AUDITOR GENERAL'S REPORT Health Result Based Financing (HRBF) and Design Project Financial Statements For the period July 1, 2015 to June 30, 2016 January 2017 Closeout Audit Yusador S. Gaye, CPA, CGMA Auditor General, R. L. Auditor General’s Report on the Audit of the Health Result Based Financing (HRBF) Design Project Financial Statements For the period July 1, 2015 to June 30, 2016 Table of Contents ACRONYMS USED ............................................................................................................. 2 AUDITOR GENERAL’S REPORT ......................................................................................... 3 FINANCIAL STATEMENTS ................................................................................................. 5 Statement of Receipts and Payments ..................................................................................... 5 Statement of Comparison of Budget and Actual Amounts ......................................................... 6 For the 12 months ended June 30, 2016 ................................................................................ 6 1. IDA/ (World Bank) Fund .......................................................................................... 9 2. GOODS ................................................................................................................ 10 3. CONSULTING SERVICES........................................................................................ 11 4. OPERATING COST ................................................................................................ 12 5. SUB-GRANTS ....................................................................................................... 13 Note 6. Cash at the end of the year .................................................................................... 14 1 Promoting Accountability of Public Resources Auditor General’s Report on the Audit of the Health Result Based Financing (HRBF) Design Project Financial Statements For the period July 1, 2015 to June 30, 2016 ACRONYMS USED Acronyms/Abbreviations/Symbol Meaning AFP Audit Focal Person AG Auditor General CGMA Chartered Global Management Accountant COSO Committee of Sponsoring Organization of the Treadway Commission CPA Certified Public Accountant EPHS Essential Package Health Services FSs Financial Statements GoL Government of Liberia HRBF Health Result Based Financing HSSP Health Systems Strengthening Project IAU Internal Audit Unit IBRD International Bank for Reconstruction And Development IDA International Development Association IFRs Interim Financial Reports INTOSAI International Organization of Supreme Audit Institutions IPSAS International Public Sector Accounting Standards ISSAI International Standards of Supreme Audit Institutions LMDC Liberia Medical and Dental Council MOH Ministry of Health P’OFM Office of Financial Management PBF Performance Based Financing PCO Project Coordination Office PIM Project Implementation Manual QPR Quarterly Progress Report SOE Statement of Expenditures ToR Term of Reference 2 Promoting Accountability of Public Resources Auditor General’s Report on the Audit of the Health Result Based Financing (HRBF) Design Project Financial Statements For the period July 1, 2015 to June 30, 2016 AUDITOR GENERAL’S REPORT January 6, 2017 Dr. Bernice T. Dahn Minister Ministry of Health Republic of Liberia Dear Dr. Dahn: Re: Report of Independent Auditors on the Financial Statements We have audited the accompanying financial statements of the Health Result Based Financing (HRBF) Design Project for the fiscal period ended June 30, 2016. These financial statements comprise the Statement of receipts and payments and the Statement of comparison of budget and actual amounts for the fiscal period ended June 30, 2016 and a summary of significant accounting policies and other explanatory information. The audit of the financial statements of the Health Result Based Financing (HRBF) Design Project of the Ministry of Health for the fiscal period ended June 30, 2016 was commissioned by the Auditor- General (AG) under the AG’s statutory mandate as provided for in Section 2.1.3 of the General Auditing Commission’s Act of 2014 as well as the Audit Engagement Terms of Reference (ToR). Management’s Responsibility for the Financial Statements Management of the Health Result Based Financing (HRBF) Design Project of the Ministry of Health is responsible for the preparation and fair presentation of these financial statements in accordance with Cash Basis International Public Sector Accounting Standards (IPSAS) and World Bank Guidelines, 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. We conducted our audit in accordance with International Standards of Supreme Audit Institutions (ISSAIs). These standards require that we comply with ethical requirements, 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 misstatement 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 3 Promoting Accountability of Public Resources Auditor General’s Report on the Audit of the Health Result Based Financing (HRBF) Design Project Financial Statements For the period July 1, 2015 to June 30, 2016 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. Opinion In our opinion, the financial statements present fairly, in all material respects, the statement of receipts and payments and the Statement of comparison of budget and actual amounts of Project NO.TF13274LBR for the fiscal period ended June 30, 2016 and a summary of significant accounting policies and other explanatory information of the Health Result Based Financing (HRBF) Design Project of the Ministry of Health for the fiscal period ended June 30, 2016 in accordance with Cash Basis International Public Sector Accounting Standards (IPSAS). Monrovia, Liberia January 2017 4 Promoting Accountability of Public Resources Auditor General’s Report on the Audit of the Health Result Based Financing (HRBF) Design Project Financial Statements For the period July 1, 2015 to June 30, 2016 FINANCIAL STATEMENTS Health Result Based Financing (HRBF) Design Project Statement of Receipts and Payments For the 12 months ended June 30, 2016 Notes July 1, 2015 July 1, 2014 June 30, 2016 June 30, 2015 Receipts US$ US$ IDA(World Bank) Fund 1 90,870 208,966 Other Receipts - - Total Receipts 90,870 208,966 Less Payment: Payment Goods 2 1,125 - Consulting Services 3 52,971 19,600 Operating Cost 4 2,503 11,954 Sub-Grants 5 131,393 14,217 Total payments 187,992 45,771 Decrease/ Increase in cash (97,122) 163,195 Cash at the begging of the year 166,495 3,300 Cash at the end of the year 6 69,373 166,495 The notes found on page 7-14 are integral part of these financial statements 5 Promoting Accountability of Public Resources Auditor General’s Report on the Audit of the Health Result Based Financing (HRBF) Design Project Financial Statements For the period July 1, 2015 to June 30, 2016 Health Result Based Financing (HRBF) Design Project Statement of Comparison of Budget and Actual Amounts for the 12 months ended June 30, 2016(7) Original Final Actual Amounts Variance Percenta Budget Budget ge Variance Cash Inflows US$ US$ US$ US$ (%) Authorized Allocations/Receipts 406,336 406,336 90,870 315,466 77.64 Total Receipts 406,336 406,336 90,870 315,466 - Cash Outflows Civil Works - - - - - Goods 1,800 1,800 1,125 675 37.50 Consulting Services 75,927 75,927 52,971 22,956 30.23 Training 53,460 53,460 - 53,460 100 Operating Costs 19,136 19,136 2,503 16,632 86.92 Sub-Grants 256,013 256,013 131,393 124,620 48.68 Total Payments 406,336 406,336 187,992 218,343 Net Cash Flows - - (97,122) The notes found on page 7-14 are integral part of these financial statements 6 Promoting Accountability of Public Resources Auditor General’s Report on the Audit of the Health Result Based Financing (HRBF) Design Project Financial Statements For the period July 1, 2015 to June 30, 2016 NOTES TO THE FINANCIAL STATEMENTS General Information and Accounting Policies: I. The Reporting Entity and Principal address Ministry of Health Health Result Based Financing (HRBF) Design Project Congo Town, Monrovia Liberia II. Background of the Project On January 23, 2013, the Republic of Liberia and the International Bank for Reconstruction and Development/International Development Association (“World Bank”) entered into a Grant Agreement for the financing of the Health Result Based Financing (HRBF) Design Project under the Ministry of Health. The development objective of the Health Result Based Financing (HRBF) for Liberia is to improve the quality of maternal health, Child health, and infectious disease services in selected secondary-level health facilities. During the Preparatory stage, the Project consisted of three main components as outline below:  The first component deals with strengthening the institutional capacity to improve the quality of selected health interventions at performance-based Financing (PBF) health facilities.  The second component is about improving health workers competencies to address key Health-related concerns at selected health facilities.  The third component deals with project management. This component will support the operational capacity of the Ministry of health (MOH) to effectively manage the project. On the basis of the above, the International Development Association (“World Bank”) provided the initial grant of US$850,000.00 to fund the preparation of a full-scale Health System Strengthening Project (HSSP) to address various Secondary level healthcare interventions. The notes found on page 7-14 are integral part of these financial statements 7 Promoting Accountability of Public Resources Auditor General’s Report on the Audit of the Health Result Based Financing (HRBF) Design Project Financial Statements For the period July 1, 2015 to June 30, 2016 III. Significant Accounting Policies The financial statements have been prepared in accordance with the Cash Basis International Public Sector Accounting Standards (IPSAS). This implies that all expenditures are expensed whether they are revenue or capital in nature and income is recognized when funds are received from the IDA/ADB (World Bank). IV. Reporting Currency Financial reports have been presented in United States Dollars. Transactions in other currencies are translated into United States Dollars and recorded at the rate of exchange ruling at the date of the transaction(s). Balances in other currencies are translated into United States Dollars at the rate of exchange prevailing on the reporting date. V. Reporting Period The reporting period for these financial statements is the 12 months ended June 30, 2016. (1 July 2015 to 30 June 2016). The notes found on page 7-14 are integral part of these financial statements 8 Promoting Accountability of Public Resources Auditor General’s Report on the Audit of the Health Result Based Financing (HRBF) Design Project Financial Statements For the period July 1, 2015 to June 30, 2016 1. IDA/ (World Bank) Fund July 1, 2015 July 1, 2014 Date June 30, 2016 June 30, 2015 US$ US$ July 8, 2014 - 89,324 January 1 ,2015 - 87,382 April 30, 2015 - 32,260 July 8, 2015 21,524 - November 16,2015 69,346 - Total 90,870 208,966 The notes found on page 7-14 are integral part of these financial statements 9 Promoting Accountability of Public Resources Auditor General’s Report on the Audit of the Health Result Based Financing (HRBF) Design Project Financial Statements For the period July 1, 2015 to June 30, 2016 July 1, 2015 July 1, 2014 June 30, 2016 June 30, 2015 US$ US$ 2. GOODS Management Costs: Furniture & Fixtures 1,125 - TOTAL 1,125 - The notes found on page 7-14 are integral part of these financial statements 10 Promoting Accountability of Public Resources Auditor General’s Report on the Audit of the Health Result Based Financing (HRBF) Design Project Financial Statements For the period July 1, 2015 to June 30, 2016 July 1, 2015 July 1, 2014 June 30, 2016 June 30, 2015 US$ US$ 3. CONSULTING SERVICES Project Preparation: Foreign Consultant 34,939 - Foreign Travel DSA 8,262 - Foreign Travel-means of travel 6,046 - Residential Allowance- Foreign Consultant 1,500 2,000 Taxes and Duties 2,224 - Local Consultant - 17,600 TOTAL 52,971 19,600 The notes found on page 7-14 are integral part of these financial statements 11 Promoting Accountability of Public Resources Auditor General’s Report on the Audit of the Health Result Based Financing (HRBF) Design Project Financial Statements For the period July 1, 2015 to June 30, 2016 July 1, 2015 July 1, 2014 June 30, 2016 June 30, 2015 US$ US$ 4. OPERATING COST Project Preparation: Honorarium - 2,000 Domestic Travel - 5,367 Repairs & Maintenance-Civil Work 199 - Telecommunication & Internet - 708 Vehicle Fuel & Maintenance 252 1,088 Computer & ITC Services - 175 Stationery & Printing Service - - Meeting Refreshment - 100 Vehicle Insurance 1,851 2,462 Bank Charges 201 54 TOTAL 2,503 11,954 The notes found on page 7-14 are integral part of these financial statements 12 Promoting Accountability of Public Resources Auditor General’s Report on the Audit of the Health Result Based Financing (HRBF) Design Project Financial Statements For the period July 1, 2015 to June 30, 2016 July 1, 2015 July 1, 2014 June 30, 2016 June 30, 2015 US$ US$ 5. SUB-GRANTS Hospital Performance Bonus: Staff Performance Bonus-Redemption Hospital 56,043 - Hosp. Property Maintenance – Redemption 21,523 - Drug and Medical Consumables 34,565 - Food and Catering services 500 - Bank Charges – Redemption 270 - Management Costs: Honorarium – LMDC 6,300 455 Stationery & Printing Services- LMDC 7,205 - Professional Service – LMDC 4,350 13,550 212 Bank Charges – LMDC 637 - - TOTAL 131,393 14,217 The notes found on page 7-14 are integral part of these financial statements 13 Promoting Accountability of Public Resources Auditor General’s Report on the Audit of the Health Result Based Financing (HRBF) Design Project Financial Statements For the period July 1, 2015 to June 30, 2016 Note 6. Cash at the end of the year This is a closeout audit of the Health Result Based Financing (HRBF) Design Project of the Ministry of Health. All the necessary closeout procedures were performed and the uncommitted fund balance of US$ 69,373 on the bank statement has been subsequently transferred to the World Bank. 7. Variance analysis The 77.64% variance represents budgeted balance of cash receipts which was not expended due to the slow pace of the project activities. The 37.50 % variance associated with goods is attributed to the transfer of procurement of medical equipment to EERP through the UN Agencies. The 30.23 % variance associated with consulting services is due to the fact that most of the needed faculty members under the PGMRP are not yet in place. The 100% variance for training is attributed to the resignation of the PBF Consultant who should have provided training for the counties hospitals staff for the implementation of the PBF. The 86.92% variance for operating cost is attributed to the slow pace of the project activities due to the restructuring process as well as the delay in rolling up of the PBF activities. The 48.68% variance for sub-grand is due to the delay in rolling up the PBF activities to selected county hospitals. The notes found on page 7-14 are integral part of these financial statements 14 Promoting Accountability of Public Resources