441

SSACP/HumidTropics 1,000,7-73

PAEPARD 1,533,736

Prointense Africa 19,385

ECoSIB 370,317

CCARDESA 6,855

GFAR/FAO 318

NORAD CSA

BIOMASS 127,513

Africa Brazil (EMBRAPA) 27,466

TIGA

BMGF/CIP- BNFB 35,120

Innovation System 83,137

TOTAL 5,220,686

2015

1,338,033 695,581

1,944,504

766,314

4,744,432

2015

755,837

536,936

4,628,878

2,238,690

1,672,594

12,787

187

19,832

448,980

72,038

141,335

16,960

10,545,054

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9. PROPERTY, PLANT AND EQUIPMENT

Furniture 2016 and

Computers Fittings Equipment

Cost At 1 January 2016 161,360 70,768 286,380 Additions 6,378 Write Offs (44,734) (15,080) (18,444) Disposal (9,176) - (2,940) --At 31 December 2016 113,828 55,688 264,996

Accumulated Depreciation At 1 January 2016 159,210 42,485 268,566 Charge for the year 3,618 5,892 13,542 Write Offs (43,983) (6,013) (18,444) Disposal (9,176) - (2,940) --At 31 December 2016 109,669 42,364 260,724

Net book value At 31 December 2016 ~ ll.ill 4,272

2015 Furniture

Computers and Fittings Equipment

Cost At 1 January 2015 177,693 39,986 286,980 Additions 30,782 Disposal (16,333) - (600) ---At31 December 2015 161,360 70,768 286,380

Accumulated Depreciation At 1 January 2015 169,653 33,888 247,745 Charge for the year 5,890 8,597 21,421 Disposal (16,333) - (600) --At31 December2015 159,210 42,485 268,566 -

Net book value At 31 December 2015 ~ llll4

Motor Vehicles Total

298,623 817,131 6,378

(78,258) (12,116)

298,623 733,135

242,347 712,608 35,296 58,348

(68,440) (12.116)

277,643 690,400

~ ilm

Motor Vehicles Total

321,424 826,083 30,782

(22,801) (39,734) 298,623 817,131

209,662 660,948 55,486 91,394

(22,801) (39,734) 242,347 712,608

1Q4.523

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(b) Disposal of Property and Equipment

Cost of assets Accumulated fund

Net Book Value Proceeds

Profit on disposal

(c) Net Assets written off

Cost of assets Accumulated fund

Loss on write off

2016

12,116 (12,116)

---------

683

683

2016

78,258 (68,440)

9,818

2015

39,734 (39,734)

10,872

10,872 -----

2015

The assets written off are assets capitalised by the entity in prior years that did not meet the entity's capitalisation threshold policy of US$1,000.

10. CASH AND CASH EQUIVALENT

Cash at bank Cash in Hand

TOTAL

11. RECEIVABLE FROM NON EXCHANGE TRANSACTIONS

EC/IFAD Global Forum for Agricultural Research

TOTAL

2016

5,084,J45 23,463

------------5,107,808 =======

2016

41,402

41,402 -----

2015

6,749,057 25,790

------------6,774,847 =======

2015 1,672,760

41,402 -----------

1,714,162 =======

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12. ADVANCES (By Programme) 2016

MDTF -

CORAF/WECARD 162,560

ASARECA 43,764

CCARDESA 285,490

UniBRAIN 82,382

PAEPARD 270,073

SSACP 136,661

Other miscellaneous 29,958

Sub-total 1,010,888

Staff Advances 145,686

------------Total 1,156.574

13. INVENTORIES

Inventories comprise of office supplies and other office consumables balance.

Office Supplies Fuel stock Account Total

14. PREPAYMENTS

20-16

12,481 2,136

liill

2015

249,666

234,475

285,490

640,757

220,187

240,711

113,129

1,984,415

I 02,054

------------2,086,462

2015

11,911 2,776

~

This is mainly rent prepaid. FARA rents office space and a house for the Executive Director in Accra under tenancy agreements. Included in the tenancy agreement is a requirement to pay the landlord in advance for the entire period, which is expensed annually on a pro-rata basis

15. ACCRUED EXPENSES AND PAY ABLES

Staff accrued costs Audit Fees Sundry accruals Accounts payable

2016

113,596 58,098

1,093,221 150,875

1,415,720

2015

183,128 103,533

2,014,756 164,289

2,465,706

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16. TEMPORARY RESTRICTED FUNDS

Temporarily restricted funds are funds used for specific purposes and are mainly from the core rogramme donors. The grant agreements with the donors explicitly state the purpose for which the grants are awarded. Such grant agreements also specify the circumstances under which unspent grants are returned to the donors. At the balance sheet date, unspent temporarily restricted funds amounted to US$1,659,346 (2015: US$5,014,498). The details of the restricted fund is as detaile

0

d below:

SCHEDULE OF TEMPORARY RESTRICTED FUNDS UNUTILISED

Opening Received/ Amount Un utilised Net Change Balance Receivable Utilised grants during the

l-Jan-16 2016 2016 31-Dec-16 year SSACP/Humidtraopics/Innovation System 1,633,639 (1 ,083 ,910) 549,729 1,083 ,910

PAEPARD 915,624 1,453,990 (1,533 ,736) 835,878 79,746

PSTAD 177,100 177,100

UniBRAIN 1,673,992 (1 ,664,441) 9,551 1,664,441

Africa Adapt 16,812 16,812

SADC MAPP/CCARDESA 34,619 (6,855) - 27,764 6,855

PARI 362,144 654,082 (1 ,121 ,625) (105,399) 467,543

ProintenseAfrica 40,627 18,000 (19,385) 39,242 1,385

ECoSIB 99,013 269,500 (370,317) (1 ,804) 100,817

Biomass 22,749 190,023 (127,513) 85,259 (62,510)

Africa Brazil (EMBRAPA) 28,893 (27,466) 1,427 27,466

YPARD- GFAR (1 ,352) 5,500 (318f 3,830 (5 ,182)

BMGF/CIP - BNFB 64,593 (35,120) 29,473 (29,473)

BMZ/ZEF - TIGA 10,638 10,638

5,014,498 2,655,688 (5,990,686} 1,679,500 3,334,998

FUNDS RETURNED

UniBRAIN (20,154}

TOTAL FUNDS RETURNED (20,154}

TOT AL RESTRICTED 1,652,346

17. NET ASSET

i. Reserves

FARA' s reserve is a pool of unspent/unallocated unrestricted funds set aside over a period of time to meet future obligations or risks or to broaden and stabilize the financial base of the organization. It is the accumulated operational surplus accrued after netting off secretariat earnings ( other than donor funds) against actual expenditure which are not donor funded expenditure represents reserve.

ii. Accumulated fund

These are funds which are available to be used for any legal purposes at the discretion of the Executive Board. 23

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18. FINANCIAL INSTRUMENTS

All financial instruments to which FARA is a party are recognised in the financial statements.

Credit risk

In the normal course of business, FARA incurs credit risk from accounts receivable and transactions with banking institutions. FARA manages its exposure to credit risk by:

• Holding bank balances and short-term deposits (demand deposits) with Ghanaian and United States-registered banking institutions; and

• Maintaining credit control procedures over accounts receivable.

As at 31 December 2016, the total amount of cash and cash equivalents was US$5,107,808 (2015: US$ US$6,774,847). These amounts are held with reputable banks in Ghana and Citibank NA, New York, USA. Receivables including advances to staff and prepayments as at 31 December 2016 amounting to US$1,308,226 (2015: US$3,939,131).

The maximum exposure as at 31 December 2016 was equal to the total amount of bank balances, and receivables disclosed in the statement of financial position. FARA does not r_equire any collateral or security to support financial instruments and other receivables it holds due to the low risk associated with the realization of these instruments.

Foreign currency exchange rate risk

FARA operates separate bank accounts in Euro, Dollar and Ghanaian cedis. FARA incurs currency risk as a result of the conversion of foreign currency balances held in these bank accounts to United States dollars at period end. Significant amount ofrevenues and expenses are settled in USD therefore management believes that FARA is not materially exposed to currency risk. As a result, FARA does not hedge its foreign currency exposure. Foreign currency transactions are translated to United States dollars at exchange rates at the dates of the transactions.

19. FINANCIAL INSTRUMENTS

Interest rate risk

Interest rate risk arises from possible impact of changes in the interest rates on the value of financial instruments. FARA does not have assets and liabilities that are dependent on interest rate levels therefore, management believes that FARA has no exposure to interest rate risk.

Fair values

As at 31 December 2016, the carrying amounts approximate the fair values for all financial instruments held by FARA.

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Forum/or Agricultural Research in Africa (A Company Limited by Guarantee) Annual Report/or the year ended 31 December 2016


20. RELATED PARTY TRANSACTIONS

FARA is governed by a board of directors whose members are entitled to payment of honoraria and other travel related expenses when participating in FARA meetings or any other FARA business. The list of directors during the year under review is listed on page l of this report.

Except for the Executive Director, who is remunerated by the organisation, no other board member received any remuneration or loans other than the entitlements indicated above during the year under review. For the year under review, the Executive Director's total emoluments were US$ 192,616 (2015: US$ 206,990).

21. COMMITMENTS

There were no outstanding capital commitments at the reporting date and at 31 December 2015.

22. CONTINGENT LIABILITIES

There were no contingent liabilities at the reporting date and at 31 December 2015 .

23. EXCHANGE CONTROL

All remittances from Ghana are subject to the approval of the exchange control authorities

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Forum for Agricultural Research in Africa (A Company Limited by Guarantee) Annual Report f or the year ended 31 December 201 6

(A ll amounts in the notes are expressed in US dollars unless otherwise stated)_

24. NOTES TO THE STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS

Basis of preparation

The budget information has been prepared on an accrual basis since it is the policy of FARA to apply the accrual basis of accounting for its budgets during the fiscal year. The accrual basis of accounting is one under which transactions, other events and conditions are recognized when they occur (and not only when cash or its equivalent is received or paid). Therefore, the concept recognizes revenue when earned and expenses when incurred.

Key assumptions include:

Funding available throughout the periods

Donors interest in sponsoring programmes of the Secretariat

Budget approval

The Forum for Agricultural Research in Africa (FARA) is a non-profit public international institution in accordance with public international law. FARA is funded primarily within the framework of a 5-Year Medium Term and Operational Plan (MTOP) budget by a group of donors under the Multi-Donor Trust Fund (MDTF), donors aligned to but not signed up to, the MDTF, development agencies, foundations and private enterprises for specific projects, etc.

FARA as a Forum is governed by the General Assembly whose functions and powers include among others : "to approve and ratify agreements, contracts, policies, programmes, new members, protocols, bye-laws, budgets, financial statements, audit reports, the membership fee and seat of FARA".

The functioning of the Forum between the General Assemblies is entrusted to an elected board of directors whose functions according to Section 8.3 b (ii) of the FARA Constitution, include: "recommends for approval or ratification by the General Assembly, policies, programmes, budgets, financial statements, audit reports, agreements, contracts, protocols, bye-laws, new members, and the membership fees". The board of directors also reviews, approves and establishes the annual plan of work while the Secretariat (through its Executive Director) draft an annual work plan and associated budget and report on progress made to the board of directors and as appropriate to the General Assembly.

The approval of the Budget by General Assembly (through the Board of Directors) empowers the Secretariat:

• to commit and authorise expenditures and to make all payments to be borne by the FARA, for the purposes assigned and within the limits of the appropriations and the commitment authority, as the case may be;

• to receive the income entered in the Budget, together with any other resources accruing to FARA in respect of its activities

Presentation of Budget Information in Financial Statements (continued)

Programme Activities (Projects)

The projects budgets are approved by the donors as contained in the signed contracts and agreements covering each project.

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24. NOTES TO THE STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS - CONT'D

Comparison of budget and actual and also at the level of projects

FARA prepares its financial statements on an accrual basis. The budget for the entity is usually linked to programmes which are implemented by partners. The Statement of Financial Position, Statement of Financial Performance, Statement of Changes in Net Assets and Cash Flow Statement are prepared on a full accrual basis. FARA budget and financial statements are therefore prepared using same bases. To enable users and funders to derive the needed benefit and make this presentation useful, management has decided to present the comparison of budget and actual expenditure. This form of presentation as indicated is to ensure management achieves the reporting requirement of IPSAS 24 and also meets the needs of stakeholders within the forum for effective decision making.

Explanation of key variances

Secretariat Activities: Core Functions activities low burn rate could be attributable to late approval of the procurement plan as most activities here include procurement of consultants.

Staff cost budget over was due to non-realisation of funds expected from shared staff cost under MDTF (such as M & E Lead Specialist for services to Partner organisations).

Programme Activities:

CRPl.2 Humid Tropics, PARI and UNIBRAIN expenditures include previous year activities implemented and paid for in 2016.

Prointense Africa did not have much activities during the year.

PAEPARD advances granted to some partners are yet to be accounted for and the balance form part of the advances balance on the balance sheet.

YPARD expenditure is made up of the cost of an intern who was recruited in November 2016 hence the low burn rate.

Africa Brazil Agric Innovation Marketplace main activities for the year 2016, that is Marketplace Forum event, was postponed till February 201 7.

Biomasweb first tranche funds were released to project partners late in the year due to late signing of the agreement hence the second tranche will be disbursed in 2017 after justification of the first tranche advance.

BNFB project activities actually started late in the year due to late signing of the agreement and some of the activities carried forward into 2017.

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ANNEX 1

List of abbreviations and acronyms

AFAAS

AtDB

ASARECA

CCARDESA

CORAF/WECARD

CTA

DANIDA

EC

EMBRAPA

ENDA

FARA

FAO

GFAR

IDRC

IDS

!FAD

IITA

IPSAS

MDTF

NASRO

NORAD

PAEPARD PAR! PSTAD

SABIMA

SADC/FANR

SDC

SFSA

SSACP

UniBRAIN

African Forum for Agricultural Advisory Services

African Development Bank

Association of Strengthening Agricultural Research in East and Central Africa

Center for the Coordination of Agricultural Research and Development in Southern Africa -Conseil Ouest et Centre Africain pour la Recherche et le Developpement Agricoles/West and Central African Council for Agricultural Research and Development The Technical Centre for Agricultural and Rural Cooperation

Danish International Development Agency

European Commission

The Empresa Brasileira de Pesquisa Agropecuaria (Brazilian Enterprise for Agricultural Research) Environmental Development Action in the third World

Forum for Agricultural Research in Africa

Food & Agriculture Organization

Global Forum for Agricultural Research

International Development Research Center

Institute for Development Studies

International Fund for Agricultural Development

International Institute of Tropical Agriculture

International Public Sector Accounting Standards

Multi-Donor Trust Fund

North African Sub Regional Organisation

Norwegian Agency for Development Cooperation

Platform for African European Partnership for Agricultural Research & Development Program of Accompanying Research for Agricultural Innovation Promotion of Science & Technology for Agricultural Development

Strengthening Capacity for Safe Biotechnology Mahagement in Sub-Sahara Africa

Southern Africa Development Cooperation/Food Agriculture and Natural Resources

Swiss Agency & Development Cooperation

Sygenta Foundation for Sustainable Agriculture

Sub Sahara Africa Challenge Programme

Universities, Business and Research in Agricultural Innovation

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attenrion: mr. robert degraft-hru1son

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