Public Disclosure Authorized Public Disclosure Authorized Ministry of Education and Higher Education, Republic of Lebanon Emergency Education System Stabilization Project - TF18789 Report and financial information for the year ended 31 December 2017 Public Disclosure Authorized Public Disclosure Authorized
Emergency Education System Stabilization Project - TF18789 Report and financial information for the year ended 31 December 2017 Page Independent auditor's report 1-3 Statement of cash receipts and payments by category 4 Statement of cash payments classifying the uses of funds 5 Statement of movements in the Designated Account 6 Notes to the financial information 7-11 List of signed contracts Appendix A Statement of cash receipts and payments by category for the period from inception date to 31 December 2017 Appendix B Statement of cash payments classified by component for the period from inception date to 31 December 2017 Appendix C
pwc Independent auditor's report to the Ministry of Education and Higher Education, Republic of Lebanon Report on the audit of the financial information Our opinion In our opinion, the financial information of the project 'Emergency Education System Stabilization Project TF18789' ("the Project") is prepared, in all material respects, in accordance with the accounting policies described in note 2 to the financial information. What we have audited The Project's financial information comprise: * the statement of cash receipts and payments by category for the year ended 31 December 2017; * the statement of cash payments classifying the uses of funds for the year then ended; * the statement of movements in the Designated Account for the year then ended; and " the notes to the financial information. Basis for opinion 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 information section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Ministry of Education and Higher Education in accordance with the International Ethics Standard Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) and the ethical requirements that are relevant to our audit of the financial information in Lebanon. We have fulfilled our other ethical responsibilities in accordance with the IESBA Code. Other information The Project Management Unit ("PMU") of the Ministry of Education and Higher Education is responsible for the other information. The other information comprises the list of signed contracts (appendix A), the statement of cash receipts and payments (appendix B) and the statement of cash payments classified by component (appendix C) for the period from inception date to 31 December 2017 (but does not include the financial information and our auditor's report thereon). Our opinion on the financial information does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial information, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial information or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. PricewaterhouseCoopers, Saba House Bldg., Block B/C, Said Freiha Str., Hazmieh, Lebanon, MoF # 95693 P.O. Box i-3y55, Beirut, Lebanon, Telephone +961 (5) 428600, Facsimile +961 (5) 951979,.wl c I ri rn
2 Independent auditor's report (continued) to the Ministry of Education and Higher Education, Republic of Lebanon Emphasis of matter - Basis of accounting and restriction on distribution and use We draw attention to note 2 to the financial information, which describes the basis of accounting. The financial information is prepared to enable the PMU to meet its reporting obligations to the World Bank under the terms of the Project Appraisal Document No. PADI 190. 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. Our opinion is not modified in respect to this matter. Responsibilities of management and those charged with governance for the financial information The PMU is responsible for the preparation of the financial information in accordance with the accounting policies described in note 2 to the financial information, and for such internal control as management determines is necessary to enable the preparation of financial information that is free from material misstatement, whether due to fraud or error. Those charged with governance are responsible for overseeing the Project's financial reporting process. Auditor's responsibilities for the audit of the financial information Our objectives are to obtain reasonable assurance about whether the financial information as a whole is 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 this financial information. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism through the audit. We also: * Identify and assess the risks of material misstatement of the financial information, 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 internal 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 internal control. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
3 Independent auditor's report (continued) to the Ministry of Education and Higher Education, Republic of Lebanon Auditor's responsibilities for the audit of the financial information (continued) 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. Beirut, Lebanon 19 July 2018 7023
q1 Ministry of Education and Higher Education, Republic of Lebanon 4 Statement of cash receipts and payments by category for the year ended 31 December 2017 Note 2017 uss Sources of funds IBRD grant funds 6 12,618,869 IBRD direct payments 6 1,426,996 14,045,865 Uses of funds by project component Support to schools 4 6,198,428 Learning environment quality 5 7,930,405 Project management and support 514,638 14,643,471 Deficit (597,606) The financial information on pages 4 to 11 were authorised by Ms. Sonia El Khoury on 16 July 2018 on behalf of the Project Management Unit ("PMU") of the Ministry of Education and Higher Education, Republic of Lebanon: Sonia El Khou y Program Mana er Program Management Unit - Reaching All Children with Education / R.A.C.E Ministry of Education and Higher Education The notes on pages 7 to II are an integral part of this financial information.
5 Statement of cash payments classified by component for the year ended 31 December 2017 Note 2017 US$ Support to schools Parent Council Fund 6,198,428 Learning environment quality School rehabilitation 1,830,163 Supplemental school financing 1,443,170 National textbook program for public primary schools 4,388,572 DOPS strengthening 268,500 7,930,405 Project management and support PMU staff 493,715 Other recurrent costs 20,923 514,638 Total expenditures by grant component and sub-components 14,643,471 The notes on pages 7 to 11 are an integral part of this financial information.
6 Statement of movements in the Designated Account for the year ended 31 December 2017 Notes 2017 US$ Designated Account balance at beginning of year 983,089 Add: World Bank funding 6 12,618,869 World Bank direct payments 6 1,426,996 14,045,865 Less: Uses of funds 3 (14,643,471) Designated Account balance at end of year 385,483 The notes on pages 7 to 11 are an integral part of this financial information.
7 Notes to the financial information for the year ended 31 December 2017 1 Project background The Lebanese Republic has obtained from the International Bank for Reconstruction and Development "IBRD" of the World Bank a grant of US$ 32 million to finance the implementation of the Emergency Education System Stabilization (EESSP) ("the Project"). The Project is designed to support the strategy of Reaching All Children with Education in Lebanon ("RACE") and to provide stability during a period of significant stress. The three-year project aims to address two central human development and education system challenges facing Lebanon: maintaining the ability of schools to provide education services and maintaining the quality of the learning environment. The Project plays an important role in stabilizing both the public system as well as providing a platform for other donors to channel funding through Government structures. Its development objectives are to: * support the operational needs of Lebanese public schools and to improve the learning environment in response to the continued influx of Syrian refugee children; and * to alleviate short-term financial pressure on the Ministry of Education and Higher Education ("MEHE") and invest in quality to provide benefits to the Lebanese public school system. The Project Management Unit ("PMU") within the Ministry of Education and Higher Education ("MEHE") is responsible for the overall coordination and implementation of the Project. For the year ended 31 December 2017, total cash receipts received from the World Bank amounted to US$ 12,618,869; disbursements made amounted to US$ 14,643,471 and IBRD direct payments amounted to US$ 1,426,996. 2 Principal accounting policies and basis of preparation The PMU prepares the financial information of the Emergency Education System Stabilization Project (EESSP) ("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 PMU classifies the Project's uses of funds for accounting and reporting purposes under the following components: Component I - Support to schools (USS 15.1 mnillion): The first component provides financing for school operating costs at the level of the school. Two funds currently exist to serve essential school needs, the "Parent Council Fund" and the "School Fund", each with its own account for each school. Each fund has its own eligible expenditures under MEHE regulations. The support under this program is in addition to planned and existing support by other partners.
8 2 Principal accounting policies and basis of preparation (continued) Component 2 - Learning environment quality (US$ 15.8 million): The second component improves the quality of the public school learning environment by financing the rehabilitation of school buildings, providing small emergency funds to a majority of public primary schools, providing students enrolled in public schools with national textbooks and workbooks and by financing the 'Direction d'orientation Pedagogique et Scolaire ("DOPS") to enable providing high quality services to schools, teachers and students. Component 3 - Project management and support (USS 1.1 million): The third component consists of necessary incremental expenditures related to the management and implementation of the Project. This includes key staff positions as well as operating costs for the PMU. 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. The significant accounting policies adopted by the PMU in the preparation of the financial information are as follows: Basis of preparation The financial information has been prepared in accordance with the cash basis of accounting as required by the Project Appraisal Document no. PADI 190. 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 are used, accounted for and classified in accordance with the conditions of the Project Appraisal Document PADI 190 and the PMU Financial Management Manual. Designated Account The designated account includes deposits held at call with the bank. The movement in the designated account represents the movement in the Project funds received and expenditures disbursed during the year.
9 3 Project expenditures by grant component 2017 UsS Support to school (note 4) 6,198,428 Learning environment quality (note 5) 7,930,405 Project management and support 514,638 4 Support to school 14,643,471 The Parent Council Fund is financed at the rate of US$60 per student and can be used for the activities included in Decree No. 2153/M, 2007. 2017 Us$ Parent Council Fund Works 6,198,428 5 Learning environment quality This Project component includes the following: Sub-component 2.1: School rehabilitation This sub-component improves the quality of the public school learning environment by financing the rehabilitation of school buildings that are in the greatest need of repair. Activities include improving structural security, access to water and sanitation as well as the physical appearance of the school. Sub-component 2.2: Supplemental schoolfinancing This sub-component provides small emergency funds to a majority of public primary schools used for purchasing items for classrooms and/or extracurricular activities that would enhance student and teacher motivation, foster pride in public schools and promote attendance and retention as well as minor physical improvements. Sub-component 2.3: National textbook program for public primay schools This sub-component provides national textbooks and workbooks to students (grades I through 9) enrolled in public schools for the school years 2015-2016 and 2016/2017 depending on final student numbers and negotiated textbook prices. Sub-component 2.4: DOPS strengthening This sub-component supports the continuing professional development for DOPS staff as well as resources and equipment for DOPS staff to efficiently and effectively carry out visits to schools, report and recommend support activities and provide for teacher centred workshops.
10 5 Learning environment quality (continued) 2017 USS Sub-component 2.1: School rehabilitation Works 1,656,664 Goods 162,699 Consultants' services 10,800 1,830,163 Sub-component 2.2: Supplemental schoolfinancing Works 1,443,170 Sub-component 2.3: National textbook prograni for public primary schools Works 4,388,572 Sub-component 2.4: DOPS strengthening Works 268,500 7,930,405 6 IBRD funds and direct payments received The below table lists the World Bank funds received in the Designated Account during the year ended 31 December 2017: Us$ Receipt dates 9 June 2017 5,854,065 7 September 2017 6,764,804 Total IBRD funds 12,618,869
11 6 IBRD funds and direct payments received (continued) The below table lists the direct payments received from the World Bank for the Project during the year ended 31 December 2017: Receipt dates 27 January 2017 211,715 28 March 2017 317,254 28 March 2017 45,132 28 March 2017 391,352 28 March 2017 84,605 17 August 2017 46,740 17 August 2017 57,015 17 August 2017 162,699 28 August 2017 110,484 Total direct payments 1,426,996 US$ 7 Movement in the Designated Account The table below shows the movement in the Designated Account during the year ended 31 December 2017: USS Debit Credit Balance At I January 2017 983,089 31 January 2017 511,760-471,329 28 February 2017 1,100-470,229 31 March 2017 48,200-422,029 30 April 2017 296,817-125,212 31 May 2017 31,806-93,406 30 June 2017 5,736,376 5,854,065 211,095 31 July 2017 24,100-186,995 31 August 2017 24,100-162,895 30 September 2017 4,456,836 6,764,804 2,470,863 31 October 2017 1,913,386-557,477 30 November 2017 115,821 441,656 31 December 2017 56,173-385,483 31 December 2017 13,216,475 12,618,869 385,483
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Appendix B Statement of cash receipts and payments by category for the period from inception date to 31 December 2017 M Sources of funds IBRD funding 25,832,127 IBRD direct payments 1,426,996 27,259,123 Uses of funds by project component Support to schools 12,510,500 Learning environment quality 13,566,783 Project management and support 796,357 26,873,640 Surplus 385,483
Appendix C Statement of cash payments classified by component for the period from inception date to 31 December 2017 US$ Support to schools Parent Council Fund 10,292,618 School Fund 2,217,882 12,510,500 Learning environment quality School rehabilitation 2,961,044 Supplemental school financing 2,002,622 National textbook program for public primary schools 8,334,617 DOPS strengthening 268,500 13,566,783 Project management and support PMU staff 750,364 Other recurrent costs 45,993 796,357 Total expenditures by grant component and sub-components 26,873,640