Special Purpose Financial Statements Second Science and Technology Project

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Special Purpose Financial Statements Public Disclosure Authorized Public Disclosure Authorized

2 Contents Independent Auditor's report 1-2 Summary of funds received 3 Summary of expenditures 4-5 Summary of statements of expenditures ("SOEs") 6 Statement of designated accounts 7 Balance sheet 8 Notes to special purpose financial statements 9-14

3 Independent Auditors' report We have audited the accompanying special purpose financial statements of Second Science Technology Project ("the Project"), financed by Loan agreement number 8258-HR ("the Contract") between the International Bank for Reconstruction and Development ("IBRD") and Republic of Croatia, which comprise the summary of funds received, the summary of expenditures, the summary of statements of expenditures ("SOE"), the statement of designated accounts and balance sheet for the year ended 31 December 2015, and notes, comprising a summary of significant accounting policies and other explanatory information. The special purpose financial statements of the Project have been prepared by Project's Management in accordance with the cash basis of accounting as set in Note 2 to the special purpose financial statements. Project's Management's responsibility for the special purpose financial statements Project's Management is responsible for the preparation of these special purpose financial statements in accordance with the accounting policies as set in Note 2 to the special purpose financial statements, and for such internal control as Management determines is necessary to enable the preparation of the special purpose financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these special purpose financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the special purpose financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the special purpose financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the special purpose financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Project's Management preparation of the special purpose financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Project's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Project's Management, as well as evaluating the overall presentation of the special purpose financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the special purpose financial statements of the Project for the year ended 31 December 2015 are prepared, in all material respects, in accordance with the accounting policies described in Note 2 to the special purpose financial statements. 1

4 Independent Auditors' report (continued) Basis of Accounting Without modifying our opinion, we draw attention to Note 2 to the special purpose financial statements, which describes the basis of accounting. The special purpose financial statements are prepared to assist the Project's Management to comply with the financial reporting provisions of the Contract referred to above. As a result, the special purpose financial statements of the Project may not be suitable for other purposes. Other matters Our report is intended for the information of the Project and IBRD and should not be used for any other purpose. However, following the IBRD's formal receipt of these special purpose financial statements of the Project, the IBRD will make these special purpose financial statements publicly available in accordance with "The World Bank Policy on Access to Information" and its distribution will not be limited. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come, except where expressly agreed by our prior consent in writing. 24 May 2016 KPMG Croatia d.o.o. z eviziju Signed on behalf of KPMG Croatia d.o.o. za reviziju: Croatian Certified A itors Eurotower, 17th floor Ivana Lu6i6a 2a nipmc Croatia PM roai Jo-ko D2ida Zagreb Kr.0 Croatia d. eviu Director, tia eified auditor Eurotower. 17- kat Drco,C tia certified uio Ivana Luei6a 2a, Zagreb 2 2

5 Special purpose financial statements Summary of funds received 10 July January Accumulated to in EUR 31 December December 2015 date PPA Disbursed from the BRD 1,146,511-1,146,511 Disbursed from the Government 1,947-1,947 LOAN 1,148,458-1,148,458 Disbursed from the IBRD 4,246,605 1,457,234 5,703,839 Disbursed from the Government 1,065, ,906 1,442,743 5,312,442 1,834,140 7,146,582 Total funds received 6,460,900 1,834,140 8,295,040 The special purpose financial statements of the Project were approved by the Project's Management on 24 May Du5ko Staji Project's Manager The accompanying notes form an integral part of the special purpose financial statements

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8 Special purpose financial statements Summary of statements of expenditures ("SOEs") in EUR Consultant Sub- Operating Application No. and date services financing costs Training Total Total SOE as at 31 December ,302 1,687,061 65,502 4,085 2,106,950 SOE Mar , ,565 11,570 13, ,398 SOE Jul ,090 3,269 2, ,502 SOE Dec , ,135 (3,098) 5, ,138_ Total loan from I January to 31 December ,835 1,671,790 11,741 20,672 2,043,038 Total SOE as at 31 December ,137 3,358,851 77,243 24,757 4,149,988 SOE May , ,794 2,893 8, ,687 SOE Dec , ,036 50,122 9, ,547 Total loan from I January to 31 December ,397 1,065,830 53,015 17,992 1,457,234 Total SOE as at 31 December ,009,534 4,424, ,258 42,749 5,607,222 The accompanying notes form an integral part of the special purpose financial statements

9 Special purpose financial statements Statement of designated accounts 1 January July December in EUR December Balance at beginning of the period - 838,145 Transfers from Loan account to designated account Funds from PPA 1,190,924 - Funds from Loan 4, ,457,234 Credited on designated account 5,349,987 2,295,379 Direct payments from Designated account Claimed on SOEs for PPA (1,044,848) - Claimed on SOEs for Loan (3,105,140) (1,457,234) (4,149,988) (1,457,234) Claimed on SOE (undebited previous year) - 361,856 Debits from Designated account not yet claimed (361,856) (501,929) (4,511,842) (1,597,307) Balance at the end of the period 838, ,072 STATEMENT OF DESIGNATED ACCOUNT - fee and interest Balance at beginning of the period Interest earned Fee (348) (60) Transfer to designated account (90) - Balance at te end of the period Total balance at the end of the period 838, ,133 The accompanying notes form an integral part of the special purpose financial statements 7

10 Special purpose financial statements Balance sheet at 31 December December 31 December in EUR in EUR ASSETS Bank balances 838, ,133 Fees and transfer to designated account Project expenditures (from IBRD loan) 4,496,071 6,093,376 Project expenditures - fronting fee 58,901 58,901 Project expenditures (from Government funds) 1,067,784 1,444,690 Total 6,461,440 8,295,160 SOURCES IBRD (PPA and Loan) 5,349,987 6,807,166 IBRD - fronting fee 58,901 58,901 Exchange rate differences at reinstatement (15,771) (15,718) 5,393,117 6,850,349 Government funds 1,067,784 1,444,690 Interest received Total 6,461,440 8,295,160 The accompanying notes form an integral part of the special purpose financial statements

11 Special purpose finacial statements Notes to the special purpose financial statements 1 General International Bank for Reconstruction and Development ("IBRD") and the Republic of Croatia ("Government") signed an Advance Agreement for Preparation of Proposed second Science and Technology Project on 16 February 2012 and 30 April 2012, respectively, to facilitate the preparation of ("Project" or "STP Il"). On 22 May 2013, IBRD and the Republic of Croatia signed a Loan agreement - Second Science and Technology Project (Loan number 8258-HR). The objectives of the Project are to support absorption of EU Funds in the research and innovation sector by capacitating selected public sector organizations and stimulating the demand for those funds from the business and scientific communities. Main project headings can be summarized as follows: Part A: Capacity Building for Absorption of EU Funds 1. Support to the selected public sector organizations in the research and innovation sector to improve their capacity to qualify for and manage EU Funds in the area of research and innovation through Technical Assistance and Training; 2. Support to selected public sector organizations in the research and innovation sector for the development of applications for research and development grant schemes and infrastructure projects for EU Funds; 3. Support to selected public sector organization for project management and implementation, through financing of Operating Costs, Training and audit for the Project. Selected public sector organizations include the Ministry of Science, Education and Sports ("MSES"), Business Innovation Croatian Agency BICRO ("BICRO") and Unity through Knowledge Fund ("UKF"). MSES has overall responsibility of the project and for strategic guidance on Project implementation. Part B: Research and Innovation Programs 1. Support for research and innovation programs through the provision of Sub-financing, through BICRO, to Beneficiaries for Sub-projects in accordance with the Operational Procedures; 2. Support for strengthening human resources, research excellence and research commercialization through the provision of Sub-financing for collaborative research activities with the Croatian Diaspora and leading international scientific institutions under the Research Cooperability Program; for young scientists for implementation of the Young Researchers and Professionals Program; and for mobility of scientists in order to enhance the flow of knowledge and skills in the Republic of Croatia under the Connectivity Program; 3. Support for strengthening innovation activities through the provision of Sub-financing, through MSES, to Beneficiaries of Sub-projects, including for investments and activities in research commercialization and intellectual property protection of research results under the Technology Transfer Office Support Program.

12 Special purpose finacial statements Notes to the special purpose financial statements (continued) 1 General (continued) Part B: Research and Innovation Programs (continued) BICRO and UKF are responsible for sub-financing to beneficiaries, including selecting sub-projects for financing from loan and PPA proceeds, pre-screening, evaluation and supervision procedures while protecting its interests and the interests of the IBRD. In the period from 10 July 2012 to 31 programmes relating to STP II: - PROGRAM I - Proof of Concept ("PoC"): a o December 2015 BICRO sub-financed the following PoC Private - supports the entrepreneurs pre-commercial activities in the early developmental phase of new products, services and technological processes; PoC Public - designed to support scientists and researchers from Croatian universities and institutes to help them to turn their idea into a global business and to help them to bridge the gap between their ideas and early scientific results and commercial potential; - PROGRAM II - The Development of the knowledge-based companies - RAZUM aimed at the development of new-technology-based enterprises and academic entrepreneurship; - PROGRAM Ill - Research and development program - IRCRO incite small and medium enterprises to cooperate with scientific and research institutions on private research and development activities; UKF supports research that is competitive at an international level, fosters research that creates new values in Croatian economy and supports projects that help the development of research infrastructure in Croatia. In the period from 10 July 2012 to 31 December 2015, UKF sub-financed following programs: - Cooperability - Crossing Borders Grant - supports medium-scale collaborative research projects in Croatia with involvement of scientific and research Croatian Diaspora; - Young researchers and professionals - Research in Industry and Academia Grant - designed to increase mobility of young researchers and professionals between academia and Croatian industry as well as to strengthen long-term cooperation between two sectors. 10

13 Special purpose finacial statements Notes to the special purpose financial statements (continued) I General (continued) Project restructuring At 5 November 2014 MSES initiated STP II restructuring due to the statutory changes of STP II's beneficiaries: 1. Merger of BICRO and Croatian Agency for Small Entrepreneurship and Investment ("HAMAG") into new agency: Croatian Agency for Small Business, Innovation and Investment ("HAMAG-BICRO") on 8 May 2014 and 2. Transfer of UKF from MSES to Croatian Science Foundation ("CSF"). Transfer Agreement between MSES and CSF was signed on 19 February Due to the abovementioned changes, at the beginning of May 2014, the financing of Component B.1. BICRO Programs were temporarily suspended until the completion of restructuring and, consequently, BICRO's special account was closed in June Since February 2014, the financing of UKF programs within the Component B.2 was reduced to 18 existing sub-projects contracted prior to signing of the transfer agreement, which remained under authority of MSES until the restructuring completion. The restructuring was ended on 25 February 2015 when Annex to the Loan agreement was signed. Additional agreements for inclusion of HAMAG-BICRO and Croatian Science Foundation in STPII were signed on 13 April 2015 for HAMAG-BICRO and 7 April 2015 for Croatian Science Foundation. Restructuring also includes: 1. MZOS transferred to HAMAG-BICRO activity to support centres for technology transfer of EUR 1,500, Funds for activity Component I conducted by HAMAG-BICRO are increased by EUR 1,012,506. Former programs conducted by BICRO (Program I, II and Ill) are consolidated in "Innovation Process Support Framework" as components I, II and III for easier monitoring of projects under different programs, development phases and preparations for commercialisation. Activities in 2015 In March 2015 public call was open for submission of bidding documentation for three infrastructural projects which are on an indicative list for EU tenders (Centre for Advance Laser Techniques - CALT under Institute for Physics; Croatian scientific and educational cloud - HR- ZOO under University Computing Centre; Open Scientific Infrastructural Platforms for Innovative Applications in the Economy and Society - O-ZIP under Ruder Bo9kovid Institute). The tender is carried out by QCBS procurment method in accordance with World Bank procedures and will be finished in the first quarter of 2016 when the agreement will be signed with selected consultant.

14 Special purpose finacial statements Notes to the special purpose financial statements (continued) 1 General (continued) In 2015 HAMAG-BICRO has invite tenders for: - Component I (PoC 6) - deadline for submission is 19 January Component II (Razum) - 7 projects were contracted in the amount of co-financing of HRK 24,662,693 (EUR 3,245,091) - Component III (IRCRO) - 19 projects were contracted of HRK 13,226,615 (EUR 1,740,344) - Projects under Office for technology transfer- 3 projects were contracted in first round of EUR 182,072. In second round 30 projects of EUR 992,677 applied (contracts with selected projects are signed in March 2016). Unity through Knowledge Fund (UKF), now under Croatian Science Foundation, has invite tenders for projects as part of program "Partnership in Research" on 10 March After proposals evaluation, in December 2015 nine new projects were contracted. All funds allocated to UKF are now contracted. 2 Basis of preparation The special purpose financial statements of the Project are prepared under the cash basis of accounting. Under the cash basis of accounting, transactions are recorded when cash is paid or received by the Project. 12

15 Special purpose finacial statements Notes to the special purpose financial statements (continued) 3 Significant accounting policies Following are the principle accounting policies adopted in preparation of these special purpose financial statements. a) Functional and presentational currency The special purpose financial statements are prepared in Euro. Transactions arising in currencies other than Euro are translated into the Euro using the Croatian National Bank exchange rates prevailing at the date of transaction. The exchange rate prevailing as at 31 December 2015 was 1 EUR: HRK. b) Funds received Funds received represent cash received from the IBRD and the Government, and are recognised when received, or in the case of direct payments from loan account (Fronting fee) when the Project receives notification of payment from the IBRD. c) Expenditures Expenditures represent cash expenditures of the Project and are recognized when paid. Expenditures for sub-financing relate to sub-financing made available by the Project to HAMAG- BICRO and Croatian Science Foundation (CSF) for Unity through Knowledge Fund (UKF) for disbursement to beneficiaries. These expenditures are recorded when disbursed to UKF beneficiaries and HAMAG-BICRO. 4 Subsequent events Nothing to report. 13

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