International Atomic Energy Agency General Conference (Unofficial electronic version)	GC(41)/9 August 1997

INTRODUCTION TO THE AGENCY'S ACCOUNTS FOR 1996 AND FINANCIAL HIGHLIGHTS
1. I present herewith the Agency's accounts for the year ended 31 December 1996. Part I contains the External Auditor's report to the Board of Governors on the audit of the accounts. The Agency's accounts, comprising Statements I to IV and Schedules S1 to S13, are presented in Parts II and III, respectively. Part IV, entitled "Notes to the financial statements" describes the purpose and financing of the Funds and the authority under which they are administered, and the significant accounting policies applied by the Secretariat in preparing the statements and schedules. The notes offer the reader additional information on significant items and events which could have a bearing on the financial position of the Agency, or of funds in its possession or under its control. A new Part V called "Annex" has been added to present financial information which, under the new United Nations system accounting standards, no longer has the status of a financial statement, schedule or note, but is considered useful for Member States and has therefore been included.

   I. Significant changes

2. The changes in this year's accounts are driven principally by the need to take due consideration of the new United Nations system accounting standards which were adopted by the Consultative Committee on Administrative Questions (CCAQ) in 1995. The Secretariat developed an information paper which was provided to the Member States in April 1996 explaining much of the expected changes which are now incorporated in this document. The Secretariat was supported in this effort by the External Auditor.

3. The new accounting standards do not require the submission of certain data which in the past may have been of use to the Member States. Therefore, the Secretariat has been careful to ensure that all essential information included in the 1995 Accounts document is also retained in this document at least for 1996 in either the schedules, notes, or included in the newly added Annex in Part V.

4. Former Fund group III "General Fund - Operational Facilities" has been dissolved following the transfer of its largest component, the International Centre for Theoretical Physics (ICTP), to the United Nations Educational, Scientific and Cultural Organization (UNESCO) in 1996. The Agency's annual contribution to ICTP will continue to be reported under Regular Budget appropriation 3 "Research and Isotopes". The remaining component in Fund group III, the IAEA Marine Environment Laboratory in Monaco, is now presented as follows:

   Regular Budget contribution in Fund group I Statement IV under Appropriation 3 "Research and Isotopes";

   Voluntary contributions and funds received under inter-organization arrangements
   (United Nations Environment Programme (UNEP)) under a new Fund group III named "General Fund - Extrabudgetary Programme Fund".

   This is also in accordance with the new fund group structure foreseen by the revised Financial Regulations in effect since 1995.

5. The Extrabudgetary Programme Fund (Fund Group III) includes the following new accounts:

   Belgium - to administer contributions in support of the Coordinated Research Programme on cellular biology and biotechnology including mutation techniques for the development of new useful banana genotypes under the Food and Agriculture Programme;

   CEG Secretariat - to administer contributions in support of the Contact Expert Group (CEO) for International Radioactive Waste Projects under the Radioactive Waste Management Programme;

   MOSCAMED - to administer contributions in support of the development of new technologies for application in fruit fly sterile insect technique action programmes under the Food and Agriculture Programme; and

   IMPHOS - to administer contributions in support of the Coordinated Research Programme on the use of nuclear and related techniques for evaluating the agronomic effectiveness of phosphate fertilizers, in particular rock phosphates, under the Food and Agriculture Programme.

6. The Equipment Replacement Fund (ERF) in the amount of $ 1.8 million, established with allocations from computer services income, forced budget savings and deferred programme activities related to 1993 appropriations, has been moved from the reserves of the Regular Budget Fund and established as a separate Reserve Fund in Fund group VI named "Trust Fund and Reserve Funds". Its use in 1996, as approved by the Board of Governors, is described in Note 13 to the Financial Statements. The Equipment Replacement Fund 2000 (ERF 2000), currently holding $ 200 000, is shown under the Regular Budget Fund and will be transferred to the Reserve Fund after approval by the Board.

   II. Financial Highlights

   General

7. The Agency's financial situation has improved considerably toward the end of 1996. Total Agency cash holdings at the end of the year amounted to $ 133.4 million (1995: $ 79.8 million). This was mainly due to the receipt of most of the 1995 outstanding assessments for the Regular Budget.

8. The United Nations rate of exchange of the Austrian schilling versus the United States dollar has increased from 10.10 in January to 10.80 in December 1996, with an annual average of 10.51. This resulted in over-all losses on exchange in US dollar terms. However, these losses did not affect the current budget resources since they were absorbed by previous year's gains carried over under the provision for revaluation of cash on the balance sheet in Statement II (Regular Budget Fund and Technical Co-operation Fund).

   Fund Group I. Regular Budget Fund and Working Capital Fund

9. Appropriations originally approved in the amount of $ 219 017 000 at the rate of AS 12.70 to the US dollar, were recalculated at $ 256 450 000 using the average rate of exchange of AS 10.51, in accordance with Resolution GC(39)/RES/8 Attachment.

10. Cash in banks increased from $ 18.1 million in 1995 to $ 69.9 million in 1996 in the Regular Budget Fund, including the Working Capital Fund. This was due to an increase in assessment collection for the current as well as for the prior years and enabled the Secretariat to return, in November 1996, the advance of $ 15.8 million which had been borrowed from the Working Capital Fund.

11. The 1995 cash surplus amounted to $ 1.3 million. Member States' individual shares in this surplus are shown in Schedule S5.

12. The 1996 budgetary surplus of $ 10.6 million (1995: $ 8.3 million) consists of the following:

    	Millions of US dollars
    	1996	1995
    Unused balance of appropriations (Statement IV)	6.6	5.3
    Surplus of actual resources over adjusted estimates (Annex A1)	3.7	2.9
    Contributions assessed on new Member States (Schedule S1)	0.3	0.1
    	10.6	8.3

    Fund Group II. General Fund - Technical Co-operation Fund

13. The financial situation of the Fund is stable. Total pledges amounted to $ 50.5 million (1995: $ 47.7 million) against a target of $ 64.5 million (1995: $ 61.5 million). Cash held was slightly higher than last year with $ 33.0 million as compared to $ 31.7 million the previous year. However, the free use by the Agency of a significant part of this cash is legally or otherwise restricted, as shown in Schedule S11.

    Other Fund groups

14. The financial situation of Fund groups III, IV, V and VI is stable. Their resources are based on extrabudgetary contributions from Member States or Member State institutions received before the respective activities are undertaken, or funding agreements with United Nations or other international organizations and agreements with trustors.

(signed) HANS BLIX
Director General

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