Chapter

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

Author(s):
International Monetary Fund
Published Date:
September 1977
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Letter of Transmittal

August 2, 1977

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, the Subsidy Account, the Trust Fund, and the Staff Retirement Fund for the year ended April 30, 1977, together with the reports of the External Audit Committee thereon.

In conformity with the By-Laws, the audit of the Fund has been performed by an External Audit Committee consisting of auditors nominated by three member countries. At the Fund’s request, Tunisia, the United Kingdom and Uruguay nominated auditors to serve on this Committee. They respectively nominated Mr. Mohamed Bouaouaja, Director, Research Department, Central Bank of Tunisia; Mr. J. A. Collens, Deputy Director of Audit, Exchequer and Audit Department, United Kingdom; and Mr. Lelis A. Breda, Chief, Money and Credit Sector, Central Bank of Uruguay. 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 774,647,780, and operational expenses amounted to SDR 727,568,264 resulting in net operational income of SDR 47,079,516. Administrative budget and fixed property expenses, including the annual amortization of the contribution to the Staff Retirement Fund to discharge the past service liabilities (SDR 4,392,696), amounted to SDR 65,270,508 which resulted in an excess of expenses over income of SDR 18,190,992 for the year. In accordance with Executive Board Decision No. 708-(57/57), adopted November 27, 1957, this excess of expenses over income has been charged against the Special Reserve.

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

Yours sincerely,

/s/

H. Johannes Witteveen

Chairman of the Executive Board

Chairman of the Board of Governors

International Monetary Fund

General Account

Report of the External Audit Committee

Washington, D.C.

July 1, 1977

Authority for the Audit

The audit for the year ended April 30, 1977, was carried out pursuant to Section 20(b) of the By-Laws of the International Monetary Fund.

Scope of the Audit

We have conducted the audit in accordance with generally accepted auditing standards and in compliance with the requirements of Section 20(b) of the By-Laws that it should be comprehensive with respect to examination of the records of the Fund; should extend, insofar as practicable, to the ascertainment that operations and transactions conducted through the General Account were supported by the necessary authority; and should determine that there was adequate and faithful accounting for the assets and liabilities of the Fund. Our examination included a review of the adequacy of the system of accounting and internal control and such tests as we considered necessary in the circumstances, having regard to the extent and results of the tests which we observed to have been carried out by the Internal Auditor.

Scope of the Accounts

Exhibits A through E represent the accounts which Section 20(b) of the By-Laws requires to be prepared and audited. They include corresponding figures for the year ended April 30, 1976, for the purposes of comparison. Schedules 1 through 5 submitted with our report to the Board of Governors contain further details of items in the accounts which the Audit Committee consider may be of interest to the Board.

Audit Opinion

In our opinion, the financial statements (Exhibits A through E) present fairly, in terms of special drawing rights, the financial position of the General Account of the International Monetary Fund as at April 30, 1977, and the results of its operations and transactions for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year.

External Audit Committee:

/s/ J. A. Collens, Chairman (United Kingdom)

/s/ MohamedBouaouaja (Tunisia)

/s/ Lelis A. Breda (Uruguay)

International Monetary Fund

(Note 1)

Exhibit A Balance Sheet

as at April 30, 1977

Amounts expressed in special drawing rights

(Note 2)

19771976
Assets
Gold with Depositories (Note 3)4,959,027,0705,369,539,548
Special Drawing Rights771,093,672460,846,614
Currencies and Securities (Notes 4 and 5)
With depositories
Currencies13,968,013,20111,796,561,246
Securities16,247,600,89016,288,819,875
30,215,614,09128,085,381,121
Add: Net valuation adjustment receivable1,795,286,7792,491,464,005
Subscriptions to Capital—Receivable32,010,900,87030,576,845,126
(Balances of initial quotas—not due)23,547,18046,694,339
Charges Receivable from Members195,065,337140,470,388
Other Assets (Notes 2 and 7)17,501,2084,019,249
Total Assets37,977,135,33736,598,415,264
Capital, Reserves, and Liabilities
Capital
Subscriptions of Members29,216,500,00029,211,400,000
Reserves (Exhibit C and Note 8)686,484,417704,675,409
Indebtedness (Note 6)
Oil facility6,702,087,6356,465,147,635
General Arrangements to Borrow and other borrowing1,000,000,0007,702,087,635
Remuneration Payable to Members226,878,584104,081,938
Interest Payable on Indebtedness126,806,443107,807,354
Other Liabilities (Note 7)18,378,2585,302,928
Total Capital, Reserves, and Liabilities37,977,135,33736,598,415,264
The notes in Exhibit E are an integral part of the financial statements.
The notes in Exhibit E are an integral part of the financial statements.
/s/ R. J. Familton/s/ H. Johannes Witteveen
Acting TreasurerManaging Director

Exhibit B Statement of Income and Expenses

for the year ended April 30, 1977

Amounts expressed in special drawing rights

(Note 2)

19771976
Operational Income:
Charges on balances in excess of quotas727,276,094408,500,224
Interest on holdings of special drawing rights22,980,88920,838,104
Service charges23,748,56226,336,528
Other operational income642,235231,875
Total operational income774,647,780455,906,731
Deduct operational expenses
Remuneration226,878,584104,081,938
Interest on indebtedness495,682,633303,425,483
Other operational expenses5,007,047
Total operational expenses727,568,264407,507,421
Net Operational Income47,079,51648,399,310
Expenses:
Administrative budget expenses:1,887,9331,420,496
Board of Governors
Executive Directors:2,541,641
Salaries2,762,092
Other compensations and benefits (Note 7)875,105692,754
Travel956,267723,202
Total Executive Directors4,593,4643,957,597
Staff:22,743,022
Salaries25,418,223
Other compensations and benefits (Note 7)13,365,0669,757,960
Travel5,001,5034,883,306
Total staff43,784,79237,384,288
Special services to member countries4,497,6554,002,199
Other:1,523,504
Communications1,686,065
Office occupancy expenses1,742,8771,698,895
Books and printing941,286955,409
Supplies and equipment (Note 2)1,121,040988,880
Data processing services1,181,2481,029,479
Miscellaneous1,145,9721,104,711
Total other7,818,4887,300,878
Total administrative budget expenses62,582,33254,065,458
Deduct: Assessments levied on participants for
estimated expenses of operating the1,000,0451,600,289
Special Drawing Account
Reimbursement for the expenses
of conducting the business of the
Trust Fund800,000
Total deductions1,800,0451,600,289
Net administrative budget expenses60,782,28752,465,169
Fixed property expenses (Note 2)64,43769,923
Amortization of employer’s contribution to the Staff Retirement
Fund to discharge past service liabilities (Note 7)4,392,696
Net valuation adjustment (gain) loss on administrative(266,938)
balances not subject to maintenance of value31,088
Total Expenses65,270,50852,268,154
Deduct realized gain from the sale of property934,418
Net Expenses65,270,50851,333,736
Excess of Expenses over Income (Exhibit C)18,190,9922,934,426
The notes in Exhibit E are an integral part of the financial statements.
The notes in Exhibit E are an integral part of the financial statements.

Exhibit C Statement of Reserves

as at April 30, 1977

Amounts expressed in special drawing rights

(Note 2)

19771976
Special Reserve (Note 8)
Balance—Beginning of the fiscal year339,095,706342,030,132
Deduct excess of expenses over income (Exhibit B)18,190,9922,934,426
Balance—End of the fiscal year320,904,714339,095,706
General Reserve
Balance365,579,703365,579,703
Total Reserves (Exhibit A)686,484,417704,675,409
The notes in Exhibit E are an integral part of the financial statements.
The notes in Exhibit E are an integral part of the financial statements.

Exhibit D Statement of Changes in Financial Position

for the year ended April 30, 1977

Amounts expressed in special drawing rights

(Note 2)

Resources were applied to:
Net increase in use of the gold tranche and in currency holdings in excess of members’ quotas3,996,874,572
Increase in holdings of special drawing rights310,247,058
Increase in currency holdings from subscription payments28,247,159
Excess of expenses over income18,190,992
4,353,559,781
Resources were provided by:
Increase in net creditor positions2,591,065,987
Borrowing:
General Arrangements to Borrow and Swiss National Bank1,000,000,000
Oil facility436,940,000
Less: Repayment of borrowing under 1974 oil facility200,000,000236,940,0001,236,940,000
Sales of gold410,512,478
Increase in the excess of other liabilities over other assets109,941,316
Quotas of new members5,100,000
4,353,559,781
The notes in Exhibit E are an integral part of the financial statements.
The notes in Exhibit E are an integral part of the financial statements.

Exhibit E Notes to the Financial Statements

for the year ended April 30, 1977

Note 1—General Account

All operations and transactions on the account of the International Monetary Fund (the Fund) are conducted through the General Account. Assets held in the General Account comprise gold, currencies of the Fund’s member countries, and special drawing rights (SDRs). The Fund’s resources in the General Account are made available to members in accordance with the Fund’s policies either in the form of currencies or SDRs, which members purchase against the payment of their own currencies. The amount of such use is related to a member’s quota in the Fund. In addition to purchases under the Fund’s regular facilities, members may use the Fund’s resources under the extended Fund facility (to support corrective policies over two to three years), the compensatory financing facility (to assist members experiencing fluctuations in receipts from exports of primary products), the buffer stock financing facility, and the oil facility (for balance of payments problems caused by increases in the costs of petroleum and petroleum products). Use of all the Fund’s facilities is dependent on members having a balance of payments need.

In addition to transactions with currencies (including borrowing by the Fund), the purchase or sale of gold by the Fund, the receipt of SDRs in payment of charges and in repurchases by members and the use of SDRs by the Fund take place through the General Account.

Note 2—Accounting Practices

Unit of Account

The accounts of the General Account are expressed in terms of the special drawing right. The currency value of the SDR is determined by a standard basket of the currencies of sixteen members and the gold value is 0.888671 gram of fine gold. Members’ currencies and securities are converted into equivalent amounts of SDRs on the basis of representative rates of exchange determined in accordance with decisions of the Board of Executive Directors. Gold held by the General Account is valued on the basis that one unit of special drawing rights is equivalent to 0.888671 gram of fine gold.

Property, Furniture, and Equipment

The Fund charges as an expense of each accounting period the total costs incurred for fixed property, furniture, and equipment. As at April 30, 1977, the net balance of the Fund’s property accounts, at cost, which had been charged to expenses, amounted to SDR 63,235,813 (SDR 62,813,188 at April 30, 1976).

Income and Expenses

The Fund maintains its books of account on the accrual basis and accordingly follows a policy of recognizing income as it is earned and recording expenses as they are incurred.

Note 3—Gold with Depositories

The accounts do not include gold held under earmark for members which was equivalent to SDR 333,104 at both April 30, 1977 and April 30, 1976.

Note 4—Currencies and Securities with Depositories

Securities issued by members to the Fund comprise non-negotiable and noninterest-bearing securities, payable to the Fund on demand. Each member has the option to substitute securities for that amount of the member’s currency held by the Fund which is in excess of ¼ of 1 per cent of the member’s quota.

In order to maintain the value of the Fund’s currency holdings, a holding is revalued whenever the member’s currency is used by the Fund in a transaction with another member, or for such other purposes as the Fund may decide. All currency holdings are revalued as at April 30 each year. An account receivable or an account payable is established for the amount of currency payable by or to a member, the balance of which is included in the Fund’s currency holdings. At April 30, 1977, amounts receivable amounted to SDR 1,872,688,403 and amounts payable to SDR 77,401,624.

Note 5—Operational Transactions

During the year ended April 30, 1977, members’ purchases amounted to SDR 4,910 million of which SDR 160 million was in the gold tranche, SDR 2,370 million was under the Fund’s regular facilities, SDR 1,753 million was under the compensatory financing facility, SDR 437 million was under the oil facility and SDR 190 million was under the extended Fund facility. Over the same period, repurchases by members totaled SDR 868 million, of which SDR 200 million related to the oil facility.

As at April 30, 1977, total outstanding purchases of members amounted to SDR 16,068 million, of which SDR 2,626 million represented purchases in the gold tranche not subject to Fund charges and SDR 6,702 million represented purchases under the oil facility, which were subject to separate schedules of charges. Currency holdings in excess of members’ quotas which are subject to Fund charges were SDR 13,442 million and total creditor positions of members on which the Fund pays remuneration amounted to SDR 6,332 million.

Members incur certain obligations to the Fund with the use of Fund resources from the General Account. One member has not fulfilled financial obligations to repurchase a part of the Fund’s holdings of the member’s currency, to pay Fund charges on currency balances in excess of the member’s quota and to submit information on monetary reserves. Normal means of communication are not available between the Fund and the member. The Fund has this situation under continuing review.

Note 6—Indebtedness

Oil Facility

The Fund has entered into borrowing agreements with various members and Switzerland, or institutions within their territories, under which these lenders agreed to provide the Fund with specified currencies to finance purchases of currencies from the Fund by other members under the oil facility. The outstanding borrowings carry interest rates of 7 per cent for amounts called under the 1974 borrowing agreements and 7¼ per cent for amounts called under the 1975 borrowing agreements. Any calls made by the Fund under these agreements are repayable over seven years except that calls made under the borrowing agreements with Canada and the Deutsche Bundesbank are repayable over five years.

General Arrangements to Borrow (GAB)

Ten members, or institutions within their territories, have adhered to the General Arrangements to Borrow under which the Fund may borrow their currencies up to specified amounts. These arrangements first became effective from October 24, 1962 and have been renewed until October 23, 1980. The Fund pays a transfer charge of one-half of one per cent on amounts borrowed under these arrangements and, in addition, pays interest at the rates at which the Fund levies charges on the holdings of currencies resulting from purchases financed from borrowing under the GAB. Any calls made by the Fund under the GAB are repayable within five years.

Other

The Swiss National Bank has entered into a borrowing agreement with the Fund under which it has agreed to lend to the Fund U.S. dollars equivalent to SDR 300 million for exchange transactions under a stand-by arrangement. The other terms and conditions of this borrowing are similar to those of the General Arrangements to Borrow.

Note 7—Other Compensations and Benefits

The Fund pays various allowances to or on behalf of Executive Directors and staff including the employer’s contribution to the Staff Retirement Plan. All contributions to the Plan and all other assets, liabilities and income of the Plan are held separately and can be used only for the benefit of the participants in the Plan and their beneficiaries. The funding of the Plan is based upon a percentage of salaries paid, and the employer contributes that part of the costs and expenses of the Plan not provided by the contributions of the participants.

In August 1976 certain improvements in the benefits provisions of the Plan and changes in the rate of contribution and funding arrangements were approved effective from September 1, 1976. A payment equivalent to SDR 19,032,422 was made from the General Account to the Staff Retirement Fund on September 1, 1976. Of this amount, SDR 17,570,796 was to discharge the past service liabilities resulting from the improved benefits and changes in funding arrangements and is being charged against income over a period of four years. Accordingly, SDR 4,392,696 was charged against income in the year ended April 30, 1977; the balance of SDR 13,178,100 is included as a deferred charge in other assets. The balance of the payment made on September 1, 1976, namely SDR 1,461,626, was to fund part of the accumulated experience losses of the Plan as determined by the actuary engaged by the Pension Committee. Experience gains and losses are amortized over a period of 15 years and at April 30, 1977 unamortized experience losses amounted to SDR 18.4 million.

Contributions by the employer to the Staff Retirement Fund for the year ended April 30, 1977 amounted to SDR 6,854,196, including the amortization of experience losses of the Plan, but excluding the payment for past service liabilities.

Note 8—Special Reserve

Income from investments in U.S. Government securities was placed to the Special Reserve from November 1, 1957 until February 15, 1972 when the investment program was terminated. The Articles of Agreement provide that any administrative deficit for any fiscal year must be written off first against this reserve. Transfers may be made from this reserve to the General Reserve.

Special Drawing Account

Report of the External Audit Committee

Washington, D.C.

July 1, 1977

Authority for the Audit

The audit for the year ended April 30, 1977, was carried out pursuant to Section 20(b) of the By-Laws of the International Monetary Fund.

Scope of the Audit

We have conducted the audit in accordance with generally accepted auditing standards and in compliance with the requirements of Section 20(b) of the By-Laws that it should be comprehensive with respect to examination of financial records; should extend, insofar as practicable, to the ascertainment that operations and transactions conducted through the Special Drawing Account were supported by the necessary authority; and should determine that there was adequate and faithful accounting for special drawing rights. Our examination included a review of the adequacy of the system of accounting and internal control and such tests as we considered necessary in the circumstances, having regard to the extent and results of the tests which we observed to have been carried out by the Internal Auditor.

Scope of the Accounts

Exhibits A and B represent the statements which Section 20(b) of the By-Laws requires to be prepared and audited in respect of the Special Drawing Account. Exhibit A includes corresponding figures for the year ended April 30, 1976, for the purposes of comparison. Schedules 1 through 3 submitted with our report to the Board of Governors contain further details from the accounting records for special drawing rights which the Audit Committee consider may be of interest to the Board.

Audit Opinion

In our opinion, the statements (Exhibits A and B) of the Special Drawing Account of the International Monetary Fund present fairly the allocation and holdings of special drawing rights as at April 30, 1977, and properly reflect the operations and transactions in this account for the year then ended.

External Audit Committee:

/s/ J. A. Collens, Chairman (United Kingdom)

/s/ Mohamed Bouaouaja (Tunisia)

/s/ Lelis A. Breda (Uruguay)

International Monetary Fund

Exhibit A Balance Sheet

as at April 30, 1977

Amounts expressed in special drawing rights

Allocations19771976
Net cumulative allocations of special drawing rights to participants (Note 1)9,314,835,4009,314,835,400
Holdings
Holdings of special drawing rights (Note 2 and Exhibit B)
Participants
Holdings above allocations:
Allocations2,468,666,0002,449,904,000
Received (net)1,997,028,2922,070,327,850
Total holdings above allocations4,465,694,2924,520,231,850
Holdings below allocations:
Allocations6,846,169,4006,864,931,400
Used (net)2,768,121,9642,531,174,464
Total holdings below allocations4,078,047,4364,333,756,936
Total holdings by participants8,543,741,7288,853,988,786
General Account Holdings771,093,672460,846,614
9,314,835,4009,314,835,400
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 allocation 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 obligatory limit or any agreed higher limit.

Other NoteUnder the provisions of Article XXV of the Fund Agreement, participants that have used allocations received incur certain obligations in regard to the reconstitution of their holdings of SDRs; participants are required to maintain average daily holdings over the most recent of the five-year periods ending in calendar quarters, of not less than 30 per cent of the average of their daily net cumulative allocations over the same periods. One participant has not fulfilled the reconstitution requirements for the five-year periods ending on December 31, 1975 and subsequent calendar quarters. The normal means of communication between the Fund and the participant are not available. The Fund has the participant’s situation under review.
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 allocation 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 obligatory limit or any agreed higher limit.

Other NoteUnder the provisions of Article XXV of the Fund Agreement, participants that have used allocations received incur certain obligations in regard to the reconstitution of their holdings of SDRs; participants are required to maintain average daily holdings over the most recent of the five-year periods ending in calendar quarters, of not less than 30 per cent of the average of their daily net cumulative allocations over the same periods. One participant has not fulfilled the reconstitution requirements for the five-year periods ending on December 31, 1975 and subsequent calendar quarters. The normal means of communication between the Fund and the participant are not available. The Fund has the participant’s situation under review.
/s/ R. J. Familton/s/ H. Johannes Witteveen
Acting TreasurerManaging Director

Exhibit B Statement of Source and Use of Special Drawing Rights

for the year ended April 30, 1977

Amounts expressed in special drawing rights

ParticipantsGeneral

Account
Total
Total Holdings as of April 30, 19768,853,988,786460,846,6149,314,835,400
Source of Special Drawing Rights Received
Allocations
Transactions with Designation (Article XXV, Section 5(a))118,798,350118,798,350
Transactions without Designation
Under Article XXV, Section 2(b) (i)163,763,817163,763,817
Under Article XXV, Section 2(b) (ii)153,253,124153,253,124
Net Interest78,095,55822,980,889101,076,447
Transfers Between Participants and the General Account
Purchases25,483,89425,483,894
Repurchases72,573,51772,573,517
Charges8,097,151716,828,098724,925,249
Reimbursement of Special Drawing Account
Expenses (Assessment)1,000,0451,000,045
Remuneration24,108,11024,108,110
Reconstitution445,273,091445,273,091
Interest on Fund Borrowings
Under General Arrangements to Borrow48,73348,733
Other
General Account Charges124,512124,512
1,017,046,340813,382,5491,830,428,889
Use of Special Drawing Rights
Transactions with Designation (Article XXV, Section 2(a))118,798,350118,798,350
Transactions without Designation
Under Article XXV, Section 2(b) (i)163,763,817163,763,817
Under Article XXV, Section 2(b) (ii)153,253,124153,253,124
Net Charges101,076,447101,076,447
Transfers Between Participants and the General Account
Purchases25,483,89425,483,894
Repurchases72,573,51772,573,517
Charges716,828,0988,097,151724,925,249
Reimbursement of Special Drawing Account
Expenses (Assessment)1,000,0451,000,045
Remuneration24,108,11024,108,110
Reconstitution445,273,091445,273,091
Interest on Fund Borrowings
Under General Arrangements to Borrow48,73348,733
Other
General Account Charges124,512124,512
1,327,293,398503,135,4911,830,428,889
Total Holdings as of April 30, 1977 (per Balance Sheet)8,543,741,728771,093,6729,314,835,400

Subsidy Account

Report of the External Audit Committee

Washington, D.C.

July 1, 1977

Authority for the Audit

The audit for the year ended April 30, 1977, was carried out pursuant to Executive Board Decision No. 4773-(75/136) of August 1, 1975, and Section 20(b) of the By-Laws of the International Monetary Fund.

Scope of the Audit

We have conducted the audit in accordance with generally accepted auditing standards and in compliance with the general requirements of Section 20(b) of the By-Laws that it should be comprehensive with respect to the examination of records; should extend, insofar as practicable, to the ascertainment that operations and transactions were supported by the necessary authority; and should determine that there was adequate and faithful accounting for the relevant assets and liabilities. Our examination included a review of the adequacy of the system of accounting and internal control and such tests as we considered necessary in the circumstances, having regard to the extent and results of the tests which we observed to have been carried out by the Internal Auditor.

Scope of the Accounts

Exhibits A and B represent the accounts required to be audited under Executive Board Decision No. 4773-(75/136). Exhibit A includes corresponding figures for the year ended April 30, 1976, for the purposes of comparison. Schedules 1 through 3 submitted with our report to the Board of Governors contain further details from the accounting records which the Audit Committee consider may be of interest to the Board.

Audit Opinion

In our opinion, the financial statements (Exhibits A and B) present fairly, in terms of special drawing rights, the financial position of the Subsidy Account administered by the International Monetary Fund as at April 30, 1977, and properly reflect the transactions in this Account for the year then ended.

External Audit Committee:

/s/ J. A. Collens, Chairman (United Kingdom)

/s/ Mohamed Bouaouaja (Tunisia)

/s/ Lelis A. Breda (Uruguay)

International Monetary Fund

(Note 1)

Exhibit A Statement of Financial Position

as at April 30, 1977

Amounts expressed in special drawing rights

(Note 2)

19771976
Balance at beginning of year36,686,385
Contributions received (Note 3)25,797,98236,035,190
Interest earned on investments2,324,480322,083
Valuation gain (loss)(360,249)329,112
Additions during year27,762,21336,686,385
64,448,59836,686,385
Less: Subsidy payments (Note 4)13,818,505
Balance at end of year50,630,09336,686,385
Balance represented by:
Currency on deposit9,830,0784,962,614
Investments in United States Government obligations, at cost39,414,39931,262,398
Accrued interest receivable (Note 5)1,385,616461,373
Total assets50,630,09336,686,385
The notes in Exhibit B are an integral part of the financial statement.
The notes in Exhibit B are an integral part of the financial statement.
/s/ R. J. Familton/s/ H. Johannes Witteveen
Acting TreasurerManaging Director

Exhibit B Notes to the Financial Statement

for the year ended April 30, 1977

Note 1

The Subsidy Account was established by the Fund to assist the most seriously affected (MSA) members to meet the interest cost of using resources made available through the Fund’s oil facility for 1975.

Note 2

The accounts of the Subsidy Account are expressed in terms of the SDR, the currency value of which is determined by a standard basket of the currencies of sixteen members.

Note 3

Currency contributions to the Subsidy Account are converted to equivalent amounts of SDRs on the basis of exchange rates against the SDR at the time of receipt. Cumulative contributions to the Subsidy Account at April 30, 1977 amounted to SDR 61,833,172.

Note 4

The rate of subsidy for the fiscal year ended April 30, 1976 was set by the Fund at five per cent per annum of the average daily balances of the Fund’s holdings of recipient members’ currencies in excess of quotas under the 1975 oil facility during that year. Subsidy payments were made in U.S. dollars based on the SDR/US$ rate on July 19, 1976.

Note 5

Includes accrued interest purchased amounting to SDR 27,419 at April 30, 1977 (SDR 145,926 at April 30, 1976).

Trust Fund

Report of the External Audit Committee

Washington, D.C.

July 1, 1977

Authority for the Audit

The audit for the period May 5, 1976 through April 30, 1977 was carried out pursuant to Executive Board Decision No. 5069-(76/72) of May 5, 1976 and Section 20(b) of the By-Laws of the International Monetary Fund.

Scope of the Audit

We have conducted the audit in accordance with generally accepted auditing standards and in compliance with the general requirements of Section 20(b) of the By-Laws that it should be comprehensive with respect to the examination of records; should extend, insofar as practicable, to the ascertainment that operations and transactions were supported by the necessary authority; and should determine that there was adequate and faithful accounting for the relevant assets and liabilities. Our examination included a review of the adequacy of the system of accounting and internal control and such tests as we considered necessary in the circumstances, having regard to the extent and results of the tests which we observed to have been carried out by the Internal Auditor.

Scope of the Accounts

Exhibits A through C represent the accounts required to be audited under Executive Board Decision No. 5069-(76/72). Schedules 1 and 2 submitted with our report to the Board of Governors contain further details from the accounting records which the Audit Committee consider may be of interest to the Board.

Audit Opinion

In our opinion, the financial statements (Exhibits A through C) present fairly, in terms of special drawing rights, the financial position of the Trust Fund administered by the International Monetary Fund as at April 30, 1977, and its income and expenses for the period May 5, 1976 through April 30, 1977, in conformity with generally accepted accounting principles.

External Audit Committee:

/s/ J. A. Collens, Chairman (United Kingdom)

/s/ Mohamed Bouaouaja (Tunisia)

/s/ Lelis A. Breda (Uruguay)

International Monetary Fund

(Note 1)

Exhibit A Balance Sheet

as at April 30, 1977

Amounts expressed in special drawing rights

(Note 2)

Assets
Currency on deposit102,875
Gold (Note 3)17,643,481
Investments406,201,501
Loans (Note 4)31,588,000
Accrued interest on investments5,632,632
Accrued interest on loans40,357
Total Assets461,208,846
Liability and Trust Resources
Liability—
Obligation to deliver gold (Note 3)64,712,969
Trust resources (Exhibit B)396,495,877
Liability and Trust Resources461,208,846
The notes in Exhibit C are an integral part of the financial statements.
The notes in Exhibit C are an integral part of the financial statements.
/s/ R. J. Familton/s/ H. Johannes Witteveen
Acting TreasurerManaging Director

Exhibit B Statement of Income and Expenses

for the period May 5, 1976 through April 30, 1977

Amounts expressed in special drawing rights

(Note 2)

Income:
Net proceeds realized from the sale of gold:
Gross amounts received573,389,314
Less cost of gold182,924,530
390,464,784
Investment income8,970,133
Interest income on loans40,357
399,475,274
Expenses:
Administrative expenses (Note 2):
Staff salaries and benefits and other services723,983
Gold weighing and handling charges54,273
Data processing services9,859
Communications5,807
Other6,078
Total administrative expenses800,000
Income less administrative expenses398,675,274
Exchange valuation loss2,179,397
Net income396,495,877
The notes in Exhibit C are an integral part of the financial statements.
The notes in Exhibit C are an integral part of the financial statements.

Exhibit C Notes to the Financial Statements

for the period May 5, 1976 through April 30, 1977

Note 1—Purposes

The Trust Fund was established in 1976 to provide balance of payments assistance on concessional terms to eligible members that qualify for assistance. The IMF may decide that the Trustee will undertake other activities in connection with the distribution of profits from sales of gold for the benefit of developing members. Each recipient’s share will be calculated on the basis of the share of each eligible member in total IMF quotas as of August 31, 1975 and on the basis of the actual profits realized in the gold auctions. No decision had been made by April 30, 1977 on the recipients of the direct distribution of profits.

Note 2—Accounting Practices

Unit of Account

The accounts of the Trust Fund are expressed in terms of the special drawing right (SDR), the currency value of which is determined by a standard basket of currencies of sixteen members.

Administrative expenses

The Trust Fund is administered by the International Monetary Fund as Trustee. The expenses of conducting the business of the Trust Fund that are paid from the General Account of the IMF are reimbursed annually by the Trust on the basis of a reasonable estimate of these expenses by the IMF.

Note 3—Obligation to deliver gold

Title to gold sold by the Trust Fund passes to the purchaser when delivery is effected after full payment is made. As of April 30, 1977 successful bidders had paid a total of SDR 64,712,969 against the future delivery of gold which, at cost to the Trust Fund (SDR 35 per fine ounce) amounted to the equivalent of SDR 17,643,481.

Note 4—Loans

Loans are made from the Trust Fund to those eligible members that qualify for assistance in accordance with the provisions of the Trust Instrument. Each loan disbursement is repayable in ten semiannual installments which shall begin not later than the end of the first six months of the sixth year, and be completed at the end of the tenth year, after the date of disbursement. Interest on the outstanding loan balances is charged at the rate of one-half of one per cent per annum.

Staff Retirement Fund

Report of the External Audit Committee

Washington, D.C.

July 1, 1977

Authority for the Audit

The audit of the Staff Retirement Fund of the International Monetary Fund for the year ended April 30, 1977, was carried out pursuant to and in accordance with the requirements of Section 20(b) of the By-Laws of the International Monetary Fund. All assets and income of the Staff Retirement Fund, in accordance with Article 9, Section 1, of the Staff Retirement Plan, are the property of the International Monetary Fund and are held and administered by it separately from its other property and assets.

Scope of the Audit

We have conducted the audit in accordance with generally accepted auditing standards and in compliance with the general requirements of Section 20(b) of the By-Laws that it should be comprehensive with respect to the examination of records; should extend, insofar as practicable, to the ascertainment that operations and transactions were supported by the necessary authority; and should determine that there was adequate and faithful accounting for the relevant assets and liabilities. Our examination included a review of the adequacy of the system of accounting and internal control and such tests as we considered necessary in the circumstances, having regard to the extent and results of the tests which we observed to have been carried out by the Internal Auditor. In the course of our audit, reference was made to the Articles of the Staff Retirement Plan and to the decisions of the Pension, Administration, and Investment Committees created under the Plan.

Scope of the Accounts

Exhibits A through F represent the accounts required to be prepared and audited. Exhibits A and B include corresponding figures for the year ended April 30, 1976, for the purposes of comparison. Schedules 1 through 5 to Exhibit A and Schedules 1 and 2 to Exhibit B submitted with our report to the Board of Governors contain further details of items in the accounts which the Audit Committee consider may be of interest to the Board.

Audit Opinion

In our opinion, the financial statements (Exhibits A through F) present fairly, in terms of U.S. dollars, the financial position of the Staff Retirement Fund of the International Monetary Fund as at April 30, 1977, and the changes in its financial position for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year.

External Audit Committee:

/s/ J. A. Collens, Chairman (United Kingdom)

/s/ Mohamed Bouaouaja (Tunisia) /s/

Lelis A. Breda (Uruguay)

International Monetary Fund

Exhibit A Balance Sheet

as at April 30, 1977

Amounts expressed in U.S. dollars

19771976
Assets
Cash at Banks14,38778,174
Investments
Bonds
Amortized cost (market value $33,319,714 in 1977,
$21,303,299 in 1976)
Notes insured by U.S. Government13,077,2065,615,886
International development banks5,792,4425,768,549
Corporate11,449,91010,406,672
Commercial paper300,000119,000
Certificates of deposit2,530,0001,405,000
Repurchase agreements1,546,000
Total amortized cost34,695,55823,315,107
Add: Net realized losses2,227,8892,226,348
Funds originally invested36,923,44725,541,455
Deduct: Amortized net realized losses1,112,659889,872
Adjusted book value of bonds35,810,78824,651,583
Stocks
Cost (market value $61,875,670 in 1977, $47,022,017 in 1976)67,036,48545,781,047
Deduct: Net realized gains2,732,4811,820,362
Funds originally invested64,304,00443,960,685
Recognized appreciation/(depreciation)(29,000)373,000
Adjusted book value of stocks64,275,00444,333,685
Total investments at adjusted book value100,085,79268,985,268
Accrued Interest on Bonds, Accrued Contributions
Receivable, and Miscellaneous Accounts Receivable797,134582,515
Total Assets100,897,31369,645,957
Liabilities and Reserves
Participants’ Account (Exhibit C)18,221,82516,017,191
Accumulation Account (Exhibit D)51,964,34232,498,404
Retirement Reserve Account (Exhibit E)30,602,58921,075,410
Accounts Payable108,55754,952
Total Liabilities and Reserves100,897,31369,645,957
The notes in Exhibit F are an integral part of the financial statements.
The notes in Exhibit F are an integral part of the financial statements.
/s/ R. J. Familton/s/ H. Johannes Witteveen
Acting TreasurerManaging Director

Exhibit B Statement of Changes in Financial Position

for the year ended April 30, 1977

Amounts expressed in U.S. dollars

19771976
Total Assets—beginning of the year69,645,95762,667,083
Less: Accounts Payable54,95230,471
Net Assets69,591,00562,636,612
Contributions:
Participants3,143,7662,761,938
International Monetary Fund28,167,2325,497,777
Participant restored to service2,24413,332
Net transfers (to) from retirement plans of other international organizations(39,954)9,773
Total Contributions31,273,2888,282,820
Investment Income:
Interest and dividends3,651,9752,651,188
Amortization of accumulated discounts39,96450,290
Amortization of net realized losses on bonds(222,787)(222,653)
Recognized market depreciation on equity investments(402,000)(1,240,000)
Net Investment Income3,067,1521,238,825
Payments:
Pensions and other benefits(2,441,570)(1,978,569)
Contributions, benefits, and interest paid to participants upon withdrawal(470,431)(393,000)
Commutation benefits(72,500)(105,800)
Death benefits(158,188)(89,883)
Total Payments(3,142,689)(2,567,252)
Balances—end of the year
Net Assets100,788,75669,591,005
Add: Accounts Payable108,55754,952
Total Assets—per Balance Sheet100,897,31369,645,957
The notes in Exhibit F are an integral part of the financial statements.
The notes in Exhibit F are an integral part of the financial statements.

Exhibit C Participants’ Account

for the year ended April 30, 1977

Amounts expressed in U.S. dollars

Balance, April 30, 1976 (per Balance Sheet)16,017,191
Add:
Participants’ contributions
Participating service3,132,616
Additional voluntary11,1503,143,766
Contributions and interest refunded by participant restored to service1,867
Transfers from retirement plans of the
International Bank for Reconstruction and Development10,852
United Nations2,136
Inter-American Development Bank95713,945
Interest credited to participants849,4574,009,035
Deduct:
Refunds upon withdrawal of participants
Accumulated contributions349,022
Additional voluntary contributions10,523359,545
Refunds upon death of participants45,717
Transfers to Retirement Reserve Account1,372,542
Transfers to retirement plans of the
International Bank for Reconstruction and Development10,378
United Nations16,21926,5971,804,401
Balance, April 30, 1977 (per Balance Sheet)18,221,825
The notes in Exhibit F are an integral part of the financial statements.
The notes in Exhibit F are an integral part of the financial statements.

Exhibit D Accumulation Account

for the year ended April 30, 1977

Amounts expressed in U.S. dollars

Balance, April 30, 1976 (per Balance Sheet)32,498,404
Add:
Contributions of the International Monetary Fund
Participating service6,265,232
Prior service21,902,00028,167,232
Income from investments
Bonds
Interest2,124,473
Amortization of premium and accumulation of discount (net)39,964
Amortization of net realized losses(222,787)1,941,650
Stocks
Dividends received1,527,501
Recognized depreciation(402,000)1,125,5013,067,151
Benefits and interest refunded by participant restored to service377
Transfers from retirement plans of the
International Bank for Reconstruction and Development21,828
United Nations4,303
Inter-American Development Bank1,60327,73431,262,494
Deduct:
Withdrawal benefits110,886
Payments upon death of participants77,942
Transfers to retirement plans of the
International Bank for Reconstruction and Development20,741
United Nations34,29455,035
Transfers to Retirement Reserve Account9,370,635
Interest transferred to
Participants’ Account849,457
Retirement Reserve Account1,332,6012,182,05811,796,556
Balance, April 30, 1977 (per Balance Sheet)51,964,342
The notes in Exhibit F are an integral part of the financial statements.
The notes in Exhibit F are an integral part of the financial statements.

Exhibit E Reserve Account

for the year ended April 30, 1977

Amounts expressed in U.S. dollars

Balance, April 30, 197621,075,410
Add:
Transfers from
Participants’ Account1,372,542
Accumulation Account9,370,63510,743,177
Interest credited1,332,60112,075,778
Deduct:
Pension payments to
Retired participants2,089,080
Beneficiaries of deceased participants234,898
Disabled retired participants and their children103,0942,427,072
Pension commutation payments72,500
Payments upon death of retired participants34,529
Payments to retired participants upon surrender of pension rights14,4982,548,599
Balance, April 30, 1977 (per Balance Sheet)30,602,589
The notes in Exhibit F are an integral part of the financial statements.
The notes in Exhibit F are an integral part of the financial statements.

Exhibit F Notes to the Financial Statements

for the year ended April 30, 1977

Note 1—The Plan

In accordance with the provisions of the Staff Retirement Plan, all assets and income of the Staff Retirement Fund are the property of the International Monetary Fund and are held and administered by it separately from all its other property and assets and are to be used solely for the benefit of participants and retired participants or their beneficiaries. The International Monetary Fund, as employer, meets the administrative costs of the Plan and is to contribute the part of the cost and expenses of the Plan not provided by the contributions of participants, plus any additional amounts required to pay costs and expenses of the Plan not otherwise covered. The combined rate of contribution was changed during the year from 19.5 per cent to 21 per cent of participants’ gross salaries (14 per cent from the employer and 7 per cent from participants).

Note 2—Actuarial Valuation

The most recent valuation of the Plan by the actuary engaged by the Pension Committee was made as at April 30, 1976. The actuary’s valuation showed an experience loss for the year then ended of $6.4 million. Experience losses are amortized by contributions from the employer over a period of fifteen years. At April 30, 1977 the unamortized experience losses amounted to $21.4 million (SDR 18.4 million).

Note 3—Valuation Basis of Investments

All investments are recorded in the accounts at cost or amortized cost. The basis of valuation of the investment portfolio is intended to focus on the prospective long-run average yield of the existing portfolio. Therefore, not only interest and dividends, but also realized gains and losses on bonds and the effect of unrealized changes in the value of equity investments, are taken into account. The realized net loss (or gain) on bonds is amortized through the Accumulation Account over a ten-year period; unrealized market appreciation or depreciation on bonds is ignored. The amount of appreciation (or depreciation) on stocks to be recognized through the Accumulation Account each year is based on a ten-year moving average of the annual rate of changes in the market value of the equity portfolio. “Funds originally invested” is the cumulative amount of contributions from the employer and from the participants made available for investment plus investment income. The investment base for determining the yield on investments is the “adjusted book value” in the balance sheet.

Selected Decisions of the International Monetary Fund and Selected Documents (Eighth Issue, Washington, 1976), pages 66–67.

See Annual Report, 1975, page 94.

See Annual Report, 1976, pages 98–99.

Ibid.

See Annual Report, 1975, page 94.

Selected Decisions of the International Monetary Fund and Selected Documents (Eighth Issue, Washington, 1976), pages 173–74.

Selected Decisions of the International Monetary Fund and Selected Documents (Eighth Issue, Washington, 1976), pages 173–74.

Selected Decisions of the International Monetary Fund and Selected Documents (Eighth Issue, Washington, 1976), pages 98–113.

The increase became effective on November 23, 1976.

Arrangements have not been made to distribute gold at this time to Cambodia and China, as noted on page 60.

Selected Decisions of the International Monetary Fund and Selected Documents (Eighth Issue, Washington, 1976), page 178.

Selected Decisions of the International Monetary Fund and Selected Documents (Eighth Issue, Washington, 1976), pages 56–62.

Selected Decisions of the International Monetary Fund and Selected Documents (Eighth Issue, Washington, 1976), pages 70–74.

Ibid., pages 76–78.

The references in this report to Article XXIV are to the present Articles. Some of the events mentioned in this report might occur after the Proposed Second Amendment has become effective. It should be noted, therefore, that Article XXIV, Sections 1(a) and 4(a), (b), and (c), will become Article XVIII, Sections 1(a) and 4(a), (b), and (c), respectively, of the amended Articles.

Article XXIV, Sections 4(a) and (b).

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