URBAN DEVELOPMENT PROJECT

Transcription

1 URBAN DEVELOPMENT PROJECT IDA CREDIT NUMBER 5762-KG IDA GRANT NUMBER D101 -KG IMPLEMENTED BY COMMUNITY DEVELOPMENT AND INVESTMENT AGENCY SPECIAL PURPOSE FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR'S REPORT Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized BISHKEK June 2018

2 URBAN DEVELOPMENT PROJECT IDA CREDIT NUMBER 5762-KG IDA GRANT NUMBER D101-KG TABLE OF CONTENTS STATEMENT OF MANAGEMENT'S RESPONSIBILITIES FOR THE PREPARATION AND PRESENTATION OF THE SPECIAL PURPOSE FINANCIAL STATEMENTS 3 INDEPENDENT AUDITOR'S REPORT 4-5 SPECIAL PURPOSE FINANCIAL STATEMENTS : Statement of cash receipts and payments 6 Statement of expenditures per components 7 Notes to the special purpose financial statements 8-15 ANNEX 1. RECONCILIATION BETWEEN THE AMOUNTS SUBMITTED BY THE ARIS AND DISBURSED BY THE WORLD BANK 16 Page 2

3 STATEMENT OF MANAGEMENT'S RESPONSIBILITIES FOR THE PREPARATION AND PRESENTATION OF THE SPECIAL PURPOSE FINANCIAL STATEMENTS The management of the Community Development and Investment Agency (hereinafter: ARIS) is responsible for the preparation of the special purpose financial statements of "Urban Development Project" ("Project") financed by Financing Agreement and IDA Grant Number D101-KG dated 25 April 2016 that present fairly the Project's cash receipts and payments, and expenditures per components for the year ended 31 December 2017, in accordance with the International Public Sector Accounting Standard: Financial Reporting under the Cash Basis of Accounting, ("IPSAS-Cash Basis") issued by the International Public Sector Accounting Standards Board ("IPSASB") within the International Federation of Accountants ("IFAC") and the Financial Management Manual for World Bank Financed Investment Operations (WB Guidelines). In preparing the special purpose financial statements, ARIS's management is responsible for: * Property selecting and applying accounting policies; * Presenting information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; * Providing additional required disclosures for the year ended 31 December ARIS's Management is also responsible for: * Designing, implementing and maintaining an effective and sound system of internal controls, throughout the Project; * Maintaining adequate accounting records that are sufficient to show and explain the Project's transactions, and which enable them to ensure that the special purpose financial statements of the Project comply with IPSAS - Cash Basis and the WB Guidelines; * Taking such steps that are reasonably available to them to safeguard the assets of the Project and to affirm that funds received have been used in accordance with the Financing Agreement and IDA Grant Number D101 -KG dated 25 April 2016, and World Bank related guidelines, with due attention to economy and efficiency, and only for the purposes for which the financing was provided; and * Preventing and detecting fraud and other errors. The special purpose financial statements for the year ended 31 December 2017 were authorized for issue on 14 June 2018 by the ARIS's Management. On behalf of the ARIS's Management: Arstan Muktarov Rahat Junush&A / Executive Director Financial Manager 3

4 INDEPENDENT AUDITOR'S REPORT To the management of the Community Development and Investment Agency Opinion We have audited the special purpose financial statements of "Urban Development Project" ("Project") financed by Financing Agreement and IDA Grant Number D101-KG dated 25 April 2016 ("Financing Agreement"), and implemented by Community Development and Investment Agency ("ARIS"), which comprise the statement of cash receipts and payments and the statement of expenditures per components for the year ended 31 December 2017, and notes to the special purpose financial statements, including a summary of significant accounting policies. In our opinion, 1. the accompanying financial statements present fairly, in all material respects, the cash flows for the year ended 31 December 2017 in accordance with International Public Sector Accounting Standard: Financial Reporting Under the Cash Basis of Accounting, (IPSAS-Cash Basis); 2. funds have been used in accordance with the conditions of the Financing Agreement concluded between the International Development Association (IDA) and the Kyrgyz Republic, and WB Guidelines, with due attention to economy and efficiency, and only for the purposes for which the financing was provided; 3. supporting documents, records and accounts have been maintained to support claims for reimbursement of expenditures incurred. Expenditures included in the withdrawal applications and reimbursed against are eligible for financing under the Financing Agreement; Interim Unaudited Financial Statements (IFSs) issued by ARIS during the Reporting year are in agreement with the underlying books of account; 4. The Designated account used has been maintained in accordance with the provision of the Financing Agreement, and World Bank related guidelines; 5. Goods and Services financed have been procured in accordance with the Financing Agreement and World Bank related guidelines. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs) as issued by International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants (IFAC). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Project and of the ARIS in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled out other ethical requirements in accordance with IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of Matter- Cash Basis of Accounting We draw attention to Note 2 to the financial statements, which describes that financial statements are prepared in accordance with cash basis framework, as a result, they may not be suitable for another purposes. Our opinion is not modified in respect of this matter.

5 Responsibilities of the Management for the Financial Statements Management of the ARIS is responsible for the preparation and fair presentation of the special purpose financial statements in accordance with IPSAS-Cash Basis issued by the Interrtional Public Sector Accounting Standards Board (IPSASB) of the IFAC and Financial Management Manuat for World Bank Financed Investment Operations ("WB Guidelines"), and for such internal control as management determines is necessary to enable the preparation of special purpose financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility for the Audit of the Special Purpose Financial Statements Our objectives are to obtain reasonable assurance about whether the special purpose financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is high level of assurance, but is not a guaranty that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements arise from fraud and 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 special purpose financial statements. As part of an audit in accordance with ISAs, we exercise professional judgement. maintain professional skepticism throughout the audit. We also: * Identify and assess the risks of material misstatement of the special purpose financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. * Obtain an understanding of internal control relevant to the audit 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 internal control. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. * Evaluate the overall presentation, structure and content of the special pur., financial statements, including the disclosures, and whether the special purpose financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with management regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. "BDO Armenia" CJSC 14 June 2018 GneL Khachatryan, FCCA/ Engagement Partner - BDO

6 - r м А С.Т f' W Pi, ; CV.,. ы v N b л U й м с L го _ о S. 'д " г уу и ^ е, еу оаы,,. осч ' о ' у R м (. N О 1, ы '- +*r = л 3. ы м dw т. ы а` со глo.,о м м " ti С ` ^ м о в " ` - й.,., ' `V' ' ' + О О ' м г+1 ev Уе') 7 +и.+ й г. rм. м., й v й р гnа р з с,г.i t j рр" h ai р И ""7, : Ш > N ц 7 р м *` у Е ц? М 1' S b.аы Е LL и D Е г м i 'й е ' ' " ' +D О ' м м N и'f f`м. 1Л 'Q ц 1 Q N., ьы= а с а л ` ^" '- ц' и ` "' л rts а, + Q оо о r п сиа г ал an s С С +" w м ш U i' С ь ' С р L Е С N С G% v Ф 6J 'Сз л- С CL RS ^ С С ы г. л. '' ' и_ tд л 'К% t! С..-, О l, `. + Ф О cv й ' й д а \` iб L - '- + г с 9 : С +`+ q v п ` rts +.+ U' Е О v С7 t_1 ги -4 л - % 1 `- м "` 'Е "' а '^ а '-' с' `t L.?, ', N и с.b с, '" гс ``., ;ti `.1 гз ял 1,.._ Г О. 1 0 L _ С_ N = ` + и Li.С М n и с гц с оп i с ti С и С V _!Л С L? С С7 С С GJ yzj f5 00 Q1 G7 И rt у С,' v а ar -_.? Q. Е ьr С '- м д ',..7^+.У ' й, S и о а о Е з Е Е g - Е- С, ^ ш '` ' п5 С7 = Z г л Ё а 'с О с й ' ',, ' С С iu 7+ avmre р й 3 Е С ' иr и У О и Q х > N С Ly С д.! =} CL.1 С tj Q,ра а 'l ry V N Lry. V 7 в... СФ,р *,' ` 4 д 4 а о.-.,.-. Q О О й -' цз а Й 1, р й л t7 1- С5 а... й ti й о Н Ф ш 1- >,у и Wэ

7 `,,,.,._.а,а cv г: м а гi + 4+ с.л пt v т А, с. а r.,i -- г.оr т а и й г у,. еч >. т с 3 *^.`r^а и an +G.с?, av N гv N r яю й г а `r Q r i ; ' N tз о у и у й а '-. м с, 1i { hi. h 1. И Р Т N(V rr' is БТ 'Q I г iму. i >. а г 1! М г м г 7. % 3 М С R1 М м ' us гт ' ' +О О vfl t.. г +.а vs ь.. и N ю,' "- н ` ' оо` и м `= У- г: i ер Г lл. Г М ы".- '- `и с у й с R t ' en м ' ' М гч,- ' м V Ш А N,NCa +О GiS оао ^' tг1 омо, L п t с R7 у г*'б +и6 ` Р. ^ р О(1 `Q G fб С_ и r`' у а 1t7 ' г > - - М i1! Lt и 3 а_ R5 R1 а w.й Пt tj I t ' М М ' ' N г ' М.. еч N а а М * р з р С, р.о,р аг ухо1.. Q `о ` r. ' ^ v ст 3'' ао,. о а л г r м, ` и и >, м,а иэ + С м у Сэ 41 ь и д.. л ад 3 i а й t. Е v й J а,. у Е,,:, с О а С С t' R5 й О N W О Q1 С1. L а.+.``^ У 'И N ±+ С =,,`м- j. w si L О f G7 L] L с а й >+ д ед1 с '^ ' ' 5 Т' э- 'G,1 М с С, t Л U -.1-s'. СО С L г н Gя с с i0 г а,. у ' 1] ti1.,io -р G v qсл `" й - - ' Ч [1 Е Е ч- С w О р с, _ о О ' v с v + д', а с z_ци,. оо с '' С7 с С w +r ол го д пs с С г" Су?,'.= а.+ С N 4% 3 +б 'i1 ` С ' '" Qt и ' С1 С Q7 у + +"'.ь с `L vt С.с D 3 й +-+ ; f N Ш i L cj Ci г rt3 ti fv гв р f' 1 ц.q с О и а L Е Н l7,,, j V С7.Q в,,1i й G i cu,0 в io q и гl гi 1-,, а` ш з,

8 IDA Grant Number D1 01 -KG Notes to the special purpose financial statements 1. General information The Project The Financing Agreement and IDA Grant D1 01 -KG was concluded on 25 April 2016 between the Kyrgyz Republic and the International Development Association (IDA), according to which IDA provided financing to the Kyrgyz Republic in the amount of 4,900,000 Special Drawing Rights (SDR) and 4,000,000 SDR, respectively. The Financing Agreement became effective on 29 December The financing was provided for the implementation of -Urban Development Project- (the Project). The payment currency of both and IDA Grant D101-KG is United States dollars (). The Closing date of both and IDA Grant D101-KG is set 31 December The Grace Period for submitting withdrawal application for expenditures incurred before the Closing date is four months following the Closing date: 30 April The Project objectives The objective of this project is improve the quality of municipal services and pilot energy efficiency and seismic resilience retrofits of urban infrastructure in Participating Towns. The Project consists of the following parts: Part 1: Urban Development Carrying out the following investments/ activities in the Participating towns: (a) upgrade and/ or expand the municipal infrastructure to improve water supply, solid waste management and street lighting; and (b) carry out pilot activities to improve energy sufficiency and seismic resistance in selected public buildings. Part 2: Institutional Strengthening Support the Recipient's urban policy reform agenda: (a) at the national level through the development of urban policy objectives and priorities based on the road-map for improving urban and spatial development; and (b) at the Local level through: (i) development of Performance Improvement Plans for Eligible Utilities operating within Participating Towns; (ii) providing targeted assistance and Training to local institutions to strengthen their capacity to provide quality and sufficient services and support Participating Towns to build dialogue with local stakeholders on local needs in connection with the Project; (iii) supplying and instalting financial management and planning systems; and (iv) developing Energy Saving Action Plans in Participating Towns. Part 3: Implementation support Carrying out Project management activities, including provision of technical assistance to assist in Project implementation, financial management, procurement, accounting, auditing, monitoring and evaluation, and financing of Incremental Operating Costs The Project outcomes The completed tasks in reporting year included: Feasibility Paper ("FP") and Design and Estimated Documentation ("PSD") for the rehabilitation of the water supply system in towns of Kerben and Sulukta; 8

9 IDA Grant Number D101-KG Notes to the special purpose financial statements * PSD on improving the energy efficiency of street lighting in the two selected towns of Toktogul and Balykchy; * FP and PSD for improving seismic safety and energy efficiency in schools and kindergartens of the towns of Toktogut and Balykchy. * A training was conducted on social mobilization and an exchange visit for representatives of the municipality, water utilities and activists from the towns of Sulukta and Kerben to the water supply enterprises of the villages of Baltabay and Orgochor The Project Budget The Project is financed by: * * IDA Grant D101-KG. IDA Grant/Credit IDA Credit Number IDA Grant Number Government Expenditure KG KG cofinancing Total Financing Category (b) (inclusive of taxes) S SDR equivalent SDR equivalent equivalent equivalent % (a) (a) (1) Goods, works, consultants' services, nonconsulting services and Training under Parts 1(a) and 2 of the Project 4,460,000 6,351,620 2,760,000 3,911,645-10,263, % (2) Goods, works, consultants' services, non- Consulting services and Training under Part 1(b) of the Project 440, , , ,013 2,400,000 3,848,630 37% (3) Goods, consultants' services and Incremental operating costs under Part 3 of the Project - 660, , , % Total 4,900,000 6,978,237 4,000,000 5,669,052 2,400,000 15,047,289 (a) The budget equivalents for and IDA Grant D101-KG, with underling currency of SDR, is calculated based on cumulative funds received in plus, if any, equivalent of undisbursed funds in SDR as at reporting date. SDR/U5D rate as at is set at ( : ) Project Implementation The Project is implemented by Community Development and Investment Agency (ARIS). The ARIS was established on 15 October 2003 according to the Kyrgyz President's Decree for operating control over the Projects financed by the World Bank. ARIS is an independent legal entity, and it is registered in the legal organizational form envisaged by the legislation of the Kyrgyz Republic for nonfor-profit organizations. Co-founders of ARIS are Administration of the President of the Kyrgyz Republic, association of Legal entities "Association of Local self-government bodies of villages and communities of the Kyrgyz Republic" and "Counterpart-Sheriktesh" public association. The work of ARIS is supervised by the Supervisory Board, which is the superior steering body of ARIS. The ARIS address is: 102 Bokonbayeva Street, Bishkek, the Kyrgyz Republic,

10 IDA Grant Number D101-KG Notes to the special purpose financial statements 2. Summary of significant accounting policies 2.1. Preparation and presentation of financial statements The special purpose financiai statements are prepared in accordance with the International Public Sector Accounting Standard: Financial Reporting Under the Cash Basis of Accounting (IPSAS-Cash Basis), issued by the International Public Sector Accounting Standards Board (IPSASB) within the International Federation of Accountants (IFAC), and presented in accordance with Financial Management Manual for World Bank Financed Investment Operations (March 2010): RM 3 - Financial Reporting and Auditing. The principal accounting policies applied in the preparation of these special purpose financial statements are set out below. These policies have been consistently applied to all the periods presented. 2.2 Cash basis of accounting Project financing is recognised as a source of project funds when the cash is received. Project expenditures are recognised as a use of project funds when the payments are made. 2.3 Reporting currency The reporting currency of these special purpose financial statements is United States dollars (). The cofinancing received and expenditures made in Local currency, Kyrgyz Som (KGS), are translated into based at the exchange rate prevailing at the date of the transaction as issued by the CJSC "Kyrgyz Investment Credit Bank" ("KICB"). The exchange rate defined by the CJSC KICB is as follows: 31 December 2017: 1 = KGS Taxes The taxes are paid in accordance with the tax regulation of the Kyrgyz Republic Budget Expenditure budget is created based on actual accumulated expenditures for the last period plus the updated procurement plans for the Reporting year. 10

11 IDA Grant Number D101-KG Notes to the special purpose financial statements 3. Summary of Summary Reports and SOEs 3.1. During the Reporting year, there were no Summary Reports or SOEs submitted to the WB by the ARIS related to IDA Grant Number D01 -KG Withdrawal Withdrawal Disbursement categories Total application application (1) Goods, works, (2) Goods, works, (3) Goods, No value date consultants' consultants' consultants' services services, non- services, non- and Incremental consulting services consulting services operating costs and Training under and Training under under Part 3 of the Parts 1(a) and 2 of Part 1(b) of the Project the Project Project 2 05.Dec , , , Total 65, , , Statement of Designated Accounts Financing Agreement IDA Credit IDA Grant Number 5762-KG Number D101-KG Bank account number Bank CJSC "Kyrgyz Investment and Credit Bank" Bank location Erkindik 21, Bishkek, Kyrgyz Republic Account currency 1. Opening balance as at IDA Credit IDA Grant Number Number 5762-KG D101-KG Total For the year ended 31 Dec Add: opening discrepancy - 3. IDA advance/replenishment 692, , Less: Refund to IDA from DA - 5. Present outstanding amount advanced to DA - 692, , DA closing balance as at , , Add: Amount of eligible expenditures paid 312, , Less: interest earned (if credited to DA) Total advance accounted for - 692, , Closing discrepancy (5)-(9)

12 IDA Grant Number D101-KG Notes to the special purpose financial statements 5. Statement of Financial Position The Statement of Financial Position discloses assets, liabilities and net assets of the Project as at reporting date. It is prepared in accrual basis that is transactions are recognized when they occur (and not only when cash is received or paid). - Note 31 Dec 2017 ASSETS Cash 6 415,095 Prepayments Total assets 415,095 LIABILITIES Payables 4,812 Total liabilities 4,812 NET ASSETS Cumulative income - IDA Grant D101-KG 692,734 Government cofinancing Other income 38, ,320 Cumulative expenses Project expenses 320,815 Other expenditures (bank charges) ,037 Total net assets 410, Cash Underlying 31 Dec 2017 Currency Designated Account IDA Grant Di01-KG Designated Account 379, ,839 Other Interest account Tender account KGS 35,256 35, ,095 (') All accounts are held at CJSC "Kyrgyz Investment and Credit Bank" (Bishkek, Kyrgyz Republic). 12

13 IDA Grant Number D101-KG Notes to the special purpose financial statements 7. Project Expenditures 7.1. Project expenditure financing per funds Year ended 31 Dec 2017 IDA Credit Number IDA Grant Government Other Category 5762-KG D101-KG cofinancing income Total (1) Goods, works, consultants' services, non-consulting services and Training under Parts 1(a) and 2 of the Project 157, ,470 (2) Goods, works, consultants' services, non-consulting services and Training under Part 1(b) of the Project (3) Goods, consultants' services and Incremental operating costs under Part 3 of the Project - 155,425-3, ,533 Total - 312,895-3, ,003 Cumulative as at 31 Dec IDA Credit Number IDA Grant Government Other Category 5762-KG D101-KG cofinancing income Total (1) Goods, works, consultants' services, non-consulting services and Training under Parts 1(a) and 2 of the Project - 157, ,470 (2) Goods, works, consultants' services, non-consulting services and Training under Part 1(b) of the Project (3) Goods, consultants' services and Incremental operating costs under Part 3 of the Project - 155,425 3, ,533 Total M3, , Project expenditure budget execution Cumulative Expenditures as at 31 Dec 2017 Total budget Execution Category % (1) Goods, works, consultants' services, nonconsulting services and Training under Parts 1(a) and 2 of the Project 157,470 10,263, (2) Goods, works, consultants' services, nonconsulting services and Training under Part 1(b) of the Project 3,848,630 (3) Goods, consultants' services and Incremental operating costs under Part 3 of the Project 158, , Total 316,003 15,047,

14 IDA Grant Number D101-KG Notes to the special purpose financial statements 8. Financing 8.1. Advance/ (advance recovery) Direct Payment SOE and Summary Report Reporting Cumulative as year at 31 Dec 2017 Special Commitment - Total - Total financing budget 6,978,237 Percentage of finance provided as at 31 Dec % 8.2. IDA Grant Number DO 01-KG Reporting Cumulative as year at 31 Dec 2017 Advance/ (advance recovery) 500, ,000 Direct Payment - SE and Summary Report 192, ,734 Special Commitment - - Total 692, ,734 Total financing budget 5,669,052 Percentage of finance provided as at 31 Dec % 8.3. Government cofinancins In-cash Reporting Cumulative as year at 31 Dec _- Total - - Total financing budget 2,400,000 Percentage of finance provided as at 31 Dec % 9. Other income Reporting Cumulative as year at 31 Dec 2017 Interest accrued 36,689 36,689 Fees for tender documents 1,897 1,897 Total 38,586 38,586 14

15 IDA Grant Number DIOI-KG Notes to the special purpose financial statements 10. Schedule of Fixed assets The schedule of fixed assets procured and received by ARIS for the Project implementation is follows: 1 January Additions Deductions 31 December Furniture Event after reporting date IDA Grant Number f01-kg The application N 3 in the total amount of 184,142, that includes expenditures relating to the Reporting year in the amount of 120,161 was submitted to WB on 22 March 2018 and was approved on 2 April Litigations There are no pending itigations related to the Project as at reporting date and as at approval date of these financial statements. 15

16 IDA Grant Number D101-KG ANNEX 1. RECONCILIATION BETWEEN THE AMOUNTS SUBMITTED BY THE ARIS AND DISBURSED BY THE WORLD BANK During the Reporting year there were no withdrawal applications submitted by the ARIS to WB related to the. IDA Grant Number D101-KG Expenditure Category Appl. ARIS WB Difference 1 500, , , , (1) Goods, works, consultants' services, non- 2 65, , consulting services and Training under Parts 1 (a) - and 2 of the Project 65, , , , (3) Goods, consultants' services and IncrementaL - operating costs under Part 3 of the Project 126, , Total 692, ,