PRIVATE SECTOR DEVELOPMENT CAPACITY B IDF GRANT No. TF013657 ILDING PROJECT IMPLEMENTED BY INVESTMENT AND PUBLIC PRIVATE PARTNERSHMP DEPARTMENT OF MINISTRY OF ECONOMY OF THE KYRGY REPUBLIC SPECIAL PURPOSE FINANCIAL STATEENTS AND INDEPENDENT AUDITOWS REPO T For the period from 4 September 2013 to 21 Ocinber 2016 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized BISHKEK October 2016
PRIVATE SECTOR DEVELOPMENT CAPA CITY BUILDING PROJECT IDF GRANT NO. TF013657 TABLE OF CONTENTS STATEMENT OF MANAGEMENT'S RESPONSIBILITIES FOR THE PREPARATION AND PRESENTATION OF THE SPECIAL PURPOSE FINANCIAL S, ATEMENTS 3 INDEPENDENT AUDITOR'S REPORT SPECIAL PURPOSE FINANCIAL STATEMENTS For the period from 4 September 2013 to 21 October 2016: Statement of cash receipts and payments Statement of expenditures per components Page Notes to the special purpose financial statements 8-11 ANNEX 1. RECONCILIATION BETWEEN THE AMOUNTS SUB 1TTED BY THE IPPPD AND DISBURSED BY THE WORLD BANK 12 4-5 6 7 2
STATEMENT OF MANAGEMENT'S RESPONSIBILITIES FOR THE PREPARATION AND PRESENTATION OF THE SPECIAL PURPOSE FINANC1 L STATEMENTS FOR THE PERIOD FROM 4 SEPTEMBER 2013 TO 14 OCTOBER 1016 The Investment and Public Private Partnership Department of N nistry of Economy of the Kyrgyz Republic ("IPPPD") is responsible for the preparation of tl, special purpose financial statements of "Private Sector Development Capacity Building Pr ject" ("Project") financed by Letter Agreement and that prese t fairly the Project's cash receipts and payments, expenditures per components for the period from 4 September 2013 to 21 October 2016, in compliance with the International Public Se ctor Accounting Standard "Financial Reporting under the Cash Basis ofaccounting" (IPSA -Cash Basis) issued by the International Public Sector Accounting Standards Board (IPSA SB) of the International Federation of Accountants (IFAC) and the Financial Manageme t Manual for World Bank Financed Investment Operations (WB Guidelines). In preparing the special purpose financial statements, IPPPD is resp onsible for: * Properly selecting and applying accounting policies; * Presenting information, including accounting policies, i a manner that provides relevant, reliable, comparable and understandable informatioi * Providing additional required disclosures for the period frc i 4 September 2013 to 21 October 2016. IPPPD's Management is also responsible for: * Designing, implementing and maintaining an effective al sound system of internal controls, throughout the Project; * Maintaining adequate accounting records that are sufficie t to show and explain the Project's transactions, and which enable them to ensure that e special purpose financial statements of the Project comply with IPSAS - Cash Basis a d the WB Guidelines; a Taking such steps that are reasonably available to them to safeguard the assets of the Project and to affirm that funds received have been used i accordance with the Letter Agreement dated 18 March 2013, and World Bank related guidelines, with due attention to economy and efficiency, nd only for the purposes for which the financing was provided; and * Preventing and detecting fraud and other errors. The special purpose financial statements for the period from 4 & ptember 2013 to 21 October 2016 were authorized for issue on 24 October 2016 by the IPPPI. On behalf of the IPPPD: Kanat Abdrahmanov oairag Temiralieva Head of Poject onsultant Investment and Public Private o cial Management Partnership Department of Ministry of Economy 3
"SOS-AUDIT"L TD INDEPENDENT AUDITOR'S RE PORT On the special purpose financial statements o the Private Sector Development Capacity Building Project for the period from 4 September 2013 to 21 Octo er 2016 To the management of the Investment and Public Private Partne ship Department of Ministry of Economy of the Kyrgyz Republic ("IPPPD") We have audited the accompanying special purpose financial statements of the "Private Sector Development Capacity Building Project" (the Project) f nanced by Letter Agreement, which comprise the statement of ca0h receipts and payments, the statement of expenditures per components for the period frm 4 September 2013 to 21 October 2016, and a summary of significant accounting policies and other explanatory notes. Management's Responsibility for the Special Purpose Financia Statements The management of the IPPPD is responsible for the preparatio and fair presentation of these special purpose financial statements in accordance with International Public Sector Accounting Standard: Financial Reporting Under the Cash Iasis of Accounting, (IPSAS- Cash Basis) issued by the International Public Sector Accountimg Standards Board (IPSASB) of the International Federation of Accountants (IFAC), and Financial Management Manual for World Bank Financed Investment Operations, and Ior such internal control as management determines is necessary to enable the preparatio, of special purpose financial statements that are free from material misstatements, whether d.e to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these special pur ose financial statements based on our audit. We conducted our audit in accordance with Intert ational Standards on Auditing (ISAs) as issued by International Auditing and Assurance S dards Board (IAASB) of the IFAC. Those standards require that we comply with ethic requirements and plan and perform the audit to obtain reasonable assurance whether the special purpose financial statements are free from material misstatement. An audit involves performing procedures to obtain reason; le audit evidence about the amounts and disclosures in the special purpose financial statef ents. The procedures selected depend on the auditor's judgment including the assess ent of the risk of material misstatement of the special purpose financial statements, wlether due to fraud or error. In making those assessments, the auditor considers internal conirol relevant to the preparation and fair presentation of the special purpose financial statei ent in order to design audit procedures that are appropriate in the circumstances, but not fr the purpose of expressing an opinion on the effectiveness of the internal control. IpnnL np4wp PhqGbu UUwluh Uunghwg4wb UWlut R; p. bp1lw0 0037, U.Squiw ujw0 38/55; Rbn.' (+37410) 20 11 51; Iwpu' (+37410) 20 11 50; w sosaudit.am; tlinum' info@sosaudit.arn An Associate of the Crowe Horwath Business Alli nce 38/55 A.Tigranyan, 0037 Yerevan, RA; Tel.: (+37410) 20 11 51; Fax: (+37410) 20 11 50; www. saudit.am; E-mail: info@sosaudit.am 4
"UOU-MfIPI-khS" WIIQ "SOS-AUDIT" LTD An audit also includes the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evalu ing the overall presentation of the special purpose financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Opinion In our opinion, 1. the special purpose financial statements present fairly in.11 material respects the cash receipts and payments for the period from 4 September 1013 to 21 October 2016 in accordance with IPSAS-Cash Basis; 2. funds have been used in accordance with the conditions i f the Letter Agreement IDF Grant No. TF013657 dated 18 March 2013 between the International Bank for Reconstruction and Development (IBRD) and the Kyrgyt Republic, and World Bank related guidelines, with due attention to economy and ifficiency, and only for the purposes for which the financing was provided; 3. supporting documents, records and accounts have been maintained to support claims for reimbursement of expenditures incurred. Expenditure included in the withdrawal applications and reimbursed against are eligible for :imancing under the Letter Agreement IDF Grant No. TFO 13657; 4. The Designated account used has been maintained in accoddance with the provision of the Letter Agreement, and Word Bank related guidelines. Emphasis of matters Without qualifying our opinion, we draw your attention to Note 8 of these special purpose financial statements which disclosed that the Project was completed as at the reporting date. -"SOS-Audit" LLCIN01 24 October 2016 Manve -Gnel Khachatryan, FCCA Di Auditor * SOS-AUDIT" 0)00513166 PpnnL Inpqwp PbqGbu UuwGuh Uungwg4w6 UOq.d 99; p. bpulwg 0037, U.S iqpwgiwo 38/55; :bn.' (+37410) 20 11 51; atwpu' (+37410) 20 11 50; www. bsauditarn; LL-Lnum' info@sosaudit.am An Associate of the Crowe Horwath Business Allia ce 38/55 A.Tigranyan, 0037 Yerevan, RA; Tel.: (+37410) 20 11 51; Fax: (+37410) 20 11 50; www.so audit,am; E-mail: info@sosaudit.am 5
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Private Sector Development Capacity Building Project Notes to the special purpose financial statements For the period from 4 September 2013 to 21 October 2016 1. General information 1.1. The Project The Letter Agreement was concluded on 18 March 2013 between the Kyrgyz Republic and the International Bank for Reconstruction and Development ("IBRD", "WB"), according to which a grant from the WB's Institutional Development F nd ("IDF") in the amount not to exceed 320,000 Unites States dollars ("USD") was provided to the Ky rgyz Republic. The Letter Agreement became effective on 4 September 2013. The financing was provided for the implementation of "Private Sector D velopment Capacity Building Project" (the Project). The Closing date of is set 4 September 2016. The Grace Period for submitting withdrawal application for expenditur s incurred before the Closing date is four months following the Closing dates. 1.2. The Project objectives The objective of the project is to build the capacity of the Ministry of Economy of the Kyrgyz Republic ("MoE") by: (a) Strengthening coordination and communication amongst govcrnment agencies, the private sector and donors; (b) Designing a private sector development ("PSD") strategy and ac ion plan; and (c) Enhancing its policy implementation supervision capacity. The Project consists of the following parts: Part 1: Part II: Development of Staff Capabilities and Expertise in PSD S rategy and Train-the-Trainers Development of PSD Strategy and Implementation Mon toring 1.3. The Project Budget and Financing The Project is wholly financed by IDF Grant No. TFO13657, inclusive o taxes. IDF Grant Grant Expenditure No. Financing Category TF013657 Total (inclusive of taxes) USD USD equivalent % (1) Goods, Consultants' services including audit, Training and Operating Costs 320,000 320,000 100% Total 320,000 320,000 1.4. Project Implementation The Investment and Public Private Partnership Department of the Ministry of Economy of the Kyrgyz Republic ("IPPPD") is responsible for the Project implementation. 1he Department performed its duties mostly through International Aid Coordination Division (IACD) operating under it. The IPPPD address is: 106 Chui Avenue, Bishkek, Kyrgyz Republic. 8
Private Sector Development Capacity Building Project Notes to the special purpose financial statements For the period from 4 September 2013 to 21 October 2016 2. Summary of significant accounting policies 2.1. Preparation and presentation offinancial statements The special purpose financial statements are prepared in accordance with the International Public Sector Accounting Standard: Financial Reporting Under t e Cash Basis ofaccounting (IPSAS-Cash Basis), issued by the International Public Sector Accounting Standards Board (IPSASB) of the International Federation of Accountants (IFAC), and presented in accordance with Financial Management Manual for World ank Financed Investment Operations (March 2010): RM 3 - Financial Reporting and Auditi rg. The principal accounting policies applied in the preparation of th se special purpose financial statements are set out below. These policies have been consisten ly applied to all the periods presented. 2.2 Cash basis of accounting Project financing is recognised as a source of project funds when the cash is received. Project expenditures are recognised as a use of project funds when the pa ments are made. 2.3 Reporting currency The reporting currency of these special purpose financial state nts is United States dollars (USD). The expenditures made in local currency, Kyrgyz Som (KGS), ae translated into USD based at the exchange rate prevailing at the date of the transaction as iss ed by the commercial bank, OJSC "Commercial Bank Kyrgyzstan" (CBK), where the amounis are held. The exchange rate defined by the CBK is as follows: 21 October 2016: USD 1 67.80 KGS. 2.4. Taxes The taxes are paid in accordance with the tax regulation of the K rgyz Republic. 9
Private Sector Development Capacity Building Project Notes to the special purpose financial statements For the period from 4 September 2013 to 21 October 2016 3. Summary of Summary Reports and SOEs Payment categories Withdrawal Withdrawal application application (1) Goods, Consultants' services No value date including audit, Training and Operating Costs Total 2 21.Jul.2014 57,057.00 57,057.00 3 8.Oct.2014 37,682.30 37,682.30 4 16.Dec.2014 24,633.91 24,63191 5 5.Mar.2015 45,928.32 45,928.32 6 21.Jan.2016 57,400.78 57,400.78 8 22.Sept.2016 57,886.26 57,886.26 Total 280,588,57 280,588.57 4. Statement of Designated Account Bank account number 1030120800003387 Bank OJSC "Commercial Bank yrgyzstan" Bank location Erkindik 58, Bishkek, Kyr z Republic Currency USD 1. Opening balance as at 04.09.2013 2. Add: opening discrepancy Grant IDF No. TF013657 4.SL-p.2013_21.Oct.2016 3. WB advance/replenishment 290,567 4. Less: Refund to WB from DA 5. Present outstanding amount advanced to DA 290,567 6. DA closing balance as at 21.10.2016-7. Add: Amount of eligible expenditures paid 290,567 8. Less: interest earned (if credited to DA) 9. Total advance accounted for 290,567 10. Closing discrepancy (5)-(9) 5. Cash Underlying 21 Oct 2016 CurrencV USD Escrow account* USD 9,978 9 978 (*) Escrow account is opened at OJSC "Commercial Bank Kyrgyzstan" for pa ing the final audit fee. 10
Private Sector Development Capacity Building Project Notes to the special purpose financial statements For the period from 4 September 2013 to 21 October 2016 6. Project Expenditures Cumulative Expenditures as at 21 Oct 2016 Total budget Execution Category USD USD % (1) Goods, Consultants' services including audit, Training and Operating Costs Goods 24,556 21,000 117% Consultants' services including audit 213,820 270,000 79% Training 28,300 15,000 189% 0perating costs 13,913 14,000 99% Total 280,589 3200 88% 7. Financing Reporti Cumulative as at peried 21 Oct 2016 USP USD Advances/ (advance recovery) 9,978.10 9,978.00* Direct Payments -. SOE and Summary Report 280,588. 7 280,588.57 Total 290,566. 7 290,566.57 Total financing budget 320,000 Percentage of finance provided as at 21 Oct 2016 91% (*) The unsettled advance balance will be covered with the submission of SOE for finial audit service in the amount of USD 9,978.00. 8. Project completion The Project was completed as at 4 September 2016 (the Closing Date), and the Grace period for submitting withdrawal application for expenditures incurred before the Closing date set four months after the Closing Date. However, all the transactions were completed as at 21 October 2016 (Reporting date). As at the date of signing these special purpose financial statements: a. No expenditures related to the Project were incurred after the Closing Date; the payments made during the Grace period related to expenditures incurred before the losing Date; b. No withdrawals from grant account were made after Reporting date; c. No expenditures related to the Project were submitted to the WB after the Reporting date; the SOE for finial audit service in the amount of USD 9,978.00 will be Submitted to the WB after the completion of the audit service; d. There were no uncovered prepayments or payables outstanding to contractors related to the Project as at the Reporting Date, except for final audit service; e. The outstanding cash balance at escrow account as at Reporting Date, will be paid for final audit service, including the related non-resident income tax (Note 5); f. We are not aware about any pending or existing litigations against t e Project. 11
Private Sector Development Capacity Building Project ANNEX 1. RECONCILIATION BETWEEN THE AMOUNTS SUBMI TED BY THE IPPPD AND DISBURSED BY THE WORLD BANK For the period from 4 September 2013 to 21 October 2016 (Amounts are shown in US dollars) Expenditure Category Appl. IPPPD WB Difference Advance (recovery) 1 60,000.00 n ((50,022.00) 9,978.00 2 57,057.00 57,057.00 3 37,682.30 37,682.30 - (1) Goods, Consultants' services 4 24,633.91 24,633.91 - including audit, Training and Operating 5 45,928.32 45,928.32 - Costs 6 57,400.78 57,400.78 8 57,886.26 57,886.26-280,588.57 280,588.57 Total 280,588.57 290,566.57 12