Public Disclosure Authorized Public Disclosure Authorized EMP MANAGEMENT DURABIL POP "DISASTER AND CLIMATE RISK MANAGEMENT PROJECT" IDA CREDIT NO. 4794-MD & IDA CREDIT NO. 5637-MD PROJECT FINANCIAL STATEMENTS For the period from 1 January 2015 to 23 December 2016 Public Disclosure Authorized Public Disclosure Authorized
CONTENTS: Auditors' Report 1. Summary of Sources and Uses of Funds 3 2. Uses of Funds by Project Component/Activity 4 3. Withdrawal Schedule 5 4. SOE Schedule 6 5. Designated Account Statement 7 Explanatory notes to Project Financial Statements 8-10,eintru Ir ~'1fr ide~ 2
KPMG Moldova S.R.L. 171/1 Stefan cel Mare Bd. 8 th floor, MD-2004 Chisinau Republic of Moldova Tel: +373 (22) 580 580 Fax: +373 (22) 540 499 www.kpmq.md Independent Auditors' Report To the Management of EMP Management Durabil POP Opinion We have audited the accompanying project financial statements of EMP Management Durabil POP, IDA credit number 4794-MD and IDA credit number 5637-MD ("the Project") as at 23 December 2016 and for the period 1 January 2015 to 23 December 2016, comprising the Summary of Sources and Uses of Funds, the Uses of Funds by Project Component/Activity, the Withdrawal Schedule, the SCE Schedule, the Designated Account Statement and explanatory notes, comprising a summary of significant accounting policies and other explanatory information to the Project Financial Statements (together referred to as "the Project Financial Statements"). In our opinion the accompanying Project Financial Statements, present fairly, in all material respects, the Summary of Sources and Uses of Funds, the Uses of Funds by Project Component/Activity, the Withdrawal Schedule, the SOE Schedule and the Designated Account Statement in accordance with the cash receipts and disbursements basis of accounting described in Note 2 to the Project Financial Statements. 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 Auditors' Responsibilities for the Audit of the Project Financial Statements section of our report. We are independent of the Project in accordance with the ethical requirements that are relevant to our audit of the Project Financial Statements in Moldova and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of Matter - Basis of Accounting and Restriction on Use and Distribution We draw attention to Note 2 to the Project Financial Statements which describes the basis of accounting. The Project Financial Statements are prepared solely to assist the management to comply with the terms of the Financing Agreement Credit Number 4794-MD signed between the Government of Republic of Moldova and the International Development Ref.: 17003 Page 1 of 3 @2017 KPMG Moldova SRL, a MokWovan limed liability company and a member firmn of fhe KPMG networik of Independent member firms affiliated with KPMG Intenational Cooperatlve (7KPMG Internationar), a Swiss entity. All ights reserved. PDC no. 0000875 IDNO:1002600046371
Association ("IDA") on 12 August 2010 and Financing Agreement Credit Number 5637-MD signed between the Government of Republic of Moldova and IDA on 21 May 2015. As a result, Project Financial Statements may not be suitable for another purpose. Our report is intended solely for the Management of EMP Management Durabil POP, as a body; a copy of the report can be provided to IDA. Our report should not be used by or distributed to other parties other than Management of EMP Management Durabil POP and IDA. Our opinion is not modified in respect of this matter. Responsibilities of Management and Those charged with Governance for the Project Financial Statements Management is responsible for the preparation of the Project Financial Statements in accordance with the cash receipts and disbursements basis of accounting described in Note 2 to the Project Financial Statements and for such internal control as management determines is necessary to enable the preparation of Project Financial Statements that are free from material misstatement, whether due to fraud or error. In preparing the Project Financial Statements, management is responsible for assessing the relevance of the going concern basis of accounting, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Project or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Project's financial reporting process. Auditors' Responsibilities for the Audit of the Project Financial Statements Our objectives are to obtain reasonable assurance about whether the Project Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' 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 these Project Financial Statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: * Identify and assess the risks of material misstatement of the 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 internal control. Ref.: 17003 Page 2 of 3
* 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. * Conclude, as applicable, 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 going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the 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 auditors' report However, future events or conditions may cause the Project to cease to continue as a going concern. 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. Other matter Our audit work has been undertaken so that we might state to the management of EMP Management Durabil POP those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the management of EMP Management Durabil POP, for our audit work, for this report, or for the opinion we have formed. A copy of the report can be provided to International Development Association. KPMG Moldova S.R.L. Chisinau, Republic of Moldova 31 January 2017 Ref.: 17003 Page 3 of 3
1 Summary of Sources and Uses of Funds Schedule For the period Cumulative tepro for 1 January 2015 the period 23 December 10 -v23 201620162010-23 December 2016 USD USD Opening cash balances IDA Designated Account, USD 22,364 IDA Designated Account, MDL. Total Opening Balance 5 22,364 - Sources of Funds IDA financing - Designated Account 3 592,127 3,720,998 - Direct Payments 3 2,513,936 8,594,128 Other sources of financing Guarantee amount received 52,451 52,451 Bids selling funds 150 6,339 Total Sources of funds 3,158,663 12,373,916 Uses of Funds IDA financing used Goods, works, consultant's services, incremental (3072046) (12,260,554) operating costs Other sources offinancing used Uses of disbursed Guarantee Amount (52,451) (52,451) Bids Spending (1,946) (6,299) Funds returned to World Bank (54,508) (54,508) Total Uses of Funds 2 (3,180,951) (12,373,812) Translation difference 83 55 Closing cash balances IDA Designated Account, USD IDA Designated Account, MDL 159 159 Total Closing Cash Balances 159 159 Mr. Valentin Plesca eltruidf Project Manager Mrs. Eugenia Veverita.7$ Financial Management Expert oft Project 1 ]AN, 2017 Date 31 January 2017 Or ride 1 Amount returned to World Bank as per SOE 03 Application of Withdrawal 13 from November 29, 3
2 Uses of Funds by Project Component/Activity for the period from 1 January 2015 to 23 December 2016 USD A.: Strengthen Severe Weather Forecasting 2,115,315 A. I - Develop Early Warning/ Nowcasting Capabilities 1,859,662 A.2 - Dual Polarization Doppler Radar Technology for Localized Forecasts, including: 3,568 IDA Credit 1,622 BIDs 1,946 A.3 - Development of Plans for Seasonal/Climate Forecasts 238,398 A.4 - Trainings for component A 13,688 B.: Improve Disaster Preparedness and Emergency Response 812,189 B.1 - Feasibility Study and Design 35,457 B.2 - Establish Emergency Command Centre, including 772,800 IDA Credit 720,349 Uses of received guarantee 52,451 B.3 - Capacity Building and Evaluation 3,933 C.: Initiate Adaptation to Climate Risks in Agriculture C. 1 - Development of Just-in-Time (JIT) Communication Platform C.2 - Adverse Weather Adaptation Advisory Services C.3 - Goods and IT equipment for coordination unit, component coordination C.4 - Trainings for component C D. Project Management 198,938 Total funds used by Project component 3,126,443 Funds returned to World Bank " 54,508 Total 3,180,951 Mr. Valentin Plesca Project Manager Mrs. Eugenia Veverita Financial Management Expert ofthe Project Date 31 January 2017 'Y; C3 31. IAN. 2017 e ride 4
3. Withdrawal schedule Disbursement Category Goods, works, consultants' services, including training, Incremental Operating Costs and Technical Advisory Services for the Project Application Amount amount in disbursed Total Disbursement (Advance Payment) Original Cey. USD/ EURO/ MDL USD USD 2010 50,000 Total Disbursement 2011 657,033 Total Disbursement 2012 2,325,140 Total Disbursement 2013 3,716,385 Total Disbursement 2014 2,460,505 Application No. 88 Direct Payment C 9,250 10,488 Application No. 89 Direct Payment $ 545,624 545,624 Application No. 90 Direct Payment $ 180,873 180,873 Application No. 91 Direct Payment $ 24,006 24,006 Application No. 92 $ 229,425 229,425 Application No. 93 Direct Payment C 65,000 71,939 Application No. 96 Direct Payment E 3,599 3,912 Application No. 01 $ 100,000 100,000 Application No. 02 $ 62,702 62,702 Application No. 03 $ 100,000 100,000 Application No. 04 Direct Payment $ 238,398 238,398 Application No. 05 Direct Payment 561,666 623,646 Application No. 06 Direct Payment $ 59,599 59,599 Application No. 07 Direct Payment $ 58,875 58,875 Application No. 09 $ 100,000 100,000 Application No. 10 Direct Payment E 154,297 173,137 Application No. 11 Direct Payment 449,333 494,648 Application No. 12 Direct Payment MDL 574,689 28,791 Total Disbursed in 2015-2016 3,106,063 Total cumulative disbursed as at 23-Dec-16 12,315,127 Mr. Valentin Plesca Kj4i-z - Project Manager Mrs. Eugenia Veverita Financial Management Expert of tne Project Date 31 January 2017 9 CO 0 31.IAN 701G ori e
4. SOE Schedule Beneficiary Number of SOE For 1 January 2015-23 December 2016 USD SOE 39 81,351 SOE 40 144,618 SOE 01 62,702 SOE 41 24,032 SOE 02 164,540 SOE03 80,952 Total Reported expenditures 558,194 Mr. Valentin Plesca Project Manager Mrs. Eugenia Veverita Financial Management Expert of e Project tr& O If e Date 31 January 2017 31, AN. 21 or ide 6
5. Designated Account Statement Designated Account Statement For the period from 1 January 2015 to 23 December 2016 Designated Account N2 MD81NB000000003261584044 in USD Bank: National Bank of Moldova Designated Account opening balance as at 1 January, 2015 22,364 Total Credits (add): Opening balance DA 22,364 IDA replenishments of DA during the period 592,127 Disbursement of Guarantee Amount 52,451 BIDs procurement 150 644,728 667,092 Total debits (less): Refund to IDA from DA during the period 54,508 IDA eligible expenditures paid from DA during the period 558,112 Uses of disbursed Guarantee Amount 52,451 IDA funds transferred to the project account in MDL Bids preparation expenses 1,946 667,016 667,016 Exchange rate difference Designated accounts 83 Designated Account closing balance as at December 23, 2016 159 Mr. Valentin Plesca Project Manager Mrs. Eugenia Veverita Financial Management Expert of th roject ecr Date 31 January 2017 31 IAN. 2017 7
Notes to the Financial Statements 1. General information On 12 August 2010, a Financing Agreement (FA) IDA 4794-MD was signed between the Government of the Republic of Moldova and International Development Association (IDA) regarding the proposed project called the Disaster and Climate Risk Management Project (further referred as "DCRMP" or the "Project"). On 21 May 2015, the additional Financing Agreement (FA) IDA 5637-MD was signed between the Government of the Republic of Moldova and IDA to extend the existing financing for finalizing the planned Project activities. The overarching objective of the Project is to strengthen the State Hydrometeorological Service's (SHS) ability to forecast severe weather and to improve Moldova's capacity to prepare for and respond to natural disasters. It is expected that the objective is achieved through strengthened capacities to: (i) monitor weather and issue early warnings of weatherrelated hazards by providing timely and accurate hydrometeorological forecasts and services; (ii) manage and coordinate responses to natural and man-made disasters; and (iii) help individuals, particularly farmers, be aware of, and adapt to natural hazards and climate variability. The Moldova DCRMP comprises four components: (A) Strengthen severe weather forecasting; (B) Improve disaster preparedness and emergency response; (C) Initiate activities for adaptation to climate risks in agriculture; and (D) Support project management. The Component A aims to strengthen the State Hydrometeorological Service's ability to forecast severe weather and provide decision makers and other users with more effective, diverse, and timely forecasts and warnings. The Component B aims to strengthen Government capacity to manage emergencies and coordinate disaster response among levels of government agencies by establishing and operating an Emergency Command Center (ECC) in Chisinau, at the Civil Protection and Emergency Situations Service of the Ministry of Internal Affairs (CPESS) premises and associated capacity-building activities. The objective of the Component C is to enhance the practical application of agrometeorological information in the agriculture sector in order to increase its resilience towards adverse weather effects. The Component D will provide fiduciary support for the implementation of the three components. In essence, fiduciary services are centralized for the proposed Project and carried out by the I.P. EMP Management Durabil POP (POPs Project Management Team/PMT) under the Ministry of Environment. In particular, the support was to enhance the financial management and procurement functions as well as, if necessary, the technical aspects of project implementation, including monitoring and evaluation. ItrU CS, - 314N. 201?7-0 r d
Notes to the Financial Statements (continued) 1. General information (continued) Project management World Bank Task Team Leader - Anatol Gobjila The World Bank, Moldova office E-mail: agobjila@worldbank.org Project Fiduciary Unit I.P. EMP Management Durabil POP Director - Valeriu Plesca Tel/fax +373 22 226254 E-mail: vplesca@moldovapops.md In accordance with the financing agreements, the Project closing date was 30 September 2016. The Project's Steering Committee is responsible for deciding on the policy and programs of the DCRMP. The Steering Committee had the following members as at 23 December 2016: 1. Liliana Palii - General Secretary of the Government, Chairman; 2. Valeriu Muntean - Minister of Environment, Vice Chairman; 3. lurie Nastas - Head of Service "National economy finances, capital expenditures and procurement" of the Ministry of Finance; 4. Mihail Harabagiu - Head of Civil Protection and Emergency Management Service; 5. Mihail Roibu - Director State Hydrometeorological Service; 6. lurie Usurelu - Deputy Minister of Agriculture and Food Industry; 7. Ion Turcan - Deputy Minister of Internal Affairs; 8. Valentin Plesca - Manager of the Project, secretary of Steering Committee. The IDA 4794-MD and IDA 5637-MD funds reported in these project financial statements have been expended in accordance with the intended purposes as specified in these financing agreements. 2. Basis of accounting These Project Financial Statements are prepared solely to assist the management to comply with the terms of the Financing Agreement Credit Number 4794-MD signed between the Government of Republic of Moldova and International Development Association ("IDA") on 12 August 2010 and Financing Agreement Credit Number 5637-MD signed between the Government of Republic of Moldova and IDA on 21 May 2016. As a result, Project Financial Statements may not be suitable for another purpose. The management has assessed the relevance of the going concern basis of accounting and concluded that it is not relevant of the financial framework applied in the preparation of these Project financial statements. The Project Financial Statements have been prepared in accordance with the basis of preparation and significant accounting policies described below. ventru CdT 3 1.IN 2017 9
Notes to the Financial Statements (continued) 2. Basis of accounting (continued) (a) Basis of preparation The Project Financial Statements have been prepared in accordance with the cash receipts and disbursements basis of accounting. On this basis sources of funds are recognized when received rather than when earned and funds used are recognized when paid rather than when incurred. The amounts are expressed in USD and are prepared for the period from 1 January 2015 to 23 December 2016. (b) Foreign exchange rates The Exchange rate used to convert the USD amounts in MDL is the official exchange rate of National Bank of Moldova on the date of payment. (c) Designated Account (DA) The Designated Account, opened by the State Treasury in the National Bank of Moldova, is the account to which all replenishments are drawn from IDA. The Designated account is in USD. All payments in USD for eligible expenses are made from this designated account. If the payments are made to Republic of Moldova residents, then the payments are made through transitory accounts (conversion from USD to Moldovan Leu at the National Bank of Moldova official exchange rate). (d) Transitory accounts The transitory accounts are held at State Treasury as treasure accounts for the converted amount in MDL, since the payments within the country can be done only in the local currency (MDL). (e) Sources of funds The sources of funds are the amounts transferred by the World Bank from the loan account, to the Designated Account of the Project (f) Uses of funds The uses of funds are the amounts spent for covering eligible expenditures for the needs of the Project. 3. Subsequent events The last invoice payable to Meteo France International of EUR 75,026 equivalent was paid subsequent to the date the Financial Report (23 December 2016) on 11 January 2017 as a direct payment via World Bank Client Connection System. This payment is not included in these Project financial statements. The audit fees equivalent of EUR 7,772 will be paid subsequent to the approval of the Project financial statements and are not included in these Project Financial Statements. The funds allocated for the payment of the audit fees will be made as direct payment via World Bank Client Connection System. n 5 1. IAN, 2017 10