The Akshay Patra Foundation (‘the Trust or TAPF’) is registered under the Indian Trust Act 1882 as a Public Charitable Trust. It was formed on 1st July 2000 and was registered on 16th October 2001. The principal activity for the Trust is to implement the mid-day meal program of the Government of India through respective state governments for the children studying in government and municipal schools.
The Trust is also involved in various other charitable activities such as providing intensive coaching for eligible students after school hours under “Vidya Akshaya Patra Program”, providing subsidised meals to daily wage earners under various schemes like “Akshaya Kalewa program” and “Aap Ki Rasoi Program”, providing food for babies and mothers in Anganwadis and implementing various other programs for the relief of the poor.
1.2 Significant accounting policies
(i) Basis of preparation of financial statements The balance sheet and income and expenditure accounts are prepared under the historical cost convention and the accounting is on accrual basis. In the absence of any authoritatively established accounting principles for the specialised aspects related to charitable trusts which do not carry out any commercial activity, these statements have been prepared in accordance with the significant accounting policies as described below. There are no trusts or entities over which TAPF exercises controlling interest, thus there is no requirement of consolidating other entities into the TAPF’s financial statements.
(ii) Use of estimates The preparation of the financial statements in conformity with the significant accounting policies, requires that the Board of Trustees of the Trust (‘Trustees’) make estimates and assumptions that affect the reported amounts of income and expenditure of the year and reported balances of assets and liabilities. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.
(iii) Fixed assets Fixed assets are stated at cost of acquisition or construction, less accumulated depreciation. The cost of fixed assets includes the purchase cost of fixed assets and any other directly attributable costs of brining the assets to their working condition for the intended use. Borrowing costs, if any, directly attributable to acquisition or construction of those fixed assets which necessarily take a substantial period of time to get ready for their intended use are capitalised.
Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortisation. Fixed assets received as donation in kind are measured and recognised at fair value on the date of being ready for their intended use. Advances paid towards the acquisitions of fixed assets as at the balance sheet date are disclosed under long-term loans and advances.
(iv) Depreciation Depreciation on fixed assets is provided on a straight-line method basis over the estimated useful life as follows:
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Class
of assets
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Estimated
|
|
|
useful life
|
|
|
in years
|
|
Buildings
|
15
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|
Kitchen and related
equipments
|
3
|
|
Office and other
equipments
|
3
|
|
Computer equipments
|
3
|
|
Furniture and fixtures
|
5
|
|
Vehicles
|
3
|
|
Distribution vessels
|
2
|
|
Intangible assets
|
3
|
|
|
|
Land is not depreciated. Depreciation on leasehold improvements is provided over the primary lease term or the useful life of assets, whichever is lower.
Depreciation is charged on a proportionate basis for all assets purchased and sold during the year.
Individual low cost assets, acquired for less than Rs.5,000 (other than distribution vessels), are depreciated fully in the year of acquisition.
(v) Inventory
Inventory comprises provisions and groceries which include food grains, dhal & pulses, oils and ghee and other items like spares and fuel. Inventory is valued at cost, determined under the First-In-First Out method.
In case of Government grants of rice and wheat, the inventory cost is determined at the lower of the market price of government regulated price.
Cost of inventory, other than those received as government grants, comprises purchase cost and all expenses incurred in bringing the inventory to its present location and condition.
Inventories received as donation in kind are measured at fair value on the date of receipt.
(vi) Revenue recognition
Donation received in cash, other than those received for depreciable fixed assets, are recognised as income when the donation is received, except where the terms and conditions require the donations to be utilised over a certain period.
Such donations are accordingly recognised rateably over the period of usage. The deferred income is disclosed as “Deferred donation – feeding” under other current liabilities in the balance sheet.
Donation received in kind, other than those received for depreciable fixed assets are measured at fair value on the date of receipt and recognised as income only upon their utilisation.
Unutilised donations are deferred and disclosed as kind donations or grain grants received in advance under other current liabilities in the balance sheet.
Donations made with a specific direction that they shall form part of the corpus fund or endowment fund of the Trust are classified as such, and are directly reflected as trust fund receipts in the balance sheet.
Government grants related to subsidy received in cash or in kind are recognised as income when the obligation associated with the grant is performed and right to receive money is established and reflected as receivables in the balance sheet. The value of subsidies and donations received in kind is determined based on the lower market price or government regulated price of those goods at the time of receipt.
Donations received in cash towards depreciable fixed assets, the ownership of which lies with the Trust, are treated as deferred donation income and recognised as donation income in the income and expenditure account on a systematic and rational basis over the useful life of the asset.
The deferred donations towards depreciable fixed assets (receive both in cash and in kind), being identified as funds which provide long term benefits to the Trust, are disclosed under the Designated Funds in the Balance Sheet.
Income from cultural events, if any, is recognised as and when such events are performed.
Income from receipts for other programs is recognised when the associated obligation is performed and right to receive money is established.
Interest on deployment of funds is recognised using the time-proportion method, based on underlying interest rates.
(vii) Income Tax
The Trust is registered u/s. 12A of the In-come tax Act, 1961 (‘the Act’). Under the provisions of the Act, the income of the Trust is exempt from tax, subject to the compliance of terms and conditions speci-fied in the Act.
Consequent to the insertion of tax liability on anonymous donations vide Finance Act 2006, the Trust provides for the tax liability in accordance with the provisions of Section 115 BBC of the Act, if at all there are any such anonymous donations.
(viii) Foreign exchange transactions
Transaction: Foreign exchange transactions are recorded at a rate that approximates the exchange rate prevailing on the date of the transaction. The difference between the rate at which foreign currency transactions are accounted and the rate at which they are realised, is recognised in the income and expenditure account.
Translation: Monetary foreign currency assets and liabilities at the year-end are restated at the closing rate. The difference arising from the restatement is recognised in the income and expenditure account.
(ix) Provisions and contingent liabilities
The provisions are recognised when, as a result of obligating events, there is a present obligation that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation.
The contingent liability disclosure is made when, as a result of obligating events, there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources.
No provision or disclosure is made when, as a result of obligating events, there is a possible obligation or a present obligation when the likelihood of an outflow of resources is remote.
(x) Impairment of assets
The Trust periodically assesses whether there is any indication that an asset may be impaired. If any such indication exists, the Trust estimates the recoverable amount of the asset. If such recoverable amount of the asset is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the income and expenditure account. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recover-able amount subject to a maximum of depreciable historical cost.
(xi) Retirement benefits
Provident fund
All eligible employees receive benefit from provident fund, which is a defined contribution plan. Both the employee and the Trust make monthly contributions to the fund, which is equal to a specified percentage of the covered employee’s basic salary. The Trust has no further obligations under this plan, beyond its monthly contributions. Monthly contributions made by the Trust are charged to income and expenditure account.
Gratuity
The Trust provides gratuity, a defined benefit retirement plan, to its eligible employees. In accordance with the Payment of Gratuity Act, 1972, the gratuity plan provides a lumpsum payment of the eligible employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee’s basic salary and tenure of employment with the Trust. The gratuity liability is accrued based on an actuarial valuation at the balance sheet date, carried out by an independent actuary.
Compensated absences
The employees of the Trust are entitled to compensated absences which are both accumulating and non-accumulating in nature. The expected cost of accumulating compensated absences is determined by actuarial valuation based on the additional amount expected to be paid as a result of the unused entitlement that has accumulated as at the Balance Sheet date. Expense on non-accumulating compensated absences is recognised in the period in which the absences occur.
(xii) Leases
Assets acquired under lease, where the Trust substantially has all the risk and rewards of ownership, are classified as finance lease. Such assets acquired are capitalised at the inception of lease at lower of the fair value or present value of minimum lease payments.
Assets acquired under lease where the significant portion of risks and rewards of ownership are retained by the lessor are classified as operating lease. Lease rentals are charged to income and expenditure account on a straight line basis over the lease term.
