e) Foreign currency translation
Transactions in currencies other than the entity’s measurement and reporting currency (EUR) are converted at the average monthly rates of exchange. Year-end balances in other currencies are converted at the prevailing rates of exchange at the balance sheet date. Resulting exchange differences are recognised in the statement of operations. The following are the principal rates of exchange used at the end of the year to revalue the balance sheet items to EUR for reporting purposes:
h) Expenditures incurred for projects and activities
The annual action plan and budget as well as the revised budgets are approved by the Board. They include funding for projects subcontracted to partners (see point g) and current expenditures required (mainly via vendors) to achieve the objectives of the year. All expenditures incurred on behalf of a project or for any activity of DNDi are recorded on an accrual basis.
USD CHF GBP 100 CDF 100 INR 100 KES 100 JPY 100 BRL 0.9152 0.9245 1.3563 0.1017 1.3867 0.8967 0.7604 23.1027
0.8226 0.8315 1.2804 0.0915 1.2971 0.9146 0.6875 31.0965
i) Credit risk, market risk, and liquidity risk cash-flow management
DNDi’s liquid assets are maintained in cash, low-risk short-term deposits or capital-guaranteed investments. At the balance sheet dates, there are no significant concentrations of credit risk. Any form of speculation is prohibited. The main financial risk for DNDi is the volatility of foreign exchange rates that can affect the value of its holding in various currencies (USD, EUR, GBP, and CHF). DNDi is exposed to currency risk on donations received, projects expenditure and general and administrative expenses that are denominated in a currency other than the functional currency (EUR). These transactions are mainly denominated in EUR, CHF, USD, GBP, BRL, KES, INR, JPY, and AUD. DNDi ensures that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances. The diversity of fundraising currencies represents a ‘natural hedging’ mechanism (income in BRL, CHF, EUR, GBP, JPY, and USD).
Restricted public and private institutional donations based on annual or multi-year agreements are recorded, over the life of the agreement, as and when the milestones set out in the agreement are achieved. Unrestricted public and private institutional donations based on annual or multi-year agreements are recorded on an accrual basis over the life of the agreement. A reconciliation between donations committed to DNDi and income recognized in the statement of operation is shown in table 7.b. Other donations are recorded on a cash basis.
j) Tangible fixed assets
Tangible fixed assets are stated at cost in EUR less accumulated depreciation. Depreciation is charged to the statement of operations on a straight-line basis over the estimated useful lives of the tangible fixed asset items. The rates of depreciation used are based on the following estimated useful lives:
g) Funding committed to projects