AUDIT OF THE ADDITIONAL READINESS PREPARATION ACTIVITIES OF THE FORESTRY DEVELOPMENT AUTHORITY, LIBERIA

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1 Public Disclosure Authorized Public Disclosure Authorized AUDIT OF THE ADDITIONAL READINESS PREPARATION ACTIVITIES OF THE FORESTRY DEVELOPMENT AUTHORITY, LIBERIA FOR THE EIGHTEEN (18) MONTHS PERIOD ENDED 31 DECEMBER 2016 AND SIX (6) MONTHS ENDED 30 JUNE 2017 GRANT NO: TFA0929 Public Disclosure Authorized Public Disclosure Authorized

2 For the Eighteen (18) Months Period ended 31 December 2016 and Six (6) Months Period ended 30 June 2017 LIST OF ABBREVATIONS Acronyms DSA FCPF FDA GoL IDA IFR IPSAS MHA PFMU REDD RIU R-PIN R-PP Meaning Daily Subsistence Allowance Forest Carbon Partnership Facility Forestry Development Authority Government of Liberia International Development Association Interim Financial Report International Public Sector Accounting Standard Million Hectares Project Financial Management Unit Reducing Emission from Deforestation and Forest Degradation REDD Implementation Unit Readiness Preparation Idea Note Readiness Preparation Proposal 2

3 For the Eighteen (18) Months Period ended 31 December 2016 and Six (6) Months Period ended 30 June 2017 TABLE OF CONTENTS TRANSMITTAL LETTER...4 PROJECT GENERAL INFORMATION...5 EXECUTIVE SUMMARY...6 INDEPENDENT AUDITOR S REPORT STATEMENT OF RECEIPTS AND PAYMENTS STATEMENT OF FINANCIAL POSITION NOTES TO THE FINANCIAL STATEMENTS INDEPENDENT AUDITOR S REPORT ON THE DESIGNATED ACCOUNT STATEMENT OF DESIGNATED ACCOUNT INDEPENDENT AUDITOR S REPORT ON THE STATEMENT OF EXPENDITURES STATEMENT OF EXPENDITURES SUPPLEMENTARY INFORMATION DETAILED LISTING OF WITHDRAWAL APPLICATIONS SCHEDULE OF FIXED ASSETS MANAGEMENT LETTER INTERNAL CONTROL FINDINGS AND RECOMMENDATIONS PERSONS CONTACTED OR INVOLVED IN THE AUDIT

4 TRANSMITTAL LETTER Date: November 9, 2017 The Managing Director Forestry Development Authority, Liberia Whein Town, Mount Barclay Montserrado County, Liberia Attention: Honorable Darlington Tuagben Dear Sir Audit of the Additional Readiness Preparation Activities of the Forestry Development Authority, Liberia We are pleased to present our report on audit of the Additional Readiness Preparation Activities implemented by the REDD Implementation Unit of the Forestry Development Authority, Liberia for the Eighteen (18) months period ended 31 December 2016 and. Our report is detailed as follows: Executive summary which summarizes the Project s background, audit objectives and our scope of work, financial highlights and key oversight of the project activities for the period under review. Our independent report on the financial statements of the project that highlights the financial position and performance of the project and the designated account. Supplementary information that are integral to the financial statements as a whole. Management letter, which reports on the internal control, financial management and compliance weakness of the Project. We would like to extend our appreciation to the management and staff of the Project Implementation Unit (PIU) of the Forestry Development Authority and the Project Financial Management Unit of the Ministry of Finance and Development Planning for their cooperation and assistance during the course of the audit. Yours truly P. Ernest Parker Jr. Partner Parker & Co., LLC Certified Public Accountants & Business Advisors 81 Sekou Toure Avenue, Mamba Point Monrovia, Liberia 4

5 For the Eighteen (18) Months Period ended 31 December 2016 and Six (6) Months Period ended 30 June 2017 PROJECT GENERAL INFORMATION Project Financial Management Unit: Dr. Christopher Sokpor Unit Manager Dr. Salia Hussein Senior Project Accountant Mr. Subozu Kollie Senior Assistant Internal Auditor Project Management Unit: Project Location: Bankers: Auditors: Mr. Saah A. David Jr. - National REDD +Project Coordinator Mrs. Lorpu Sangai- Project Accountant Mr. Ephraim Swen Procurement Officer Mr. Zinnah Mulbah Strategic Environment & Social Assessment Coordinator Forestry Development Authority (FDA) Whein Town, Mount Barclay Liberia Guaranty Trust Bank (Liberia) Limited 13 th Street, Sinkor Monrovia, Liberia Parker and Company, LLC Certified Public Accountants and Business Advisors 81 Sekou Toure Avenue, Mamba Point Monrovia, Liberia 5

6 EXECUTIVE SUMMARY The Forest Carbon Partnership Facility (FCPF) is a multi-donor initiative, which became operational in 2008 to assist countries in establishing the key pillars of REDD + readiness by; developing their national reference scenarios for emissions from deforestation and forest degradation; adopting and complementing national strategies for stopping deforestation and forest degradation; and designing national monitoring, reporting and verification systems for REDD +. These activities are referred to as REDD + Readiness. The concept of readiness and the process of getting ready for the REDD + is however a continuum. While the FCPF has established key milestones to be reached as part of the readiness process, the process depends on the country s context and therefore is not a specific pre-defined output set by the FCPF for every country. Liberia contains approximately 4.3 million hectares (Mha) of lowland tropical forest. This is under threat due to continued clearance and degradation for the expansion of agriculture and mining activities. Between 1990 and 2010, Liberia lost 12.2% of its forest cover. The Government of Liberia received a grant of US$ 3.6millon (original grant) in 2012, and activities thereunder were nearing completion; expected project closure was November 30, As all of the identified activities of Liberia s REDD+ Readiness Preparation Proposal (R-PP) were not funded under the original grant and the need for additional funding stressed in the mid-term report (MTR) submitted in August 2014, in November 2014, following a presentation of the project s midterm report at the PC in Arusha, Tanzania, the FCPF granted an additional funding of US$ 5.0 million to implement outstanding activities required to ready Liberia for REDD+ implementation. The additional funding for REDD+ Readiness builds on the REDD+ readiness activities already launched, consolidates and strengthens achievements and completes aspects of REDD+ readiness that have not yet been completed. The additional funding will strengthen national REDD+ management arrangements, strengthen platforms for civil society engagement at the national and county level, strengthen country level structures, finalize the national REDD+ strategy, design an emissions reductions program, develop a reference emissions level and support the development of measurement, reporting and verification system. Liberia received a grant of US$3.6 million for readiness activities in preparation for REDD+ implementation. The grant was based on the Readiness Preparation Idea Note (R-PIN) and the REDD+ Readiness Preparation proposal (R-PP). The World Bank grant to support readiness work by the REDD+ Implementation Unit (RIU) was schedule to be completed by May 2015 but was extended to November The RIU is the program management section, under the mandate of the Forestry Development Authority (FDA) that is responsible for facilitating the implementation of REDD+ readiness activities in Liberia, as guided by the R-PP and its sub-components. 6

7 EXECUTIVE SUMMARY CONT D Audit Objectives The objective of the project financial audit was to: to express a professional opinion on the financial position of the FCPF grant for the Readiness Preparation Activities at the end of the accounting eighteen (18) months period ended 31 December 2016 and six (6) months period which ended 30 June 2017 and of the funds received and expenditures incurred as reported by the Project Financial Statements. Provide assurance on the Statement of Expenditures and Designated Account activity covering the accounting period during which the withdrawals are made in accordance with the international Standards on Auditing (ISA) Provide a management letter containing observations and recommendations to REDD + RIU and PFMU on the results of the audit Our Scope Parker and Company, LLC was engaged to conduct the financial audit of the Project financial statement of the Additional Readiness Preparation Activities for the twenty-four (24) months period, which spanned July 1, 2015 to June 30, We executed the audit in accordance with the term of reference between Parker & Co., LLC and the Forestry Development Authority, RIU and the provisions of the Standard Term and Conditions of the Grant Agreement between the FCPF and the Government of Liberia (GoL). We have issued an audit opinion on the project financial report as summarized below and as detailed in the next section: Opinion on project financial report: Unqualified Management letter, which highlights: Comments and observations on the accounting records, system and controls that were examined during the course of the audit. Specific deficiencies identified and areas of weakness in the systems, controls, and recommendations for improvements. Financial highlights Inflow of funds During the year under review, funds received from the IDA into the Designated Account amounted to US$937,756. Detailed in the supplementary information on page 26. 7

8 EXECUTIVE SUMMARY CONT D Expenditures Project expenditure incurred during the period were as follows: Expenditures Category US$ Coordination of the REDD+ Readiness Process and consultations 245,633 Contribution to the design of the national REDD+ strategy 132,738 Development of Reference Level or Reference Emission Level 78,819 Project Management 292,567 Total 749,757 Oversight/Governance Structure of the Project REDD+ in Liberia is coordinated and implemented through the RIU, which is hosted at the Forestry Development Authority (FDA). The RIU consists of both administrative and technical specialists headed by the National Coordinator. The National Coordinator handles the daily management of the project unit. The RIU is to provide leadership, managerial and administrative support to the implementing Agencies and Ministries. The Project Financial Management Unit (PFMU) at the Ministry of Finance and Development Planning handles the financial management function of the project. The PFMU has strong budgetary, accounting, financial reporting and internal control arrangements that are satisfactory to the World Bank. PFMU accounts for the use of the project funds using the cash basis of accounting. The unit has an integrated ERP accounting system called Sun Accounting System that provides adequate segregation of duties and accurate recording of all accounting transactions of the project. PFMU prepares quarterly interim financial report (IFR) that is submitted to the World Bank upon which subsequent withdrawal applications are based. Funds for project activities are disbursed directly into the Project designated account setup and managed by the PFMU. Banking and payment processing are centrally managed by the PFMU to ensure adequate control and financial monitoring. 8

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10 PARKER & CO., LLC Certified Public Accountants & Business Advisors 81 Sekou Toure Avenue P.O. Box 1921, Mamba Point Monrovia, Liberia INDEPENDENT AUDITOR S REPORT To the Members of the Project Implementation Unit of the Forestry Development Authority (FDA) Report on the Financial Statements We have audited the accompanying cash basis IPSAS financial statements of the Additional Readiness Preparation Activities project as of and for the Eighteen (18) months ended 31 December 2016 and Six (6) months period ended 30 June 2017, as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with cash basis of accounting as described in Note 1; this includes determining that the cash basis of accounting is an acceptable basis for preparation of the financial statements in the circumstances. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risk of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our unmodified opinion. 10

11 Opinion In our opinion, the cash-basis IPSAS financial statements referred to above present fairly in all material respects the receipts and payments for the period then ended in conformity with the basis of accounting described in Note 1. Basis of Accounting We draw attention to Note 1 of the financial statements, which describes the basis of accounting. The financial statements are prepared on the cash basis IPSAS, Financial Reporting Under the Cash Basis of Accounting. Our opinions are not modified with respect to this matter. Certified Public Accountants (Liberia) Date: November 9, 2017 Monrovia 11

12 STATEMENT OF RECEIPTS AND PAYMENTS Cumulative 30-Jun Dec Jun-2017 Note US$ US$ US$ RECEIPTS External assistance from multilateral 4 agency 209, , ,756 Total Receipts 209, , ,756 PAYMENTS Coordination of the REDD+ Readiness Process and consultations 51, , ,633 Contribution to the design of the national REDD+ strategy 82,188 50, ,738 Development of Reference Level or Reference Emission Level - 78,819 78,819 Project Management 139, , ,567 Total Payments 272, , ,757 (Decrease)/Increase in cash (63,106) 251, ,999 Fund Balance, January 1 251, Increase/(Decrease) in cash (63,106) 251, ,999 Available Fund balance 187, , ,999 Cash on hand brought forward Accumulated Fund Balance 187, , ,999 The notes on pages 14 to 19 form an integral part of these financial statements 12

13 STATEMENT OF FINANCIAL POSITION ASSETS EMPLOYED 30-Jun Dec-16 Note US$ US$ Current assets Cash and bank balances 2 187, ,105 FUND BALANCES Financed by: Accumulated fund 187, ,105 The notes on pages 14 to 19 form an integral part of these financial statements 13

14 NOTES TO THE FINANCIAL STATEMENTS NOTE 1. SUMMARY OF SIGNIFCANT ACCOUNTNG POLICIES Reporting Entity The Government of Liberia through the Forestry Development Authority (FDA) received an additional financing grant in the amount of US$5.0million from the Forest Carbon Partnership Facility (FCPF) in November 2014 for the Additional Readiness Preparation Activities. The Project objective is to carry out a consultative and quantitative analysis of different land use options for the development of the national REDD+ Strategy for Liberia, to be approved by the National Climate Change Steering Committee. The project consist of four main components, namely: Component 1: Support to Coordination of the REDD+ Readiness Process and Consultations Component 2: Contribute to the design of the national REDD+ strategy (including Design of Emission Reduction Program). Component 3: Develop a Reference Level or Reference Emissions Level. Component 4: Project management Basis of Preparation The financial statements have been prepared in accordance with Cash Basis IPSAS financial reporting under the cash basis of accounting as adopted by the PFMU and GoL. The accounting policies have been applied consistently throughout the period. Reporting Currency These financial statements are expressed in United States dollars. Transactions denominated in other currencies other than the United States dollars are translated into United States dollars based on the rate of exchange prevailing on the date of the transaction. Foreign Currency Exchange Cash receipts and payments arising from transactions in a foreign currency are not reported in the Statement of Receipts and Payments. Payments denominated in foreign currencies measured in terms of historical cost are retranslated to the functional currency at the exchange rate on the transaction date and factored in determining gain or loss. Foreign currency gain or loss is the difference between costs in the functional currency at the measurement date and the cost in foreign currency translated at the exchange rate on the transaction date. Gain or loss are reported in the notes to the financial statements. There were no payments or cash balances held in foreign currencies during the reporting period. 14

15 NOTES TO THE FINANCIAL STATEMENTS CONT D NOTE 2. CASH IN BANK AND ON HAND Cash in bank and on hand represents the Project designated account balance and petty cash at the end of the period. The organization maintains its designated account with Guaranty Trust Bank. Funds within the designated account are used to manage operational cost and pay salaries and allowances to project personnel. Minor expenses are made through petty cash. The status of cash in bank and on-hand as at 30 June 2017 and 31 December 2016 were as follow: 30-Jun-2017 US$ 31-Dec-2016 US$ Cash in Bank (Designated Account) 183, ,105 Petty Cash 4,000 4,000 Total 187, ,105 NOTE 3. CAPITAL ASSETS Capital assets are recorded as expenditures when acquired, without regard to their useful economic life. No depreciation charge is expensed or accumulated over the remaining useful life of these assets. This practice is consistent with the cash basis of accounting adopted by the Readiness Preparation Activities Project. However, an asset register is maintained for internal control and other administrative purposes. (Refer to the annex for detailed schedule of assets). NOTE 4: EXTERNAL ASSISTANCE The primary source of income for the REDD project consists of grant funds received from the Forest Carbon Partnership Facility (FCPF) through the International Bank for Reconstruction and Development (World Bank) acting as Trustee. The total funds received from the FCPF/IDA for the twenty-four (24) period ended June 30, 2017 amounted to US$937,756. (Refer to annex for detail information on the withdrawal application). Non-Compliance with significant terms and conditions There have been no instances of non-compliance with terms and conditions, which resulted in rescheduling, or cancellation of external assistance grants. 15

16 NOTES TO THE FINANCIAL STATEMENTS CONT D NOTE 4: EXTERNAL ASSISTANCE CONT D Undrawn External Assistance Undrawn external assistance grants at reporting date are amounts specified in a binding agreement with the Forest Carbon Partnership Facility and the International Bank for Reconstruction and Development (World Bank) and the Government of Liberia for funding of the Additional REDD+ project currently under development. Undrawn external assistance will be disbursed where conditions have been satisfied, and their ongoing satisfaction is highly likely, and the project is anticipated to continue to completion. Undrawn external assistance at the reporting date was US$4,062,244. Schedule of Undrawn External Assistance US$ US$ Loan/Grant Amount Committed to the project 4,272,015 5,000,00 Withdrawal assistance disbursed to the project during the period (209,771 (727,985) Undrawn external assistance 4,062,244 4,272,015 The significant terms and conditions that determine or affect access to the amount of undrawn assistance relate of the achievement of the following objectives and project components: Carried out consultative and quantitative analysis of the different land use options for development of the national REDD+ Strategy approved by the National Climate Change Steering Committee and the achievement of the project components. Support to the coordination of the REDD+ Readiness process and consultations and strengthen national feedback and grievance redress mechanisms. Contribute to the design of the national REDD+ strategy Develop a reference level or scenario (including forest cover mapping and forest in priority areas) Project management 16

17 NOTES TO THE FINANCIAL STATEMENTS CONT D NOTE 5: RESTRICTED ASSETS Restricted assets comprise all assets owned by the project in accordance with the grant agreement with the Forest Carbon Partnership Facility (FCPF) and the International Bank for the Reconstruction and Development (World Bank). NOTE 6: COMMITMENTS During the reporting period, FDA REDD+ entered into contracts, which are scheduled for completion in subsequent financial reporting periods. As at 30, June 2017, the outstanding commitments were as follows: 17

18 NOTES TO THE FINANCIAL STATEMENTS CONT D NOTE 6: COMMITMENTS CONT D SCHEDULE OF COMMITMENTS No. Contract Description Initial Contract Amount Contract End Date State of completion Previous Payment Current payment Payment to Date Amount Outstanding Commitments Amount as 30 June Project Coordinator 437, Dec-18 Ongoing 202,160 89, , ,594 2 Strategic Environment & Social Assessment National Coordinator 138, Feb-17 Completed 103,200 35, ,200-3 Procurement Specialist 194, Nov-17 Ongoing 113,200 53, ,750 27,450 4 Finance Officer 75, Nov-17 Ongoing 35,415 26,180 61,595 13,420 5 REDD+ Strategy 477, May-15 Completed 414,742 62, ,030-6 PIM Consultant 34, Dec-16 Completed 11,625 23,250 34,875-7 REDD+ Policy Consultant 41, Feb-17 Completed 30,800 11,050 41,850-8 National Feedback & Grievance 158, Nov-17 Ongoing - 47,680 47, ,254 9 Communications/ Stakeholder Engagement Specialist 33, Nov-17 Ongoing - 16,520 16,520 17, Procurement Officer 19, Jan-18 Ongoing - 6,080 6,080 13, Nat'l Readiness Management Arrangement - Vehicles repair 74, May-17 Completed 74,800-74,800 - TOTAL 1,684, , ,077 1,357, ,918 18

19 NOTES TO THE FINANCIAL STATEMENTS CONT D NOTE 7: AUTHORIZATION DATE The financial statements were authorized for publication on November 9, 2017 by Honorable Darlington Tuagben, Managing Director, FDA and on November 9, 2017 by Dr. Christopher Sokpor, Unit Manager, PFMU. 19

20 PARKER & CO., LLC Certified Public Accountants & Business Advisors 81 Sekou Toure Avenue P.O. Box 1921, Mamba Point Monrovia, Liberia INDEPENDENT AUDITOR S REPORT ON THE DESIGNATED ACCOUNT To the Members of the Project Implementation Unit of the Forestry Development Authority (FDA) We have audited the financial statements of the Additional Readiness Preparation Activities project as of and for the eighteen (18) months period ended 31 December 2016 and six (6) months period ended 30 June 2017 and have issued our report thereon dated 9 November 2017, which contained an unmodified opinion on those financial statements. Our audit was performed for the purpose of forming an opinion on the financial statements as a whole. The designated account reconciliation between amount received from the Bank and amount disbursed by the project is presented for the purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management, was derived from, and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with International Standards of Auditing. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. Certified Public Accountants (Liberia) Date: November 9, 2017 Monrovia 20

21 STATEMENT OF DESIGNATED ACCOUNT RECONCILIATION BETWEEN AMOUNT RECEIVED FROM THE BANK AND AMOUNT DISBURSED BY THE PROJECT METHOD OF DISBURSEMENT DESIGNATED ACCOUNT (203/310282/2/1/0) FOR THE EIGHTEEN (18) MONTHS PERIOD ENDED 31 DECEMBER 2016 AND SIX (6) MONTHS PERIOD ENDED 30 JUNE 2017 Received from the bank: US$ Balance in the designated account, July 1 251,105 - Funds received from IDA during the period 209, ,985 Total 460, ,985 Disbursement by the project : Disbursements from G. T. Bank during the period 272, ,880 Cash on hand 4,000 4,000 Balance in the designated account at period end 183, ,105 Total 460, ,985 21

22 PARKER & CO., LLC Certified Public Accountants & Business Advisors 81 Sekou Toure Avenue P.O. Box 1921, Mamba Point Monrovia, Liberia INDEPENDENT AUDITOR S REPORT ON THE STATEMENT OF EXPENDITURES To the Members of the Project Implementation Unit of the Forestry Development Authority (FDA) We have audited the financial statements of the Additional Readiness Preparation Activities project as of and for the eighteen (18) months period ended 31 December 2016 and six(6) months period ended 30 June 2017, and have issued our report thereon dated 9 November 2017, which contained an unmodified opinion on those financial statements. Our audit was performed for the purpose of forming an opinion on the financial statements as a whole. The statement of expenditures is presented for the purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management, was derived from, and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with International Standards of Auditing. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. Certified Public Accountants (Liberia) Date: November 9, 2017 Monrovia 22

23 STATEMENT OF EXPENDITURES Cumulative Cumulative 30-Jun Dec Jun-17 US$ US$ Coordination of the REDD+ Readiness Process and Consultations Vehicles - 74,800 74,800 National Feedback & Grievance Consultant - 47,680 47,680 Air Fares, Vehicle Hire, Etc. 4,904 29,212 34,116 DSA, Hotel & Accommodation 27,348 37,614 64,962 Communication & Stakeholder Engagement Specialist 13,720 2,800 16,520 Refreshment 4,721 2,054 6,775 Training , , ,633 Contribution to the design of the National REDD+ Strategy PIM Consultant - 23,250 23,250 Development of a National REDD+ Strategy 62,288-62,288 Policy Coordinator 8,250 2,800 11,050 Strategic Environment & Social Assessment National Coordinator 7,000 24,500 31,500 Forestry Specialist 4,650-4,650 82,188 50, ,738 Development of Reference Level or Reference Emissions Level Development of Reference Scenario for REDD+ - 78,819 78,819-78,819 78,819 Project Management National REDD+ Project Coordinator 36,398 53,081 89,479 Procurement specialist 22,050 31,500 53,550 Project Accountant 10,780 15,400 26,180 Strategic Environment & Social Assessment National Coordinator - 3,500 3,500 Procurement officer 6,080-6,080 Office equipment - 14,630 14,630 Fuel 11,373 7,259 18,632 Vehicle Repair & Maintenance 11,252 4,720 15,972 DSA, Hotel & Accommodation 9,204 8,611 17,815 Communication (Tel, Internet) 8, ,688 Office supplies 5,293 3,528 8,821 Bank charges 2,196 5,591 7,787 Production & Binding 5,500-5,500 23

24 STATEMENT OF EXPENDITURES CONT D Cumulative Cumulative 30-Jun Dec Jun-17 US$ US$ Project Management Cont d Advertising & Publicity 2,750 3,420 6,170 Stationery & Printing 2, ,675 Operating Cost 1,627 3,021 4,648 Office Materials 1,278 1,046 2,324 Utilities (Water, Electric, etc.) 2,831 1,010 3,841 Reversal to nullify on pvs - (3,725) (3,725) 139, , ,567 Total Disbursement 272, , ,757 24

25 SUPPLEMENTARY INFORMATION 25

26 DETAILED LISTING OF WITHDRAWAL APPLICATIONS INCLUDING REFERENCE NUMBERS AND AMOUNTS INVOLVED Application Date Reference Mode of Disbursement Fund Source Amount US$ 23-Feb-16 MFDP/FCPF/001 Reimbursement IDA Grant 300, Jul-16 MFDP/FCPF/003 Reimbursement IDA Grant 86, Sep-16 MFDP/FCPF/004 Reimbursement IDA Grant 58, Dec-16 MFDP/FCPF/005 Reimbursement IDA Grant 54, Dec-16 MFDP/FCPF/006 Reimbursement IDA Grant 227,985 7-Feb-17 MFDP/FCPF/007 Reimbursement IDA Grant 128, Apr-17 MFDP/FCPF/008 Reimbursement IDA Grant 81,315 Total 937,756 26

27 SCHEDULE OF FIXED ASSETS Date of Receipt Asset Description Asset Value/ Cost Identification Number Status 24-Jun-16 Toyota Hilux Double Cabin 31,650 FDA/FCPF-AF/MV-02 Good 24-Jun-16 Toyota Land Cruiser 43,150 FDA/FCPF-AF/MV-01 Good 7-Dec-16 Laptop 1,575 FDA/FCPF-AF/OE-001/001 Good 7-Dec-16 Laptop 1,575 FDA/FCPF-AF/OE-001/004 Good 7-Dec-16 Laptop 1,575 FDA/FCPF-AF/OE-001/002 Good 7-Dec-16 Laptop 1,575 FDA/FCPF-AF/OE-001/003 Good 7-Dec-16 Digital Camera - Nikon Coolpix P90C 949 FDA/FCPF-AF/OE-014/002 Good 7-Dec-16 Digital Camera - Nikon Coolpix P90C 949 FDA/FCPF-AF/OE-014/001 Good 7-Dec-16 Digital Camera - Nikon Coolpix P90C 949 FDA/FCPF-AF/OE-014/003 Good 7-Dec-16 Mini Projector - Pico Mobile/ Pocket 449 FDA/FCPF-AF/OE-007/001 Good 7-Dec-16 Paper Shredder 325 FDA/FCPF-AF/OE-018/001 Good 7-Dec-16 Comb binding machine - Deli 179 FDA/FCPF-AF/OE-012/001 Good 7-Dec-16 Paper Cutter - Deli 32 FDA/FCPF-AF/OE-019/001 Good 12-Dec-16 Desktop Computer - 22' LCD Display 849 FDA/FCPF-AF/OE-002/001 Good 12-Dec Dec-16 Laptop Computer - 15" Display, 500GB Hard Drive 7200RPM- DELL Inspiron 15R 875 FDA/FCPF-AF/OE-001/005 Good Laptop Computer - 15" Display, 500GB Hard Drive 7200RPM- DELL Inspiron 15R 875 FDA/FCPF-AF/OE-001/006 Good 7-Dec-16 Laptop Computer " Display, 500GB SSHD 5400RPM - Apple MacBook Pro 1,899 FDA/FCPF-AF/OE-001/007 Good Total 89,430 27

28 MANAGEMENT LETTER To the Members of the Project Implementation Unit of the Forestry Development Authority (FDA) In planning and performing our audit of the financial statements of the Additional Readiness Preparation Activities project as of and for the eighteen (18) months period ended 31 December 2016 and six (6) months period ended 30 June 2017 in accordance with International Standards on Auditing, we considered the Project internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Project s internal control. Accordingly, we do not express an opinion on the effectiveness of Additional Readiness Preparation Activities Project internal control. However, during our audit we became aware of several matters that are opportunities for strengthening internal controls and operating efficiency. We will review the status of these comments during our next audit engagement. We have already discussed many of these comments and suggestions with the PFMU management team, and we will be pleased to discuss them in further detail at your convenience, to perform any additional study of these matters, or to assist you in implementing the recommendations. Certified Public Accountants (Liberia) Date: November 9,

29 INTERNAL CONTROL FINDINGS AND RECOMMENDATIONS Finding n : 1 Control Issue: Title: No fuel utilization report Insufficient supporting document Basis i.e. article reference: Section of the Financial Procedures Manual of the Project Financial Management Unit states: Monthly, the Stores Officer shall prepare stock reports (in this case, fuel utilization report) which quarterly shall form part of the Interim Financial Report. Description of the finding: We noted that a significant portion of expenditure was incurred for the provision of vehicle fuel. However, we found that even though FDA, REDD+ FCPF III had fuel usage report logs, they were not being used. The purpose of a fuel usage report is immensely important to the Project Implementation Unit of the Forestry Development Authority in systematically maintaining daily or hourly records of the way fuel are being distributed and utilized. The transactions for which there were no fuel utilization reports are detailed below: Date Reference No. Description Payee Amount (USD) /015 Pmt for fuel: Super Petrol Super Petroleum 1, /0110 Fuel pmt: Super Petroleum Super Petroleum 1, /0214 Super Petroleum Pmt Super Petroleum 1, TOTAL 4, We therefore consider a total amount of US$ 4, to be ineligible. Amount US$: 4, Cause: No explanation was provided for this lapse in control. Effect: Key requirements in ensuring an accurate and complete set of financial files are effective financial control policies and procedures. Without a fuel usage report or some other evidence of fuel utilization, the implementing line Ministry cannot demonstrate that bulk suppliers of fuel are relevant to the project, to claim the incurred expenditure. This Fuel usage report logs would be used as additional evidence that the individuals and vehicles signing for fuel used these resources appropriately for the project activities. 29

30 INTERNAL CONTROL FINDINGS AND RECOMMENDATIONS CONT D Recommendation In order to ensure adequate control and accurate reporting of funds disbursed, and to comply with the terms of grant agreement, the Project Financial Management Unit at the Ministry of Finance should ensure that adequate supporting documents are maintained to support all costs declared in the Financial Reports. As an effective internal controls over the use of fuel distributed for project activities, we recommend that a fuel utilization report must be provided as evidence that the fuel distributed were used for the only benefit of the project. Comments from the Entity: FDA already has in place basic controls regarding fuel distribution and utilization; the quantity of fuel procured and the beneficiaries using the fuel signed for as evidence of receipt of the fuel. Secondly, management received report from all field visits (assessment) that were carried out by the project staff receiving the fuel. However, base on the advice from PFMU the project is considering resorting to the use of Total Tom to prevent such issue from occurring. 30

31 PERSONS CONTACTED OR INVOLVED IN THE AUDIT The Auditor Parker & Company, LLC Mr. P. Ernest Parker Horatius K. Porte Wakuna N. Gang Engagement Partner Parker & Co., LLC Lead Auditor - Parker & Co., LLC Auditor Parker & Co., LLC The Entity subject to audit Forestry Development Authority REDD+ Mr. Saah A. David, Jr. Mrs. Lorpu Sangai Mr. Ephraim Swen National REDD +Project Coordinator Project Accountant Procurement Officer Oversight/Governance Structure of the Project - PFMU Dr. Christopher Sokpor Mr. Leroy N. Fendor Mr. Subozu Kollie Ms. Yasmin Freeman Mr. Amos W. Fahn Unit Manager PFMU Deputy Director, PFMU Senior Assistant Internal Auditor - PFMU Assistant Internal Auditor - PFMU Senior Assistant Project Accountant - PFMU African Development Bank in Liberia Ms. Larisa Leshchenko Country Manager International Bank for Reconstruction and Development; International Development Association 31