U I I AUDITORS' REPORT ON THE FINANCIAL STATEMENTS OF I FEDERAL URBAN JOB CREATION & FOOD SECURITY AGENCY WOMEN ENTREPRENEURSHIP DEVELOPMENT PROJECT GRANT NUMBER IDA CREDIT NO.5112 ET AND TF-16392ET AS AT AND FOR THE YEAR ENDED 07 JULY 2017 I, TAY & Co. Chartered Certified Accountants & Authorized Auditors Addis Ababa, Ethiopia Tel. 251-11-442-1336 Fax 251-11-442-1338 E-mail: tavco(ethionet.et P.O.Box 1335 Addis Ababa, Ethiopia Ethio-china Friendship Street Wongelawit Tadesse Building l1 Floor ukste: unw tavaulditina.om I I U I , krte,rec( C'artifi t-ccv tntj Aitxie, w INDEPENDENT AUDITOR'S REPORT ON THE FINANCIAL STATEMENTS OF FEDERAL URBAN JOB CREATION & FOOD SECURITY AGENCY WOMEN ENTREPRENEURSHIP DEVELOPMENT PROJECT GRANT NUMBER IDA CREDIT NO.5112 ET AND TF-16392ET Opinion We have audited the accompanying financial statements of Federal Urban Job Creation & Food Security I Agency Women Entrepreneurship Development project Grant Number IDA Credit No.5112 ET and TF- 16392ET, which comprise statements of financial position as at 07 July 2018, statements of source and uses of fund, and a summary of significant accounting policies and other explanatory notes for the year then ended. . We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. I In our opinion, the financial statements present fairly, in all material respects, the financial position of Federal Urban Job Creation & Food Security Agency Women Entrepreneurship Development project Grant Number IDA Credit No.5112 ET. And TF-16392ET as at 07 July 2018, its financial performance and Operating result for the year then ended in accordance with Generally Accepted Accounting Principle. In addition, with respect to the statement of expenditure submitted during the year ended 7 July 2018, in our opinion. a. The statements, together with the procedures and initial control involved in their preparation, can be replied up on to support the relevant withdrawals, b. Adequate supporting documentation has been maintained to support claims to IDA for reimbursements of expenditures incurred: and c. Expenditures are eligible for financing under IDA Credit No.5112 ET and TF-16392 ET 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 Company in accordance with the international Ethics Standards Board for Accountants' code of Ethics for I Professional Accounts (IESBA Code) together with the ethical requirments that are relevant to our audit of the financial statemetns in Ethiopia, and we have fulfilled our other ethical responsibilities in accordance with th uirements and the IESBA Code. We believe that the audit evidence we have obtAined is so . eMr nt),.4 opriate to nrovide a hasis for our oninion. 0 0 3h ' E ) endship Street, Wengelawit Tadesse Building 1st Floor Tel. (011) 442 133, %06 - 1) 470 7092,(011) 470 7094 - Mob. (093) 0014106, (091) 151 5038/39 Fax (011) 442 1338 - e-mail: tayco@ethionet.et - www.tayauditing.com - P.O. Box 1335 - Addis Ababa, Ethiopia Responsibilities of the Management and those Charged with Governance for the Financial Statements The management is responsible for the preparation and fair presentation of the financial statements in accordance with the accounting policies of the company/ IFRS, and for such internal control as management determines is necessary to enable the preparation of a project report that is free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern, and using the going concern basis of accounting unless management either intends to liquidate the company or to cease operations, or have no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company's financial reporting process. Auditor's Responsibility for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the project report as a whole is 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. 1 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 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 Company's internal control. I * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. * Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditio ast significant doubt on the Group's ability to continue as a going concern. w t a material uncertainty exists, we are required to draw 3 2- 0 e attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern. * 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 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 also 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 reasonable be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statement of the current period and are therefore the key audit matters. We describe these ,matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. The engagement partner on the audit resulting in this independent auditor's report is yeheyis Bekele BA,FCCA I I C ified Aecountants & Addis Ababa, Aut ed Auditors December 14, 2018 I 1 3 I FEDERAL URBAN JOB CREATION & FOOD SELUMI i yMna"w- i WOMEN ENTREPRENEURSHIP DEVELOPMENT PROJECT GRANT NUMBER IDA CREDIT NO.5112 ET AND TF-16392ET BALANCE SHEET AS AT 07 JULY 2018 CURRENCY: ETHIOPIAN BIRR 2018 2017 Notes CURRENT ASSET Receivable 5 878,194.32 2,321,773.20 I Cash at bank 6 3,801,840.26 7,052,819.02 4,680,034.58 9,374,592.22 I I CURRENT LIABLITIES Creditors and accruals 7 96,128.07 159,434.22 I Net current Asset 4,583,906.51 9,215,158.00 REPRESENTED BY: Fund Balance 8 4,583,906.51 9,215,158.00 14 mI FEDERAL URBAN JOB CREATION & FOOD Simuii t A" % i WOMEN ENTREPRENEURSHIP DEVELOPMENT PROJECT GRANT NUMBER IDA CREDIT NO.5112 ET AND TF-16392ET STATEMENT OF SOURCES AND USES OF FUNDS FOR THE YEAR ENDED 7 JULY 2018 CURRENCY: ETHIOPIAN BIRR Notes 2018 2017 SOURCES. IDA Credit SOE procedures 9 216,999.77 19,914,838.72 Gain on Exchange 547,785.11 279,219.66 IDA Credit 9,522,247.01 9,083,995.68 10,287,031.89 29,278,054.06 USES I Entrepreneurial Skills, Technology and cluster Development 10 8,618,980.76 24,863,439.53 Project Management, Advocacy and outreach, monitoring and evaluation and 11 impact Evaluation 6,299,302.62 6,153,682.07 14,918,283.38 31,017,121.60 EXCES OF SOURCE OVER USES / (4,631,251.49) (1,739,067.54) (USES OVER SOURCE) I I t rs FOR THE YEAR ENDED 7 JULY 2018 1. ESTABLISHMENT OF THE AGENCY Federal Urban Job Creation and Food Securities Agency was established as per the Council of Ministers Regulation 374/2016. 2 OBJECTIVE OF THE AGENCY The Agency established with the following objectivities:- a) To improve the livelihood of citizen who are unable to work or able to work but unemployed due to different conditions and live under poverty line; based on the principles of urban job creation and food security ,by providing developmental safety net support to citizen sustainably and ensure their food security. b) To support and coordinate institutions assisting the micro enterprises and small enterprises do not fall under the manufacturing sector to make them competitive, sustainable and strong foundation industrial development. c) To promote and develop micro enterprises and small enterprises do not fall under the manufacturing sector engaged in urban agriculture ,construction ,trade and services sectors with a view to make these sectors competitive,sustainable and thereby create employment opportunities in the urban center,improve their income and create fair resource distribution d) To ensure balanced nutritional security of citizens. I 3 Background of the project Financing agreement was signed on 12 June 2012 between the Federal Democratic Republic of Ethiopia and the International Development Association (IDA) according to which SDR 32,200,000 (Thirty-two million two hundred thousand) is available in the form of credit to implement the activities of the Women Entrepreneurship Development I project, under credit agreement No 5122-ET.The project is implemented through Ministry of Urban Development and construction (MoUD &C) National project management team (NPMT) is established with in the Federal Micro and Small Enterprise Development Agency (FeMSEDA) under the MoUD &C . MoUD &C , FeMSEDA , NPMT, Development Bank of Ethiopia (DBE) and other sub national administration selected for the execution of the project and implementing project activities. The objective of the project is to increase the earning and employment of Micro and small enterprises (MSEs)fully or partially owned by female entrepreneurs in the targeted cities. I 4. Accounting policies The principal accounting policies adopted by the project are set out below. These policies have been consistently applied Ia. Basis of presentation These financial statements have been prepared in accordance with cost convention b. Currency Transitions in foreign currency are converted to Birr at the exchange rate ruling at the date of the transaction. Cash c. Basis of accounting Modified cash basis of accounting is used in the recognition of source and uses of fund. d. Fund balance IIncorporates gain on exchange rate and net interest income before profit and tax of Development bank of Ethiopia e. Fixed Asset Fixed Assets are treated As project Expenditure at the time of Purchase without applying the rule of Depreciation. I ~10 6 I 4% GRANT NUMISEK LvUA L,minti 11".0x A . IIQ IJ - . & NOTES TO THE ACCOUNT FOR THE YEAR ENDED 7 JULY 2018 CURRENCY: ETHIOPIAN BIRR 5. Advance to Regions&Staff receivable 2018 2017 Staff debtor 37.37 - A/R FUJCFSA - 246,977.82 Advance to Addis Ababa COFED 483,174.53 1,261,011.87 Entoto College - 106,467.00 General Winget college 106,467.00 106,467.00 Advance to Mekelle COFED 41,742.28 55,260.82 Advance to Mekelle polytechnic college - 159,849.00 Advance to Gonder COFED 10,889.93 - Advance to Assela COFED 24,242.97 - Advance toDillaCOFED 44,384.25 - Advance to Axum COFED 9,317.13 - Advance to Bahir Dar COFED 67,975.50 41,814.26 I Advance to Adama COFED 22.42 140,920.25 Advance to Hawassa COFED - 63,046.70 Advance to Dere Dawa COFED 89,940.94 139,958.48 878,194.32 2,321,773.20 I 6. Cash and Bank Balance 2018 2017 NBE-0100751300078 1,763,037.81 - NBE-0100101300490 - 3,352,749.61 1 NBE-0100751040010 2,038,802.45 3,700,069.41 3,801,840.26 7,052,819.02 7. Creditors and Accruals 2018 2017 l Withholding tax payable 4,262.06 VAT Payable - 32,487.58 Other Payables with Governments 96,128.07 40,289.58 Other payroll Deduction - 82,395.00 96,128.07 159,434.22 fi 0> 3 0 GRANT NUMBER IDA CREDIT NO.5112 ET AND TF-16392ET NOTES TO THE ACCOUNT FOR THE YEAR ENDED 7 JULY 2018 CURRENCY: ETHIOPIAN BIRR 8 Fund Balance 2018 2017 Opening Balance 9,215,158.00 10,954,225.54 Add: Result of Current year (4,631,251.49) (1,739,067.54) 4,583,906.51 9,215,158.00 9 SOE Procedure 2018 2017 Withdrawal application IDA 216,999.77 9,032,364.20 I Direct payment by World bank - 10,882,474.52 216,999.77 19,914,838.72 I 10 Entrepreneurship Skills, Technology and cluster Development 2018 2017 Stationery & office supplies 1,397,897.14 769,679.72 Contractual professional Service - 17,878,351.00 Training 3,734,841.12 4,210,759.35 Fuel & lubricants 79,417.54 55,539.14 Repair and maintenance 118,124.41 132,610.32 Periderm 883,051.80 477,776.32 Telephone Expense 1,496,987.29 1,042,002.78 Rent 168,060.00 88,480.00 Transportation 132,610.00 29,252.00 Insurance - 4,779.00 Entertainment 200,290.49 3,831.59 Service Charge 12,331.68 25,053.97 Loading & unloading 2,899.80 3,965.00 Advertising 11,224.00 15,250.00 Purchase of machinery 381,245.49 126,109.34 8,618,980.76 24,863,439.53 Z 40,1 44fdfter WC GRANT NUMISEK IUA 'L4% J.F.%7JLAo x NOTES TO THE ACCOUNT FOR THE YEAR ENDED 7 JULY 2018 11 Project Management, Advocacy and outreach, Monitoring and evaluation and impact Evaluation. CURRENCY: ETHIOPIAN BIRR 2018 2017 Salaries & related benefit 4,657,691.77 4,020,718.16 Stationery & office supplies 60,899.71 138,352.69 Contractual professional Service 51,750.00 206,195.00 Training 201,197.20 368,994.21 Fuel & lubricants 101,000.00 1,000.00 Repair and maintenance 226,006.25 129,761.09 Periderm 203,314.00 236,740.32 Telephone Expense 2,328.63 21,384.88 Rent 339,863.33 398,880.00 I Publication 75,228.70 196,392.70 Medical Supplies 76,281.15 39,011.72 Transportation 118,658.00 92,080.00 Insurance 39,679.27 70,187.10 Entertainment 29,351.72 39,832.46 Service Charge 62,715.39 43,470.53 Loading & unloading 800.00 1,200.00 Advertisement 28,440.00 5,750.00 1 Purchase of machinery 24,097.50 141,217.27 Miscellaneous expense - 2,513.94 6,299,302.62 6,153,682.07 I 12 Comparative figures 1 To facilitate comparism ,certain figures of the previous year are re-classified. 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