AlDf Uniteö Purpose Mozambique For the year enöeö31 Marcnh2019 United Purnose Moambiue Financial Audit Report fJr the Year ended 31 March 2019 Contents 1 Introduction 1 1.1 The project 1 1.2 Funding 1 2 Independent auditor's report 2 2.1 Introduction 2 2.2 Our engagement 2 2.3 Reporting 2 2.4 Summary of results 3 2.5 Restriction on use and limitation of liability 3 3 Management's responsibility statement 4 4 Report on statement of receipts and payments 5 5 Financial statements 7 5.1 Statement of financial position 7 5.2 Consolidated statement of receipts and payments 8 5.3 Statement of receipts and payments by fund 9 5.4 Basis of accounting 10 5.5 Cash at bank 11 5.6 Donations 12 5.7 Other receipts 13 5.8 Interest income 13 6 Report on evaluation of project internal controls 14 7 Report on evaluation of whether the financial statements payments are in compliance with the relevant project agreement terms and local laws and regulations 15 Q 2019 KPMG International. All rights reserved. United Purnose Moainhiaue Financial Audit Report fir the year ended 31 March 2019 1 Introduction 1.1 The project United Purpose is an international non-profit and non-governmental organisation registered as a charity with number 272465 in 1976 in the United Kingdom. It operates in ten countries in Africa, South America and Asia. United Purpose has over 22 years of experience in implementing development and relief projects in Mozambique. United Purpose's approach in Mozambique is to be involved in partnerships and capacity building with local organizations (including civil society organizations, private sector and public sector). United Purpose Program in Mozambique has thematic focus on Social Accountability and Good Governance along with integrated local development aspects with emphasis on: (i) Food Security and Nutrition; (ii) Water, Sanitation and Hygiene; (iii) Community Health; (iv) Capacity Building, Education and Advocacy; and (v) Social Protection. Program focuses cross-cutting themes of Gender, HIV, Climate Changes and Disability. Through partnerships with local Civil Society Organisations (CSOs),. local communities, Local Government and the private sector, United Purpose Mozambique works to: (i) assist citizens and CSOs to monitor and demand transparency and accountability from the Government regarding provision of services and public resources allocation; (ii) improve incomes, health and well-being indicators of vulnerable communities; and (iii) improve the effectiveness and efficiency of local CSOs by ensuring that they have skills, confidence and apply necessary approaches to achieve their objectives. Geographically, activities of United Purpose in Mozambique, in partnership with national organizations, are carried out in 6 provinces namely, Niassa, Maputo, Manica, Zamb&zia, Nampula and Cabo Delgado with 3 local offices', head office in Lichinga and support offices in Maputo and Chimoio. 1.2 Funding Funds are transferred by the donors to the organisation's bank accounts and implementation of the projects are in accordance with the specific funding agreements signed between United Purpose and the donors. During the year under audit, United Purpose Mozambique received funds from the folllowing donors: * United Purpose UK; * World Bank; * Swiss Agency for Development and Cooperation (SDC); * Programa de Desenvolvimento Municipal (PRODEM) - joint funding from Sweden, Ireland, Denmark and Switzerland managed by consultants company COWI; * Action on Poverty (AOP); * Food Security Through Climate Adaptation and Resilence in Mozambique (FAR) - funding from Swedish embassy managed by Swiss contact; 1 United Purose Moanbiane Financial Audit Report for the year ended 31 March 2019 2 Independent auditor's report 2.1 Introduction KPMG Mozambique was contracted by United Purpose Mozambique to conduct a financial audit for the year ended 31 March 2019. 2.2 Our engagement The scope of the financial audit is: * To perform an audit in accordance with the International Standards on Auditing in order to express an opinion on whether the financial statements for the year ended 31 March 2019 have been prepared, in all material respects, in accordance with the basis of accounting adopted by United Purpose. * To evaluate the design of the internal controls over the key transaction streams and assess whether the controls have been operating effectively during the year. * To evaluate whether the financial statements are in compliance with the relevant agreement terms,local laws and regulations. 2.3 Reporting We have presented our report as follows; * Audit of the financial statements (See section 4); * Evaluation of the internal controls (See section 6); * Evaluation of whether the financial statements are in compliance with the relevant agreement terms, and local laws and regulations (See section 7). 2 United Purnose Moainhiaue Financial Audit Report fbr the year ended 31 March 2019 2.4 Summary of results * Audit of the financial statements - Our report for the year ended 31 March 2019 contains an unqualified opinion. * Evaluation of the internal controls - Our report indicates that there are deficiencies in the design and operation of controls which have come to our attention and these are dealt with in a separate letter. * Compliance with agreement terms, local laws and regulations - Our report indicates that there arc no instances of non-compliance which have come to our attention. 2.5 Restriction on use and limitation of liability The financial statements are prepared in accordance with the basis of accounting described in note 5.4 to provide information to the donors in accordance with the funding agreements signed between United Purpose Mozambique and the donors, as referred in Section 1. As a result, the financial statements and our reports in Sections 4, 6 and 7 may not be suitable for another purpose. Our report is intended solely for United Purpose and donors and should not be distributed to or used by parties other than those specified above. To the fullest extent permitted by law our liability is restricted to those who engaged us. 3 United Purnose Afo:anbiate Financial Audit Report for the year ended 31 March 2019 3 Management's responsibility statement The Management of United Purpose Mozambique is responsible for the preparation and presentation of the financial statements for the year ended 31 March 2019 and the accompanying notes, in accordance with the basis of accounting, as described in note 5.4. Management is also responsible for determining that the basis of accounting is an acceptable basis for preparing and presenting the financial statements in the circumstances; for such internal control as the Management determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; and for maintaining adequate accounting records and an effective system of risk management. Management is also responsible for the other internal controls and for compliance with the relevant agreement terms, local laws and regulations applicable to United Purpose Mozambique. The responsibility for the prevention and detection of non-compliance rests with management. Approval of the financial statements The financial statements for the year ended 31 March 2019 and the accompanying notes, were approved by management on 6 August 2019 and are signed on their behalf by: Helei a Skenber Coutmy Director 4 KPMG Auditores e Consultores, SA Telefone: +258 (21) 355 200 Edificio KPMG Telefax: +258 (21) 313 358 Rua 1.233, No 72 C Caixa Postal, 2451 Maputo, Mogambique Email: mz-fminformation()kompg.com Web: www.kpmg.co.mz 4 Report on statement of receipts and payments Independent auditors report To the Management of United Purpose Mozambique Opinion We have audited the financial statements of United Purpose Mozambique, set out on pages 7 to 13, which comprise the statements of financial position as at 31 March 2019 and the statement of receipts and payments for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information. In our opinion, the accompanying financial statements of United Purpose Mozambique for the year ended 31 March 2019 have been prepared, in all material respects, in accordance with the cash receipts and disbursement basis of accounting described in Note 5.4. 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 Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Entity in accordance the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (JESBA Code) together with the ethical requirements relevant to our audit of the financial statements in Mozambique, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. 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 We draw attention to Note 5.4 to the financial statements, which describes the basis of accounting. The financial statements are prepared to provide information to the management of United Purpose and the donors. As a result, the financial statements may not be suitable for another purpose. Our report is intended solely for United Purpose and the donors and should not be distributed to parties other than United Purpose and the donors. Our opinion is not modified in respect of this matter. Other Information The management is responsible for the other information. The other information comprises the Managements' Report and the Managements' Responsibility Statement. The other information does not include the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon, hi connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other infornation is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. KPMG Aditores a CrAl es,S. SA, uma soci.dade ar6nimia do Registada em MoCambique sob a designaho do, KPMG responsabi ldad. ,imttada, a mmbr. da KPMG intama oa,i- uma Auditoras a Consultores, SA coaperati Suia KPMG Auditores a ConsulTores SA, a Moamnbique limited liability Ragistered In Mozambique, as KPMG Audnares 5 Company, Is a member of PMG International. a Swiss cooperatlea a Consuitores, 5A Responsibilities of Management for the Financial Statements Management is responsible [or the preparation and presentation of the financial statements in accordance with the cash receipts and disbursement basis of accounting described in Note 5.4, for determining the acceptability of the basis of accounting, 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. Auditors' Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the 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 this financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: * Identify and assess the risks of material misstatement of the financial statement, 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 Entity's internal control. * 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 financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with management 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. MG, S ciedade de Auditores Certificados, 04/SCAIOCAM/2014 epresenta a por: er He&m-indra Jolhi 7/CA/OCAM/2014 Partner 6 August 19 6 United Purnose Mo.anbiane Financial Audit Report for the Year ended 31 March 2019 5 Financial statements 5.1 Statement of financial position as at 31 March 2019 Note 31 March 2019 31 March 2018 MT MT Current assets Cash at bank 5.5 35557939 32922 134 Total assets 35557939 32922134 Accumulated funds Opening balance 32 922 134 24 939 789 Excess of receipts over payments 2 506 930 7 982 345 Payables 128 875 - Total accumulated funds 35557939 32922 134 7 United Purnose Moz7ambiane Financial Audit Report for the Year ended 31 March 2019 5.2 Consolidated statement of receipts and payments for the year ended 31 March 2019 April 2018 - April 2017 - March 2019 March 2018 Note MT MT Receipts Donations 5.6 62283014 75 168 511 Interest income 5.8 1016489 87215 Other receipts 5.7 14878492 5 760385 Total receipts 78177995 81 016 111 Payments Staff cost 40 429 805 24 900 830 Project activities 27 038 160 41 371 350 Equipment - 1 364205 Monitoring and evaluation 7325100 5 397381 Other cost 878 000 - Total payments 75 671 065 73 033 766 Excess of receipts over payments 2506930 7982345 8 United Purpose Mozanique Financial Audit Report for the Year ended 31 March 2019 5.3 Statement of receipts and payments by fund for the year ended 31 March 2019 AOP World Bank PRODEMI 1 PRODEM 2 SDC P19 FAR United Purpose Total Nloz MT MT MT MT MT MT MT MT MT Receipts Donations 4391 396 1 736074 - 16500000 18 133696 709961 13 741 300 7070587 62283014 Funds channelled to core account - - - - - - - 14 170 523 14 170 523 Interest income - - - . - 1016489 1 016489 Other income - - - - - - - 707969 707969 Total receipts 4391 396 1 736 074 - 16500 000 18 133 696 709 961 13 741 300 22 965 568 78 177 995 Payments Staffcost 3 165 334 - - 10952213 1 892303 - 8 076826 16343 128 40429804 Project activities 4 172750 - - 9200463 1 442557 688 678 11 529894 246386 27280728 Monitoring and evaluation 1 997 769 - 1 693 561 165 606 - 570 076 2655 520 7082532 Other expenses - - - - - 878 000 878 000 Total payments 9 335 853 - - 21 846 237 3 500 466 688 678 20 176 796 20 123 034 75 671 065 Excess of receipts/(payments) over payments (receipts) (4 944 457) 1 736 074 - (5346237) 14633 230 21 283 (6435496) 2 842 534 2 506 930 Opening balance (8 488 289) (1 885 101) (38 059) 5 346 824 - - 11 004 193 26982 566 32 922 134 Payables - - - - - - - 128 875 128875 Closing balance (13 432 746) (149 027) (38 059) 587 14633 230 21 283 4568697 29953 975 35 557 939 9 United PurDose Moainbione Financial Amdit Report for the year ended 31 March 2019 Notes to the financial statements fbr the year ended 31 Varch 2019 5.4 Basis of accounting The financial statements have been prepared in accordance with the following basis of accounting, applied consistently with that of the previous year. a) Accounting convention The financial statements are prepared under the historical cost convention. b) Cash basis The financial statements have been drawn up on the cash basis from the information reflected in the financial reports and accounting records of the project. c) Currencies The functional currency of the project is MT. Transactions in other currencies are translated into Metical at weighted average exchange rate. Monetary assets and liabilities denominated in currencies other than MT are translated to MT at the year end exchange rate. d) Fixed assets Fixed assets are expensed in the year of purchase, e) Funds received Funds received comprise donations received from donors and are recorded on receipt of the funds into the bank account. f) Payments Payments are recorded in the books on disbursement of the funds from the bank account, h) Payables Payables are measured at cost. g) Advances Advances represent payments which have been made but which are yet to be reimbursed or justified with supporting documents. 10 United Purose Mozambieue Financial Audit Report ftv the year ended 31 March 2019 Notes to the financial statements f1br the year ended 31 March 2019 (Continued) 5.5 Cash at bank 31 March 31 March 2019 2018 MT MT Bank Currency Account Millennium bim MZN 21143091 1 812 003 5 045 085 Millennium bim MZN 10905032 4 568 697 11 433 805 Millennium bim MZN 79743507 908 193 95 062 Millennium bim MZN 262450088 187 640 6 089 348 Millennium bim MZN 107005454 173 092 122 362 Millennium bim MZN 131685843 2782 2782 Millennium bim USD 21143188 18 729 157 977 924 Millennium bim USD 75235723 6 946 6 903 Millennium bim USD 91619023 3 269 429 3 248 863 Millennium bim MZN 402389660 5 900 000 5 900 000 35557939 32922 134 11 United Purnose Alo7ambiaue Financial Audit Report for the year ended 31 March 2019 Notes to the financial statements for the year ended 31 March 2019 (Continued) 5.6 Donations The donations received during the year are detailed as follows: Donor Date Original currency Equivalent in MZN AOP 24.05.2018 Aus$ 1 217 54483 AOP 29.09.2018 Aus$ 15 000 642 190 AOP 14.02.2019 Aus$ 100 000 4 426 354 5 123 027 SDC 15.02.2019 USD 292500 18273 938 18 273 938 World Bank 17.05.2018 USD 28037 1 685 598 1 685 598 SNV 30.04.2018 USD 52857 3 298638 SNV 16.05.2018 USD 3969 238 590 SNV 16.10.2018 USD 56537 3421924 6959 152 FAR/Swiss contact 08.11.2018 SEK 2 050 000 13 741 300 13 741 300 PRODEM 03.04.2018 MZN 16 500 000 16500000 16500000 Total 62 283 014 12 United Puroose Mo7ambiaue Financial Audit Report for the Year ended 31 March 2019 Notes to the financial statements for the year ended 31 March 2019 5.7 Other receipts Current Prior year year Prodem contribution 8 878 000 5 760 385 FAR contribution 2 930 400 - Reimbursement from Staff 105 400 Swiss Contact rent contribution 242 569 Vehicle Disposal income 360 000 Salaries contribution for CORE 2 362 123 - 14 878 492 5 760 385 5.8 Interest income Month April 2018 89446 87215 May 2018 86560 - June 2018 89445 - July 2018 86560 - August 2018 89446 - September 2018 89446 - October 2018 86560 - November 2018 89446 - December 2018 86560 - January 2019 89446 - February 2019 89446 - March 2019 44129 - 1016489 87215 The interest income results from a MT 5 900 000 term deposit at Millennium bim. The deposit was made on 5 February 2018 with maturity of one month, at an interest rate of 17,85% and it is automatically renewable. 13 KPMG Auditores e Consultores, SA Telefone: +258 (21) 355 200 Edificio KPMG Telefax: +258 (21) 313 358 Rua 1.233, N' 72 C Caixa Postal, 2451 Maputo, Mogambique Email: mz-fminformation(kpma.com Web: www.kpmg.co.mz 6 Report on evaluation of project internal controls Independent auditor's report To the management of United Purpose Mozambique As an extension of our audit of the financial statements of United Purpose Mozambique for the year ended 31 March 2019, reported in Section 4, we are required to assess that "there are adequate internal controls over the key transaction streams which have been operating effectively during the year" and report on deficiencies in the design or operation of internal controls that have come to our attention during our financial audit. Management's responsibility for the internal controls Management is responsible for determining the project's control objectives and for the design and implementation of internal controls, including key controls, to achieve those control objectives and for ensuring that such controls operate effectively. Auditors' responsibility There are no established frameworks for evaluating the effectiveness of internal controls applicable to an entity of this nature. Accordingly, we applied our professional judgment in determining the procedures selected and the extent of our procedures, as well as the matters to be reported. The extent of our procedures comprised enquiries and discussions with those responsible for financial and accounting matters and performing such tests of detail as we considered necessary for the purpose of our audit of the financial statements; and additional enquiries and discussions where we considered it appropriate having regard to our knowledge of the entity. However, our objective was not to provide an opinion on project internal controls. Accordingly, we do not express such an opinion. Matters coming to our attention These are dealt with in a separate management letter. K MG, Soc edade de Auditores Certificados, 04/SCA/OCAM/2014 R pres utad por: Hen Chandra i, 57/CA/OCAM/2014 Partne 6 August 20 9 1PMG Aaditoros o ConsultresA, uma soedade anrnima de Rogistada em Modambique sob a designayo do, KPMG ersponsabilidade limlada. 6 mrembro da KPMG Intomacional urma Auditores a Consultores. SA cooporaiva Suipa KPMG Auditores a ConSullofes. SA, a Mozambique limited liability Registerod [n Moambique, as KPMG Auditores 14 Company, is a mombarof KPMG Interatlooal, a Swiss cooporatloe e Consultoros, SA KPMG Auditores e Consultores, SA Telefone: +258 (21) 355 200 Edificio KPMG Telefax: +258 (21) 313 358 Rua 1,233, No 72 C Caixa Postal, 2451 Maputo, Mogambique Email: mz-fminformation@kpma.com Web: www.kpmg.co,mz 7 Report on evaluation of whether the financial statements payments are in compliance with the relevant project agreement terms and local laws and regulations Independent auditor's report To the management of United Purpose Mozanbique As an extension of our audit of the financial statements of United Purpose Mozambique for the year ended 31 March 2019, reported in Section 4, we are required to report on whether the financial statements are in compliance with the relevant project agreement terms, local laws and regulations. Management responsibility Management is responsible for compliance with the relevant project agreement terms, local laws and regulations applicable to the United Purpose Mozambique. The responsibility for the prevention and detection of non-compliance rests with management. Auditors' responsibility There are no established frameworks for evaluating the effectiveness of compliance with the relevant project agreement terms, local laws and regulations applicable to an entity of this nature. Accordingly, we applied our professional judgment in detennining the procedures selected and the extent of our procedures, as well as the matters to be reported. The extent of our procedures comprised enquiries and discussions with those responsible for financial and accounting matters and inspecting correspondence with the relevant licensing or regulatory authorities as we considered necessary for the purpose of our audit on the financial statements; and additional enquiries and discussions where we considered it appropriate having regard to our knowledge of the project. However, our objective was not to provide an opinion on overall compliance with project agreement terms, local laws and regulations. Accordingly, we do not express such an opinion. Matters coming to our attention Matters of non-compliance are dealt with in a separate letter. K MG, SoOedade de Auditores Certificados, 04/SCA/OCAM/2014 R pres tad por: H- n Ch adr .Jpshi, 57/CA/OCAM/2014 Part r 6 August 2019 KPMG Aoditores a Consnltoros. SA. uma sociedado an6nima de Registada em Mog.ambiqua sob a dosignaglo do, KPMG responsabilldado llmitada. 6 mermbro da KPMG Intemaclonal, uma Auditores e Consultores, SA cooperativa Suira KPMG Auditores a Consultores, SA, a Mozambiqu- fimited lability Registerod in Mozambique, as KPMG Auditores 15 Company, is a mernber of KPMG International, a Swiss coop atlo a ConsuItors. SA