30 October 2019 16:08

Statement of the Agency on the external auditor’s report on consolidated financial statements

According to the item 4.5.18 of its Charter, the State Agency on Mandatory Medical Insurance (the Agency) involves an external auditor to conduct an independent audit of its activities. Pursuant to the requirement of the Charter, the Agency authorized PwC Azerbaijan LLC, one of the Big Four companies, to conduct an audit of the annual financial statements for 2018.

For the purpose of transparency, which is always of great importance for the Agency, and pursuant to the requirements of the Law of the Republic of Azerbaijan “On Accounting”, external auditor’s report on consolidated financial statements was published on the Agency’s official website.

These consolidated financial statements on the activities of the Agency and its subsidiaries (jointly referred to as the “Group”) for the year ended on December 31, 2018 have been drawn up in accordance with International Financial Reporting Standards.

It should be noted that pursuant to the item 2 (c) of the IAS No 20 “Accounting for Government Grants and Disclosure of Government Assistance”, funds received from the state budget are not recognized as the Agency’s income and therefore are not shown in the consolidated statement of profit or loss and other  comprehensive income. The above mentioned funds are shown in the “Other reserves” subsection of the “Capital” section of the report on the consolidated financial position of the Agency.

Thus, since the funds received from the state budget were not recognized as income of the years, the Agency ended the respective years with a loss.

The main operating incomes of the Agency consist of collected insurance fees. Since insurance fees were not collected in 2018, and the amounts received from the state budget are not recognized as income, the last year ended with a loss. Recognized income of the last year reached total of 1 mln 543 thousand manats, which includes income received from medical services not included in the basic package (package of exceptions), as well as the paid exemption amount. As stated in the report, in 2018, the cost of medical services provided to citizens in the pilot territories constituted 30 mln 340 thousand manats, and the general and administrative expenses of the Agency amounted to 11 mln 306 thousand manats.

As of the end of last year, the authorized capital of the Agency was 4 mln manats, and the total capital of the Group was 70 mln 536 thousand manat. The assets of the Group constituted to 73 mln 609 thousand manats, 85% of which are long-term assets. The Group has no long-term liabilities, and its short-term liabilities constituted 3 mln 73 thousand manats.

It should be noted that the Agency is a public legal entity and does not have a purpose of gaining a profit. Moreover, in the areas where mandatory medical insurance is applied as a pilot project (Mingachevir City, Yevlakh and Agdash Regions), medical services provided to 340 thousand residents as part of the basic package are free of charge, which, in its turn, is one of the important factors affecting the excess of expenses over the income.