Public Disclosure Authorized Public Disclosure Authorized?49 0~.1 'q N.%+C Gd/A+ 'A"Xi Federal Democratic Republic of Ethiopia Office of the Federal Auditor General Ref No Ministry of Finance and Economic Cooperation Addis Ababa Re: Submission of the PBS Project Sub-Programs A and B and ESPES Program Audit Report Public Disclosure Authorized it is to be recalled that the Ethiopian Government and the Development Partners have reached an Agreement regarding the Annual Audit of the Project Financial Statements of the promoting of Basic Services (PBS ) Project Sub-programs A and B and Enhancing shared prosperity through Equitable service (ESPES) program to be submitted to the Ministry of Finance and Economic Cooperation by the Office of the Federal Auditor General. We have, therefore, attached herewith the PBS Project Audit report for the Year ended sene 30, 2008 (7 July 2016). Public Disclosure Authorized a 0~ -V -- -- eneral r:-eral Auditor General 457 251111551255 4h +251 111 552594 E-mail ofagitcwethionetet A&A An7 A.fA*. PO.Box TeL Fax +25111555099 Website wwwofag.gov.et Addis Ababa Ethiopia
The Federal Democratic t'?p. y q? Republic of Ethiopia quh.. yc SOFFCE OF THE FEDERAL AUDTOR GENERAL e.p.6.a CP 4. an/ft+ THE FEDERAL DEMOCRATC RPUBLC OF ETHOPA MNSTRY OF FNANACE AND ECONOMC COOPERATON PROMOTNG OF BASC SERVCES PROJECT SUB-PROGRAMS A AND B AND ENHANCNG SHARET PROSPORTY THROUGH EQUTABLE SERVCE NDEPENDENT AUDTOR'S REPORT AUDT FNDNGS AND RECOMMENDATONS ON THE PROJECT FNANCAL STATEMENTS FOR THE YEAR ENDED 7 JULY 2016 i 05 January 2017 Gn0
NDEPENDENT AUDTOR'S REPORT ON THE PROJECT FNANCAL STATEMENTS OF THE MNSTRY OF FNANCE AND ECONOMC COOPERATON OF THE FEDERAL DEMOCRATC REPUBLC OF ETHOPA PROMOTNG OF BASC SERVCES PROJECT SUB-PROGRAMS A AND B AND ENHANCNG SHARED PROSPTY THOUGHY EQAUTABLE SERVCE (ESPES) PROJECT We have audited the accompanying Project Financial Statements of the Promoting of Basic Services Project Sub-Programs A and B of the Ministry of Finance and Economic Cooperation of the Federal Democratic Republic of Ethiopia for the year ended 7 1 July 2016, which have been financed by DA Financing Agreements DA51620, DA5716, Multi Donors Trust Fund Financing Agreement TF13952, Austria fund and taly fund. The preparation of the Project Financial Statements (PFSs) is the responsibility of the Ministry of Finance and Economic Cooperation. This audit is a special purpose audit for the Promoting of Basic Services Project Sub-Programs A and B and Enhancing shared prosperity through Equitable service (ESPES) whose terms of reference are those given in the Terms of Reference for the audit of Promoting of Basic Services (PBS ) Project Sub-Programs A and B and Enhancing shared prosperity thought equitable service (ESPES). These Terms of Reference include, inter alia, our responsibility to express an opinion on the Project Financial Statements based on our audit and report on material inappropriate expenditure and other pertinent matters. Standards on Auditing (SA) issued by the nternational Auditing and Assurance Standards Board of the nternational Federation of We conducted our audit in accordance with the nternational Accountants with special reference to SA 800 and the World Bank relevant Guidelines for the World Bank financed projects.
These Standards require that we plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatement. An audit includes examining on a test basis the evidence supporting the amounts and disclosures in the Financial Statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. n our opinion, the Project Financial Statements present fairly, in all material respects, the financial position at 7 July 2016 ------ and- the cash receiptsand disbursements -for- the year th en--andedof the Promoting of Basic Services Project Sub- Programs A W and B and Enhancing shared prosperity through equitable service of the Ministry of Finance and Economic cooperation of the Government of the Federal Democratic Republic of Ethiopia which were prepared on a modified cash basis and in accordance with the accounting policy of the Government of the Federal Democratic Republic of Ethiopia. Emphasis of matters: * Supporting documents was not provided for audit work for the payment amounting birr 14,543,738.63 which was recorded and reported as actual expenditure by Central Statistics Agency. n addition, in our opinion, in all material respects: * During the year, all external financing has been used in accordance with the conditions of the relevant financing agreements and only for the purposes for which the financing was provided; 2
* Counterpart funds have been provided and used in accordance with the relevant financing agreements and only for the * Goods, works and services financed under the Project have been procured in accordance with the relevant financing agreements purposes for which they were provided; including specific provisions of the World Bank Procurement policies and procedures; * The necessary supporting documents, records and accounts have been maintained in respect of all project activities, including expenditures/transfers reported in nterim Unaudited Financial Reports (FRs). n addition, the FRs issued during the audit were in agreement with the underlying books of accounts. * Designated Accounts have been maintained in accordance with the provisions of the relevant financing agreements, and funds disbursed out of the accounts were used only for the purpose intended in the financing agreement; National laws and regulations have been complied with and that the financial and accounting procedures approved for the Project were followed and used; * Financial performance of the project was satisfactory; and * Assets procured from project funds existed and there was verifiable ownership by the implementing agencies or beneficiaries in line with the financing agreement. 06 January 2016 3
MNSTRY OF FNANCE AND ECONOMC COOPERATON GOVERNMENT OF FEDERAL DEMOCRATC REPUBLC OF ETHOPA PROMOTNG OF BASC SERVCES PROJECT SUB PROGRAMS A AND B AND ENHANCNG SHARED PROSPORTY THROUGH EQUTABLE SERVCE PROGRAM CONSOLDATED STATEMENT OF FNANCAL POSTON AT 7 JULY 2016. ASSETS 7 July 2016 July 2015 Notes Birr Birr CURRENT ASSETS Cash balances 3 155,373,307.00 284,244,988.00 Advances 4 22,934,253.00 2,1985.00 Total current Assets 178,3o7,560.00 306,353,442.00 CURRENT LABLTES._.. Account Payable 5 4,856,703.00 5, 67 8, 011. 00 NET CURRENT ASSETS 173,450,857.00 300,675,432.00 REPRESENTED BY ACCUMULATED FUND 173,450,857.00 300,675,432.00 NB: Cents have been rounded to Birr _ '. 4 g
MNSTRY OF FNANCE AND ECONOMC COOPERATON GOVERNMENT OF FEDERAL DEMOCRATC REPUBLC OF ETHOPA PROMOTNG OF BASC SERVCES PROJECT SUB-PROGRAMS A AND B CONSOLDATED STATEMENT OF SOURCES AND USES OF FUNDS FOR THE YEAR ENDED 7, JULY 2016. Cumulative From For the year July 8j2014to 7 ended 7 July 2016 July,2015 Note Birr Birr Opening Balance 300,675,532.00 809,871,043.01 Beginning Balance Adjustment 39,671.00 60,656.22 PBS Financing nternational Development Association( DA) 51620 484,988,410.00 2,848,248,248.82 Trust Fund (TF) 13952 393,665,405.00 2,977,545,910.85 From DA 5716 3,776,788,435.00,659.713,406.12 From taly 91,991,475.00 86,777,520.00 Austria Fund 31,388,280.00 Sub Total 5,079,537,108.00 8,382,216,785.02 Contribution by the Ethiopian Government (Counter part fund) 40,810,936,115.00 31,044,194,732.87 Gain on foreign Exchange 36,561,166.00 39,108,414.05 Total Financing 45,927,034,390.00 39,465;519,931.94 PBS Project Expenditure Sub-Program A 6 45,278,165,356.00 38,645,418,964.00 Sub-Program B 7 475,418,176.00 519,425,536.21 45,753,583,532.00 39164,844,500.21 Total-Project Expenditure Excess of Financing over Expenditure (Accumulated Fund) 173,450,857.00 300,675431.73 Note: - Please note that ETB 393,665,405 (USD 18,950,000.00) is retroactive financing made by DA irectly deposited to Treasury account t* Fede, ~ 5 loera
MNSTRY OF FNANCE AND ECONOMC COOPERATON GOVERNMENT OF FEDERAL DEMOCRATC REPUBLC OF ETHOPA DESGNATED DOLLAR ACCOUNTS WTH EQUVALENT BRR AMOUNT STATEMENT FOR THE ENHANCNG SHARED PROSPERTY THROUGHY EQUTABLE SERVCES (ESPES). 1 For the year ended 7 JULY 2016 Account Number 010010/1300528 Depository Bank NBE Address Addis Ababa, Ethiopia Currency USD and Birr Amount in USD Amount in Birr BEGNNNG BALANCE Fund Received From: nternational Development Association 176,467,858.13 3,776,788,435.17 (DA)5716 Total 176,467,858.13 3,776,788,435.17 Deducted -Transfer to:- Government Treasury account- 176,400,000.00 3,792,969,240.00 Bank Service Charge Total Fund Available 167,400,000.00 3,792,969,240.0 67,858.13 (16,180,804.83) Gain on foreign exchange 17,662,202.09 ENDNG BALANCE-7 JULY 2016 67,858.13 1,481,397.2617 17,6,881 3,7,88451 NB: The closing exchange rate used for ending balance is USD=21.8308 6 1
U MNSTRY OF FNANCE AND ECONOMC COOPERATON GOVERNMENT OF FEDERAL DEMOCRATC REPUBLC OF ETHOPA DESGNATED DOLLAR ACCOUNTS WTH EQUVALENT BRR AMOUNT STATEMENT FOR THE B Sub Program A For the year ended 7 JULY 2016 Account Number 02615/147000/00 Depository Bank Address Currency NBE Addis Ababa, Ethiopia USD and Birr 1 Amount in USD Amount in Birr ---BEGNNNGBALANCE 7,954,305.80 163,745,749.00 Fund Received From: nternational Development Association (DA) Trust Fund (TF) TALY 4,361,914.80 91,991,475.10 Austria Fund 1,521,797.00 31,388,280.00 Total Fund Available 13,838,017.60 287,125,504.10 Deduct -TRANSFER TO Government Treasury Account-Birr 13,500,000.00 292,765,050.00 Bank Service Charge - - Total Transfers 13,500,000.00 292,765,050.00 Fund Balance 338,018.00 (5,639,546.00) Gain on foreign exchange - 13,018,741.00 ENDNG BALANCE-7 JULY 2016 338,018.00 7,379,195.00 NB: The closing exchange rate used for ending balance is 1USD=21.8308 The P 7 CXC /~u 7
MNSTRY OF FNANCE AND ECONOMC COOPERATON GOVERNMENT OF THE FEDERAL DEMOCRATC REPUBLC OF ETHOPA DESGNATED DOLLAR ACCOUNTS WTH EQUVALENT BRR AMOUNT STATEMENT FOR THE PBS SUB-PROGRAM B For the year ended 7 JULY 2016 Account Number 02615/148000/00 Depository Bank NBE Address Addis Ababa, Ethiopia Currency USD and Birr Amount in USD Amount in Birr BEGNNNG BALANCE 681,674.35 14,032,811. Add: Receipt - Fund Received From DA 51620 21,307,454.60. 444,899,844.28 Fund Received From -TF 13952 0 0 Total Fund Available 21,989,128.95 458,932,656.11 1 DEDUCT -Transfer To: B1 and B2 Birr Account 13,700,000.00 287,886,310.50 B3 Birr Account 4,700,000.00 99,593,090.00 MoFEC Finance 1,242,354.89 26,009,547.39 Direct Payment Bank Service Charge Total Transfers 19,642,354.89 413,488,947.40 Fund balance 2,346,774.06 45,496,203.22 Gain on foreign exchange - 5,788,246.92 ENDNG BALANCE-7, JULY 2016 2,346,774.06 51,231,955.15 NB: The closing exchange rate used for ending balance is 1USD=21.8308 (2,346,774.06*21.8308)=51,231,955.15
MNSTRY OF FNANCE AND ECONOMC COOPERATON GOVERNMENT OF THE FEDERAL DEMOCRATC REPUBLC OF ETHOPA DESGNATED BRR ACCOUNTS STATEMENT FOR THE PBS SUB-PROGRAMS B1 AND B2 For the year ended 7, JULY 2016 Account Number 01601/014311/00 Depository Bank NBE Address Addis Ababa, Ethiopia Currency Birr Beginning Balance 1,082,216.00 ADD: Transfer from Pooled Special Account 287,886,310.00 Total fund available 288,968,526.00 TRANSFER TO REGONAL/ PROGRAM MPLEMENTNG ENTTES: Tigray National Regional State 16,760,777.20 Afar National Regional State 9,606,127.00 Amhara National Regional State 33,671,109.10 Oromiya National Regional State 62,769,167.60 Somali National Regional State 21,814,576.00 Benshangul-Gumuz National Regional State 7,004,972.40 Southern Nations, Nationalities and people's Regional State 28,783993.00 Gambella Peoples National Regional State 7,243,528.30 Harari National Regional State 4,148,418.00 Dire Dawa City Administration 5,833,649.10 Addis Ababa City Administration 25,005,695.50 Office of the Federal Auditor General (OFAG) 8,452,914.40 Ministry of Finance and Economic Cooperation (MoFEC) 47,264,825.90 Total Transfer 278,339,753.40 287899.0 Bank Service Charge 71,71.80 Sub Total 279,0591469.20 ENDNG BALANCE-7, JULY 2016 9,909,056.45 7,4,583 F-- 9
MNSTRY OF FNANCE AND ECONOMC COOPERATON GOVERNMENT OF THE FEDERAL DEMOCRATC REPUBLC OF ETHOPA DESGNATED BRR ACCOUNTS STATEMENT FOR THE PBS SUB-PROGRAM B3 For the year ended 7, JULY 2016 Account Number 0160/1014312/00 Depository Bank NBE Address Addis Ababa, Ethiopia Currency Birr Opening Balance 8,648,473.52 Add: Transfer from Pooled Special Account 99,593,090.00 Total fund available for use 108,241,563.52 Less: Transfer and Expenditure Transfer to CSA 13,168,011.00 Transfer to MoFEC 66,572,094.86 Transfer to MOA Transfer to MOWE 8,170,550.00 Transfer to MOH/EHNR Total Transfer 87,910,655.86 Expenditure Bank Service Charges 248,982.73 Total Transfer & Expenditure 88,159,638.59 CLOSNG BALANCE-7, JULY 2016 20,081,924.93 10
MNSTRY OF FNANCE AND ECONOMC COOPERATON GOVERNMENT OF THE FEDERAL DEMOCRATC REPUBLC OF ETHOPA PROMOTNG OF BASC SERVCES PROJECT SUB-PROGRAMS A AND B AND ENHANCNG SHARED PROSPORTY THRUOGY EQUTABLE SERVCE(ESPES) DECLARATON OF NON-PROCUREMENT OF MATERAL ASSETS FOR THE YEAR ENDED 7, JULY 2016 We hereby declare that there were no material assets acquired or procured to date with the project funds for the sub-programs that are valued individually at USD 20,000 or more each and financed by the project. 11
MNSTRY OF FNANCE AND ECONOMC COOPERATON GOVERNMENT OF THE FEDERAL DEMOCRATC REPUBLC OF ETHOPA PROMOTNG OF BASC SERVCE PROJECT SUB PROGRAMS A AND B AND ENHANCNG SHARED PROSPERTY THROUGH EQUTABLE SERVCES (ESPES) NOTES TO THE PROJECT FNANCAL STATEMENTS FOR THE YEAR ENDED 7, JULY 2016 1. BACKGROUND With the objective of expanding access and improving the quality of basic services in Education, Health, Agriculture, Water Supply and Sanitation and Rural Roads delivered by subnational governments and strengthening financial transparency and accountability in service delivery, the Government of E-thiop-ia and the-world Bank signe_t1ie Promoting of Basic Services (PBS ) Project which commenced in October 2012. PBS has two sub-programs. These sub programs are implemented by MoFEC is discussed as under: SUB-PROGRAM A - t is to contribute to the higher level of objective of promoting basic service and improving the quality of Government at Regional and local levels. SUB-PROGRAM B - Support to strengthening the capacity, transparency, accountability and financial management of Government at Regional and Local authority levels. ESPES - Focuses to improve equitable access to basic service and Strength accountability and institutionalize critical systems of the decentralized level. 1
1 2. SGNFCANT ACCOUNTNG POLCES The principal accounting policies adopted by the Project, which are consistent with those applied in the preceding period, are stated below: a) BASS OF PREPARATON: i) These Financial Statements have been prepared on a modified cash basis in accordance with the accounting policy of the Government of the Federal Democratic Republic of Ethiopia. i)the Project Financial Statements combine transactions of Sub-Programs A and B of the Promoting of Basic Services 1-- --- (PBS ) -and -(ESPES)- enhancing-- shared prosperi-tythrough equitable service for reporting consolidated transactions of all of these sub-programs. b) CURRENCY These financial statements are presented in birr. Transactions in foreign currency are translated into birr at the approximate rate of exchange prevailing at the date of the transaction. -the h Pea, 13
MNSTRY OF FNANCE AND ECONOMC COOPERATON GOVERNMENT OF THE FEDERAL DEMOCRATC REPUBLC OF ETHOPA PROMOTNG OF BASC SERVCE (PBS ) PROJECT SUB-PROGRAMS A AND B AND ENHANCNG SHARED PROSPERTY THROUGH EQUTABLE SERVCE (ESPES) NOTES TO THE CONSOLDATED FNANCAL STATEMENTS FOR THE YEAR ENDED 7, July 2016 3. CASH ON HAND AND AT BANK Birr Birr Balance in Pooled Dollar account No 02615/147000/00 7,379,195.28 Balance in pooled Dollar account No 0100101300528 1,481,397.26 Balance in Dollar account No. 02615/148000/00 51,231,955.15 Balance in Birr account No. 0160101431100 9,909,056.45 Balance in Birr account No. 0160101431200 20,081,924.93 BALANCE AT BANK MoFEC 90,083,529.07 Balance at Regions B Cash on hand 400,948.00 Cash in transit 0.00 Cash at bank 64,888,830.26 65,289,778.33 TOTAL CASH BALANCE 155,373,307.40 4. ADVANCES These are advances for sub-programs B Birr Total Tigray 4999.98 5,000 Afar 105,617.82 105,618.00 Amhara 485,449.12 485,449.00 Orornia 11,440.3(T 11440.00 Somali - - Benshangule-Gumuz 276,118.43 276,118.00 SNNPR 2,174,312.65 2,174,313.00 Gambella -- Harari 548,216.06 548,216.00 Dire Dawa - Addis Ababa 792,784.69 792,785.00 MoFED 4,904,117.68 4,904,118.00 OFAG 521,090.76 521,091.00 EPH 230,903.00 230,903.00 CSA 11,414,570.95 11,414,571.00 MOA 4,883.00 4,883.00 MOWE 1,459,749.00 1,459,749.00 TOTAL 22,934,253.30 22,934,253.30 5. ACCOUNT PAYABLES These are payables for sub-programs B Tigray 29,918.10 29,918.10 Afar 126,575.96 126,575.96 Amhara 98,395.52 98,395.52 Oromia 28,624.53 28,624.53 Somali - - Benshangule-Gumuz 1,658.00 1,658.00 SNNPR 114,564.59 114,564.59 - Gambella Harari 17,205.00 17,205.00 Dire Dawa 817.60 817.60 Addis Ababa 625,152.67 625,152.67 MoFED 3,425,933.13 3,425,933.13 OFAG 238,756.13 238,756.13 EPH 9,234.40 9,234.40 CSA 139,437.30 139,437.00 MOA 430.32 430.32 MOWE - TOTAL 4,856,703.25 4,856,703.25 f N 14
MNSTRY OF FNANCE AND ECONOMC COOPERATON GOVERNMENT OF THE FEDERAL DEMOCRATC REPUBLC OF ETHOPA PROMOTNG OF BASC SERVCE (PBS ) PROJECT AND ENHANCNG SHARED PROSPORTY EQUTABLE SERVCE SUB-PROGRAM A AND B NOTES TO THE PROJECT FNANCAL STATEMENTS FOR THE YEAR ENDED 7, JULY 2016 6. EXPENDTURE OF SUB-PROGRAM A Birr Education 24,708,586,700.00 Health (ncluding HV/ADS) 10,707,042,300.00 Agriculture and Natural Resource 7,370,758,700.00 Water Supply and Sanitation 1,824,369,800.00 Rural Road 667,407,800.00 TOTAL 45,278,165,356.00 7. EXPENDTURE OF SUB-PROGRAM B Personal Services 103,275,681.00 Goods and Services 286,625,549.00 Fixed Assets 85,464,451.00 TOTAL 475,365,681.00 285,645,41.00
GOVERNMENT OF THE FEDERAL DEMOCRATC REPUBLC OF ETHOPA PROMOTNG OF BASC SERVCE PROJECT SUBPROGRAMS A AND B AND ESPES ENHANCNG SHARED PROSPERTY THROUGH EQUTABLE SREVCE A RECONCLATON OF AMOUNTS "RECEVED BY THE PROJECT FROM THE DEVELOPMENT PARTNERS (NCLUDNG THE WORLD BANK)" WTH THOSE SHOWN AS BENG "DSBURSED BY THE DEVELOPMENT PARTNERS (NCLUDNG THE WORLD BANK)" Amounts4 Understate -,... "Disbursed-by Amounts. nt d amount.... the Devealopment "Received by-. dr c -n1he!.*'-.received. Remark -parters. - the PBS. e U -(including. the Project",y worldbank)" project 1 nternational Development Association (DA)51620 USD 9,648,251.15 USD 9,648,251.15 - B Advance 2 nternational Development - ---- Association (DA)51620 USD 11,659,203.45 USD 11,659,203.45 - B Advance 3 nternational Development Association (DA) 5716 USD 89,639,594.00 USD 89,639,594.00 - ESPES Advance 4 nternational Development Association (DA) 5716 USD 86,828,264.00 86,828,264.00 - ESPES Advance 5 Trust Fund (TF) 13952 USD 18,950,000.0.00 USD 18,950,000.0.00 - A Reimburseme nt 6 taly Fund USD 4,361,914.80 USD 4,361,914.80 - A Advance 7 Austrian Fund USD 1,521,797.00 USD 1,521,797.00 - A Advance FOR THE YEAR ENDED 7, JULY 2016 Note: * nternational Development Association (DA): Credit Number 51620-ET * nternational Development Association (DA): Credit Number 5716-ET * Multi Donors Trust Fund (TF) : Grant Number 13952 * taly Fund: * Austria Development Fund Agency. 14 1