TeL: +00 232 88 224880 12 Wilberforce Street info@bdosl.com Freetown, Sierra Leone ,B D O www.bdost.com P 0 Box 575 'X' 6th July 2015 The Director Public Sector Reform Unit Office of the President 8 Wesley Street Freetown Ref: 1114/g/nr/mij Dear Madam FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 We confirm that there were no reportable audit issues for the year ended 31st December 2014. The issues which emanated from the audit exercise were cleared prior to the conclusion of the audit. The results of the audit tests carried out were also satisfactory. Yours faithfully ，蔔．馴，賽一’一＇－一兀一‘’一，＿一＇_&！二＿_J•騙口矚•．曄驪－ 二騙 皺…嗡 一咦口口口口口口口口口口口口 卜一‘馴 ■ 頂〕磁 萬’- ) The Government of Sierra Leone Public Sector Reform Unit Pay and Performance Project Financial Statements For the year ended 31 December 2014 CONTENTS PAGE General Information 1 Background Information on the Project 2-4 Management's Responsibility Satement 5 Independent Auditors' Report 6 -7 Statement of Resources and Expenditure 8 - 9 Statement of Income and Expenditure 10 Statement of Financial Position 11 Statement of Cashftow 12 Notes to the Financial Statements 13-14 The Government of Sierra Leone Public Sector Reform Unit Pay and Performance Project Financial Statements For the year ended 31 December 2014 GENERAL INFORMATION Office Public Sector Reform Unit 8 Wesley Street Freetown Project Coordinator Ms Sidratu Koroma - Director Public Sector Reform Unit Implementing Agencies HRMO, PSC and Ministry of Finance and Economic Development Project Accountant Accountant General Accountant Generals Department Ministry of Finance and Economic Development George Street Freetown Bankers Bank of Sierra Leone Gloucester Street Freetown I Auditors BDO Regent House 12 Wilberforce Street Freetown 1 1 1 The Government of Sierra Leone Public Sector Reform Unit Pay and Performance Project Financial Statements 5 For the year ended 31 December 2014 BACKGROUND INFORMATION ON THE PROJECT I The Pay and Performance Project is a USD 17.0 Million World Bank support programme to public sector reforms in Sierra Leone, being implemented from 2012 to 2017. It's objectives are:- 1. Undertaking pay reforms aimed at improving the competitiveness of the Civil Service, thereby attracting, motivating and retaining competent skills for effective service delivery. 2. Rationalising staffing in the Civil Service by filling existing critical skills gaps through merit-based competitive recruitment, while minimising the numbers of redundant posts and personnel in the 5 service. 3. Minimising waste and inefficiencies by improving the integrity of the payroll and personnel records; harmonising and strengthening pay administration and management systems, and streamlining payroll management procedures, processes and accountability mechanisms. 4. Building the required capacity for driving reforms and effectively managing performance in the Civil Service. 5. Introducing and implementing a robust performance management system that links rewards to productivity. 6. Implementing comprehensive training and staff development programmes aimed at changing work ethics and culture while continuously upgrading capacities and skills in the public service. Project Components The Pay and Performance Project comprises of two main components as follows: Component 1: Support to the Government of Sierra Leone (GoSL's) Public Sector Reform Programme, specifically Pay Reform, Recruitment and Staffing, and Performance Management. g Pay reform Implementing Partner: HRMO; MoFED This supports review and implementation of the GoSL's strategy for reforming public sector pay. It recognises that remuneration should be commensurate with the responsibilities of the job, which will require that a comprehensive job evaluation and grading exercise be completed before a competitive pay is introduced in a new pay structure. In addition, the strategy envisages significant decompression of the pay structure, which will allow professionals and managers to be remunerated more competitively, and maintaining an affordable and sustainable public service wage bill in relation to the GoSL's recurrent revenues. The objectives of this sub-component are: a) to attract and retain key professional and managerial staff; and b) to motivate all civil servants to perform their jobs to an acceptable standard. 2 I The Government of Sierra Leone Public Sector Reform Unit Pay and Performance Project Financial Statements I For the year ended 31 December 2014 BACKGROUND INFORMATION ON THE PROJECT (Contd) Three results are sought to achieve these objectives: (a) civil servants are paid more equitably and competitively; (b) the authority to change personnel records and payroll is vested in, and restricted to HRMO (an audit trail will be maintained); (c) the human resource database and the payroll are directly linked. Recruitment and staffing (Implementing Partner: PSC) The objective of this sub-component is to create a capable civil service of the right size and job composition to deliver its core functions assigned by the Government. I Four results are sought to achieve this objective: (a) priority vacancies in the GoSL's annual recruitment plans are filled; (b) recruitments are based on appropriate open, competitive and merit-based procedures; (c) promotions are based on open, competitive and merit-based promotion procedures; (d) vacancies are filled within three months. Performance management and accountability (Implementing Partner: HRMO) The objectives of the performance management component are to: (a) improve the performance and productivity of ministries and individual civil servants; (b) increase citizens' trust and confidence in the government; (c) strengthen the accountability of ministries to the executive and citizens. Three results are sought to achieve these objectives: (a) annual staff performance appraisal reports are of an acceptable quality; (b) annual performance reports of civil service managers on performance contracts are of an acceptable quality; (c) ministries' performance is evaluated by the GoSL. Component 2: Technical Assistance (Implementing Partner: PSRU) The Technical Assistance (TA) component will complement the first component by financing selected inputs for which the GoSL has requested more intensive supervision by the Association or for which resources may not be readily available in the GoSL's budget. This component will finance goods, consultancy services, non-consulting services, monitoring and evaluation, training, study tours and workshops. Specific areas identified for financing under this component include: Sub-component 2.1: Strategic Communications Program: Given the importance of effective and continuous information sharing on the reform activities within and outside the government, the GoSL proposes to develop and implement and strategic communication program. 1 3 I The Government of Sierra Leone Public Sector Reform Unit Pay and Performance Project Financial Statements BACKGROUND INFORMATION ON THE PROJECT (Contd) Fr the year ended 31 December 2014 Subcomponent 2.2: Enhancing Social Accountability The GoSL is already implementing measures to enhance the accountability of the public services. This component will be used to consolidate and improve the quality of some of these ongoing initiatives and to support the implementation of some new ones, including public disclosure PSR-related information, a complaint handling mechanism for recruitment, "Meet the Public" forums on PSR and Citizen's Charters. Sub-component 2.3: Job Evaluation and Labour Market Survey 1. A consulting firm has been contracted to: (i) conduct a comprehensive job evaluation exercise covering all civil service jobs based on an appropriate factor based scheme; (ii) build skills within the civil service to carry out job analysis and evaluation; (iii) obtain comparative pay data for a select number of civil service benchmark jobs; (iv) examine the future demand and supply of skills in the economy which are needed by the civil service; (v) design (a) new pay structure(s) and a new grading structure for the civil service based on the information from the job evaluation and labour market survey; (vi) develop an implementation for phasing in the new structure in accordance with priorities and wage bill constraints; (vii) prepare administrative, maintenance and appeals procedures; (viii) propose orgainsation and staffing structures to maintain the job evaluation system. Sub-component 2.4: Implementation Support 2. This sub-component will support implementation activities contained within Component 1 to be conducted by the PSRU, HRMO and PSC. Goods and consultancy services would support the immediate needs of new staff in the PSC, the new Performance Management Directorate in the HRMO, the coordination and MEtE responsibilities of the PSRU associated with this project. The PSRU will also engage a procurement specialist on a part-time basis to assist it as the implementing agency for component 2. this sub-component would also support additional consultancies, trainings and workshop as needed. I 1 4 I The Government of Sierra Leone I Public Sector Reform Unit Pay and Performance Project Financial Statements 5 For the year ended 31 December 2014 MANAGEMENT'S RESPONSIBILITY STATEMENT Management is responsible for the preparation and presentation of the financial statements, comprising 5 the statement of financial position at 31 December 2014, the statement of income and expenditure, the statement of resources and expenditure and the statement of cashflow for the period then ended and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes prepared on the basis of accounting described in note 1 and of such internal control as the director determine is necessary to enable the preparation of financial statement that are free from material misstatement whether due to fraud or error. Approved of the Financial Statements The Financial Statements were approved by Management on ) % 4f\ 2015 and signed on its behalf by: Director Public Sector Reform Unit I I I I I I The Government of Sierra Leone Public Sector Reform Unit Pay and Performance Project Financial Statements For the year ended 31 December 2014 INDEPENDENT AUDITORS' REPORT TO THE GOVERNMENT OF SIERRA LEONE AND THE WORLD BANK We have audited the financial statements on pages 8 to 12 of the Technical Assistance Component of the Pay and Performance Project implemented by the Public Sector Reform Unit for the year ended 31 December 2014 and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes as set out on pages 13 to 14. Management's responsibility for the financial statements The project's management is responsible for the preparation and presentation of these financial statements on the basis of accounting for the purpose of determining the eligible expenditure and results for the year for use by the World Bank and the Government of Sierra Leone. This responsibility includes: determining whether the accounting policies described in note 1 form an acceptable basis for preparing and maintaining internal controls relevant to the preparation and presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances. Auditors' responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. These standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgement including the assessment of risk of material misstatement of the financial statements whether due to fraud or error. In making those risk assessment we consider internal controls relevant to the entity's preparation and presentation of the financial statements 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 controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall financial statements presentation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis I for our audit opinion. I I 1 6 I <4f I The Government of Sierra Leone Public Sector Reform Unit Pay and Performance Project Financial Statements For the year ended 31 December 2014 INDEPENDENT AUDITORS' REPORT TO THE GOVERNMENT OF SIERRA LEONE AND THE INTERNATIONAL DEVELOPMENT ASSOCIATION (IDA) (Contd) Opinion In our opinion, the financial statements present a true and fair view of the state of affairs of the 31 December 2014 and the results for the period then ended in accordance with the accounting adopted by the project as stated in note 1 of the financial statements and the requirements of the Project Agreement Document. I Freetown 29k" June 2015 Chartered Accountants I I I I I I I 1 7 I The Government of Sierra Leone Public Sector Reform Unit Pay and Performance Project Financial Statements 5 For the year ended 31 December 2014 STATEMENT OF PROJECT RESOURCES AND EXPENDITURE 2014 2013 Total Le Le Le Resources 3 Designated Account-Bank of Sierra Leone - 1,768,659,415 1,768,659,415 Sub Total - 1,768,659,415 1,768,659,415 Fund rceived from IDA - 981,952,913 981,952,913 Sub total - 981,952,913 981,952,913 Total funds available - 2,750,612,328 2,750,612,328 Expenditure Overseas training 476,861,109 87,395,596 564,256,705 Professional/consultancy fees 665,612,238 201,217,410 866,829,648 Public relation expenses 101,567,500 103,520,900 205,088,400 Furniture, office equipment, safe - 62,250,000 62,250,000 Computers and ancillary equipment 182,200,000 267,450,000 449,650,000 Vehicle expenses 16,977,320 525,148,485 542,125,805 Total: Goods, non-consulting services, consultant' service, operating costs, and training under part 2 of the project (1,443,218,167) (1,246,982,391) (2,690,200,558) Total net funds available (1,443,218,167) 1,503,629,937 60,411,770 Closing Balance Designated account- Bank of Sierra Leone (1,443,218,167) 1,503,629,937 60,411,770 The Financial Statements were approved on 29th June 2015 Director Public Sector Reform Unit I I I I 1 8 I The Government of Sierra Leone Public Sector Reform Unit Pay and Performance Project Financial Statements For the year ended 31 December 2014 STATEMENT OF PROJECT RESOURCES AND EXPENDITURE Inception 2014 2013 to 2014 I USD $ USD $ USD $ Resources Designated Account -Bank of Sierra Leone - 413,500 413,500 I Sub total - 413,500 413,500 Funds received from IDA - 227,770 227,770 Sub total - 227,770 227,770 I Total funds available - 641,270 641,270 Expenditure Overseas training 108,217 20,399 128,616 Professional/consultancy fees 149,957 46,524 196,481 Public relation expenses 23,049 23,662 46,711 Furniture, office equipment, safe - 14,554 14,554 Computers and ancillary equipment 41,348 62,227 103,575 Vehicle expenses 3,853 121,111 124,964 Exchange loss 14,172 - 14,172 I Total: Goods, non-consulting services, consultant' service, operating costs, and training under part 2 of the project 340,596 288,477 629,073 Total net funds available (340,596) 352,793 12,197 Closing balance Designated account-Bank of Sierra Leone (340,596) 352,793 12,197 The Financial Statements were approved on 29th June 2015 Director Public Sector Reform Unit 9 1 The Government of Sierra Leone Public Sector Reform Unit Pay and Performance Project Financial Statements For the year ended 31 December 2014 I STATEMENT OF INCOME AND EXPENDITURE Notes 2014 2014 2013 2013 Resources USD $ Le USD $ Le Designated Account - Bank of Sierra Leone 352,793 1,503,629,937 413,500 1,768,569,415 Sub total 352,793 1,503,629,937 413,500 1,768,569,415 Funds received from IDA - - 227,770 981,952,913 Sub total 3 - - 227,770 981,952,913 Total funds available 352,793 1,503,629,937 641,270 2,750,522,328 Total resources expenditure Overseas training 108,217 476,861,109 20,399 87,395,596 Professional/consultancy fees 149,957 665,612,238 46,524 201,217,410 Public relation expenses 23,049 101,567,500 23,662 103,520,900 Furniture, office equipment, safe - - 14,554 62,250,000 Computers and ancillary equipment 41,348 182,200,000 62,227 267,450,000 Vehicle expenses 3,853 16,977,320 121,111 525,148,485 Exchange loss 14,172 - - Total: Good, non-consulting services, consultants' service, operating costs, and training under part 2 of the project (340,596) (1,443,21 8,167) (288,477) (1,246,982,391) Total net funds available 12,197 60,411,770 352,793 1,503,539,937 Closing balance Designated account - Bank of Sierra Leone 3 12,197 60,411,770 352,793 1,503,539,937 The Financial Statements were approved on 29th June 2015 Director Public Sector Reform Unit 1 I I I I 10 3 1 The Government of Sierra Leone Public Sector Reform Unit Pay and Performance Project Financial Statements For the year ended 31 December 2014 I STATEMENT OF FINANCIAL POSITION USD $ SLL US$ SLL Notes 2014 2014 2013 2013 Assets g Cash and cash equivalents 2 12,197 60,411,770 352,793 1,503,629,937 Total assets 12,197 60,411,770 352,793 1,503,629,937 I Funding and iabiities/deferred income 2 12,197 60,411,770 352,792 1,503,629,973 Total funding and liabilities 12,197 60,411,770 352,792 1,503,629,973 I The Financial Statements were approved on 29th June 2015 3 Director Public Sector Reform Unit I I I I I I I I I I II I I The Government of Sierra Leone Public Sector Reform Unit Pay and Performance Project Financial Statements For the year ended 31 December 2014 I STATEMENT OF CASHFLOW USD $ SLL US$ SLL Notes 2014 2014 2013 2013 Operating activities Cash received from donors and third parties - - 641,270 2,750,612,328 Cash paid to suppliers and employees (340,596) (1,443,218,167) (288,477) (1,246,982,391) I Net increase/(decrease) in cash and cash equivalents (340,596) (1,443,218,167) (288,477) (1,246,982,391) Cash and cash equivalents of the beginning of the period 352,793 1,503,629,937 - Cash and cash equivalents at the end of the year 12,197 60,411,770 352,793 1,503,629,937 I I I I I I I I I I 1 12 U I The Government of Sierra Leone I Public Sector Reform Unit Pay and Performance Project Financial Statements I For the year ended 31 December 2014 NOTES TO THE FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied unless otherwise stated. 1.1 Basis of preparation The statements of resources and expenditure have been prepared on a cash basis of accounting and have been presented in United States Dollars, with an additional column in Leones for the Special Account Leones Account. 1.2 Foreign currency transactions Assets including cash balances and liabilities (if any) denominated in foreign currencies are transactions are accounted for at the rate of exchange prevailing on the date at which the transactions were recorded. All gains and losses arising are taken to the income and expenditure statement. 2014 2013 Closing exchange rate 4,935 4,262 Spot rate 4,407 4,262 1 1.3 Fixed assets Fixed assets are expensed on acquisition but a comprehensive fixed asset register is maintained to account for the fixed assets and their location. 1.4 Income Funding from donors are held in a deferred income account when received and are only recognised in the Project's income statement when utilised. 1.5 Expenses Expenses are only recognised in the financial statements when paid. 13 I The Government of Sierra Leone Public Sector Reform Unit Pay and Performance Project Financial Statements For the year ended 31 December 2014 I NOTES TO THE FINANCIAL STATEMENTS (Contd) I 2 DEFERRED INCOME Deferred income is analysed as follows: USD$ SLL US$ SLL Notes 2014 2014 2013 2013 Resource 5 I.D.A. funding 352,793 1,503,629,937 641,270 2,750,612,328 Total Expenditure (340,596) (1,443,218,167) (288,477) (1,246,982,391) I Released to income statement 340,596 1,443,215,167 288,477 1,246,982,391 3 Balance carried forward 12,197 60,411,770 352,793 1,503,629,937 Presented by: Cash and cash equivalents 12,197 60,411,770 352,793 1,503,629,937 12,197 60,411,770 352,793 1,503,629,937 3 RECEIPTS IDA - - 641,270 2,750,612,328 Total cash received - 641,270 2,750,612,328 4 CONTINGENT LIABILITIES There were no contingent liabilities at the end of the reporting period. (2013 - nil) 5 RELATED PARTY TRANSACTION There is no evidence of any related party transaction. 6 POST FINANCIAL POSITION EVENTS There is no post financial position event that needs reporting. I 14