Chapter

Appendix VIII. Financial Statements of the General Account, Special Drawing Account, and Staff Retirement Fund

Author(s):
International Monetary Fund
Published Date:
September 1972
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Letter of Transmittal

August 7, 1972

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, 1972, 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, Canada, Germany and Nicaragua nominated auditors to serve on this Committee. They respectively nominated Mr. George R. Long, Assistant Auditor General of Canada; Mr. Walter Scholz, Member of the Board of Directors of the Deutsche Revisionsund Treuhand-Aktiengesellschaft Treuarbeit—Wirtschaftsprüfungsgesellschaft —Steuerberatungsgesellschaft; and Mr. Hilario Hooker A., Director, Financial Department, Banco Central de Nicaragua. The Auditors thus nominated were confirmed by the Executive Directors.

It will be noted that, in the year under review for the General Account, operational income amounted to SDR 72,234,198 and operational expenditure amounted to SDR 31,759,437 resulting in net operational income of SDR 40,474,761. However, budgetary and fixed property expenditure amounted to SDR 53,743,091 which resulted in net expenditure of SDR 13,268,330 for the fiscal year. In addition, income from the Fund’s investment program, which was terminated during February 1972, amounted to SDR 17,537,157. Pursuant to Executive Board Decision No. 708-(57/57), adopted November 27, 1957, the income from investments has been credited to the Special Reserve and net expenditure was written off against 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 28, 1972

To the Managing Director

and the Executive Directors

International Monetary Fund

Our report, dated June 28, 1972, 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, 1972, 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 are supported by the necessary authority; and that it determine that there is adequate and faithful accounting for the assets and liabilities of the Fund and for special drawing rights. In the course of the audit, 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. In determining our program of test examination, consideration was given to the adequacy of the system of accounting and internal control and 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, 1972, 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, 1972, the statement of Source and Use of Special Drawing Rights 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.

Heretofore, the financial statements of the Fund have been presented in United States dollars with a gold equivalent of 0.888671 gram of fine gold. With effect from March 20, 1972 the accounts of the Fund have been summarized in Special Drawing Rights. One special drawing right is equivalent to 0.888671 gram of fine gold. Thus for the first time the annual financial statements of the Fund are stated in Special Drawing Rights.

In our opinion these Statements together with the notes appearing thereon, present fairly the financial position of the International Monetary Fund as at April 30, 1972, 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/ G. R. Long, Chairman (Canada)

/s/ W. H. Scholz (Germany)

/s/ Hilario Hooker A. (Nicaragua)

Exhibit A (General Account)

General

Balance

as at April

Amounts expressed in

(one SDR is equivalent to

Assets
Gold with Depositories(See Note 1)SDR 5,330,969,285
(152,313,408.151 fine ounces at SDR 35 per ounce)
Special Drawing Rights909,960,112
Currencies and Securities (See Note 2)
With depositories
CurrenciesSDR 5,875,252,126
Securities17,333,854,713
(nonnegotiable, noninterest-bearing
demand obligations, payable at face
value by members in their currencies)
Deduct:SDR 23,209,106,839
Currency adjustments payable (net)42,895,66923,166,211,170
(in accordance with Article IV, Section 8)
Subscriptions to Capital—Receivable
Balances of initial quotas—not dueSDR 196,604,973
Balance of an increase in quota—not due (Contra)2,400,000199,004,973
Other Assets (See Note 3)15,361,877
Total AssetsSDR 29,621,507,417
Notes:

Excludes 7,267.638 fine ounces held under earmark for members.

Total outstanding purchases of members amount to SDR 2,948 million. Currency holdings in excess of members’ quotas subject to Fund charges amount to SDR 833 million. The par value of the U. S. dollar was changed on May 8, 1972 from 0.888671 to 0.818513 gram of fine gold per U. S. dollar under Article IV, Section 5. The new par value of the U. S. dollar corresponds to 1.08571 U. S. dollars per special drawing right, or 38.0000 U. S. dollars per troy ounce of fine gold. Pursuant to Article IV, Section 8 (b), the United States paid to the Fund additional U. S. dollars on June 2, 1972 equal to the reduction in the gold value of the U. S. dollars held by the Fund on May 8, 1972. The change in the par value of the U. S. dollar resulted in an increase in the Fund’s holdings of that currency but had no effect on the Fund’s balance sheet as at April 30, 1972.

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

4. 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 7,267.638 fine ounces held under earmark for members.

Total outstanding purchases of members amount to SDR 2,948 million. Currency holdings in excess of members’ quotas subject to Fund charges amount to SDR 833 million. The par value of the U. S. dollar was changed on May 8, 1972 from 0.888671 to 0.818513 gram of fine gold per U. S. dollar under Article IV, Section 5. The new par value of the U. S. dollar corresponds to 1.08571 U. S. dollars per special drawing right, or 38.0000 U. S. dollars per troy ounce of fine gold. Pursuant to Article IV, Section 8 (b), the United States paid to the Fund additional U. S. dollars on June 2, 1972 equal to the reduction in the gold value of the U. S. dollars held by the Fund on May 8, 1972. The change in the par value of the U. S. dollar resulted in an increase in the Fund’s holdings of that currency but had no effect on the Fund’s balance sheet as at April 30, 1972.

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

4. 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, 1972

special drawing rights

0.888671 gram of fine gold)

Capital, Reserves, and Liabilities
Capital
Subscriptions of membersSDR 28,808,600,000
Reserves (Exhibit C)
Special reserveSDR 410,638,635
General reserve365,579,703776,218,338
Subscription in Respect of an Increase inQuota
Consented to but Not Yet Effective
Balance not due (Contra)2,400,000
Provision for Potential Refunds of
Stand-By Charges (See Note 4)523,892
Other Liabilities (See Note 3)33,765,187
Total Capital, Reserves, and LiabilitiesSDR 29,621,507,417
/s/ W. O. Habermeier/s/ P.-P. Schweitzer
TreasurerManaging Director

Exhibit B (General Account)

General Account Statement of Income and Expenditure for the year ended April 30, 1972

Amounts expressed in special drawing rights

(one SDR is equivalent to 0.888671 gram of fine gold)

Operational Income
Operational chargesSDR3,027,386
Charges on balances in excess of quotas62,025,490
Interest on holdings of special drawing rights7,181,322
Total Operational Income (See Note 1)SDR72,234,198
Deduct Operational Expenditure:
RemunerationSDR30,519,326
Interest on indebtedness1,213,442
Other26,669
Total Operational Expenditure31,759,437
Net Operational IncomeSDR40,474,761
Budgetary Expenditure
Board of GovernorsSDR702,431
Executive Directors
SalariesSDR2,056,868
Other compensations and benefits522,944
Travel469,4223,049,234
Staff
SalariesSDR15,912,463
Other compensations and benefits5,910,002
Travel3,792,60825,615,073
Special services to member countries2,822,059
Other expenses
CommunicationsSDR1,390,346
Office occupancy expenses998,501
Books and printing (See Note 2)643,706
Supplies and equipment648,287
Data processing services543,126
Miscellaneous (See Note 3)644,0074,867,973
Total Budgetary ExpenditureSDR37,056,770
Deduct: Assessments levied on participants for estimated
cost of operating the Special Drawing Account1,024,629
Net Budgetary ExpenditureSDR36,032,141
Fixed Property Expenditure17,710,950
Total Budgetary and Fixed Property Expenditure.53,743,091
Net ExpenditureSDR13,268,330
(Charged against the Special Reserve pursuant
to Executive Board Decision No. 708-(57/57),
adopted November 27, 1957)
Notes:

Excludes income from investments amounting to SDR 17,537,157 transferred to Special Reserve (Exhibit C).

After deduction of SDR 96,733 for sales of Fund publications.

After deduction of SDR 343,576 for food service sales and SDR 57,931 for miscellaneous administrative income.

Notes:

Excludes income from investments amounting to SDR 17,537,157 transferred to Special Reserve (Exhibit C).

After deduction of SDR 96,733 for sales of Fund publications.

After deduction of SDR 343,576 for food service sales and SDR 57,931 for miscellaneous administrative income.

Exhibit C (General Account)

General Account Statement Of Income And Expenditure for the year ended April 30, 1972

Amounts expressed in special drawing rights

(one SDR is equivalent to 0.888671 gram of fine gold)

Special Reserve (See Note 1)
Balance, April 30, 1971SDR406,369,808
Add
Income from investments in U. S.
Government securities17,537,157
SDR423,906,965
Deduct
Net expenditure (Exhibit B)13,268,330
Balance, April 30, 1972SDR410,638,635
General Reserve
Balance, April 30, 1971 (See Note 2)SDR378,060,637
Deduct
Distribution of net income for fiscal
year 1971 in accordance with Board
of Governors’ Resolution No. 26-712,480,934
Balance, April 30, 1972365,579,703
Total Reserves (per Balance Sheet)SDR776,218,338
Notes:

Income from investments in U.S. Government securities was placed to this reserve from November 1, 1957 until February 15, 1972 when the Fund’s gold investment program was terminated. Pursuant to Executive Board Decision No. 708-(57/57) any administrative deficit for any fiscal year of the Fund must be written off first against this reserve. Under 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 SDR 46,422,138 for fiscal year ended April 30, 1971, transferred provisionally to the General Reserve pending action by the Board of Governors. In accordance with Board of Governors’ Resolution No. 26-7, SDR 33,941,204 was allocated to the General Reserve and SDR 12,480,934 was distributed to members pursuant to Article XII, Section 6 (b).

Notes:

Income from investments in U.S. Government securities was placed to this reserve from November 1, 1957 until February 15, 1972 when the Fund’s gold investment program was terminated. Pursuant to Executive Board Decision No. 708-(57/57) any administrative deficit for any fiscal year of the Fund must be written off first against this reserve. Under 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 SDR 46,422,138 for fiscal year ended April 30, 1971, transferred provisionally to the General Reserve pending action by the Board of Governors. In accordance with Board of Governors’ Resolution No. 26-7, SDR 33,941,204 was allocated to the General Reserve and SDR 12,480,934 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, 1972

Amounts expressed in special drawing rights

(one SDR is equivalent to 0.888671 gram of fine gold)

Allocations
Net cumulative allocations of special
drawing rights to participants (See Note 1)SDR9,314,835,400
Holdings
Holdings of special drawing rights (See Note 2) (Exhibit B)
Participants
Holdings above allocations
AllocationsSDR3,903,449,000
Received (net)1,052,042,514SDR4,955,491,514
Holdings below allocations
AllocationsSDR5,411,386,400
Used (net)1,962,002,6263,449,383,774SDR8,404,875,288
General Account909,960,112
SDR9,314,835,400
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 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 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/ W. O. Habermeier/s/ P.-P. Schweitzer
TreasurerManaging Director

Exhibit B (Special Drawing Account)

Special Drawing Account Source and Use of Special Drawing Rights Year Ended April 30, 1972

Amounts expressed in special drawing rights

(one SDR is equivalent to 0.888671 gram of fine gold)

ParticipantsGeneral AccountTotal
Total Holdings as at April 30, 19715,873,437,419489,849,1816,363,286,600
Source of Special Drawing Rights Received
Allocations2,951,548,8002,951,548,800
Transactions with Designation (Article XXV, Section 2(a))266,809,680266,809,680
Transact ions without Designation
Under Article XXV, Section 2(b)(i)355,000,000355,000,000
Under Article XXV, Section 2(b) (ii)25,000,00025,000,000
Net Interest14,427,8427,181,32221,609,164
Pavments Between Participants and the General Account
Repurchases15,445,728516,728,889532,174,617
Distribution of Net Income Settlements8,306,1718,306,171
Charges423,96230,765,39731,189,359
Reimbursement of Special Drawing Account Expenses1,024,6291,024,629
Remuneration14,745,67214,745,672
Replenishment under Articles VII. Section 2 (u). and XXV
Section 1(f)21,300,00021,300,000
Under Article XXV, Sections 2(b) (ii) and 1(e)29,000,00029,000,000
Reconstitution46,367,77346,367,773
3,748,375,628555,700,2374,304,075,865
Us** nf SIner.ial Drawinp Rights
Transactions with Designation (Article XXV, Section 2(a))266,809,680266,809,680
Transactions without Designation
Under Article XXV, Section 2(b) (i)355,000,000355,000,000
I Inder Article XXV. Section 2(b) (ii)25,000,00025,000,000
Net Charges21,609,16421,609,164
Payments Between Participants and the General Account
Repurchases516,728,88915,445,728532,174,617
Distribution of Net Income Settlements8,306,1718,306,171
Charges30,765,397423,96231,189,359
Reimbursement of Special Drawing Account Expenses1,024,6291,024,629
Remuneration14,745,67214,745,672
Replenishment under Articles VII. Section 2 (ii), and XXV,
Section 1(f)21,300,00021,300,000
Under Article XXV, Sections 2(b) (ii) and 1(e)29,000,00029,000,000
Reconstitution46,367,77346,367,773
1,216,937,759135,589,3061,352,527,065
Total Holdings as at April 30, 1972 (per Balance Sheet)8,404,875,288909,960,1129,314,835,400

Staff Retirement Fund

Memorandum by the Audit Committee

June 28, 1972

To the Managing Director

and the Executive Directors

International Monetary Fund

Our report, dated June 28, 1972, 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, 1972, includes the following paragraphs relating to the scope of the audit, and the audit certificate given with respect to the Staff Retirement Fund:

Scope of the Audit

We have examined the accounts and financial statements of the Staff Retirement Fund for the year ended April 30, 1972. In the course of the examination, we referred to the Articles of the Staff Retirement Plan and to the decisions of the Pension, Administration and Investment Committees created under the Plan. We made what we consider to be an adequate test check of the transactions, taking into account the audit carried out by the Internal Auditor.

Audit Certificate

In our opinion, the Balance Sheet, Statement of Source and Application of Funds, and the related schedules—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, 1972, and the results of its transactions 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/ G. R. Long, Chairman (Canada)

/s/ W. H. Scholz (Germany)

/s/ Hilario Hooker A. (Nicaragua)

Exhibit I

Staff Retirement Fund Balance Sheet as at April 30, 1972

Amounts expressed in U. S. dollars

Assets
Cashat Banks$ 101,406
Investments
Bonds, at amortized cost
Notes insured by United States Government$ 2,462,546
(market value, $2,714,919)
International Bank for Reconstruction and
Development and Inter-American
Development Bank (See Note)8,008,327
(market value. $7,493,810)
Corporate6,171,188$16,642,061
(market value, $5,326,648)
Stocks, at cost
Preferred Convertible$ 1,222,043
(market value. $1,408,000)
Common24,945,67826,167,72142,809,782
(market value, $29,478,342)
Accrued Interest on Bonds, Contributions from
Participants and Employer, and Miscellaneous
Receivables375,133
Total Assets$43,286,321
Liabilities and Reserves
Participants’ Account$ 8,868,787
Accumulation Account26,574,614
Retirement Reserve Account6,764,831
Reserve Against Investments1,020,358
Accounts Payable57,731
Total Liabilities and Reserves$43,286,321
Note: A commitment has been made for the purchase of $250,000 face amount of International Bank for Reconstruction and Development 8 5/8 per cent bonds due August 1, 1995 at par on August 2, 1972.
Note: A commitment has been made for the purchase of $250,000 face amount of International Bank for Reconstruction and Development 8 5/8 per cent bonds due August 1, 1995 at par on August 2, 1972.
/s/ W. O. Habermeier/s/ P.-P. Schweitzer
TreasurerManaging Director

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