By Dr. Lamine J. Conteh, CFE
Introduction
On the request of The Gambia Times, I have reviewed the 2009 – 2016 financial statements of Assets Management & Recovery Corporation (AMRC). A review is substantially less in scope than an audit. The objective of an audit is to express an opinion regarding the financial statements as a whole. Accordingly, I do not express such an opinion.
AMRC’s management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in The Gambia. These principles include the design, implementation, and maintenance of internal controls. The preparation and fair presentation of these financial statements should be free from material misstatement whether due to fraud or error.
Supplementary Information
For periods ending December 31st, 2013 and December 31st, 2014, AA & Co was AMRC’s principal auditor. During these years, AA & Co. rendered unqualified opinions on the company’s December 31st, 2013 and December 31st, 2014 financial statements and internal controls. With an unqualified opinion, the external auditor has given assurance that a client’s financial statements and internal controls are fairly stated in all material respects. For year-ending December 31st, 2015, Augustus Prom Audit and Tax Advisors were the successor auditors, and it rendered an unqualified opinion on the AMRC’s financial statements and internal controls. The Ministry of Finance and Economic Affairs did not upload on its website external auditors’ reports for calendar years 2016, 2017, 2018, and 2019.
In 2009, AMRC reported total income of D185,700,000; expenses of D182,600,000; income before income tax and after taxes of D3,100,000. With regard to 2009 income statement, the company’s total expenses equaled 101.70 percent of 2009 total revenues of D182,600,000. For year 2009, the company reported total assets of D155,200,000; liabilities of D107,600,000; and total equity of D47,600,000. In effect, debt-to-equity ratio in 2009 was 226.05 percent, and debt-to-asset ratio was 69.33 percent. Debt-to-equity ratio is total debt divided by total equity, and it measures the degree of which an entity is financing its operations through debt. On the other hand, debt-to-asset ratio is total debt divided by total assets. In addition, debt-to-asset ratio is the percentage of an entity’s total assets that are financed with debt.
In 2010, AMRC disclosed total revenues of D15,100,000; total expenses of D16,900,000; and a loss of D1,800,000. For calendar year 2010, total expenses in year 2010 was 111.92 percent of total revenues. As compared to 2009, AMRC’s total revenues decreased by 91.87 percent, and total expense also decreased by 90.74 percent. The company reported total assets of D46,900,000; total liabilities of D800,000; and total equity of D46,100,000 in year 2010.
When compared to 2009, AMRC’s total assets in year 2010 decreased by 72.36 percent, total liabilities decreased by 99.26 percent, and total equity decreased by 3.15 percent. During the same period, AMRC’s debt-to-equity ratio was 1.74 percent, and debt-to-asset ratio of 1.71 percent.
For period-ending December 31st, 2011, AMRC earned D19,500,000; incurred D22,300,000 of expenses; and a loss of D2,800,000 before taxes. When compared to fiscal year 2010 financial data, AMRC’s 2011 revenues increased by 29.14 percent. Expenses increased by 31.95 percent, and loss before taxes increased by 55.56 percent. Within the same period of calendar year 2011, the company had total assets of D140,400; total liabilities of D600,000; and total equity of D139,800,000. Correspondingly, as compared to calendar year 2010, total assets in 2011 increased by 199.36 percent, total liabilities decreased by 25 percent, and total equity increased by 203.25 percent. Affirmatively, debt-to-equity ratio was 0.43 percent, and debt-to-asset ratio of 0.43 percent.
For calendar year 2012, the company reported total revenues of D9,700,000; total expenses of D14,300,000; and profit before taxes of D4,600,000. As compared to year 2011 financial information, AMRC’s total revenues in 2012 decreased by 50.26 percent, and total expenses also decreased 35.87 percent. In calendar year 2012, AMRC reported 147.42 percent of total expenses-to total revenues.
As reported in financial year 2012, AMRC had total assets of D39, 400,000, total liabilities of D1, 100,000, and total equity of D38, 300,000. As compared to calendar year 2011, AMRC’s total assets decreased by 97.19 percent, total liabilities grew by 83.33 percent, and total equity decreased by 72.60 percent. During the same year, the company’s debt-to-equity ratio was 0.43 percent, and debt-to-asset ratio of 0.43 percent.
In 2013, AMRC reported total revenues of D13,900,000; total expenses of D14,100,000; and a loss before income taxes of D200,000. In light of the 2013 year-end report, the company’s total expenses equaled 101.44 percent of total revenues. As compared to 2012 year-end revenues of D9,700,000, AMRC total revenues grew by 43.30 percent in fiscal year 2013 as expenses decreased by 1.40 percent.
For calendar year 2013, the company reported total assets of D47,000,000; total liabilities of D11,400,000; and total equity of D35,600,000. Comparatively, in 2013 total assets increased by 19.29 percent, total liabilities increased by 936 percent, and total equity decreased by 7.05 percent. During calendar year 2013, debt-to-equity ratio was 32.02 percent, and debt-to-asset ratio was 24.26 percent.
In year 2014, AMRC realized D15,100,000 of revenues; total expenses of D16,900,000; and loss before income taxes of D1, 800,000. For calendar year 2014, the company’s total expenses equaled 111.93 percent of total revenues in 2014. As compared to calendar year 2013, the company’s total revenues grew by 8.63 percent in 2013, and expenses by 19.9 percent in 2014.
For calendar year 2014, AMRC reported total assets of D38,300,000; total liabilities of D700,000; and total equity of D37,600,000. As a comparison to calendar year 2013, in year 2014 the company’s total assets decreased by 18.51 percent, total liabilities decreased by 93.86 percent, and total equity increased by 5.61 percent. During calendar year 2014, AMRC had debt-to-equity ratio of 1.86 percent, and debt-to-asset ratio of 1.83 percent.
In calendar year 2015, AMRC reported total income of D19,500,000; expenses of D22,300,000; and loss before income tax D2,800,000. During 2015 business cycle, the company’s total expenses before taxes was reported at 114.36 percent of total revenues. As compared to 2014 year-end financial activities, AMRC’s total revenues grew by 29.14 percent and expenses expanded by 31.95 percent in 2015.
During year 2015, the company reported total assets of D307,500,000; total liabilities of D10,000,000; and total equity of D297, 500,000. In calendar year 2015, AMRC reported an increase of 703 percent in total assets, increase of 1,329 percent in total liabilities, and an increase of 692 percent in equity. Additionally, during the same period, debt-to-equity ratio was 3.36 percent, and debt-to-asset ratio was 3.25percent.
In calendar year 2016, AMRC reported total revenues of D5,200,000; total expenses of D11,700,000; and net loss of D6,500,000. As compared to 2015, year 2016 total revenues decreased by 73.33 percent and total expenses also decreased by 47.53 percent. For accounting period of year 2016, total expenses represented 225 percent of total revenues.
AMRC reported total assets of D299,900,000; liabilities of D8,900,000; and equity of D291, 000,000. During calendar year 2016, AMRC’s total assets decreased by 2.47 percent, liabilities decreased by 11 percent, and equity also decreased by 2.18 percent. Debt-to-equity ratio in calendar year was 0.31 percent, and debt-to-asset ratio was 2.97 percent.
Analyses
As these figures indicate, in 2009, every dalasi the company had in equity, it owed D2.26 in debt; and every dalasi it had owed in debt, it had only 69 bututs in assets.
In 2010, for every dalasi the company earned in revenue, it incurred approximately D1.12 in expenses, while for every dalasi of revenue in 2009 it had expenses of 98 bututs. In 2011, for every dalasi AMRC earned in revenue, it spent D1.14 in expenses.
As these numbers indicate, compared to the year earlier, in 2012 the ratio of total expenses to total revenues was 114 percent. Furthermore, in the same year, every dalasi AMRC owed in debt, it had only 43 bututs in equity, whereas for every dalasi it owed in debt in 2012, and it had only 43 bututs.
In 2013, for every dalasi AMRC earned in revenue, it spent D1.10 in expenses, and for every dalasi it had in assets in 2012, it had 34 bututs in liabilities. Similarly, in 2013, every dalasi it owed to creditors, AMRC had only 32 bututs in equity, while for every dalasi in owed in debt, and it had only 24 bututs in corresponding assets.
In 2014, for every dalasi AMRC earned in revenues, it undertook approximately D1.12 of expenses, while its revenues grew by almost 9 percent in 2014. Correspondingly, in 2014, every dalasi that AMRC had in assets, prior year assets decreased nearly 20 bututs. During the same year, every dalasi AMRC had in equity, it owed D1.86 of liabilities.
In 2015 as usually, for every dalasi that AMRC earned in revenue, it spent D1.14 in expenses. In effect, the company’s total expenses outgrew its total revenue by 13 percent in that year as compared to the preceding year. Furthermore, in 2015, every dalasi that AMRC had in equity, it owed D3.36 in debt and for every dalasi it had in assets, it owed D3.25 in debt to creditors.
As AMRC total expenses in 2016 decreased by 48 percent when compared to total expenses in 2015. The company’s total revenues precipitously decreased by 73 percent during the same period. Not surprisingly, for every dalasi the AMRC earned in revenues, it undertook D2.25 of expenses in that year.
Conclusion
My responsibility, as assigned by The Gambia Times, was to conduct a review in accordance with the applicable accounting standards of The Gambia. I believe that the results of my procedures provide a reasonable basis for my conclusion.
Given the limited materials provided in AMRC’s financial statements, I was not aware of any material modifications that should be made to the 2009 – 2019 financial statements of AMRC in order for them to be in accordance with accounting principles of The Gambia.
Dr. Lamine Jassey Conteh is an Assistant Professor of Accounting and Finance in the United States of America.