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Gawad Kalinga

Community
Development
Foundation, Inc.
(A non-stock, non-profit
organization)
Financial Statements
As at and for the years ended June 30, 2014 and 2013
Independent Auditors Report

To the Board of Trustees of


Gawad Kalinga Community Development Foundation, Inc.
(A non-stock, non-profit organization)
Cheng Building, No. 212 Haig Street
Barangay Daang-Bakal, Mandaluyong City

Report on the Financial Statements

We have audited the accompanying financial statements of Gawad Kalinga Community Development
Foundation, Inc., which comprise the statements of assets, liabilities and fund balances as at
June 30, 2014 and 2013, and the related statements of support, donations and expenses, statements of
total comprehensive income, statements of changes in fund balances and statements of cash flows for the
years then ended, and a summary of significant accounting policies and other explanatory information.

Managements Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in
accordance with Philippine Financial Reporting Standards, and for such internal control as management
determines is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.

Auditors Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We
conducted our audits in accordance with Philippine Standards on Auditing. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditors judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entitys
preparation and fair presentation of the financial statements 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 entitys internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by management, as well
as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Independent Auditors Report
To the Board of Trustees of
Gawad Kalinga Community Development Foundation, Inc.
(A non-stock, non-profit organization)
Page 2

Opinion

In our opinion, the accompanying financial statements present fairly, in all material respects, the
financial position of Gawad Kalinga Community Development Foundation, Inc. as at June 30, 2014 and
2013, and its support, donations and expenses and its cash flows for the years then ended in accordance
with Philippine Financial Reporting Standards.

Report on Bureau of Internal Revenue Requirements

Our audits were conducted for the purpose of forming an opinion on the basic financial statements
taken as a whole. The supplementary information on taxes and licenses in Note 19 to the financial
statements is presented for purposes of filing with the Bureau of Internal Revenue and is not a required
part of the basic financial statements. Such supplementary information is the responsibility of
management and has been subjected to the auditing procedures applied in our audits of the basic
financial statements. In our opinion, the supplementary information is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

Isla Lipana & Co.

Geraldine Hammond-Apostol
Partner
CPA Cert. No. 83512
P.T.R. No. 0007723; issued on January 6, 2015 at Makati City
SEC A.N. (individual) as general auditors 0108-AR-3, Category A; effective until January 29, 2016
SEC A.N. (firm) as general auditors 0009-FR-3; effective until August 15, 2015
T.I.N. 112-071-151
BIR A.N. 08-000745-34-2013; issued on April 4, 2013; effective until April 3, 2016
BOA/PRC Reg. No. 0142, effective until December 31, 2016

Makati City
October 7 ,2015
Statement Required by Section 8-A, Revenue Regulations No. V-1

To the Board of Trustees of


Gawad Kalinga Community Development Foundation, Inc.
(A non-stock, non-profit organization)
Cheng Building, No. 212 Haig Street
Barangay Daang-Bakal, Mandaluyong City

None of the partners of the firm has any financial interest in Gawad Kalinga Community Development
Foundation, Inc. or any family relationships with its founder, executive directors or members of the
Board of Trustees.

The supplementary information required by the Bureau of Internal Revenue is presented in Note 20 to the
financial statements.

Isla Lipana & Co.

Geraldine Hammond-Apostol
Partner
CPA Cert. No. 83512
P.T.R. No. 0007723; issued on January 6, 2015 at Makati City
SEC A.N. (individual) as general auditors 0108-AR-3, Category A; effective until January 29, 2016
SEC A.N. (firm) as general auditors 0009-FR-3; effective until August 15, 2015
T.I.N. 112-071-151
BIR A.N. 08-000745-34-2013; issued on April 4, 2013; effective until April 3, 2016
BOA/PRC Reg. No. 0142, effective until December 31, 2016

Makati City
October 7, 2015
Statements Required by Rule 68, Part I Section 4,
Securities Regulation Code (SRC),
As Amended on October 20, 2011

To the Board of Trustees of


Gawad Kalinga Community Development Foundation, Inc.
(A non-stock, non-profit organization)
Cheng Building, No. 212 Haig Street
Barangay Daang-Bakal, Mandaluyong City

We have audited the financial statements of Gawad Kalinga Community Development Foundation, Inc.
as at and for the year ended June 30, 2014, on which we have rendered the attached report dated
October 7, 2015. The supplementary information shown in the Schedule of Receipts and Disbursements,
and Schedule of All Standards and Interpretations under Philippine Financial Reporting Standards
effective as at June 30, 2014, as additional components required by Part I, Section 4 of Rule 68 of the
SRC, is presented for purposes of filing with the Securities and Exchange Commission (SEC) and is not a
required part of the basic financial statements. Such supplementary information is the responsibility of
management and has been subjected to the auditing procedures applied in the audit of the basic financial
statements. In our opinion, the supplementary information has been prepared in accordance with Part I,
Section 4 of Rule 68 of the SRC.

Isla Lipana & Co.

Geraldine Hammond-Apostol
Partner
CPA Cert. No. 83512
P.T.R. No. 0007723; issued on January 6, 2015 at Makati City
SEC A.N. (individual) as general auditors 0108-AR-3, Category A; effective until January 29, 2016
SEC A.N. (firm) as general auditors 0009-FR-3; effective until August 15, 2015
T.I.N. 112-071-151
BIR A.N. 08-000745-34-2013; issued on April 4, 2013; effective until April 3, 2016
BOA/PRC Reg. No. 0142, effective until December 31, 2016

Makati City
October 7, 2015
Gawad Kalinga Community Development Foundation, Inc.
(A non-stock, non-profit organization)

Statements of Assets, Liabilities and Fund Balances


June 30, 2014 and 2013
(All amounts in Philippine Peso)

Notes 2014 2013

ASSETS

Current assets
Cash and cash equivalents 5 364,435,085 163,050,757
Advances to GK programs, net 6 336,643,871 278,774,612
Prepayments 19 240,000 -
Other receivables 7 497,904 6,157,010
Total current assets 701,816,860 447,982,379
Non-current assets
Property and equipment, net 8 317,907,113 125,429,523
Intangible assets, net 9 23,723,636 31,540,603
Prepayments 3,640,000 -
Advances to related parties 11 1,579,597 -
Total non-current assets 346,850,346 156,970,126
Total assets 1,048,667,206 604,952,505

LIABILITIES AND FUND BALANCES

Current liabilities
Accrued expenses and other current liabilities 10 19,891,581 8,691,018
Deferred grant 12 2,960,000 7,807,857
Due to related parties 11 1,575,035 -
Total current liabilities 24,426,616 16,498,875
Non-current liability
Retirement benefit obligation 14 8,350,094 5,622,263
Total liabilities 32,776,710 22,121,138
Fund balances
Designated fund 996,502,160 595,711,355
General fund 19,388,336 (12,879,988)
Total fund balances 1,015,890,496 582,831,367
Total liabilities and fund balances 1,048,667,206 604,952,505

The notes on pages 1 to 30 are integral part of these financial statements.


Gawad Kalinga Community Development Foundation, Inc.
(A non-stock, non-profit organization)

Statements of Support and Donations, and Expenses


For the years ended June 30, 2014 and 2013
(All amounts in Philippine Peso)

Notes 2014 2013


Designated fund:
Program support and donations 12 725,410,726 296,325,405
Program expenses 13 (324,619,921) (194,680,598)
Excess of support and donations over expenses 400,790,805 101,644,807
General fund:
Support and donations
Donations to administration 12 99,961,474 58,429,939
General and administrative expenses
Staff costs 15 (36,103,679) (46,784,373)
Depreciation and amortization 8, 9 (9,565,548) (9,173,437)
Local area administrative costs (5,245,442) (2,554,574)
Travel and transportation (3,990,189) (6,104,587)
Communication, light and water (2,473,175) (2,970,035)
Rent 17 (1,092,000) (1,092,000)
Professional fees (1,021,664) (994,609)
Meetings, planning, and trainings (459,355) (1,020,346)
Printing and supplies (432,519) (660,712)
Event expenses (375,000) (282,100)
Repairs and maintenance 17 (218,637) (180,856)
Marketing and promotion (74,725) -
Taxes and licenses (13,934) (122,147)
Others (1,617,829) (402,753)
Total general and administrative expenses (62,683,696) (72,342,529)
Other income (expense)
Foreign exchange gains, net 18 1,237,947 190,729
Interest income 5 674,286 528,958
Loss on write-off of long outstanding receivables 7 (5,410,946) -
Gain on write-off of long outstanding liability 10 - 6,183,427
Total other income (expense) (3,498,713) 6,903,114
Excess (Deficiency) of support and donations over
expenses 33,779,065 (7,009,476)
Total excess of support and donations over expenses 434,569,870 94,635,331

The notes on pages 1 to 30 are integral part of these financial statements.


Gawad Kalinga Community Development Foundation, Inc.
(A non-stock, non-profit organization)

Statements of Total Comprehensive Income


For the years ended June 30, 2014 and 2013
(All amounts in Philippine Peso)

Note 2014 2013


Excess of support and donations over expenses 434,569,870 94,635,331
Other comprehensive income
Item that will not be subsequently reclassified to excess of
support and donations over expenses
Remeasurement (loss) gain on retirement benefit obligation 14 (1,510,741) 1,404,751
Total comprehensive income for the year 433,059,129 96,040,082

The notes on pages 1 to 30 are integral part of these financial statements.


Gawad Kalinga Community Development Foundation, Inc.
(A non-stock, non-profit organization)

Statements of Changes in Fund Balances


For the years ended June 30, 2014 and 2013
(All amounts in Philippine Peso)

Designated General
fund fund Total fund
(Note 1) (Note 1) balances
Balances at June 30, 2012 508,132,097 (21,340,812) 486,791,285
Comprehensive income
Excess of support and donations over expenses
for the year 101,644,807 (7,009,476) 94,635,331
Other comprehensive income
Remeasurement gain on retirement benefit
obligation - 1,404,751 1,404,751
Transfer of program savings (Note 1) (14,065,549) 14,065,549 -
Total comprehensive income for the year 87,579,258 8,460,824 96,040,082
Balances at June 30, 2013 595,711,355 (12,879,988) 582,831,367
Comprehensive income
Excess of support and donations over expenses
for the year 400,790,805 33,779,065 434,569,870
Other comprehensive income
Remeasurement loss on retirement benefit
obligation - (1,510,741) (1,510,741)
Total comprehensive income for the year 400,790,805 32,268,324 433,059,129
Balances at June 30, 2014 996,502,160 19,388,336 1,015,890,496

The notes on pages 1 to 30 are integral part of these financial statements.


Gawad Kalinga Community Development Foundation, Inc.
(A non-stock, non-profit organization)

Statements of Cash Flows


For the years ended June 30, 2014 and 2013
(All amounts in Philippine Peso)

Notes 2014 2013


Cash flows from operating activities
Excess of support and donations over expenses 434,569,870 94,635,331
Adjustments for:
Loss on write-off of long outstanding receivables 6, 7 33,613,457 -
Depreciation and amortization 8, 9 11,137,548 10,745,437
Retirement benefit expense 14 1,217,090 1,395,625
Loss on write-off of property and equipment 8 340,827 -
Fair value of donated assets 8 (189,658,263) -
Interest income 5 (674,286) (528,958)
Unrealized foreign exchange gains 18 (588,286) (190,729)
Operating income before changes in working capital 289,957,957 106,056,706
Changes in:
Advances to GK programs (86,071,770) (68,241,244)
Prepayments (3,880,000) -
Other receivables 248,160 7,330,452
Deferred grant (4,847,857) -
Accrued expenses and other current liabilities 11,200,563 (3,595,870)
Due to related parties 1,575,035 -
Net cash generated from operations 208,182,088 41,550,044
Interest received 5 674,286 528,958
Retirement benefits paid 14 - (524,049)
Net cash provided by operating activities 208,856,374 41,554,953
Cash flows from investing activities
Acquisition of property and equipment 8 (5,943,658) (3,134,961)
Advances made to related parties 11 (1,579,597) -
Acquisition of computer software 9 (537,077) -
Net cash used in investing activities (8,060,332) (3,134,961)
Net increase in cash and cash equivalents 200,796,042 38,419,992
Cash and cash equivalents at July 1 163,050,757 124,440,036
Effects of exchange rate changes in cash and cash equivalents 18 588,286 190,729
Cash and cash equivalents at June 30 5 364,435,085 163,050,757

The notes on pages 1 to 30 are integral part of these financial statements.


Gawad Kalinga Community Development Foundation, Inc.
(A non-stock, non-profit organization)

Notes to Financial Statements


As at and for the years ended June 30, 2014 and 2013
(All amounts are shown in Philippine Peso unless otherwise stated)

Note 1 - General information

Gawad Kalinga Community Development Foundation, Inc. (the Foundation) was organized and
registered with the Securities and Exchange Commission (SEC) as a non-stock, non-profit organization on
July 28, 2003 primarily to advance and uphold an integrated, holistic and sustainable community
development program, especially in the depressed areas, addressing shelter, livelihood, education and
health issues in the spirit of nation building, to strengthen the development and improvement of human
and spiritual formation of couples and their children especially the underprivileged, disadvantaged and
marginalized sectors of society, and to foster cooperation with others in the pursuit and realization of the
objectives for which the Foundation has been established.

On October 3, 2010, the Board of Trustees approved the change in the Foundations accounting period
from December 31 to June 30. The Foundation has completed the statutory requirements for filling with
the SEC and the latter has approved the change in accounting period on April 5, 2013. The Foundation has
likewise filed for the change in accounting period with the Bureau of Internal Revenue (BIR), which was
approved by the latter on July 28, 2014.

The programs of the Foundation are usually done in partnership with corporate entities, local government
units, government agencies, schools and universities and international donors. These partnerships can
take the form of land donations, monetary contributions, materials and volunteer work and are either
coursed through the Foundation, their affiliates here and abroad, or directly to the project sites. The
financial statements account only for all cash and non-cash donations and other financial supports made
directly to the Foundation.

The annual deficiency of support and donations over expenses has resulted in a cumulative deficit in the
Foundations undesignated/general fund balance. While the Foundation is expected not to make profit, it
is nevertheless the Foundations policy that its operations must be supported fully by funds from its
undesignated/general support and donations.

In line with this policy, the Foundation instituted plans and programs to raise resources and reduce costs
to address the annual deficiency and to resolve the accumulated deficit. On resource generation, the
Foundation focused on activities that will increase funds for administrative purposes. The Foundation also
reviewed its policies on pricing and cost allocation on designated program funds. On cost reduction, the
Foundation implemented a major reorganization in December 2012 resulting in a decreased number of
paid full time employees from 125 to 92 and paid volunteer workers from 66 to 43 as at December 31, 2014.
These measures have resulted in the ability of the Foundation to fully meet and support its operations from
undesignated donations in 2014.

In 2013, the Board of Trustees approved the application from designated to undesignated/general fund
balance of the P14 million program savings from completed and fully liquidated projects as at 2009 and
earlier.
The Foundation is exempt from the payment of taxes pursuant to Section 30 of the Tax Reform Act of
1997 (Republic Act 8424). On September 2, 2005, the Foundation was accredited as a duly qualified-
donee institution by the Philippine Council for NGO Certification, Inc. (PCNC), a certification body
authorized by the government to evaluate non-profit organizations for the tax-exempt status. On July 23,
2007, the Bureau of Internal Revenue issued a certificate of registration to the Foundation as a donee
institution. The registration had a validity of five (5) years and it expired on July 2012. In November
2014, the Foundation renewed and was granted accreditation by PCNC and the BIR re-issued a certificate
of registration to the Foundation as a donee institution valid until November 5, 2015. The Foundation is
now in process of renewing its accreditation with PCNC and the BIR.

As a PCNC-accredited non-for-profit organization, the Foundation is subject, among others, to the 30%
limitation of administrative expenses over total expenses at any given taxable year. The Foundation
has been in compliant with this requirement since 2003.

The Foundations office is currently located at Cheng Building, #212 Haig Street, Barangay Daang - Bakal,
Mandaluyong City (Note 17).

The Foundation is governed by a Board of Trustees whose members do not receive compensation.

The Foundations financial statements were approved for endorsement to the Board of Trustees by the
Board Audit Committee on July 20, 2015, and authorized for issuance by the Board of Trustees on
October 7, 2015.

Note 2 - Summary of significant accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out
below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of preparation

In 2012, the Foundations total assets exceeded P350 million. Consequently, it ceased to qualify as a
Small and Medium-sized Entity (SME) as defined under Philippine Financial Reporting Standards
(PFRS) for SMEs and retrospectively adopted and prepared the financial statements in accordance with
the full PFRS. The term PFRS in general includes all applicable PFRS, Philippine Accounting
Standards (PAS), and interpretations of the Philippine Interpretations Committee (PIC), Standing
Interpretations Committee (SIC), International Financial Reporting Interpretations Committee
(IFRIC) which have been approved by the Financial Reporting Standards Council (FRSC) and adopted
by the SEC.

These financial statements have been prepared under the historical cost convention, unless otherwise
stated.

The preparation of financial statements in conformity with PFRS requires the use of certain critical
accounting estimates. It also requires management to exercise judgment in the process of applying the
Foundations accounting policies. The areas involving a higher degree of judgment or complexity, or
areas where assumptions and estimates are significant to the financial statements are disclosed in
Note 4.

(2)
Changes in accounting policies and disclosures

(a) New standards, amendments to existing standards and interpretations adopted

The following amendments to existing standards have been adopted by the Foundation effective July 1,
2014:

Amendment to PAS 32, Financial instruments: Presentation. This amendment clarifies that the
right of set-off must not be contingent on a future event. It must also be legally enforceable for all
counterparties in the normal course of business, as well as in the event of default, insolvency or
bankruptcy. The amendment also considers settlement mechanisms. The amendment did not
have a significant effect on the Companys financial statements.

Amendment to PAS 36, Impairment of assets, on the recoverable amount disclosures for non-
financial assets. This amendment removed certain disclosures of the recoverable amount of cash
generating units which had been included in PAS 36 by the issue of PFRS 13. The amendment did
not have a significant impact on the Companys financial statements.

Other standards, amendments to existing standards and interpretations which are effective for the
financial year beginning January 1, 2014 are not material to the Foundation.

(b) New standards, amendments to existing standards and interpretations not yet adopted

A number of new standards and amendments to standards are effective for annual periods beginning
after January 1, 2014, and have not been applied in preparing these financial statements. The more
relevant ones as detailed below are not expected to have a significant effect on the financial statements
of the Foundation:

PFRS 9, Financial Instruments, addresses the classification, measurement and recognition of


financial assets and financial liabilities. The complete version of PFRS 9 was issued in July 2014.
It replaces the guidance in PAS 39 that relates to the classification and measurement of financial
instruments. PFRS 9 retains but simplifies the mixed measurement model and establishes three
primary measurement categories for financial assets: amortized cost, fair value through other
comprehensive income and fair value through profit and loss. The basis of classification depends
on the entitys business model and the contractual cash flow characteristics of the financial asset.
Investments in equity instruments are required to be measured at fair value through profit or loss
with the irrevocable option at inception to present changes in fair value in other comprehensive
income not recycling. There is now a new expected credit losses model that replaces the incurred
loss impairment model used in PAS 39. For financial liabilities there were no changes to
classification and measurement except for the recognition of changes in own credit risk in other
comprehensive income, for liabilities designated at fair value through profit or loss. PFRS 9 relaxes
the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It
requires an economic relationship between the hedged item and hedging instrument and for the
hedged ratio to be the same as the one management actually use for risk management purposes.
Contemporaneous documentation is still required but is different to that currently prepared under
PAS 39. The standard is effective for accounting periods beginning on or after January 1, 2018 with
early adoption permitted.

The Foundations initial assessment of the potential impact of PFRS 9 on its financial statements
provides that it would not significantly change the classification and measurement of its existing
financial assets which are limited to those measured at amortized cost. The Foundation will
continue its assessment and finalize the same on the effectivity of the new standard.

(3)
No other new standards, amendments to existing standards and interpretations that are effective
beginning or after January 1, 2014 are expected to have a material impact on the Foundations financial
statements.

2.2 Funds

The accounts of the Foundation are maintained to reflect the resources for various activities which
observe the limitations and restrictions placed on the use of resources. On overall, the fund balances of
the Foundation are reported in the following two fund groups:

(a) General or undesignated fund represents the resources available for the Foundations operations
and administration functions.

(b) Designated fund represents the resources which carry restrictions and are to be used only for
purposes specified by their donors and be utilized for the main programs of the Foundation.

Excess funds from fully completed and liquidated projects are transferred from designated fund to
general or undesignated fund subject to approval of the Board of Trustees.

The relevant accounting policies for classification, recognition and measurement of funds received are
presented in Note 2.14.

2.3 Cash and cash equivalents

Cash and cash equivalents include deposits held at call with banks and other short-term highly liquid
investments with original maturities of three (3) months or less from the date of acquisition. These are
carried in the statement of assets, liabilities and fund balances at face amount or at nominal amounts
and earns interest at the respective bank deposit rates.

The relevant accounting policies for classification, recognition, measurement and impairment of cash
and cash equivalents are presented in Note 2.5.

2.4 Advances to GK programs

Advances to GK programs pertain to unutilized and unliquidated advances as at reporting date. These
are initially recognized and subsequently measured at the amount of cash or consideration given out to
GK programs, less provision for impairment, if any. A provision for impairment of advances to GK
programs is established when there is objective evidence that the Foundation will not be able to receive
the liquidation reports for all amounts allocated for each project.

When a project is discontinued caused by any administrative, legal or other factors, these are indicators
that the related advances are impaired. The amount of the provision is the difference between the
assets carrying amount and the present value of estimated future cash flows, discounted at the 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 recognized within general and administrative expenses in the statement of
support and donations and expenses. When advances remain unliquidated despite the completion of
specified project and after the Foundation has exerted all administrative remedies, it is written-off
against the allowance account for advances.

Subsequent recoveries of amounts previously written-off are credited against general and
administrative expenses in the statement of support and donations and expenses. Reversals of
previously recorded impairment provision are credited to other income in the statement of support and
donations and expenses based on the result of managements update assessment, considering the

(4)
available facts and changes in circumstances, including but not limited to results of recent discussions
and arrangements entered into with GK programs as to the recoverability of receivables at the end of
the reporting period.

Other relevant accounting policies on advances are presented in Note 2.5.

2.5 Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity. The Foundation recognizes a financial instrument in
the statement of assets, liabilities and fund balances when, and only when, the Foundation becomes a
party to the contractual provisions of the instrument.

2.5.1 Classification

The Foundation classifies its financial assets and liabilities according to the categories described below.
The classification depends on the purpose for which the financial assets and liabilities were acquired.
Management determines the classification of its financial assets and liabilities at initial recognition.

(a) Financial asset

The Foundation classifies its financial assets in the following categories: (i) financial assets at fair value
through profit or loss; (ii) loans and receivables; (iii) held-to-maturity investments; and (iv) available-
for-sale investments. The classification depends on the purpose for which the financial assets were
acquired. Management determines the classification of its financial assets at initial recognition. The
Foundations financial assets as at June 30, 2014 and 2013 are limited to loans and receivables.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market and where management has no intention of trading. These are included
in current assets, except for maturities greater than 12 months after the reporting date, in which case,
these are classified as non-current assets. The Foundations loans and receivables comprise cash and
cash equivalents (Note 5) and other receivables (Note 7) in the statement of assets, liabilities and fund
balances.

(b) Financial liabilities

The Foundation classifies its financial liabilities in the following categories: (i) financial liabilities at
fair value through profit or loss (including financial liabilities held for trading and those that
designated at fair value); and (ii) other financial liabilities at amortized cost.

Other financial liabilities at amortized cost pertain to issued financial instruments that are not classified
or designated at fair value through profit or loss and contain contract obligations to deliver cash or
another financial asset to the holder or to settle the obligation other than the exchange of a fixed amount
of cash. As at June 30, 2014 and 2013, the Foundations financial liabilities under this category include
accrued expenses and other current liabilities (except unconfirmed deposits, unallocated donations and
payable to government agencies) (Note 10) and due to related parties (Note 11) in the statement of
assets, liabilities and fund balances.

(5)
2.5.2 Recognition and measurement

(a) Initial recognition and measurement

Regular purchases and sales of financial assets are recognized on trade date - the date on which the
Foundation commits to purchase or sell the asset. Financial assets are initially recognized at fair value
plus transaction costs. Financial liabilities not carried at fair value through profit or loss are initially
recognized at fair value of the consideration received less directly attributable transaction costs.

(b) Subsequent measurement

Loans and receivables are carried at amortized cost using the effective interest method. Other financial
liabilities are likewise subsequently measured at amortized cost.

2.5.3 Impairment of financial assets

The Foundation assesses at each reporting date whether there is objective evidence that a financial
asset or a 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 reorganization, 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 Foundation first assesses whether objective evidence of impairment exists. The amount of the loss
is measured as the difference between the assets carrying amount and the present value of estimated
future cash flows (excluding future credit losses that have not been incurred) discounted at the
financial assets original effective interest rate. The carrying amount of the asset is reduced and the
amount of the loss is recognized within general and administrative expenses in the statement of
support and donations and expenses.

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 recognized (such as an improvement in the
debtors credit rating), the reversal of the previously recognized within other income (expense) in the
statement of support and donations and expenses.

Impairment testing of receivables is further described in Note 2.3.

2.5.4 Derecognition

Financial assets are derecognized when the rights to receive cash flows from it have expired or have
been transferred and the Foundation has transferred substantially all risks and rewards of ownership.

Financial liabilities are derecognized when, i.e., when the obligation is discharged, cancelled or has
expired.

(6)
2.5.5 Offsetting of financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of assets,
liabilities and fund balances when there is a legally enforceable right to offset the recognized amounts
and there is an intention to settle on a net basis or realize the asset and settle the liability
simultaneously. The legally enforceable right must not be contingent on future events and must be
enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of
the company or the counterparty. As at June 30, 2014 and 2013, there are no financial assets and
liabilities that were offset.

2.6 Other receivables

Other receivables 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 other
receivables is established when there is objective evidence that the Foundation 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 reorganization, and default or delinquency in payments are considered indicators that the
receivable is impaired. The amount of the provision is the difference between the assets carrying
amount and the present value of estimated future cash flows, discounted at the assets 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 recognized within general and administrative expenses in the statement of
support and donations and expenses. When other receivable remains uncollectible after the
Foundation has exerted all legal remedies, it is written-off against the allowance account for
receivables.

The Foundation first assesses whether objective evidence of impairment exists individually for
receivables that are individually significant, and collectively for receivables that are not individually
significant. If the Foundation determines that no objective evidence of impairment exists for an
individually assessed receivable, whether significant of not, it includes the asset in a group of financial
assets with similar credit risk characteristics and collectively assesses those for impairment.
Receivables that are individually assessed for impairment and for which an impairment loss is or
continues to be recognized are not included in a collective assessment of impairment.

Subsequent recoveries of amounts previously written-off are credited against expenses in the statement
of support, donations and expenses. Reversals of previously recorded impairment provision are
credited in the statement of support, donations and expenses based on the result of managements
update assessment, considering the available facts and changes in circumstances, including but not
limited to results of recent discussions and arrangements entered into with debtors as to the
recoverability of receivables at the end of the reporting period.

2.7 Prepayments

Prepayments are recognized in the event that payment has been made in advance of obtaining right of
access to goods or receipt of services and measured at nominal amounts. Prepayments are
derecognized in the statement of assets, liabilities and fund balances either with the passage of time or
through use or consumption.

Prepayments are carried at cost and are included in current assets, except when the related goods or
services are expected to be received and rendered more than twelve months after the end of the
reporting period, in which case, these are classified as non-current assets.

(7)
2.8 Property and equipment

Property and equipment are carried at historical cost less accumulated depreciation and impairment
losses, if any. Historical cost includes expenditure that is directly attributable to the acquisition of
these items, which comprises its purchase price and any directly attributable costs of bringing the asset
to its working condition and location for its intended use.

Subsequent costs are included in the assets 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
the Foundation and the cost of the item can be measured reliably. The carrying amount of the replaced
part is derecognized. All other repairs and maintenance are charged to general and administrative
expenses in the statement of support and donations and expenses within expenses during the financial
period in which they are incurred.

Land is recognized at fair value at the time of donation. Subsequent fair value is determined based on
periodic valuation performed by external independent appraiser and used only for disclosure purposes.

Land is not depreciated. Land improvements are charged as part of program expenses of specific
project in the statement of support and donations and expenses. Depreciation is calculated using the
straight-line method to allocate their costs to their residual values over their estimated useful lives, as
follows:

No. of years
Computer and other equipment 3
Transportation equipment 5
Office equipment 5
Office furniture and fixtures 3

Leasehold improvements are amortized over the term of the lease or the estimated useful life of the
improvements of 5 years, whichever is shorter.

Donated property and equipment which are designated for specific purposes and are to be utilized for
main programs of the Foundation are classified under the Designated fund and those that are used
for administrative purposes are recorded under the General fund in the statement of support,
donations and expenses. Related depreciation charges are also recorded based on their fund
classification.

The assets residual values and useful lives are reviewed and adjusted, if appropriate, at each reporting
date to ensure that the method and period of depreciation are consistent with the expected pattern of
economic benefits from items of property and equipment.

An assets carrying amount is written down immediately to its recoverable amount if the assets
carrying amount is greater than the estimated recoverable amount (Note 2.11).

The carrying amount of an item of property and equipment is derecognized on disposal or when no
future economic benefits are expected from its use or disposal, at which time the related cost,
accumulated depreciation and accumulated impairment losses, if any, are eliminated from the
statement of assets, liabilities and fund balances. Gains and losses on disposals are determined by
comparing proceeds with the carrying amount and are recognized in the statement of support,
donations and expenses. Fully depreciated assets are retained in the accounts until they are no longer

(8)
in use and no further depreciation are charged to current operations. Assets that are determined to be
non-existent and assets that are no longer in use are immediately written-off and the resulting losses
are charged to current operations.

2.9 Intangible assets

Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and
bring to use the specific software. These costs are amortized using straight-line method to allocate the
costs over their estimated useful life of ten (10) years from the date the intangible asset is available for
use. Amortization ceases when the intangible asset is derecognized.

2.10 Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.

The fair value of a non-financial asset is measured based on its highest and best use. The assets
current use is presumed to be its highest and best use.

The fair value of financial and non-financial liabilities takes into account non-performance risk, which
is the risk that the Foundation will not fulfill an obligation.

The Foundation classifies its fair value measurements using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. The fair value hierarchy has the following
levels:

quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2); and
inputs for the asset or liability that are not based on observable market data (that is, unobservable
inputs) (Level 3).

The appropriate level is determined on the basis of the lowest level input that is significant to the fair
value measurement.

The fair value of financial instruments traded in active markets is based on quoted market prices at the
reporting date. A market is regarded as active if quoted prices are readily and regularly available from
an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices
represent actual and regularly occurring market transactions on an arms length basis. The quoted
market price used for financial assets held by the Partnership is the current bid price. Note that under
PFRS 13, the use of bid and asking prices is still permitted but not required. These instruments are
included in Level 1. As at June 30, 2014 and 2013, there are no financial and non-financial assets and
liabilities at fair value included in Level 3.

The fair value of assets and liabilities that are not traded in an active market (for example, over-the-
counter derivatives) is determined by using valuation techniques. These valuation techniques
maximize the use of observable market data where it is available and rely as little as possible on entity
specific estimates. If all significant inputs required to fair value an instrument are observable, the asset
or liability is included in Level 2. If one or more of the significant inputs is not based on observable
market data, the asset or liability is included in Level 3. As at June 30, 2014 and 2013, there are no
financial and non-financial assets and liabilities at fair value included in Level 3.

(9)
The Foundation uses valuation techniques that are appropriate in the circumstances and applies the
technique consistently. Commonly used valuation techniques are as follows:

Market approach - A valuation technique that uses prices and other relevant information generated
by market transactions involving identical or comparable (i.e., similar) assets, liabilities or a group
of assets and liabilities, such as a business
Income approach - A valuation technique that converts future amounts (e.g., cash flows or income
and expenses) to a single current (i.e., discounted) amount. The fair value measurement is
determined on the basis of the value indicated by the current market expectations about those
future amounts.
Cost approach - A valuation technique that reflects the amount that would be required currently to
replace the service capacity of an asset (often referred to as current replacement cost).

Specific valuation techniques used to value financial instruments include:

Quoted market prices or dealer quotes for similar instruments.


The fair value of interest rate swaps is calculated as the present value of the estimated future cash
flows based on observable yield curves.
The fair value of forward foreign exchange contracts is determined using forward exchange rates at
the reporting date, with the resulting value discounted back to present value.
Other techniques, such as discounted cash flow analysis, are used to determine fair value for the
remaining financial instruments.

2.11 Impairment of non-financial assets

Non-financial assets that have an indefinite useful life are not subject to depreciation and amortization
and are tested annually for impairment. Non-financial assets that have definite useful lives are subject
to depreciation and amortization and are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is
recognized for the amount by which the assets carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an assets fair value less costs to sell and value in use. For purposes
of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units or CGUs). Non-financial assets that suffered impairment
are reviewed for possible reversal of the impairment at each reporting date.

Where an impairment loss subsequently reverses, the carrying amount of the asset or CGU is increased
to the revised estimate of its recoverable amount, but the increased carrying amount should not exceed
the carrying amount that would have been determined had no impairment loss been recognized for the
asset or CGU in prior years. A reversal of an impairment loss is recognized as income immediately and
credited to other operating income in profit or loss.

2.12 Accrued expenses and other current liabilities

Accrued expenses and other current liabilities are recognized in the period in which the related money,
goods or services are received or when a legally enforceable claim against the Foundation is established.
These are classified as current liabilities if payment is due within one (1) year or less. If not, they are
presented as non-current liabilities. These are unsecured, non-interest bearing and are measured at
the original invoice amount (as the effect of discounting is immaterial). Derecognition policy is
discussed in Note 2.5.2.

(10)
2.13 Provisions and contingencies

Provisions are recognized when: (i) the Foundation has a present legal or constructive obligation as a
result of past events; (ii) it is more likely than not that an outflow of resources will be required to settle
the obligation; and (iii) the amount has been reliably estimated. Provisions are derecognized when the
obligation is settled, cancelled or has expired. Provisions are not recognized for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in
settlement is determined by considering the class of obligations as a whole. A provision is recognized
even if the likelihood of an outflow with respect to any one item included in the same class of
obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the
obligation using a pre-tax rate that reflects current market assessments of the time value of money and
the risks specific to the obligation. The increase in the provision due to passage of time is recognized as
interest expense in the statement of support and donations and expenses.

Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best
estimate. Provisions are derecognized when the obligation is paid, cancelled or has expired.

Contingent liabilities are not recognized in the financial statements. These are disclosed unless the
possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are
not recognized in the financial statements but disclosed when an inflow of economic benefit is
probable. If it becomes virtually certain that an inflow of economic benefits will arise, the asset and the
related income are recognized in the financial statements.

2.14 Support and donations, and expense recognition

Support and donations either monetary or in-kind are initially recognized at the fair value of the
consideration received in the ordinary course of the Foundations activities.

Support and donations are recognized to the extent that it is probable that the economic benefits will
flow to the Foundation and the amount of support and revenue can be measured reliably. The
following specific criteria must also be met before support, donations and expense are recognized:

2.14.1 Support and donations

Support and donations are recognized in the period received and reported as revenues of the fund for
which they are intended.

i. Designated support and donations are recognized upon fulfillment of the donor-imposed
conditions attached to the support and/or to the extent that expenses are incurred. Designated
support for which restrictions and conditions have not yet been met, are deferred in deferred grant
account.

ii. General or undesignated support and donations are recognized upon receipt of the support, and
expenses are reported when incurred.

(11)
2.14.2 Interest income

Interest income on bank deposits, net of withholding taxes, is recognized on a time proportion basis,
taking account of the principal outstanding and the effective rate over the period to maturity, when it is
determined that such income will accrue to the Company.

2.14.3 Expenses

Expenses are recognized when incurred based on liquidation and completion reports for specified
projects. Unutilized and unliquidated program expenses are recorded in advances to GK programs
(Note 2.4) in the statement of assets, liabilities and fund balances.

2.15 Government grants

Grants from the government are recognized at their fair value where there is a reasonable assurance
that the grant will be received and the Foundation will comply with all attached conditions.
Government grants relating to costs are deferred and recognized in the statement of support, donations
and expenses over the period necessary to match them with the costs that they are intended to
compensate. Government grants for which restrictions and conditions have not yet been met are also
classified as deferred grant.

2.16 Leases - Foundation as the lessee

Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are
classified as operating leases. Payments, if any, made by the Foundation under operating leases are
charged to general and administrative expenses in the statement of support and donations and expenses
on a straight-line basis over the period of the lease. The amount of operating lease that the Foundation
charged to general and administrative expenses is equivalent to the fair value of rentals under the rent-
free arrangement (Note 17).

2.17 Employee benefits

2.17.1 Retirement benefits

The Foundation has no formal retirement plan. For purposes of determining its retirement costs and
obligations, the Foundation considers the defined benefit pension plan. A defined benefit pension plan
is a retirement plan that defines an amount of pension benefit that an employee will receive on
retirement, usually dependent on certain factors such as age, years of credited service, and
compensation.

The liability recognized in the statement of assets, liabilities and fund balances is the present value of
the defined benefit obligation at the end of the reporting date less the fair value of plan assets. In cases
where the amount determined results in a surplus (being an excess of the fair value of the plan assets
over the present value of the defined benefit obligation), the Foundation measures the resulting asset at
(a) the lower of such amount determined, and (b) the present value of any economic benefits available
to the Foundation in the form of refunds or reductions in future contributions to the plan.

The defined benefit obligation is calculated annually by independent actuary using the projected unit
credit method. The present value of the defined benefit obligation is determined by discounting the
estimated future cash outflows using interest rates of government bonds that are denominated in the
currency in which the benefits will be paid, and that have terms to maturity approximating to the terms
of the related retirement benefit obligation.

(12)
Remeasurements arising from experience adjustments and changes in actuarial assumptions are
charged or credited to general fund balance as part of other comprehensive income in the statement of
total comprehensive income in the periods in which they arise.

Past service costs are recognized immediately within general and administrative expenses in the
statement of support and donations and expenses in the period in which they arise.

The retirement benefit expense is equivalent to the change in the actuarial present value of the defined
benefit obligation and fair value of plan assets during that period, and is recognized in the statement of
support and donations and expenses. Retirement benefit expense includes current service cost and net
interest cost.

2.17.2 Termination benefits

Termination benefits are payable when employment is terminated by the Foundation before the normal
retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits.
The Foundation recognizes termination benefits at the earlier of the following dates: (i) when the
Foundation can no longer withdraw the offer of those benefits; and (ii) when the Foundation recognizes
costs for a restructuring which involves the payment of termination benefits. In the case of an offer
made to encourage voluntary redundancy, the termination benefits are measured based on the number
of employees expected to accept the offer. Benefits falling due for more than 12 months after the end of
the reporting period are discounted to their present value. The related liability is derecognized when
the obligation is discharged or cancelled.

2.17.3 Other short-term benefits

Wages, salaries, paid annual vacation and sick leave credits and other non-monetary benefits are
accrued during the period in which the related services are rendered by employees of the Foundation.
Short-term employee benefit obligations are measured on an undiscounted basis.

2.18 Foreign currency transactions and translation

2.18.1 Functional and presentation currency

Items included in the financial statements of the Foundation are measured using the currency of the
primary economic environment in which the Foundation operates or in which it primarily generates
and expends cash (the functional currency), while presentation currency is the currency in which the
financial statements are presented. The financial statements are presented in Philippine Peso, which is
the functional and presentation currency of the Foundation.

2.18.2 Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year-end exchange of monetary assets and
liabilities denominated in foreign currencies are recognized within other income (expenses) in the
statement of support and donations and expenses.

(13)
2.19 Related party relationships and transactions

Related party relationship exists when one party has the ability to control, directly, or indirectly
through one or more intermediaries, the other party or exercise significant influence over the other
party in making financial and operating decisions. Such relationships also exist between and/or among
entities which are under common control with the reporting enterprise, or between and/or among the
reporting enterprise and its key management personnel, trustees, or members. In considering each
possible related party relationship, attention is directed to the substance of the relationship, and not
merely the legal form.

2.20 Events after the reporting date

Post year-end events that provide additional information about the Foundations position at the
reporting date (adjusting events) are reflected in the financial statements. Post year-end events that
are not adjusting events are disclosed in the notes to the financial statements when material.

Note 3 - Financial risk management objectives and policies

3.1 Financial risk factors

The Foundations activities are limited mainly to receipt of support and donations for its projects and
liquidation of advances made to GK programs, hence it is not directly exposed to a variety of financial
risks except for currency, credit, and liquidity risks. Management ensures that it has sound policies
and strategies in place to minimize potential adverse effects of these risks on the Foundations financial
performance. Risk management is carried out by management under policies approved by the
Foundations Board of Trustees.

3.1.1 Currency risk

Foreign exchange risk arises when future transactions and recognized assets and liabilities are
denominated in a currency that is not the Foundations functional currency. The Foundation is not
significantly exposed to foreign exchange risk since it does not have significant financial assets and
liabilities denominated in foreign currencies (Note 18).

3.1.2 Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in a
financial loss to the Foundation. Credit risk arises from deposits and short-term placements with banks
and financial institutions, as well as credit exposure to debtors, including other outstanding receivables.

(14)
The Foundations financial assets that are subject to credit risk are shown below:

Past due but not impaired


Neither past Over 3 Past due
due nor Up to 3 to 6 Over 6 to 12 Over 12 and
Notes Amount impaired months months months months impaired
As at June 30, 2014
Cash and cash equivalents 5 364,435,085 364,435,085 - - - - -
Other receivables 7 - - - - - - -
365,334,682 364,488,942 - - - - -
As at June 30, 2013
Cash and cash equivalents 5 163,050,757 163,050,757 - - - - -
Other receivables 7 4,491,611 14,000 17,600 20,000 1,895,454 2,544,557 -
167,542,368 163,064,757 17,600 20,000 1,895,454 2,544,557 -

Other receivables exclude advances to officers and employees which are collectible through monthly
payroll deductions.

The Foundations maximum expense to credit risk at the reporting date is the carrying value of the
financial assets above. The Foundation does not hold any collateral as security for the above financial
assets.

Credit quality of fully performing financial assets

(a) Cash in banks and short-term placements

The Foundation has a standardized process in place to effectively manage the credit risk from cash and
short-term placements deposited with banks and other financial institutions. For banks and other
financial institutions, only independent rated parties and with good, if not the highest, credit standing
is accepted.

The Foundation maintains its cash and short-term placements in commercial and universal banks as
follows:

2014 2013
Universal banks 342,198,733 151,394,286
Commercial banks 22,236,352 11,656,471
364,435,085 163,050,757

Universal and commercial banks represent the largest single group, resource-wise, of financial
institutions in the Philippines. They offer the widest variety of banking services among financial
institutions. In addition to the function of an ordinary commercial bank, universal banks are also
authorized to engage in underwriting and other functions of investment houses, and to invest in
equities of non-allied undertakings.

The Foundations maximum exposure to credit risk as at June 30, 2014 and 2013 is the carrying value
of cash in banks and short-term placements.

(b) Other receivables

(15)
Other receivables are advances which are subject to reimbursements from partners and donors. The
Foundation does not hold any collateral as security for these receivables. None of the financial assets
that are fully performing have been renegotiated during the years ended June 30, 2014 and 2013.

The Foundations maximum exposure to credit risk as at June 30, 2014 and 2013 is the carrying
amount of other receivables (excluding advances to officers and employees). The balances disclosed
are the contractual undiscounted cash flows, which approximate their carrying balances as the impact
of discounting is not significant due to their relative short or medium-term nature.

3.1.3 Liquidity risk

Liquidity risk is the risk that suitable sources of funding for the Foundations activities may not be
available. Prudent liquidity risk management implies maintaining sufficient cash to meet operating
capital requirements. The Foundation projects monthly cash flows from its operating and investing
activities.

The table below analyzes the Foundations financial liabilities into relevant maturity groupings based
on the remaining period as at June 30, 2014 and 2013 to the contractual maturity date. The amounts
disclosed are the contractual undiscounted cash flows. Balances due within 12 months equal their
carrying balances, as the impact of discounting is not significant.

Accrued expenses and Less than Between Between


other current liabilities 3 months 3 to 6 months 6 to 12 months Total
As at June 30, 2014 6,271,000 - 497,017 6,768,017
As at June 30, 2013 4,554,839 - 975,709 5,530,548

The financial liabilities presented above exclude unconfirmed deposits, unallocated donations and
payable to government agencies amounting to P13,123,564 as at June 30, 2014 (2013 - P3,160,470)
(Note 10).

The Foundations financial liabilities are due and expected to be paid within twelve months from the
reporting period, which also reflects the remaining period until the contractual maturity dates. Based on
managements assessment, the Foundation has sufficient level of readily available funds, which does not
yet consider expected receipts from collection of receivables, to settle maturing obligations as they fall
due.

Note 4 - Critical accounting estimates, assumptions and judgments

Estimates, assumptions and judgments are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are believed to be reasonable
under the circumstances.

4.1 Critical accounting estimates and assumptions

The Foundation makes estimates and assumptions concerning the future. The resulting accounting
estimates will, by definition, seldom equal the related actual results. The estimates and assumptions
that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed in the next section.

4.1.1 Estimating useful lives of property and equipment (Note 8)

(16)
The useful life of each of the Foundations property and equipment is estimated based on the period
over which these assets are expected to be available for use. Such estimation is based on a collective
assessment of industry practice, internal technical evaluation and experience with similar assets. The
estimated useful life of each asset is reviewed periodically and updated if expectations differ from
previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or
other limits on the use of the asset. It is possible, however, that future results of operations could be
materially affected by changes in the amounts and timing of recorded expenses brought by changes in
the factors mentioned above.

If the actual useful lives of the property and equipment assets as disclosed in Note 8 are prospectively
prolonged or shortened by 10% at the beginning of the year, the carrying amount of property and
equipment would have been higher by P602,453 or lower by P736,332 (2013 - P871,716 higher or
P1,065,431 lower).

4.1.2 Estimating useful lives of intangible assets (Note 9)

The useful lives of intangible assets are assessed to be either finite or infinite. As at June 30, 2014 and
2013, the Foundations intangible assets with finite lives, shown under Intangible assets account in
the statement of assets, liabilities and fund balances are amortized over its useful economic life and
assessed for impairment whenever there is an indication that the intangibles may be impaired. The
amortization period and method for an intangible with a finite useful life is reviewed at least annually.
Changes in the expected useful life or the expected pattern of consumption of future economic benefits
embodied in the assets is accounted for by changing the amortization period or method, as appropriate,
and treated as changes in accounting estimates. The amortization expense on intangibles with finite
lives is recognized in statement of support and donations and expenses in the general and
administrative expenses category consistent with the function of the intangible assets.

A reduction in the estimated useful lives of intangible assets would increase the recorded general and
administrative expenses and decrease non-current assets. Management believes that the estimated
useful lives of intangible assets approximate the actual economic benefits of these assets to the
Foundation.

If the actual useful lives of the intangible assets as disclosed in Note 9 are prospectively prolonged or
shortened by 10% at the beginning of the year, the carrying amount of intangible assets would have
been higher by P2,109,538 or lower by P2,578,324 (2013 - P1,350,079 higher or P1,650,097 lower).

4.1.3 Provision for retirement benefits (Note 14)

The determination of the Foundations retirement benefit obligation is dependent on the selection of
certain assumptions used by the actuary in calculating such amounts. These assumptions, as described
in Note 14, include among others, discount rates and salary increase rates which are based in part on
current market conditions. Remeasurement gains and losses comprised of experience adjustments and
changes in actuarial assumptions are appropriately considered in determining both present value of
retirement obligation and fair value of plan assets. Consequently, management no longer performs
analysis on projected changes in interest rates and rate of return on plan assets.

(17)
The sensitivity analysis on the significant actuarial assumptions was prepared by remeasuring the
retirement benefit obligation at the reporting date after first adjusting one of the current assumptions
according to the applicable sensitivity increment or decrement (based on changes in the relevant
assumption that were reasonably possible at the valuation date) while all other assumptions remained
unchanged. The corresponding change in the retirement benefit obligation was expressed as a
percentage change from the base retirement benefit obligation.

The impact of potential changes in the discount rate and salary increase rate on the amount of defined
benefit obligation as at June 30, 2014 and 2013 are presented below:

2014 2013
% Impact % Impact
Discount rate
Increase due to 100 bps (8.2) (687,686) (8.4) (473,186)
Decrease due to 100 bps 9.2 768,857 9.4 530,166
Salary increase rate
Increase due to 100 bps 8.4 699,366 8.7 490,473
Decrease due to 100 bps (7.7) (640,810) (8.0) (447,912)
No attrition rates 15.8 1,3117,031 16.8 945,860

The above sensitivity analyses are based on a change in an assumption while holding all other
assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions
may be correlated. When calculating the sensitivity of the defined benefit obligation to significant
actuarial assumptions, the same method (present value of the defined benefit obligation calculated with
the projected unit credit method at the end of the reporting period) has been applied as when
calculating the retirement obligation recognized within the statements of assets, liabilities and fund
balance.

4.2 Critical judgments in applying the Foundations accounting policies

4.2.1 Impairment of advances to GK programs and other receivables

The provision for impairment of advances to GK programs and other receivables is based on the
Foundations assessment of the receipt of liquidation reports and collectibility of payments from
related foundations and other debtors, respectively. This assessment requires judgment regarding the
outcome of disputes and the ability of each GK programs and related foundations and other debtors to
provide liquidation reports or to pay the amounts owed to the Foundation. Any change in the
Foundations assessment of the collectibility of advances to GK programs and other receivables could
significantly impact the decision to write-off the advances and receivables and calculation of such
provision.

Any change in the Foundations assessment of collectibility of advances to GK programs and other
receivables that was not previously provided for due to reassessment made as additional information is
received could significantly impact the calculation of such provision and the results of operations. The
amounts and timing of recorded provision for impairment of advances to GK programs and other
receivables for any period would differ if the Foundation made different assumptions or utilized
different estimates. The details of advances to GK programs and other receivables are disclosed in
Notes 6 and 7, respectively.

(18)
4.2.2 Impairment of property and equipment and intangible assets

Property and equipment and intangible assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An
impairment loss would be recognized whenever evidence exists that the carrying value is not
recoverable. Accordingly, results of managements most recent assessment disclosed the absence of
any conditions (such as physical damage or significant change in operations) rendering certain
property and equipment and intangible assets as obsolete and would not warrant assessment for
impairment and/or recognition of an impairment provision in its carrying amount as at June 30, 2014
and 2013. The details of property and equipment and intangible assets are shown in Notes 8 and 9,
respectively.

Note 5 - Cash and cash equivalents

The account as at June 30 consists of:

2014 2013
Cash in banks 342,208,504 145,836,062
Short-term placements 22,226,581 17,214,695
364,435,085 163,050,757

Cash in banks generally earn interest based on daily bank deposit rate. Average interest rate on savings
deposits for the year ended June 30, 2014 is 0.27% (2013 - 0.26%).

Short-term placements are made for varying periods of up to three (3) months, depending on the
immediate cash requirements of the Foundation, and earn an average interest rate of 0.63% for the
year ended June 30, 2014 (2013 - 0.69%). All short-term placements are invested with universal
banks.

Interest income earned from cash in banks and short-term placements for the year ended
June 30, 2014 amounted to P674,286 (2013 - P528,958).

(19)
Note 6 - Advances to GK programs

The level of advances utilized as at June 30, 2014 is as follows:

Unliquidated/ % of
Total Utilized advances in: Unutilized Unliquidated
advances 2010 2011 advances 2013 2014 advances advances
2014 379,323,967 - - - - 84,452,183 294,871,784 81%
2013 239,122,524 - - - 58,393,980 138,956,457 41,772,087 11%
2012 302,094,444 - - 147,666,090 90,171,211 47,104,368 17,152,775 5%
2011* 99,843,413 - 20,889,703 47,552,253 6,069,872 14,281,849 11,049,736 3%
2010 196,967,697 109,748,867 23,122,487 39,392,786 16,246,217 8,457,340 - -
1,217,352,045 109,748,867 44,012,190 234,611,129 170,881,280 293,252,197 364,846,382 100%
Less: Allowance for impairment of unliquidated advances (28,202,511)
336,643,871

As at June 30, 2014, the Foundation provided an allowance for impairment of unliquidated advances amounting to P28,202,511 made in years
2012 and 2011.

The level of advances utilized as at June 30, 2013 is as follows:

Unliquidated % of
Total Utilized advances in: /Unutilized Unliquidated
advances 2010 2011 advances 2013 advances advances
2013 239,122,524 - - - 58,393,980 180,728,544 65%
2012 302,094,444 - - 147,666,090 90,171,211 64,257,143 23%
2011* 99,843,413 - 20,889,703 47,552,253 6,069,872 25,331,585 9%
2010 196,967,697 109,748,867 23,122,487 39,392,786 16,246,217 8,457,340 3%
838,028,078 109,748,867 44,012,190 234,611,129 170,881,280 278,774,612 100%
* covers six months period only as disclosed in Note 1

(20)
Note 7 - Other receivables

The account as at June 30 consists of:

2014 2013
Advances to officers and employees 497,904 1,665,399
Advances to Bayan-anihan Foundation, Inc. - 2,544,557
Advances to summit events - 1,947,054
497,904 6,157,010

As at June 30, 2014, the Foundation has written-off long outstanding receivables totalling to P5,410,946,
which comprise of (i) advances made to Bayan-anihan Foundation, Inc., which ceased its operation in April
2012; (ii) advances for summit events held in 2010 and 2011; (iii) advances made to employee to purchase
merchandise and souvenirs which were destroyed during the typhoon Ondoy.

Advances to officers and employees are collected through monthly payroll deductions over a period of one
(1) year.

Note 8 - Property and equipment

The details of property and equipment as at June 30 are as follows:

Computer and
Land and land other Transportation Office Office furniture
improvements equipment equipment equipment and fixtures Total
Cost
June 30, 2012 122,832,000 1,854,852 4,890,987 2,288,033 17,568 131,883,440
Additions 2,468,660 563,732 - 102,569 - 3,134,961
June 30, 2013 125,300,660 2,418,584 4,890,987 2,390,602 17,568 135,018,401
Additions 193,543,413 269,251 1,095,000 292,198 402,059 195,601,921
Write-offs - (1,696,113) (2,039,587) (2,332,955) (17,568) (6,086,223)
June 30, 2014 318,844,073 991,722 3,946,400 349,845 402,059 324,534,099
Accumulated depreciation
June 30, 2012 393,000 1,352,343 3,013,376 2,269,448 17,568 7,045,735
Charges 1,572,000 331,365 570,282 69,496 - 2,543,143
June 30, 2013 1,965,000 1,683,708 3,583,658 2,338,944 17,568 9,588,878
Charges 1,572,000 137,505 677,530 200,081 196,388 2,783,504
Write-offs - (1,376,862) (2,039,587) (2,311,379) (17,568) (5,745,396)
June 30, 2014 3,537,000 444,351 2,221,601 227,646 196,388 6,626,986
Net book values
June 30, 2013 123,335,660 734,876 1,307,329 51,658 - 125,429,523
June 30, 2014 315,307,073 547,371 1,724,799 122,199 205,671 317,907,113

In 2014, two (2) Deeds of Donation were entered into between the Foundation, SM Investment Corporation
(SMIC) and SM Development Corporation (SMDC), and Peakhold Finance Corporation (PFC) for parcels of
land described as follows:

Donor Location Lot No TCT No. Area (Sq.m.)


SMIC and SMDC Dasmarias, Cavite 7256, FLS-2006 T-90474 38,291
PFC Fairview, Quezon City 6563 N-332703 150
The donated parcels of land are intended to facilitate the implementation of socialized land, housing and
community development projects of the Foundation. The related registration fees and taxes for the transfer of
title over the donated land will be on the account of donor.

Based on the valuation of an independent appraiser on November 28, 2013, the fair value of the donated land
received in 2014 amounted to P189,658,263 inclusive of the improvements thereon valued at P75,795,263.

The Deeds of Donation provide no restrictions as to the title, rights and interests over the donated lots of land.

In 2013, two (2) Deeds of Donation were entered into between the Foundation and Cityland, Inc. for parcels of
lot described as follows:

Lot No TCT No. Area (Sq.m.)


3654-A T-18659007/2012004080 1,945
3655-A T-18660/077-2012004081 9,730
3648-B 2-A-1 T-454100/77-2012004083 42,897
3648-B 2-A-2 T-45411/077-2012004084 376
3653 Rs-04 T-31974/077-2012004082 60,054

The donated lots situated in Cavite are intended to facilitate the implementation of socialized land, housing
and community development projects of the Foundation and for the donor to avail of the incentives under the
Omnibus Investments Code of 1987 and pursuant to the prevailing various regulatory provisions. Titles to
these parcels of lots were transferred to the Foundation on June 21, 2012. The related registration fees and
taxes for the transfer of title over the donated land will be on the account of the Foundation.

Based on the valuation of an independent appraiser on October 12, 2012, the fair value of the donated land
received in 2013 amounted to P122,832,000 inclusive of the improvements thereon valued at P7,860,000.

The Deeds of Donation provide that the Foundation is restricted to sell, assign or transfer any rights over the
land without prior written consent from the Cityland Inc. and the Board of Investments.

The carrying values of property and equipment are fully recoverable from continuing use and hence,
management believes that no impairment is necessary.

In 2014, the Foundation derecognized property and equipment with total cost of P6,086,223 that are no
longer in use.

As at June 30, 2014, fully depreciated property and equipment that are still being utilized by the Company
has a total cost of P330,388 (2013 - P95,000)

Depreciation for the years ended June 30 was charged as follows:

Note 2014 2013


Program expenses 13 1,572,000 1,572,000
General and administrative expenses 1,211,504 971,143
2,783,504 2,543,143

(2)
Note 9 - Intangible assets

The details of intangible assets as at June 30 are as follows:

2014 2013
Cost
July 1 46,391,477 46,391,477
Additions 537,077 -
June 30 46,928,554 46,391,477
Accumulated amortization
July 1 14,850,874 6,648,580
Amortization 8,354,044 8,202,294
June 30 23,204,918 14,850,874
Net book value 23,723,636 31,540,603

Intangible assets pertain to the acquisition of accounting software license and costs related to the
development of the Foundations systems (GK Unity, Quicknet and GK1World.com) to run its project,
financial management and partner support database. The account also includes software licenses granted
to the Foundation in 2012 by a private company. The total fair value of the in-kind donations to
administration was P35,631,477.

Amortization during the year is classified under general and administrative expenses.

Note 10 - Accrued expenses and other current liabilities

Accrued expenses and other current liabilities as at June 30 consist of:

2014 2013
Unconfirmed deposits 8,438,020 2,610,524
Accrued salaries and other payables 6,271,000 4,797,268
Unallocated donations 4,132,249 -
Payable to government agencies 553,295 549,946
Payable to GK777 Expo suppliers 451,726 451,726
Retention payable - 236,263
Others 45,291 45,291
19,891,581 8,691,018

Unconfirmed deposits pertain to donations received from unknown donors. These amounts are
subsequently reclassified to general funds when the identities of these donors are not established or after six
(6) months from the receipt of these donations, whichever is earlier.

Unallocated donations pertain to donations received from various donors which are not yet allocated to a
specific project based on the conditions specified by these respective donors. Once conditions are met,
these amounts are subsequently transferred to designated fund.

In 2013, P6,183,427 of long outstanding payables were written-off resulting in recognition of income in the
statement of support and donations, and expenses.

(3)
Note 11 - Related party transactions

The Foundation transacts with entities which are considered related parties under PAS 24, Related Party
Disclosures. The Foundations transactions and balances with its related parties as at and for the year
ended June 30, 2014 (2013 - nil) are as follows:

Outstanding
Transactions balance Terms and conditions
Receivable from related parties:
GK Mabuhay Social Enterprise, Inc.
Donations received in behalf of the Foundation 543,685 -
Cash advance 680,000 680,000 Collectible upon demand. The
cash advance is unsecured in
nature and bears no interest.
There is no provision related to
this receivable.
680,000
GK Enchanted Farm, Inc.
Cash advance 899,597 899,597 Collectible upon demand. The
cash advance is unsecured in
nature and bears no interest.
There is no provision related to
this receivable.
1,579,597
Payable to related parties:
GK Mabuhay Social Enterprise, Inc.
Donations received by the Foundation in behalf of the
related party 3,080,881 (275,035) Payable upon demand. These
are unsecured, unguaranteed and
non-interest bearing.
GK Enchanted Farm, Inc.
Advance rent (Note 17) 1,300,000 (1,300,000) Payable upon demand. The cash
advance is unsecured in nature
and bears no interest. There is no
provision related to this
receivable.
(1,575,035)

GK Mabuhay Social Enterprise, Inc. and GK Enchanted Farm, Inc. are former programs of the Foundation
intended to provide livelihood to the communities built by the Foundation. As of
June 30, 2014, the Foundation and GK Enchanted Farm, Inc. have two (2) common Board of Trustees while
three (3) members of the board of directors of GK Mabuhay Social Enterprise, Inc. are the immediate family
members of the Foundations Board of Trustees.

Salaries and other short-term benefits and retirement benefits of key management personnel for the year
ended June 30, 2014 amounted to P3,598,151 and P188,949, respectively (2013 - P1,884,000 and
P140,218). There are no other long-term benefits granted to key management personnel.

(4)
Note 12 - Support and donations

Details of the account for the years ended June 30 are as follows:

Note 2014 2013


Designated fund:
Shelter and infrastructure 358,572,318 182,642,609
Disaster response 316,892,961 8,564,232
Livelihood development 11,137,817 1,679,203
Social tourism 6,846,963 75,287,386
Child and youth development 5,218,769 15,448,196
Health 2,564,231 436,868
Food sufficiency 355,866 1,040,112
Others 23,821,801 11,226,799
Total program support and donations 725,410,726 296,325,405
General fund 17 99,961,474 58,429,939
Total support and donations 825,372,200 354,755,344

The significant increase in donations received during the year for shelter and infrastructure and disaster
response represent funds intended for the relief operations and rehabilitation of the provinces affected by
Typhoon Yolanda in November 2013.

In 2012, the Foundation entered into a Memorandum of Agreement (MOA) with the Philippine Amusement
and Gaming Corporation (PAGCOR) for the construction of at least one hundred (100) learning centers in
GK community nationwide or in public schools near GK communities nationwide with total amount of P65
million divided into two allocations. The Foundation received the first allocation amounting to P32.5
million and has accomplished the construction of related learning centers in 2013. As at June 30, 2014, all
required documentation for the release of second allocation were submitted to PAGCOR pending review
and approval.

Deferred grant

On February 11, 2005, the Foundation entered into a MOA with the Department of Social Welfare and
Development (DSWD), in a joint project (Kalinga Luzon) to build and provide shelter to the typhoon-
affected families in several areas in Luzon. The MOA called for DSWDs financial commitment to fund half
of the cost of each house to be built. The Foundations pledge is to supply labor in addition to answering for
the remaining half of the cost, landscaping, administrative expenses and other costs that may be needed for
the completion of the houses. DSWD requires the Foundation to liquidate the grants provided through
submission of formal liquidation reports. The corresponding liquidation reports for the remaining amount
of P7,807,857 were submitted in 2011 awaiting approval. In 2014, DSWD partially approved the liquidation
reports amounting to P4,847,857.

(5)
As at June 30, 2014, the following tranches have been received and liquidated:

Deferred
Date received Amount Liquidated grant
Tranche A April 26, 2005 10,000,000 10,000,000 -
Tranche B August 25, 2005 3,304,265 3,304,265 -
Tranche C September 2, 2005 26,695,735 26,695,735 -
Tranche D December 15, 2006 48,181,820 40,373,963 7,807,857
88,181,820 80,373,963 7,807,857
Less: Partial liquidation in 2014 (4,847,857)
2,960,000

Note 13 - Program expenses

Details of the account for the years ended June 30 are as follows:

Notes 2014 2013


Shelter and infrastructure 240,709,080 158,153,842
Loss on write-off of long outstanding receivable 6 28,202,511 -
Disaster response 20,905,266 2,981,624
Child and youth development 6,003,972 3,982,390
Livelihood development 4,048,165 1,608,294
Events 3,905,289 2,384,024
Research and Training 2,603,481 505,141
Depreciation 8 1,572,000 1,572,000
Social tourism 1,094,938 6,372,654
Health 545,907 572,345
Food sufficiency 356,918 10,041,664
Others 14,672,394 6,506,620
324,619,921 194,680,598

Note 14 - Retirement benefit obligation

The Foundation provides for normal retirement benefits above the minimum required by Republic Act (RA)
7641, Retirement Pay Law. Under its retirement plan, officers and employees shall receive retirement
benefits equivalent to 100% of the monthly pay for every year of credited service based on the salary at the
time of retirement, provided that the employee is 60 years old and has rendered at least 5 years of service.
The Foundation also provides for an optional retirement benefit to employees who are at least 50 years old
and rendered at least 10 years of service. The latest actuarial valuation of the retirement benefits was
sought from an independent actuary as at June 30, 2014.

The following are details of the retirement benefit obligation and expenses recognized in the statements of
assets, liabilities and fund balances and statements of support and donations, and expenses within staff
cost, respectively as at and for the year ended June 30:

2014 2013
Retirement benefit obligation 8,350,094 5,622,263
Retirement benefit expense 1,217,090 1,395,625

(6)
Changes in the present value of the retirement benefit obligation for the years ended June 30 are as follows:

2014 2013
At July 1 5,622,263 6,155,438
Interest cost 317,096 400,103
Current service cost 899,994 995,522
Benefits paid - (524,049)
Remeasurement from:
Changes in financial assumptions 850,221 410,101
Experience adjustments 660,520 (1,814,852)
At June 30 8,350,094 5,622,263

The amounts of retirement benefit expense recognized in the statement of support and donations, and
expenses for the years ended June 30 are as follows:

2014 2013
Current service cost 899,994 995,522
Interest cost 317,096 400,103
1,217,090 1,395,625

Changes in the retirement benefit obligation recognized as at June 30 are as follows:

2014 2013
At July 1 5,622,263 6,155,438
Retirement benefit expense 1,217,090 1,395,625
Remeasurement loss (gain) recognized in other comprehensive income 1,510,741 (1,404,751)
Benefits paid - (524,049)
At June 30 8,350,094 5,622,263

Changes in the cumulative actuarial gain (loss) recognized in other comprehensive income under general
fund in the statement of changes in fund balances are as follows:

2014 2013
At July 1 4,368,543 2,963,792
Remeasurement (loss) gain (1,510,741) 1,404,751
At June 30 2,857,802 4,368,543

The principal actuarial assumptions used are as follows:

2014 2013
Discount rate 5.55% 5.64%
Salary increase rate 2.50% 1.25%

The actuarial present value of the retirement benefit obligation under the plan is measured in terms of
actuarial assumptions for discount rate, salary rate increases, and mortality and disability rate using the 2001
Commissioner Standard Ordinary Task Force (CSO) Table - Generational and the Disability Study Period 2
Benefit 5, respectively.

(7)
The discount rate used is based on the spot yield curve calculated from the PDEX (PDS/T-R2) market yields
by stripping the coupons from the government bonds to create virtual zero coupon bonds as at the valuation
date, and considering the average years of remaining working life of the employees. Salary rate increases are
set by reference over the period over which the benefits are expected to be paid.

The Foundation does not have transactions with the plan asset owing to the unfunded status of retirement
plan. There is no expected contribution to the retirement benefit plan in 2015.

Expected maturity analysis of undiscounted retirement benefit payments as at June 30 are as follows:

2014 2013
Between 1 to 3 years 71,853 71,863
Between 4 to 5 years 2,471,809 1,621,525
Over 5 years 3,370,637 2,908,335
5,914,299 4,601,723

The retirement plan is not significantly exposed to investment and interest rate risk owing to its unfunded
status. Furthermore, there are no funding arrangements, funding policy, minimum funding requirements
or asset-liability matching strategies used by the Foundation.

Note 15 - Staff costs

Details of the account for the years ended June 30 follow:

Note 2014 2013


Salaries and wages 27,997,788 36,546,274
Employee benefits 6,888,801 8,842,474
Retirement benefit expense 14 1,217,090 1,395,625
36,103,679 46,784,373

In 2013, the Foundation paid termination benefits amounting to P4,368,030 as part of its reorganization
discussed in Note 1.

Note 16 - Tax exemption

The Foundation is exempt from income tax pursuant to Section 30 of the Tax Reform Act of 1997.
Accordingly, the Foundation did not recognize deferred income tax assets for the tax effects of temporary
differences arising from net loss carryover, provision for impairment of receivables, retirement benefit
obligation and the unrealized foreign exchange gains and/or losses because of its tax-exempt status.

Note 17 - Lease agreement

The Foundation entered the following lease agreements:

(a) The Foundations office space is being rented free of charge from Foundation of Friends, Inc. (Pro-
friends) (Note 1). As agreed with Pro-friends, the Foundation shall pay for the improvements,
refurbishing, repairs and maintenance necessary for its operations.

The fair value of free rentals for the year ended June 30, 2014 and 2013 amounted to P1,092,000 which
was recognized as part of donations to administration in the statement of support, donations and
expenses (Note 12).

(8)
Total improvements and refurbishing expenses charged as repairs and maintenance in the statement of
support, donations and expenses during the year amounted to P218,637
(2013 - P180,856).

(b) The Foundation entered into a renewable lease agreement with Roman O. Valbuena, Jr. for a 6 hectare
land located at Barangay Encanto, Municipality of Angat, Bulacan for a period of 50 years until 2061.
Advance payment was made by the Foundation during the year amounting to P3,880,000 of which
P1,300,000 was paid by Enchanted Farm in behalf of the Foundation (Note 11). The leased land is
currently being used to facilitate the implementation of socialized land, housing and community
development projects of the Foundation.

The approximate minimum annual rental on such leases as at March 31 based on the original term of the
lease agreements are as follows:

2014 2013
Not later than 1 year - 240,000
Later than 1 year but not later than 5 years - 960,000
Later than 5 years 7,400,000 10,320,000
7,400,000 11,520,000

Note 18 - Foreign currency denominated financial assets and liabilities

Details of the Foundations foreign currency denominated financial asset at June 30 are follows:

2014 2013
Cash
In USD (US$) 1,164,883 9,723
In Euro () 12,104 12,931
Philippine Peso (P) equivalent 51,580,311 1,151,575

As at June 30, 2014, exchange rates were P59.61 (2013 - P56.49) per 1 and P43.66 (2013 - P43.31) per
US$1. Unrealized foreign exchange gains for the year end ended June 30, 2014 amounted to P588,286
(2013 - P190,729).

Note 19 - Supplementary information required by Revenue Regulation No. 15-2010

The following supplementary information required by Revenue Regulation No. 15-2010 information is
presented for purposes of filing with the BIR and is not a required part of the basic financial statements.

(a) Output and input value-added tax (VAT)

The Foundation being a non-stock and non-profit organization is a non-VAT registered entity.

(9)
(b) Importations, excise tax and documentary stamp tax

The Foundation does not have transactions subject to customs duties and tariff fees, excise taxes and/or
documentary stamp tax for the year ended June 30, 2014.

(c) All other local and national taxes

All other local and national taxes paid for the year ended June 30, 2014 consist of:

Mayors permit 9,313


Community tax 3,121
Filing and registration fees 1,500
13,934

The above local and national taxes are lodged under taxes and licenses account in the statement of support
and donations and expenses.

(d) Withholding taxes

Withholding taxes paid and accrued for the year ended June 30, 2014 consist of:

Paid Accrued Total


Withholding tax on compensation 2,384,981 214,607 2,599,588
Expanded withholding tax 563,234 60,653 623,887
2,948,215 275,260 3,223,475

(e) Tax assessments

As at June 30, 2014, there are no outstanding tax assessments with the BIR for open taxable years 2011 to
2014.

(f) Tax cases

As at June 30, 2014, there are no outstanding tax cases under preliminary investigation, litigation and/or
prosecution in courts or bodies outside of the BIR.

(10)