UZB: Kashkadarya Regional Road Project

Transcription

1 Audited Project Financial Statements Project Number: Loan: 3481-UZB Period covered: 01 January 2017 to 31 December 2017 UZB: Kashkadarya Regional Road Project Prepared by the Republican Road Fund For the Asian Development Bank Date accepted by ADB: 1 August 2018 The audited project financial statements are documents owned by the borrower. The views expressed herein do not necessarily represent those of ADB s Board of Directors, Management, or staff. These documents are made publicly available in accordance with ADB s Public Communications Policy 2011 and as agreed between ADB and the Republican Road Fund under the Cabinet of Ministers of the Republic of Uzbekistan.

2 v^c IA R GROUP TSIAR-FINANS, LLC 0 2a, Chust street, Tashkent, , Uzbekistan 8 Tel/Fax: (998-71) , , И reception@ciar.uz: reception@ciarqroup.net ADB LOAN No.3481-UZB: KASHKADARYA REGIONAL ROAD PROJECT INDEPENDENT AUDITOR S REPORT ON SPECIAL PURPOSE FINANCIAL STATEMENTS AS OF 31 DECEMBER 2017, AND FOR THE YEAR THAN ENDED Program M anagem ent U nit o f the Republican Road Fund u nder the Cabinet o f M inisters o f the R epublic o f Uzbekistan Received copies o f Independent Auditor s Report (figures in writing) 2018 surname, Initials Seal, Stamp (signature)

3 s ^ C I A R GROUP TSIAR-FINANS, LLC 2 CONTENTS CONTENTS...2 INDEPENDENT AUDITOR S REPORT... 3 STATEMENT OF SOURCES AND USES OF FUNDS...5 STATEMENT OF USES OF FUNDS BY PROJECT CATEGORIES...7 STATEMENT OF USES OF FUNDS BY CATEGORIES FROM ADB LOAN PROCEEDS...8 STATEMENT OF USES OF FUNDS BY CATEGORIES FROM THE GOU CONTRIBUTION STATEMENT OF PROJECT S USD ADVANCE ACCOUNT...10 STATEMENT OF PROJECT S UZS ADVANCE ACCOUNT...11 NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS PROJECT BACKGROUND PROJECT ACCOUNTING POLICY PRESENTED FINANCIAL STATEMENTS CASH AND CASH EQUIVALENTS RETROACTIVE FINANCING FIXED ASSETS STATEMENT OF EXPENDITURE (SOE) PROCEDURES CUMULATIVE EXPENDITURES TA X E S STATEMENT OF PROJECT S CO-FINANCING ACCOUNT... 18

4 ^ C I A R GROUP TSIAR-FINANS, LL INDEPENDENT AUDITOR S REPORT To the Management of Program Management Unit of the Republican Road Fund under the Cabinet» Ministers of the Republic of Uzbekistan We have audited the accompanying Special Purpose Financial Statements (hereinafter - Financ Statements) of the Kashkadarya Regional Road Project (hereinafter - Project), financed against the lo proceeds of the Asian Development Bank (hereinafter - ADB, Bank) based on the financial reporti provisions of the Loan Agreement No.3481-UZB dated 3 March 2017 (h e re in a fte r-th e Loan Agreement), the year ended 31 December The Special Purpose Financial Statements comprise Statement of Sources and Uses of Funds, Statement Uses of Funds by Project Categories, Statement of Uses of Funds by Categories from ADB loan proceei Statement of Uses of Funds by Categories from the GOU contribution, Advance Accounts Statements as 31 December 2017 and for the year then ended, and a summary of significant accounting policies and otl explanatory information (notes of the Special Purpose Financial Statements). The Special Purpose Financial Statements have been prepared by the management of the Progr: Management Unit of the Republican Road Fund under the Cabinet of Ministers of the Republic of Uzbekisl (hereinafter - PMU) according to the International Public Sector Accounting Standards (hereinafter IPSAS), based on the cash flow method. Responsibility of the managers for drawing up financial statement The management of the PMU is responsible for preparation and fair presentation of these Special Purpc Financial Statements based on the cash flow basis in accordance with IPSAS. This responsibility indue designing, implementing and maintaining internal control relevant to the preparation and fair presentation the Special Purpose Financial Statements that are free from material misstatement, whether due to fraud error; selecting and applying appropriate accounting policies; and making accounting estimates that : reasonable in the circumstances. Auditor s responsibility Our responsibility is to express an opinion on the accompanying Special Purpose Financial Stateme based on our audit. W e conducted our audit in accordance with International Standards on Auditing (IS published by International Federation of Accountants. Those standards require that we should follow ethi norms, plan and perform the audit to obtain reasonable assurance that there is no incorrect or false data the Special Purpose Financial Statements. Audit stipulates carrying out the procedures, which are aimed to get audit proofs as regards numeric d; and information, contained in the Special Purpose Financial Statements. Choosing the procedures is bas on auditor s professional judgment, including the estimation of risks of substantial misrepresenting financial statement as a result of fraud or mistakes. In the process of estimation of above-mentioned ris Auditor considers internal control system related to the preparation and authentic submission of financ statement of the organization to develop audit procedures, which are necessary in the presi circumstances, but not to express opinion on the effectiveness of organization s internal control system, audit also includes evaluating principles of accounting policies used and estimates made by management, as well as evaluating the overall presentation of the Financial Statements.

5 s^ C IA R GROUP TSIAR-FINANS, LL( A u d ito r s opinion In our opinion, A) The Special Purpose Financial Statements of the Kashkadarya Regional Road Project fair present in all material respects the financial position of the Project as at 31 December 2017 and the resul' of its operations for the year then ended, in conformity with the International Public Sector Accountir Standards. B) The Executing Agency has utilized all proceeds of the Loan withdrawn from ADB only for purpose of the Project as agreed between the ADB and Republic of Uzbekistan, in accordance with the Loa Agreement; and no proceeds of the Loan have been utilized for other purposes; and C) The Executing Agency was in compliance as at 31 December 2017 with all financial covenants of th Loan Agreement. In addition, (i) (a) With respect to Statement of Expenditures (SOE), adequate supporting documentation has beg maintained to support claims to the Asian Development Bank for reimbursements of expenditures incurre' and (b) which the expenditures are eligible for financing under the Loan Agreement. (ii) (a) The Advance Accounts give a true and fair view of the receipts collected and payments mac during the year ending at 31 December 2017; and (b) these receipts and payments support Advanc Accounts liquidations/replenishments during the year. Basis o f A ccounting We draw attention to Note 2 to the Special Purpose Financial Statements, which describes the basis accounting. The Special Purpose Financial Statements are prepared to assist the Project to comply with tt financial reporting provisions on the requirements conditions of the Loan Agreement and IPSAS. As a resu the Special Purpose Financial Statements may not be suitable for another purpose. O ther M atter Financial Audit reports and opinions, as ruled by the requirements set by the ADB, shall be uploade published and publicly accessible on the ADB s website. A uditor: TSIAR-FINANS LLC, 2A, Chust Street, ' V C l f l P ' f l / V / f A / s Tashkent, , Uzbekistan ' «11» June 2018

6 Kashkadarya Regional Road Project ADB Loan N UZB 5 STATEMENT OF SOURCES AND USES OF FUNDS As of 31 December 2017 (USD) ADB Funds Cumulative Indicator Note Actual 2017 Actual 2016 ^ 7 * ^ Financina the Project Replenishment to Project USD Advance Account 3, Total ADB Funds Government Funds GOU counterpart financing in cash Total Government Funds Total on direct financing Other financina Republican Road Fund financed retroactive expenditures Other ' Total on other financing TOTAL FINANSING Expenses Direct Financina Funds 1. Works and Consulting Services Incremental Administrative Costs Unallocated Single Social Payment Total Other costs Reimbursement of retroactive costs to the Uzbekistan ^ Road Fund Other Total TOTAL EXPENSES Exchange rate difference Excess of Receipts over Payments

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13 Kashkadarya Regional Road Project ADB Loan N UZB 12 NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS for the year ended 31 December Project background On December 5, 2016 the Board of Directors of the Asian Development Bank (hereinafter - ABD, Bank) has approved the Loan for the financing of the Kashkadarya Regional Road Project (hereinafter - Project). On March 3, 2017 the ADB and Republic of Uzbekistan have signed the Loan Agreement and ADB lent to Uzbekistan Loan No.3481-UZ to facilitate implementation of "Kashkadarya Regional Road Project for the amount USD 198 million. The Project is co-financed with funds of the Government of the Republic of Uzbekistan (hereinafter - Government, GOU), represented by the Ministry of Finance. The objective of the Project is to improve the efficiency of the road subsector in Uzbekistan. Project financing plan is as follows: Source o f financing USD ADB Government Total Decree No.2739 of the President of the Republic of Uzbekistan dated 24 January 2017 designates the Republic Road Fund under the Ministry of Finance of the Republic of Uzbekistan (hereinafter - Road Fund) as ' an executive agencies responsible for the target and effective use of loan proceeds and Project implementation. In order to optimize logistics and economic effectiveness Program Management Unit under Republican Road Fund under the Cabinet of Ministers of the Republic of Uzbekistan (hereinafter - PMU) was created. The PMU is registered by the Resolution dated 5 February 2016 of the Khokim of Yunus-Abad district of Tashkent City. PMU is a public non-commercial enterprise with the following main objectives: To achieve the goals and objectives of the Project; To establish and enable Monitoring and Evaluation system for the project implementation; To ensure the targeted and effective timely disbursement of project funds for the project implementation; Management of the procurement of goods and services, in line with the ADB and national regulatory requirements, and others. PMU is located at: 29, Istiqlol Street, Tashkent, Republic of Uzbekistan. The Project consists of the following parts: Part A. The upgrading of two sections, approximately 77 kilometers in length and otherwise more particularly described in the PAM, of the existing highway in the Kashkadarya region between Karshi, Shakhrisabz and Kitab cities (including by road 4R79 km 28-64, 4K319 km 18-30, M39 km ) into a 4 lane concrete pavement incorporating road safety and climate change adaptation features; and Part B. The development of the capacity of rhe Road Fund and selected road design institutes operating in in the territory of Borrower in relation to modern road design and construction standards, and Project management among others. The Project shall include the provision of consulting services for construction supervision, Project implementation support, and institutional development.

14 Kashkadarya Regional Road Project ADB Loan No.3481-UZB 13 Category In USD 1 Works and Consulting Services Incremental Administrative Costs (including the following PMU costs: PMU staff salaries (including withholding taxes and pension charges assessed on such salaries under the Borrower s applicable law); operational expenses; travel; training; computers; software; office furniture; office equipment and spares; and vehicles) ADB financing: Unallocated Total (*) Exclusive of taxes and duties imposed within the territory of the Borrower. ln% 100% of all expenditures* 100% of all expenditures* 100% of all expenditures* Government proceeds under the Project implementation are available to cover the following eligible costs: Category In USD Government financing: 1 Single Social Payment % of all expenditures 2 Feasibility study and detailed design % of all expenditures 3 Exemptions from taxes and duties % of all expenditures 4 Financial costs in investment period % of all expenditures Total ln% 2. Project Accounting Policy These Special Purpose Financial Statements have been prepared, in accordance with requirements of International Public Sector Accounting Standards (hereinafter - IPSAS) issued by the International Public Sector Accounting Standards Board of the International Federation of Accountants, following the cash flow basis Basis for the preparation of the Special Purpose Financial Statements Statement of Sources and Uses of Funds, Statement of Uses of Funds by Project Categories and Notes to the Financial Statements are developed to reflect operations conducted in the Project s framework. Statement of Sources and Uses of Funds, Statement of Uses of Funds by Project Categories, and Advance Accounts Statements are developed based on cash flow basis in accordance with below-stated principles Financing Financing of the Project is considered as actual in the following cases: 1. ADB Financing: when suppliers of material resources or services are paid by the ADB from the Loan Account (hereinafter - Loan Account) under Direct payment procedures; * Advance account financing is recognized when the funds from the ABD s Loan Account were transmitted to the Project Advance account (hereinafter - the Advance account) opened with Joint- Stock Commercial Bank Capital Bank (hereinafter-jscb Capital Bank ). 2. Government financing: Once the funds are transferred from the Road Fund accounts to the PMU account (Co-financing Account) opened in the Treasury of the Ministry of Finance of the Republic of Uzbekistan and once the finds are transferred from the accounts of the Republican Road Fund to suppliers of goods,

15 Project Financial Statements are prepared by the Management of the PMU and have been signed for and on Kashkadarya Regional Road Project ADB Loan No.3481-UZB Expenditures The Project expenditures are recognized as such and stated in the financial statements when the payment is made to suppliers of goods, works and/or services. The payments are made either directly from the Loan account administered by the Bank, from the Letters of credit or from Project Advance account, from the Cofinancing Account, and from the accounts the Republican Road Fund Other revenues and expenditures Other Project Revenues are the Republican Road Fund financed retroactive expenditures and the exchange proceeds from the servicing bank. Financing from other revenues is recognized in the following cases: when funds for financing of retroactive expenditures before the time of first disbursement of ADB funds are disbursed from the accounts of Republican Road Fund to the Project Advance account opened with JSCB Capital Bank. when funds generated from the foreign exchange sales are transferred from the servicing bank to the Project Advance account opened with JSCB Capital Bank. Other expenditures include reimbursement to the Republican Road Fund for covered retroactive expenditures, and expenditures covered from other sources of revenues. Such expenses are recognized, when the payment is made to suppliers of goods, works and/or services. These payments are direct from the Project Advance Accounts. These expenditures are not included in the Statement of Uses of Funds by Project Categories and in the expenditures under procedure of the Statement of Expenditures Reporting currency and exchange rate methodology Uzbekistan s national currency is Uzbek Soum (UZS). ADB Fund s Project financing are budgeted in United States Dollars (USD). Hence, USD is functional and reporting currency in which the Project Special Purpose Financial Statements are presented (presentation currency). Itemization in the Financial Statements is exercised in the functional currency. The Project has two Advance Accounts: USD and UZS (ADB Loan No.3481-UZB) for financing eligible expenditures within ADB s share. The Project also has Co-financing Account for financing Project s expenditures by GOU. Pursuant to the Presidential Decree No.5177 dated 02 September 2017 as of 05 September 2017, the foreign exchange can be freely purchased for the national currency. Commercial banks are free to charge exchange commissions at their discretion. For preparing Project s financial statements, the following principles of foreign exchange rate conversion were used: for ADB funds, expenses in UZS are restated in USD at the Central Bank of Uzbekistan (CBU) exchange rate effective on the date of payment; for ADB funds, retroactive expenses in UZS are recalculated in USD at the CBU exchange rate, effective on the date of payment.» On the Government funds expenditures in UZS are converted into USD at the respective CBU exchange rate effective on the date of actual expenditures; exchange differences generated from the exchange of UZS into USD are reported in the Statements of Project Advance Account and in the Statement of Source and Use of Funds as expenditures at the established exchange rate; UZS balances of Project s bank accounts are revalued at the official exchange rate of CBU effective at the reporting date. As at 31 December 2017 the CBU s UZS to USD official exchange rate was UZS /U SD Presented financial statements

16 Kashkadarya Regional Road Project ADB Loan N UZB Statement of Sources and Uses of Funds This Statement details information of the reporting period on financing and uses of funds of the Project by sources controlling by PMU. During the reported period, the Project was funded: by GOU counterpart financing for the amount of USD in cash funds to cover the Project recurrent costs (pis. see Note 10); from other sources of revenues for total of USD including: for total of USD is the Republican Road Fund financed retroactive expenditures (pis. see Note 5), and for total of USD received from the servicing bank as commissions from foreign exchange sale. The total Project expenditures for the reporting period amount USD (minus exchange rate difference USD 8 602) including: ADB financing - expenditures for total of USD are the expenditures under the SOE procedure (including for total of USD Project retroactive expenditures) (pis. see Note 5, 7); GOU financing - expenditures for total of USD are the PIU expenditures (Single Social Payment) (pis. see Note 10); Others are the PIU ineligible (non-reimbursable by ADB) expenditures for total of USD Statement of Uses of Funds by Project Categories This Statement has detailed the information on the Expenditures of the Project Reported Period by the Project categories by all sources of revenues. During the reported period, the Project was expended: by GOU co-financing for total of USD : Project Management costs (Single Social Payment) for total of USD and financial costs for total of USD by ADB in the amount of USD : expenditures for total of USD are the expenditures under the SOE procedure, including for total of USD Project retroactive expenditures (pis. see Note 5, 7) Statement of Uses of Funds by Categories from ADB Loan Proceeds This Statement includes detailed data on the cash expenditures by the Project Categories in terms of the ADB counterpart financing Statement of Uses of Funds by Categories from the GOU Contribution This Statement includes detailed data on the cash expenditures by the Project Categories in terms of the GOU counterpart financing. 4. Cash and cash equivalents The PMU opened two bank account in JSCB Capital Bank and bank account in the Treasury of the Ministry of Finance of the Republic of Uzbekistan. The Project s accounts and their purposes are listed below: 4.1. Project s Advance Accounts Project s USD Advance Account USD Advance Account was opened by PMU on 06 March First ADB disbursement is dated 18th April 2017, From 18 April 2017 to 31 December 2017 the total IDA disbursement was USD USD was transferred to the Project Advance Account in UZS (exchange transaction) to cover eligible Project costs.

17 Kashkadarya Regional Road Project ADB Loan No.3481-UZB 16 Financing received for the Project retroactive expenditures reimbursed to the Republican Road Fund on 18 April 2017 (pis. see Note 5). Total costs covered from the PMU s UZS Advance account over the reporting period was USD , including expenditures covered by ADB for total USD , including retroactive Project expenditures for total of USD and other USD Project s Co-financing A ccount Co-financing account is used to cover expenditures, funded by the Government. This account receives remittances from the Republican Road Fund accounts. Total amount of Government financing of the Single Social Payment expenses for the reporting period comprised USD in UZS equivalent. The total amount of expenditures, incurred for the reporting period from the Co-financing account is USD Balances of the Project s bank accounts are reflected in the following table: Balance as at January 1, UZS Project s UZS Advance Account Total Project Funds as at January 1, USD Balance as at December 31, 2017 Project s UZS Advance Account Project s UZS Advance Account , Total Project Funds as at December 31, Retroactive financing Retroactive financing is the financing of project expenditures prior to the effective date of the related Loan Agreement. Withdrawal from the Loan Account could be made for reimbursement of eligible expenditures incurred under the Project, before effective date of Loan Agreement but not earlier 12 month before the date of Loan Agreement is signed. Retroactive Project expenditures occurred beginning from 11 March 2016 to 17 April The Republican Road Fund covered retroactive Project expenditures. Funds to cover Project retroactive expenditures were transferred to the Project UZS Advance Account. Total revenues for financing retroactive Project expenditures from 11 February 2016 to 17 April 2017 was USD (UZS thousand). Total retroactive Project expenditures was USD (UZS thousand). Amount of USD (UZS thousand) were unused. Below is information on retroactive Project expenditures from the 3 March 2016 to 17 April 2017 by the cost break-down: From 3 March 2016 to 31 From 1 January 2017 Payment details December 2016 to 17 April 2017 USD 000 UZS USD 000 UZS USD 000 UZS PMU salary Office Rent Communication and internet services Acquisition of Fixed Assets Business trip Acquisition of stationary Total Retroactive Expenses

18 Kashkadarya Regional Road Project ADB Loan N UZB Fixed Assets The fixed assets of the Project consist of office equipment, furniture and vehicles purchased for the use of PMU for the period of the Project implementation. Costs of current refurbishment and maintenance are accounted when they occur and entered in the Accounts as Project expenditures. Fixed assets administered by the PMU and procured from the Project funds are structured as following: Office Furniture Vehicle Total equipment At 1 January Purchase Disposal At 1 January Purchase Disposal At 31 December During the reporting period, the Project has procured computers, printers and laptops in amount USD , chairs in amount USD and automobile Lacetti in amount USD Statement of Expenditure (SOE) procedures SOE procedure used by the Project to replenish funds to the Advance Account in accordance with the ' conditions of the Loan Agreement and ADB Guidelines requirements. Summary data on funds recovered and reimbursed through SOE procedures is stated in the following table: Total Amount reported under SOEs (*) Less: expenditure are netted off ADB on the account of advance payment as per SOE A0003 on September 5, 2017* Less: expenditures no submitted to ADB as per SOE A0004 on 31 December 2017** Subtotal (20 000) (53 957) Replenished to Advance Account Including Advance Payment ( ) Including replenished expenditures for 2016 (63 250) Difference * Total in the Application A0003 is USD74 361, where USD was reimbursed to the Advance Account and USD was netted off on the account of Advance payment. ** Total in the application A0004 is USD65 673, where USD are the 2017 expenditures and USD are the 2018 expenditures. This application was followed by the disbursement of USD to the Advance account and USD was netted off on the account of Advance payment. Including by the expenditure withdrawal application: No. of Withdrawal application Date of Withdrawal application Category Including reporting year Total reimbursable Netted of ADB as at 31 December 2017 Replenishment o f the Advance Account as at 31 December 2017 A

19 Kashkadarya Regional Road Project ADB Loan No UZB Cumulative expenditures Cumulative Project expenditures include Direct payments, expenditures from the Project Advance Account, from the Co-financing Account, and from the accounts Road Fund to the suppliers of goods (works and services), expenditures of the GOU counterpart financing, other Project costs, including exchange losses. Direct payments Project Expenditures Note 2017 Cumulative from the beginning o f the Project - - Payments from the Project Advance Accounts Expenditures of the counterpart financing Other expenses Exchange rate difference Total Taxes Services and goods acquired from ADB funds are exempted from all taxes and levies based on Tax Code of the Republic of Uzbekistan. 10. Statement of Project s Co-financing Account Account No: Depositary bank: Treasury Ministry of Finance of the Republic of Uzbekistan Related loan: 3481-UZB Currency: UZS USD 000 UZS Balance as at January 01, Inflow: Road Fund Financing Total inflow: Outflow: Expenses on related categories Total outflow: Balance as at December 31,