Project Financial Statements and Independent Auditor's Report. People in Need non-governmental organization

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Project Financial Statements and Independent Auditor's Report People in Need non-governmental organization Youth Inclusion and Social Accountability Project State and Peace Building Multi-donor Trust Fund Grant Agreement No. TF As of September 30, 2016 and for the period from May 28, 2014 to September 30, 2016 Public Disclosure Authorized

2 Contents Page... 1 Statement of cash receipts and payments... 4 Statement of uses of funds by Project activities... 5 Notes to the project financial statements... 6

3 Independent a report / Grant Thornton CJSC 8/1 Vagharshyan Str Yerevan, Armenia T F To the Supervisory Council of People in Need non-governmental organization, We have audited the accompanying project financial statements of the Youth Inclusion and Social Accountability Project (t (the as administrator of grant funds provided by various donors under the State and Pease Building Multi-donor Trust Fund, Grant Agreement No. TF016978, which comprise the statement of cash receipts and payments, the statement of uses of funds by Project activities as of September 30, 2016 and for the period from May 28, 2014 to September 30, 2016, and a summary of significant accounting policies and other explanatory information. Management of the People in Need non-governmental organization is responsible for the preparation and fair presentation of these project financial statements in accordance with the Financial Reporting Under the Cash Basis of Accounting issued by the International Public Sector Accounting Standards Board of the International Federation of Accountants, the World Bank guidelines, and the relevant points of the Grant Agreement No. TF and for such internal control as management determines is necessary to enable the preparation of these project financial statements that are free from material misstatement, whether due to fraud or error. Our responsibility is to express an opinion on these project financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the project financial statements are free from material misstatement. Audit, Tax, Advisory Member of Grant Thornton International Ltd

4 2 An audit involves performing procedures to obtain audit evidence about the amounts and judgment, including the assessment of the risks of material misstatement of the project financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers statements in order to design audit procedures that are appropriate in the circumstances, but not audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the project financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion. Basis for Qualified Opinion 1. When reporting use of grant proceeds in Statements of Expenditures (SOEs), payments in Georgian lari were converted into US dollars, using a daily exchange rate, determined as the average of commercial is calculation, the resulting exchange rates have normally exceeded the commercial exchange rate applied by the bank, when converting Grant proceeds received on Designated Account in US dollars into Georgian lari. As a result, amount of eligible expenditure in US dollars reported to the World Bank in SOEs (total for Designated Account and Reimbursement withdrawals) is less than the amount that would have been reported, had the correct exchange rates been applied. 2. For the purpose of making payments to suppliers and employees in Georgian lari, the Organization has maintained a segregated Georgian lari account, where Grant proceeds were deposited after conversion from US dollars received on Designated Account in US dollars. Reconciliation of Georgian lari account with the amount of eligible expenditures in Georgian lari, as reported in the SOE supporting schedules has identified a discrepancy of approximately Georgian lari 4, 740 (estimated equivalent of US dollars 2,258 at average exchange rate of 2.1 Georgian lari for 1 US dollar). Due to the nature of accounting records of the Organization and limitation in the processes of Project financial management and reporting (manual preparation of SOE, cumulative reporting of expenditures in SOE, ineffective Designated Account reconciliation procedures due to absence of linkage between SOEs and the Designated Account, as well as incorrect use of exchange rates), we were unable to determine the adjustments that would have been found necessary in respect of the statement of cash receipts and payments, the statement of uses of funds by Project activities, as well as the Designated Account statement presented in note 8 to the project financial statements. Audit, Tax, Advisory Member of Grant Thornton International Ltd

5 3 Qualified Opinion In our opinion, except for the possible effect of matters described in the Basis for Qualified Opinion paragraph, the project financial statements present fairly the cash balance of the Youth Inclusion and Social Accountability Project as of September 30, 2016 and the cash received and cash paid for the period from May 28, 2014 to September 30, 2016 in accordance with the International Public Financial Reporting Under the Cash Basis of Accounting issued by the International Public Sector Accounting Standards Board of the International Federation of Accountants, the World Bank guidelines and the relevant points of the Grant Agreement No. TF Emphasis of a Matter We draw attention to note 3 to the project financial statements, which states that the closing date of the Project was defined as May 31, Our opinion is not qualified in respect of this matter. Basis of Accounting Without modifying our opinion, we draw attention to note 2 to the project financial statements, which describes the basis of accounting. The project financial statements are prepared to assist the management of the People in Need non-governmental organization to meet the requirements of the financial reporting of the World Bank. As a result, the project financial statements may not be suitable for another purpose. November 29, 2016 Gagik Gyulbudaghyan Managing Partner Emil Vassilyan, FCCA Engagement Partner Audit, Tax, Advisory Member of Grant Thornton International Ltd

6 State and Peace Building Multi-donor Trust Fund. Grant Agreement No. TF As of September 30, 2016 and for the period from May 28, 2014 to September Statement of cash receipts and payments As of September 30, 2016 and for the period from May to September 30, 2016 In US dollars Actual Total Budgel Variance Cash balance as of May 28, 2014 Add: cash receipts Grant fund (note 4) 486,818 Total cash receipts 486,818 Less: cash payments 1. Goods, works, non-consulting services, consullants' services, training and operating costs under Part 1 (a), (b), (d) and Parts 2 and 3 or the Project 2. Goods, works, non-consulting services, consultants' services, training and operating costs under Part 1(c) of the Project (note 5) 309, , ,000 16,348 (3,166) Total cash payments 486, ,000 13,182 Cash balance as or September 30, 2016 The project financial statements were approved on November 29, 2016 by: Lauriane Gauny Co1111/ry Director Georgia 011d Art11e11ia Ana Badagadze Fina11cial ma11ager lnis statement is ro on pages 6 ro 12. ores to and forming part of the project financial srarcmenrs ser our

7 5 Statement of uses of funds by Project activities In US dollars Actual Total Budget Variance Part 1: Promoting Youth Involvement in Local Development 323, ,100 22,418 Part 2: Participation in Civic Engagement and Youth Inclusion 18,439 24,800 6,361 Part 3: Project Management 144, ,100 (15,597) Total cash payments 486, ,000 13,182 This statement is to be read in conjunction with the notes to and forming part of the project financial statements set out on pages 6 to 12.

8 6 Notes to the project financial statements 1 Activity Grant Agreement No. TF for the Youth Inclusion and Social Accountability Project (the May 2, 2014 between the People in Need non-governmental organization and the International Development Association (the World Bank ), as the administrator of grant funds provided by various donors under the State and Pease Building Multi-donor Trust Fund. The total amount of the Grant was agreed to be US dollars 500,000. Effective date of the Agreement is May 28, The objective of the Project is to increase the participation of youth in social accountability and civic engagement leading to greater youth inclusion. The Project consists of the following parts: Part 1: Promoting Youth Involvement in Local Development of a program of activities including: (a) (b) (c) (d) Setting up forum for beneficiaries to be involved in local development planning, including meetings and information communication technology (ICT) tools; Conducting a survey and an assessment including consultations with beneficiaries to identify, prioritize issues faced by them and develop an eligible action plan to address priorities; Providing grants to beneficiaries in the project area to implement the eligible actions plans; and Carrying out an evaluation of the implementation of the eligible action plans with a focus on social accountability mechanisms. Part 2: and Youth Inclusion in Civic Engagement through the carrying out of a baseline survey and an impact evaluation of Part 1 of the Project. Part 3: Project Management Financing the incremental costs incurred by the Recipient relating to Project implementation, coordination and supervision.

9 7 In accordance with the Grant Agreement No. TF dated May 2, 2014, the financing of the Project is implemented through the following categories: Category Amount of the Grant Allocated (In US dollars) Percentage of Expenditures to be financed (inclusive of Taxes) (1) Goods, works, non-consulting services, consultants' services, training and operating costs under Part 1(a), (b), (d) and Parts 2 and 3 of the Project 326, % (2) Goods, works, non-consulting services, consultants' services, training and operating costs under Part 1(c) of the Project 174, % 500,000 The Project is implemented by the Georgian branch of the People in Need non-governmental organization Organization headquartered in the Czech Republic. The branch of the Organization was registered in Georgia on March 22, Working through its offices in Kutaisi and Tbilisi, the Organization provides support to economically and socially vulnerable population of Imereti, Racha and Kakheti regions. Projects focus mainly on fostering rural and urban economic development, enhancing civil society and supporting integration of vulnerable groups into community life. The main donors of projects are the European Commission, the Government of the Czech Republic and World Bank. The legal address of the Organization is ublic. The addresses of offices in Georgia are: #7 Brosse Street, Kutaisi 4600, Georgia and 16 Kikodze Street, Tbilisi, Georgia. The number of the Organization staff involved in implementation of Project in Georgia office was 6. 2 Significant accounting policies 2.1 Statement of compliance The project financial statements are prepared in accordance with IPSAS Financial Reporting Under the Cash Basis of Accounting, the World Bank guidelines and the relevant points of the Grant Agreement No. TF Alternatively, the Organization presents the financial position of the Project as of the reporting date as an encouraged additional disclosure, as prescribed in the part 2 of IPSAS Financial Reporting Under the Cash Basis of Accounting (refer to note 10). 2.2 The project financial statements include: a) The statement of cash receipts and payments of the Project as of September 30, 2016 and for the period from May 28, 2014 to September 30, 2016, showing the World Bank and counterpart funds separately, and the statement of uses of funds by Project activities.

10 8 b) Accounting policies and explanatory notes (including additional accounting policies and disclosures), covering Summary of summary reports or SOEs used as the basis for the submission of withdrawal applications in the notes, as appropriate; Statement of designated account in the notes, as appropriate; Statement of financial position showing accumulated funds of the Project, bank balances, other assets of the Project, and liabilities, if any, as described in the note Functional and presentation currency The national currency of Georgia is Georgian lari. These project financial statements are presented in US dollars (presentation currency). In preparing the project financial statements, transactions in currencies other than US dollar are recorded at the average commercial rates of exchange defined by JSC TBC Bank prevailing on the dates of the transactions. 2.4 Expenses Expenses incurred in the framework of the Project are recognized on the cash basis of accounting, i.e. when the relevant cash is paid. The expenses are recognized in the statement of cash receipts and Additionally, the Project expenses are disclosed in the statement of uses of funds by Project activities. 2.5 Project financing Financing received in the framework of the Grant Agreement No. TF is recorded in the cash receipts at the time of receipt. In addition, the Project funds received are disclosed in the statement of financial position (refer to note 10). 2.6 The World Bank financing To finance eligible expenditures for the Grant Agreement No. TF016978, the World Bank disburses proceeds from the Grant account using one or more of the disbursement methods, which are stated below: a. Reimbursement The Bank may reimburse the borrower to finance eligible expenditures that the borrower has pre-financed from its own resources. b. Advance The Bank may advance loan proceeds into a designated account of the borrower to finance eligible expenditures as they are incurred and for which supporting documents will be provided at a later date. c. Direct payments expenditures.

11 9 d. Special commitment The Bank may pay amounts to a third party for eligible expenditures under Special commitments entered into, in writing, at the and on terms and conditions agreed between the Bank and the borrower. 3 Closing date of the project According to Letter Agreement dated May 2, 2014 the closing date of the Project was defined as February 29, On February 12, 2016, the closing date has been extended to May 31, Grant fund In US dollars As of September 30, 2016 and for the period from May 28, 2014 to September 30, 2016 Designated account advance 99,578 SOE procedures (note 6) 255,000 Reimbursement 231,818 Redemption of designated account advance (99,578) 486,818 Organization requests advance to and documentation of designated account accompanied by the statement of expenditure (SOE). 5 Project expenditure Category 2 Expenditure reported under Category 2 is related to Part 1(c) of the Project, which includes provision of grants to beneficiaries in the project area to implement the eligible actions plans. During Project implementation, negative variance of US dollars 3,166 has arisen between the amount of actual expenditures and budget figures as per the approved Category Schedule. The variance arose due to budget increases on certain grant contracts, as approved by the World Bank as part of the Procurement Plan. 6 SOE withdrawal schedule For the period from May 28, 2014 to September 30, 2016 In US dollars Application No. Category Goods, works, non-consulting services, consultants' services, training and operating costs under Part 1(a), (b), (d) and Parts 2 and 3 of the Project Goods, works, nonconsulting services, consultants' services, training and operating costs under Part 1(c) of the Project Total ,771-34, ,579-29, ,072-91, (70,662) 70, ,276 52,302 99,578 Total 132, , ,000

12 10 7 Uses of funds by Goods, works, non-consulting services, consultants' services, training and operating costs category descriptions The statement of cash receipts and payments discloses the expenses in two combined categories, as defined in the Grant Agreement No. TF However, for the convenience of certain users, the breakdown of uses of funds is disclosed in the table below. In US dollars As of September 30, 2016 and for the period from May 28, 2014 to September 30, ,333 2, ,563 29, , ,818 8 Designated account statement In US dollars Opening balance as of May 28, Add: Cumulative unexplained discrepancy - Grant replenishment during the period 255, , ,000 Less: Refund to the World Bank from the designated account during the period - Present outstanding amount advanced to the designated account (1) 255,000 Closing balance as of September 30, Add: Transfer to local currency account for eligible expenditures 249,393 Amount of eligible expenditures paid during the period 5,570 Service charges (if applicable) , ,000 Less: Interest earned (if credited into the designated account) - Total advance accounted for (2) 255,000 Discrepancy (1) (2) to be explained -

13 11 9 Reconciliation between the amounts received by the Organization and disbursed by the World Bank For the period from May 28, 2014 to September 30, 2016 In US dollars Category Goods, works, non-consulting services, consultants' services, training and operating costs under Part 1(a), (b), (d) and Parts 2 and 3 of the Project Goods, works, non-consulting services, consultants' services, training and operating costs under Part 1(c) of the Project Advance to designated account Appl. The Organization The World Bank Difference ,814 29, ,591 23, ,771 34, ,579 29, ,313 97, ,072 91, (70,662) (70,662) ,898 26, ,276 47, , , ,662 70, ,202 54, ,302 52, , ,166 - PINADV001 35,000 35, ,229 60, ,928 3, (99,578) (99,578) Total 486, ,818 -

14 12 10 Statement of financial position As described in note 2.1, the policy of the Organization is to prepare the project financial statements in accordance with IPSAS Financial Reporting Under the Cash Basis of Accounting. However, the Organization also has presented a separate statement of financial position as a disclosure encouraged under IPSAS Financial Reporting Under the Cash Basis of Accounting. US dollar Assets As of September 30, 2016 Current assets Balances in bank accounts Designated account - - Non-current assets Project expenditures 486, ,818 Total assets 486,818 Funds and liabilities Funds Grant fund 486, ,818 Total funds and liabilities 486,818

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