DABO AUDIT CO.,LTD O O O O AUDIT REPORT * Financial Statement for the period from 31 December 2014 through 31 December 2015 IMPROVING PRIMARY EDUCATION OUTCOMES FOR THE MOST VULNERABLE CHILDREN IN RURAL MONGOLIA PROJECT Uiaanbaatar 2016 Content page o 1 FINANCIAL STATEMENT Auditor's report on financial statement 34 Audited financial statement 5 2 SOURCES AND USES OF FUNDS Auditor's opinion on sources and uses of funds 6 Audited sources and uses of funds statement 7 3 STATEMENT OF EXPENDITURES Auditor's reporton Statement of Expenditure 8 Audited Summary of Applications for Withdrawal 9 Audited Comprehensive Statement of Expenditure 10 4 DESIGNATED ACCOUNT STATEMENT Auditor's report II Audited Designated Account Statement 12 5 NOTES TO THE AUDITED REPORTS 13-19 6 LETTER TO THE MANAGEMENT OF THE PROJECT 20-21 7 RESPONSE ON THE LETTER TO THE MANAGEMENT 22 El B U U O O 0 0 0 0 0 Chingeltei district, 1"' khoroo, MONTSAME agency building #1, Ulaanbantar Phone: 9999-6217, 9191-0954 E-mail: dabg.auditdvahno.com Central post office-13 POB:2622 UNQUALIFIED AUDITOR'S REPORT IMPROVING PRIMARY EDUCATION OUTCOMES FOR THE MOST VULNERABLE CHILDREN IN RURAL MONGOLIA PROJECT "SAVE THE CHILDREN" NON-GOVERNMENTAL ORGANIZATION TO: MR. MITSUAKI TOYODA COUNTRY DIRECTOR We have audited the accompanying Financial Statement of the Improving Primary Education Outcomes for The MostVulnerable Children in Rural Mongolia Project, Grant No. TF012100, which is being implementedwith the support from Japan Social Development Fund, Trust Fund of the World Bank, for the period ending 31 December 2015. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in compliance with International Public Sector Accounting Standard, Grant Agreement, World Bank's Manual and other relevant instructions and procedures. This responsibility includes: selecting and applying appropriate accounting policies; designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; and making accounting estimates that are reasonable in the circumstances. 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 on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance 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 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 ofthe 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 give a true and fair view of the financial position of Improving Primary Education Outcomes for The Most Vulnerable Children In Rural Mongolia Project as of December 31, 2015, and of its financial performance and its cash flows for the year then ended in accordance with International Accounting Standards, Grant Agreement, World Bank's Manual and o er relevant instructions and procedures. 3TA% XT r GvA I CO., LTD 2 .05.30 4 Japan Social Development Fund -T1012100 "IMPROVING PRIMARY EDUCATION OUTCOMES FOR THE MOST VULNERABLE CHILDREN IN RURAL MONGOLIA PROJECT-130760 AUDITED BALANCE SHEET (as of 31 December 2015) (USD) 2014/12131 2015/12/31 -. ASSET 1. Cash 1.1 Small fund IMNT/ - - 1.2 Designated account /VSD/ 76,973.61 198,325.80 Total cash 76,973.61 198,325.80 2. NON-CURRENT ASSET 2.1 Goods 361,485.87 539,811.65 2.2 Consultant'sservices 189,437.60 236,936.30 2.3 Training 427,663.63 808,016.25 2.4 Civilworks 27,202.46 27,202.46 2.5 Community Block Grants 34,664.64 72,488.49 2.6 Operating costs 82,169.62 121,232.81 2.7 Non-financed funds 42.90 290.65 Total 1,122,666.72 1,805,978.61 TOTAL ASSET 1,199,640.33 2,004,304.41 LIABILITIES AND SOURCES 1. Sources 1.1 Grant Fund from Japan Social Development Fund 1,197,043.33 2,000,579.00 1.2 "Save the Children" Non-governmental Organization Fund Total sources 1,197,043.43 2,000,579.00 2. Bank net interest income 2.1 Designated account net interest income 2,597.00 3,725.41 Total net interest income 2,597.00 3,725.41 TOTAL LIABILITIES AND SOURCES 1,199,640.33 2,004,304.41 Mitsuaki Toyoda Gereltuya Ts. CountryDirector Project Manager Bulgan B. Finance Manager Chingeltei district, 1" khoroo, NIONTSAME agency building #1, Ulaanbaatar Phone: 9999-6217, 9191-0954 E-mail: dabg.auditayahoo.con Central post oflice-13 POB:2622 UNQUALIFIED AUDITOR'S REPORT IMPROVING PRIMARY EDUCATION OUTCOMES FOR THE MOST VULNERABLE CHILDREN IN RURAL MONGOLIA PROJECT "SAVE THE CHILDREN" NON-GOVERNMENTAL ORGANIZATION TO: MR. MITSUAKI TOYODA COUNTRY DIRECTOR We have audited the accompanying Sources and Uses of Funds Statement of the Improving Primary Education Outcomes for The MostVulnerable Children In Rural Mongolia Project, Grant No.TF012100, which is being implementedwith the support from Japan Social Development Fund, Trust Fund of the World Bank, for the period ending 31 December 2015. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of the Sources and Uses of Funds Statement in compliance with Grant Agreement, World Bank's Manual and other relevant instructions and procedures. This responsibility includes: selecting and applying appropriate accounting policies; designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the Sources and Uses of Funds Statement that are free from material misstatement, whether due to fraud or error; and making accounting estimates that are reasonable in the circumstances. Auditor's Responsibility Our responsibility is to express an opinion on the Sources and Uses of Funds Statement based on our audit. We conducted our audit in accordance with International Standards on Auditing. Sources and Uses of Funds Statement was examined according to planned procedures. We have evaluated the reasonableness of accounting estimates made by management, appropriateness of accounting policies, as well as adhered internal control. 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 Sources and Uses of Funds Statementgives a true and fair view ofthe financial position of Improving Primary Education Outcomes for The Most Vulnerable Children In Rural Mongolia Project as of December 31, 2015, in accordance with International Accounting Standards, rAgreement, World Bank's Manual and other relevant instructions and procedures. BG AUD TO., LTD 6.05.30, 6 "IMPROVING PRIMARY EDUCATION OUTCOMES FOR THE MOST VULNERABLE CHILDREN IN RURAL MONGOLIA PROJECT-130760 AUDITED SOURCES AND USES OF FUNDS (as at 31 December 2015) (USD) Accumulated as 2015 Accumulated as of31.12.2014 of31.12.2015 SOURCES OF FUNDS Beginning balance of monetary asset Grant Fund from Japan Social Development Fund 1,197,043.33 803,535.67 2,000,579.00 "Save the Children" Non-governmental Organization Fund Non-financed source - Total sources 1,197,043.33 803,535.67 2,000,579.00 Bank net interest income 2,597.00 1,128.41 3,725.41 Total other sources 2,597.00 1,128.41 3,725.41 TOTAL SOURCES OF FUNDS 1,199,640.33 804,664.08 2,004,304.41 USES OF FUNDS Goods 361,485.87 178,325.78 539,811.65 Consultants' services 189,437.60 47,498.70 236,936.30 Training 427,663.63 380,352.62 808,016.25 Civil works 27,202.46 - 27,202.46 Community Block Grants 34,664.64 37,823.85 72,488.49 Operating costs 82,169.62 39,063.19 121,232.81 Amount withdrawn and not yet claimed 42.90 247.75 290.65 Total disbursement 1,122,666.72 683,311.89 1,805,978.61 Financing balance 76,973.61 121,352.19 198,325.80 Designated account 76,973.61 121,352.19 198,325.80 Operating account - - - TOTAL CASH AND CASH EQUIVALENTS 76,973.61 121,352.19 198,325.80 Mits aki Toyoda Gereltuya Ts. Country Director Project Manager Bulgan B. Finance Manager U 7 U Chingelfei district, I" khoroo, MONTSAME agency building #1, Ulaanbatar Phone: 9999-6217, 9191-0954 E-mail: dabg.audit?yahoo.com Central post offce-13 POB:2622 UNQUALIFIED AUDITOR'S REPORT IMPROVING PRIMARY EDUCATION OUTCOMES FOR THE MOST VULNERABLE CHILDREN IN RURAL MONGOLIA PROJECT "SAVE THE CHILDREN" NON-GOVERNMENTAL ORGANIZATION TO: MR. MITSUAKI TOYODA COUNTRY DIRECTOR We have audited the accompanying Statement of Expenditures the Improving Primary Education Outcomes for The MostVulnerable Children In Rural Mongolia Project, Grant No.TF012100, which is being implementedwith the support from Japan Social Development Fund, Trust Fund of the World Bank for the period ending 31 December 2015. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of the Statement of Expenditures in compliance with Grant Agreement, World Bank's Manual and other relevant instructions and procedures. This responsibility includes: selecting and applying appropriate accounting policies; designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the Statement of Expenditures that are free from material misstatement, whether due to fraud or error; and making accounting estimates that are reasonable in the circumstances. Auditor's Responsibility Our responsibility is to express an opinion on the Statement of Expenditures based on our audit. We conducted our audit in accordance with International Standards on Auditing. Statement of Expenditures was examined according to planned procedures. We have evaluated the reasonableness of accounting estimates made by management, appropriateness of accounting policies, as well as adhered internal control. 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 Statementof Expenditures gives a true and fair view ofthe financial position of Improving Primary Education Outcomes for The Most Vulnerable Children In Rural Mongolia Project as of December 31, 2015, in accordance with International Accounting Standards, Grant iefgr tthl orld k's Manual and other relevant instructions and procedures. ABGAU I CO., LTD LJ 01A.05.30 X7A(ulI 0) 0 Japan Social Development Fund -TF012100 "IMPROVING PRIMARY EDUCATION OUTCOMES FOR THE MOST VULNERABLE CHILDREN IN RURAL MONGOLIA PROJECT-130760 AUDITED SUMMARY OF APPLICATION FOR WITHDRAWAL (as at 31 December 2015) (USD) Number Note Claimed Financing Date Amount Date Amount Total as of I" January of 2015: 1,122,666.72 1,197,043.33 Note 1 2 3 4 WA-7 4 22-Jan-15 - 26-Jan-15 173,000.00 WA-8 4 19-Apr-15 162,933.14 22-Apr-15 162,000.00 WA-9 4 23-Jun-15 165,529.84 24-Jun-15 165,800.00 WA-10 4 22-Sep-15 164,398.23 24-Sep-15 164,295.67 WA-11 4 22-Dec-15 138,762.94 23-Dec-15 138,440.00 WA-12 4 18-Jan-16 51,439.99 19-Jan-16 - Total of 2015 683,064.14 803,535.67 Total as of 31 December 2015 1,805,730.86 2,000,579.00 Notes: (I) These applications for withdrawalsdisbursed in reporting year and financed by World bank. (2) These applications for withdrawal were not transferred to Designated account, but paid directly from World bank. (3) These applications for withdrawal disbursed in previous year and received financing from World bank in reporting year. (4) These applications for withdrawal disbursed in reporting year, but not claimed from World bank. Mitsu'aki Toyoda Gereltuya Ts. Country Director Project Manager Bulgan B. Finance Manager U9 0 ［す （「戦― “敏 J や5りj 」 つ J 1 一園J Chingeltei distHet, 0 khorou, MONTSAME Phone: 9999-6217, 9191-0954 -00 agency building, n, Ulaanbaatar E-mail. dahg.audit,*yahoo.covn Central post office-13 POB:2622 UNQUALIFIED AUDITOR'S REPORT IMPROVING PRIMARY EDUCATION OUTCOMES FOR THE MOST VULNERABLE CHILDREN IN RURAL MONGOLIA PROJECT "SAVE THE CHILDREN" NON-GOVERNMENTAL ORGANIZATION TO: MR. MITSUAKI TOYODA COUNTRY DIRECTOR We have audited the accompanying Statement of Designated Account for the Improving Primary Education Outcomes for The MostVulnerable Children In Rural Mongolia Project, Grant No.T17012100, which is being implementedwith the support from Japan Social Development Fund, Trust Fund of the World Bank, for the period ending 31 December 2015. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of the Statement of Designated Account in compliance with Grant Agreement, World Bank's Manual and other relevant instructions and procedures. This responsibility includes: selecting and applying appropriate accounting policies; designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the Statement of Designated Account that are free from material misstatement, whether due to fraud or error; and making accounting estimates that are reasonable in the circumstances. Auditor's Responsibility Our responsibility is to express an opinion on theStatement of Designated Account based on our audit. We conducted our audit in accordance with International Standards on Auditing. Statement of Designated Account was examined according to planned procedures. We have evaluated the reasonableness of accounting estimates made by management, appropriateness of accounting policies, as well as adhered internal control. 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 Statement of Designated Account gives a true and fair view of the financial position of Improving Primary Education Outcomes for The Most Vulnerable Children In Rural Mongolia Project as of December 31, 2015, in accordance with International Accounting Standards, Grant Agreement, World Bank's Manual and other relevant instructions and procedures. AOG A U IT LTD FJ r 1 . 2 It(15.301, Tf Japan Social Development Fund -TF012100 "IMPROVING PRIMARY EDUCATION OUTCOMES FOR THE MOST VULNERABLE CHILDREN IN RURAL MONGOLIA PROJECT-130760 AUDITED STATEMENT OF DESIGNATED ACCOUNT (as at 3I December 2015) (USD} PART A- ACCOUNT TRANSACTIONS 2014/12/31 2015/12/31 Beginning balance 164,802.73 76,973.61 Add: Advance received from Japan Social Development Fund - Funds received from Japan Social Development Fund on that year 534,900.00 803,535.67 Net interest of account balance 1,055.27 1,128.41 Deduct: Goods 209,1 89.45 178,325.78 Consultants' services 72,699.38 47,498.70 Training 275,589.39 380,352.62 Civil works - Community Block Grants 33,904.83 37,823.85 Operating costs 32,358.44 39,063.19 Amount withdrawn and not yet claimed 42.90 247.75 Ending balance 76,973.61 198,325.80 PART B- ACCOUNT RECONCILIATION Designated account balance as or year ending 76,973.61 198,325.80 Add: Amount withdrawn and not yet claimed Non-financed sources 171,923.58 51,730.64 Paid for bank service - - Deduct: Net interest paid for account balance 2,597.00 3,725.41 Non-financed sources - - Total advance recorded in designated account 246,300.19 246,331.03 SC JAPAN Mitsuaki Toyoda 0 Gereltuya Ts. Bulgan B. Finance Manager U Lii 0 U NOTE 1. PROJECT INTRODUCTION B Project name: Improving primary education outcomes * for the most vulnerable children in rural Mongolia Project address: Chingeltei district, Khoroo 1, 4"' Floor, Arizona Centre Grant number: Japan Social Development Fund Grant -TFOI12100 Implementing agency "Save the Children" Non-governmental Iorganization Contract approval date 2012.02.15 Duration of the project 2012.06.21-2017.06.21 Project total cost 2,637,579USD Objective: The project aims to improve quality, performance, and access to preschool and primary school education for 7500 children aged between 5-10 in 30 soumns of the Arkhangai, Uvurkhangai, ri Dornod, Sukhbaatar provinces. The development objective of the project is to improve the education outcomes of some 7,500 most vulnerable children (aged 5-10) in four educationally under performing and under served rural aimags (Dornod, Sukhbaatar, Arkhangal and Uvurkhangai) of Mongolia. The project is comprised of three main components: 1. Strengthening school preparation programs for new school entrants in remote communities J(home-based curriculum development; capacity building and technical support; and community mobilization); a Training modules and materials on school readiness developed for parents, school administrators, kindergartenprimary teachers, and dormitory staff; T Learning resource materials on school preparation produced for 10,000 e an childrenfamilies; D 30 Toy and Equipment Libraries setup at 30 target kindergartens/schools; T 40 soumn governors and local government officials trainedon school readiness/preparation; * 30 community education councils formed at soun level and conduct regular operations; c s Capacity of at least2 kindergarten/primary/dormitory teachers on school preparation built through training; 0 Up to 30 CECs provided with community block grants to promote the program * delivery and reach; and 0 At least 3,600 parents/caregivers contacted to share knowled geand skills on caring for 5-6 year old children's psychosocial and development needs. 2 2. Introducing extracurricular after-school programs specifically targeting lower-primary age children living away from home (development of after-school programs; capacity building and technical support; program delivery support; and community participation); and 13 D* :3* A school guidance manual on after-school programs developed and 30 soum schools (5 teachers per school, including primary and dormitory teachers and school social workers) receive relevant training; At least 60 target children regularly attend and benefit from the after-school programs per school each year during the second year to the fourth year; At least 5 community members are identified, trained and act as after school program facilitators at each school; ll * 500 copies of an"After-School Program Best Practices Manual" developed and circulated to all schools in Mongolia; Up to 30 CEC sprovided with community block grants to promote the program delivery and reach; and 30school dormitories supported with basic equipment and renovation. 3. Piloting compensatory distance education programs for lower-primary age children in rural communities (program curriculum and learning resource material development; parents' education; capacity building and technical support; and program delivery support). * Alternative lower-primary, home-learning education curricula (grades l-3)and their corresponding teaching and learning materials (including a series ofself-learning videoprograms) developed and piloted; * At least 1,000 teaching and learning resource materials developed, produced, and disseminated; * Training for at least 140 teachers,community volunteers and mentor parents trained on individual teaching/coaching/monitoring techniques and program delivery; * At least 300 children enrolled in the alternative lower-primary education equivalency programs; * Capacity of 34soum/aimag school sorenlightenment centers to deliver program activities improved (e.g., setting up of resource libraries); * Up to 30 CEC-sprovided with community block grants to promote the program delivery and reach; and * Project-produced teaching and learning resource materials uploaded onto NFDE's web site for wider circulation and use. New approaches and innovations * A School Readiness Toy and Equipment library will be established in each of the 30 soUms. * Community Education Councils will be established in each of the 30 soums. 0 A small sized, results based community block grant scheme will be introduced on a pilot basis. * Alternative lower-primary, home-learning education curricula (gradesl-3) and corres ponding teaching and learning materials will be developed and piloted, including a series of self-learning video programs for parents of children in Grade 1-3. E3 0 Q Project source of funds: /lhousand USD/ Component Component name Budget I Strengthening school preparation programs for new school entrants (5 to 6 731.7 years of age) in the community Introducing extracurricular after-school programs in schools for 623.9 vulnerable children (6 to 10years of age)living away from parents/home 3 Piloting compensatory education programs for lower-primary out-of- 573.3 school children (6 to9 years of age) in rural communities 4 Project management, monitoring and evaluation, and knowledge 528.7 dissemination ________ d i s s e m i n a t i o n T o t a l P r o j e c t b u d g e t 2 , 4 5 7 . 6 /thousand USDf Expenditure category Amount Financing percentage Total Consultants' services, training, 2,165.6 100% 2,165.6 goods, civil works Community Block Grants 117.0 100% 117.0 Operating Costs 175.0 100% 175.0 Total amount 2,457.6 100% 2,457.6 NOTE 2. ACCOUNTING POLICY The Recipient shall provide the World Bank with the following financial reports, which are prepared in accordance with the guidelines by the World Bank. 1 . Balance sheet I Fiancal rporing2. Statement on Use of Funds by disbursement categories I Fnania reortng3. Statement on Use of Funds by project activity or components B4. Designated account statement, Designated account reconciliation statement ____ ___________________5. Statement of Expenditures ______ Received fundsand uses of the Project's financial statements 2 Bssof presentation are prepared on the cash basis of accounting. Project 2 Basisaccounting should be in accordancewith the Financial * ____________Management Manual approved by World Bank. Reporting currency will be USD. MNT incurred costs shall o be converted to USD by TDB3 exchange rate of first day of 3 Reporting measurement each month. USD incurred costs shall be converted to MNT by TDB -________ _______-exchange rate of that day. Balance as of 31 December 2014 should be considered as 4 Prsenttionof te reort beginning balance and account balance should be presented ii 4 Presntaion f te reort by cumulative amount as of 31 December 2015 in Project financial statements. o5 Monitoring organization World Bank 6 Registration Information "Sun Systems" accounting software is used to keep record system and report. Income is recognized when cash is received. Income 07 Income consists of World Bank's financing and bank account S interest_earnings. 8 Expenditure Disbursement is recognized as expenditure when the money a IS ci C]2 U D II II II is paid according to the purpose. Project's Designated Account in USD0 should be opened in a Ii9 Deintdacutcommercial bank according to World Bank's approval. The 9ceiling of the Designated Account is as follows: II ____________1. GrantTFO012100-250,000 Procurement guidelines of World Bank should be adhered to II in the procurement of goods, works and services. Following methods should be used according to procurement plan of 10 Procurement of goods, works reporting period. and services 1. National Competitive Bidding 50,000< 200,000 ii 2. Shopping <50,000 3. Direct Contracting-all contracts regardless of ______________________contract value Should adhere to Consultant selection guidelines of World Bank. Following methods should be used according to procurement plan of reporting period. 1. Quality-cost based selection 100,000 Procurement of consultants' 2. Less-cost selection- Assignment meeting I i services requirement of Pamd 3.6 of Consulting guideline. 3. Consultant's Qualification Selection- Assignment mehdmeeting the requirement of Pan . 3.7 of Consultant guideline So4. Individual Consultant Selection -Assignment prourmeetiln the requirement of Par . 5.1 and 5.3 NOTES 4. FINANCIAL STATEMENT INDICATORS (USD) A. Cash and cash equivalents Designated account: Bank name Account name Account I2014.12.31 2015.12.31 srenumber Trade and Development Designated account 452566696 76,973.61 198,325.80 3.Bank /CfSD/oslatsQaicao SlconAsime Amount 76,973.61 198,325.80 I-Total [76,73.61 1 198,325.801 The project does not have small fund and sub-account. Expenditures occurred in rural areas and by cash are disbursed from non-governmental organization's general account and are replenished from designated account at the end of every month. Banknam AccuntnameAccunt 204.1231 015 12.3 叮 g 〕〕勰’ 口 D 口 D D E.Operating Costs # Expenditure Accumulated as Accumulated as of of 31.12.2014 2015 31.12.2015 1 Project staff salary 39,171.68 20,625.19 59,796.87 2 Office rent 35,347.86 13,124.15 48,472.01 3 Recruitment 4,088.21 179.69 4,267.90 4 Communication 2,828.09 1,261.19 4,089.28 5 Stationery 118.27 213.64 331.91 Other support costs 615.51 3,659.33 4,274.84 Total amount 82,169.62 39,063.19 121,232.81 F.Designated account interest earnings Grant Accumulated as or Accumulated as number 31.12.2014 Added Deducted of 31.12.2015 TF012100 2,597.00 1,328.14 199.73 3,725.41 2,597.00 1,328.14 199.73 3,725.41 D E3 19 E3 11