I I I I SUSTAINABLE LAND MANAGEMENT PROJECT (SLMP) INDEPENDENT AUDITORS REPORT AND DESIGNATED ACCOUNT I 7 JULY 2016

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1 Public Disclosure Authorized Public Disclosure Authorized SUSTANABLE LAND MANAGEMENT PROJECT (SLMP) Public Disclosure Authorized Public Disclosure Authorized NDEPENDENT AUDTORS REPORT AND DESGNATED ACCOUNT 7 JULY 2016 T T TMS Plus?+onAhZ;Ft Yt.4-fl &FPWT (Vh.) Chartered Certified Accountants (UK)?+&+94T %&+( (h&'a) Authorized Auditors (Ethiopia) / Tel /Fax hh Mob / /57 Y.A P.O. Box tmsplus@ethionet.et W A l Addis Ababa-Ethiopia g

2 1 *T Chartered Certified Accountants (UK) and Authorised Auditors (Ethiopia) Tel / /52 Mob / / / / Fax / P.O.Box Addis Ababa - Ethiopia NDEPENDENT AUDTORS' REPORT ON THE ACCOUNTS OF THE MNSTRY OF AGRCULTURE AND NATURAL RESOURCES - SUSTANABLE LAND MANAGEMENT PROJECT (SLMP ) DA CREDT No ET, GEF GRANT No.TF 15868, LDCF GRANT No and MDTF GRANT No We have audited the accompanying Designated Account of Ministry of Agriculture and Natural Resources - Sustainable Land Management Project (SLMP ) DA Credit ET, GEF Grant TFl5868, LDCF Grant No and MDTF Grant No for the year ended 7 July Managements' Responsibility for the Designated Accounts The project's Management is responsible for the preparation and fair presentation of the designated account in accordance with nternational Financial Reporting Standards and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these designated account based on our audit. We conducted our audit in accordance with nternational Standards on Auditing and World Bank guide lines for designated accounts. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the designated account is free from material misstatement. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion n our opinion, the financial statements thereof present fairly, in all material respects, the financial position of the designated account of the Ministry of Agriculture and Natural resources - Sustainable Land Management Project (SLMP ) DA Credit ET, GEF Grant TF15868, LDCF Grant No and MDTF Grant No as at 07 July 2016 and the movements for the year then ended in accordance with nternational Financial Reporting Standards and are in a reement with the records maintained by the Project. U Chartered tsaddis Ababa Authorized Au 6 January 2017

3 MNSTRY OF AGRCULTURE AND NATURAL RESOURCES SUSTANABLE LAND MANAGEMENT PROJECT (SLMP ) DA LOAN No ET, GEF GRANT No. TF15868, LDCF GRANT No DESGNATED ACCOUNT STATEMENT FOR THE YEAR ENDED 7 JULY Account number Depository Bank National Bank of Ethiopia Address Addis Ababa, Ethiopia Related Credit DA credit ET, Multi Donor Trust Fund Grant number TF , Global Environment Facility Grant number TF and Least Developed Countries Trust Fund Grant number TF Currency USD Balance at 8 July ,179, Deposit to special account 25,633, Refund from travel ,813, Less: Transfer to Birr account and expenditures 28,302, Balance at 7 July , dAudi

4 SUSTANABLE LAND MANAGEMENT PROJECT (SLMP) NDEPENDENT AUDTORS REPORT AND FNANCAL STATEMENT 7 JULY 2016 U -WOM TM TMS Plus?+o0Ah1AT a %A-fl h'p-tw'* (ehb) Chartered Certified Accountants (UK)?'ft' o?&4,+(" (h*.&a') k.h ! Authorized Auditors (Ethiopia) Tel hi) Mob / /57 Y P.O. Box tmsplus@ethionet.et MA M AfA'1?Lk,? Addis Ababa-Ethiopia

5 T * uschartered Certified Accountants (UK) and Authorised Auditors (Ethiopia) Tel / /52 Mob / / / / Fax /60 - tmsplus@ethionet.et /tafessef@hotmail.com P.O.Box Addis Ababa - Ethiopia NDEPENDENT AUDTORS' REPORT ON THE ACCOUNTS OF THE MNSTRY OF AGRCULTURE AND NATURAL RESOURCES - SUSTANABLE LAND MANAGEMENT PROJECT (SLMP ) DA CREDT No ET, GEF GRANT No.TF 15868, LDCF GRANT No and MDTF GRANT No We have audited the accompanying financial statements of Ministry of Agriculture and Natural Resources - Sustainable Land Management Project (SLMP ) DA Credit ET, GEF Grant TF15868, LDCF Grant No and MDTF Grant No set out on pages 3 to 10, which have been prepared under the historical cost convention and in accordance with the accounting policies specified on page 6. Managements' Responsibility for the Financial Statements The project's Management is responsible for the preparation and fair presentation of these financial statements in accordance with nternational Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with nternational 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 financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. n 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 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 financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion n our opinion, the financial statements together with the notes forming part thereof present fairly, in all material respects the financial position of Ministry of Agriculture and Natural Resources - Sustainable Land Management Project (SLMP ) financed under DA Credit ET, GEF Grant TF15868, LDCF Grant No and MDTF Grant No as at 7 July 2016 and of its sources and u ear then ended in accordance with nternational Financial Reportd agreement with the records maintained by the project. Piu

6 1 2 n addition, with respect to nterim Financial Reports submitted during the year ended 7 July 2016, in our opinion. * the reports, together with the procedures and internal controls involved in their preparation, can be relied upon to support the relevant withdrawals; and Grant TF - nt No and MDTF Grant No % 'OL Accouflta * Expenditures are eligible for financing under DA Credit ET, GEF TMS Addis Ababa Cha ered Certi edits 6 January 2017 Authorized Auditors 1

7 .1 3 MNSTRY OF AGRCULTURE AND NATURAL RESOURCES SUSTANABLE LAND MANAGEMENT PROJECT (SLMP ) DA LOAN No ET, GEF GRANT No. TF15868, LDCF GRANT No BALANCE SHEET AS AT 7 JULY 2016 Currency: Ethiopian Birr CURRENT ASSETS Notes 2015 Receivables 3 77,644, Cash on hand and at bank 4 12,284, ,483 89,928, ,495 CURRENT LABLTES Creditors 5 2,236, NET CURRENT ASSETS 87,692, ,358 REPRESENTED BY: Fund balance 6 87,692, ,358 fj(qwgpyw -..d dt rs

8 MNSTRY OF AGRCULTURE AND NATURAL RESOURCES SUSTANABLE LAND MANAGEMENT PROJECT (SLMP ) DA LOAN No ET, GEF GRANT No. TF15868, LDCF GRANT No STATEMENT OF SOURCE AND USES OF FUNDS FOR THE YEAR ENDED 7 JULY Currency: Ethiopian Birr Notes SOURCE OF FUND 2015 DA Loan 286,956, GEF Grant 46,262, LDCF Grant 27,883, ,819,740 MDTF Grant 188,111, ,876, ,213, Government Grant 11,154, Gain on foreign exchange 1,773, ,761, ,141, ,576,770 PROGRAMME EXPENDTURE ntegrated water shed 7 393,526, ,016,872 Capacity building 8 90,816, Rural land administration 9 37,287, Project management 10 92,802, ,670,174 DEFCT OF NCOME OVER EXPENDTURE 614,433, ,426,893 (52,292,245.44) (57,850,123) 0,eflile Ace - e75.598t , 5960,7

9 5 MNSTRY OF AGRCULTURE AND NATURAL RESOURCES SUSTANABLE LAND MANAGEMENT PROJECT (SLMP ) DA LOAN No ET, GEF GRANT No. TF15868, LDCF GRANT No NOTES TO THE FNANCAL STATEMENTS FOR THE YEAR ENDED 7 JULY 2016 Currency: Ethiopian Birr 1. BACKGROUND The objective of the project is to reduce land degradation and improve land productivity in selected watersheds in targeted regions. The project consists of the following parts. Part A: ntegrated Watershed and Land Management Scaling up and adoption of appropriate sustainable land and water management technologies and practices by smallholder farmers and communities in selected watersheds and woredas. Part B: nstitutional Strengthening, Capacity Development and Knowledge Generation and Management Strengthening and enhancing capacity at the institutional level and building relevant skills and knowledge of key stakeholders including the Government agencies, research organizations and academia involved in the sustainable management of natural resources, as well as the private sector, community leaders and smallholder farmers. Part C: Rural Land Administration, Certification and Land use mprovement of tenure security of smallholder farmers through support of the ongoing program of the government providing land certificates to landholders, by enhancing rural land certification and administration and local level participatory land use planning at watersheds or kebeles. Part D: Project Management Provision of technical assistance and operating costs. M ' TMS"

10 6 MNSTRY OF AGRCULTURE AND NATURAL RESOURCES SUSTANABLE LAND MANAGEMENT PROJECT (SLMP ) DA LOAN No ET, GEF GRANT No. TF15868, LDCF GRANT No NOTES TO THE FNANCAL STATEMENTS FOR THE YEAR ENDED 7 JULY 2016 Currency: Ethiopian Birr 2. ACCOUNTNG POLCES The principal accounting policies adopted by the project, are as stated bellow:- 2.1 Basis of preparation These financial statements have been prepared in accordance with the Ethiopian Government's Manual of the Federal Accounting System based on a modified cash basis of accounting. 2.2 Basis of accounting Cash basis of accounting is used in matching the source and expenditure of fund with a double entry accounting system. 2.3 Currency These financial statements are presented in Birr. Transaction in foreign currency are translated in to Birr at the approximate rate of exchange prevailing at the date of transaction. Cash balances denominated in foreign currencies are translated in to Birr at the exchange rates ruling at the balance sheet date. The closing rate as at 07 July 2016 was Birr for a USD. 2.4 Fixed assets Fixed assets are treated as project expenditure at the time of purchase without applying the rule of depreciation. 2.5 ncome and expenditures Collection are recorded when actually received and expenditure are recognized when payments are effected. Acc or7zed Auditofs

11 7 MNSTRY OF AGRCULTURE AND NATURAL RESOURCES SUSTANABLE LAND MANAGEMENT PROJECT (SLMP ) DA LOAN No ET, GEF GRANT No. TF15868, LDCF GRANT No NOTES TO THE FNANCAL STATEMENTS FOR THE YEAR ENDED 7 JULY RECEVABLES Currency: Ethiopian Birr Project advance 65,101, Staff advance 47, ,016 Sundry debtors 12,492, Purchase advance 2, ,644, , CASH ON HAND AND AT BANK USD Account 11,151, ,446,431 BRR Account 732, ,106,052 Cash on hand 399, ,284, ,552, CREDTORS Sundry creditors 72, ,934 ncome tax payable 12, ,763 VAT Payable 205, Withholding tax payable 23, Pension payable 4, Provident fund 1, Payable to Ethiopian Gov't (note 5.1 below) 1,917, ,236, The balance repressentes expenditures paid from the Goverenement budget in Tigray Region. 6. FUND BALANCE Balance brought forward 139,984, ,481 Add: Excess of expenditure over income (52,292,245.44) (57, ) 87,692, TMS

12 MNSTRY OF AGRCULTURE AND NATURAL RESOURCES SUSTANABLE LAND MANAGEMENT PROJECT (SLMP ) DA LOAN No ET, GEF GRANT No. TF15868, LDCF GRANT No NOTES TO THE FNANCAL STATEMENTS FOR THE YEAR ENDED 7 JULY Currency: Ethiopian Birr 7. NTEGRATED WATER SHED 2015 Vehicles, plant and machinery 21,697, Fuel and lubricants 215, ,182 Other materials 1, Preview -224,802 Repair and maintenance Local training 230, Regional expenditure 358,046, Loading and unloading 4, Perdiem and transport 811, Fees and charges 47, Wage 12, Contracted proffessional service 12,459, ,526, ,016, CAPACTY BULDNG Local training 5,871, ,906 Foreign training 979, , Regional expenditure 73,918, ,291 Car rent 248, Knowledge generation and management 9,798, Preview Transportation Advertisement 1,350 Bank charge - 10,260 90,816, ,>TMS zeauditos,

13 9 MNSTRY OF AGRCULTURE AND NATURAL RESOURCES SUSTANABLE LAND MANAGEMENT PROJECT (SLMP ) DA LOAN No ET, GEF GRANT No. TF15868, LDCF GRANT No NOTES TO THE FNANCAL STATEMENTS FOR THE YEAR ENDED 07 JULY 2016 Currency: Ethiopian Birr 9. RURAL LAND ADMNSRTATON 2015 Vehicles, plant and machinery 543, Training 499, Wages to casual staff Fuel and lubricants 18, Travel and perdiem 109, Preview 251,587 Transportation 8,380 Repair and maintenance 760 Contracted professional service 1,162, ,031,916 Bank charge 300 Regional expenditure 34,954, ,287, ,141, PROJECT MANAGEMENT Salary 3,914, Wages to casual staff Uniform Office supplies 536, Printing 27, ,287 Fuel and lubricants 306, ,072 Preview 778,056 Transportation 188, ,941 Entertainment 22, Repair and maintenance 1,013, Contracted professional service 635, Advertisement 186, nsurance 164, ,627 Loading unloading 3,346 Fees and charges " 9TMS 990, ,1 1,014 Telephone k/* 67, Local training 4o 1,099, ) Foreign training r 13, Purchase of fixed assets 449, Regional expenditure 81,446, , Foreign institution contributions -08,579 Perdiem 739, _ 92,802,

14 MNSTRY OF AGRCULTURE AND NATURAL RESOURCES SUSTANABLE LAND MANAGEMENT PROJECT (SLMP ) DA LOAN No ET, GEF GRANT No. TF15868, LDCF GRANT No NOTES TO THE FNANCAL STATEMENTS FOR THE YEAR ENDED 07 JULY Withdrawal Application Equivalent in Number USD Birr Currency: Ethiopian Birr SLMP FR 07 12,146, ,503, SLMP 11 FR 09 13,487, ,584, ,633, ,088, Direct payment 286, ,125, Total 25,920, ,213, TMS tj%fed AdO

15 Annex - MNSTRY OF AGRCULTURE AND NATURAL RESOURCE -SUSTANABLE LAND MANAGEMENT PROJECT (SLMP) LST OF MATERAL PURCHASED FOR THE YEAR ENDED 07 JULY 2016 Sr Date of GRN No Type of Asset purchase Qty Unit price Cost of Asset Number 1 Toyota Tsusho Corporation 18/6/ , ,360, Wind Shield 27/6/ , Helmet 27/6/ , Mailbox 27/6/ , Dell 7020 Desk top CORS 10/5/ , , Stapler Medium 10/5/ , Puncher Medium 10/5/ Digital Photo Camera 10/5/ , , TV Stand 102*40*68*cm 9 MDF+Glass+Metal 10/5/ , , Hitach refrigerator R-T240EUNSLS 1 10, , Samsung TV CS 21K , , Hard Disk 142 3, , Sony Camera , , Camera Memory 8 GB Galaxy 56 EDGE Mobil Apparatus 23/11/ , , Sony LCD Projector DX /1/ , , Lenovo Er 431 Laptop 1 26, , Calculator DJ Workstation 7 37, , Leather Chair 1 10, , Managerial table 1 19, , Three Door Shelf 5 8, , Medium Chair W/ARM-YS402(Back) 15 2, , TA eodtrs

16 Annex- MNSTRY OF AGRCULTURE AND NATURAL RESOURCES SUSTANABLE LAND MANAGEMENT PROJECT (SLMP ) DA LOAN No ET, GEF GRANT No. TF15868, LDCF GRANT No LST OF VSTED MPLEMENTNG AGENCES AND WOREDAS FOR THE YEAR ENDED 7 JULY 2016 Contact Regions Name of woredas Name of Bureaus Person Tigray RPCU Regional SLM CU Gebreyohanes Endamokeni Ganta afeshum Aferhome Amhara RPCU Co-ordination Unit Tilahun Fagita Laygaint Gagusa shekuda Wallda Jabitekenan Mekit Gonjikolla Basokben Gozamen Yilemana Densa g Oromia Welemera Meseret Degem Abota Kuyu Ejere Kersa Aberga C*ff9d 4 Wenchi Malimu Jarso Ajara Sebeta e.auditors

17 1 1 Annex- MNSTRY OF AGRCULTURE AND NATURAL RESOURCES SUSTANABLE LAND MANAGEMENT PROJECT (SLMP ) DA LOAN No ET, GEF GRANT No. TF15868, LDCF GRANT No LST OF VSTED MPLEMENTNG AGENCES AND WOREDAS FOR THE YEAR ENDED 7 JULY 2016 SNNP RPCU Co-ordination Unit Ayder Angecha Soro Mierab Azernet Gumer Tenbaro Boloso Bombe Kindo didaye 0 N zeuudtr