Ministry of Education and Higher Education, Republic of Lebanon - Second Education Development Project - EDP II - Loan# 7966

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1 Public Disclosure Authorized Public Disclosure Authorized Ministry of Education and Higher Education, Republic of Lebanon - Second Education Development Project - EDP II - Loan# 7966 Report and financial information for the period from 1 January 2015 to 31 December 2015 Public Disclosure Authorized Public Disclosure Authorized

2 Second Education Development Project - EDP II- Loan# 7966 Report and financial information for the period from 1 January 2015 to 31 December 2015 Page Independent auditor's report 1-2 Statement of cash receipts and payments by category 3 Statement of cash payments classifying the uses of funds 4 Statement of movements in the Designated Account 5 Notes to the financial information 6-9 List of signed contracts Appendix A

3 -t pwc Independent auditor's report to the Ministry of Education and Higher Education, Republic of Lebanon Report on the financial information We have audited the accompanying financial information of the Second Education Development Project (EDP II) ("the Project") which comprises: (i) Statement of cash receipts and payments by category; (ii) Statement of cash payments classifying the uses of funds for the period from I January 2015 to 31 December 2015; (iii) Statement of movements in the Designated Account; and (iv) the notes to the financial information. The financial information has been prepared by the Education Sector Development Secretariat ("ESDS") in accordance with the accounting policies described in note 2 of the financial information, as approved by the World Bank, and as required by the terms of the Financial Operational Manual of Loan No. LE-7966, dated April The ESDS's responsibility for the financial information The ESDS is responsible for the preparation of this financial information in accordance with the accounting policies described in note 2 to the financial information. This includes determining that the basis of accounting set out in note 2 is an acceptable basis for the preparation of the statement in the circumstances, and for such internal control as the ESDS determines is necessary to enable the preparation of financial information that is free from material misstatement, whether due to fraud or error. Auditor's responsibility Our responsibility is to express an opinion on this financial information 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 whether the financial information is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial information. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial information, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of the financial information in order to design audit procedures that are appropriate in the circumstances. 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 information. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. PricewaterhouseCoopers, Saba House Bldg., Block B/C, Said Freiha Str., Hazmieh, Lebanon, MoF # P.O. Box , Beirut, Lebanon, Telephone +961 (5) , Facsimile +961 (5) , ww.12vc.com/iqliiddle-ast

4 2 Independent auditor's report (continued) to the Ministry of Education and Higher Education, Republic of Lebanon Opinion In our opinion, the financial information for the Project for the period from I January 2015 to 31 December 2015 presenting the sources and uses of funds, the expenditures by loan component and the movement in the Designated Account, is prepared, in all material respects, in accordance with the accounting policies described in note 2 to the financial information. Basis of accounting and restriction on distribution and use Without modifying our opinion, we draw attention to note 2 to the financial information, which describes the basis of accounting. The financial information is prepared to enable the ESDS to meet its reporting obligations to the World Bank under the terms of the Loan Agreement No. LE As a result, the financial information may not be suitable for another purpose. Our report is intended solely for the Ministry of Education and Higher Education, Republic of Lebanon and the World Bank and should not be distributed to or used by parties other than the Ministry of Education and Higher Education, Republic of Lebanon and the World Bank. Beirut, Lebanon 28 June

5 3 Statement of cash receipts and payments by category for the period from 1 January 2015 to 31 December 2015 Note USS Sources of funds IBRD loan funds 5 1,092,740 1,163,145 IBRD loan direct payments 5 2,072,110-3,164,850 1,163,145 Uses of funds by project component Early childhood education 4 2,424, ,235 Supporting improvements in quality of education 581,232 - Education sector policy development and management 4 433, ,031 3,439, ,266 Incremental operating costs Project management and operating costs 24,555 21,672 3,463, ,938 (Deficit) surplus (298,806) 290,207 The notes on pages 6 to 9 are an integral part of this financial information.

6 4 Statement of cash payments classified by component for the period from 1 January 2015 to 31 December 2015 Note USS Early childhood education Quantity and quality of KG Schools 4 2,424, ,235 Supporting improvements in quality of education Educational leadership for school-based development and improvement 5 581,232 Education sector policy development and management Institutional capacity development and efficiency 6 124, ,072 Sector development management, monitoring and evaluation 6 309, , , ,031 Incremental operating costs Project management and operating costs 24,555 21,672 Total expenditures by loan component and sub-components 3,463, ,938 The notes on pages 6 to 9 are an integral part of this financial information.

7 5 Statement of movements in the Designated Account for the period from 1 January 2015 to 31 December UsS Designated Account balance at beginning of period 413, ,750 Add: IBRD loan funds 1,092,740 1,163,145 IBRD direct payments 2,072,110-3,164,850 1,163,145 Less: Uses of funds (3,463,656) (872,938) Designated Account balance at end of period 115, ,957 The notes on pages 6 to 9 are an integral part of this financial information.

8 6 Notes to the financial information for the period from 1 January 2015 to 31 December Project background The Lebanese Republic has obtained from the International Bank for Reconstruction and Development "[BRD" of the World Bank a loan of 40 million to finance the implementation of the Second Education Development Project (EDP II). The objectives of the Project are to: (i) improve teaching quality and the learning environment in general education and in preschool in the Lebanese Republic; and (ii) increase governance and managerial capacity of the Ministry of Education and Higher Education (MEHE) and schools. The Education Sector Development Secretariat (ESDS) within the MEHE is responsible for overall coordination and implementation of the EDP II. 2 Principal accounting policies and basis of preparation The Education Sector Development Secretariat ("ESDS") prepares the financial information of the Education Development Project II (EDP II) ("the Project"). The Project's governing documents provide certain guidelines for governing its financial activities. To ensure observance of limitations and restrictions on the use of financial resources, the ESDS classifies the Project's uses of funds for accounting and reporting purposes under the following components: Component 1 - Early Childhood Education ( 15.7 nillion): The first component supports increasing the schools' readiness upon students' entry into primary education. This includes increasing infrastructure capacity, enhancing learning resource materials, initiating a program of professional development for preschool teachers, evaluating the implementation of early childhood education programs, and assisting the Ministry of Education and Higher Education to measure the preschool learning environment and students' readiness for first grade. Component 2 - Supporting Improvements in Quality of Education ( 7.6 million): The second component enhances school-based development through improving the quality of teaching and learning at the school level. It also enhances teacher professional development through establishing a national system of professional standards and other mechanisms including induction programs and trainings related to the teachers' professional development.

9 7 2 Principal accounting policies and basis of preparation (continued) Component 3 - Education sector policy development & management ( 16.7 million): The third component provides advisory services and technical assistance to the Ministry of Education and Higher Education to strengthen the education sector. Incremental operating costs: consists of necessary incremental expenditures related to the management and implementation of the Project. The Project's expenditures are reflected in the unaudited Interim Financial Reports (IFRs) presented to the World Bank office in Beirut on a quarterly basis. For the period from I January 2015 to 31 December 2015, total cash receipts received from the World Bank amounted to 1,092,740 (2014-1,163,145); disbursements made amounted to 3,463,656 ( ,938) and IBRD loan direct payments amounted to 2,072,110 ( nil). The significant accounting policies adopted by the ESDS in the preparation of the financial information are as follows: Basis of preparation The financial information has been prepared in accordance with the cash receipts and disbursements basis of accounting. Sources of Funds Funds received are recognised when cash is received. Use of Funds Uses of funds, expenses and other disbursements are recognised when cash is disbursed. Eligible expenditures under the Loan Agreement are used, accounted for and classified in accordance with the conditions of the Loan Agreement and applicable laws and regulations of the ESDS's financial activities.

10 8 3 Project expenditures by loan component Early childhood education (note 4) 2,424, ,235 Supporting improvements in quality of education (note 5) 581,232 - Education sector policy development and management (note 6) 433, ,031 Project management and operating costs 24,555 21,672 3,463, ,938 4 Early childhood education Quantity and quality of KG Schools Goods 2,072, ,235 Consultants' services 351,907-5 Supporting improvements in quality of education 2,424, , US Supporting improvements in quality of education Consultants' services 581,232-6 Education sector policy development and management Institutional capacity development and efficiency Goods 17,530 - Consultants' services 106, , , ,072 Sector development management, monitoring and evaluation Consultants' services 289, ,976 Training 19,060 58,918 Goods , , , , ,031

11 9 7 IBRD loan funds and direct payments received The below table lists the IBRD loan funds received in the Designated Account for the period from I January 2015 to 31 December 2015: USs Receipt dates 4 April , August , October ,256 Total IBRD loan funds 1,092,740 The below table lists the IBRD direct payments made by the World Bank for the project from I January 2015 to 31 December 2015: USS Receipt dates 6 March ,002 5 May , June , July ,703 Total direct payments 2,072,110 8 Movement on the Designated Account The table below shows the movement in the Designated Account for the period from I January 2015 to 31 December 2015: USS Debit Credit Balance At 1 January , January , February , , March ,089-85, April , , , May , , June , , July , , August , , , September ,032-70, October , , , November , , December , ,151 Designated Account at 31 December ,391,546 1,092, ,151

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Ministry of Education and Higher Education Republic of Lebanon - Second Education Development Project - EDP I - Loan# 7966

Public Disclosure Authorized Public Disclosure Authorized Ministry of Education and Higher Education Republic of Lebanon - Second Education Development Project - EDP I - Loan# 7966 Report and financial