LOCAL ECONOMY AND INFRASTRUCTURE DEVELOPMENT PROJECT IBRD LOAN NUMBER 8572-AM IMPLEMENTED BY ARMENIAN TERRITORIAL DEVELOPMENT FUND SPECIAL PURPOSE FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR'S REPORT For the period froni 29 December 2016 to 3 1 December 2018 YEREVAN June 2019 CONTENT Page, INDEPENDEIT AUDIiOR REPORT .....,. .......... ,,,,,,,... ...................................... 3 STATEMAENT OF CASH Rz¯CElTS AND PAYMLNr$ , , , . ,,,,,,,,,,,,,...............5 STATEMENT OF USES OF FUND'S BY PRDJECT ACTIVI~TY ................................ . G Nr ES T HF SPEC!AL PURPOSE Fl ANG f'AL STATEMLENTS .....,,,,,,,,,,,,,,,,,,,, . ....7 ANNEX 1. ECONIL.IATION BETWEEN T-E AM.OLN7 SUliiTTED fL '1-E ATDF AND DiSBURSED BY THL WORLD BAW ,............ ..................,,,, 1 TeL: +374 6JJ 5299 2V76. Dpyir Anhaght Sir, B ai rll: bCCo.bdoariea.aaT 5th Flw.i offiL-*7 www,bdParmvuia.arn 'ere.an, Arneria INDEPENDENT AUDITOR'S REPORT T the Management of the Armenian Territorial Development Fund Opinwon We have audited the special purpose financial statements of 'Local Economy and InFrastructure DeveLopment Project" "'Project") financed by Loan Agreement IBRD Loan Number 8572-AM dated 23 February 2016 ("Loan Agreement"), and implemented by Armenian Territorial Development Fund ('ATDF'), which comprise of the statement of cash receipts and payments and the statement of expenditutr per components for the period from 29 December 2016 to 31 December 2018, and notes to the special purpose financial statements, including a s.rnmary of significant accounting policies, in our opinion, the accompanying financial statements present fairly, in all materiaL respects, the caslh flows for the period from 29 December ZO(16 to 31 December 2017 and for the year ended 31 December 2018 in accordance with International Pblic Sector Accounting Standards: Finandai Reporting Under the Csh asis of Accouritirrg, (IPSAS-Co5h 8asis, Basis for Opnion We conducted our audit in accordance with International Standards on Auiditing (ISA5 as issued by InternationaL Auditing and Assurance Standards foard (lAA54) of the International Federation of Accountants (IFAC). Our responsibIlities under those standards are fLfrther described in the Auditor's ResporsibifUties for the Audit of the FirrorciarK Statements section of our report. We are independent of the Project and of the ATDF in accordance with the Iiterniational Ethics Standards &ord for Accountarts' Code of EthWcs for Professional Accountants (ESSA Code), and we have fulfilled our other ethical requirements in accordance with IESA Code- We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Empsi of Matter- Cash Basis of Accounting We draw attention to Note 2 to the financial statements, which describes that financiaL statements are prepared in accordance with cash basis framewirk, as a resuLt, they may not be suitable for armther purposes. Our opinion is not modified In respect of this matter. Responiibilties of the MangeSent for the Financial Statements Management of the ATDF is responsible for the preparation and fair presentation of the special purpose financial statements in accordance with IPSAS-Cash Basis issued by the International PubLic Sector Accounting Standards Bard (IPSASO) of the IFAC and Financial Management Manual for World Bank Financed Investment Operations ('"WB Guidelines"}, and for such internal control as management determines is necessary to enable the preparation of special purpose financial statements that are free from materiaL misstatement, whether due to fraud or error. Auditors Responsibility for the Audit of the Special Purpose Financial Statements Our objectives are to obtain reasonable assurance about whether the special purpose 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 high level of assurance, but is rot a guaranty that an audit conducted in accordance with 1SAs will always detect a material misstatement when it exists. A4 .:t AfK ini* III1rM. Mistatements arise from fraud and error and are consid"ed material if, individuaLy or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these special purpose financial statements. As part of an audit in accordance with ISM, we exercise professional jvdgement and maintain professional skepticism throughout the audit. We also: * Identify and assess the risks of materiaL misstatement of the speciaL purpose financial statements, whether due to fraud or error, design and perfon 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 misstaternent resuIting from fraud is higher than for one resulting from error, as fraud may involve cotLusion, forgery, intentional omissions, misrepresentations, o 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 circurmstancesr but not for the purpose of expressing an opinion on the effectiveness of the internal control. * Evaluate the appropriaterbss of accounting poLicies used and the reasonableness of accounting estimates end related dfsclosures made by management. * Evaluate the overall presentation, structure and content of the special purpose financial statements, Including the dEsClosuresr and whether the special purpose financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with management regarding, among other matters, the planned scope and timing of the audit and signfficant audit findings, including any significant deficiencies in internaL controL that we identify during our audit. Report on Other Legal Requirements To comply with the terms of the Loan Agreement, the ATDF management shalL insure that: 1. funds have been used in accordance with the conditions of the Loan Agreernet concLuded between the International Bank for Reconstruction and Developrierit (IBR) and the Republic of Armenia, and WB Guidelines, with due attention to economy and efficiency, and only for the purposes for which the financing was provided; 2. supporting documents, records and accounts have been maintained to support claims for reimbursement of expenditures incurred. Reimbursed expenditures included in the withdrawal applications are elIgible for financing under the Loan Agreement; Interim Unaudited Financial Reports (IFRS) issued by ATDF during the Reporting year are in agreement with the underlying books of accounts; 3. the Designated Accounts have been maintained in accordance with the provisions of the Loan Agreement, and World Bank related guideLines; 4. Financed Wort, Goods and Services have been procured in accordance with the Loan Agreement and World Bank reLated guidelines. In our opinion, the Project management has complied with the above requirements for the period from Z9 December 2016 to 31 Decenber 2011. "100 Armenia" CJSC. 20 Juine 2(19 Vahagn akyan, FCCA Karine Chilingaryan Managi Partner Auditor BDQ :仰〕一 스… flOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS Luuf fc-JTJCWMY fl-nd klfrGS EFUC t u., e- Dcvcfnpinf W Pnqjeck* ffl.90 t6 1 263,418 8 __ /_ 9ZC1,5 310,112 6.-1 316,622 9 20C18 18 5,71q 418,556 97,3Q 40.580 973,307 73,97 1,047283 4. STATEMENT OF DESIGNATED ACCOIJNT Funding IBRO Loai rNurrbŽr 8577 -AM lion account nurnber 'IQfOOgl9OBl B Ba fKCerkiLI Trea5ury Bank LoCuor Metig Ac iy [ iri Stree i Yerevan, RCnic of Armenia, 0010 Accoun currircy USD 29.12..2016. Year ended Tutl 1,12.2017 31.12-2018 USD U5s0 USD 1. Opening batanco 9Ü, 95 2. Add: openi discre5ar9c 6 3. 'AfBaa ïn e; IÉL pIJti-rnrmen! 1 33,396 1l913,8Bje g,IJ7 3 1, Iess Re1~und io V3 frrrm DA 5. PresÉnt Dutstanding amourit advanced to DA 133,396 2 ,04,.488 2,Ø.17,753 6, 2A COsing buinn 90 595 4144, å9 414.394 7. Adj: Ar-i.nti o' eligiblt ex peldiLms d 42,795 .,087 1 ,. LL:!; i, te'-es ea, | rn c re i ed to DA: 9. Total advance accoured for 13,,390 4,481 2047,276 10. Ctosin discrepan,cy (Sj-() 6 7 5. STATEMENJT OF FINANCIAL POSITION 7he S.aleiiltiL o' Finäricial. 31sili::i ditosen m LibLitlies an net arsni5 o` the Pvj5ec. a at repor:i-g5 dale. It 5 prepared in accmal. basis that is wansactions are re<-cgn,izec 'en tliïg ccur (and no: nl.y when cash is recelved or paid>. 3 1.11201a 31.-12.2017 lole USD USD ASSETS cäshì 6 414,394 9u, 595 Preiaymer',s and rc·:ivablcs 7 966,246 Total asseLs 1 10,640 9a 595 L-I413 IL IT IES PoabLcl.s >147 5 Tatal Liabilities 46 75 NET ASSETS C unulative income Funds 9 'BRD Lar, 8572-AM 2,184,783 270,896 RA GovernreiL 40p,/57 Y 510,859 L,593,540 251,755 Cumulative expensas Project expenies 10 1,25,833 190,994 1,25E{1833 190,994 Foreir currency loss 542 166 Total net assets 1,334,165 90,595. 6. CASH Account Account held at Underlying 31.12.2018 31 12.2017 Curr-enc:y_. UiSD UiSE DesignaLcd accoumr r BD L.::ar 8577-AMi USD ,1-4,391 90,595 414,394 90,595 7. Prepayrrents and recelvables 31 Dec 20t8 31 Dec 2017 LSD JSD Pr paynts n Works 966,246 966,246 145 Prepaynents wc: paid la c:I:1: ip :o 20 % f :·ne .or·s.rtion cortrkrc; cimount bivsu: or bank g uaramee Drovided. 8. Payables 31 Dec 201a 31 Dec 2017 USD USD On Works Iletenticorsi 46,475 46.,475 l(1 RebzluL·ns of 5% are iw:d rom tie crp.uLd servi:e inveices a: guarant r- the quli:tv ot the wo k. 2.':W. are paid after signing the fial. act, o:nd the remainii-g 2.Y. are kHot for up to ore year as guaraly h::r the qualit\. of u,:.r formed w.ork, o· paiJ or tne basis of a Gi'-year bank guaranty. 9. Financing 9- f. 'BRO L,oa Number 8572-AM 29.12.2016- Year ended Cumu[alive at 31. 12.2017 31.12,2018 31,12.2018 uSD UD U05D Adv ances 100,0c 900.0,0 1,000.w0 S(E and Summary Shy e t s 33,396 ,013.887 ,017,283 FrIuL-end Fee 137>503 - 137,500 T7a 270896 1,913,a87 2¯184,783 low f·nancirg budg.L 55,000,QD PLrcer Lage of fin r:e providc : n° at 31 Dtc 201X 4% 92, Governient of the Repubic of ArrneTia co-finoncin9 29.12. 2016- Year ended Cu.iulative at 31.12.2017 31.12.2018 31,12,2018 USD __ US U5D Uortriu:ions inv ca5s _1,855 _ 397,299 '08,757 Total 7 Total10.858 _B397__99 408,757 ¯ot( rir ancing budgL 11,715.625 Perccn.aC o:f f.nance :wovided as al 31 Dec 7018 3% 10. Project E xpeindi tures 10.1. Project experl|ures finrrncfng per funds 29.12.2016 Goods, we71, nar"-cnsu., ng service: ronsjtints' servl .15 1 935,121 and/ur T!,jjhirg unr Pit i1 nd 2 nf f- Prc 1ir ari 2~ nf (hr? Prnjert 121 Operatiri;ost s 102 99B3 1 12S.UYX m Gu'Js. wr ks r:nii isurisJt in'J sc d can.ilt- nts' seryvicr k nrer Par: I o e Po ec" J- e-nd Fei? 1e 7, 5J0 137, 3UJ 10c Total 2,178,604 8715,6253% 11, Events after the reportirng date Trie appica:ion N 10 hal T-cLJdes e.xpendiLui relaL··g Lu the reporing period i r the amloun- G. .- -'jå07 l''JSD w-· subrrit-d o WB On 20 MArch 2 19 irind a ppro'v;d nn 26 Mwci1 YU1l9. ANNEX 1. RECONCILIATION BETWEEN THE AMOUNTS SUBMITTLD BY THE ATDF AND DISBURSED BY THE WORLD BANK Lcal Economy n,;: infm·. ..twrcc4 D vuprn