MDTF GRANT No. TF017411

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1 Public Disclosure Authorized EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE (EITI) - POST COMPLIANCE PHASE II IN KYGYZ REPUBLIC IN KYRGYZ REPUBLIC MDTF GRANT No. TF Public Disclosure Authorized IMPLEMENTED BY KYRGYZSTAN EITI SECRETARIAT OF STATE AGENCY FOR GEOLOGY AND MINERAL RESOURCES SPECIAL PURPOSE FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR'S REPORT Public Disclosure Authorized Public Disclosure Authorized BISHKEK March 2016

2 EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE (EITI) - COMPLIANCE PHASE II IN KYRGYZ REPUBLIC MDTF GRANT NO. TF 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 8-11 ANNEX 1. RECONCILIATION BETWEEN THE AMOUNTS SUBMITTED BY THE EITI SECRETARIAT AND DISBURSED BY THE WORLD BANK 12 Page 2

3 STATEMENT OF MANAGEMENT'S RESPONSIBILITIES FOR THE PREPARATION AND PRESENTATION OF THE SPECIAL PURPOSE FINANCIAL STATEMENTS FOR THE PERIOD FROM 22 SEPTEMBER 2015 TO 29 FEBRUARY 2016 The management Kyrgyzstan EITI Secretariat ("EITI Secretariat") of the State Agency for Geology and Mineral Resources ("SAGMR") is responsible for the preparation of the special purpose financial statements of "Extractive Industries Transparency Initiative (EITI) - Post Compliance Phase II in Kyrgyz Republic" ("Project") financed by Grant Agreement MDTF Grant No. TF and that present fairly the Project's cash receipts and payments, expenditures per components for the period from 22 September 2015 to 15 March 2016, in compliance 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, EITI Secretariat's management is responsible for: * Properly 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 period from 22 September 2015 to 15 March EITI Secretariat'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 Grant Agreement dated 6 July 2015, 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 period from 22 September 2015 to 15 March 2016 were authorized for issue on 30 March 2016 by the EITI Secretariat's Management. On behalf of the EITI Secretariat's Management: Karybek ev / U A Umut Ishenkulova Head of XY Financil Manager of Kyrgyzstan EITI Secre ti NITIATIVE Kyrgyzstan EITI Secretariat 3

4 11UOU_UflIV1bS" U(11Q "SOS-AUDIT" LTD INDEPENDENT AUDITOR'S REPORT On the special purpose financial statements of the Extractive Industries Transparency Initiative (EITI) - Post Compliance Phase II in Kyrgyz Republic for the period from 22 September 2015 to 15 March 2016 To the management of the Kyrgyzstan EITI Secretariat of the State Agency for Geology and Mineral Resources ("EITI Secretariat") We have audited the accompanying special purpose financial statements of the "Extractive Industries Transparency Initiative (EITI) - Post Compliance Phase II in Kyrgyz Republic" (the Project) financed by Grant Agreement MDTF Grant No. TF , which comprise the statement of cash receipts and payments, the statement of expenditures per components for the period from 22 September 2015 to 15 March 2016, and a summary of significant accounting policies and other explanatory notes. Management's Responsibility for the Special Purpose Financial Statements The management of the EITI Secretariat is responsible for the preparation and fair presentation of these special purpose financial statements in accordance with 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 Financial Management Manual for World Bank Financed Investment Operations, and for such internal control as management determines is necessary to enable the preparation of special purpose financial statements that are free from material misstatements, whether due to fraud or error. Auditor's 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 (ISAs) as issued by International Auditing and Assurance Standards Board (IAASB) within the IFAC. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the special purpose financial statements are free from material misstatement. An audit involves performing procedures to obtain reasonable audit evidence about the amounts and disclosures in the special purpose financial statements. The procedures selected depend on the auditor's judgment including the assessment of the risk of material misstatement of the special purpose financial statements, whether due to fraud or error. In making those assessments, the auditor considers internal control relevant to the preparation and fair presentation of the special purpose financial statement 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. 39; PpnnL 9np4wp PbqGbu UUtul Uunghwgt[w6 UGOqwtu p;. bplwo 0037, L.Shqptwjwl 38/55; 9bn.' (+37410) ; Iwu' (+37410) ; l[-inun' info@sosaudit.am An Associate of the Crowe Horwath Business Alliance 38/55 A.Tigranyan, 0037 Yerevan, RA; Tel.: (+37410) ; Fax: (+37410) ; info@sosaudit.am

5 "U OU-UUPTh-IfS" Uffll! "SOS-AUDIT" LTD An audit also includes the appropriateness of accounting policies used and the reasonableness of accounting estimates made by 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 opinion. Opinion In our opinion, 1. the special purpose financial statements present fairly in all material respects the cash receipts and payments for the period from 22 September 2015 to 15 March 2016 in accordance with IPSAS-Cash Basis; 2. funds have been used in accordance with the conditions of the Grant Agreement dated 6 July 2015 between the International Development Association (IDA) and the Kyrgyz Republic, and World Bank related 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 Grant Agreement ; 4. The Designated account used has been maintained in accordance with the provision of the Grant Agreement, and World Bank related guidelines. Emphasis of matters Without qualifying our opinion we draw your attention to Note 8 of these special purpose financial statements which disclosed that the Project was completed as at the reporting date. "SOS-Audit" LLC 30 March 2016 ell h aryan Gnel Khachatryan, FCCA not r Auditor BR; p. bputu0 0037, U.SilqptuOJwu SpnnlfL Rnp wp hqi~bu UUnluh Uunghugi4wb UGrwid 38/55; Aba2.' (+37410) ; 'bwpu' (+37410) ; ti-lilnutn' info@sosaudit.am An Associate of the Crowe Horwath Business Alliance I38/55 A.Tigranyan, 0037 Yerevan, RA; Tel.: (+37410) ; Fax: (+37410) ; info@sosaudit.aml

6 Extractive Industries Transparency Initiative (EITI) - Post Compliance Phase II in Kyrgyz Republic Statement of cash receipts and payments TOTAL OPENING CASH Note Actual Budget Variance Reporting Cumulative as at Reporting Cumulative as Reporting Cumulative as at period 15.Mar.2016 period at 15.Mar.2016 period 15.Mar.2016 _ Sources of Funds 7 252, ,360 TOTAL FUNDS 252, ,360 Other income (interest accrued) Project Expenditures 6 (1) Goods, non-consulting services, consultants' services including audit, Training and Incremental Operating Costs 237, , , ,000 (62,797) (62,797) TOTAL PROJECT EXPENDITURES 237, , , ,000 (62,797) (62,797) Other expenditures (banking charges) TOTAL CLOSING CASH 5 15,271 15,271,APMAr Karybe &ev r orac Umut Ishenkulova Head of 7 RS Financial Manager of Kyrgyzstan EITI Secretariat IT ' 0 Kyrgyzstan EITI Secretariat 30 March 2016o. The notes on pages 8-11 form an integra special purpose financial statements. 6

7 Extractive Industries Transparency Initiative (EITI) - Post Compliance Phase II in Kyrgyz Republic Statement of expenditures per components Actual Budget Variance Reporting Cumulative as at Reporting Cumulative as at Reporting Cumulative as at period 15.Mar.2016 period 15.Mar.2016 period 15.Mar.2016 Part 1. Support Continuous Quality Improvements in EITI Report Preparation and Production 142, , , ,000 (4,024) (4,024) Part 2. Build Capacity and Organize Workshops to Reach Wider Citizens and Strengthening Communications Activities 20,762 20,762 23,250 23,250 (2,488) (2,488) Part 3. Institutionalization of EITI and Improving Legal Acts 54,706 54,706 55,000 55,000 (294) (294) Part 4. Operational Support for Efficient EITI Implementation 18,759 18,759 28,158 28,158 (9,399) (9,399) Total Allocated 237, , , ,408 (16,205) (16,205) Unallocated - 46,592 46,592 (46,592) (46,592) TOTAL 237, , , ,000 (62,797) (62,797) KaryV r_aev Umut Ishenkulova Head of Financial Manager of Kyrgyzstan EITI Secretari Lus akyrgyzstan EITI Secretariat 30 March 2016 The notes on pages 8-11 form NTAIL c se special purpose financial statements. 7

8 Extractive Industries Transparency Initiative (EITI) - Post Compliance Phase II in Kyrgyz Republic I Notes to the special purpose financial statements 1. General information 1.1. The Project The Grant Agreement was concluded on 6 July 2015 between the Kyrgyz Republic and the International Development Association (IDA), according to which IDA acting as administrator of grants provided by Multi-Donor Trust Fund (MDTF), provided financing to the Kyrgyz Republic in the amount of 300,000 US dollars (USD). The Grant Agreement became effective on 22 September The financing was provided for the implementation of "Extractive Industries Transparency Initiative (EITI) - Post Compliance Phase II in Kyrgyz Republic" (the Project). The Closing date of is set 31 December The Grace Period for submitting withdrawal application for expenditures incurred before the Closing date is four months following the Closing dates: 30 April The Project objectives The objective of the project is to increase transparency and governance in the Recipient's extractive industries sector through adherence to the new EITI Standard on the disclosure of revenues, licenses, and sub-national payments. The Project consists of the following parts: Part 1: Support Continuous Quality Improvements in EITI Report Preparation and Production; Part 2: Build Capacity and Organize Workshops to Reach Wider Citizens and Strengthening Communications Activities; Part 3: Institutionalization of EITI and Improving Legal Acts; Part 4: Operational Support for Efficient EITI Implementation The Project Budget and Financing The Project is wholly financed by MDTF Grant No. TFO 17411, inclusive of taxes. MDTF Grant Expenditure Grant No. Financing Category TF Total (inclusive of taxes) USD USD equivalent % (1) Goods, non-consulting services, consultants' services including audit, Training and Incremental Operating Costs 300, , % Total 300, , Project Implementation The State Agency for Geology and Mineral Resources under the Government of Kyrgyz Republic (SAGMR) coordinates the activities for the EITI implementation through the Kyrgyzstan EITI Secretariat (EITI Secretariat). The EITI Secretariat and SAGMR address is: 2 Erkindik Avenue, office 312, Bishkek, Kyrgyz Republic. 8

9 Extractive Industries Transparency Initiative (EITI) - Post Compliance Phase II in Kyrgyz Republic Notes to the special purpose financial statements 2. Summary of significant accounting policies 2.1. Preparation and presentation offinancial statements The special purpose financial statements are prepared in accordance with the International Public Sector Accounting Standard: Financial Reporting Under the Cash Basis ofaccounting (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 (USD). The expenditures made in local currency, Kyrgyz Som (KGS), are translated into USD based at the exchange rate prevailing at the date of the transaction as issued by the commercial bank where the amounts are held.. The exchange rate defined by the National Bank of the Kyrgyz Republic is as follows: 15 March 2016: USD 1 = KGS Taxes The taxes are paid in accordance with the tax regulation of the Kyrgyz Republic. 9

10 Extractive Industries Transparency Initiative (EITI) - Post Compliance Phase II in Kyrgyz Republic Notes to the special purpose financial statements 3. Summary of Summary Reports and SOEs Payment categories Withdrawal Withdrawal application application (1) Goods, non-consulting No value date services, consultants' services including audit, Training and Incremental Operating Costs Total 30 Dec , , Mar , , Total 160, , Statement of Designated Account Bank account number Bank Bank location Currency 1. Opening balance as at Add: opening discrepancy OJSC "Commercial Bank Kyrgyzstan" Erkindik 58, Bishkek, Kyrgyz Republic USD Grant No. TF WB advance/replenishment 175, Less: Refund to WB from DA _ 5. Present outstanding amount advanced to DA 175, DA closing balance as at , Add: Amount of eligible expenditures paid 160, Less: interest earned (if credited to DA) - 9. Total advance accounted for 175, Closing discrepancy (5)-(9) 5. Cash Underlying 15 Mar 2016 Currency USD Designated Account -MDTF Grant No. TFO USD 15,157 Interest account KGS ,271 (*) Accounts are held at OJSC "Commercial Bank Kyrgyzstan" (Bishkek, Kyrgyz Republic). 10

11 Extractive Industries Transparency Initiative (EITI) - Post Compliance Phase II in Kyrgyz Republic Notes to the special purpose financial statements 6. Project Expenditures Cumulative Expenditures as at 15 Mar 2016 Total budget Execution (a) Category USD USD % (1) Goods, non-consulting services, consultants' services including audit, Training and Incremental Operating Costs 237, ,000 79% Total 237, ,000 79% (a) Underperformance of the budget is mainly due to non-use of unallocated budget. 7. Financing Reporting Cumulative as period at 15 Mar 2016 USD USD Advances/ (advance recovery) 15,157 15,157 Direct Payments 76,948 76,948 SOE and Summary Report 160, ,255 Total 252, ,360 Total financing budget 300,000 Percentage of finance provided as at 15 Mar % 8. Project completion The Project was completed as at 31 December 2015 (the Closing Date), and the Grace period for submitting withdrawal application for expenditures incurred before the Closing date set at 30 April However, all the transactions were completed as at 15 March 2016 (Reporting date). As at the date of signing these special purpose financial statements: a. No expenditures related to the Project were incurred after the Closing Date; the payments made during the Grace period related to expenditures incurred before the Closing Date; b. No withdrawals from grant account were made after Reporting date; c. No expenditures related to the Project were submitted to the WB after the Reporting date; d. There were no uncovered prepayments or payables outstanding to contractors related to the Project as at the Reporting Date, except for the final audit service; e. The outstanding cash balance as at Reporting Date, will be used to pay final audit service (USD 6,578 including related taxes); the residual amount at the Designated account shall be refunded to the WB, and residual amount in the Interest account shall be transferred to the state budget; f. We are not aware about any pending or existing litigations against the Project. 1 11

12 Extractive Industries Transparency Initiative (EITI) - Post Compliance Phase II in Kyrgyz Republic ANNEX 1. RECONCILIATION BETWEEN THE AMOUNTS SUBMITTED BY THE EITI SECRETARIAT AND DISBURSED BY THE WORLD BANK EITI Expenditure Category Appl. SECRETARIAT WB Difference 1 120, Advance (recovery) I SECRETARIAT 10, (104,843.36) 15, (1) Goods, non-consulting services, 2DP 52, , consultants' services including audit, 55, Training and Incremental Operating 55, _ Costs 4DP 24, , , , , , Total 237, ,

JSDF GRANT FOR THE SUPPORT TO COMMUNITY SEED FUNDS PROJECT

JSDF GRANT FOR THE SUPPORT TO COMMUNITY SEED FUNDS PROJECT JSDF GRANT NO. TF014029 IMPLEMENTED BY AGRIBUSINESS COMPETITIVENESS CENTER SPECIAL PURPOSE FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR'S REPORT