Comrades:
The functional currency is the domestic currency relative to international financial transactions, particularly when these goods and services are produced and marketed in the domestic market. It is the hope that entities in the Gambia are engaged in business to sell their goods and services to their respecitive customers. It also the hope that these entities formulate strategic costs incurred that do not exceed benefits derived from their money measure approaches. These entities should record their sale prices denominated in the Gambian Dalasi.
It is thus practical and economically sound that entities in the Gambia follow the realization principle of pricing their goods and services denominated in the Gambian Dalasi. One patriotic duty is that it illustrates confidence in the Gambian Dalasi.
Analyzation principle, which consists of both financial and nonfinancial data entails, for example, market surveys. These surveys may affirm customer tastes and preferences. If one successfully pinpoints customers tastes and
preferences; direct materials or services, direct labor and manufacturing/service overhead allocated are valued as production costs. My question is, did the entities in the Gambia pay their Gambian workers in foreign currencies? No! These costs were paid in the Gambian Dalasi, even if raw materials were purchased internationally. A case in point is that a pro forma statement is prepared by a bank prior to a purchase of foreign goods, and that the purchaser pays invoice prices directly to a Gambian bank. It is categorically true that these entities are not directly paying the foreign seller. It is also true that Gambian banks denominanate the Gambian Dalasi as the money measure amount owed to a foreign seller.
When total manufacturing or service costs are valued, the notion is that the entity hopes to make a profit. In this regard, realization principle takes form when a sale or purchase is made. Realization principle is defined as the point of sale or purchase, from which a transaction is first recorded in the book of original entry called the general journal. Are entities in the Gambia recording their transactions in foreign currencies? I hope not! If this is true, then the Dalasi will continue to devalue at a significant rate.
Even if an entity that is located in the Gambia is a subsidiary of a parent headquartered in a foreign country, asset = liabilities + owners' equity should be measured in the Gambian Dalasi; thus affirming that at point of sale these transactions should be recorded at historical value. This affirms the notion that assets recorded at historical
values assert that inflation is temporary and that changes in prices are minimal. But if the entity chooses to ignore its funcitional currency, its is directly affirming its lack of confidence in its own domestic currency.
Foreign currency adjustments in the form of comprehensive income will not be necessitated by an entity such as
Taff. The principle is further affirmed that the only entity making foreign currency translation adjustments should be the Central Bank of the Gambia. A subsidiary entity located in the Gambia plays no active role in the determination of asset = liabilities + owners' equity on a consolidated basis. Do we even have such entities? No. Why? Because policies enacted or lack of sound fiscal policies are cultivating negative trends in the viability of the Gambian's economic output. This policy should be above politics because it directly affects every Gambian.
A note of caution is that since we have numerous merchandises and hotel industries in the Gambia, why should a price at point of sale be denominated in the U.S. Dollar and the British Pound Sterling? Does this signal that these entities have no trust in the Gambian Dalasi? Why should one pay Taff Real Estate foreign currencies at realization point of obtaining property? Does Taff have authority directly selling foreign currencies to respective foreign governments? Is Taff Real Estate now the Central Bank of the Gambia?
Are other Gambian entities also directly selling those foreign currencies with respective foreign governments? I state emphatically that this is totally impossible. Are these entities mediating as the Central Bank of The Gambia? No. If this is in the affirmative, then we have a fiscal crisis in the Gambia. Are these entities deposing their daily transactions denominated in the Gambian Dalasi with commercial banks in the Gambia? I concur affirmatively.
A case in point is that the Gambia Central Bank is the intermediary of foreign currency sales between affected foreign governments. Is this not of sound fiscal policy that our house be in order. This in my interpretation should be above politics. I practically and sincerely affirm constructive engagement. The APRC government should change course and listen to its critics. We all have stakes in the Gambia, and thus it is prudent that the realization principle not be violated by these entities and the Gambian government.
Naphiyo,
Muhammad Lamine J. Conteh
-----Original Message-----
From: Abdoul Njie <[log in to unmask]>
Sent: Feb 3, 2004 11:52 AM
To: [log in to unmask]
Subject: Re: The Gambian Dalasi-LEKBI
Mr. Jasseh,
At your convenience, for those of us who are not savy in the fields of
accounting and financing, could you kindly elaborate on the realization
principle( Revenue Recogniton Principle) and the effect such practices have
on the devaluation of the Gambian Dalasi?
Welcome back and hope you had a wonderful time.
As always to You- BEST REGARDS,
Ablie Njie- Lekbi
Best Regards,
Ablie Njie0- Lekbi
>From: Jassey Conteh <[log in to unmask]>
>Reply-To: Jassey Conteh <[log in to unmask]>
>To: [log in to unmask]
>Subject: The Gambian Dalasi
>Date: Tue, 3 Feb 2004 10:12:29 -0500
>
>Comrades:
>
>I was just checking around and noticed that hotels, taff's real estate and
>other
>entities in the Gambia are denominating their respective sales prices in
>the U.S.
>and the British Pound Sterling. This should be stopped by the Ministry of
>Finance
>because it has contributed to the devaluation of the Gambian Dalais.
>
>Since these entities are located in the Gambia, both the revenue and
>expenditure
>measurements state that the domestic currency should be the functional
>currency
>for the realization principle. I hope the Ministry of Finance takes a
>serious look
>at the lack of confidence that these entities are contributing to the
>economic stability of
>the Gambia.
>
>Naphiyo,
>Comrade M. Lamine J. Conteh
>
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