Financial Statements

Report of the Comptroller and Auditor General for presentation to the Houses of the Oireachtas

I have audited the financial statements on pages 28 to 44 under the Industrial Development Act, 1993.

Respective Responsibilities of the Board of the Agency and the Comptroller and Auditor General

The accounting responsibilities of the Board of the Agency are set out on page 26. It is my responsibility, based on my audit, to form an independent opinion on the financial statements presented to me by the Agency and to report on them.

I review whether the statement on the system of internal financial control on page 27 reflects the Agency's compliance with applicable guidance on corporate governance and report any material instance where it does not do so, or if the statement is misleading or inconsistent with other information of which I am aware from my audit of the financial statements.

Basis of Audit Opinion

In the exercise of my function as Comptroller and Auditor General, I conducted my audit of the financial statements in accordance with auditing standards issued by the Auditing Practices Board and by reference to the special considerations which attach to State bodies in relation to their management and operation.

An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Agency's circumstances, consistently applied and adequately disclosed.

I planned and performed my audit so as to obtain all the information and explanations that I considered necessary to provide me with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement whether caused by fraud or other irregularity or error. In forming my opinion I also evaluated the overall adequacy of the presentation of information in the financial statements.

Opinion

In my opinion, proper books of account have been kept by the Agency and the financial statements, which are in agreement with them, give a true and fair view of the state of affairs of the Agency at 31 December 2004 and of its income and expenditure and cash flow for the year then ended.

John Purcell
Comptroller and Auditor General

6 May 2005

Statement of Board
Members Responsibilities

The Industrial Development Agency Ireland (IDA) was established on 1 January 1994 as an agency of Forfás (the policy and advisory board for industrial development in Ireland) under the provisions of the Industrial Development Act, 1993.

Paragraph 7(2) of the First Schedule to the Industrial Development Act, 1993 requires the Agency to keep, in such form as may be approved of by the Minister for Enterprise, Trade and Employment with the consent of the Minister for Finance, all proper and usual accounts of money received and expended by it. In preparing those accounts, the Board is required to:

• select suitable accounting policies and apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• prepare the Financial Statements on a going concern basis unless it is inappropriate to presume that the Agency will continue in operation;
• disclose and explain any material departures from applicable accounting standards.

The Board is responsible for keeping proper books of account which disclose with reasonable accuracy at any time the financial position of the Agency and which enables it to ensure that the Financial Statements comply with Paragraph 7(2) of the First Schedule to the Industrial Development Act, 1993. The Board is also responsible for safeguarding all the assets of the Agency and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

On behalf of the Board:

John Dunne, Chairman

Sean Dorgan, Chief Executive

Gary Kennedy, Chairman, Audit and Finance Committee

Statement on the System of Internal Financial Control

On behalf of the Board of IDA Ireland I acknowledge our responsibility for ensuring that an effective system of internal financial control is maintained and operated by the Agency.

The system can only provide reasonable and not absolute assurance that assets are safeguarded, transactions authorised and properly recorded, and that material errors or irregularities are either prevented or would be detected in a timely period.

The Board has taken steps to ensure an appropriate control environment is in place by:

• establishing formal procedures through various committee functions to monitor the activities and safeguard the assets of the organisation
• clearly defining and documenting management responsibilities and powers
• developing a strong culture of accountability across all levels of the organisation.

The Board has also established processes to identify and evaluate business risks. This is achieved in a number of ways including:

• working closely with Government and various agencies and institutions to ensure that there is a clear understanding of IDA's goals and support for the Agency's strategies to achieve those goals
• carrying out regular reviews of strategic plans both short and long term and evaluating the risks to bringing those plans to fruition
• setting annual and longer term targets for each area of our business followed by regular reporting on the results achieved
• establishing and enforcing extensive standard procedures and provisions under which financial assistance may be made available to projects, including provisions requiring repayment if the project does not fulfil commitments made by the promoter.

The system of internal financial control is based on a framework of regular management information, administrative procedures including segregation of duties, and a system of delegation and accountability. In particular it includes:

• a comprehensive budgeting system with an annual budget which is reviewed and agreed by the Board
• regular reviews by the Board of periodic and annual financial reports which indicate financial performance against forecasts
• setting targets to measure financial and other performances
• clearly defined capital investment control guidelines
• formal project management disciplines.

The IDA has an internal audit department, which reports directly to the Audit & Finance Committee of the Board. This committee meets on a quarterly basis to review reports prepared by Internal Audit and other departments. The Audit & Finance Committee in turn keeps the Board informed of the matters that it has considered.

The internal audit function operates in accordance with the Framework Code of Best Practice set out in the Code of Practice for the Governance of State Bodies. A rolling three-year Internal Audit work plan is determined by the Audit & Finance Committee and revised annually where required. The current work plan takes account of areas of potential risk identified in a risk assessment exercise carried out by management with the assistance of consultants with expertise in the area of risk assessment. The Internal Auditor provides the Committee with quarterly reports on assignments carried out. These reports highlight deficiencies or weaknesses, if any, in the system of internal financial control and the recommended corrective measures to be taken where necessary.

I confirm that, in respect of the year ended 31 December 2004, the Board conducted a review of the system of internal financial control. The Board's monitoring and review of the effectiveness of the system of internal financial control is informed by the work of the Internal Auditor, the Audit & Finance Committee, which oversees the work of the Internal Auditor and the executive managers within IDA Ireland who have responsibility for the development and maintenance of the financial control framework.

Signed on behalf of the Board

John Dunne, Chairman

27 April 2005

Basis of Accounting

1. The Financial Statements have been prepared in accordance with the historical cost convention in the form approved by the Minister for Enterprise, Trade and Employment with the consent of the Minister for Finance and are denominated in euro.
   The Financial Statements are prepared on an accrual basis, except where stated below. The financial year is 1 January to 31 December.
   Financial Reporting Standards recommended by recognised accountancy bodies are adopted as they become applicable.
2. Tangible Fixed Assets comprise:
   1. Land which is held for the purposes of industrial development.
   2. Site development works.
   3. Industrial buildings leased to tenants including buildings in the course of sale where title had not passed at the year end.
   4. Vacant property available for industrial promotion or in the course of sale where title had not passed at the year end.
   5. Other Fixed Assets including motor vehicles, computer and office equipment and fixtures and fittings.
3. Telecommunication Assets comprise:
   Telecommunication Assets constitute an indefeasible right of use of a designated portion of a global telecommunications network for a period of 25 years.
4. Investments consist entirely of equity investments.
5. Accounts Receivable comprise amounts due in respect of:
   1. Properties sold on a deferred basis. Interest is charged on these amounts at the Exchequer Lending Rates advised by the Department of Finance.
   2. Rents due under the terms of lease agreements, for periods of up to 35 years, entered into between the Agency and tenants and charges for the use of Undeveloped Lands.
   3. Fees from purchase options given on IDA property, deposits paid by IDA for the purchase of property where title had not been received, and the provision of other services.
   4. Amounts due in respect of the disposal of telecommunication assets.
6. Accounts Payable comprise amounts payable in respect of:
   1. Creditors.
   2. Grants that have matured for payment.
   3. Deposits received in respect of disposals of property in progress.
   4. Amounts due in respect of the purchase of telecommunication assets.
7. By way of memorandum Income and Expenditure in respect of Industrial Property transactions are set out in note 23 to the Financial Statements.

Accounting Policies

1. Income recognition
   Income from Oireachtas grants, grant refunds, the European Social Fund, and investments represent actual cash received.
2. Carrying Amounts, Depreciation and Provisions for Impairment
   1. The carrying amounts for telecommunication assets and tangible fixed assets, other than land, comprise: Historic cost less accumulated depreciation and less a provision for impairment of the assets, where applicable, to endeavour to ensure that the value of the assets carried in the Financial Statements do not exceed their estimated recoverable amounts.
   2. The carrying amounts for Land and Investments comprise: Historic cost less a provision for impairment of the assets, where applicable, to endeavour to ensure that the value of the assets carried in the Financial Statements do not exceed their estimated recoverable amounts.
   3. Depreciation is calculated in order to write off the cost of assets less, where applicable, any impairment provision over their estimated remaining useful lives. No provision for depreciation is made in respect of land or investments.
   4. Provisions for impairment may be made following reviews of fixed assets, telecommunication assets and investments carried out by officers of IDA or independent valuers, as appropriate, if events or changes in circumstances or economic conditions indicate that the carrying amount of the assets or investments may not be fully recoverable. Any such provisions will be recognised in the Operating Account in the year in which they are made.
      Where a subsequent review indicates that the circumstances which gave rise to a provision for impairment no longer exist or have changed materially the accumulated provision for impairment will be reduced accordingly.
3. Accounting for Bad and Doubtful Debts
   Known bad debts are written off and specific provision is made for any amount the collection of which is considered doubtful. A further general provision is maintained.
4. Accounting for Investments
   The IDA Financial Statements do not reflect a consolidation of the results of the investee companies because IDA activities are so different from those of the investee companies that such consolidation would be incompatible with the obligation to give a true and fair view.
5. Grants Payable
   Grants are accrued in the Financial Statements when the grantee complies with stipulated conditions.
6. Foreign Currencies
   Assets and liabilities denominated in foreign currencies are translated at the exchange rates ruling at the Balance Sheet date. Revenues and costs are translated at the exchange rates ruling at the dates of the underlying transactions.
   Profits and losses arising from foreign currency translations and on settlement of amounts receivable and payable in foreign currency are dealt with in the Operating Account.
7. Operating Leases
   The rentals under operating leases are dealt with in the Financial Statements as they fall due.
8. Capital
   Capital represents funds utilised for the acquisition of industrial property, other fixed assets, telecommunication assets and investments taking account of disposals, depreciation charges and, where applicable, provisions for impairment in the carrying amounts.
9. Telecommunication Assets Reserve
   Profits arising on the disposal of telecommunication assets are not realised until such time as the consideration price is received. Unrealised profits are transferred to a special Telecommunication Assets Reserve pending receipt of the consideration. If subsequently any part of the profit is deemed unrealisable, the reserve account will be reduced by the transfer of a similar amount to the Operating Account.
10. Superannuation
    All IDA staff are employees of Forfás and are seconded to the IDA by Forfás. Legislation requires Forfás to prepare and administer pension schemes for the granting of pension entitlements to its staff including staff seconded to IDA. Forfás is also responsible for pension reporting requirements, including those set out under FRS 17. Voluntary early retirement costs paid directly by IDA and all pension contributions deducted from staff are accounted for in the Operating Account in the period in which they arise.

Operating Account

As on 31 December 2004

	Notes	2004 €'000	2003 €'000
Income
Oireachtas Grants	1	83,216	119,157
National Training Fund	2	2,138	650
EU & Exchequer Co-Funded Research Technology and Innovation (RTI) for Industry Programme	3	2,966	2,575
Grant Refunds		21,910	24,569
Rental Income		2,644	3,303
Less Rental Income received from Enterprise Ireland Clients	4 (a)	-446	-
Other Income	5	1,725	2,445
Profit on Disposal of Assets	6	30,901	38,809
Total		145,054	191,508
Expenditure
Grants Payable	7	65,545	96,493
"Promotion, Administration and General Expenses	8 (a)	36,387	35,350
Industrial Building Charges	9	7,379	9,712
Depreciation Charges and Provisions	10	14,181	13,874
Total		123,492	155,429
Net Operating Surplus for Year		21,562	36,079
Contribution to the Exchequer	11	-9,495	-31,437
Balance at 1 January		37,738	18,399
Transfer (to)/from Capital	12	-5,153	14,697
Balance at end of Year		44,652	37,738

Amounts shown under Income and Expenditure are in respect of continuing activities.
There are no recognised gains or losses, other than those dealt with in the Operating Account.

The Basis of Accounting, Accounting Policies, Cash Flow Statement and Notes 1 to 24 form part of these Financial Statements.

On behalf of the Board:

John Dunne, Chairman

Sean Dorgan, Chief Executive

Gary Kennedy, Chairman, Audit and Finance Committee

Balance Sheet

As at 31 December 2004

	Notes	2004 €'000	2003 €'000
Tangible Fixed Assets
Industrial Property	13	200,915	194,326
Other Fixed Assets	14	1,283	1,946
Sub Total		202,198	196,272
Intangible Assets and Investments
Telecommunication Assets	15	2,075	2,487
Investments	16	2	363
Total Tangible and Intangible Assets and Investments		204,275	199,122
Current Assets
Accounts Receivable	17	45,147	15,948
Cash at Bank and on hand		17,598	31,645
Sub Total		62,745	47,593
Current Liabilities
Accounts Payable	18	19,765	10,406
Net Current Assets		42,980	37,187
Long Term Receivables
Accounts Receivable: amounts falling due after more than one year	17	1,672	551
Net Assets		248,927	236,860
Representing:
Capital	12	204,275	199,122
Operating Account		44,652	37,738
Total		248,927	236,860

As at 31 December 2004

The Basis of Accounting, Accounting Policies, Cash Flow Statement and Notes 1 to 24 form part of these Financial Statements.

On behalf of the Board:

John Dunne, Chairman

Sean Dorgan, Chief Executive

Gary Kennedy, Chairman, Audit and Finance Committee

 

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