H World Bank Funded Project (Emergency Monrovia Urban Sanitation Project) Implemented by the Government of Liberia through "Project Financial Management Unit in the Ministry of Finance and Development Planning" Report and Financial Statements For the Eighteen (18) Months ended December 31, 2016 CONTENT: Page: 1. Independent Auditor's Report 3. Balance Sheet 4. Statement of Receipts and Payments 5. Statement of Comprehensive Performance and accumulated fund 6. Statement of Cash Flows 7. Notes to the Financial Statements 11. Independent Auditor's Report on the Statement of Expenditures 13. Statement of Expenditures 14. Notes to the Statement of Expenditures 16. Independent Auditor's Report on the Special Account Statement 18. Designated Account reconciliation Management Letter Clearance World Bank-pfmu/emus-2016 PKF Liberia PKF Accountants & business advisers Independent Auditor's Report Project Steering Committee and the World Bank Project Financial Management Unit (PFMU) Ministry of Finance and Development Planning Republic of Liberia We have audited the balance sheet for the "Trust Fund Grant No.: IDA 49080, TF A1481, TF17803 and GoL-LBR with Project ID: P146966 and P115664 "Emergency Monrovia Urban Sanitation Project (EMUS)" as at December 31, 2016 and the related statements of receipts and payments, statement of comprehensive performance, accumulated fund, and cash flows for the Eighteen (18) months ended December 31, 2016. Management's Responsibility for the financial statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Public Sector Accounting Standards (IPSAS) 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. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. Our audit was conducted 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. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatements of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair 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 control. An 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. Tel +231-886-510 562 - 231-886-510 603 .231-886 835-784 * Email: pkfliberia@pkf.com.ir * pkfliberia@yahoo.com PKF Liberia * Randall Street* Lara Building * Fourth Floor* Suite 41 * RO. Box 10-3635 *1000 Monrovia 10* Liberia contact Person: Nim'ne E. Mombo Sr., Managing Partner & Prof. D. Ansu Sonii Sr., Partner PKF-Liberla is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms 2 Opinion In our opinion, the financial statements referred to above present fairly in all material respects, the financial position of the "Trust Fund Grant No.: IDA 49080, TF A1481, TF17803 and GoL-LBR with Project ID: P146966 and P115664 "Emergency Monrovia Urban Sanitation Project (EMUS)" as at December 31, 2016 and its operations for the year then ended as well as for the revenue collected and expenditures made by the Project during the eighteen (18) months in accordance with the International Public Sector Accounting Standards (IPSAS). PKF-Lib ia Accountants & business advisors on rBoa Ministry of Finance and Development Planning Trust Fund Grant No.: IDA 49080,TF A1481, TF17803, and GoL-LBR Project ID: P115664, P146966 Emergency Monrovia Urban Sanitation (EMUS) Project Balance sheet As at December 31, 2016 2016 2015 Note US$ US$ Assets Cash in bank 3 52,651 222,912 Long-term assets 4 1,525,306 1,395,087 Total assets 1,577,957 1,617,999 Liabilities Audit fee payable 10,000 7,000 10,000 7,000 Fund balance Accumulcted fund 1,567,957 1,610,999 Total liabilities & fund balance 1,577,957 1,617,999 The notes on pages 7 to 10 form an integral part of these financial statements. Roderick G. Smith Dr. Christopher4. Sokpor Project Manager Unit Manager EMUS PFMU Monrovia City Corporation Ministry of Finance & Development Planning AL 4 Ministry of Finance and Development Planning Trust Fund Grant No.: IDA 49080,TF A1481, TF17803, and GoL-LBR Project ID: P115664, P146966 Emergency Monrovia Urban Sanitation (EMUS) Project Statement of Receipts and Payments For the eighteen (18) months ended December 31, 2016 Cumulative July 1, to Cumulative to December December3 to June 30, 31,2016 1, 2016 2015 US$ US$ US$ Receipts: Grants Received 36,298,770 6,902,440 29,396,330 Sale of bid document 61,015 - 61,015 36,359,785 6,902,440 29,457,345 Payments: Total expenditures for the period (per statement of expenditures page 13) 36,324,134 7,082,701 29,241,433 Add:Prior Year Adjustment - - 7,000 Adjusted expenditures for the period 36,324,134 7,082,701 29,248,433 Add:Audit fee paid 25,000 - 25,000 Less: accrued audit fee (42,000) (10,000) (32,000) Total payments 36,307,134 7,072,701 29,241,433 Excess of receipts over payments 52,651 (170,261) 215,912 The notes on pages 7 to 10 form an integral part of these financial statements. 7-1 71 5 Ministry of Finance and Development Planning Trust Fund Grant No.: IDA 49080,TF A1481, TF17803, and GoL-LBR Project ID: P115664, P146966 "Emergency Monrovia Urban Sanitation Project (EMUS)" 6-1 Statement of comprehensive performance and accumulated fund For the eighteen (18) months ended December 31, 2016 2016 2015 Note US$ US$ Income: Grant received 6,902,440 5,266,912 Sale of bid document - - Total income 6,902,440 5,266,912 Expenditure: Civil works 1 4,703,961 4,366,411 Consultant services 3 1,819,932 654,915 Training and workshops 4 - - Operating cost 5 428,589 382,353 Total expenditure 6,952,482 5,403,679 Net operating results (50,042) (136,767) a Accumulated fund Beginning balance 1,610,999 1,747,766 Add: Prior Year Adjustment 7,000 - Adjusted Beginning balance 1,617,999 1,747,766 Net operating results (50,042) (136,767) Balance at December 31, 2016 1,567,957 1,610,999 The notes on pages 7 to 10 form an integral part of these financial statements. 6 Ministry of Finance and Development Planning Trust Fund Grant No.: IDA 49080,TF A1481, TF17803, and GoL-LBR Project ID: P115664, P146966 "Emergency Monrovia Urban Sanitation (EMUS) Project" Statement of cash flows For the eighteen (18) months ended December 31, 2016 2016 2015 US$ US$ Operating activities: Net operating results (page 5) (50,042) (136,767) Adjustments to reconcile net operating results to net cash flows from operating activities: Prior Year Adjustment 7,000 - Changes in operating assets and liabilities: Advance Payment to Consultants - Audit fee payable 3,000 - Net cash flows from operating activities (40,042) (136,767) Invesing activities: Purchase of long-term assets (130,219) (54,481) Net cash used in investing activities (130,219) (54,481) Net decrease in cash and cash equivalents (170,261) (191,248) Cash and cash equivalents at the beginning of the period 222,912 414,160 Cash and cash equivalents at the end of the period 52,651 222,912 The notes on pages 7 to 10 form an integral part of these financial statements. 7 Trust Fund Grant No.: IDA 49080, TF A1481, TF17803 and GoL-LBR Project ID: P115664, P146966 "Emergency Monrovia Urban Sanitation Project (EMUS)" Notes to the Financial Statements For the eighteen (18) months ended December 31, 2016 1, General background of PFMU 1.1 The Government of Liberia has finalized arrangement with various institutional donors to finance a program of rehabilitation and reconstruction of the vital sectors of the economy. The Government has established a Project Financial Management Unit (PFMU) that is responsible for providing centralized accounting, disbursement and reporting services for donor funded projects and programs that are being and shall be executed by the Government of Liberia. The responsibility for the establishment and maintenance of a financial management system for the projects and programs rest with the Government of Liberia through the Project Financial Management Unit (PFMU) in the Ministry of Finance and Development Planning and implementing units of the sector ministries implementing the project. 1.2 The Project Financial Management Unit (PFMU) has been established in the Ministry of Finance and Development Planning with appropriate financial management staff to ensure that: (a) all aspects of financial management required under the projects/programs are carried out; (b) payments are processed expeditiously on behalf of the implementing units; * (c) adequate internal controls are in place; (d) quarterly financial monitoring reports are prepared on a timely basis; (e) the financial information required by the implementing units are prepared on a regular basis and on time; (f) the annual financial statements are prepared on a timely basis; (g) and the annual external audit is completed on time and audit findings and recommendations are implemented expeditiously. Project sponsorship of EMUS Project 1.3 The Emergency Monrovia Urban Sanitation Project is funded 100% by the World Bank under its Economic Management and Capacity Building Program for Liberia with funds provided under the Trust Funds Grant No. IDA 49080, TF A1481, TF17803 and GoL-LBR with Project ID: P115664, P146966. The effective date of the operation of this project was on Octob6r 20, 2009. 8 Trust Fund Grant No.: IDA 49080, TF A1481, TF17803 and GoL-LBR Project ID: P115664, P146966 "Emergency Monrovia Urban Sanitation Project (EMUS)" Notes to the Financial Statements For the eighteen (18) months ended December 31, 2016 Project description and objective Component 1: Solid Waste Collection (US$11.2 million) ] 1.4 The objective of this component is to assist the Monrovia City Corporation (MCC) to provide solid waste services and increase the volume of the collected and disposed waste from approximately 30% of the daily generated waste to 45%. This will be achieved through: (i) technical assistance to small and medium enterprises which provide door-to-door collection service; (ii) construction of transfer stations, provision of equipment, and assistance towards financing the operating cost of service delivery; and (iii) a public awareness campaign to sensitize the population towards safe handling of solid waste. Component 2: Building Institutional and Technical Capacity at MCC US$4.9million) 1.5 This component aims to strengthen the capacity of MCC for proper revenue administration, financial management, and technical oversight to the provision of solid waste services in Monrovia. The following activities will be financed: (i) technical assistance (TA) for a financial and organizational audit followed by assistance for the implementation of selected action items identified by the audit; and (ii) technical assistance for project implementation and supervision. 1.6 In addition, US$1.8 million (10%) has been allocated for contingency and US$ 0.5 million for audit fees, training and operating costs of the implementing agency. 2. Significant accounting policies Basis of accounting and reporting 2.1 The financial statements have been prepared under historical cost convention, in accordance with International Public Sector Accounting Standards (IPSAS). This basis recognizes revenue transactions only when cash is received whilst expenditures are recognized on an accrual basis when goods and/or services are received and the obligation to pay has been incurred. 2.2 No procedures have been adopted to reflect either price changes or changes in the general level of inflation. Trust Fund Grant No.: IDA 49080, TF A1481, TF17803 and GoL-LBR Project ID: P115664, P1 46966 "Emergency Monrovia Urban Sanitation Project (EMUS)" Notes to the Financial Statements For the eighteen (18) months ended December 31, 2016 Currency of reporting 2.3 These financial statements are expressed in United States dollars. Cash and near cash assets as well as all liabilities denominated in other currencies, are translated to United States dollars at the applicable year-end rates. Transactions occurring in other currencies during the year are brought into the books of account at the prevailing rates of exchange on the dates of the respective transactions. Gains or losses arising on foreign currency transactions are reflected in expenditures for the period in which they arise. Long-term assets E j 2.4 Long-term assets represent expenditures incurred in capital works and acquisition of property and equipment. Such assets have been stated at historical cost. No depreciation is charged. l Grant 2.5 Grant is recognized on cash basis and credited to the Project's account when received. 3. Cash on hand and in bank 2016 2015 $ $ Designated Account - UBA - 2 Designated Account - Grant 1 - . 1,819 Designated Account - Grant 2 (583) 219.025 Designated Account - Grant 2 49,594 - GOL Support _39 2.066 7'6122,1 00 0 C O m N W .C 3 L CO C) ~ Cø CCD o co 0 in co C> C> c:l 0 D (N~ C \J A- 0 E 05 (04 CJ~- 0 cr ( o L 0 LL LL No N LO Os © I C C ca r 0 W> - D o CD r. M CaEco o E N N r I- - † N E o 0 0 r Caa LI.