**Company Registered Number: CE007585 Charity Registration Number: 1167756**
## **AL-HIKMEH FOUNDATION**
**(A Charitable Incorporated Organisation)**
**TRUSTEES' REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020**
## **AL-HIKMEH FOUNDATION**
## **(A Charitable Incorporated Organisation)**
## **CONTENTS**
||Page|
|---|---|
|**Reference and Administrative Details of the Charity, its Trustees and Advisers**|1|
|**Trustees' Report**|2 - 8|
|**Statement of Trustees' Responsibilities**|9|
|**Independent Auditors' Report on the Financial Statements**|10 - 13|
|**Statement of Financial Activities**|14|
|**Balance Sheet**|15|
|**Statement of Cash Flows**|16|
|**Notes to the Financial Statements**|17 - 26|
## **AL-HIKMEH FOUNDATION**
## **(A Charitable Incorporated Organisation)**
## **REFERENCE AND ADMINISTRATIVE DETAILS OF THE CHARITY, ITS TRUSTEES AND ADVISERS FOR THE YEAR ENDED 31 DECEMBER 2020**
|**Trustees**|Dr Z Thamer, Chair|
|---|---|
||Dr B Thamer|
||Mr K Elkorishy|
|**Charity registered**
**number**
1167756
**Principal office**
Al-Hikmeh Foundation
Office 5
211 Kingsbury Road
London
NW9 8AQ
**CIO number**
CE007585
**Honorary Executive**
**Director**
Mr M Marashi
**Independent auditors**
MHA MacIntyre Hudson
Statutory Auditor
6th Floor
2 London Wall Place
London
EC2Y 5AU
**Bankers**
Barclays Bank PLC
75 King Street
Hammersmith
London
W6 9HY
**Solicitors**
BDB Pitmans LLP
50 Broadway
Westminster
London
SW1H 0BL
Husain Al-Khoee, appointed on 24/05/2021||
Page 1
## **AL-HIKMEH FOUNDATION (A Charitable Incorporated Organisation)**
## **TRUSTEES’ REPORT FOR THE YEAR ENDED 31 DECEMBER 2020**
The Trustees present their report and the financial statements of the Charity for the year ended 31 December 2020.
## **Structure, governance and management**
## **Governing document**
The governing document of Al-Hikmeh Foundation is its Charitable Incorporated Constitution, approved on 21st June 2016 which encompasses the charitable objectives that Al-Hikmeh Foundation's activities must be in line with. Furthermore, it establishes rules and procedures for the running of the Charity.
## **How the Charity is constituted**
Al-Hikmeh Foundation is a charitable incorporated organisation (CIO), registered with the Charity Commission for England and Wales on 21 June 2016 with the registered Charity number 1167756.
## **Organisation Structure**
- The Board of Trustees make strategic decisions about the Charity as well as governance decisions. They are responsible for managing the annual budget and plan for the Charity.
- The Honorary Executive Director, who is chosen by the Board of Trustees, is in charge of the everyday management of the Charity. This includes the supervision of operational activities and the management of activities undertaken in line of the Charity's objectives outlined in this document. The Honorary Executive Director reports back to the Board in the form of regular meetings assessing progress within the Charity.
## **Recruitment and appointment of Trustees**
- Apart from the first Charity Trustees, every appointed Trustee must be appointed for a term of three years by a resolution passed at a properly convened meeting of the Charity Trustees.
- In selecting individuals for appointment as appointed Charity Trustees, the Charity Trustees must have regard to the skills, knowledge and experience needed for the effective administration of the CIO.
## **Induction of Trustees**
The Charity Trustees will make available to each new Charity Trustee, on or before his or her first appointment:
- A copy of the current version of the constitution.
- A copy of the CIO's latest Trustees' Annual Report and statement of accounts.
- A copy of the annual plan for the current year.
- The initial information provided to a new Trustee listed above delivers a necessary amount of understanding of the way the Charity is managed and help them to get involved with the processes of the Charity.
- Trustees undergo on-going training through the means of workshops and events whenever necessary.
Page 2
## **AL-HIKMEH FOUNDATION (A Charitable Incorporated Organisation)**
## **TRUSTEES’ REPORT FOR THE YEAR ENDED 31 DECEMBER 2020**
## **Objectives and activities**
## **Purposes and Aims**
Our objectives, as set out in the Charity's constitution and is as follows:
- The prevention or relief of poverty and financial hardship in Iraq by providing: grants, items and services to orphans and other individuals in need and/or charities or other organisations working to prevent or relieve poverty and financial hardship.
- The prevention or relief of sickness among orphans and other individuals in need in Iraq by purchasing medical equipment and/or providing grants to organisations working to prevent or relieve sickness.
## **Activities for achieving objectives**
Our partner was chosen after research of potential partners in the region who had the reach and capability to carry out the foundation's objectives. Relationship managed through ongoing reporting, site visits and executive communication with partner’s management.
- Through our fundraising efforts, the Charity is able to provide grant funding to our partner organisation to carry out charitable work towards the relief of poverty, which includes the following programmes:
- Education Programme: our partner organisation ensures the development of as many orphans and other children in need as they can by supporting their schooling. Incentives are in place so that students excelling in studies are rewarded with gifts and awards.
- Entertainment Programme: our partner provides much needed regular fun activities for the children, such as trips to the theme park, swimming lessons, sport activities, cinema trips etc. Although due to the Covid-19 pandemic, this has been limited in the year.
- Salary Programme: our partner organisation provides monthly wages to the guardian of orphans who are suffering from impoverishment to provide for them with essential financial support and relief.
- Clothes Programme: our partner organisation distributes clothing to orphans and other impoverished peoples throughout the year to promote wellbeing in the form of essential clothing that is otherwise unaffordable for them.
- Food Programme: nutritious and staple foods are distributed year-round in the form of food baskets to beneficiaries who otherwise would find it very difficult to purchase these foods. This was even more significant this year due to the COVID-19 pandemic affecting the livelihood of the beneficiaries.
- Home Appliances Programme: A house requires appliances to keep it homely and functioning and unfortunately many impoverished peoples cannot afford basic appliances. To overcome this, our partner organisation distributes various appliances to its beneficiaries.
- Home construction and renovation programme: many of our beneficiaries do not have safe or adequate housing, therefore our partner organisation implements housing and renovation projects to provide a safe and stable environment for orphans and their families and other individuals to grow up in.
- Healthcare Programme: as one of our primary charitable objectives, healthcare programmes are dedicated to providing healthcare for orphans and other individuals in need.
Page 3
## **AL-HIKMEH FOUNDATION (A Charitable Incorporated Organisation)**
## **TRUSTEES’ REPORT FOR THE YEAR ENDED 31 DECEMBER 2020**
## **Grant Making Policy**
Grant funding is the main activity carried out in achieving Al-Hikmeh Foundation's charitable aims and objectives. Funding is sent to its partner organisation who's aims are aligned with that of Al-Hikmeh Foundation’s.
The Charity has adopted a grant making policy that guides the process of making grants to its partner.
- The aims of the partner organisation are assessed and approved by the Board of Trustees and a partnership is then established.
- A Partner organisation that receives funding from Al-Hikmeh Foundation is expected to produce reports accounting for where the funds have been spent and identifying how many beneficiaries the funds have reached.
- A Partner organisation receives regular visits by a representative from Al-Hikmeh Foundation to first hand observe the work being done. Visitations also provide assurance and transparency to donors that funds are utilised towards public benefit.
## **Contribution Made by Volunteers**
The Honorary Executive Directors' involvement is performed on a voluntary basis and is not paid any amount of salary from the Charity. Furthermore, bookkeeping as well as graphics and designs are done by volunteers who are not paid any amount of salary from the Charity. We are unable to obtain a reliable figure for the amounts of donated services by volunteers.
## **Fundraising**
The Charity’s fundraising is primarily from private donors. Donations from private donors are generally unsolicited and are received because the person is interested in supporting the Charity’s activities. Some fundraising is also done through the platform of Amazon Smile through customers who support our Charity through their shopping. A small percentage of income has been recouped from Gift Aid.
The Charity carries out all fundraising through its internal teams and does not employ external or commercial firms, either professional fundraisers or commercial participators. The Charity is not subject to any undertaking to be bound by any voluntary scheme for regulating fundraising or any voluntary standard of fundraising in respect of its activities. No complaints have been received in respect of the Charity’s fundraising activities during the financial year.
## **Public Benefit**
The charitable objects and activities which Al-Hikmeh Foundation undertakes for the public benefit and achievement in delivering these are set out in the relevant sections in this Trustees’ Report. The Board of Trustees of Al-Hikmeh Foundation ensure that the activities undertaken by Al-Hikmeh Foundation are relevant and beneficial to the needs of our beneficiaries in the following manner:
- Al-Hikmeh Foundation's work is focused on, (however not restricted to), a group who are seen as potentially the most influential on society. The orphans of today could be the next leaders in society and our support of our partner organisation is instrumental in facilitating their growth which will in turn benefit their society in its present and future forms.
- Basic necessities such as food, clothing, healthcare and shelter are provided through our partner organisation. This provides the minimum level of living that everyone should have a right to.
Page 4
**AL-HIKMEH FOUNDATION (A Charitable Incorporated Organisation)**
## **TRUSTEES’ REPORT FOR THE YEAR ENDED 31 DECEMBER 2020**
- The focus on education within Al-Hikmeh Foundation's work provides beneficiaries with the tools to make them self-sufficient, thus creating prosperity in society and removing dependency on others.
The Board of Trustees of this Charity declare and confirm that they have had regard to and have complied with the guidance issued by the Charity Commission on Public Benefit.
## **Achievements and Performance**
The Charity provided grants to their partner organisation that have managed to register and provide aid for tens of thousands of families, orphans and widows. Through this Al-Hikmeh Foundation has helped its beneficiaries take a step forward towards rebuilding their lives following the tragedies in Iraq. Many orphans, widows and internally displaced people (IDPs) have been given basic necessities such as food, water, shelter and further to that, they have been provided with healthcare and education.
Charitable activities were implemented across 14 regions across Iraq in the form of several programmes benefiting the Iraqi society and working towards the primary objectives of the foundation, which are the relief of poverty and sickness. These programmes are:
- Education Programme: The education programme which Al-Hikmeh supports is a key part of the objective to support orphans. This is primarily in the form of partners ensuring the orphans are enrolled and given a decent level of education. This development is unlikely to be received without the grants that Al-Hikmeh gives and will contribute towards empowering orphans with a sufficiently broad skill set that they can use to help contribute to society and be self-sufficient. The program also includes incentive mechanisms such as high achievers being rewarded with gifts and awards. In 2020, the COVID-19 pandemic meant that this program was put on hold.
- Entertainment Programme: Al-Hikmeh prides itself on its work to support orphans’ social and mental wellbeing. This is catered for by providing them with opportunities and entertainment so that they can equally have fun, make friends, and enjoy themselves like any other child should. The entertainment programme involves taking the orphans on trips and engaging on sporting activities. In 2020, the grant funding towards the entertainment program benefitted a total of 640 beneficiaries.
- Salary Programme: Another avenue which Al-Hikmeh uses to help alleviate poverty and hardship from the orphans and poor of Iraq is to support the salary programme which provides a basic monthly salary to orphans and the needy to help them cope with the basic costs of living for them and their families. In 2020, AHF’s grant funding used for the salary programme reached 8,424 beneficiaries.
- Clothes Programme: Another effort of poverty relief that the foundation supports is the distribution of clothes to orphans and the needy. These individuals usually cannot afford clothes and face severe financial difficulty, and therefore the funding Al-Hikmeh provides has a significant impact on their living standards. In 2020, clothing was distributed to 10,141 people across Iraq.
- Food Programme: The financial difficulties facing orphans and the poor families means that they cannot regularly afford basic nourishment levels. Therefore Al-Hikmeh provided funding to ensure that this basic need is met. This support accounted for the feeding of 52,184 people.
- Home Appliances Programme: Al-Hikmeh supports initiatives to provide essential home appliances, such as, stoves, ovens, fridges, vacuum cleaners etc to families to improve their quality of life. In 2020, grant funding for the home appliances programme provided appliances to 4,711 people’s homes.
Page 5
## **AL-HIKMEH FOUNDATION (A Charitable Incorporated Organisation)**
## **TRUSTEES’ REPORT FOR THE YEAR ENDED 31 DECEMBER 2020**
- Home construction and renovation programme: One of the basic human rights is to have a safe shelter. Many orphans and their families either do not have a place to stay or live in unsafe conditions. Therefore Al-Hikmeh supports programmes which build and renovate homes for orphans and their families. In 2020, the grant for this programme contributed towards 32 projects being competed.
- Health Programme: Al-Hikmeh Foundation continues to place great importance on its health programme which focuses specifically on providing a range of treatments to vulnerable orphans at hospitals and clinics, as well as medicines from pharmacies. This programme is especially important in Iraq as the country has a very poor and overstretched public healthcare system and private healthcare tends to be unaffordable to the orphans. As a result, it is fair to say this health programme is essential to the wellbeing of these Iraqi orphans who benefit from healthcare they would otherwise not have access to. During 2020, the grant towards the healthcare programme enabled a total number of 2,466 beneficiaries to receive some form of healthcare.
## **Measuring Achievements**
All activities carried out by Al-Hikmeh foundation during this reporting period are subject to performance reviews which are received and reviewed by the Trustees. These include the reviews of our partner to determine the overall impact, achievements and performances of our activities in addition to site monitoring visits and sample inspection of project implementation and sample examination of financial records.
The impact Al-Hikmeh Foundation has had on the lives of those afflicted in Iraq has been incredibly positive with the amount of families that have benefited from the various programmes funded by Al-Hikmeh Foundation. Beneficiaries have expressed their gratefulness to the Charity in turning around their lives from having no hope, to being provided a stepping stone to achieving more than they ever could have thought with their lives.
It is evident that because of the opportunities given to the orphans, they grow up having better health, education, and quality of life, and therefore are empowered to make a meaningful contribution to society and move towards independence. Across 2020, through AHF’s grants totalling £1,897,043 (2019 - £4,425,184), we were able to reach around 96,253 people (2019 - 90,000 people) who benefitted through various programs that our partner runs.
## **Financial review**
For the year ended 31 December 2020, the Foundation received an income of £1,996,859 (2019 - £4,425,184). Expenditure totalled £2,007,496 (2019 - £4,424,439). Total unrestricted funds carried forward for the Foundation as 31 December 2020 were £12,665 (2019 - £23,302).
## **Reserves Policy**
Subsequent to consultation, the Board of Trustees concluded that it is to preserve a policy on reserves of £12,000 should a reduction in income occur. The Trustees consider that this amount of reserve is adequate funds to ensure governance and other operating costs are covered. Potential risks facing the Charity have been considered through the means of risk assessment in defining this policy. As a result of the COVID-19 pandemic, it is the Trustees’ view that the level of reserves maintained by the Charity is deemed sufficient.
## **Going Concern**
The Board of Trustees have regarded the financial position of the Foundation to be healthy, sustainable and ready to move forward to the next financial year. For this reason, they continue to adopt the going concern basis in preparing the financial statements. Further details regarding the adoption of the going concern basis can be found in the Accounting Policies. Although the COVID-19 pandemic disturbed and continues to disturb the distribution of aid to some level, our partners managed to overcome and adapt to this new reality and as a result, our work has not been impacted significantly.
Page 6
## **AL-HIKMEH FOUNDATION (A Charitable Incorporated Organisation)**
## **TRUSTEES’ REPORT FOR THE YEAR ENDED 31 DECEMBER 2020**
The charity does not have on-going commitments of any significance and hence is not reliant on future funding to sustain its going concern position.
## **Risk Management**
An effective risk management is essential to ensure that the Trustees can take appropriate and timely action where risks are identified and are better placed to achieve the Charity's mission statement. The Charity manages the risks through a risk assessment which is regularly reviewed, updated and monitored. This proactive approach allows Trustees to take the necessary course of action once risks have been identified, either to:
- Minimise the impact of risk for example with contingency planning;
- Accept the risk;
- Transfer the risk (Insurance);
- Reduce the risk (if complete avoidance is impossible or disproportionately expensive in time or money); or
- Monitor the risk.
The Trustees should be clear about the risks in the context of Al-Hikmeh Foundation's charitable mission and in identifying risks, which may impede its ability to deliver its strategic objectives. This policy is, therefore, reviewed and aligned with any strategic plans for the Charity as developed over time to ensure that relevant risks are identified and dealt with accordingly.
## **Principal risks facing the Charity**
The Board of Trustees, having discussed and analysed, have identified the following principal risks:
- Dependency on partner organisation
- Limited donor base
- High-risk operating area of partner organisation
- The long-term impact of the COVID-19 pandemic
These risks are constantly investigated, and suitable actions are carried out adhering to the policy outline above. The risks are regularly re-visited, monitored and updated as decided by the Board of Trustees.
## **Plans for the future**
The Board of Trustees of Al-Hikmeh Foundation have agreed on a one-year plan of activities of the Charity will include:
- Enhancing the reporting and data gathering regime with partner organisation
- Continue to look at possible ways to diversify income streams, within the foundation’s operational framework, to reduce the risk the Charity faces.
- Continue to monitor the impact of COVID-19 pandemic and ensure review of the mitigation that is in place to safeguard operations.
- Look to employ a staff member on a part-time basis to manage the workload.
The Charity will continue to focus on how to improve to maximise the effects on the lives of the beneficiaries and society in general through its charitable objectives.
Page 7
## **AL-HIKMEH FOUNDATION (A Charitable Incorporated Organisation)**
## **TRUSTEES’ REPORT FOR THE YEAR ENDED 31 DECEMBER 2020**
## **Policy for the remuneration of Key Management Personnel**
The Charity considers the Key Management Personnel of the Charity to be the Trustees.
- Al-Hikmeh Foundation Trustees are not paid in their capacity as a Trustee.
- Provided that they meet the criteria of the Charity Commission guidance for ‘Payments to Charity Trustees’, they can be reimbursed if sought by Trustees for out of pocket expenses, in consideration of its reasonability. Similarly, they may also be paid for extra ordinary work for the Charity, if it is agreed upon by the Board of Trustees, and if there are no alternative staff members who can supply the work in question.
This report was approved and authorised for issue by the Trustees on and signed on its 18/10/2021 behalf by:
…………………………… **Dr Z Thamer Chair**
Page 8
## **AL-HIKMEH FOUNDATION**
## **(A Charitable Incorporated Organisation)**
## **STATEMENT OF TRUSTEES' RESPONSIBILITIES FOR THE YEAR ENDED 31 DECEMBER 2020**
The Trustees are responsible for preparing the Trustees' Report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
The law applicable to charities in England & Wales 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 Charity and of its incoming resources and application of resources, including its income and expenditure, for that period. In preparing these financial statements, the Trustees are required to:
- select suitable accounting policies and then apply them consistently;
- observe the methods and principles of the Charities SORP (FRS 102);
- make judgements and accounting estimates that are reasonable and prudent;
- state whether applicable UK Accounting Standards (FRS 102) have been followed, subject to any material departures disclosed and explained in the financial statements;
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Charity will continue in business.
The Trustees are responsible for keeping adequate accounting records that are sufficient to show and explain the Charity's transactions and disclose with reasonable accuracy at any time the financial position of the Charity and enable them to ensure that the financial statements comply with the Charities Act 2011, the Charity (Accounts and Reports) Regulations 2008 and the provisions of the Trust deed. They are also responsible for safeguarding the assets of the Charity and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Approved by order of the Members of the Board of Trustees and signed on its behalf by:
................................................ **Dr Z Thamer** Chair of Trustees Date: 18/10/2021
Page 9
**(A Charitable Incorporated Organisation)**
## **AL-HIKMEH FOUNDATION**
## **INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF AL-HIKMEH FOUNDATION**
## **Opinion**
We have audited the financial statements of Al-Hikmeh Foundation (the 'Charity') for the year ended 31 December 2020 which comprise the Statement of Financial Activities, the Balance Sheet, the Statement of Cash Flows and the related notes, 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, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
The financial statements have been prepared in accordance with Accounting and Reporting by Charities preparing their accounts in accordance with the Financial Reporting Standards applicable in the UK and Republic of Ireland (FRS 102) in preference to the Accounting and Reporting by Charities: Statement of Recommended Practice issued on 1 April 2005 which is referred to in the extant regulations but has been withdrawn.
This has been done in order for the accounts to provide a true and fair view in accordance with the Generally Accepted Accounting Practice effective for reporting periods beginning on or after 1 January 2015.
In our opinion the financial statements:
- give a true and fair view of the state of the Charity's affairs as at 31 December 2020 and of its incoming resources and application of resources 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 Charities Act 2011.
## **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 charity in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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 charity'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.
Page 10
**(A Charitable Incorporated Organisation)**
## **AL-HIKMEH FOUNDATION**
## **INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF AL-HIKMEH FOUNDATION (CONTINUED)**
## **Other information**
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' Report thereon. The Trustees are responsible for the other information contained within the Annual Report. 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. 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 course of 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.
## **Matters on which we are required to report by exception**
We have nothing to report in respect of the following matters where the Charities (Accounts and Reports) Regulations 2008 requires us to report to you if, in our opinion:
- the information given in the Trustees' Report is inconsistent in any material respect with the financial statements; or
- sufficient accounting records have not been kept; or
- the financial statements are not in agreement with the accounting records and returns; or
- we have not received all the information and explanations we require for our audit.
## **Responsibilities of Trustees**
As explained more fully in the Statement of Trustees' Responsibilities, the Trustees are responsible for the preparation of the financial statements which 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 charity'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 charity or to cease operations, or have no realistic alternative but to do so.
Page 11
**(A Charitable Incorporated Organisation)**
## **AL-HIKMEH FOUNDATION**
## **INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF AL-HIKMEH FOUNDATION (CONTINUED)**
## **Auditors' responsibilities for the audit of the financial statements**
We have been appointed as auditor under section 144 of the Charities Act 2011 and report in accordance with the Act and relevant regulations made or having effect thereunder.
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 an Auditors' Report 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
- Obtaining an understanding of the legal and regulatory frameworks that the entity operates in, focusing on those laws and regulations that had a direct effect on the financial statements;
- Enquiry of management and those charged with governance to identify any instances of known or suspected instances of fraud;
- Enquiry of management and those charged with governance around actual and potential litigation and claims;
- Enquiry of management about any instances of non-compliance with laws and regulations;
- Reviewing the design and implementation of control systems in place
- Testing the operational effectiveness of the controls;
- Performing audit work over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for bias;
- Review the due diligence processes in place on major donors and enquiry of legal advisers for the confirmation of donations receive in the year;
- Performing audit work over the grant making and monitoring process;
- Reviewing minutes of meetings of those charged with governance;
- Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occuring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
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 Auditors' Report.
Page 12
**(A Charitable Incorporated Organisation)**
## **AL-HIKMEH FOUNDATION**
## **INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF AL-HIKMEH FOUNDATION (CONTINUED)**
## **Use of our report**
This report is made solely to the charity's Trustees, as a body, in accordance with Part 4 of the Charities (Accounts and Reports) Regulations 2008. Our audit work has been undertaken so that we might state to the charity's Trustees 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 charity and its trustees, as a body, for our audit work, for this report, or for the opinions we have formed.
**MHA MacIntyre Hudson** Statutory Auditor London, United Kingdom Date: 27 October 2021
MHA MacIntyre Hudson are eligible to act as auditors in terms of section 1212 of the Companies Act 2006.
Page 13
## **AL-HIKMEH FOUNDATION**
## **(A Charitable Incorporated Organisation)**
## **STATEMENT OF FINANCIAL ACTIVITIES FOR THE YEAR ENDED 31 DECEMBER 2020**
|**Note**
**Income from:**
Donations
3
**Total income**
**Expenditure on:**
Charitable activities
4
**Total expenditure**
**Net movement in funds**
**Reconciliation of funds:**
Total funds brought forward
Net movement in funds
**Total funds carried forward**|**Unrestricted**
**funds**
**2020**
**£**
**1,996,859**
**1,996,859**
**2,007,496**
**2,007,496**
**(10,637)**
**23,302**
**(10,637)**
**12,665**|**Total**
**funds**
**2020**
**£**
**1,996,859**
**1,996,859**
**2,007,496**
**2,007,496**
**(10,637)**
**23,302**
**(10,637)**
**12,665**|Total
funds
2019
£
4,425,184|
|---|---|---|---|
||||4,425,184|
||||4,424,439|
||||4,424,439|
||||745|
||||22,557
745|
||||23,302|
The Statement of Financial Activities includes all gains and losses recognised in the year.
All income and expenditure derive from continuing activities.
The notes on pages 17 to 26 form part of these financial statements.
Page 14
## **AL-HIKMEH FOUNDATION**
## **(A Charitable Incorporated Organisation)**
## **BALANCE SHEET AS AT 31 DECEMBER 2020**
|**Note**
**Fixed assets**
Tangible assets
8
**Current assets**
Debtors
9
Cash at bank and in hand
12
Creditors: amounts falling due within one
year
10
**Net current assets**
**Total assets less current liabilities**
**Net assets excluding pension asset**
**Total net assets**
**Charity funds**
Restricted funds
Unrestricted funds
**Total funds**|**2020**
**£**
**300**
**20,037**
**20,337**
**(7,980)**|**2020**
**£**
**308**
**308**
**12,357**
**12,665**
**12,665**
**12,665**
**-**
**12,665**
**12,665**|2019
£
300
29,989
30,289
(7,500)|2019
£
513|
|---|---|---|---|---|
|||||513
22,789|
|||||23,302|
|||||23,302|
||||||
|||||23,302|
|||||-
23,302|
||||||
|||||23,302|
The financial statements were approved and authorised for issue by the Trustees and signed on their behalf by:
................................................
## **Dr Z Thamer**
Chair Date: 18 October 2021
The notes on pages 17 to 26 form part of these financial statements.
Page 15
## **AL-HIKMEH FOUNDATION**
## **(A Charitable Incorporated Organisation)**
## **STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2020**
|**Note**
**Cash flows from operating activities**
Net cash used in operating activities
11
**Change in cash and cash equivalents in the year**
Cash and cash equivalents at the beginning of the year
**Cash and cash equivalents at the end of the year**
12
The notes on pages 17 to 26 form part of these financial statements|**2020**
**£**
**(9,952)**
**(9,952)**
**29,989**
**20,037**|2019
£
898|
|---|---|---|
|||**898**
29,091|
||||
|||29,989|
||||
Page 16
**(A Charitable Incorporated Organisation)**
## **AL-HIKMEH FOUNDATION**
## **NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020**
## **1. General information**
The Charity is a Charitable Incorporated Organisation (''CIO''), registered in England and Wales, and a registered Charity (Charity Registered Number 1167756) in England and Wales.
The address of the registered office is given in the Charity information on page 1 of these financial statements. The nature of the Charity’s operations and principal activities are detailed in the Trustees Report.
In the event of the Charity being wound up, the liability in respect of the guarantee is limited to £1 per Member of the Charity.
## **2. Accounting policies**
## **2.1 Basis of preparation of financial statements**
The financial statements 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), the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) and the Charities Act 2011.
The financial statements have been prepared to give a 'true and fair' view and have departed from the Charities (Accounts and Reports) Regulations 2008 only to the extent required to provide a 'true and fair' view. This departure has involved following the Charities SORP (FRS 102) published on 16 July 2014 rather than the Accounting and Reporting by Charities: Statement of Recommended Practice effective from 1 April 2005 which has since been withdrawn.
Al-Hikmeh Foundation meets the definition of a public benefit entity under FRS102. Assets and liabilities are initially recognised at historical cost or transaction value unless otherwise stated in the relevent accounting policy.
The financial statements are presented in sterling which is the functional currency of the Charity and amounts are rounded to the nearest pound.
## **2.2 Going concern**
There are no material uncertainties about the Charity's ability to continue. The Trustees have considered the level of funds held and the expected income and expenditure for at least 12 months from authorising the financial statements. The budgeted income and expenditure is sufficient with the level of reserves for the Charity to be able to continue as a going concern. Although the COVID-19 pandemic disturbed the distribution of aid to some level, our partners managed to overcome this and as a result, our work has not been impacted significantly.
## **2.3 Foreign currencies**
Foreign currency transactions are initially recorded in the functional currency, by applying the spot exchange rate as at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate ruling at the reporting date, with any gains or losses being taken to the Statement of Financial Activities.
Page 17
**(A Charitable Incorporated Organisation)**
## **AL-HIKMEH FOUNDATION**
## **NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020**
## **2. Accounting policies (continued)**
## **2.4 Income**
Donations are recognised once the Charity has entitlement to the income, it is probable that the income will be received and the amount of income receivable can be measured reliably.
Grants are included in the Statement of Financial Activities on a receivable basis. The balance of income received for specific purposes but not expended during the period is shown in the relevant funds on the Balance Sheet. Where income is received in advance of entitlement of receipt, its recognition is deferred and included in creditors as deferred income. Where entitlement occurs before income is received, the income is accrued.
Where the donated good is a fixed asset, it is measured at fair value, unless it is impractical to measure this reliably, in which case the cost of the item to the donor should be used. The gain is recognised as income from donations and a corresponding amount is included in the appropriate fixed asset class and depreciated over the useful economic life in accordance with the Charity's accounting policies.
On receipt, donated professional services and facilities are recognised on the basis of the value of the gift to the Charity which is the amount it would have been willing to pay to obtain services or facilities of equivalent economic benefit on the open market; a corresponding amount is then recognised in expenditure in the period of receipt.
## **2.5 Expenditure**
All expenditure is accounted for on an accruals basis. Expenditure is recognised once there is a legal or constructive obligation to transfer economic benefit to a third party, it is probable that a transfer of economic benefits will be required in settlement and the amount of the obligation can be measured reliably. Expenditure is classified by activity. The costs of each activity are made up of the total of direct costs and shared costs, including support costs involved in undertaking each activity. Direct costs attributable to a single activity are allocated directly to that activity. Shared costs which contribute to more than one activity and support costs which are not attributable to a single activity are apportioned between those activities on a basis consistent with the use of resources. Central staff costs are allocated on the basis of time spent, and depreciation charges allocated on the portion of the asset’s use.
Expenditure on charitable activities is incurred on directly undertaking the activities which further the Charity's objectives, as well as any associated support costs.
Grants payable are charged in the year when the offer is made except in those cases where the offer is conditional, such grants being recognised as expenditure when the conditions attaching are fulfilled. Grants offered subject to conditions which have not been met at the year end are noted as a commitment, but not accrued as expenditure.
All expenditure is inclusive of irrecoverable VAT.
Page 18
**(A Charitable Incorporated Organisation)**
## **AL-HIKMEH FOUNDATION**
## **NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020**
## **2. Accounting policies (continued)**
## **2.6 Tangible fixed assets and depreciation**
Tangible fixed assets costing £500 or more are capitalised and recognised when future economic benefits are probable and the cost or value of the asset can be measured reliably.
Tangible fixed assets are initially recognised at cost. After recognition, under the cost model, tangible fixed assets are measured at cost less accumulated depreciation and any accumulated impairment losses. All costs incurred to bring a tangible fixed asset into its intended working condition should be included in the measurement of cost.
Depreciation is charged so as to allocate the cost of tangible fixed assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
Plant and machinery
-
25% Straight line
## **2.7 Debtors**
Trade and other debtors are recognised at the settlement amount after any trade discount offered. Prepayments are valued at the amount prepaid net of any trade discounts due.
## **2.8 Cash at bank and in hand**
Cash at bank and in hand includes cash and short-term highly liquid investments with a short maturity of three months or less from the date of acquisition or opening of the deposit or similar account.
## **2.9 Liabilities and provisions**
Liabilities are recognised when there is an obligation at the Balance Sheet date as a result of a past event, it is probable that a transfer of economic benefit will be required in settlement, and the amount of the settlement can be estimated reliably.
Liabilities are recognised at the amount that the Charity anticipates it will pay to settle the debt or the amount it has received as advanced payments for the goods or services it must provide.
Provisions are measured at the best estimate of the amounts required to settle the obligation. Where the effect of the time value of money is material, the provision is based on the present value of those amounts, discounted at the pre-tax discount rate that reflects the risks specific to the liability. The unwinding of the discount is recognised in the Statement of Financial Activities as a finance cost.
Page 19
**(A Charitable Incorporated Organisation)**
## **AL-HIKMEH FOUNDATION**
## **NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020**
## **2. Accounting policies (continued)**
## **2.10 Financial instruments**
The Charity does not have a material holding in complex financial instruments. The Charity only holds basic Financial Instruments. The financial assets and financial liabilities of the Charity are as follows:
Debtors - trade and other debtors (including accrued income) are basic financial instruments and are debt instruments measured at amortised cost as detailed in Note 9. Prepayments are not financial instruments.
Cash at bank - is classified as a basic financial instrument and is measured at face value.
Liabilities - trade creditors, accruals and other creditors will be classified as financial instruments, and are measured at amortised cost as detailed in Note 10. Taxation and social security are not included in the financial instruments disclosure. Deferred income is not deemed to be a financial liability, as in the cash settlement has already taken place and there is simply an obligation to deliver charitable services rather than cash or another financial instrument.
## **2.11 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 Charity 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 Charity for particular purposes. The costs of raising and 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 20
**(A Charitable Incorporated Organisation)**
## **AL-HIKMEH FOUNDATION**
## **NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020**
## **3. Income from donations**
|**Unrestricted**
**funds**
**2020**
**£**
Donations
1,986,859
Grants
10,000
1,996,859|**Total**
**funds**
**2020**
**£**
**1,986,859**
**10,000**|
|---|---|
||**1,996,859**|
Income from grants relates to the £10,000 received from Brent Council under the Small Business Grant Fund (SBGF) (2019 - £NIL). There are no unfulfilled conditions or other contingencies attaching to grants recognised as income in either year.
||Unrestricted|Total|
|---|---|---|
||funds|funds|
||2019|2019|
||£|£|
|Donations|4,425,184|4,425,184|
**4. Analysis of expenditure on charitable activities**
|Relief of Poverty
Activities
undertaken
directly
2019
£
Relief of Poverty
40|**Grant**
**funding of**
**activities**
**2020**
**£**
1,897,043
Grant
funding of
activities
2019
£
4,427,341|**Support**
**costs**
**2020**
**£**
110,453
Support
costs
2019
£
(2,942)|**Total**
**funds**
**2020**
**£**
**2,007,496**|
|---|---|---|---|
||||Total
funds
2019
£
4,424,439|
Page 21
**(A Charitable Incorporated Organisation)**
## **AL-HIKMEH FOUNDATION**
## **NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020**
## **4. Analysis of expenditure on charitable activities (continued)**
## **Analysis of support costs**
|Depreciation
IT and digital
Legal and professional fees
Bank charges
Insurance
Governance costs
Account/subscription fees
Telephone
Printing
Rent
Foreign exchange loss/(gain)
Registration costs
**Total 2020**
**5.**
**Grants to institutions**
Orphan Charity Foundation|**Total**
**funds**
**2020**
**£**
**205**
**-**
**-**
**320**
**774**
**9,480**
**324**
**42**
**-**
**2,475**
**96,798**
**35**
**110,453**
**2020**
**£**
**1,897,043**
**1,897,043**|Total
funds
2019
£
153
308
4,714
463
801
8,342
40
54
42
3,600
(21,459)
-
(2,942)
2019
£
4,427,341
4,427,341|
|---|---|---|
The Orphan Charity Foundation is registered in Iraq with General Secretariat to the Council of Ministers, NGO Directorate with registration number 1K73462 as a non-governmental organisation.
Page 22
## **AL-HIKMEH FOUNDATION**
## **(A Charitable Incorporated Organisation)**
## **NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020**
## **6. Governance costs**
|Auditor's remuneration - Other services
Auditor's remuneration - Audit of the financial statements
**Total**|**2020**
**£**
**1,800**
**7,680**
**9,480**|2019
£
1,742
6,600|
|---|---|---|
|||8,342|
## **7. Trustees' remuneration and expenses**
During the year, no Trustees, who comprise all the Key Management Personnel of the Charity, received any remuneration or other benefits (2019 - £NIL).
During the year ended 31 December 2020, no Trustee expenses have been incurred (2019 - £NIL).
During the year ended 31 December 2020, the Charity had no employees (2019 - £NIL).
Page 23
## **AL-HIKMEH FOUNDATION**
## **(A Charitable Incorporated Organisation)**
## **NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020**
|**8.**
**Tangible fixed assets**
**Cost or valuation**
At 1 January 2020
At 31 December 2020
**Depreciation**
At 1 January 2020
Charge for the year
At 31 December 2020
**Net book value**
At 31 December 2020
At 31 December 2019|**Plant and**
**machinery**
**£**
**819**|
|---|---|
||**819**|
||**306**
**205**|
||**511**|
||**308**|
||513|
Page 24
**(A Charitable Incorporated Organisation)**
## **AL-HIKMEH FOUNDATION**
## **NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020**
## **9. Debtors**
|**2020**
**£**
**Due within one year**
Other debtors
**300**
**300**
**10.**
**Creditors: Amounts falling due within one year**
**2020**
**£**
Accruals
**7,980**
**11.**
**Reconciliation of net movement in funds to net cash flow from operating activities**
**2020**
**£**
Net (expenditure)/income for the year (as per Statement of
Financial Activities)
**(10,637)**
**Adjustments for:**
Depreciation charges
8
**205**
Increase in creditors
10
**480**
**Net cash provided by/(used in) operating activities**
**(9,952)**
**12.**
**Analysis of cash and cash equivalents**
**2020**
**£**
Cash in hand
**20,037**
**Total cash and cash equivalents**
**20,037**|2019
£
300|
|---|---|
|||
||300|
||2019
£
7,500|
||2019
£
745|
||153
-|
|||
||898|
||2019
£
29,989|
|||
||29,989|
Page 25
**(A Charitable Incorporated Organisation)**
## **AL-HIKMEH FOUNDATION**
## **NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020**
## **13. Analysis of changes in net debt**
|Cash at bank and in hand|**At 1**
**January**
**2019**
**£**
**29,989**
**29,989**|**Cash flows**
**£**
**(9,952)**
**(9,952)**|**At 31**
**December**
**2020**
**£**
**20,037**|
|---|---|---|---|
||||**20,037**|
## **14. Related party transactions**
During the year an unrestricted donation of £3,000 was made to the Charity by a Trustee (2019 - £NIL).
Page 26