Promoting Accountabliity of Pubik Resoures AUDITOR GENERAL'S REPORT On The Audit of the Public Sector Modemization Project (PSMP) For the Period June 2016 to July 2017 December, 2017 Yusador S. Gaye, CPA, CGMA Auditor General, R.L. Auditor Generals Report on the Public Sector Moderniation Project Financial Statements For the period July 1, 2016 to June 30, 2017 Table of Contents Report on the Audit of the PSMP Financial Statements........................-.-................................. 3 Statement of Receipt and Expenditure by Category ......................................................... ..... 5 Project Designated Account Statement...................................................................................... 6 Statement Of Fund Balance And Cash Status For The Year Ended June 30, 2017......................... 6 Statement of Comparison of Budget to Actual Amount............................................................... 7 NOTES TO FINANCIALSTATEMENTS ...............................................................................9 1. Background and Information of the project..................................................................... 9 2. Use of Grant Proceeds....................................................................... ...... 9 3. Significant Accounting Policies .. 1..... ...................................... ................ -......10 4 . G ra nt.................................................. ................. ..................... ...........................10 5. Improve Pay Management.............................................................................................11 6. Strengthening Payroll Management ............................................................................... 11 7. Improved Performance......................................................................................11 8. Improved/Project Management....................................................................................11 2 Ensuring Accountability of Public Resources Auditor General'S Report on the Public Sector Modemizaton Project Financial Statements For the period ended June 30, 2017 December 30, 2017 Dr. Puchu Leona Bernard Director General Civil Service Agency Monrovia, Liberia RE: Report on the Audit of the PSMP Financial Statements Opinion In our opinion, the accompanying financial statements present fairly, in all material respects, the Statement of Receipts and Payments, Statement of Comparison of Budget and Actual Amounts and a summary of accounting policies and other explanatory notes for the fiscal period then ended in accordance with International Public Sector Accounting Standards (IPSAS) Cash Basis of Accounting. We have audited the accompanying financial statements of Public Sector Modernization Project (PSMP) as at 3une 30, 2017, which comprise the Statement of Receipts and Payments, Statement of Comparison of Budget and Actual Amounts and a summary of accounting policies and other explanatory notes. Basis for Opinion We conducted our audit in accordance with International Standard of Supreme Audit Institutions (ISSAIs).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 Public Sector Modernization Project (PSMP) and the Civil Service Agency (CSA) in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of PSMP Management for the financial statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Public Sector Accounting Standard Cash Basis (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. In preparing the financial statements, management is responsible for assessing the Project Management ability to continue as a going concern, disdosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the project or to cease operations, or has no realistic alternative but to do so. 3 Ensuring Accountability of Public Resources Auditor General's Report on the PublIc Sector Modemizadon Project Financial Statements For the penod ended June 30, 2017 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 the International Standard of Supreme Audit Institutions (ISSAIs) 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. Yusador S. Gaye, CPA, CGMA Auditor General, R.L. Monrovia, Liberia December 2017 4 Ensuring Accountability of Public Resources Auditor General's Report on the Public Sector ModemizaPon Prject Financial Statennts For the period ended June 30, 2017 Statement of Receipt and Expenditure by Category Notes July 1, 2016 July 1, 2015 June 30, June 30, 2016 2017 Receipts US$ US$ IDA(World Bank) Fund 4 1,878,588.00 1,828,374.00 Total Receipts 1,878,588.00 1,828,374.00 Less Payment: Payment Improve Pay management 5 148,369.00 76,029.20 Strengthened payroll Management 6 411,865.00 177,755.43 Improved Performance 7 420,340.00 253,179.42 Program/ project Management 8 921,147.00 854,453.26 Total payments 1,901721.00 1,361,417.31 Excess of payments over receipts over (23,133.00) 466,957.00 payment Fund Balance as at beginning 466,957.00 - Decrease/ Increase in cash Cash at the end of the year 443,824.00 466,956.69 The notes on page 9 to 13 are integral part of these Project Financial report. 5 Ensuring Accountobility of Public Resources Auditor Genera's Report on the Public Sector Modemization Project financial Statements For the period ended June 30, 2017 Project Designated Account Statement Account Number 1502021698 Statement Of Fund Balance And Cash Status For The Year Ended June 30, 2017 Notes 2017 2016 In United States Dollars A. FUND BALANCE Balance of Project Fund b/f 466,956.69 - Add: Total Receipts during the period 1,878,588.00 1,828,374.00 Total fund available for operations 2,345,544.69 1,828,374.00 Less: Total payments during the period 1,901,721.00 1,361,417.31 Balance of project funds at the end of the year 443,824.69 466,956.69 B. CASH STATUS: Cash at bank 443,824.69 466,956,69 Total cash on hand and in bank 443,824.69 466,956.69 Difference between A and B - The notes on page 9 to 13 are integral part of these Project Financial report. 6 Ensuring Accountability of Public Resources Auditor Generals Report on the Public Sector Modernization Project Financial Statements For the period ended June 30, 2017 Statement of Comparison of Budget to Actual Amount Original Budget Final Budget Actual Variance Amounts US$ US$ US$ US$ Cash Inflows Authorized 1,878,588.00 1,878,58800 1,901,721.30 23,133.30 Allocations/Receipts Total Receipts 1,878,588.00 1,878,588.00 1,901,721.30 23,133.30 Cash Outflows Improve Pay Management 148,561.00 148,561.00 148,369.00 192.00 Strengthened payroll 424,478.57 424,478.57 411,865.51 12,613.06 Management Improved Performance 438,677.05 438,677.05 420,340.03 18,337.02 Program/ project 1,601,740.00 1,601,740.00 921,146.76 680,593.24 Management Total Payments 2,613,456.62 2,613,456.62 1,901,721.30 711,735.32 Note: DLI payments of USD 680,000.00 cleared by the Bank to be paid to participating Ministries and included in Component 4 budget was differed to the 2017/ 2018 fiscal year. The notes on page 9 to 13 are integral part of these Project Financial report. 7 Ensuring Accountability of Public Resources Auditor Generals Report on the Public Sector Modernization Project Financial Statements For the penod ended June 30, 2017 STATEMENT OF FINANCIAL POSITION AS AT JUNE 30, 2017 In United State Dollars AM-tl Notes 2017 2016 Cash and cash equivalent 443,824.00 466,957.00 Total Assets 443,824.00 466,957.00 Fund Balance Grants 443,824.00 466,957.00 Accumulated 443,824.00 466,957.00 The notes on page 9 to 13 are integral part of these Project Financial report. 8 Ensuring Accountability of Public Resources Auditor General's Report on the Public Sector Modernization Project Financial Statement5 For the period ended June 30, 2017 NOTES TO FINANCIAL STATEMENTS 1. Background and Information of the project With support from the International Development association AID-Us Agency For International Development (Usaid), SIDA-Swedish Intl. Dev. Cooperation Agency (Sida); the PSM-Project is to improve pay and performance management in participating ministries, and strengthen payroll management in the civil service in Liberia. The project has four components. The PSM Project was approved by the World Bank on February 10, 2014 and other Partners with a grant amount of USD 10.71 Million. The aim of the project is: I. Improved Pay Management II. Strengthened Payroll Management III. Improved Performance IV. Program/Project Management 2. Use of Grant Proceeds The table sets out the categories of items to be financed out of the grant proceeds, the allocation of the amounts of the grant to each category and the percentage of expenditures for items to be financed in each category: Category Amount of % of grant allocated expenditure expressed in to be US$ Million financed Improved Pay Management 3,18 30 Strengthened Payroll Management 3.05 28 Improved Performance 3.38 32 Program/Project Management 1.10 10 TOTAL 10.71 100 All categories of expenditure shown in these financial statements are fully financed based on the percentage below: % of Expenditure USAID 47 IDA 19 SIDA 34 Total 100 9 Ensuring Accountability of Pubic Resources Auditor General's Report on the Public Sector Modernization Project Financial Statements For the period ended June 30, 2017 3. Significant Accounting Policies Basis of Accounting The financial statement have been prepared been in accordance with the Cash basis International Public Sector Accounting Standards (IPSAS) and in the manner required by the project Grant Agreement as required by the World Bank's Operating Policcies and procedures and PFMU's Financial Management manual. This implies that all expenditures are expensed whether they are revenue or capital in nature and income is recognized when funds are received from the World Bank. Reporting currency Financial reports have been presented in United states Dollars Transactions denominated in other currencies are translated into United Stated Dollars and recorded at the rate of exchange ruling at the date of transactions. Balances denominated in other currencies are translated into United States Dollars at the rate of exchange prevailing on the reporting date. 4. Grant Grant from PSMP is held in a deferred income account when received and rae only recognized in the project's income statement when utilized. Grant Receipt 30 June 30 June In United States Dollars 2017 2016 PSMP/MFDP/001-IDA 53590 - 600,000.00 PSMP/MFDP/003-IDA 53590 - 728,374.00 PSMP/MFDP/005-IDA 53590 - 500,000.00 PSMP/MFDP/006-IDA 53590 94,000.00 - PSMP/MFDP/001-TF A1263 1,784,588.00 1,878,588.00 1,828,374.00 10 Ensuring Accountability of Public Resources Auditor General's Report on the Public Sector Modernization Project Financial Statements For the period ended-June 30, 2017 NOTES TO THE FINANCIAL STATEMENT (Continued) In United States Dollars Note 1-Jul-16 1-Jul-15 30-Jun-17 30-Jun-16 5. Improve Pay Management Develop CS Pay Strategy 27,111.00 - Civil Servants mapped-grades 30,878.00 11,199.00 Training-Grading Job Evaluation & Class 90,000.00 49,444.00 CS aware of pay reforms - 2,000.00 Strengthening Pension Unit 380.00 13,386.00 TOTAL 148,369.00 76,029.00 6. Strengthening Payroll Management 6 CSA & MAC HR Office Employees 4,226.00 75585 HRMIS-Biometrics Decentralization 85,794.00 72419 Produce Biometric ID cards 313,463.00 29752 IT Infrastructure Upgrade & Supp 8,382.00 - TOTAL 411,865.00 177,756.00 7. Improved Performance 7 Org design model & methodology 167,712.00 8,625.00 Org diagnoses carried out MACs 3,500.00 18,093.00 Reversal org structure 10 MACs-GC 68,077.00 33,023.00 Armed mandate & function of MACs 126,716.00 19,885.00 Heads of Department & Divisions Training 32,390.00 135,694.00 Perf Management Training rolled out in MAC 21,945.00 37,859.00 TOTAL 420,340.00 253,179.00 8. Improved/Project Management 8 Workshop/Retreat/Forum 43,596.00 10,299.00 General Operations 486,305.00 438,861.00 program Implementation Support 12,893.00 171,276.00 Office-Capacity Support - 17,100.00 Tech Support to Implementation agencies/LIPA - 34,000.00 Consultancy 378,353.00 182,917.00 TOTAL 921,147.00 854,453.00 Ensuring Accountability of Public Resources Auditor Generals Report on the Public Sector Modernization Project Financial Statements For the penod ended June 30, 2017 9. Cash paid Improve Pay Management 148,369.00 76,029.00 Strengthening Payroll 411,865.00 177,756.00 Management Improved Performance 420,340.00 253,179.00 Improved/Project Management 921,147.00 854,453.00 Total Payment 1,901,721.00 1,361,417.00 12 Ensuring Accountobifty of Public Resources Auditor General' Report on the Public Sector Modemizatyon Project Financial Statements For the period ended June 30, 2017 NOTES TO FINANCIAL STATEMENT (continued) PROJECT DESIGNATED ACCOUNT STATEMENT Account Number 1502021698 Account Type Current Account Depository Bank Central Bank of Liberia Address Ashmun Street Monrovia, Liberia Related Grant Agreement Grant No. IDA 53590 Currency In United States Dollar In United States Dollar 2017 2016 June June Total Grant Received 1,878,588.00 1,828,374.00 Total grant income reported 1,878,588.00 1,828,374.00 Amount spent 1,901721.00 1,361,417.31 Balance as at July 1 466,957.00 - Balance as at June 30 443,824.00 466,957.00 13 Ensuring Accountability of Public Resources