Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Audit for an Impact for the Public Ema i. ba Independent Auditor's Report To the readers of Kiribati Telecommunication and ICT Development Project Financial statements for the period ended 31 December 2015 We have audited the financial statements of Kiribati Telecommunications and ICT Development Project (KTICTDP) financed under the World Bank - IDA and Pacific Region Infrastructure Facility Project (PRIF) which comprise the Statement of Cash Receipts and Payments as of December 31. 2015. and for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility Management (Executing Agency) is responsible for the preparation and fair presentation of these financial statements in accordance with the modified cash basis of accounting described in Note 7 to the Financial Statement. and for such internal control as management determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on the accompanying statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. Our audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management. as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. The KTICTDP Management's policy is to prepare the accompanying statements in the format agreed between the Donor's and the Government of Kiribati as noted in the Draft Project Operation Manual for the Grant, on a cash receipts and disbursement basis in which cash is recognized when received and expenses are recognized when paid. rather than when incurred. Unqualified Opinion In our opinion, the aforementioned financial statements and appended notes that were also the subject of the audit. presents fairly. in all material respects. the cash receipts and disbursements of ICT Project for the year ended December 31. 2015 in accordance with the cash receipts and disbursements basis of accounting described in Note 7: and expencditure have been applied to the purposes intended for in the Grant aureement.
In addition: With respect to Statements of Expenditure. adequate supporting documents have been maintained to support claims to the Donors for reimbursements of expenditures incurred: and which expenditures are eligible for financing under IDA Grant Agreement H7800 KI/PRIF TF 11213 KI. The Designated Accounts re note 2 give a true and fair view of the receipts collected and payments made during the year ended 31 December 2015: and these receipts and payments support Designated Account replenishments during the year....... $ 4.4... 28 June. 2016 Mrs. Matereta B Raiman Auditor General Kiribati National Audit Office Bairiki Tarawa
KIRIBATI NATIONAL AUDIT OFFICE Tel: (686)21118 P.0 BOX 63 Fax: (686)21250 rik itarawa Email: infor@knao.gov.ki Kiribati Audit for an impact for the public File Ref: TRH: 33/25 Date: 28/06/2016 Reina Timau Project Manager Kiribati Fiduciary Services Unit Dear Sir/Madam, Final Management Letter for KTICT accounts for year ended 31 December 2015 We have audited in accordance with International Standards on Auditing the financial statements of the Kiribati Telecommunications and ICT Development Project (the Project), financed under the IDA Grant H7800KI and PRIF Grant TF 11213K11 for the year ending 31/12/2015, and have issued our report dated 28/06/2016. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statement. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the statement, whether due to fraud or error. In making those risk assessments, we considered internal controls relevant to the Project's preparation and fair presentation of the statement 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. We would be pleased to discuss these comments and recommendations with you any time. The Project's written response to our comments and recommendations has not been subjected to the auditing procedures applied in the audit of the statement and, accordingly, we express no opinion on it. This report consists of: Section I Contains recommendations relating to improvements in existing systems and procedures noted in the current year.
This communication is intended solely for the information and use of the Project's Management and is not intended to be and should not be used by anyone other than these specified parties. Yours sincerely, Auditor General Cc: Secretary, MCTTD, Betio, Project Manager, KAIP MCTTD, Betio
Section I Improvements to existing systems and procedures Audit Issue no. 1 - Unretired Imprest, $30,056 Observation: The audit noted staff imprest during the year amounted to $30,056 had not been retired as of 31 December 2015. Section 5.10 of the POM highlighted that accounting and reporting of the project should be in accordance to the existing Government Financial Regulations and processes. Therefore, the Project should abide by the Kiribati Financial Regulations (KFR) which requires that imprest be retired when the service is completed (KFR, 2011, s12.3) or on due date (KFR, 2011, s12.5) and within 10 days after completion of trip, per Imprest policy. Implications: The failure to retire imprest on time may: * Distort cash flow of the Project, * Result in misuse of project funds; * Cause an overstatement of expenditure. Recommendation: * The project accountant should ensure that all imprest holders retire their imprest within 10 days after returning from trip, * Salary deductions from respective employees should be done, * Management should implement internal control system for retirement of imprest, * Ensure imprest are only issued to those that do not have outstanding dues. Management Response: We concur with your recommendations, and will take steps to ensure prompter retirement of imprests. We would point out that the unretired imprests as at 31" March 2016 had been reduced from $30,000 to $15,000.
KIRIBATI TELECOMMUNICATIONS AND ICT DEVELOPMENT PROJECT Funded by: World Bank (International Development Association - IDA) Pacific Region Infrastructure Facility (PRIF) FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2015
Contents KIRIBATI TELECOMMUNICATIONS AND ICT DEVELOPMENT PROJECT Introduction 2 Statement of Receipts and Payments Summary 3 Statement of Funds Received By Source 4 Summary of Grant Balances with World Bank 5 Statement of Funds Paid By Component 6 Statement of Funds Paid By Category 7 Sc 'ement of Balances 8 Notes to the Financial Statements 9 Fixed Assets Register 11
KIRIBATI TELECOMMUNICATIONS AND ICT DEVELOPMENT PROJECT The Financial Reports for the project for its third year of implementation ending 31 December 2015 are being presented for auditing. In compliance with the project agreements the audit report is required to be submitted to the World Bank by the 3 0 th June 2016, and we would request your kind offices if the auditing could be completed by the due date. Al. "inancial records for the project are held within the Kiribati Fiduciary Services Unit at the Ministry of Finance & Economic Planning. Meere Karotu PST Manager Reina Timau Manager, KFSU Date: 5th February 2016 2
KIRIBATI TELECOMMUNICATIONS AND ICT DEVELOPMENT PROJECT IDA GRANT H7800 KI/PRIF GRANT TF 11213 KI STATEMENT OF RECEIPTS & PAYMENTS SUMMARY For the Period Ended December 31, 2015 AU$ Account Decsription Notes 2015 Cumulative CASH RECEIPTS Direct Payments IDA Grant H7800 KI 1 $ - $ 307,449 PRIF Grant TF 11213 KI 1 $ 223,514 $ 373,715 Designated Accounts (DAs) IDA Grant H7800 KI 2 $ 634 $ 461,075 PRIF Grant TF 11213 KI 2 $ 912,194 $ 1,586,678 Total Cash Receipts P$ 1,136,342 '$ 2,728,917 CASH PAYMENTS (Per Grant Component) 3 Component 1 IDA Grant H7800 KI $ - $ 499,388 PRIF Grant TF 11213 KI $ 342,693 $ 759,663 Component 2 IDA Grant H7800 KI $ - $ 78,826 PRIF Grant TF 11213 KI $ 578,854 $ 866,988 Component 3 IDA Grant H7800 KI $ - $ - PRIF Grant TF 11213 KI $ 22,680 $ 22,680 Component 4 IDA Grant H7800 KI $ 582 $ 30,258 PRIF Grant TF 11213 KI $ 63,352 $ 191,188 Total Cash Payments $ 1,008,161 $ 2,448,991 NET CASH RECEIPTS $ 128,181 $ 279,926 NET CHANGE IN CASH $ 128,181 $ 279,926 Opening Cash Balances Designated Account $ 140,687 $ - Accounts Receivable $ 11,058 $ - Total Opening Cash $ 151,745 $ - Add: Net Change in Cash $ 128,181 $ 279,926 Net Cash Available $ 279,926 $ 279,926 Ending Cash Balances 4 Designated Account $ 249,901 $ 249,901 Accounts Receivable $ 30,056 $ 30,056 Accounts Payable $ (31) $ (31) $ 279,926 $ 279,926 3
-0 o- fl 'O fl - 0 fi<00<< e o 0<0 o r o.4< 00 m 00 o - f m oo 4<.-o 4<..4 C3 I no no- an-0.c.c.c. >o 0 4 n~ ks ri D6 ce r, V oooo m ä g m u Ln i rrd ùû d fl 4e,.> m40,>o40 - - - 0 fl 4 014 0 og40> 0 < 0 i 1 nf - n Ln 9 - i o m H< 9 40<1-1 '><1 mr.oo OJ -w 4. s <<N 0 0 ' - - - - < ON 0< m. a~~~~~~~~~ 2 a 0 <14 o- > 90 :r 14 <or z m.o0.4. o.fl 4 <fl 4 e o fli e s e o O > E > - 00d - 00<ro - 4011<0 f l o 00 10 N4011o r- 40* 4 - o a 99 t O <2 c hr. < </1 LO -> as ao o.o a m <V o z- T c2 E c9 Zu 4 > - - - > > - 40 ogzo 4 < 4 - o 0 oco mcmcc C, CCe CCC CC o - 0 0 E E E E E E EE E E EE E '00<.. 0 :.0..e. c.c. c. Eu oc3 < 4< < 4< < < <0< <<<< z z z z z z z z z z z z z oae ~ ~ ~ 1 cc z ~ z z zz z z 0..oo - o w oo 0 a ) o c) NT> NN NN NS E N E c
KIRIBATI TELECOMMUNICATIONS AND ICT DEVELOPMENT PROJECT IDA GRANT H7800 KI/PRIF GRANT TF 11213 KI SUMMARY OF GRANT BALANCES AS PER WB STATEMENT FOR THE PERIOD ENDED DECEMBER 31, 2015 IDA GRANT H7800 KI 31-Dec-2015 World Bank Monthly Disbursement Sununary - December 2015 Country Kiribati Project. P126324 KI: Telecommunicanons and ICT Development Project Samm2ry Loan: IDA 17S00-001 KI The undi5bursed balance on 01-Dec-2015 227.024 3S The total posted tm the month of December 2015. 000 The undisbursed balance on 31-Dec-2015: 227.024 33 Loan status on December 31. 2015: Commit CcV Total Cancelled Net Disbursed Undisbursed Committed Available XDR 700,000.00 0.00 700.000.00 472,975.62 227,024.33 000 227.024.38 Total Disbursed as Percentage of Net Allocated Amount 6757 % PRIF GRANT TF 11213 KI World Bank Mointlv Disbursement Suunary - December 2015 Country Kiribati 31-Dec-2015 Project P126324 KI: Telecommunications and ICT Development Project Loan: TF 11213-001 KI Summxary- The undisbursed balance on 01-Dec-2015 2.17,24992 The total posted in the month of December 2015: 53.041.27 The undisbursed balance on 31-Dec-2015: 2.464.203.65 Loan status on December 31. 2015: Commit Ccy Total Cancelled Net Disbursed Undisbursed Committed Available USD 4.100.000 00 0.00 4.100.000.00 1.635.791.35 2.464.208.65 0.00-1464.208.65 Total Disbursed as Percentage of Net Allocated Amount 39.90 % 5
KIRIBATI TELECOMMUNICATIONS AND ICT DEVELOPMENT PROJECT IDA GRANT H7800 KI/PRIF GRANT TF 11213 KI STATEMENT OF FUNDS PAID BY COMPONENT (AU$) For the Period Ended December 31, 2015 Note 3 2015 1 Cumulative IDA PRIF Total IDA PRIF Total Component 1 - Policy & Legal Support 1.1 Policy Review & Coordination 15,825 15,825 191,939 204,018 395,957 1.2 TSKL Transformation 305,368 305,368 307,449 533,318 840,767 1.3 Policy Analyst for MCTTD 21,500 21,500 22,327 22,327 1.4 Audit of TSKL Accounts Total Component 1-342,693 342,693 499,388 759,663 1,259,051 Component 2 - Regulatory Support 2.1 New Market Entry Selection 245,026 245,026 245,026 245,026 2.2 General Regulatory Support o 2.3 Technical Management & Training 37,924 37,924 9,256 77,564 86,820 2.4 Equipment & Software for TAK - r 2.5 Spectrum System Mngm't Database r 2.6 Spectrum Monitoring Equipment ' - 65,480 r 65,480 2.7 Senior Regulatory Specialist for TAK 215,287 215,287 4,090 418,480 422,570 2.8 Numbering Specialist - 45,300 45,300 2.9 Universal Access Plan 80,617 80,617 80,617 80,617 Total Component 2-578,854 578,854 78,826 866,988 945,813 Component 3-0/I Connectivity 3.1 TA to MCTTD & TAK - - - - - 3.2 0/1 Connectivity Subsidies - 22,680 22,680-22,680 22,680 Total Component 3-22,680 22,680-22,680 22,680 Component 4 - Project Management 4.1 T&ICT Project Coordinator 39,598 39,598 21,589 78,309 99,897 4.2 Procurem't Specialist (PMU cost) 4.3 Computer Equipment & Peripherals o - 3,970 7,585 11,556 4.4 Incremental Operating Costs 582 23,754 24,336 4,699 57,794 62,493 4.5 Project Audit " 7 4.6 Double cab - ICT 47,500 47,500 4.7 Assistant to ICT Manager r 4.8 TICT & KAP Accountant r Total Component 4 582 63,352 63,934 30,258 191,188 221,446 Grand Total 582 1,007,579 1,008,161 608,472 1,840,519 2,448,991 6
KIRIBATI TELECOMMUNICATIONS AND ICT DEVELOPMENT PROJECT IDA GRANT H7800 KI/PRIF GRANT TF 11213 KI STATEMENT OF FUNDS PAID BY CATEGORY (AU$) For the Period Ended December 31, 2015 2015 Cumulative IDA PRIF Total IDA PRIF Total Category 1 582 984,899 985,481 608,472 1,817,839 2,426,311 Goods, works, non-consulting services, consultants' services, operating costs and training Category 2-22,680 22,680-22,680 22,680 Subsidies under Component 3 (b) Grand Total 582 1,007,579 1,008,161 608,472 1,840,519 2,448,991 7
KIRIBATI TELECOMMUNICATIONS AND ICT DEVELOPMENT PROJECT IDA GRANT H7800 KI/PRIF GRANT TF 11213 KI STATEMENT OF BALANCES (AU$) For the Period Ended December 31, 2015 Note 4 2015 (i) Designated Account $ 249,900.67 Bank Reconciliation at 31 December 2015 $ 252,483.97 Balance as per Bank Statement Less: Unpresented Cheques Dec-15 998234 $ 646.20 Jan-16 998237 $ 305.00 Feb-16 998236 $ 229.50 Mar-16 998239 $ 739.84 Apr-16 998238 $ 662.76 r$ 2,583.30 $ 249,900.67 (ii) Accounts Receivable M Karotu $ 10,699.90 langaibo Tekanimaeu $ 2,190.00 Rimeta Beniamina $ 4,780.90 Renga Teannaki $ 690.00 Kaboterenga Romatoa $ 2,19Q.00 Ereta Vidia $ 3,030.00 Kamauri Tetaua $ 690.00 Samaluta Nunaia $ 345.00 Tabwakea Banin $ 290.00 Tabaua Rotitaake $ 535.00 Teewa Tonaeka $ 270.00 Bakarere Katarake $ 270.00 Eritana Simi $ 730.00 Kareinai Timirau $ 535.00 Teera Eriuta $ 1,175.00 Danietta Apisai $ 1,075.00 Burita Teeriki $ 270.00 Betero Tooma $ 290.00 Total $ 30,055.80 8
Notes to the Financial Statements BACKGROUND 1. The Kiribati Telecommunications and ICT Development Project (the Project) officially commenced in November 2012, being the date of WB effectiveness of the revised IDA grant; no transactions were made in 2012. The closing date is currently set as June 30, 2017. 2. The Project is funded jointly by the World Bank (WB; through its International Development Association - IDA) and the Pacific Region Infrastructure Facility (PRIF) as follows: o IDA-Grant of Special Drawing Rights (SDR) 0.70 million (with originally estimated AU$ equivalent of AU$ 1.00 million); established through a Financing Agreement dated September 26 2012. o PRIF - Grant of US$ 4.10 million (with originally estimated AU$ equivalent of AU$ 4.10 million); established through a Financing Agreement (Amendment and Restatement) dated September 13, 2012. OBJECTIVES 3. The objective of the Project is to strengthen the legal, regulatory and institutional environment enabling a market-driven telecommunications sector, and facilitating improved connectivity for the outer islands. There are four Components to the Project, as follows: o Component 1 -Supporting the Ministry of Communications, Transport and Tourism Development (MCTTD) in carrying out (i) an ICT policy review and coordination; (ii) a Telecom Services Kiribati Limited (TSKL) restructuring; and (iii) a legal and regulatory review for legislative and regulatory reforms. o Component 2 - Supporting the Telecommunications Authority of Kiribati (TAK) in carrying out (i) an analysis of conditions for new market entry; (ii) an improved general regulatory role; and (iii) an improved technical management. o Component 3 - Facilitating improved connectivity for the outer islands. o Component 4 - Project Management. PROJECT IMPLEMENTATION & ADMINISTRATION 4. The Project is implemented under the overall policy guidance and strategic direction of the Project Steering Committee. Management support to the Project is provided through the Kiribati Fiduciary Services Unit (KFSU), which is established under the Ministry of Finance and Economic Development (MFED). 5. WB administers both the IDA and PRIF funding. One bank account ("Designated Account" {DA}) has been established in Kiribati, for both the IDA funding and the PRIF funding. In addition, larger payments under WB-administered funding may be made directly by WB and charged directly to the respective grant, rather than channeled through the Designated Account, in accordance with agreed WB procedures. 9
6. Costs are charged to the respective grants in the respective grant currency at exchange rates applied by WB. ACCOUNTING POLICY 7. The Financial Statements are prepared by the Project under the historical cost convention and in accordance with the cash basis of accounting, except: * Advances (which are given for approved official purposes only) are charged against a Receivables Account initially, and are charged to expenditure based on advance acquittals with supporting documents; and * Payables are taken up for income tax and provident fund liabilities at the time of payment of salaries and are cleared through the settlement of the liabilities to the respective authorities, on a monthly basis. 8. The reporting currency is Australian Dollars (AU$). 9. Transactions in currencies other than AU$ are translated into AU$ using the actual exchange rate applied by the bank (where the transactions are paid from the Designated Account). Where the transactions are paid directly by WB, the applicable rate is determined as follows: a. Payments against invoices in AU$ are converted to AU$ at 1: 1 b. Payments against invoices in other currencies (for example, US$) are converted to AU$ based on the exchange rate as per www.xe.com on the value date 10. This is the third year of operation for the Project. 10
KIRIBATI INFORMATION COMMUNICATION & TECHNOLOGY PROJECT IDA GRANT H7420 KI/PRIF GRANT TF12678 KI FIXED ASSETS REGISTER FOR THE PERIOD ENDED 31 DECEMBER 2015 Kiribati Information Communication Technology Fixed Assets Register Period Ended: 31st December 2015 Item Voucher Description (inc Purchase Purchase Location/ Warranty Name of SupplierAsset Serial No No. No. Make/Model/Type) Date Price Assigned To Details User 1 1303 Farrly Trap Online Laptop Lenovo 807000954 28th Jun 13 1,267 MCTTD M eere 2 1303 Fanly Trap Online Laptop Lenovo QB07000955 28th Jun 13 1,267 MCTTO No body 3 1302 Taotin Trading Co. Cabinet 3 drawer 28th Jun 13 390 MCTTD Meere 4 1330 Apple Mac mini server Apple CO7KXOASDWYN 1st Nov 13 1,437 MCTTD MCTTD 5 1422 P/U MAZDA BT-50 31st Mar14 47,500 MCTTD Meere 6 1448 John Crook Computer items 26th June l4 7,585 MCTTO MCTTD Total Amount (AU$) 59,446 11