Chapter

Appendix VI: Financial Statements of the General Account, Special Drawing Account, and Staff Retirement Fund

Author(s):
International Monetary Fund
Published Date:
September 1971
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Letter of Transmittal

July 29, 1971

My dear Mr. Chairman:

In accordance with Section 20(b) of the By-Laws of the Fund, I have the honor to submit for the consideration of the Board of Governors the audited financial statements of the General Account, the Special Drawing Account, and the Staff Retirement Fund for the year ended April 30, 1971, together with two memoranda from the Audit Committee, which include the audit certificates.

In conformity with the By-Laws, the external audit of the Fund has been performed by an Audit Committee consisting of auditors nominated by three member countries. At the Fund’s request, Ireland, Japan and Sierra Leone nominated auditors to serve on this Committee. They respectively nominated Mr. Seán Mac Gearailt, Secretary and Director of Audit, Office of Comptroller and Auditor General of Ireland; Mr. Masao Fujioka, Deputy Director-General, International Finance Bureau, Ministry of Finance, Japan; and Mr. A. S. C. Johnson, Deputy Governor, Bank of Sierra Leone. The Auditors thus nominated were confirmed by the Executive Directors.

It will be noted that, in the period under review for the General Account, ordinary income amounted to $135,593,684, and expenditure amounted to $89,171,546 (including $37,442,803 in remuneration on members’ net creditor positions pursuant to Article V, Section 9, of the Articles of Agreement), resulting in a net income of $46,422,138, which has been transferred provisionally to General Reserve pending action by the Board of Governors. In addition, income of $40,145,807 from the Fund’s investment program has been transferred to the Special Reserve.

The detailed report of the Audit Committee is being submitted separately to the Board of Governors.

Yours sincerely,

/s/

P.-P. Schweitzer

Chairman of the Executive Board

Chairman of the Board of Governors

International Monetary Fund

Memorandum by the Audit Committee

June 25, 1971

To the Managing Director

and the Executive Directors

International Monetary Fund

The report of the Audit Committee, dated June 25, 1971, submitted through you to the Board of Governors, on the audit of the financial records, operations and transactions of the International Monetary Fund, for the fiscal year ended April 30, 1971, includes the following paragraphs relating to the scope of the audit and the audit certificate given:

Scope of the Audit

The audit was conducted in accordance with the requirements of Section 20(b) of the By-Laws that the audit be comprehensive with respect to the examination of the financial records of the Fund; that it extend, insofar as practicable, to the ascertainment that operations and transactions conducted through the General Account or the Special Drawing Account during the period under review were supported by the necessary authority; and that it determine that there was adequate and faithful accounting for the assets and liabilities of the Fund and for special drawing rights. In considering the authority for operations and transactions, reference was made to the Articles of Agreement, the By-Laws, the Rules and Regulations, the Resolutions of the Board of Governors, the minutes of the Executive Board and the General Administrative Orders of the Fund. The Committee applied such tests to the accounting and other financial records as it considered necessary to establish the adequacy of the system of accounting and internal control. In determining the Committee’s program of test examination, consideration was given to the work carried out by the Internal Auditor, as reported by him, and to the standard of his work as observed by the Committee.

Audit Certificate

We have examined the Balance Sheet of the General Account of the International Monetary Fund as at April 30, 1971, the Statement of Income and Expenditure and the Statement of Reserves for the year then ended, and the schedules related thereto; and the Balance Sheet of the Special Drawing Account of the International Monetary Fund as at April 30, 1971, the statement of Source and Use, and the schedules related thereto. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

In our opinion, these Balance Sheets and Statements, together with the notes appearing thereon, present fairly the financial position of the International Monetary Fund as at April 30, 1971, and the results of the operations and transactions in the General Account and the Special Drawing Account for the year then ended, in conformity with generally accepted accounting principles, applied on a basis consistent with that of the preceding year.

Audit Committee:

/s/ A.S.C. Johnson, Chairman (Sierra Leone)

/s/ Seán Mac Gearailt (Ireland)

/s/ Masao Fujioka (Japan)

General Balanceas at April

Values expressed in U.S. dollars on the one U.S. dollar is equivalent

Assets
Gold Account
Gold with depositories (See Note 1)
(123,952,738.548 fine ounces at $35 per ounce)
Bars$4,163,590,384
General deposits174,755,465$4,338,345,849
Investments (See Note 2)
U.S. Government securities maturing
within 12 months at cost (face value
$415.790.000)$399,955,610
Funds awaiting investment35,913399,991,523$ 4,738,337,372
Special Drawing Rights (See Note 3)489,849,181
(489,849,181 units)
Currencies and Securities (See Note 4)
With depositories
Currencies$ 6,510,789,997
Securities17,729,606,466$24,240,396,463
(nonnegotiable, noninterest-bearing

demand obligations, payable at face

value by members in their currencies)
Deduct:
Currency adjustment payable7,487,28424,232,909,179
(in accordance with Article IV, Section 8)
Subscriptions to Capital—Receivable
Balances of initial quotas—not due$204,265,019
Balance of an increase in quota—not due (Contra)3,200,000207,465,019
Other Assets (See Note 5)38,852,779
Total Assets$29,707,413,530
Notes:

Excludes 15,130.023 fine ounces held under earmark for members.

Made with the proceeds of the sale of 11,428,329,237 fine ounces of gold. Upon termination of the investment, the same quantity of gold can be reacquired.

The unit of value of special drawing rights is equivalent to 0.888671 gram of fine gold.

Total outstanding purchases of members amount to $4,117 million. Currency holdings in excess of members’ quotas subject to Fund charges amount to $2,555 million.

The assets and liabilities of the Staff Retirement Fund are not included in this Balance Sheet.

Represents currencies borrowed under Article VII, Section 2(i), of the Articles of Agreement.

The charge for a stand-by arrangement is credited against the service charge for funds drawn under the arrangement. A member that cancels a stand-by arrangement will be paid a refund, which will be the prorated portion of the remaining stand-by charge.

Notes:

Excludes 15,130.023 fine ounces held under earmark for members.

Made with the proceeds of the sale of 11,428,329,237 fine ounces of gold. Upon termination of the investment, the same quantity of gold can be reacquired.

The unit of value of special drawing rights is equivalent to 0.888671 gram of fine gold.

Total outstanding purchases of members amount to $4,117 million. Currency holdings in excess of members’ quotas subject to Fund charges amount to $2,555 million.

The assets and liabilities of the Staff Retirement Fund are not included in this Balance Sheet.

Represents currencies borrowed under Article VII, Section 2(i), of the Articles of Agreement.

The charge for a stand-by arrangement is credited against the service charge for funds drawn under the arrangement. A member that cancels a stand-by arrangement will be paid a refund, which will be the prorated portion of the remaining stand-by charge.

Account Sheet 30, 1971

basis of established parities or provisional rates—to 0.888671 gram of fine gold

Capital, Reserves, and Liabilities
Capital
Subscriptions of members$28,477,800,000
Reserves (Exhibit C)
Special reserve$406,369,808
General reserve378,060,637784,430,445
Subscription in Respect of an Increase in Quota

Consented to but Not Yet Effective
Balance not due (Contra)3,200,000
Indebtedness (See Note 6)
To Participants Under General
Arrangements to Borrow$274,370,000
Other125,000,000399,370,000
Provision for Potential Refunds of
Stand-By Charges (See Note 7)853,625
Other Liabilities (See Note 5)41,759,460
Total Capital, Reserves, and Liabilities$29,707,413,530
/s/ W. O. Habermeier/s/ P.-P. Schweitzer
TreasurerManaging Director
General Account Statement of Income and Expenditure for the year ended April 30, 1971
Income
Operational charges$ 3,170,947
Charges on balances in excess of quotas128,139,673
Interest on holdings of special drawing rights4,255,698
27,366
Total Income (See Note 1)$135,593,684
Expenditure
Administrative expenditure
Board of Governors$ 897,940
Executive Directors
Salaries$1,883,749
Other compensations and benefits537,189
448,4782,869,416
Staff
Salaries$14,029,376
Other compensations and benefits5,565,504
3,185,88522,780,765
Special services to member countries2,465,737
Other administrative expenses
Communications$ 810,135
Office occupancy expenses 961,458
Books and printing (See Note 2)623,345
Supplies and equipment682,784
Miscellaneous (See Note 3)1,158,4394,236,161
Total administrative expenditure$33,250,019
Deduct: Estimated expenses of operating
the Special Drawing Account890,853
Net administrative expenditure$32,359,166
Operational expenditure
Remuneration$37,442,803
Interest on indebtedness
Under General Arrangements to Borrow8,173,903
Other3,635,417
Gold handling and sundry other costs (net)12,887
Total operational expenditure49,265,010
Fixed property expenditure7,547,370
Total Expenditure89,171,546
Net Income$ 46,422,138
(Transferred provisionally to General Reserve pending
action by Board of Governors)(Exhibit C).
Notes:

Excludes income from investments amounting to $40,145,807 transferred to Special Reserve (Exhibit C).

After deduction of $98,467 for sales of Fund publications.

After deduction of $322,818 for food service sales.

Notes:

Excludes income from investments amounting to $40,145,807 transferred to Special Reserve (Exhibit C).

After deduction of $98,467 for sales of Fund publications.

After deduction of $322,818 for food service sales.

General Account Statement of Reserves for the year ended April 30, 1971
Special Reserve (See Note 1)
Balance, April 30, 1970$366,224,001
Add
Income from investments in U.S.
Government securities40,145,807
Balance, April 30, 1971$406,369,808
General Reserve
Balance, April 30, 1970 (See Note 2)$350,303,618
Deduct
Distribution of net income for fiscal
year 1970 in accordance with Board
of Governors’ Resolution No. 25-717,532,119
$332,771,499
Transfer to Staff Retirement Fund to cover
unfunded past service cost resulting from
amendments to the Plan effective April 1, 19711,133,000
$331,638,499
Add
Net income (Exhibit B),
transferred provisionally pending
action by Board of Governors46,422,138
Balance, April 30, 1971378,060,637
Total Reserves (per Balance Sheet)$784,430,445
Notes:

From November 1, 1957 income from investments in U.S. Government securities has been placed to this reserve. Any administrative deficit for any fiscal year of the Fund must be written off first against this reserve. Pursuant to Article XII, Section 6 (c), of the Articles of Agreement, the Fund may make transfers from this reserve to the General Reserve.

Includes net income of $57,552,478 for fiscal year ended April 30, 1970 transferred provisionally to the General Reserve pending action by the Board of Governors. In accordance with Board of Governors’ Resolution No. 25-7, $40,020,359 was allocated to the General Reserve and $17,532,119 was distributed to members pursuant to Article XII, Section 6 (b).

Notes:

From November 1, 1957 income from investments in U.S. Government securities has been placed to this reserve. Any administrative deficit for any fiscal year of the Fund must be written off first against this reserve. Pursuant to Article XII, Section 6 (c), of the Articles of Agreement, the Fund may make transfers from this reserve to the General Reserve.

Includes net income of $57,552,478 for fiscal year ended April 30, 1970 transferred provisionally to the General Reserve pending action by the Board of Governors. In accordance with Board of Governors’ Resolution No. 25-7, $40,020,359 was allocated to the General Reserve and $17,532,119 was distributed to members pursuant to Article XII, Section 6 (b).

Exhibit A (Special Drawing Account)

Special Drawing Account Balance Sheet as at April 30, 1971

Values expressed in units of value of special drawing rights—one unit of value is equivalent to 0.888671 gram of fine gold

Allocations
Net cumulative allocations of special
drawing rights to participants (See Note 1)SDR 6,363,286,600
Holdings
Holdings of special drawing rights (See Note 2)(Exhibit B)
Participants
Holdings above allocations
AllocationsSDR 2,701,895,000
Received (net)621,483,667SDR 3,323,378,667
Holdings below allocations
AllocationsSDR 3,661,391,600
Used (net)1,111,332,8482,550,058,752SDR 5,873,437,419
General Account489,849,181
SDR 6,363,286,600
Notes:

Under Articles XXX and XXXI of the Fund Agreement which cover termination of participation in and the liquidation of the Special Drawing Account, respectively, a participant has an obligation to pay to the Fund an amount equal to its net cumulative allocation of special drawing rights and any other amounts that may be due and payable because of participation in the Special Drawing Account. The Fund also has an obligation to redeem the special drawing rights in accordance with these Articles.

Special drawing rights allocated by the Fund do not constitute claims by holders against the Fund to provide currency, except as prescribed by the provisions of Articles XXX and XXXI relating to the termination of participation and liquidation. Participants may use their special drawing rights to obtain currency in accordance with the provisions of Article XXV, and under Section 5 of this Article they are entitled to request the Fund’s assistance in the form of designation of participants to provide currency in exchange for special drawing rights. The obligation of a participant to provide currency for special drawing rights does not extend beyond the point at which its holdings of special drawing rights in excess of its net cumulative allocations are equal to twice its net cumulative allocation or such higher limit as may be agreed between a participant and the Fund. A participant may, however, provide currency in excess of the obligation limit or any agreed higher limit.

Notes:

Under Articles XXX and XXXI of the Fund Agreement which cover termination of participation in and the liquidation of the Special Drawing Account, respectively, a participant has an obligation to pay to the Fund an amount equal to its net cumulative allocation of special drawing rights and any other amounts that may be due and payable because of participation in the Special Drawing Account. The Fund also has an obligation to redeem the special drawing rights in accordance with these Articles.

Special drawing rights allocated by the Fund do not constitute claims by holders against the Fund to provide currency, except as prescribed by the provisions of Articles XXX and XXXI relating to the termination of participation and liquidation. Participants may use their special drawing rights to obtain currency in accordance with the provisions of Article XXV, and under Section 5 of this Article they are entitled to request the Fund’s assistance in the form of designation of participants to provide currency in exchange for special drawing rights. The obligation of a participant to provide currency for special drawing rights does not extend beyond the point at which its holdings of special drawing rights in excess of its net cumulative allocations are equal to twice its net cumulative allocation or such higher limit as may be agreed between a participant and the Fund. A participant may, however, provide currency in excess of the obligation limit or any agreed higher limit.

/s/ P.-P. Schweitzer/s/ W. O. Habermeier
Managing DirectorTreasurer

Exhibit B (Special Drawing Account)

Special Drawing Account Source and Use of Special Drawing Rights for the year ended April 30, 1971(expressed in units of special drawing rights)
ParticipantsGeneral AccountTotal
Total holdings as at April 30, 1970SDR 3,201,573,179SDR 212,472,421SDR 3,414,045,600
Source of special drawing rights received
AllocationSDR 2,949,241,000SDR 2,949,241,000
Transactions with designation347,625,106347,625,106
(Article XXV, Section 2(a))
Transactions without designation285,500,000285,500,000
(Article XXV, Section 2(b) (i))
Net interest4,845,221SDR 4,255,6989,100,919
Payments between participants and the General
Account
Repurchases3,194,237360,320,296363,514,533
Distribution of net income settlements9,115,2979,115,297
Charges142,67566,585,62666,728,301
Reimbursement of Special Drawing Account
expenses890,853890,853
Remuneration18,402,99818,402,998
Replenishment123,210,000123,210,000
(Articles VII, Section 2(ii), and XXV, Section
7(f))
Other610,506________610,506
SDR 3,741,887,040SDR 432,052,473SDR 4,173,939,513
Use of special drawing rights
Transactions with designationSDR 347,625,106SDR 347,625,106
(Article XXV, Section 2(a))
Transactions without designation285,500,000285,500,000
(Article XXV, Section 2(b) (i))
Net charges9,100,9199,100,919
Payments between participants and the General
Account
Repurchases360,320,296SDR 3,194,237363,514,533
Distribution of net income settlements9,115,2979,115,297
Charges66,585,626142,67566,728,301
Reimbursement of Special Drawing Account
expenses890,853890,853
Remuneration18,402,99818,402,998
Replenishment123,210,000123,210,000
(Articles VII, Section 2(ii), and XXV, Section
7(f))
Other________610,506610,506
SDR 1,070,022,800SDR 154,675,713SDR 1,224,698,513
Total holdings as at April 30, 1971 (per Balance Sheet)SDR 5,873,437,419SDR 489,849,181SDR 6,363,286,600

Staff Retirement Fund Memorandum by the Audit Committee

June 25, 1971

To the Managing Director

and the Executive Directors

International Monetary Fund

The report of the Audit Committee, dated June 25, 1971, submitted through you to the Board of Governors, on the audit of the financial records and transactions of the International Monetary Fund for the fiscal year ended April 30, 1971, includes the following paragraphs relating to the scope of the audit conducted, and the audit certificate given with respect to the Staff Retirement Fund:

Scope of the Audit

The Audit Committee has examined the separate accounts and financial statements relating to the Staff Retirement Fund for the year ended April 30, 1971. In the course of the examination, the Committee referred to the Articles of the Staff Retirement Plan and to the decisions of the Pension, Administration and Investment Committees created under the Plan. The Audit Committee made what it considered an adequate test check of the various classes of transactions, taking into account the audit coverage of the Internal Auditor, whose report to the Committee showed that a detailed examination had been made of the participants’ accounts.

Audit Certificate

In our opinion, the Balance Sheet, Statement of Source and Application of Funds, and the related Schedules of Participants’ Account, Accumulation Account, Retirement Reserve Account and Reserve Against Investments present fairly the financial position of the Staff Retirement Fund as at April 30, 1971, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year.

Audit Committee:

/s/ A.S.C. Johnson, Chairman (Sierra Leone)

/s/ Seán Mac Gearailt (Ireland)

/s/ Masao Fujioka (Japan)

Exhibit I

Staff Retirement Fund Balance Sheet as at April 30, 1971
Assets
Cash at Banks$ 34,160
Investments
Bonds, at amortized cost
United States Government (including
de facto guaranteed notes)$7,321,964
(market value, $6,773,557)
International Bank for Reconstruction
and Development and Inter-American
Development Bank (See Note)5,433,376
(market value, $4,607,500)
Corporate5,950,245
(market value. $4.863,601)
Corporate Convertible30,000$18,735,585
(market value $33,750)
Stocks, at cost
Preferred Convertible$ 95,811
(market value. $379.665)
Common18,938,73619,034,54737,770,132
(market value $22,455,218)
Accrued Interest on Bonds and Contributions
from Participants and Employer363,809
Total Assets$38,168,101
Liabilities and Reserves
Participants’ Account$ 7,641,578
Accumulation Account23,999,135
Retirement Reserve Account5,386,596
Reserve Against Investments864,686
Accounts Payable276,106
Total Liabilities and Reserves$38,168,101
Note:A commitment has been made for the purchase of $750,000 face amount of International Bank for Reconstruction and Development 8 5/8 per cent bonds due August 1, 1995 at par in installments of $250,000 each on August 4, 1971, February 2, 1972, and August 2, 1972.
Note:A commitment has been made for the purchase of $750,000 face amount of International Bank for Reconstruction and Development 8 5/8 per cent bonds due August 1, 1995 at par in installments of $250,000 each on August 4, 1971, February 2, 1972, and August 2, 1972.
/s/ W. O. Habermeier/s/ P.-P. Schweitzer
TreasurerManaging Director

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