"Public Institution EMP Management Durabil POP" Project ECAPDEV Grant no.: TF0A2544

Transcription

1 "Public Institution EMP Management Durabil POP" Project ECAPDEV Grant no.: TF0A2544 Public Disclosure Authorized Special purpose project financial statements for the period November 14, 2016 to March 15, 2018 and independent auditor's report Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Chisinau 2018

2 "Preparation of the Moldova Climate Adaptation and Forestry Project" Public Institution "EMP Management Durabil POP" ECAPDEV Grant No.TF0A2544 TABLE OF CONTENTS Page STATEMENT OF MANAGEMENT'S RESPONSIBILITIES FOR THE PREPARATION AND APPROVAL OF THE SPECIAL PURPOSE PROJECT FINANCIAL STATEMENTS 3 FOR THE PERIOD NOVEMBER 14,2016 TO MARCH 15, 2018 INDEPENDENT AUDITOR'S REPORT 4-6 SPECIAL PURPOSE PROJECT FINANCIAL STATEMENTS FOR THE PERIOD NOVEMBER 14, 2016 TO MARCH 15, 2018: Summary of funds received 7 Summary of expenditures 8 Summary of SOE's 9 Statement of designated accounts 10 Statement of financial position 11 Notes to the special purpose project financial statements 12-18

3 STATEMENT OF MANAGEMENT'S RESPONSIBILITIES FOR THE PREPARATION AND APPROVAL OF THE SPECIAL PURPOSE PROJECT FINANCIAL STATEMENTS FOR THE PERIOD NOVEMBER 14, 2016 TO MARCH 15, 2018 The following statement should be read in conjunction with the independent auditor's responsibilities stated in the independent auditor's report set out on pages 4-6. This statement is made with a view to distinguish the respective responsibilities of management and those of the independent auditors in relation to the special purpose project financial statements of "Preparation of the Moldova Climate Adaptation and Forestry Project", Grant no.: TF-0A2544 (the "Project"). Management is responsible for the preparation of the special purpose project financial statements that present fairly, in all material respects, cash proceeds and disbursements and uses of funds by project components of the Project for the period November 14, 2016 to March 15, 2018 in accordance with International Public Sector Accounting Standard "Financial Reporting Under the Cash Basis of Accounting" (the "IPSAS") issued by the International Public Accounting Standards Board of the International Federation of Accountants and the World Bank's Financial Management Sector Board's "Guidelines: Annual Financial Reporting and Auditing for World Bank Financed Activities" (the "WB Guidelines"). In preparing the special purpose project financial statements, management is responsible for: * selecting suitable accounting policies and applying them consistently; * making judgments and estimates that are reasonable and prudent; * stating whether IPSAS and WB Guidelines have been followed, subject to any material departures disclosed and explained in the special purpose project financial statements; and * preparing the special purpose project financial statements on a going concern basis, unless it is inappropriate to presume that the Project will continue its activity for the foreseeable future. Management is also responsible for: * designing, implementing and maintaining effective and sound system of internal control and for revealing risks in system of internal control; * maintaining proper accounting records that disclose, with reasonable accuracy at any time, the financial position of the Project, and which enable them to ensure that the special purpose project financial statements of the Project comply with IPSAS and WB Guidelines; * compliance with laws and regulations of the Republic of Moldova, accounting system of the Project and the requirements of the World Bank; * taking such steps as are reasonably available to them to safeguard the assets of the Project; and * detecting and preventing fraud and other irregularities. The special purpose project financial statements for the period November 14, 2016 to March 15, 2018 were approved and authorized for issue on June 15, 2018 by the Management of the Project. On behalf of the Management: entin Plesca Director Eugema Veverita Chief accountant June 15, 2018 June 15, 2018 Chisinau, Republic of Moldova Chisinau, Republic of Moldova 3

4 BAKER TILLY ICS Baker Tilly Klitou and Partners SRL 65 stefan cel mare si sfant blvd 5th floor, office 507 Md-2001, chisinau - moldova Tel: Fax: info@bakertilly,md Website: INDEPENDENT AUDITOR'S REPORT To the Management of the "Preparation of the Moldova Climate Adaptation and Forestry Project" Report on the Special Purpose Project Financial Statements Opinion [1] We have audited the special purpose project financial statements of "Preparation of the Moldova Climate Adaptation and Forestry Project", (the "Project") which comprise the Summary of funds received, Summary of expenditures, Summary of SOE's, Statement of designated accounts and Statement of financial position for the period November 14, 2016 to March 15, 2018, and a summary of significant accounting policies and other explanatory information (the "special purpose project financial statements"). [2] In our opinion, the accompanying special purpose project financial statements present fairly, in all material respects, cash proceeds and disbursements and uses of funds by project components of the Project for the period November 14,2016 to March 15, 2018 in accordance with International Public Sector Accounting Standard "Financial Reporting Under the Cash Basis of Accounting" (the "IPSAS") issued by the International Public Sector Accounting Standards Board of the International Federation of Accountants, and the World Bank's Financial Management Sector Board's "Guidelines: Annual Financial Reporting and Auditing for World Bank Financed Activities" (the "WB Guidelines"). Basis for opinion [3] We conducted our audit in accordance with International Standards on Auditing (ISAs). 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 Project in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the special purpose project financial statements, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of matter [4] Without qualifying our opinion, we draw attention to Note 2 to the special purpose project financial statements which describe the basis of accounting. These special purpose project financial statements were prepared for complying with the appropriate World Bank Guidelines and Grant agreement requirements, and therefore are not intended to be a complete presentation of the "Preparation of the Moldova Climate Adaptation and Forestry Project" (the "Project") operations. 4

5 Other matter [5] The special purpose project financial statements are prepared to assist the Project to comply with the requirements of the World Bank. As a result, the special purpose project financial statements may not be suitable for another purpose. Responsibilities of Management and Those Charged with Governance for the special purpose project financial statements [6] Management is responsible for the preparation and fair presentation of the special purpose project financial statements in accordance with International Public Sector Accounting Standard "Financial Reporting Under the Cash Basis of Accounting" (the "IPSAS") issued by the International Public Accounting Standards Board of the International Federation of Accountants, and the World Bank's Financial Management Sector Board's "Guidelines: Annual Financial Reporting and Auditing for World Bank Financed Activities" (the "WB Guidelines"), and for such internal control as management determines is necessary to enable the preparation of the special purpose project financial statements that are free from material misstatement, whether due to fraud or error. Auditor's responsibilities for the audit of the special purpose project financial statements [7] Our objectives are to obtain reasonable assurance about whether the special purpose project 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 ISAs 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 the special purpose project financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: * Identify and assess the risks of material misstatement of the special purpose project 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 intemal control. * 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 Project's intemal control. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. * Conclude on the appropriateness of management's 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 Project's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the special purpose project 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 Project to cease to continue as a going concern. * Evaluate the overall presentation, structure and content of the special purpose project financial statements, including the disclosures, and whether the special purpose project financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 5

6 [8] 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. [9] 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. ICS Baker Tilly Klitou and Partners SRL Chisinau, Moldova June 15, 2018 i 600 6

7 GRANT NO.: TF0A2544 SUMMARY OF FUNDS RECEIVED FOR THE PERIOD NOVEMBER 14, 2016 TO MARCH 15, 2018 Financing method / sources of financing: Note From November 14, Cumulative to date 2016 to March 15, 2018 Grant No. TF-0A2544 Payment to Designated account 5 265, ,015 Other sources , ,272 On behalf of the Management: Valentin Plesca / Eugenfa Veverita Director Chief accountant June 15, 2018 June 15, 2018 Chisinau, Republic of Moldo 9a Chisinau, Republic of Moldova The notes on pages form an integral part of the special purpose project financial statements. The Independent Auditor's Report is on pages

8 GRANT NO.; TFOA2544 SUMMARY OF EXPENDITURES FOR THE PERIOD NOVEMBER 14, 2016 TO MARCH 15, 2018 From November 14, 2016 Note o mr 15, 2018 Cumulative to date to March 15, 2018 Project expenses 1. Consultants' services 134, , Training 9,158 9, Operating costs 86,150 86,150 Total project expenses 6 229, ,396 On behalf of the Management: a tin Plesca Eugenia Veverita Director Chief accountant June 15, 2018 June 15, 2018 Chisinau, Republic of Moldova Chisinau, Republic of Moldova The notes on pages form an integral part of the special purpose project financial statements. The Independent Auditor's Report is on pages

9 GRANT NO.; TFOA2544 SUMMARY OF STATEMENTS OF EXPENDITURE (SOE'S) FOR THE PERIOD NOVEMBER 14, 2016 TO MARCH 15, 2018 NR For the period Amount SOE ,015 SOE ,866 SOE ,674 SOE , ,022 Adjustments (expenses after reporting period) (2,626) Total expenses for the reporting period 229,396 On behalf of the Management: Valentin Plesca Director Eugenia Veverita Chief accountant June 15, 2018 June 15, 2018 Chisinau, Republic of Moldova Chisinau, Republic of Moldova The notes on pages form an integral part of the special purpose project financial statements. The Independent Auditor's Report is on pages

10 GRANT NO.; TFOA2544 (in US Dolars) STATEMENT OF DESIGNATED ACCOUNTS FOR THE PERIOD NOVEMBER 14, 2016 TO MARCH 15, 2018 Bank Bank address Chisinau Territorial Treasury State Budget 7 Constantin Tdnase str., Chi*indu, Moldova Currency US Dollars MDL Bank account Description Note Total Balance as at November 14, Withdrawal application 265, ,015 Movements between accounts (sale of USD) (175,571) 175,571 Other services Total funds received 89, , ,272 The amount of eligible expenditures paid (54,241) (175,155) (229,396) Foreign exchange rate differences Balance as at March 15, , ,896 On behalf of the Management: alentin Plesca Director Eugenia Veverita Chief accountant June 15, 2018 June 15, 2018 Chisinau, Republid of 1dolVILL Chisinau, Republic of Moldova The notes on pages form an integral part of the special purpose project financial statements. The Independent Auditor's Report is on pages

11 GRANT NO.: TF0A2544 STATEMENT OF FINANCIAL POSITION AS AT MARCH 15, 2018 ASSETS Notes Cumulative to ASSETS 15-March-2018 dt date Cash and cash equivalents 4 35,896 35,896 Cumulative project expenditures 6 229, ,396 TOTAL ASSETS 265, ,292 FINANCING Grant received 5 265, ,015 Other sources Other income (exchange rate) TOTAL FINANCING 265, ,292 On behalf of the Management: Va entin Plesca i Euge Veverita Director Chief accountant June 15, 2018 June 15, 2018 Chisinau, Republic of Moldova Chisinau, Republic of Moldova The notes on pages form an integral part of the special purpose project financial statements. The Independent Auditor's Report is on pages

12 GRANT NO.: TF0A2544 NOTES TO THE SPECIAL PURPOSE PROJECT FINANCIAL STATEMENTS FOR THE PERIOD NOVEMBER 14, 2016 TO MARCH 15, GENERAL INFORMATION According to the Agreement between the GOVERNMENT of Republic Moldova and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the "Bank") dated September 9, 2016, the Bank provided a Grant No.TF-0A2544 in the amount of 350,000 US Dollars to the Republic of Moldova. Project Development Objective The Grant is provided for execution of "Preparation of Moldova Climate Adaptation and Forestry Project" (MCAFP). Project Name: Preparation of Moldova Climate Adaptation and Forestry Project Grant no.: TF-0A2544 FA signing Date: 9/9/2016 Closing Date: 15/03/2018 Grant Amount: USD 350,000 The Preparation of the Moldova Climate Adaptation and Forestry Project is implemented under the ECAPDEV Grant Agreement no. TF-0A2544 between the Moldovan Government and the International Bank for Reconstruction and Development/The International Development Association, signed on September 9, This project aims at developing of technical and financial packages for the Moldova Climate Adaptation and Forestry Project, preparing the relevant documents for environment and social safeguards and realization of communication and promotional activities. The project budget is 350,000 US dollars. The initially established implementation period was September 15, September 15, Based on ECAPDEV Grant, a team of the World Bank and local experts prepared the project proposal (Project Appraisal Document - PAD) for the Moldova Climate Adaptation Project (the final name of the new prepared project), which was presented to the World Bank in April The Moldova Climate Adaptation Project is aimed to support the Republic of Moldova in implementation of Climate Change Adaptation Strategy to 2020 (approved in 2014). Planned activities will contribute to achieve the overall objectives set out in the Framework Convention of the United Nations on climate change, to which Moldova is a part of, and with the objectives of Chapter 17 "Climate politics" of the EU Association Agreement. Under the project proposal were developed three financial agreements for the Preparation of the Moldova Climate Adaptation and Forestry Project with a total budget of 27.2 million US dollars: - Loan Agreement (X MD) between Republic of Moldova and the International Bank for Reconstruction and Development (IBRD) -US 12.4 million US dollars; - Financial Agreement (Credit N MD and Credit N MD) between Republic of Moldova and International Development Association (IDA) - 9,3 million, Special Drawing Rights (SDRs) - the equivalent of 12.8 million US dollars; and - Grant Agreement (GEF X2 TF0A5088) between Republic of Moldova and the International Bank for Reconstruction and Development - 2 million US dollars. 12

13 GRANT NO.: TF0A GENERAL INFORMATION (CONTINUED) In the period of April 27 - May 5, 2017 were held technical discussions and negotiations on these three agreements on the basis of Presidential Decree N2 161-VII from May 5-th, On June 9, 2017 agreements were approved by the Board of the Executive Directors of the World Bank and by the letter dated on June 15, 2017, addressed to the Ministry of Finance, the World Bank has proposed signing the agreements of project's financing. Currently agreements are at the stage of signing. Presidential Decree X VIII on approving the signing of agreements was issued on September 8, Preparing measures that remains until the entry into force of the agreements include the steps and approximate dates: (i) (ii) (iii) (iv) (v) (vi) Agreements signing; Ratification of agreements by the Parliament; Issuing legal opinion of the Ministry of Justice; World Bank notification by the Ministry of Foreign Affairs and European Integration; Approval of the Project Operational Manual - until the entry in force of the agreements; The entry in force of the agreements days from the date of sign. However, given that during implementation of the ECAPDEV Grant have made some savings, implementation agencies have initiated, in addition to the original program of the project, some preparatory work for the Moldova Climate Adaptation Project. Forest Management and Research Institute (FMRI) proposes to organize a series of seminars with local authorities in order to initiate and assist them in preparing proposals for activities in communities in afforestation and grazing. The Ministry of Interior Affairs has requested funding for a feasibility study to assess the capacities and needs at national level about the equipment and extinguishing forest fires for Service of Civil Protection and Emergency Situations (SCPES). Taking into account that approval, launch and development of these activities require about half the year and the initial deadline for implementation of Grant ECAPDEV was September 15, 2017, the Ministry of Agriculture, Regional Development and Environment, as a signatory of the Grant Agreement, proposed through the Letter dated 25 August 2017 to extend the deadline for implementation with six months of this grant, till March 15, 2018, for a better preparedness for implementation of the new project and taking full advantage of grant funds. On 19 October 2017 the World Bank approved the extension of the grant according to the request (the letter is attached). However, during the last six months of grant implementation, a significant progress in promoting the new project was not recorded. It is explained by the vision and position of the Ministry of Finance regarding the new Moldova Climate Adaptation Project, which, in general terms, is reduced to the necessity of project restructuring the by excluding component 1 and reviewing component 2 of the proposed project. This situation has been repeatedly discussed between the World Bank representatives and the representatives of the Ministry of Finance and the Ministry of Agriculture, Regional Development and Environment during the last 6 months, including two visits of the Minister of Finance, Mr. Octavian Armasu, at the World Bank Headquarter in Washington. By the letter dated May 14, 2018, the World Bank requested from the Ministry of Finance to submit suggestions regarding the project restructuring by the end of May, this year, within the limits of the project's development objective, offering the support of the Bank's experts in order to clarify this issue by the end of June

14 GRANT NO.: TF0A GENERAL INFORMATION (CONTINUED) The implementation deadline of the ECAPDEV Grant was March 15, 2018, but the issue of signing and approving the Moldova Climate Adaptation Project did not progress. The Ministry of Agriculture, Regional Development and Environment, as the signatory of the Grant Agreement, requested the extension of the deadline for its implementation for another six months (Appendix No. 01 / dated 2 March 2018). Taking into consideration the uncertainty regarding the promotion of the new project, the World Bank did not respond to this request, so the validity of the ECAPDEV Grant expired on 15 March For this reason, the World Bank did not approve between October 2017 and March 2018 the launch of work and expenditures upon the ECAPDEV Grant for the activities proposed by FMRI and SPCSE, which remain suspended. 14

15 GRANT NO.: TF0A PRESENTATION OF THE SPECIAL PURPOSE PROJECT FINANCIAL STATEMENTS Basis of preparation These special purpose project financial statements have been prepared in accordance with the International Public Sector Accounting Standard (the "IPSAS") "Financial Reporting under the Cash Basis of Accounting" issued by the Public Sector Committee of the International Federation of Accountants, and incorporate the following principal accounting policies, which have been consistently followed in all material respects and comply with the World Bank's Financial Management Sector Board's "Guidelines: Annual Financial Reporting and Auditing for World Bank Financed Activities" (the "WB Guidelines"). Under the cash basis approach income (or expenditure) is recognized when cash is received (or paid) irrespective of when goods or services are received or provided. The Project's approved budget disclosed by categories of expenses is presented below: Category Description Amount of the Grant Allocated (USD) COMPONENT 1: Consultant's services 244,200 COMPONENT 2: Training 10,000 COMPONENT 3: Operating costs 95,800 These special purpose project financial statements consist of: * Summary of funds received; * Summary of expenditures; * Summary of SOE's; * Statement of designated accounts; * Statement of financial position; * Significant accounting policies and other explanatory notes. Total: 350,000 The reporting currency of these special purpose project financial statements is US (the "USD"). Dollars 15

16 GRANT NO.: TF0A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash basis of accounting The special purpose project financial statements are prepared on a cash basis of accounting. The cash basis of accounting recognizes transactions and events only when cash (including cash equivalents) is received or paid by the Project. The special purpose project financial statements prepared under the cash basis provide readers with information about the sources of cash raised during the period, the purposes for which cash was used and the cash balances at the reporting date. The measurement focus in the special purpose project financial statements is balances of cash and changes therein. Foreign currency Project accounts are maintained and transactions are made in USD and Moldavian Leu (MDL). Transactions denominated in other currencies are translated into USD as follows: - Payments in MDL from designated accounts at the State Treasury account are translated into USD at the conversion rate determined by the rate of the National Bank of Moldova (NBM) on the date of transaction. - Direct payments in currencies other than USD are translated into the reporting currency at the conversion rate determined by the World Bank on the date of transaction. - As at reporting date, cash balances denominated in MDL are translated into USD at the exchange rate established by BNM at that date. The exchange rate established by BNM as at 15 March 2018 is USD 1 = MDL. The average exchange rate established by BNM for the period 14 November 2016 to 15 March 2018 is USD 1 = MDL. Cash and cash equivalents Cash and cash equivalents include cash on hand and on Treasury accounts, which can be converted to the corresponding amount of cash in the short term. Taxes Calculation and payment of personal income tax and social security contributions from income of local staff and consultants is made in accordance with the requirements and rates of the Tax Code of the Republic of Moldova. Project expenses The expenses are recorded in the period when they were actually paid. Sources of funds The funds were provided by the World Bank to the Project by replenishment of special account or through direct payment to the end supplier of goods and/or services. 16

17 GRANT NO.: TFOA CASH AND CASH EQUIVALENTS Cash and cash equivalents as at March 15, 2018 comprise: Underlying March 15, 2018 Account held at Crec Currency USD S Designated Account State Treasure of Moldova USD 35,203 Designated Account State Treasure of Moldova MDL 416 Other accounts State Treasure of Moldova MDL , APPLICATIONS TO DESIGNATED ACCOUNT From November 14, Sources of financing Application Date 2016 to March 15, 2018 USD Grant: TF A2544 (MD) Nov ,000 Grant: TF A2544 (MD) Mar ,015 Grant: TF A2544 (MD) Jun , , CUMULATIVE PROJECT EXPENDITURES From November 14, 2016 Cumulative to Type of the expense to March 15, 2018 date USD USD 1. Consultants' services 134, , Technical, Institutional, Financial and Economic Analysis of MCAFP 99,270 99, Environmental and Social Assessments 31,362 31, Audit 3,456 3, Trainings 9,158 9, Public awareness, stakeholder engagement and consultation 7,841 7, PIU trainings 1,317 1, Operating costs 86,150 86,150 Salary 48,993 48,993 Consulting services 17,003 17,003 Car expenses 12,752 12,752 Others 7,402 7, , ,396 17

18 GRANT NO.: TFOA CASH PROCEEDS AND DISBURSEMENTS From November 14, 2016 to March 15, 2018 Cumulative to date Opening balance - Funding sources Grant: TF-0A2544 (MD) 265, ,015 Other sources Total financing 265, ,272 Project expenses 1. Consultants' services 134, , Training 9,158 9, Operating costs 86,150 86,150 Total project expenses 229, ,396 Foreign currency gain / (loss) Closing balance 35,896 35, COMMITMENTS In the normal course of activities, the Project concludes agreements with suppliers of goods, works and services in accordance with the established budget and Project Procurement Plan. As at March 15, 2018 the Project had the following commitments: Date of Contract Contract Cost per Counterparty CCY Contract Contract amount due amount due Signing (contract CCY) (USD equivalent) ICS BAKER TILLY KLITOU AND EUR 5, May-17 2,975 3,683 PARTNERS SRL 3, LEGAL CASES There were no legal cases related to the Project. 10. EVENTS AFTER THE REPORTING DATE Subsequent to the date of the Financial Report (15 March 2018), there were paid 5 invoices in total amount of USD 2,626, representing operating costs. These payments are not included in these Special purpose project financial statements. 18