45
BRACLIBERIA MICROFINANCE COMPANY LIMITED NOTES TO THE FINANCIAL STATEMENT For the year ended December 31, 2010
1.
Reporting entity BRAC Liberia Microfinance Company Limited, which was established in February of 2009, is a microfinance institution of BRAC Liberia. It was established to contribute to the economic rebuilding of Liberia by providing financial services to low-income entrepreneurs, mostly women, while serving as a means to improve the agriculture sector and micro businesses. BRAC Liberia Microfinance Company Limited began operations with five (5) branches in Monrovia - Sinkor, Paynesville, Barnesville, Caldwell, and New Kru Town - in April 2009, and has opened additional branches in Kakata (Margibi County) Voinjama, Kolahum, Foya (Lofa County) St. Paul, Logan Town, and Sinje(Montserrado County), Gbarnga, Suakoko (Bong County) Saclepea, Sanniquellie, Tapitaand Ganta (Nimba County).
2.
Basis of preparation (a) Basis of presentation of the financial statement These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and the Disclosure Guidelines for Financial Reporting by Microfinance Institution which guidelines are voluntary norms recommended by a consultative group in international donors including the Consultative Group to Assist the Poor (CGAP) and the member of the Small Enterprise Education and Promotion Network (SEEP). (b) Basis of measurement The financial statements have been prepared on the historical cost basis except for the following: •
Financial instruments at fair value through profit or loss are measured at fair value;
(c) Functional and reporting currency Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (United States Dollars). Major activities were measured in Liberian dollars and translated in USD. Use of estimates and judgments The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the applications of accounting policies and the reported amounts of assets, 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 recognized in the period in which the estimate is revised and in any future periods affected. In particular, information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amount recognized in the financial statements are described in the following notes: Notes 3(c) (iii) Notes 3(g)
Depreciation Provisions
Significant accounting policies The accounting policies set out below have been applied consistently to all periods presented in these financial statements. (a) Foreign currency transactions Transactions in foreign currencies are translated to the respective functional currency of the entity at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date.