iServe Africa

AUDITED FINANCIAL STATEMENTS

YEAR ENDED 31 AUGUST, 2014

CONTENTS PAGE

Directors' Report 1

Statement of Directors' Responsibilities 2

Report of the Independent Auditor 3

Statement of Financial Position 4

Statement of Comprehensive Income 5

Statement of Changes in Fund Balances 6

Statement of Cash Flows 7

Notes to the Financial Statements 8 -14

iServe AfricaAUDITED FINANCIAL STATEMENTS

YEAR ENDED 31 AUGUST, 2014

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Independent Auditor

Horwarth Erastus & Co.Certified Public AccountantsP. O. Box 5526800200 - City SquareNAIROBI, KENYATel: 254203860513/3860521/3860524/3861120Cell Phone: 0722 395 611 1 0733 487 896E-mail: erastuscpa@kenyaweb.comWebsite: www.erastusCPA.com

e Africa

CTORS' REPORT - YEAR ENDED 31 AUGUST, 2014

- -:;uirectors submit their report and the audited financial statements for the year ended 31 August,- . !., which disclose the state of affairs of iServe Africa.

cipal Acti'fities

:: principal activity of iServe Africa is "to promote, encourage and facilitate apprenticeship_;rammes for fresh graduates in Churches and Christian organizations across Africa".

ults

_ operating results for the year are set out on page 5.

d

_ followlnq board members were in office during the period covered by this report:-

Thuita--~e Kwoba:-~-ison Mungai=c;,J"ice Nyagah- ancis Irungucseoh Ngetich

indo. e Jaoko

=- zseline Amadi- as Owiti

- _.'l1biMwangi: _,ean Ngugi Maina -ac-dine Kaimenyi

-e Nderitu--olas Omondi

-3iUS Nzioki;,:o(son Thuku Kuriasziah Muthoni Kogianyeki Mahiaini

Board ChairmanHon. TreasurerBoard Secretary / Executive DirectorProject (T&RC), left on 01 September, 2014Project (T&RC), left on 01 March, 2014Programmes and activitiesProgrammes and activitiesProject (T&RC), left on July, 2014Finance and administrationProgrammesResource mobilizationDirector, left on 01 March, 2014Director, joined on 01 July, 2014Director, joined on 01 July, 2014Director, joined on 01 July, 2014Director, joined on 01 July, 2014Director, joined on 01 July, 2014Director, joined on 01 July, 2014Director, joined on 01 July, 2014

='""nkers

Earclays Bank of Kenya,et Branch, Box 30018 - 00100

airobi

I & M Bank Limited,Kenyatta Avenue Branch, Box 30238 - 00100Nairobi

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dependent Auditor

s Erastus & Co. Certified Public Accountants have expressed their willingness to continue in office.

3Y ORDER OF THE BOARD

=or~

avid Thuita30ard Chairman)

{C\Nairobi ~ ~ b~ ,2015

1

ENT OF DIRECTORS' RESPONSIBILITIES - YEAR ENDED 31 AUGUST, 2014

- =-I:: -ectors of iServe Africa are required to prepare financial statements which give a true and fair:: the state of affairs of the Organization as at the end of each financial reporting period and the

erating results .

.=.I ~ ~ectors are required to ensure that the Organization maintains proper accounting recordsisclose, with reasonable accuracy, the financial position of the Organization. The Directors

- = <:n responsible for safeguarding the assets of the Organization.

ectors accept responsibility for the financial statements, which have been prepared using:'":::>riate accounting policies supported by reasonable and prudent judgments and estimates and--~~ormity with generally accepted non-profit accounting principles and applicable international-:;.al reporting standards.

-= .Jirectors are of the opinion that the financial statements give a true and fair view of the state of- ~-::ial affairs of the Organization as at 31 August, 2014 and of its operating results for the year

.:.- ended. The Directors further confirm the accuracy and completeness of the accounting records-: --ained by the Organization which have been relied upon in the preparation of the financial::..::.:.nents, as well as on the adequacy of the systems of internal controls.

-: uirectors are aware of the negative general fund position of Kshs 1,191,311/= and the resulting=--:osure on restricted funds as disclosed on page 6. The Directors are of the view that the negative;:-eral fund position does not pose a threat to the going concern status of the Organization based

ospective funding from donors and cost reduction measures that the Board has continued tocternent.

::ning has come to the attention of the Directors to indicate that the Organization will not remain a;: '1g concern for at least the next twelve months from the date of this statement.

-cnroved on ,Q? < b:S. 201~~

David Thuita(Board Chairman)

-------~o-b-a--------(Hon. Treasurer)

•

Harr~ungai(Board Secretary / Executive Director)

2

REPORT OF THE INDEPENDENT AUDITOR

iServe Africa

YEAR ENDED 31 AUGUST, 2014

:,'''\I"\rton the Financial Statements

: nave audited the accompanying financial statements of iServe Africa set out on pages 4 to 14 whichrise the statement of financial position as at 31 August, 2014 and the statement of comprehensivee, statement of changes in fund balances for the year then ended and a summary of significantnting policies and other explanatory notes. We have obtained all the information and explanationsto the best of our knowledge and belief were necessary for the purpose of the audit.

ponsibility for the Financial Statement

-..:::stated on page 2, the Directors are responsible for the preparation and fair presentation of these- ancial statements in accordance with generally accepted non-profit accounting principles and=..;:::Jicableinternational financial reporting standards. This responsibility includes designing, implementing=_-j maintaining internal controls relevant to the preparation and fair presentation of financial statements-,a: are free from material misstatement, whether due to fraud or error; selecting and applying

zcoropriate accounting policies; and making accounting estimates that are reasonable in themstances.

-responsibility of the Auditor

responsibility is to express an independent opinion on these financial statements based on our audit.~e conducted our audit in accordance with International Standards on Auditing. Those standardsequire that we comply with ethical requirements and plan and perform the audit to obtain reasonable

assurance whether the financial statements are free from material misstatement.

-_I audit involves performing procedures to obtain audit evidence about the amounts and disclosures in--e financial statements. The procedures selected depend on the auditor's judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal controls relevant to the entity'screparation and fair presentation of the financial statements in order to design audit procedures that areanpropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness oftae entity's internal controls.

audit also includes evaluating the appropriateness of accounting policies used and the-easonableness of accounting estimates made by the Directors, as well as evaluating the overall

esentation of the financial statements. We believe that the audit evidence we have obtained issutflcient and appropriate to provide a basis for our audit opinion. •

Opinion

our opinion, proper books of account have been kept and the accompanying financial statements,vhich are in agreement therewith, give a true and fair view of the financial position of iServe Africa as at31 August, 2014, and of its financial performance and its cash flows for the year then ended inaccordance with generally accepted non-profit accounting principles and applicable international financialeporting standards.

CPA Erastus K. Omolo practices in ERASTUS & Co. as a firm with other partners. The engagementpartner responsible for the audit resulting in this Independent auditor's report is CPA Erastus K. Omolo-PINo 1164.

6ii:,

Nairobi,~, 2015ERASTUS & Co.Certified Public Accountants

e Africa

JIEMENT OF FINANCIAL POSITION - 31 AUGUST, 2014

2014 2013

Note Kshs Kshs

6 5,226,466 665,718

3 1,030,869 851,4884 1,045,872 3,138,679

44,986 °2,121,727 3,990,167

5 3,402,119 2,606,37411 840,000 °4,242,119 2,606,374

(2,120,392) 1,383,793

Kshs 3,106,074 2,049,511

urrent assets

and equipment

ent assets

-.~ ...;ntsreceivable,:~.- and cash equivalents

current assets

: current liabilities

s payableans

current liabilities

current assets

-! assets

eoresented by :-

d balances

=-::~alfund- :~eral fund-= sstricted funds

I fund balance (Page 6)

5,226,466(1,191,311)

(929,081)

Kshs 3,106,074

665,718(1,588,294)2,972,087

2,049,511

-ese financial statements were approved on :2 g. 01>· ,2015 and signed by :-

--~-(Board Chairman) •

-e:-Eddie Kwoba(Hon. Treasurer)=1h~Harrison Mungai

(Board Secretary I Executive Director)

-~ependent auditor's report - page 3e notes on pages 8 to 14 form part of these financial statements

4

ca

..•...i-.u~ENT OF COMPREHENSIVE INCOME - YEAR ENDED 31 AUGUST, 2014

2014 2013

Note Kshs Kshs

9 (a) 12,341,620 11,570,0949 (b) 728,154 2,926,524

10 (a) 225,302 °13,295,076 14,496,618

7 12,168,322 11,794,4878 4,325,870 313,063

10 (b) 305,069 °16,799,261 12,107,550

Kshs (3,504,185) -.b389,068

Independent auditor's report - page 3The notes on pages 8 to 14 form part of these financial statements

5

end donations

-=":r-~~ funds-: generatinq activities

come

I~ndrture

- ::-:eral fund expensesicted project expenses

---e generating activities

Expenditure

"':<;.:ill;rt)I Balance for the year (Page 6)

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F CHANGES IN FUND BALANCES - YEAR ENDED 31 AUGUST, 2014

General Restricted Capital Totalfund fund fund funds

Note 8 Note 3

ents Kshs Kshs Kshs Kshs--:::'"!ce at 31 Aug 2013 (1,588,294) 2,972,087 665,718 2,049,511

=a.:a..'lce for the year (Note 7) 93,531 (3,597,716) 0 (3,504,185)

_.t: ;5~eral fund (Note 8) 303,452 (303,452) 0 0

ition 0 0 4,633,050 4,633,050

0 0 111,145 111,145

.::J -Xed assets (note 3) 0 0 (6,500) (6,500)

- 0 0 (176,947) (176,947)

ance at 31 Aug 2014 (1,191,311) (929,081) 5,226,466 3,106,074

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===e-=5:-[ auditor's report - page 3pages 8 to 14 form part of these financial statements

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SH FLOWS - YEAR ENDED 31 AUGUST, 2014

2014 2013

perating activities Kshs Kshs

e year (page 5) (3,504,185) 2,389,068

d (property and equipment) 4,633,050 519,826

° 640(30,000) (6,771)

. 9 capital:

eceivable (179,381) (415,382)payable 795,745 1,455,571

(44,986) °operating activities 1,670,243 3,942,952

ancing activities

e-payments) 840,000 (750,000)

m I (used in) financing activities 840,000 (750,000)

vesting activities

d (property and equipment) (4,633,050) (519,826)ets 30,000 6,771

--sed in investing activities (4,603,050) (513,055)

~.• increase in cash and cash equivalents (2,092,807) 2,679,897

.sn and cash equivalents:-

ecternber b/f 3,138,679 458,782ease in cash and cash equivalents (2,092,807) 2,679,897

equivalents at 31 August clf 1,045,872 3,138,679

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•-..... i.:.:::: s-c-.or's report - page 3-- --;es 8 to 14 form part of these financial statements

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FINANCIAL STATEMENTS - YEAR ENDED 31 AUGUST, 2014

is registered in Kenya as an NGO under the Non-Governmental Organizations.--:;......,-...•'" Act, No. 19 of 1990: Registration Certificate NO.218/051/11-035/6919 dated

11.

G~==-ies

iectives of iServe Africa are: -•••••• ;:> a generation of servant leaders through ministry apprenticeships.

- __ .e local churches and other organizations through apprenticeship.

ate training on faithful bible preaching and Servant Leadership.

e a structure for meaningful apprenticeship.

e volunteerism as a means of resourcing gospel ministry.

lcles

accounting

s are prepared under the historical cost convention in accordance with generallyn-profit accounting principles and applicable international financial reporting

ecognized when received or if confirmed to have been in transit at the date of thefinancial position.

1::::-...enCrtu re

---~ ...re is recognized when payments are made. However, accruals are made forliabilities at the date of the statement of financial position.

ssets

ets purchased are expensed upon acquisition. Memorandum accounts, through thed and fixed assets account are maintained to track the assets through theof financial position.

•"-":"~"""""'iation

- .?: assets are stated at cost less accumulated depreciation. Depreciation is charged on aum basis using the straight line method. Depreciation is charged proportionatelyt line basis from the month of purchase up to full write-off or month of disposal or

=:--=c-..,n whichever is earlier.

:~='~~ation has been charged based on the following rates:-

'~1. Category

ehicleers and accessories

ery and equipmentiture and fittings

Annual Rate (%)

2530

12.512.5

~~=-: a.,c tor's report - page 3ges 8 to 14 form part of these financial statements

8

CIAL STATEMENTS - YEAR ENDED 31 AUGUST, 2014

licies (cont. ... )

eceivable

-...:=.....::-.,.::.-es are initially recognized at the transaction amount. At the end of the reporting:.~ecarrying amounts of receivables are reviewed to determine whether there is any

::::i:"l,=::::'-.: evidence that the amounts are not recoverable.

. n of foreign currencies

'_3:S2~nS in currencies other than the base currency (Kshs) are converted to the base:sing the exchange rate ruling at the time of the transaction. Resulting foreign gains /

~-.:5 ars taken up in the statement of comprehensive income in the year in which they arise

Co::;:a."'a tives

+ecessary, comparative figures have been adjusted to conform to the changes in=-"'nn in the current year.

2014 2013

Kshs Kshs

12,138 1,89962,941 75,849

0 2,50061,000 70,00080,000 28,000

809,240 673,2405,550 0

1,030,869 851,488

eivable

If"""'_ C' '.J; __

sote 6)

.;. ~,_=-'::::-5- :) advanced gratuity

r.i::::::il ,===CC~'"lts receivable

.sn equivalents

1,045,872 3,132,1370 6,542

1,045,872 3,138,679•

53,035 13,4662,011 1,632

2,122,224 1,958,948420,000 420,000442,576 212,328362,273 0

3,402,119 2,606,374

d cash equivalents

. neqative balances)rests (negative balances)

-es

accounts payable

s report - page 3o 14 form part of these financial statements

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Motor OUI~o.•..•III'lIiut ,. Furnlturo

Property and equipmont___nd

Vohlclo oqulpmont&

& FIUlnTotal

6. accessorles

Cost I valuation Kshs Kshs Kshs Kshs Kshs Kshs

Balance at 01 Sep 2013 0 0 577,776 249,534 185,433 1,012,743Adjustment ** 0 0 49,665 (49,395) (3,374) (3,104)Additions 4,000,000 500,000 0 14,750 118,300 4,633,050Disposal 0 0 0 (30,000) 0 (30,000)

Balance at 31 Aug 2014 4,000,000 500,000 627,441 184,889 300,359 5,612,689

Depreciation

Balance at 01 Sep 2013 0 0 82,847 213,631 50,547 347,025Adjustment ** 0 0 (54,073) (59,381) (795) (114,249)Disposal 0 0 0 (23,500) 0 (23,500)Charge for the year 0 31,250 78,430 40,863 26,404 176,947

Balance at 31 Aug 2014 0 31,250 107,204 171,613 76,156 386,223

Net book value at 31 Aug 2014 4,000,000 468,750 520,237 13,276 224,203 5,226,466

Net book value at 31 Aug 2013 0 0 494,929 35,903 134,886 665,718

** Adjustments have been made to agree the book value of the fixed assets to the actual balances of the assets as per the fixed assets register.Accummulated depreciation has also been adjusted to be in agreement with policy. The net effect of the adjustments is as follows:

Kshs .Cost (3,104)Accummulated depreciation • 114,249

Net adjustment 111,145

Independent auditor's report - page 3The notes on pages 8 to 14 form part of these financial' statements

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~1NANC1AL STATEMENTS - YEAR ENDED 31 AUGUST, 2014

ountability statement 2014 2013

Notes Kshs Kshs

s 9 (a) 12,341,620 11,570,094~~ activities 10 (a) 225,302 0

12,566,922 11,570,094

costs

664,510 3,4003,721,287 3,009,519

postage 99,360 71,875310,312 471,277

--ing expenses 52,833 0stationery 92,186 57,192

. services 32,490 101,416port services 507,035 360,000fees 37,722 17,637

17,390 33,06821,870 59,25220,632 24,33860,230 20,01056,862 158,83010,000 41,000

106,105 299,432147,062 133,665

tion costs 5,957,886 ~861,911

expenses; E...•.••d related expenses 2,760,793 3,098,207

efresh and U-Course) 676,175 0draising costs 79,141 47,422

ends 1,804,403 2,258,965sing 320,550 272,700 •F and gratuity 242,484 455,724

+edical cover 203,263 704,892ment 29,830 (52,850)

s 26,367 41,151IF 12,200 32,600

55,230 73,765

me expenses 6,210,436 6,932,576

fund expenses (Page 5) 12,168,322 11,794,487

eating activities 10 (b) 305,069 0

as 12,473,391 11,794,487

eficit) for the year 93,531 (224,393)

eport - page 3a 14 form part of these financial statements

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'_..Cross Link

SCMTC ProclamationLoadorshlp

Mlss!n CareforcoOxford Trust

Centre TotalTeam Project

Fund movements Kshs Kshs Kshs Kshs Kshs Kshs

Income 0 0 0 43,704 684,450 728,154

Expenditure (page 5) 0 0 0 (8,000) (4,317,870) (4,325,870)

Balance I (deficit) for the year ° ° ° 35,704 (3,633,420) (3,597,716)

Transfer to general fund (120,738) (88,307) (94,407) 0 0 (303,452)

Balance at 31 Aug 2013 120,738 88,307 94,407 ° 2,668,635 2,972,087

Balance at 31 Aug 2014 ° ° ° 35,704 (964,785) (929,081 )

9. Income 2014 2013

(a) General fund donations Kshs Kshs

Staff support raising 3,685,801 1,750,077iSA apprentices support raising 993,205 1,607,119iSA host churches and organisations 2,440,905 3,088,065iSA local fundraising 1,359,374 630,366iSA international support raising

.2,782,298 4,374,444

Other income 1,080,037 120,023

Total general fund donations 12,341,620 11,570,094

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Independent auditor's report - page 3The notes on pages 8 to 14 form part of these financial statements

12

CIAL STATEMENTS - YEAR ENDED 31 AUGUST, 2014

00) 2014 2013" .ed funds Kshs Kshs

ission team 0 136,466Centre Project 684,450 2,731,334

Trust 43,704 58,724

icted funds 728,154 2,926,524

e 13,069,774 14,496,618

eneratinq activities

:::-..-e adverts 51,000 0132,905 0

16,475 024,922 0--

orne 225,302 °es

3,945 0magazine expenses 255,800 0

her resources 37,649 0ses 7,675 0

--exoenses 305,069 °--

enerating activities (79,767) °-= b-:.E:5 :0 loans without written agreements that were advanced to the organisation by

o aid in capital acquisitions (motor vehicle and land). The details are as

Amount •Amount repaid in Closing

advanced the year balance

Kshs Kshs Kshs

er (iServe Africa staff) 850,000 (150,000) 700,000a (Board chairman) 200,000 (60,000) 140,000

1,050,000 (210,000) 840,000

age 3part of these financial statements

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iServe Africa

NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 AUGUST, 2014

12. iSA placement fees

This is the amount to be paid by local resident churches to iServe Africa on the appointment of anapprentice to serve in their Ministry. The particular churches have signed contracts with iServeAfrica.

13. Taxation

No provision for corporate tax has been made in these financial statements. Being a charitableentity, the organization qualifies for exemption from Kenyan corporate tax under the provisions ofparagraph ten (10) of the first schedule to the Income Tax Act, Cap 470 (Laws of Kenya).

14.. Capital commitments

There were no capital commitments as at 31 August, 2014.

15. Employees

iServe Africa had seven (7) employees as at 31 August, 2014 [2013: five (5)].

16. Retirement benefits

The organization has a pension scheme with CfC Life Insurance where each employee contributes10% of basic salary and iServe Africa gives a matching contribution. Staff also contribute to theNational Social Security Fund (NSSF) of the Republic of Kenya. The NSSF rate of contribution perstaff member is pegged by statute at the lower of 5% of the basic salary and a maximumcontribution of Kshs 2001= per month. The employer, iServe Africa, gives a matching contributioneach month for each employee under the NSSF scheme.

17. Currency

The financial statements are prepared in Kenya Shillings (Kshs) as the base currency.

18. Abbreviations

F&A1& M BankiSAKPLCMTCNHIFNSSFPDRTBSCMTCT&RCTSM

Finance and Administration Sub - CommitteeInvestment & Mortgages BankiServe AfricaKenya Power and Lighting CompanyMinistry Training CourseNational Hospital Insurance FundNational Social Security FundPartnership DevelopmentRaising the BarSouth Central Ministry Training CourseTraining and Resource CentreThe Sheepfold Ministries

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=

Independent auditor's report - page 3The notes on pages 8 to 14 form part of these financial statements

14