I I I I I. Financial Statements for the year ended 31 December 2016

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized nternational Development Association (DA) Government of Sierra Leone FSDP-SP Project Number: DA H662 -SL Public Disclosure Authorized Public Disclosure Authorized Financial Statements This report contains 19 pages Ref: 1002/ank/eap f 0 51E, EA

2 nternational Development Association (DA) FSDP-SP Project No. DA H662 -SL Contents Page General information 1 Background information on the project 2-3 Management's responsibility statement 4 ndependent Auditor's report to the Government of Sierra Leone and the nternational Development Association (DA) 5-7 Statement of resources and expenditure (DA funding) 8 ncome statement 9 Statement of financial position 10 Statement of cash flows 11 Notes to the financial statements Opinion on the Statement of Expenditure Submitted 16 Statement of disbursement reconciliation nternational Development Association (DA) Grant Number DA H662-SL 17 Report of the ndependent Auditors on Project special account statements - Bank of Sierra Leone account no SLL Special account statements 19

3 nternational Development Association (DA) FSDP-SP Project No. DA H662 -SL General information Address Bank of Sierra Leone Siaka Steven Street Freetown Procurement Project Management iproject Ms. Esther M. Johnson Co-ordinator Mr. Abdul Aziz Sowe Financial Management Specialist Mr. Dauda Kamara Specialist Bankers Bank of Sierra Leone Siaka Stevens Street Freetown Auditor KPMG Sierra Leone Chartered Accountants KPMG House 37 Siaka Stevens Street Freetown

4 nternational Development Association (DA) FSDP-SP Project No. DA H662 -SL Background information on the project An agreement dated 19 April 2011, was entered into between the Republic of Sierra Leone ("recipient") and the nternational Development Association ("Association") in which the Association agreed to extend to the Recipient, a grant in an amount equivalent to two million six hundred thousand Special Drawing Rights (SDR 2,600,000) to fund the which is being implemented by the Bank of Sierra Leone. The objective of the Project is to strengthen the capacity of the Bank of Sierra Leone and contribute to improving efficiency in financial intermediation, safeguarding financial sector stability, reducing transaction costs of money transfer and expanding access to financial services. The Project consists of the following parts: Part A. Enhancing Access to Financial Services Carrying out a program of activities to improve efficiency in financial intermediation, reduce transaction costs of money transfer and expand access to financial services including: 1. (a) (i) Supporting development of: a basic bad debtor database operated by the (ii) Bank of Sierra Leone; and a comprehensive credit information bureau; and (b) Strengthening the Bank of Sierra Leone's oversight capacity, through the provision of technical advisory services and acquisition of goods. 2. Supporting implementation of the payment systems and remittances policy framework, in particular: (a) preparation of payment systems regulations and policies; (b) Preparation of mobile payment regulations; (c) preparing a remittances policy framework; and (d) strengthening the Bank of Sierra Leone's capacity for oversight and supervision, all through provision of technical advisory services, training and acquisition of goods. 3. Provision of technical advisory services for developing micro, small and medium enterprises/value chain finance capacity of commercial banks including: (a) carrying out an analysis of product development needs, and an analysis of constraints on an enabling environment for supporting MSME finance and agricultural finance; (b) developing sector policies and supporting dialogue on enhancing access to financial services (secured lending, leasing, value chain finance), in cooperation with selected commercial banks; (c) preparing secured lending laws and regulations; and (d) strengthening related technical capacities of selected commercial banks. 2

5 Background information on the project (continued) nternational Development Association (DA) FSDP-SP Project No. DA H662 -SL Part B. Building Financial Sector Reform and Oversight Capacity of the Bank of Sierra Leone Strengthening the technical and institutional capacity of the Bank of Sierra Leone for implementing the Financial Sector Development Plan and supervision of the financial sector including: 1. Supporting financial sector legal reforms in particular: (a) Reviewing and proposing amendments to the Other Financial Services (Amendment) Act, the Banking Act, and the Bank of Sierra Leone Act and preparing draft microfinance legislation ("Financial Sector Legislation"); (b) supporting implementation of Financial Sector Legislation; and (c) strengthening the capacity of Bank of Sierra Leone's legal department, all through provision of technical advisory services, training, operating costs and acquisition of goods. 2. Supporting implementation of Bank of Sierra Leone's nstitutional Development Plan, including: (a) reviewing human resource policies and practices and preparing a new human resources policy; (b) supporting the staff development program, in particular, carrying out an assessment of staff capacity skills and needs, and preparation of a staff capacity development plan; (c) developing a broad-based training program for Bank of Sierra Leone's staff; (d) reviewing and reengineering both functional and business processes; (e) reviewing and developing an information technology strategy and implementation plan; (f) implementing the AML/CFT framework; and (g) designing and implementing efficient supervisory processes including supervision of the microfinance sector, all through provision of technical advisory services, training, operating costs and acquisition of goods. 3. Strengthening the technical, institutional, fiduciary (financial management and procurement), monitoring, evaluation, and Project management capacity of the FSDP Secretariat, all through provision of technical advisory services, training, operating costs and acquisition of goods. 4. Provision of technical advisory services to support Bank of Sierra Leone (including the FSDP Secretariat) in the preparation of financial sector development strategies, including the microfinance policy framework and long-term finance. 13

6 Management's responsibility statement nternational Development Association (DA) FSDP-SP Project No. DA H662 -SL Management is responsible for the preparation and presentation of the financial statements, comprising the statement of financial position at 31 December 2016, the income statement, statement of resources and expenditure, and the statement of cash flows for the year then ended and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes in accordance with the accounting policies stated in note 1 of the financial statements and for such internal control as management determine is necessary to enable the preparation of financial statements that are free from material misstatement whether due to fraud or error. Approval of the financial statements The financial statements were approved by management on. 29' and signed on its behalf by:.h ~OVJ~Project Coordinator -FSDP-SP 4

7 1 KPMG Sierra Leone Telephone: /2 KPMG House Telefax: Siaka Stevens Street P 0. Box 100 nternet: Freetown Sierra Leone ndependent Auditor's report to the nternational Development Association (DA) and the Government of Sierra Leone Opinion We have audited the financial statements of Financial Sector Development Plan Support Project which comprise the statement of financial position as at 31 December 2016, the income statement, statement of resources and expenditure, and statement of cash flows for the year then ended and the notes to the financial statements which include a summary of significant accounting policies and other explanatory notes as set out on pages 12 to 15. n our opinion, the financial statements give a true and fair view of the financial position of as at 31 December 2016, and of its financial performance and cash flows for the year then ended in accordance with the accounting policies adopted by the project as stated in note 1 of the financial statements. Basis for Opinion We conducted our audit in accordance with nternational Standards on Auditing (SAs). 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 organization in accordance with the nternational Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (ESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Sierra Leone, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and presentation of these financial statements in accordance with the significant accounting policies stated in note of the financial statements, and for such internal control as the management determines is necessary to enable the preparation of financial statement that are free from material misstatement, whether due to fraud or error. 5 KPMG. a partnership established under Sierra Leonean law, is a member of the KPMG network of independent member firms affiliated with KPMG ntermational Cooperative ("KPMG nternational") a Swiss entity Partners VT ODecker DL Kawaley

8 1 ndependent Auditor's report to the nternational Development Association (DA) and the Government of Sierra Leone (continued) Auditors' responsibility for the financial statements Our objectives are to obtain reasonable assurance about whether the 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 a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or 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 financial statements. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: * dentify and assess the risks of material misstatement of the 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. 0 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 organisation's internal control. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors. 3 Conclude on the appropriateness of the Directors' use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the organisation's ability to continue as a going concern. f we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the organisation to cease to continue as a going concern. 0 Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 6

9 ndependent Auditor's report to the nternational Development Association (DA) and the Government of Sierra Leone (continued) Auditors' responsibility for the financial statements (continued) * Obtain sufficient appropriate audit evidence regarding the financial information of the business activities within the organisation to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the organisation's audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance 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. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. Other matter The financial statements have been prepared in accordance with the accounting policies stated in note 1 of the financial statements, for the purpose of determining the financial position of for use by its management and nternational Development Association, and the financial statements and related auditor's report may not be suitable for another purpose. Our report is intended solely for the management of Financial Sector Development Plan Support Project and nternational Development Association and should not be distributed to or used by parties other than the management of Financial Sector Development Plan Support Project and nternational Development Association. The Engagement Partner on the audit resulting in this independent auditors' report is Derrick L Kawaley. Freetown Chartered Accountants 3 Date: 1 7

10 nternational Development Association (DA) FSDP-SP Project No. DA H662 -SL Statement of resources and expenditure (DA Funding) for the year ended 31 December n thousands of Leones Note Resources Opening balance DA designated Account 52,253 1,382,949 Disbursement DA Disbursement 2 3,004,072-3,056,325 1,382,949 Expenditure Per diem 63, ,217 Audit fees 43,427 39,499 Course fees 26, ,858 Air ticket expenses 32, ,448 Consultancy fees 1,195, ,547 Travel expenses 80 5,631 Visa fees ,028 Other expenses ,362,694 1,330,696 Results for the year 1,693,631 52,253 Represented by: DA Designated account 5 1,693,631 52,253 The notes on pages 12 to 15 are an integral part of these financial statements. 8

11 ncome statement for the year ended 31 December nternational Development Association (DA) FSDP-SP Project No. DA H662 -SL n thousands of Leones Note ncome: Grant income 6 1,424,775 1,385,045 Total grant income 1,424,775 1,385,045 Expenditure Per diem 63, ,217 Audit fees 55,088 43,427 Course fees 26, ,858 Air ticket expenses 32, ,448 Consultancy fees 1,195, ,547 Travel expenses 80 5,631 Visa fees ,028 Other expenses Depreciation charge 4 50,420 50,421 Total expenditure 1,424,775 1,385,045 Result for the year These financial statements were approved on Project Co-ordinator - FSDP-SP The notes on pages 12 to 15 are an integral part of these financial statements. * 9

12 Statement of financial position for the year ended 31 December n thousands of Leones nternational Development Association (DA) FSDP-SP Project No. DA H662 -SL Assets: Note Property and equipment 4 82, ,764 DA designated bank account 5 1,693,631 52,253 1,775, ,017 Equity Deferred grant income 6 1,720, ,590 1,720,887 - Liability Accrued charges 7 55,088 43,427 55,088 43,427 Total equity and liabilities 1,775, ,017 These financial statements were approved on Project Co-ordinator -FSDP-SP The notes on pages 12 to 15 are an integral part of these financial statements. 10

13 Statement of cash flows for the year ended 31 December nternational Development Association (DA) FSDP-SP Project No. DA H662 -SL n thousands of Leones Note Operating activities Cash received from DA 2 3,004,072 Cash paid to suppliers and employees (1,424,775) (1,424,544) Depreciation for the year 4 50,420 50,421 Accrued expenses 11,661 43,427 Cash flows from operating activities 1,641,378 (1,330,696) Cash and cash equivalents as at 1 January 52,253 1,382,949 Cash and cash equivalent as at 31 December 5 1,693,631 52,253 UThese financial statements were approved on....l T... Project Co-ordinator -FSDP-SP 16 hnoeonpgs1to1aranitrapatothese wr prvdo... financial statements.. k

14 Notes to the financial statements 1. Reporting entity nternational Development Association (DA) FSDP-SP Project No. DA H662 -SL The is a project to provide technical assistance and nstitutional support to the Bank of Sierra Leone. The objective of the project is to enhance the capacity of the Bank of Sierra Leone as the apex financial institution to formulate, coordinate and take a pro-active leadership role in advancing financial sector reforms and implement the Bank of Sierra Leone nstitutional Development Plan Basis of preparation The financial Statements have been prepared in accordance with nternational Financial Reporting Standards and have been presented in Leone currency, which is the project's functional currency. All financial information presented has been rounded up to the nearest thousand. 1.2 Summary of significant accounting policies The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied unless otherwise stated. 1.3 Foreign currency transactions Foreign currency transactions are accounted for at the rate of exchange prevailing on the date at which the transactions were recorded. All gains and losses arising are taken to the income and expenditure statement. The closing exchange rate for United States Dollars as at 31 December 2016 was Le 7, midrate of the Bank of Sierra Leone indicative exchange rates at 31 December 2015 (2015: Le 5,639.10) 1.4 Property and equipment Recognition and measurement All property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that are directly attributable to the acquisition of the asset. Subsequent costs Subsequent costs are included in the asset's carrying amount or are recognized as a separate asset as appropriate, only when it is probable that future economic benefits associated with the items will flow to the Project and the cost of the asset can be measured reliably. 12

15 Notes to the financial statements (continued) 1.4 Property and equipment (continued) Depreciation nternational Development Association (DA) FSDP-SP Project No. DA H662 -SL Depreciation is charged to the income statement on a straight line basis with the corresponding credit to the respective accumulated depreciation account. Depreciation rates are reviewed on an annual basis to ensure they reflect the future economic benefits embodied in the assets. Current depreciation rates Number of Years Vehicles 5 Plant and machinery 10 Furniture and equipment Deferred grant income The grant is recognised as income over the period necessary to match them with the related costs, for which they are intended to compensate, on a systematic basis. 1.6 Cash and cash equivalent These include the Special Account bank balance held with the Bank of Sierra Leone. 2. Disbursements (nternational Development Association (DA) n thousands of Leones Amount disbursed by DA during the year WB ,027,130 - WB ,942 3,004, Other expenses n thousands of Leones Others nsurance

16 Notes to the financial statements (continued) 4. Property and equipment nternational Development Association (DA) FSDP-SP Project No. DA H662 -SL n thousands of Leones Equipment Furniture Vehicle Total Cost At 1 January ,600 37, , , December ,600 37, , ,170 At 1 January ,600 37,150-71,750 34,600 37, , ,170 Accumulated depreciation At 1 January ,183 21,669 59, ,406 Depreciation charge 8,649 9,287 32,484 50,420 At 31 December ,833 30,955 92, ,826 1 January ,533 12,382 27,070 50,985 Depreciation charge 8,650 9,287 32,484 50, December ,183 21,669 59, ,406 Net book value: At 31 December ,767 6,195 70,382 82,344 At 31 December ,417 15, , ,764 14

17 nternational Development Association (DA) FSDP-SP Project No. DA H662 -SL Notes to the financial statements (continued) 5. Cash and bank balance n thousands of Leones DA Designated Account 1,693,631 52, Deferred grant income 1,693,631 52,253 n thousands of Leones Opening balance 141,590 1,526,635 Advance to Special Account 3,004,072 - Total funds available 3,145,662 1,526,635 Released to income statement (1,424,775) (1,385,045) a s g ra n t in c o m e (to ta l e x p e n d itu re ) 1, 2,8 71 4, 9 11,720, ,590 Represented by: DA Designated account 5 1,693,631 52,253 Property and equipment 4 82, ,764 Accrued expenses 7 (55,088) (43,427) 1,720, ,590 The release to income statement is equal to the total expenditure for the year. 7. Accrued charges n thousands of Leones Accrued audit fees 55,088 43,427 55,088 43,

18 KPMG Sierra Leone Telephone: /2 KPMG House Telefax: Siaka Stevens Street P O. Box 100 nternet: Freetown Sierra Leone Opinion on the Statement of expenditure submitted We have audited the Statement of Expenditure of the Financial Sector Development Plan Support Project (FSDP-SP), funded by the nternational Development Association (DA), and with Project No. DA H662 - SL submitted in support of applications for reimbursement for expenditure in accordance with the DA Agreement letter dated 19 April Our examination was made in accordance with nternational Standards on Auditing and accordingly included such tests of the accounting records, verification of assets and liabilities, review of systems of internal controls and other auditing procedures that we considered necessary in the circumstances. Opinion n our opinion, the Statement of expenditure, the supporting summary sheets and information submitted with them can be relied upon to support the applications for grant disbursement by the nternational Development Association (DA) for expenditure incurred for the purposes of the project as specified in the above-mentioned DA Agreement Document. Freetown Chartered Accountant Date c KPMG, a Partnership established under Sierra Leonean taw, is a member Of The KPMG network of independent member firms affiliated with KPMG ntemnational Cooperative J"KPMG nternational"), a Swiss entity Partners VTO0 Decker D L Kawaley

19 c:) c - o m C0 11 N r- 0 o 2 C) ( D r: il oý :-J E) CO O l C> il i l cna U : E R O : l l i Eo o o j ii cs<dlo m ll o: - o-0l C (D 0 CiO l 0 o C*ý0 q C Ri 0 C r- r_i t.: - ' O o < COo e E C) m o 0 - : cý < q* E,-r- c. 4- C: Eæ <Di > -L i- z 4- C:J 3C 0 O O + +- N ii E) E -. i 00 <D ~ 0 Q E- 0)0 Q- C-

20 KPMG Sierra Leone Telephone: /2 KPMG House Telefax: Siaka Stevens Street P 0. Box 100 nternet: Freetown Sierra Leone Report of the ndependent Auditors on the Project's Special account statement - Bank of Sierra Leone account number SLL We have audited the accompanying Special Account Statement established under the provisions of the project set out on page 19. n our opinion, the receipts are properly accounted for and the withdrawals were made for the purpose of the project in accordance with the grant agreement. The special account statement give a true and fair view of the ending balance for the year ended 31 December n accordance with the provisions of the terms of reference of this audit, we confirm as follows: Funds provided to the project have been used for their intended purposes. " The special account of the project has been maintained in accordance with the provisions of the Grant Agreement and with disbursement rules and procedures. Freetown Date: ij Chartered Accountants 18 KPMG, a partnership established under Sierra Leonean law, is a member of the KPMG network of independent member firms affiliated with KPMG nternational Cooperative (KPMG nternational"), a Swiss entity Partners: VT 0 Decker DL Kawaley

21 3 Special account statement for the year 31 December 2016 nternational Development Association (DA) FSDP-SP Project No. DA H662-SL Account No: SLL Depository bank: Address: Grant Agreement Number Currency: Bank of Sierra Leone Siaka Stevens Street, Freetown DA H662-SL Leones Account Activity Grant from nternational Development Association (DA) n thousands of Leones Balance at 1 January 52,253 1,382,949 Funds transferred by DA 3,004,072-3,056,325 1,382,949 Expenditure: Per diem (63,464) (614,217) Audit fees (43,427) (39,499) Course fees (26,760) (227,858) Air ticket expenses (32,396) (262,448) Consultancy fees (1,195,081) (169,547) Travel expenses (80) (5,631) Visa fees (714) (11,028) Other expenses (772) (468) (1,362,694) (1,330,696) Balance at 31 December 1,693,631 52,253 19