REPUBLIC OF TURKEY PRIME MINISTRY Undersecretariat of Treasury INDEPENDENT AUDITOR'S REPORT On HEALTH SYSTEM STRENGTHENING AND SUPPORT PROJECT Implemented by MINISTRY OF HEALTH And Financed Under World Bank Loan No: 8531-TR As of December 31, 2016 and for the year then ended Report Number: 249/4-67/14-44/4 Prepared by Abbas ORMEN Bilgehan GOKMEN Mustafa Emre BAYKAL Senior Treasury Controller Treasury Controller Treasury Controller June 23, 2017 TABLE OF CONTENTS 1. EXECUTIVE SUMMARY 2. INDEPENDENT AUDITOR'S REPORT & FINANCIAL STATEMENTS OF THE PROJECT 2.1. Independent Auditor's Report 2.2. Statement of Sources and Uses of Funds 2.3. Statement of Cumulative Investments 2.4. Statement of Requests for Disbursement (SOE Statement) 2.5 Statement of Special Account 2.6 Notes to the Project Financial Statements 1. General Information On The Project 2. Basic Accounting Policies 3. World Bank Loan 4. Limited Use Of Funds And Other Assets 5. Cash Balance 6. Planned Expenditure � г i � i REPUBLIC OF TURKEY PRIME MINISTRY Undersecretariat of Treasury EXECUTIVE SUMMARY A. Project Summary A Loan Agreement numbered 8531-TR was signed between Republic of Turkey (the Borrower) and International Bank for Reconstruction and Development on September 30, 2015 in order to finance Health System Strengthening and Support Project carried out by the Ministry of Health. A total of 120 Million Euro will be used in the project and all of the mentioned amount will be financed from World Bank resources. The closing date of the project is May 31, 2020. The objectives of the Project are to improve primary and secondary prevention of selected non-communicable diseases, increase the efficiency of public hospital L management, and enhance the evidence-based policy-making capacity of the Ministry of Health. The Project consists of the following parts: 1.Primary and Secondary Prevention 2. Increasing Efficiency of Public Hospital Management 3. Improving the Effectiveness of Overall Health Sector Administration In the audit period (01/01/2016 - 31/12/2016), total disbursements made under the Project is EURO 7.606.881,48 B. Objectives of Audit The objectives of our audit are; a) To give an opinion on whether the financial statements, prepared as of December 31, 2016 and for the year then ended, present fairly, in all material respects, the financial position of the Project in accordance with the cash receipts and disbursements basis of accounting, b) To determine, as of December 31, 2016, whether the Ministry of Health has complied, in all material respects, with the rules and procedures of the Loan Agreement numbered 8531-TR, f c) To examine whether adequate supporting documentation has been maintained to support claims to the World Bank for reimbursements of expenditures incurred with respect to SOEs and to evaluate eligibility of these expenditures for financing under the World Bank Loan Agreement numbered 853 1-TR. C. Scope of Audit We have performed an audit of financial statements of the project as of December 31, 2016, and for the period then ended in accordance with the cash receipts and disbursements basis of accounting. We have also performed a compliance audit on whether the Project activities are in line with the Loan Agreement and related World Bank Guidelines. Our audit was conducted in accordance with the International Standards on Auditing published by International Federation of Accountants and related World Bank guidelines. There was no limitation in our scope for the Project's audit. D. Audit Results For the financial statements of the project; our audit resulted with an unqualified opinion. In addition, as of December 31, 2016, and for the period then ended the Ministry of Health has complied, in all material respects, with the rules and procedures of the Loan Agreement. With respect to SOEs, adequate supporting documentation has been maintained to support claims to the World Bank for reimbursements of expenditures incurred; and these expenditures are eligible for financing under the World Bank Loan Agreement. E. Management Recommendations A management letter, dated June 23 2017, to the attention of the Ministry of Health was issued separately from this report. The objective of this Management Letter is to enable the auditors to communicate appropriately to those charged with governance and management deficiencies in internal control that the auditors have identified during the audit and that, in the auditors' professional judgment, are of sufficient importance to merit their respective attentions. For this purpose, our recommendations are attached to the Letter. - 藝 - 鼾- - F !一_ ! 〕 {__ 〔_. -_ l_ 巨 - 〔_ 〔_ !,NnoPoNnENT Aun.ToR,5 RoPoRT& {_F,NANC,AL STATEMENTs OF THE PROJECT {_ -_ REPUBLIC OF TURKEY PRIME MINISTRY Underseeretariat of Treasury INDEPENDENT AUDITOR'S REPORT TO REPUBLIC OF TURKEY, MINISTRY OF HEALTH PROJECT MANAGEMENT AND SUPPORT UNIT Opinion We have audited the Statement of Sources and Uses of Funds, Statement of Cumulative Investments, Statement of Requests for Reimbursement (SOE Statement) and Statement of Special Account of the Health System Strengthening and Support Project as of December 31, 2016, and for the period then ended, and a summary of significant accounting policies and other explanatory information. The financial statements have been prepared by the Ministry of Health based on relevant provisions of the Loan Agreement Numbered 8531-TR In our opinion; a) The accompanying Statement of Sources and Uses of Funds, Statement of Cumulative Investments, Statement of Requests for Reimbursement (SOE Statement) and Statement of Special Account present fairly, in all material respects, the financial position and accounting policies of the Health System Strengthening and Support Project as of December 31, 2016 and for the period then ended in accordance with the provisions of the Loan Agreement Numbered 8531-TR b) The Ministry of Health, as of December 31, 2016 has complied with, in all material respects, the requirements of the Loan Agreement Numbered 8531-TR. c) With respect to SOEs, adequate supporting documentation has been maintained to support claims to the World Bank for reimbursement of expenditures incurred, and these expenditures are eligible for financing under the Loan Agreement Numbered 8531-TR. 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 this report. We are independent of the Ministry of Health within the meaning of ethical requirements and have fulfilled our other responsibilities under those ethical requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of Matter Without modifying our opinion, we draw attention to the finding numbered 1 which are attached to our Management Letter. The following point, which are expressed in detail in the finding numbered 1, must be given utmost consideration in the future periods of the project. * A tender which could be conducted through National Competitive Bidding procedure was conducted through Shopping procedure in three parts with a view to removing the time and cost limitations in the World Bank Procurement Procedures. In order to avoid recurrence of the abovementioned issue, the recommendations attached to our Management Letter must be followed and necessary measures must be taken. Basis of Accounting and Restriction on Distribution and Use We draw attention to Note "2" to the financial statements, which describe the basis of accounting. The financial statements are prepared to assist the Ministry of Health to comply with the financial reporting provisions of the World Bank Loan Agreement Numbered 8531-TR. As a result, the financial statements may not be suitable for another purpose. Our report is intended solely for the Ministry of Health, Undersecretariat of Treasury, and World Bank, and should not be distributed or used by other parties. Responsibilities of Management and Those Charged with Governance for the Financial Statements The Ministry of Health is responsible for the preparation and fair presentation of these financial statements in accordance with Loan Agreement Numbered 8531-TR, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Those charged with governance are responsible for overseeing financial reporting process of the Ministry of Health. Auditor's Responsibilities for the Audit of the Financial Statements The objectives of our audit 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 auditor's 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 these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the planning and performance of the audit. We also: * Identify and assess the risks of material misstatement of the 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 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 are required to 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. We are also required to provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. Ahmet Umit SUCU Acting Chairman of Board of Treasury Controllers A ('ALlgKAN Vic hairman (Audit Partner) Abbas ORMEN Bilgehan GOKMEN Mustafa Emre BAYKAL Senior Treasury Controller Treasury Controller Treasury Controller Date : 23/06/2017 Address: T.C. Ba§bakanlk Hazine Miiste§arhgi, Hazine Kontrolbrleri Kurulu Ba kanligi, 06510 Ankara/TURKEY MINISTRY OF HEALTH HEALTH SYSTEM STRENGTHENING AND SUPPORT PROJECT (8531-TR) SOURCES AND APPLICATION OF THE FUNDS CHART 3111212016 and for the period ending on this date (in Euro) Actual Planned Deviation Current Period Cumulative Carrent Period Cumulative Current Period Canaative I- SOURCES OF THE FUNDS A-Government Funds 000 0,00 0,00 0,00 0,00 0,00 B- Other Sources 0,00 000 0, 00 0,00 C. World Bank Loan 6.212.745,80 E.212.745,EO 3964.000,00 3.964.000,00 425,25 425,25 1. Direct payments 424917111 4249171.11 2. Designated Account 3963574.75 3903574.75 3964000.00 395400000 425,25 42525 a) Advance 2 000.00000 2000000.00 2000000.00 2 000 0G0,00 0.00 000 b) 1595319.40 1 595319.4D 95500h00 h5o5 5d.00 1060 16060 c) Summary Statement Method 365255,35 366 255.35 360500,00 368.500,00 244,65 244,65 3-Other 0,00 0.00 0.00 0,00 0,00 a) WE Adminotrative Commission 0,00 0,00 0,00 0,00 0.00 D- Reimbursement to the Designated Account 0,00 0,00 8212.745,86 8.212.745,86 3.964.000,00 3.964.000,00 425,25 425,25 L It. APPLICATION OF TH E FU NDS I. PRIMARY AND SECONDARY PREVENTION 1.1 Increasiog Awareness and Behavior Change 599.535,60 59900560 600 165.00 6016560 37,53 37.53 1 Piloting Healt3y Living Centers 216.81,03 216 51.03 21696000 3 16 960,0 010.97 5 25? 1 1.2 Public Outreach 15.617.,0 10617,00 200 050.00 200050,00 43.07 432 02 1.1 3SbstanceAbuse andAlcoholsmPrevention sd Treatmeot 183.006,67 103 56,67 16 125,00 10 125.00 1180,33 11033 1.2 E118cOe Screening Precedares 116.005,9 116.006.09 116030.00 116500,00 24.11 24,11 1..1 Diagnosis Centers Capacity Building 0.00 000 0.00 0.00 0.00 0,00 1.2.3 Nationai Cancer Registry Software 11065,80 116 005.69 116,030.00 116.030.0 24,11 24,11 1.2 3 Palliative Care Aci 0.00 0.00 0.00 0,00 0.00 0.00 I 3Streogthening Pftryeafl tht Care 7405077,01 249.t77,01 2409250,00 2409250.00 172,tO 172.19 1 3 Fmilly Phyoician TraIng Programs 245.077.81 2490177.0l 249 250.00 245.250,80 172.$0 172.19 Worload Anaiysisand SanrdardiZed Work procedure 0o Family P0ysiciaos 0.,0 000 0,60 0.00 0,00 0,00 TOTAL COMPONENT 8 984. .4358 34.0 00,30 06.445,00 960.440,00 233,3 233,03 II. INCREASING THE EFFICIENCY OF PUELIC HOSPITAL MANAGEMENT AND OPERATONS 21 fcrm os loans Facility Saagem t Systems 320 002,47 30082.47 330.1 20,00 320.120,00 37,53 37,53 2 2 Arctectural aod Techsical Stnoards to. Heait1 6ai 0,00 0.00 0,00 060 0.00 000 2.3 Techoical Sapped to roue PPs 179.711,83 17071168 179010.00 116 000 9.17 24,11 TOTAL COMPONENT 11 499.794,30 499.794,30 490.930,00 495.930.00 135,70 135,70 ]LiIMPROVING THE EFFECTIVENESS OF OVERALL HEALTH SECTOR ADMINISTRATION 3.1 Weit Fuoctiorno tHosi1h Manago1most System 932 613,07 932013.57 933 076.0 0339676,00 291.35 201.35 01.1 Narmoiation i inernatiso a standards 104.904,72 116 904.72 116 776.00 1 776.0,00 870,2 070.28 3 12 National 8-hoath staodards and legislation C,01,877,70 601.077,70 600300.10 t02,250.00 372.30 372,30 1 3 Computerized Decision Suppert System 0.00 0,00 0,00 0.00 0.00 0,00 3 S4MedicaT Practices Declsioh Sappd System 145 0.1 14.031.15 146950.00 14950,00 1109 119,1 3 2 Sharng Turkeys Enperoence 143.335,00 143 335,60 144 3%000 144 350,00 1014.45 1 014,45 3 3 1Sildsg copacity in ngealt Tcotogy Assessmont 79.776.03 79776.03 60300.00 20300,00 523,97 523.97 3 Spporing PrAaecly Manage aed SWotroi c Posnfog 4F98m 772P6h 4y6s772,i5 4667050.00 496700,00 277 35 277.35 TOTAL COMPONENT Ill 6.142.497,B8 5.142.497,80 6,145.675,00 6.145.675,00 2.107,12 2.107,12 Total Project Disbursement 7.806.001,40 7.606.881,40 7,611.060,00 7.611.050,00 2.476,66 2.470,65 S2bttal 000 0,00 0,00 0,00 0,00 0,00 a)WB Administra dase Commission 0.00 0.00 0.00 0,00 0,00 0 00 2peoing Balance 0,00 Closing Oalance 606.864,30 Z Ide. ENALP P eel Director II.MRVN H FETIEESO VRL.ELT ETRAMNSRTO 3.I elFntoigHat.aaeetSse 3 135 3 1.79396c 3 70 9.5213 MINISTRY OF HEALTH HEALTH SYSTEM STRENGTHENING AND SUPPORT PROJECT (8531 TR) CUMULATIVE INVESTMENTS TABLE 3111212016 and for the period ending on this date (in Euro) 1-INVESTMENTS Actual Planned Deviation 1RIMARY AND SECONDARY PREVENTION Current Period Cumulative Current Period Cumulative Current Period Cumulative 1 1 Increasing Awareness and Behavior Change 599.505,68 599 505,568 600 165,00 600 165,00 37.53 37,53 1 1 1 Piloting Healthy Living Centers 216.801,03 216.881,03 216.990,00 216.990,00 10B,97 108.97 1 1 .2 Public Outreach 199 617.90 199.617,98 200 050,00 200 050,00 432,02 432,02 1.13 Substance Abuse and Alcoholism Prevenion, and Trealment 13 006,67 183006,67 183 125,00 183.125,00 118.33 118,33 1.2 Effective Screening Procedures 11600589 116 005.89 116 03000 116 030.00 24.11 24.11 1 2.1 Diagnosis Centers Capacity Building O,00 0.00 0.00 0 0,00 0 00 1 2 National Cancer Registry Software 116005,89 116 005.89 116 030,00 116 02000 24,11 24 11 1.2.3 Palliative Care Activies 0,00 0,00 0,00 0.00 0.00 0,00 13 Strengthening Primary Health Care 249077,81 249.077,81 249250,00 249 250,00 172,19 172.18 1.3 1 Family Physician Training Programs 249.077,81 249 077.81 249 250,00 249.250,00 172.19 172,19 1 12 Workload Analysis and Standardized Work Procedures for Family Phystians 0.00 0.00 0.00 0,00 0,00 0.00 TOTAL COMPONENT I 964589,38 964.589,38 965.445,00 965.445,00 233,83 233,83 It. INCREASING THE EFFICIENCY OF PUBLIC HOSPITAL MANAGEMENT AND OPERATIONS 2.1 Reform of the Health Facillty Management Systems 320.082,47 320 02,47 320 120,00 320 120.00 37.53 37.53 2.2 Architectural and Technical Slandards Ior Hnallh Facilifies 0,00 0.00 0.00 0,00 0.00 0.00 2.3 Technical Support to the PPP 179.711,83 179.711,83 179 810,00 179.840,00 98,17 98.17 TOTAL COMPONENT il 499.794,30 499.794,30 499.930,00 499.930,00 135,70 135,70 Ill. IMPROVING THE EFFECTIVENESS OF OVERALL HEALTH SECTOR ADMINISTRATION 3 1 Well Functioning Health Management System 932 613,57 932 613,57 933975,00 933 975,00 291 35 291,35 3 1 1 Harmonization with intemational standards 184 904,72 184 904.72 185775,00 18 775,00 070,28 870,28 3.1.2 National e-health standards and legislation 601.877,70 601.877,70 602.250,00 602 250,00 372,30 372,30 3.1.3Computerized Decisian Support System 0,00 0,00 0,00 000 0,00 0,00 3,1 4 Medical Practices Decision Support System 145.831,15 145.831,15 145950,00 145 950,00 116,85 11.85 3.2 Shaong Turkeys Experience 143 335,55 143.335,55 14435000 144.350,00 1014,45 101445 3 3 Building Capacity in Health Technology Assessment 79.776,03 79.776,03 8030.00 80300,00 523.97 523,97 3 4 Supporting Proecl Management and Stratgc Planning 4 986 772,65 4 985 772,65 4 91 030.00 4 987 L60,00 277.35 2/7 35 TOTAL COMPONENT ilt 5.142,497.80 0.142.497,85 6.145,675,00 6.145.676,00 2.107.12 2.107,12 Total Investmlent Cost 7.606.881,48 7,606.881,48 7,611,050,00 7.611.0$0,00 2.476,65 2.476,65 Za ide SENAL3 Pr ject Direct r I i MINISTRY OF HEALTH HEALTH SYSTEM STRENGTHENING AND SUPPORT PROJECT (8531 TR) STATEMENT OF WITHDRAWALS FOR DISBURSEMENT (SOE) 3111212016 and for the period ending on this date (in Euro) 1- Requests Reimbursed Disbursement Catego ies 1- Goods and 2- Consultants 3- Training 4 Ca5- Incremental Total Amount Date of Application Date Application Number Technical 2 n t and apitation Operating Total Services Payments oti Paid Payment Services Workshops Costs 29.09.2016 1 11.985,83 181,62 12.167,45 12.167,45 11.10.2016 29.09.2016 2 66.124,65 261.425,17 1.419,93 328.969,75 328.969,75 12.10.2016 29.09.2016 3 87.271,91 129.535,18 825,18 217.632,27 217.632,27 12.10.2016 29.09,2016 4 6.861,06 110.427,22 158.648,20 3.479,92 279.416,40 279.416,40 12.10.2016 29.09.2016 5 149.490,35 0,00 168,93 149.659,28 149.659,28 12.10.2016 29.09.2016 6 0,00 160.156,13 10.615,20 264,41 171.035,74 171.035,74 12.10.2016 07.12.2016 8 169.118,83 39.929,51 261,83 209.310,17 209.310,17 12.12.2016 07.12.2016 9 155.030,33 46.474,90 25.623,11 227.128,34 227.128,34 12,12.2016 Subtotal 6.861,06 909.605,25 646.628,16 0,00 32.224,93 1.595.319,40 1.595.319,40 II- Requests Pending Reimbursement Disbursement Categories 1- Goods and 3- Training .. 5- Incremental 2- Consultants' 4- Capitation Total Amount Date of Application Date Application Number Technical and Operating Total Sevies Services Wrsos Payments CssPald Payment Services Workshops Costs Subtotal 0,00 0,00 0,00 0,00 0,00 0,00 TOTAL AMOUNT REQUESTED 6.861,06 909.605,25 646.628,16 32.224,93 1.595.319,40 1.595.319,40 Za e ?ENALP' Pr t Director MINISTRY OF HEALTH HEALTH SYSTEM STRENGTHENING AND SUPPORT PROJECT (8531 TR) DESIGNATED ACCOUNT STATEMENT ACCOUNT NO: 941632006 AT THE CENTRAL BANK OF TURKEY 31/1212016 and for the period ending on this date (in Euro) Opening Balance 0,00 Reimbursements to DA 3.963.574,75 a) Advance 2.000.000,00 b) SOE Procedure 1.595.319,40 c) Summary Sheet 368.255,35 Refunds to DA 0,00 Available Funds 3.963.574,75 Withdrawals Made for Expenditures 3.357.710,37 Service charges for the account paid to the Central Bank 0,00 Total Disbursements from DA 3.357.710,37 Closing Balance 605.864,38 Zahi e SENA P Pro t t r L i REPUBLIC OF TURKEY MINISTRY OF HEALTH HEALTH SYSTEM STRENGTHENING AND SUPPORT PROJECT (LOAN NO. 8531-TR) NOTES ON PROJECT FINANCIAL STATEMENTS FOR THE YEAR ENDING ON 31.12.2016 1.GENERAL INFORMATION ON THE PROJECT The loan agreement was signed between the Government of Turkish Republic and International Bank for Reconstruction and Development (WB) to provide financial support in the execution of Health System Strengthening and Support Project (HSSSP) on 30/09/2015 and approved by the resolution of the Council of Ministers no.2015/8168 and dated 12/10/2015 and came into effect on the same day as the letter of World Bank dated 26/11/2015. The Project consists of main components and sub-components. These components have been prepared in line with the Strategic Goals set out in the Strategic Plan and the component activities are carried out together by different units of the Ministry of Health. Component 1 includes activities for Primary and Secondary Prevention, Component 2 for Increasing the Efficiency of Public Hospital Management and Operations, and Component 3 for Improving the Effectiveness of Overall Health Sector Administration. Table 1 below shows the Project Components and the funds allocated to each component in accordance with the Loan Agreement. There are 10 implementing units (given below) for 3 main components and their subcomponents which will be executed by the Ministry of Health under the Project, and the Program Implementation Plan demonstrates which unit is responsible for which component. Component 1. Primary and Secondary Prevention 39.390.000 1.1. Increasing National Awareness 25.320.000 1.2. Increasing effective cancer screening 3.760.000 1.3. Strengthening primary health care 10.310.000 Component 2. Increasing the Efficiency of Public Hospital Management and Operations 41.650.000 2.1. Reforming the health facility management system 25.500.000 2.2. Introducing architectural and technical standards for health facilities 2.590.000 2.3. Strengthening health investments to be made through PPP 13.560.000 Component 3. 38.960.000 Improving the Effectiveness of Overall Health Sector Administration 3.1. Health management system 27.264.000 3.2. Sharing Turkey's experience 2.846.000 3.3. Health technology assessment 3.516.000 3.4. Project Management 5.334.000 TOTAL PROJECT AMOUNT 120.000.000 Ministry of Health, Project Implementing and Expenditure Units: 1. General Directorate of Health Investments 2. General Directorate of Health Information Systems 3. General Directorate of Health Services 4. General Directorate of Health Research 5. General Directorate of Emergency Health Services 6. General Directorate of Foreign Affairs and European Union 7. Public Health Institution of Turkey 8. Public Hospitals Institution of Turkey 9. Project Management and Support Unit 10. General Directorate of Health Promotionp Total project amount has been allocated to the Ministry of Health of Turkey as 120.000.000 Euros. The relevant unit which will execute the Project on behalf of the Ministry of Health is the Project Management and Support Unit. And, under the Health System Strengthening and Support Project (HSSSP), the implementing units of the Ministry of Health (General Directorates, Departments, and Divisions) will be responsible for planning, budgeting and implementing their own activities and expenditures. Therefore, the Project Implementing Units will continue to execute their payment and procurement operations with their expenditure authorizations. Project Management Support Unit is responsible for procurement and payment regarding the activities stipulated in the projects under Sub-Component 3.4 "Project Management and Strategic Planning" under Component 3 of the Project titled "Improving the Effectiveness of Overall Health Sector Administration" as well as coordinating planning of the Units/budget requests with Strategy Development Presidency, monitoring and providing any kind of technical support. 2. BASIC ACCOUNTING POLICIES a. Transactions regarding the project are entered into accounts on a cash basis. According to this basis, income occurs when the funds are received, and expense occurs when the funds are paid. b. Payments are made to the selling institutions through direct payments or through a Designated Account. c. Accounts are kept in the local currency of TL and the credit currency of EURO. Payments, which are made in currency other than the local currency or EURO, are exchanged into EURO by using the exchange rate of the Republic of Turkey Central Bank on the date of payment and are passed into accounts. d. Financial tables have been prepared with the aim of ensuring that the Ministry of Health acts in accordance with the financial provisions of the Loan Agreement no. 853 1-TR. 3. WORLD BANK LOAN The loan agreement was signed between the Government of Turkish Republic and International Bank for Reconstruction and Development (WB) to provide financial support in the execution of Health System Strengthening and Support Project (HSSSP) on 30/09/2015 and approved by the resolution of the Council of Ministers no.2015/8168 and dated 12/10/2015 and came into effect on the same day as the letter of World Bank dated 26/11/2015. 4. LIMITED USE OF FUNDS AND OTHER ASSETS In accordance with the loan agreement made between the Government and the World Bank, the utilization of the funds in the Designated Account is limited to the project aims. The project funds which are not used by the end of the project will be returned to the Undersecretariat of Treasury to be distributed to those providing this fund in accordance with the provisions of the relevant financing agreement. Fixed assets procured by the project funds belong to the user institutions and their use is limited to project purposes until the completion of the project. 5. CASH BALANCE AS OF 31 DECEMBER 2016 The existing cash balance expressed in Euro on 31 December 2016 is as follows: L Loan Funds Government Source Total DESIGNATED ACCOUNT 605.864,38 C 605.864,38 C 6. PLANNED EXPENDITURES Under the Health System Strengthening and Support Project (HSSSP), the budget allocated for the Ministry of Health was 112.676.000,00 TRY for the current period of 2016. The share of Project Management Support Unit in the said budget was 5.300.000,00 TRY. The reason for the large budget allocation to the Project Management Support Unit was to provide support to meeting the needs of the other user units. The realized expenditures by the Ministry of Health amounted to 7.606.881,48 Euros, with the Project Management Support Unit having a share of 4.986.772,65 Euros in this realized amount. Za de $E ALP P 'ecj ector