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Report of Independent Accountants
To the Board of Trustees and Members of Taytay sa Kauswagan, Inc.
Suite G, St. Francis Building lirares Avenue, Bacolod City Philippines
Telephone + 63 (34) 821 50,
4331651
Facsimile + 63 (34) 433 2740
We have audited the accompanying statements of assets, liabilities and hind balances of
Taytay sa Kauswagan, Inc. (a non-stock, non-profit organization) as of December 31, 2000 and 1999, and the related statements of revenues, expenses and changes in fluid balances and of cash flows for the years then ended. These financial statements are the responsibility of the
Organization's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards in the
Philippines. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Taytay sa Kauswagan, Inc. as of December 31, 2000 and
1999, and the results of its operations and changes in fluid balances and its cash flows for the years then ended in conforrnity with generally accepted accounting principles in the
Philippines.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information shown on Schedules I and II is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is falrly stated in all material respects in relation to the basic financial statements taken as a whole.
Bacolod City March20, 2001

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TAYTAY SA KAUSWAGAN, INC.
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000 AND 1999
Note 1 - Nature of operations/tax exemption
Taytay sa Kauswagan, Inc. is a non-stock, non-profit organization registered wiffi the
Securities and Exchange Commission on September 15, 1986. Its primary purpose is to solicit and receive foreign or local donations to sustain its activities aimed to assist small entrepreneurs in their pursuit for education, culture, social, civic, physical, spiritual, and economic advancement through micro-enterprise development program. It is a member of the Asian Network in Development (ANID), Inc., an international network committed to help the poor through micro-enterprise, job creation and livelihood opportunity. The
Organization is governed by the Board of Trustees whose members do not receive any compensation.
The Organization is exempt from income tax under Section 30(g) of the National Internal
Revenue Code. However, income from any activities conducted for profit regardless of the disposition made of such income shall be subject to tax.
~2-Siificantaccountinoiieies
The more significant accounting practices and policies of the Organization are set forth to facilitate the understanding of data presented in the financial statements.
Fund accounting
To ensure the observance of limitations and restrictions placed on the use of resources available to the Organization, the acc~ts of the Organization are maintained in accordance with the principles of fluid accounting. This is the procedure by which resources for various activities are classified for accounting and reporting purposes into fluids established according to their nature and purposes. Separate accounts are maintained for each flirid; however, in the accompanying financial statements, fluids that have similar characteristics have been combined into fluid groups. Accordingly, all financial transactions have been recorded and reported by hind group.

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The assets, liabilities and fund balances of the Organization are reported in two selfbalancing fund groups as follows:

General Fund which represents unrestricted resources from the Organization's credit facilities available for the sustenance of the day to day operations and administrative expenses of the Organization; and

Restricted Funds which represent restricted resources from grants obtained from
Groupe Developpement and TEAR Fund and from loans availed from European
Union, Asian Development Bank, Opportunity International and People's Credit and
Finance Corporation. These funds are restricted for use in projects for organizing and strengthening non-government and private organizations, small-scale livelihood programs and micro-enterprise development projects.
Cash equivalents are certificates of time deposit or similar financial instruments matrrring not more than three months from date of placement.
C.' Allowance for doubtful accounts is established for estimated losses on loans based on periodic review and evaluation by management.
Property and equinment are carried at cost less accumulated depreciation. Depreciation is computed on the straight-line method over the estimated useful lives of the related assets. Major renewals and betterments are capitalized, while minor repairs and maintenance are expensed as incurred. When an asset is retired or otherwise sold, its cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is either credited or charged to the fund that owns the assets.
Leasehold improvements are stated at cost and amortized over the shorter of the lease term or the estimated useful life of the improvements.
Grants are recognized as revenue in the period received and is presented net of related expenses in the statements of revenues, expenses and changes in fund balances.
Interest income on loans is recognized as revenue when earned, however, interest income on past due accounts is recognized only upon collection. Interest income on bank deDosits is presented net of final tax Q'Jote 9).
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Others
All gains and losses from the sale, collection or other disposition of non-cash assets are accounted for in the fund that owns the assets.
Note 3- Loans receivable
Loans receivable earn annual interest ranging from 24% to 30%; collectible for a maximum period of one year and secured,by real estate and chattel mortgages.
Note 4- Property and equipment
Details of this account at December 31 follow:
General fund
Land
Transportation equipment
Furniture, fixtures and equipment
Leasehold improvements
Deep-well
Less - Accumulated depreciation
Restricted funds
Transportation equipment
Furniture, fixtures and equipment
Leasehold im royements
Less - Accumulated depreciation
2000
P3,592,062
2,098,262
1,588,221
139,776
5,500
7,423,821
3,163,634
4,260,187
272,315
778,974
1999
1,198,605
1,150,862
2,621,782
1,842,808
P2,892,062
1,730,769
1,232,070
129,778
5,500
5,990,179
2,251,293
3,738,886
1,061,584
811,900
204,997
2,078,481
513,085
1,565,396
P6,102,995 P5,304,282
Note 5- Notes payable
This account represents credit availments from a local bank which are collateral free, payable within one year, and bear interest of 25% per annum
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312,500
4,166
Note 6 - Loans payable
Details of this account at December 31 follow:
General fund
Department of Trade and Industry
Alliance of Philippine Partners in Enterprise
Development
Pilipinas Bank
Less - Current portion
Restricted funds
Asian Development Bank
Opportunity International
European Union
People's Credit and Finance Corporation (PCFC)
Less - Current portion
Interest rates
12% P
18%
13%
12%
6%
12%
12%
2000
62,500 P
1999
-
62,500
62,500
34,382,934
7,043,985
4,250,000
411,923
1,333,333
1,000,000
2,645,833
1,791,667
30,104,350
7,043,985
4,250,000
6,470,826
46,088,842
11,293,985
47,869,161
7,242,870
34,794,857 40,626,291 p34,794,857 P41 ,480,457
The above loans are collateral free except for the loan with PCFC which is secured by a chartel mortgage. These obligations have various repayment dates ranging from one to five years starting January 2000 through October 2005.
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Note 7 - Due to loan beneficiaries
This account represents the 10% retention of the loans extended to loan beneficiaries as guarantee deposits. It earns interest of 4% per annum and may be withdrawn in case of emergency or when the beneficiary has fully settled his accounts.
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Note 8 - Lease contracts
The Organization leases office spaces for its main office and branches. The lease agreements cover a period of two (2) years and renewable thereafter upon mutual agreement by both parties.
Note 9-Interest income
Details of this account at December 31 follow:
Interest income on loans
General
Fund
2000
Restricted
Funds Total
Pl,704,063 P19,654,534 P21,358,597 P14,292,291
Interest income on bank deposits QIote 2) 287,239 352,837 640,076 198,679 P1 ,991 ,302
P20,007,37 1 P21 ,998,673 P1 4,490,970
1999
Total
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~1O-Retirement lan
The Organization has not established a qualified retirement plan. - Mandated retirement benefits at retirement date of qualified employees shall be shouldered by the Organization.
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Schedule I
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TAYTAY SA KAUSWAGAN, INC.
SCHEDULE OF GENERAL AND ADMINISTRATIVE EXPENSES
FOR THE YEARS ENDED DECEMBER 31,2000 AND 1999
Salaries, wages and allowances
Employee benefits
Depreciation
Representation and entertainment
Transportation and travel
Light and water
Postage, telephone and telegraph
Stationery and office supplies
Rent
Trainings and seminars
Repairs and maintenance
Meetings and conferences
Contracted services
Professional fees
Taxes and licenses
Foreign exchange loss
Membership fees
Miscellaneous
2000 1999
P2,451,133 P2,292,'134
1,139,221 926,048
793,977 588,217
538,544
325,343
253,223
198,404
267,176
278,235
188,812
144,597
179,459
163,870
160,103
87,436
87,224
59,809
58,776
32,849
176,965
213,870
163,103
69,367
67,160
57,449
3,522
69,561
482,851
80,500
483,847 340,104
P7,013,218 P6,409,97 1

Schedule II
TAYTAY SA KAUSWAGAN, INC.
SCHEDULE OF PROJECT EXPENSES
FOR THE YEARS ENDED DECEMBER 31,2000 AND 1999
Salaries, wages and allowances
2000 1999
P 3,644,621 P1 ,770,356
Employee benefits
Transportation and travel
1,869,318
1,154,052
737,564
461,995
Stationery and office supplies
Depreciation
Rent
Representation and entertainment
409,547
384,253
326,113
265,026
230,520
295,577
136,722
108,647
Light and water
Postage, telephone and telegraph
Trainings and seminars
Repairs and maintenance
Taxes and licenses
Contracted services
Membership fees
Meetings and conferences
160,724
128,846
117,200
101,996
57,052
54,352
39,440
10,810
43,265
78,645
28,526
83,178
98,752
138,456
Professional fees
Insurance
Miscellaneous 158,093
P8,881,443
78,799
49,935
223,348
P4,564,285