Public Disclosure Authorized Public Disclosure Authorized P& A O GrantThornton An instinct for growth Report of Independent Auditors Punongbayan & Araullo 20WFloor, Tower 1 The Enterprise Center 6766 Ayala Avenue 1200 Makati City Philippines Phi2ip8i228 p T +63 2988 2288 F +63 2 886 5506 grantthornton.com.ph The Board of Tmstees Concerned Citizens of Abra for Good Government, Inc. 2/F DZPA Building, Rizal corner Zamora Streets Zone 6, Bangued, Abra Public Disclosure Authorized Public Disclosure Authorized Opinion We have audited the accompanying project financial statements of Concerned Citizens of Abra for Good Government, Inc. (the Organization) covering the Guarding the Integrity of the Conditional Cash Transfer Program Project (the Project) under the Global Partnership for Social Accountability (GPSA) Trust Fund Grant No. TF015863, for which the International Bank for Reconstruction and Development/International Development Association (the World Bank) acts as an administrator of grant funds. These project financial statements, which are prepared from the books of accounts maintained by the Organization for the Project, are comprised of the statement of financial position as at December 31, 2016, and the statement of funds received and uses of funds, statement of expenditures by project component and the statement of designated accounts for the year ended December 31, 2016 and a summary of significant accounting policies and other explanatory information. In out opinion, the project financial statements present fairly, in all material respects, the financial position of the Project as at December 31, 2016, and of the funds received and expenses incurred for the year ended December 31, 2016, as carried in the books of accounts maintained by the Organization for the Project, in accordance with the accounting policies described in Note 2 to the project financial statements, the World Bank guidelines, and the relevant terms of the GPSA Trust Fund Grant agreement. Certified Public Accountants Punongbayan & Araullo (P&A) is the Philippine member firm of Grant Thornton International Ltd Offices in Cebu, Davao, Cavite BOAPRC Cert. of Reg. No. 0002 SEC Accreditation No. 0002-FR-4
P& A O GrantThornton An instinct for growth Basis for Opinion We conducted out audit in accordance with Philippine Standards on Auditing (PSA). Our responsibilities under those standards are further described in the Auditors'Re.ponsibilities for the Audit of the Project Financial Statements section of our report. We are independent of the Organization in accordance with the Code of Ethics for Professional Accountants in the Philippines (Code of Ethics) together with the ethical requirements that are relevant to out audits of the project financial statements in the Philippines, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of Management and Those Charged with Governance for the Project Financial Statements Management is responsible for the preparation and fair presentation of the project financial statements in accordance with the accounting policies described in Note 2 to the project financial statements, the World Bank guidelines, and the relevant terms of the GPSA Trust Fund Grant agreement, and for such internal control as management determines is necessary to enable the preparation of these project financial statements that are free from material misstatement, whether due to fraud or error. 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 PSA 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 PSA, we exercise professional judgment and maintain professional skepticism 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. * 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 Organization's internal control. Certified Public Accountants Punongbayan & Arauilo P&A) is the Philippine member firm of Grant Thornton International Ltd -2-
P&A O GrantThornton An instinct for growth * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. * Evaluate the overall presentation, structure and content of the project financial statements, including the disclosures, and whether the project financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 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 This report is intended for the information of the Organization and the World Bank. However, upon release by the World Bank, this report is a matter of public record and its distribution is not limited. PUNONGBAYAN & ARAULLO By: R to L Naiola P tr CPA Reg. No. 0090741 TIN 109-228-427 PTR No. 5908629, January 3, 2017, Makati City SEC Group A Accreditation Partner - No. 0395-AR-3 (until May 19, 2019) Firm - No. 0002-FR-4 (until Apr. 30, 2018) BIR AN 08-002511-19-2015 (until Mar. 18, 2018) Firm's BOA/PRC Cert. of Reg. No. 0002 (until Dec. 31, 2018) June 22, 2017-3- Certified Public Accountants Punongbayan & Araullo (P&A) is the Philippine member firm of Grant Thornton International Ltd
CONCERNED CITIZENS OF ABRA FOR GOOD GOVERNMENT, INC. STATEMENT OF FINANCIAL POSITION DECEMBER 31, 2016 COVERING THE GLOBAL PARTNERSHIP FOR SOCIAL ACCOUNTABILITY TRUST FUND GRANT FOR GUARDING THE INTEGRITY OF THE CONDITIONAL CASH TRANSFER PROGRAM PROJECT (GPSA TRUST FUND GRANT NO. TF015863) Notes In Php In USD ASSETS Cash 3 P 2,303,438 $ 46,242 Due from partners and employees 4 1,430,689 28,721 TOTAL ASSETS P 3,734,127 $ 74,963 LABILITIES AND FUND BALANCE Accounts payable 5 P 323,234 $ 6,490 Fund balance 3,410,893 68,473 TOTAL LIABILITIES AND FUND BALANCE P 3,734,127 $ 74,963 See Notes to Project Financial Statements. -4-
CONCERNED CITIZENS OF ABRA FOR GOOD GOVERNMENT, INC. STATEMENT OF FUNDS RECEIVED AND USES OF FUNDS FOR THE YEAR ENDED DECEMBER 31, 2016 COVERING THE GLOBAL PARTNERSHIP FOR SOCIAL ACCOUNTABILITY TRUST FUND GRANT FOR GUARDING THE INTEGRITY OF THE CONDITIONAL CASH TRANSFER PROGRAM PROJECT (GPSA TRUST FUND GRANT NO. TF015863) YEAR ENDED ACCUMULATED DECEMBER 31,2016 TO-DATE In Php In USD In Php In USD Funds Received: GPSA Trust Fund Grant P 7,551,699 5 160,000 P 27,110,872 S 600,000 Interest income 1,779 39 101 226 7,553,478 160,039 27,120,982 600,226 Uscs of Funds* 1. Third party monitoring of Pantawid Pamilyang Pilipino Program (4Ps) and project management 3,033,175 66,660 8,096,345 180,560 2. Mobilizing household beneficiaries to engage in applied social accountability at the community level 5,470,638 120,227 7,716,384 170,747 3. Building the capacity of civil society organization (CSO) members of the Northern Luzon Coalition of Good Governance (NLCGG) 730,345 16,051 2,671,473 59,718 4. Knowledge and learning 2,836,234 62,330 5,744,968 127,764 12,070,392 265,268 24,229,170 538,789 Effects of exchange rate changes 28,133 6,215 519,081 7,036 EXCESS (DEFICIENCY) OF FUNDS RECEIVED OVER EXPENDITURES (P 4,488,781) (5 99,014) P 3,410,893 $ 68,473 * Please refer to Statement of Expenditures by Project Component for the breakdown of expenditures incurred. See Notes to Project FinAncial Statementv. -5-
CONCERNED CITIZENS OF ABRA FOR GOOD GOVERNMENT, INC. STATEMENT OF EXPENDITURES BY PROJECT COMPONENT FOR THE YEAR ENDED DECEMBER 31, 2016 COVERING THE GLOBAL PARTNERSHIP FOR SOCIAL ACCOUNTABILITY TRUST FUND GRANT FOR GUARDING THE INTEGRITY OF THE CONDITIONAL CASH TRANSFER PROGRAM PROJECT (GPSA TRUST FUND GRANT NO. TF015863) YEAR ENDED ACCUMULATED DECEMBER 31,2016 TO-DATE Notes In Php In USD In Php In USD Component I - Third party monitoring of4ps program and project management Operating cost Operating costs 7 P 2,732,158 5 60,045 P 6,598,349 $ 147,018 Trainings 6 301,017 6,615 1,214,226 27,158 Goods - 283,770 6,384 3,033,175 66,660 8,096,345 180,560 Component 2 - Mobilizing household beneficiaries to engage in applied social accountability at the community level Trainings 6 5,060,441 111,212 6,893,366 152,445 Operating costs 7 410,197 9,015 823,018 18,302 5,470,638 120,227 7,716,384 170,747 Component 3 - Building the capacity of CSO members of the NLCGG Operating costs 7 730,345 16,051 1,738,610 38,733 Trainings 6 - - 932,863 20,985 730,345 16,051 2,671,473 59,718 Component 4 - Knowledge and learning Operating costs 7 2,123,274 46,662 4,235,126 94,170 Trainings 6 712,960 15,668 1509,842 33,594 2,836,234 62,330 5,744,968 I7,764 TOTAL EXPENDITURES P 12,070,392 $ 265,268 P 24,229,170 $ 538,789 See Notes to PMject Financial Stements.
CONCERNED CITIZENS OF ABRA FOR GOOD GOVERNMENT, INC. STATEMENT OF DESIGNATED ACCOUNTS FOR THE YEAR ENDED DECEMBER 31, 2016 COVERING THE GLOBAL PARTNERSHIP FOR SOCIAL ACCOUNTABILITY TRUST FUND GRANT FOR GUARDING THE INTEGRITY OF THE CONDITIONAL CASH TRANSFER PROGRAM PROJECT (GPSA TRUST FUND GRANT NO. TF015863) Bank: Philippine National Bank Account number: 173647700088 In Php In USD Funds received from World Bank P 7,551,699 $ 160,000 Less: Total amount recovered by World Bank - - Present outstanding amount advanced to the designated account P 7,551,699 $ 160,000 Fund balance at beginning of year* (P 7,899,674) ($ 167,487) Balance of the designated account as of December 31, 2016 2,300,208 46,177 Total amount of expenditures claimed during the year 12,070,392 265,268 Total amount withdrawn and not yet claimed as of December 31, 2016 (Reason: Unliquidated funds transferred to partners and advanced to employees and CSOs) 1,430,689 28,721 Other reconciling items: Cash on hand 3,230 65 Interest income ( 1,779) ( 39) Accounts payable 323,234) 6,490) Effects of exchange rate changes 28,133) 6,215) Total funds received as accounted for P 7,551,699 $ 160,000 *Traced from project financial statements as of December 31, 2015. See Notes to Project Financial Statements. - 7-
CONCERNED CITIZENS OF ABRA FOR GOOD GOVERNMENT, INC. NOTES TO PROJECT FINANCIAL STATEMENTS COVERING THE GLOBAL PARTNERSHIP FOR SOCIAL ACCOUNTABILITY TRUST FUND GRANT FOR GUARDING THE INTEGRITY OF THE CONDITIONAL CASH TRANSFER PROGRAM PROJECT (GPSA TRUST FUND GRANT NO. TF015863) FOR THE YEAR ENDED DECEMBER 31, 2016 1. PROJECT INFORMATION 11 The Implementing Organization Concerned Citizens of Abra for Good Government, Inc. (CCAGG or the Organization) is a civic organization that works in the remote, rural province of Abra in the northern Philippines. It was incorporated and registered with the Philippine Securities and Exchange Commission on April 18, 1988. The Organization specializes in monitoring the implementation of infrastructure projects in the province of Abra. CCAGG's community-based approach relies on the voluntary efforts of area residents who verify whether bridges, roads, and other infrastructure projects are executed according to contract regulations. These citizen audits are then verified by civil engineers working with CCAGG and turned into evidence-based reports that aim to disclose potential corruption in the implementation of public infrastructure projects. The registered office address of CCAGG is located at 2/F DZPA Building, Rizal corner Zamora Streets, Zone 6, Bangued, Abra. 1.2 Project Description On March 28, 2014, the Organization received a grant from the International Bank for Reconstruction and Development/International Development Association (the World Bank) acting as administrator of grant funds provided by multiple donors under the Global Partnership for Social Accountability (GPSA) Trust Fund in an amount not to exceed United States (U.S.) $800,000. The fund is for the project entitled "Guarding the Integrity of the Conditional Cash Transfer Program" (the Project). The Project's objective is to develop a model for civil society-government partnership for transparent and accountable implementation of the Pantawid Pamilyang Pilipino Program (4Ps), which will be implemented over a four-year period from March 28, 2014 to March 28, 2018. -8-
The Project has four components as follows: 1. Third Party Monitoring (TPM) of 4Ps Program and Project Management Strengthening the capacity of the Organization for sustained and systematic TPM to monitor the Member Country's 4Ps, through inter alia: a) The development of social audit tools to monitor the Member Country's 4Ps, particularly in relation to targeting, compliance verification, payment, and grievance redress at the municipal level; b) The formulation and production of a handbook on third party monitoring of 4Ps; c) The carrying out of an analysis on relevant topics related to the Member Country's 4Ps, including, targeting, compliance verification, payment, and grievance redress; d) The establishment of a working group to support policy dialogue at national or regional level and to discuss concerns with the 4Ps which may require policy decisions/adaption; and, e) The implementation, monitoring and evaluation of the activities financed by the grant including audits. 2. Mobilizing Household Beneficiaries to Engage in Applied Social Accountability at the Community Level Enhancing the effectiveness of the Family Development Sessions (FDS) as social accountability tool for the 4Ps, through inter alia: a) The revision of the FDS Held manual for parent leaders; and, b) The provision of training to parent leaders in the 30 municipalities covered by the 4Ps using the enhanced FDS. 3. Building the Capacity of the Civil Society Organization (CSO) Members of the Northern Luzon Coalition for Good Governance (NLCGG) Capacity building of member organizations of NLCGG through inter alia, the carrying out of workshops and training with partner CSOs of the NLCGG to facilitate the adoption of common TPM procedures and tools developed under Component 1, common FDS training curriculum developed under Component 2, and a common menu of social accountability tools for use in the Project. -9-
4. Knowledge and Learning (K&L) Consolidation of knowledge and learning products to be developed in Components 1, 2 and 3 of the Project, through inter alia; the development and implementation of a K&L plan focused on: a) Enhancing CSO partners knowledge of global good practices for improving conditional cash transfer (CCT) social accountability; b) Extracting best lessons from project implementation experiences using a variety of tools such as case studies; c) Sharing of experience within the 4Ps Program through peer learning, workshops, and publication and dissemination of K&L products; d) Exchange of experiences with the global community of CCT practitioners, particularly with countries in the Latin America and Carribean region with more mature CCT programs experiences; and, e) Providing technology and technical assistance to upgrade existing capabilities of CCAGG and the Responsible Citizens, Empowered Communities and Solidarity for Social Change Inc. (RECITE) to undertake K&L activities. Prior to the implementation of the Project activities, the Organization had entered into separate agreements with RECITE, Affiliated Network for Social Accountability - East Asia Pacific (ANSA-EAP) and Partnership for Transparency Fund (PTF) for the execution of Components 2, 3 and 4, respectively, of the Project. The mentioned partners are in-charge in carrying out the technical implementation of their respective responsibilities. From the proceeds of the grant, the Organization will cover the operating costs related to the discharge of their responsibilities. CCAGG has sole fiduciary responsibility under the Project, including procurement and financial management. The Project's components and amounts budgeted under the Grant Agreement follow: In Philippine Description Pesos In U.S. Dollars 1.) Third Party Monitoring of 4Ps Program and Project Management P 11,319,939 $ 251,750 2.) Mobilizing Household Beneficiaries to Engage in Applied Social Accountability at the Community Level 12,770,060 284,000 3.) Building the Capacity of CSO Members of the NLCGG 2,697,900 60,000 4.) Knowledge and Learning 9,184,101 204.250 P 35,972,000 $ 80000-10 -
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1 Basis ofpreparation The accompanying project financial statements have been prepared and maintained on a modified cash basis of accounting. Under this basis, grant funds are to be recorded when contracts are signed and apportioned or spread out over the year of project implementation and expenses are recognized when paid rather than when obligation is incurred, except for accrual of certain personnel, benefits, and other operating costs. 2.2 Functional and Presentation Currency The accompanying project financial statements are presented in Philippine Peso, the currency of the country in which the Project is operating, as well as in U.S. Dollar. The translation of the Philippine Peso amounts into the U.S. Dollar amounts is included for the convenience of the users of the project financial statements. Statement of financial position accounts are translated using the Bangko Sentral ng Pilipinas dosing rate on December 31, 2016 at P49.813:US$1. Grant funds received are presented on the actual grant amount in U.S. Dollar and converted using the spot rate on the date of receipt. On the other hand, actual expenditures are translated using the weighted average of the exchange rates used to convert the grants received for the year ended December 31, 2016 and the period March 28, 2014 to December 31, 2015 at P45.503:US$1 and P44.453:US$1, respectively. Any exchange rate differences are recognized in the statement of funds received and uses of funds. 2.3 Cash Cash includes cash on hand and in bank and are restricted to specific purposes bound by the contracted agreements. 2.4 Due from Partners and Employees Due from partners and employees comprise of cash advances made to project partners and employees that are not yet liquidated. 2.5 Accounts Payable Accounts payable are obligations on the basis of normal credit terms and do not bear interest. 2.6 Fund Balance The amount included in fund balance includes accumulated excess of grant funds received over expenses reduced by funds returned to funding agencies/partners and other adjustments. 2.7 Grant Funds The World Bank advances grant funds into a designated account of the Organization to finance eligible expenditures for the Project and for which supporting documents are provided at a later date. -11 -
2.8 Costs and Expenses Costs and expenses are decreases in economic benefits during the accounting period in the form of outflows or decrease of assets or incurrence of liabilities that result in decreases in fund balance. Costs and expenses are recognized in the statement of funds received and uses of funds when paid rather than when the obligation is incurred, except for accrual of certain personnel, benefits, and other operating costs. 2.9 Provisions Provisions, if any, are recognized when the Project has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. 2.10 Goods Goods include office equipment and fixtures, materials and supplies including services such as repairs and maintenance of equipment. 2.11 Contigencies Contingent liabilities are not recognized in the project financial statements. They are disclosed in the notes to the project financial statements unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognized in the project financial statements but are disclosed in the notes to project financial statements when an inflow of economic benefits is probable. 2.12 Events After the End of the Reporing Peiod Any post-year-end event that provides additional information about the Project's financial position at the end of the reporting period (adjusting event) is reflected in the project financial statements. Post-year-end events that are not adjusting events, if any, are disclosed when material to the project financial statements. 3. CASH This account is composed of the following as of December 31, 2016: In Philippine Pesos In U.S. Dollars Cash on hand P 3,230 $ 65 Cash in bank 2,300,208 461177 P 2,303,438 S 46,242 Cash in bank generally earn interest based on daily bank deposit rates. Interest income earned on savings deposits amounted to P2,598 (U.S.$57) in 2016 and P8,331 (U.S.$187) for the period March 28, 2014 to December 31, 2015. -12-
4. DUE FROM PARTNERS AND EMPLOYEES The composition of this account as of December 31, 2016 is as follows: In Philippine Pesos In U.S. Dollars Due from: CSOs P 1,249,796 $ 27,273 Partners 173,059 1,291 Project employees 7,834 157 P 1,430,689 $ 28.72 5. ACCOUNTS PAYABLE The composition of this account as of December 31, 2016 is as follows: In Philippine Pesos In U.S. Dollars Accounts payable P 281,168 $ 5,645 Salaries payable 37,043 744 Payables to government 5,023 101 P 323,234 $ 6, 6. TRAININGS Trainings represent expenditures incurred by CCAGG to conduct training, including purchase and publication of materials, rental of facilities, course fees and travel and subsistence of trainees. The details of training expenses by nature are shown below. Year Ended December 31, 2016 Accumulated To-date In Philippine In U.S. In Philippine In U.S. Pesos Dollars Pesos Dollars Trainings and seminars P 5,143,039 $ 113,027 P 7,925,455 $ 175,619 Accommodation 463,763 10,192 1,262,386 28,158 Travel and transportation 267,090 5,870 574,166 12,778 Meetings 170,456 3,746 307,525 6,829 Professional fees 21,000 462 424,000 9,528 Materials 9,070 198 52,880 1,184 Others - -- 3.885 86 1 S 133,495 P1,550= S 234,182 -B13-
The summary of training expenses incurred by each project component is shown below. Year Ended December 31. 2016 Accumulated To-date In Philippine In U.S. In Philippine In U.S. Pesos Dollars Pesos Dollars Component 1 P 301,017 $ 6,615 P 1,214,226 $ 27,158 Component 2 5,060,441 111,212 6,893,366 152,445 Component 3 - - 932,863 20,985 Component 4 712,960 15,668 1,509842 33.594 P 0441 $ 133,495 P10,55M 29 234,2 7. OPERATING COSTS Operating costs mean reasonable recurrent expenditures incurred by CCAGG required for the implementation, monitoring and evaluation of the Project, and by RECITE, ANSA-EAP and PTF, respectively, required for the implementation of some of the activities under the Project, including salaries of staff of CCAGG and its partners working on the Project, office rental, supporting staff for the Project, transportation, basic utilities (electricity and water), and communications expenses, but excluding the salaries of officials of the Member Country's civil service; and any other reasonable expenditures as may be agreed upon by the World Bank. The details of operating costs by nature are shown below. Year Ended December 31, 2016 Accumulated To-date In Philippine In U.S. In Philippine In U.S. Pesos Dollars Pesos Dollars Salaries and other employee benefits P 3,590,139 $ 78,899 P 8,294,087 $ 184,718 Transportation and travel 1,061,832 23,336 2,157,400 47,982 Office operating costs 378,498 8,318 977,766 21,799 Honorarium 312,100 6,859 625,736 13,915 Audit cost 308,000 6,769 308,000 6,769 Office rental 144,000 3,165 396,000 8,834 Office supplies 69,088 1,518 231,497 5,172 Meetings 58,501 1,286 89,093 1,974 Utilities 25,999 571 55,400 1,232 Meals 24,496 538 46,328 1,029 Communication 21,164 465 158,630 3,557 Printing - - 27,743 624 Others 2.157 49 27,423 618 P,995, 94 L 131773 P13 395M $ 298223-14 -
The summary of operating costs incurred by each project component is shown below. Year Ended December 31, 2016 Accumulated To-date In Philippine In U.S. In Philippine In U.S. Pesos Dollars Pesos Dollars Component 1 P 2,732,158 $ 60,045 P 6,598,349 $ 147,018 Component 2 410,197 9,015 823,018 18,302 Component 3 730,345 16,051 1,738,610 38,733 Component 4 2,123,274 46,662 4,235,126 94.170 PW599974 B11,773 P1350 $2223-15-