**REGISTERED COMPANY NUMBER: 08159144 (England and Wales) REGISTERED CHARITY NUMBER: 1152236** ## **REPORT OF THE TRUSTEES AND AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021** ## **FOR** ## **THE CONSTRUCTION SECTOR TRANSPARENCY INITIATIVE** Magma Audit LLP Magma House 16 Davy Court Castle Mound Way Rugby CV23 0UZ **THE CONSTRUCTION SECTOR TRANSPARENCY INITIATIVE** ## **CONTENTS OF THE FINANCIAL STATEMENTS for the year ended 31 December 2021** |||**Page**|| |---|---|---|---| |**Report of the Trustees**|1|to|5| |**Report of the Independent Auditors**|6|to|7| |**Statement of Financial Activities**||8|| |**Statement of Financial Position**||9|| |**Statement of Cash Flows**||10|| |**Notes to the Statement of Cash Flows**||11|| |**Notes to the Financial Statements**|12|to|16| **THE CONSTRUCTION SECTOR TRANSPARENCY INITIATIVE (REGISTERED NUMBER: 08159144)** ## **REPORT OF THE TRUSTEES for the year ended 31 December 2021** The trustees who are also directors of the charity for the purposes of the Companies Act 2006, present their report with the financial statements of the charity for the year ended 31 December 2021. The trustees have adopted the provisions of Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) (effective 1 January 2019). ## **ACHIEVEMENT AND PERFORMANCE** CoST experienced significant achievements in 2021 at the national and international level, a selection of which are listed below. For more on our other achievements visit www.infrastructuretransparency.org. ## **Responding and adapting to pressing global issues** As the Covid-19 pandemic took hold for a second year, CoST members continued to innovate and adapt in holding events online as well as in-person where possible. Despite challenges posed by Covid-19 restrictions, CoST members trained a record 5,798 people from government, civil society, the media and private sector to disclose and use infrastructure data. ## **Responding to climate change and environment issues** Whilst 2020 saw a commitment from the Government of Honduras to use CoST to monitor health projects built in response to the pandemic, in 2021, a further commitment was made to improve reconstruction projects following hurricanes IOTA and ETA. A CoST Honduras review showed an increase in construction and project costs that deviated significantly from similar investments outside of crisis settings. In Uganda, the programme also helped to obtain a commitment from local government to extend water supply to drought exposed farming communities. ## **Monitoring healthcare projects** In 2021, members from Afghanistan, Guatemala, Honduras and Uganda independently review data from 15 healthcare projects, finding a lack of transparency in the sector. For example, CoST Guatemala highlighted that procuring entities disclosed data on budget allocations for emergency hospitals, but not throughout the delivery cycle. ## **Mainstreaming gender equality** The CoST International Secretariat (CoST IS) increased its promotion of gender inclusion across the programme. It published guidance on mainstreaming gender equality that showed how a gender-inclusive approach can be incorporated across the core features of the CoST. The guidance highlights good practice examples, such as Honduras who over the last year have taken steps to mainstream gender and inclusion in its programme. For example, it requires procuring entities to publish data on the ratio of jobs held by women across the infrastructure project cycle. It has also broadened the joint diploma it offers on infrastructure monitoring to encompass greater outreach to women and indigenous groups. ## **Impact** In 2021, we captured almost 40 reforms on specific projects as well as those made at a broader sectoral level. For example, following recommendations from CoST Sekondi-Takoradi (Ghana), the Shama District Assembly amended school infrastructure to increase accessibility to pupils and teachers with disabilities, including through the provision of guard railings and disability ramps. Also, in Uganda, following its fourth review ('assurance review') of infrastructure projects, the Kampala Capital City Authority strengthened internal data management and quality controls on procurement through training staff to comply with procurement guidelines, quality control of bidding documents and evaluation reports. ## **Listening and adapting to member needs** The CoST IS published guidance is response to the needs of members. This included how CoST can be applied in crises settings so that infrastructure built rapidly still meets transparency standards. It also included a manual on data disclosure which is of particular value to CoST members in the process of adopting our approach. We also published guidance to reflect changing aspects of our work, such as our approach to participation and how to engage a broad range of stakeholders. Page 1 ## **THE CONSTRUCTION SECTOR TRANSPARENCY INITIATIVE (REGISTERED NUMBER: 08159144)** **REPORT OF THE TRUSTEES for the year ended 31 December 2021** ## **Sharing learnings on Public Private Partnership projects** As countries build back from the economic crisis, Public-Private Partnerships (PPPs) are likely to become more widely used as they push the costs of financing into the future. However, PPPs are more likely to fail, with serious consequences for the public purse, if they are not subject to transparency and public scrutiny. In light of this, we published lessons from the CoST experience of making PPPs more transparent in Honduras. That experience led to institutional reforms and the cancelation of project which would have cost the government US$517 million of unnecessary expenditure. ## **Innovation and technology** By the end of 2021, CoST supported the publication of data on 19,076 projects in line with the CoST Infrastructure Data Standard (CoST IDS), bringing the cumulative total to 76,767 projects globally. This reflects a recognition across our members on the value of online platforms and the use of our technology such as the Open Contracting for Infrastructure Data Standard (OC4IDS) to make more data available and to ensure it reaches the right audiences. To mark the anniversary of the launch of our Infrastructure Transparency Index (ITI) we held an event hearing from those who have implemented the Index on the reasons behind their different results and what we can expect in the future. For example, we analysed the reasons behind very different scores being achieved in various regions. The members involved also considered how and to what extent the ITI will improve the performance of procuring entities in the future. ## **Influencing** In 2021 CoST convened experts and influential thinkers at international fora, co-hosting events with partners and contributing to events organised by others. Highlights of this work include CoST sharing its experience at an OECD Integrity Forum on the role of technology; convening high-level panelists from international and national business at the US Summit for Democracy; and helping to galvanise the open government community in a session focused on the value of partnerships at the Open Government Partnership Summit. We contributed our expertise in thematic areas including water integrity and gender inclusion at UNDP and Water Integrity Network (WIN) events and we reached new audiences by hosting an event on a University College London platform and joining UNGASS and UNODC events. We influenced geo-political discourse and debate on infrastructure issues as a member of the Blue Dot Network Executive Consultation Group and by hosting an event at the Civil-20 Summit. ## **OBJECTIVES AND ACTIVITIES** CoST's objectives are for the public benefit: To promote ethical and transparent standards of conduct, compliance with the law, and accountability in the provision of infrastructure and infrastructure services in any part of the world, which may include (but not be limited to) the following means: (a) Promoting the public disclosure of project information; (b) Enabling stakeholders to hold decision-makers to account. To relieve and prevent poverty, suffering and distress caused by waste, corruption, mismanagement or inefficiency in the provision of infrastructure and infrastructure services in any part of the world. - To advance education, knowledge and the exchange of experience in the provision of infrastructure and infrastructure services. - To advance health or save lives by increasing public safety in the provision of infrastructure and infrastructure services. To further such other exclusively charitable purposes according to the law of England and Wales as the Trustees in their absolute discretion from time to time determine. CoST's Aim is to: - Help improve the value for public money invested in infrastructure. - Help improve the quality of public infrastructure and services. CoST undertakes a range of activities including: - Developing and disseminating principles, standards and approaches. - Providing technical assistance and capacity building support. - Advocating for transparency and accountability. - Building partnerships and collaborating with others. Page 2 **THE CONSTRUCTION SECTOR TRANSPARENCY INITIATIVE (REGISTERED NUMBER: 08159144)** ## **REPORT OF THE TRUSTEES for the year ended 31 December 2021** ## **Principal Officers** The Construction Sector Transparency Initiative ("CoST") had no employees in 2021. ## **Management of Major Risks** The Trustees retain responsibility for a system of internal controls that are designed to manage major risks. These systems provide reasonable but not absolute assurance against inappropriate or ineffective use of resources and against the risk of errors or fraud. The Trustees delegate authority to the International Secretariat to conduct an annual review of the major strategic and operational risks that CoST faces and the ways in which they are being monitored, managed and mitigated. The outcomes of this review are reported to the Trustees by the International Secretariat and changes in policy are made where necessary. The Trustees are satisfied with the systems in place to monitor, manage and mitigate CoST's exposure to major risks. The Trustees have assessed the major risks to which the company is exposed, in particular those related to the operations and finances of the company, and are satisfied that systems and procedures are in place to mitigate our exposure to the major risks. Details of the risk assessment were published in the CoST Business Plan 2017 - 2020 published in June 2017. An updated risk register will be included in the CoST Business Plan 2021- 2025. ## **COVID-19** As well as the implications for people's health coronavirus (COVID-19) is having a significant impact on businesses and the economy. We anticipate the next twelve months will be a challenge for CoST in terms of income generation. The Board will draw on the support of Engineers Against Poverty to help ensure that the organisation can continue to deliver its programme and sustain its operations during a time of uncertainty. ## **FINANCIAL REVIEW** ## **Financial position** ## Accounts The accounts for the year ended 31 December 2021 are shown in this annual report. The accounts show income for the period of £641,682 and resources expended were £956,786 resulting in a deficit of £315,104 for the period. ## Restricted Funds The balance on restricted funds at 31 December 2021 is £880. ## Reserves The Trustees have not set a reserves threshold as the charity has not received any unrestricted funding (free income) since it began trading. All of the charities activities are restricted to and determined by the funding it receives. As the charity has no staff or significant creditors the financial impact of closure would be limited. The Trustees will continually review this policy and if necessary will establish a Reserves Policy that considers the level of 'free reserves' sufficient to protect the organisation and its charitable programme by providing time to adjust to changing financial circumstances. ## Going concern The trustees have assessed the financial position of the charitable company and assessed the impact of COVID-19. The charity's income has dropped significantly with a large proportion due to the difficulty in obtaining new funding in the present climate. In June 2022 FCDO confirmed that £1m has been approved for CoST in 2022-23 with £1m approved in principle for 2023-24 and 2024-25, a total of £3m. This will allow the CoST to have sufficient resources to meet its liabilities as they fall due for at least twelve months and secure its financial position in the longer term. ## **STRUCTURE, GOVERNANCE AND MANAGEMENT** ## **Governing document** The charity is controlled by its governing document, a deed of trust, and constitutes a limited company, limited by guarantee, as defined by the Companies Act 2006. ## **REFERENCE AND ADMINISTRATIVE DETAILS Registered Company number** 08159144 (England and Wales) ## **Registered Charity number** 1152236 Page 3 ## **THE CONSTRUCTION SECTOR TRANSPARENCY INITIATIVE (REGISTERED NUMBER: 08159144)** ## **REPORT OF THE TRUSTEES for the year ended 31 December 2021** ## **Registered office** 6th Floor Alliance House 29-30 High Holborn London WC1V 6AZ ## **Trustees** C J Poortman G Ofori P N Mathews V Lazatin G English N Forsyuk C Schouten Appointed 09 February 2022 The Executive Board Members are also the directors of the charitable company for the purposes of company law and its trustees for the purposes of charity law. ## **Company Secretary** S Henderson ## **Auditors** Magma Audit LLP Magma House 16 Davy Court Castle Mound Way Rugby CV23 0UZ ## **Bankers** National Westminster Bank PO Box 414 38 Strand London WC2N 5JB ## **FINANCIAL INSTRUMENTS** The principal financial instruments of the charity comprise bank balances, other receivables and other payables. The main purpose of these instruments is to raise funds for the charity's operations and to finance its continuing operations. Liquidity risk is managed by the use of a bank balance along with efficient monitoring of cash flows to ensure there are sufficient funds to meet liabilities. ## **PLANS FOR FUTURE PERIODS** A new ambitious five year business plan was published in late 2020, that aims to scale up the global footprint and impact of CoST. To achieve this, CoST will focus on its' core business: developing high-quality tools and standards and supporting members and other stakeholders with implementation. A dynamic and successful programme is the best way to attract new members, including those from high-income countries. The growth will require a substantial increase in CoST's overall income, which will also need to e from a more diverse range of sources. The CoST International Secretariat (CoST IS) will continue to encourage bilateral donors to support the initiative directly, while also seeking the support of foundations. ## **STATEMENT OF TRUSTEES' RESPONSIBILITIES** The trustees (who are also the directors of The Construction Sector Transparency Initiative for the purposes of company law) are responsible for preparing the Report of the Trustees and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). Page 4 ## **THE CONSTRUCTION SECTOR TRANSPARENCY INITIATIVE (REGISTERED NUMBER: 08159144)** ## **REPORT OF THE TRUSTEES** **for the year ended 31 December 2021** ## **STATEMENT OF TRUSTEES' RESPONSIBILITIES - continued** Company law requires the trustees to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the charitable company and of the incoming resources and application of resources, including the income and expenditure, of the charitable company for that period. In preparing those financial statements, the trustees are required to - select suitable accounting policies and then apply them consistently; - observe the methods and principles in the Charity SORP; - make judgements and estimates that are reasonable and prudent; - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the charitable company will continue in business. The trustees are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the charitable company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the charitable company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. In so far as the trustees are aware: - there is no relevant audit information of which the charitable company's auditors are unaware; and - the trustees have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information. ## **AUDITORS** The auditors, Magma Audit LLP, will be proposed for re-appointment at the forthcoming Annual General Meeting. Approved by order of the board of trustees on ............................................. and signed on its behalf by: 27 September 2022 ........................................................................ C J Poortman - Trustee Page 5 ## **REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF THE CONSTRUCTION SECTOR TRANSPARENCY INITIATIVE** ## **Opinion** We have audited the financial statements of The Construction Sector Transparency Initiative (the 'charitable company') for the year ended 31 December 2021 which comprise the Statement of Financial Activities, the Statement of Financial Position, the Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). - In our opinion the financial statements: - give a true and fair view of the state of the charitable company's affairs as at 31 December 2021 and of its incoming resources and application of resources, including its income and expenditure, for the year then ended; - have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and - have been prepared in accordance with the requirements of the Companies Act 2006. ## **Basis for opinion** We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the charitable company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. ## **Conclusions relating to going concern** In auditing the financial statements, we have concluded that the trustees' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the charitable company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the trustees with respect to going concern are described in the relevant sections of this report. ## **Other information** The trustees are responsible for the other information. The other information comprises the information included in the Annual Report, other than the financial statements and our Report of the Independent Auditors thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. ## **Opinions on other matters prescribed by the Companies Act 2006** In our opinion, based on the work undertaken in the course of the audit: - the information given in the Report of the Trustees for the financial year for which the financial statements are prepared is consistent with the financial statements; and - the Report of the Trustees has been prepared in accordance with applicable legal requirements. ## **Matters on which we are required to report by exception** In the light of the knowledge and understanding of the charitable company and its environment obtained in the course of the audit, we have not identified material misstatements in the Report of the Trustees. We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: - adequate accounting records have not been kept or returns adequate for our audit have not been received from branches not visited by us; or - the financial statements are not in agreement with the accounting records and returns; or - certain disclosures of trustees' remuneration specified by law are not made; or - we have not received all the information and explanations we require for our audit; or - the trustees were not entitled to take advantage of the small companies exemption from the requirement to prepare a Strategic Report or in preparing the Report of the Trustees. Page 6 ## **REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF THE CONSTRUCTION SECTOR TRANSPARENCY INITIATIVE** ## **Responsibilities of trustees** As explained more fully in the Statement of Trustees' Responsibilities, the trustees (who are also the directors of the charitable company for the purposes of company law) are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the trustees are responsible for assessing the charitable company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the trustees either intend to liquidate the charitable company or to cease operations, or have no realistic alternative but to do so. ## **Our responsibilities for the audit of the financial statements** Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Independent Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: Based on our understanding of the company and the industry, we have identified that the principal risks of non-compliance with laws and regulations, and we have considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as Companies Act 2006, the Charities Act 2011 and Charities SORP (FRS102) .We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to posting inappropriate journal entries, and management bias in accounting estimates. Audit procedures performed included: - Making enquires with management for consideration of known or suspected instances of non-compliance with laws andregulations and fraud. - Challenging assumptions made by management in their accounting estimates. - Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations, journal entries crediting revenue, journal entries crediting cash and journal entries with specific defined descriptions. There are inherent limitations in the audit procedures describes above and the further removed non-compliant with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting in error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentation, or through collusion. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Independent Auditors. ## **Use of our report** This report is made solely to the charitable company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the charitable company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the charitable company and the charitable company's members as a body, for our audit work, for this report, or for the opinions we have formed. Victoria Craig (Senior Statutory Auditor) for and on behalf of Magma Audit LLP Magma House 16 Davy Court Castle Mound Way Rugby CV23 0UZ Date: ............................................. Page 7 ## **THE CONSTRUCTION SECTOR TRANSPARENCY INITIATIVE** ## **STATEMENT OF FINANCIAL ACTIVITIES for the year ended 31 December 2021** **----- Start of picture text -----**
2021 2020
Unrestricted Restricted Total Total
fund fund funds funds
Notes £ £ £ £
INCOME AND ENDOWMENTS FROM
Charitable activities
Charitable activities - 641,650 641,650 1,458,976
Investment income 2 - 32 32 398
Total - 641,682 641,682 1,459,374
EXPENDITURE ON
Charitable activities 4
Charitable activities - 950,606 950,606 1,518,399
Governance costs - 6,180 6,180 6,000
Total - 956,786 956,786 1,524,399
-
NET INCOME/(EXPENDITURE) (315,104) (315,104) (65,025)
RECONCILIATION OF FUNDS
Total funds brought forward - 315,984 315,984 381,009
TOTAL FUNDS CARRIED FORWARD - 880 880 315,984
**----- End of picture text -----**
The notes form part of these financial statements Page 8 ## **THE CONSTRUCTION SECTOR TRANSPARENCY INITIATIVE (REGISTERED NUMBER: 08159144)** ## **STATEMENT OF FINANCIAL POSITION 31 December 2021** **----- Start of picture text -----**
2021 2020
Notes £ £
CURRENT ASSETS
Debtors 8 48,064 15,389
Cash at bank and in hand 27,431 404,462
75,495 419,851
CREDITORS
Amounts falling due within one year 9 (74,615) (103,867)
NET CURRENT ASSETS 880 315,984
TOTAL ASSETS LESS CURRENT LIABILITIES 880 315,984
NET ASSETS 880 315,984
FUNDS 11
Restricted funds 880 315,984
TOTAL FUNDS 880 315,984
**----- End of picture text -----**
These financial statements have been prepared in accordance with the provisions applicable to charitable companies subject to the small companies regime. The financial statements were approved by the Board of Trustees and authorised for issue on ............................................. and were signed on its behalf by: 27 September 2022 ............................................. C J Poortman - Trustee ............................................. P M Matthews - Trustee The notes form part of these financial statements Page 9 ## **THE CONSTRUCTION SECTOR TRANSPARENCY INITIATIVE** ## **STATEMENT OF CASH FLOWS for the year ended 31 December 2021** **----- Start of picture text -----**
2021 2020
Notes £ £
Cash flows from operating activities
Cash generated from operations 1 (377,063) (186,258)
Net cash used in operating activities (377,063) (186,258)
Cash flows from investing activities
Interest received 32 398
Net cash provided by investing activities 32 398
Change in cash and cash equivalents in
the reporting period (377,031) (185,860)
Cash and cash equivalents at the
beginning of the reporting period 404,462 590,322
Cash and cash equivalents at the end of
the reporting period 27,431 404,462
**----- End of picture text -----**
The notes form part of these financial statements Page 10 ## **THE CONSTRUCTION SECTOR TRANSPARENCY INITIATIVE** ## **NOTES TO THE STATEMENT OF CASH FLOWS for the year ended 31 December 2021** **----- Start of picture text -----**
1. RECONCILIATION OF NET EXPENDITURE TO NET CASH FLOW FROM OPERATING ACTIVITIES
2021 2020
£ £
Net expenditure for the reporting period (as per the Statement of
Financial Activities) (315,104) (65,025)
Adjustments for:
Interest received (32) (398)
Increase in debtors (32,675) (10,287)
Decrease in creditors (29,252) (110,548)
Net cash used in operations (377,063) (186,258)
2. ANALYSIS OF CHANGES IN NET FUNDS
At 1/1/21 Cash flow At 31/12/21
£ £ £
Net cash
Cash at bank and in hand 404,462 (377,031) 27,431
404,462 (377,031) 27,431
Total 404,462 (377,031) 27,431
**----- End of picture text -----**
The notes form part of these financial statements Page 11 **THE CONSTRUCTION SECTOR TRANSPARENCY INITIATIVE** ## **NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2021** ## **1. ACCOUNTING POLICIES** ## **Company status** The company is a company limited by guarantee. The members of the company are the Trustees named on page 1. In the event of the company being wound up, the liability in respect of the guarantee is limited to £1 per member of the company. ## **Summary of significant accounting policies** The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated. ## **Basis of preparing the financial statements** The financial statements of the charitable company, which is a public benefit entity under FRS 102, have been prepared in accordance with the Charities SORP (FRS 102) 'Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) (effective 1 January 2019)', Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', the Charities Act 2011 and the Companies Act 2006. ## **Going concern** The trustees have assessed the financial position of the charitable company and assessed the impact of COVID-19. The charity's income has dropped significantly with a large proportion due to the difficulty in obtaining new funding in the present climate. In June 2022 FCDO confirmed that £1m has been approved for CoST in 2022-23 with £1m approved in principle for 2023-24 and 2024-25, a total of £3m. This will allow the CoST to have sufficient resources to meet its liabilities as they fall due for at least twelve months and secure its financial position in the longer term. ## **Incoming resources** All income is recognised in the Statement of Financial Activities once the charity has entitlement to the funds, it is probable that the income will be received and the amount can be measured reliably. Income tax recoverable in relation to donations received under Gift Aid or deed of covenant is recognised at the time of the donation. ## **Expenditure** All expenditure is accounted for on an accruals basis and has been classified under headings that aggregate all costs related to the category. Where costs cannot be directly attributed to particular headings they have been allocated to activities on a basis consistent with the use of resources. Support costs are those costs incurred directly in support of expenditure on the objects of the charitable company. Charitable activities include direct expenditure associated with providing the charitable services and support costs relating to those activities. Other resources expended consistent of governance costs which include those incurred in the governance of the charitable company and are primarily associated with constitutional and statutory requirements. ## **Taxation** The charity is exempt from corporation tax on its charitable activities. ## **Fund accounting** General funds are unrestricted funds which are available for use at the discretion of the Trustees in furtherance of the general objectives of the company and which have not been designated for other purposes. Restricted funds are funds which are to be used in accordance with specific restrictions imposed by donors or which have been raised by the company for particular purposes. The costs of administering such funds are charged against the specific fund. The aim and use of each restricted fund is set out in the notes to the financial statements. Page 12 continued... **THE CONSTRUCTION SECTOR TRANSPARENCY INITIATIVE** **NOTES TO THE FINANCIAL STATEMENTS - continued for the year ended 31 December 2021** ## **1. ACCOUNTING POLICIES - continued** ## **Financial instruments** ## (i) Financial assets Basic financial assets, including trade and other debtors, cash and bank balances are initially recognised at transaction price, unless the arrangement constitutes as financing transaction, where the transaction is measured at the present value of future receipts discounted at a market rate of interest. Such assets are subsequently carried at amortised cost using the effective interest rate method. ## (ii) Financial liabilities Basic financial liabilities, including trade and other creditors are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Debt instruments are subsequently carried at amortised cost, using the effective interest rate method. ## **2. INVESTMENT INCOME** ## **3.** ## **4.** |**INVESTMENT INCOME**||||| |---|---|---|---|---| |Deposit account interest
**INCOME FROM CHARITABLE ACTIVITIES**
Activity
Grants
Charitable activities
Grants received, included in the above, are as follows:
Dutch MinBuZa
DFID
UK FCO
UNDP Income
World Bank
WIN
The Partnership for Transparency Fund
**CHARITABLE ACTIVITIES COSTS**
All of the funds are restricted||**2021**
**£**
**32**
**2021**
**£**
**641,650**
**2021**
**£**
**238,419**
**367,778**
**-**
**8,810**
**-**
**13,915**
**12,728**
**641,650**||2020
£
398
2020
£
1,458,976
2020
£
229,166
1,150,000
5,000
46,456
28,354
-
-
1,458,976| |**Provision of charitable services:**
Supporting national programmes
International programme costs|**Total Funds**
**2021**
**£**
**483,044**
**467,061**
**950,105**||Total Funds
2020
£
923,214
594,622
1,517,836|| Page 13 continued... **THE CONSTRUCTION SECTOR TRANSPARENCY INITIATIVE** ## **NOTES TO THE FINANCIAL STATEMENTS - continued for the year ended 31 December 2021** ## **5. SUPPORT COSTS** |**5.**
**SUPPORT COSTS**||| |---|---|---| |Charitable activities
Governance costs|Governance
Finance
costs
£
£
**501**
**-**
**-**
**6,180**|Totals
£
**501**
**6,180**| ||**501**
**6,180**|**6,681**| |**6.**
**NET INCOME/(EXPENDITURE)**
Net income/(expenditure) is stated after charging/(crediting):
Auditors' remuneration|**2021**
**£**
**6,180**|2020
£
6,000| ## **7. TRUSTEES' REMUNERATION AND BENEFITS** There were no trustees' remuneration or other benefits for the year ended 31 December 2021 nor for the year ended 31 December 2020. ## **Trustees' expenses** During the year, three trustees' received reimbursement of expenses of £nil (2020: £1,341) for travel and other expenses. ## **8. DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR** |Grant debtors
Other debtors
Prepayments and accrued income
**9.**
**CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR**
Trade creditors
Accruals and deferred income||**2021**
**£**
**12,728**
**-**
**35,336**
**48,064**
**2021**
**£**
**26,900**
**47,715**
**74,615**|2020
£
-
2,180
13,209
15,389
2020
£
15,048
88,819
103,867| |---|---|---|---| Page 14 continued... ## **THE CONSTRUCTION SECTOR TRANSPARENCY INITIATIVE** ## **NOTES TO THE FINANCIAL STATEMENTS - continued for the year ended 31 December 2021** ## **10. ANALYSIS OF NET ASSETS BETWEEN FUNDS** |Current assets
Creditors due within one year
**11.**
**MOVEMENT IN FUNDS**
**Restricted funds**
Restricted funds
**TOTAL FUNDS**
Net movement in funds, included in the above are as follows:
**Restricted funds**
Restricted funds
**TOTAL FUNDS**
**Comparatives for movement in funds**
**Restricted funds**
Restricted funds
**TOTAL FUNDS**
Comparative net movement in funds, included in the above are a
**Restricted funds**
Restricted funds
**TOTAL FUNDS**|||**Total funds**
**2021**
**(Restricted)**
**75,495**
**(74,615)**
**880**|**Total funds**
**2021**
**(Restricted)**
**75,495**
**(74,615)**
**880**||Total funds
2020
(Restricted)
419,851
(103,867)
315,984| |---|---|---|---|---|---|---| ||At 1/1/21
£
**315,984**
**315,984**
Incoming
resources
£
**641,682**
**641,682**
At 1/1/20
£
381,009
381,009
s follows:
Incoming
resources
£
1,459,374
1,459,374|||Net
movement
in funds
£
**(315,104)**
**(315,104)**
Resources
expended
£
**(956,786)**
**(956,786)**
Net
movement
in funds
£
(65,025)
(65,025)
Resources
expended
£
(1,524,399)
(1,524,399)||At
31/12/21
£
**880**
**880**
Movement
in funds
£
**(315,104)**
**(315,104)**
At
31/12/20
£
315,984
315,984
Movement
in funds
£
(65,025)
(65,025)| Page 15 continued... **THE CONSTRUCTION SECTOR TRANSPARENCY INITIATIVE** **NOTES TO THE FINANCIAL STATEMENTS - continued for the year ended 31 December 2021** ## **11. MOVEMENT IN FUNDS - continued** A current year 12 months and prior year 12 months combined position is as follows: |**Restricted funds**
Restricted funds
**TOTAL FUNDS**|At 1/1/20
£
381,009
381,009|Net
movement
in funds
£
(380,129)
(380,129)|At
31/12/21
£
880
880| |---|---|---|---| A current year 12 months and prior year 12 months combined net movement in funds, included in the above are as follows: |**Restricted funds**
Restricted funds|Incoming
Resources
Movement
resources
expended
in funds
£
£
£
2,101,056
(2,481,185)
(380,129)| |---|---| |**TOTAL FUNDS**|2,101,056
(2,481,185)
(380,129)| Restricted funds relate to grants received towards completion of specific projects. These projects support the charities core objective of "helping participating countries deliver better value from public infrastructure". The charity is required to report the use of the funds to the funding providers. All funds held at the year end were represented by net current assets. ## **12. RELATED PARTY DISCLOSURES** As detailed further in the Trustees' Report, the day to day management and finance function of the Charity is undertaken by staff of Engineers Against Poverty (register charity no. 1071974). Petter Matthews, the Executive Director and a Trustee of the Charity, is also Executive Director of Engineers Against Poverty. During the year, Engineers Against Poverty recharged the Charity £452,601 (2020: £507,310) relating to workshop costs and staff time incurred on the Charity's behalf. At the year end included in creditors there was £9,250 (2020: £nil) of trade creditors and £41,535 (2020: £82,819) of accrued costs. The recharge includes an element of Petter Matthews time. Page 16