Government of Mongolia International Development Association U O O AUDIT REPORT U O Financial year 01.01.2015- 31.12.2015 MINING INFRASTRUCTURE INVESTMENT SUPPORT PROJECT ULAANBAATAR 2016 9 Content Page 1 BALANCE SHEET Auditor's report on balance sheet Audited balance sheet 2 SOURCES AND USES OF FUNDS Auditor's report on sources and uses of funds Audited sources and uses of funds statement 3 DISBURSEMENT REPORT Auditor's report on Disbursement Report Audited Summary of Withdrawal Applications R Audited Comprehensive Disbursement report 4 DESIGNATED ACCOUNT STATEMENT 13_ Auditor's report Audited Designated Account Statement 5 NOTES TO THE AUDITED REPORTS 6 LETTER TO THE MANAGEMENT OF THE PROJECT 7 RESPONSE ON THE LETTER TO THE MANAGEMENT 8 MANAGEMENT RESPONSIBILITY LETTER 0 9 NON-AUDITED FINANCIAL STATEMENTS OF THE PROJECT 10. ADJUSTMENT OF THE ENDING BALANCE 2 0 2- Chingeltei distic, I" khoroo, MONTSAME agency building #1, Ulaanbaatar Phone: 9999-6217, 9191-0954 E-mail: dahg.audit@'yahoo.con Central post office-13 POB:2622 UNQUALIFIED AUDITOR'S REPORT TO: MR ENKHBAATAR.B PROJECT COORDINATOR "MINING INFRASTRUCTURE INVESTMENT SUPPORT PROJECT" We have audited the accompanying Financial Statement of the Mining Infrastructure Investment Support Project, pursuant to the Financing Agreement concluded between the Government of Mongolia and International Development Association (IDA) Credit 4888 MN and grant agreement additional funding of Mongolia- Australia Partnership for Sustainable Development Trust Fund (TF01 6382-MN) for the period ending 31 December 2015. Management's Responsibility of the project Management is responsible for the preparation and fair presentation of these financial statements in compliance with International Public Sector Accounting Standard, Financing Agreement of IDA, 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 auditors 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 intemal 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 have been prepared in accordance with International Public Sector Accounting Standard, Financing Agreement of IDA, Grant agreement, World Bank's Manual and other relevant instructions and procedures. Statements have presented true and fair view of the financial position of "Mining Infrastructure Investment Support Project" as of December 31, 2015, and of its financial performance and its cash flows for the year then ended. r ILC B G IT CO., LTD 1- 6.06. THE GOVERNMENT OF MONGOLIA & INTERNATIONAL DEVELOPMENT ASSOCIATION LOAN 4888-MN MONGOLIA- AUSTRALIA PARTNERSHIP FOR SUISTANABLE DEVELOPMENT TRUST FUND GRANT TF01 6382-MN MINING INFRASTRACTURE INVESTMENT SUPPORT PROJECT: P118109 AUDITED BALANCE SHEET As at 31 December, 2015 lin US Dollar! 31 December 2014 31 December 2015 ASSETS 1 Cash and cash equivalents: 113.16 1.1 Cash on hand 1.2 Cash at bank:- 1.2 Designated account IDA 4888-MN 1,517,793-12 2,369,310.25 1.2 Designated account AUSAID TF016382 343,40091 305,607.44 1.2 Operating account PIU 2,33393 5,296.31 1.2 Operating account RBA 17 6.07 59.60 1.2 Operating account RBA 18 3647 735,67 1.2 Operating account RBA 20 2, . 41.03 Total 1,063.704.48 2,581,081.55 2 Accumulated project expenditures: 2.1 Goods and non consulting services 1,068142.22 2,263,95.12 2.2 Consultants services 3,074,713 32 6,396250.80 2.3 Training and workshops 1,093,77332 1,650,135.57 2.4 Incremental operating cost 358,398.66 55666 Total 5,595,027.52 10,906,578.39 3 Acummulated other expenses 3.1 Other expenses 46638 709.87 Total 466 3D TOTAL ASSETS 7.459,198.38 13,580,369.81 SOURCE OF FUNDS 4 Project funds 4.1 IDA 4588-MN 5,642,62211 10,935,040 83 *4.2 AUSAID TF016382 512.540.64_ 2,355,905,62 Total 7,255,152.75 13.300.946.45 5 Other sources 4.1 Net nterest income 202.591.80 287.351.80 4.2 Net income for bid 1,143.83 71,56 Total 204,035.63 287,423.36 TOTAL SOURCES OF FUND 7,459,198.35 13,588,369.81 Approved by PrepareJ Ariunchim W EodnkhbaFM Specialists, PI CorLatrI Chingeltei distlict, s' khoroo, MONTSAME agency building #I, Ulaanbaatar Phone: 9999-6217, 9191-0954 F-mail: dabg.auditiiya1hoo.coin Central post office-13 POB:2622 UNQUALIFIED AUDITOR'S REPORT TO: MR ENKHBAATAR.B PROJECT COORDINATOR "MINING INFRASTRUCTURE INVESTMENT SUPPORT PROJECT" We have audited the accompanying Sources and Uses o Funds Statement of the Mining Infrastructure Investment Support Project, pursuant to the financing agreement concluded between Government of Mongolia and International Development Association Credit 4888 MN and grant agreement additional funding of Mongolia- Australia Partnership for Sustainable Development Trust Fund (TF016382-MN) 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 Financing agreement of IDA, 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 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 presented fair and true view of the "Mining Infrastructure Investment Support Project" as at 31 December 2015 in accordance with the Financing agreement of IDA, Grant agreement, World Bank's Manual and other relevant instructions and procedures. BG T ., LTD 16.0 4 THE GOVERNMENT OF MONGOLIA & INTERNATIONAL DEVELOPMENT ASSOCIATION LOAN 4888-MN MONGOLIA- AUSTRALIA PARTNERSHIP FOR SUISTANABLE DEVELOPMENT TRUST FUND (TF016382) MINING INFRASTRACTURE INVESTMENT SUPPORT PROJECT: P118109 AUDITED SOURCES AND USES OF FUND As at 31 December, 2015 lin US Dollarl Accumulated Accumulated balance as at 31 In the year 2015 balance as at 31 December 2014 December 2015 SOURCES Funds IDA 4888-MN 6,642,622.11 4,292,418.72 10,935,040.83 AUSAID TF016382 612,540.64 1,753,364.98 2.365,905,62 Total 7,255,162.75 6,045,783.70 13,300,946.45 Other sources Net Interest income 202,891.80 84,460.00 287,351,80 Net income for bid 1,143.83 (1,072.27) 71.56 Total 204,035.63 83,387.73 287,423.36 TOTAL SOURCES 7,459,198.38 6,129,171.43 13,588,369.81 ACCUMULATED EXPENSES IDA 4888-MN Goods and non consulting services 1,068,142,22 175,233.68 1,243,375.90 Consultants services 2,845,875.14 2,703,199.11 5,549,074.25 Training and workshops 1,065,140.52 419,136.69 1,484.277.21 Incremental operating cost 346,912.72 212,658.92 559,571.64 Total uses of fund 5,326,070.60 3,510,228.40 8,836,299.00 AUSAID TF016382 Goods and non consulting services - 1,020,119.22 1,020,119.22 Consultants services 228,838.18 618,338.37 847,176.55 Training and workshops 28,632.80 137,225.86 165,858.66 Incremental operating cost 11,485.94 25,639.02 37,124.96 Total uses of fund 268,956.92 1,801,322.47 2,070,279.39 Other expenses Exchange loss 466.38 243.49 709.87 Total other expenses 466.38 243.49 709.87 TOTAL EXPENDITURIES 5,595,493.90 5,311,794.36 10,907,288.26 SOURCE OF FUND BALANCE 1,863,704.48 2,681,081.55 2,681,081.55 Cash on hand 113.16 (112.12) 1.04 Cash at bank: Designated account IDA 4888-MN 1,517,793.12 851,517.14 2,369,310.26 Designated account AUSAID TF016382 343,400.91 (37,793.47) 305,607.44 Operating account PIU 2,333.93 2,962.38 5,296.31 Operating account RBA 17 6.07 83.73 89.80 Operating account RBA 18 36.78 698.89 735.67 Operating account RBA 20 20.51 20.52 41.03 BALANCE IN CASH AND CASH EQUIVALENT 1,863,704.48 817,377.07 2,681,081.55 Approved Prepared Enkhbaa Ariunchimeg/ Coordinator I FM Specialists, PIU to Chingeltei district, 1" khoroo, MONTSAME agency building #1, Ulaanbaatar Phone: 9999-6217, 9191-0954 1 E-nmail: dabg.audityahooxol Central post office-13 POB:2622 UNQUALIFIED AUDITOR'S REPORT TO: MR ENKHBAATAR.B PROJECT COORDINATOR "MINING INFRASTRUCTURE INVESTMENT SUPPORT PROJECT" We have audited the accompanying Statement of expenditures of the Mining Infrastructure investment Support Project, pursuant to the Financing Agreement concluded between the * Government of Mongolia and International Development Association (IDA) Credit 4888 MN and grant agreement additional funding of Mongolia- Australia Partnership for Sustainable Development Trust Fund (TF016382-MN) for the period ending 31 December 2015. ManagemenVs Responsibility Management is responsible for the preparation and fair presentation of the Statement of LJ expenditures in compliance with Financing agreement of IDA, Grant agreement, World Bank's Manual and other relevant instructions and procedures. * This responsibility includes: selecting and applying appropriate accounting policies; designing1 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 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 Expenditures give a true and fair view of the financial position of Mining Infrastructure investment Support Project as of December 31, 2015, in accordance with the Financing agreement of IDA, Grant agreement, World Bank's Manual and other relevant instructions and procedures. BG O., LTD 6.0.0 THE GOVERNMENT OF MONGOLIA & INTERNATIONAL DEVELOPMENT ASSOCIATION LOAN 4888-MN MONGOLIA- AUSTRALIA PARTNERSHIP FOR SUISTANABLE DEVELOPMENT TRUST FUND GRANT TF016382-MN MINING INFRASTRACTURE INVESTMENT SUPPORT PROJECT: P118109 AUDITED DISBURSEMENT IN SUMMARY As at 31 December 2015 lin US-Dollarl Withdrawal Number Note Invoice Received funding 1 2 3 date amount date amount IDA 4888-MN As at 01 January 2015 6,642,622.11 WA-21 2015/01/16 1,183,448.48 WA-22 4 2015/03/06 537,573.81 2015/02/24 537,573.81 WA-23 4 2015/04/10 491,040.56 2015/03/18 491,040.56 WA-24 4 2015/05/05 138,110.70 2015/05/06 138,110.70 WA-25 4 2015/07/07 364,185.72 2015/05114 364,185.72 WA-26 4 2015/08/07 269,893.08 2015/07109 269,893.08 WA-27 4 2015/10/07 151,379.59 2015/08/19 151,379.59 WA-28 4 2015/12/08 239,331.89 2015/10/22 239,331.89 WA-29 4 2015/01/13 917,454.89 2015/12/22 917,454.89 WA-30 4401,258.16 In the year 2015 3,510,228.40 4,292,418.72 Accumulated loan as at 31 Dec 2015 10,935,040.83 AUSAID TF01 6382 As at 01 January 2015 612,540.64 WA-4 4 2015/01/16 56,416.27 WA-5 4 110,489.80 2015/02(16 110,489.80 WA-6 4 2015/03/06 49,793.03 2015/03/31 49,793.03 WA-7 4 2015/04/10 45,265.22 2015/05/11 45,265.22 WA-8 ' 2015/05/05 45,920.27 2015/05/14 45,920.27 WA-9 . 2015/05/27 183,963.31 2015/05/29 183,963.31 WA-10 4 2015/07/07 389,899.75 2015/07/21 389,899.75 WA-11 4 2015/08/07 166,422.54 2015/08/25 166,422.54 WA-12 4 2015/09/01 135,299.67 2015/09/09 135.299.67 WA-13 4 2015/10/05 174,005.12 2015/10/22 174,005.12 WA-14 4 2015/11/25 116,337.38 2015/12/10 116,337.38 WA-15 4 2015/12/08 279,552.62 2015/12/17 279,552.62 WA-16 4 2016/01/12 104,978.71 In the year 2015 1,801,927.42 1,753,364.98 Accumulated TF as at 31 Dec 2015 2,365,905.62 Remark: 1, Funded by the World Bank in the reporting period, disbursed in the last year 2. Funded by the World Bank and disbursed in the reporting period. 3 Disbursed in the r ng pe ad rned to the World Bank Approve Prepared Enkhb . rUnArchime. B Coordi a r FM Specialists, PIU U THE GOVERNMENT OF MONGOLIA & INTERNATIONAL DEVELOPMENT ASSOCIATION LOAN 4888-MN MONGOLIA- AUSTRALIA PARTNERSHIP FOR SUISTANABLE DEVELOPMENT TRUST FUND GRANT TF016382-MN MINING INFRASTRACTURE INVESTMENT SUPPORT PROJECT: P118109 AUDITED DISBURSEMENT REPORT IN DETAIL As at 31 December 2015 IDA 4888-MN In US Dollar Goods Consulting Training Incremental Total Gnworkshop operating cost WA-22 100,658.70 426,906.91 2,454.56 7,553.64 537,573.81 WA-23 24,944.39 450,890.06 11,698.35 3,507.76 491,040.56 WA-24 3,105.59 84,619.95 10,323.08 40,062.08 138.110.70 WA-25 - 332,311.92 26,927.73 4,946.07 364,185.72 WA-26 - 140,671.14 81,281.20 47,940.74 269,893,08 WA-27 - 132,121.40 13,170.39 6.087.80 151,379.59 WA-28 - 158,779.46 28,403.07 52,149.36 239,331.89 WA-29 46,525.00 656,606.16 181,497.16 32,826.57 917,454.89 WA-30 - 320,292.11 63,381.15 17,584.90 401,258.16 Total 175,233.68 2,703199.11 419,136.69 212,658.92 3,510,228.40 AUSAID TF01 6382 lin US Dollarl Training Incremental Total Goods Consulting lcost WA-5 58,553.25 49,836.60 - 2,099.95 110,489,80 WA-6 - 47,722.86 - 2,070.17 49,793.03 WA-7 39,821.53 3,387.29 2,056.40 45,265.22 WA-8 - 41,154.41 2,680.99 2,084.87 45,920.27 WA-9 173,996.20 8,528.20 1,438.91 - 183,963.31 WA-10 290,703.70 87,193.51 7,585.71 4,416.83 389,899.75 WA-11 96,558.00 47,018.75 20,679.70 2,166.09 166,422.54 WA-12 86,982.00 46,163.59 - 2,154.08 135,299.67 WA-13 101,944.50 68,644.75 1,269.37 2,146.50 174,005.12 WA-14 79,383.47 - 34,802.00 2,151.91 116,337.38 WA-15 131,998.10 97.557.88 48,634.66 1,361.98 279,552.62 WA-16 - 84,696.29 17,352.18 2,930.24 104,978.71 Total 1.020,119.22 618.338.37 137.830.81 25,639.02 1,801,927.42 Approv d Prepared EnkFa Ariunchi, P1 B Lj Coordina 11FM Specialists, Plu? Chingelitei district, I khoroo, MONTSAME agency building #l, UlaanbnLtar Phone: 9999-6217, 9191-0954 E-mail: dabg.anditd'yahocom Central post oflice-13 POB:2622 UNQUALiFIED AUDITOR'S REPORT TO: MR ENKHBAATAR.B PROJECT COORDINATOR "MINING INFRASTRUCTURE INVESTMENT SUPPORT PROJECT" We have audited the accompanying Designated account and operating account statements of the Mining Infrastructure Investment Support Project, pursuant to the Financing 5 Agreement concluded between the Government of Mongolia and International Development Association (IDA) Credit 4888 MN and grant agreement additional funding of Mongolia- * Australia Partnership for Sustainable Development Trust Fund (TF01 6382-MN) 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 designated bank account in compliance with Financing agreement, Grant agreement, World Bank's Manual and other relevant instructions and procedures. This responsibility includes: selecting and applying appropriate accounting policies; EJ designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the designated bank 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 the Bank Reconciliation Statement based on tJ our audit. We conducted our audit in accordance with International Standards on Auditing. The designated bank account 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 designated account and operating account statements give a true and fair view of the financial position of Mining Infrastructure Investment Support project as of December 31, 2015, in accordance with financing agreement of IDA, Grant agreement, WbrdBank's Manual and other relevant instructions and procedures. ABG IT C .,LTD 016.06 XTAV7II 0 U ...... ... THE GOVERNMENT OF MONGOLIA & INTERNATIONAL DEVELOPMENT ASSOCIATION LOAN 4888-MN MINING INFRASTRACTURE INVESTMENT SUPPORT PROJECT: P118109 AUDITED STATEMENT OF DESIGNATED ACCOUNT IDA 4888-MN (For the period of 01 January 2015 to 31 December 2015) /In US Dollar/ December 31, 2014 December 31, 2015 PART A: TRANSACTION DETAILS Beginning balance as at 01 Jan 2015 2,256,167.30 1,517,793.12 Add: Funding -IDA 4888-MN 2,944,853-67 4.292,418.72 Interest income 56,421.04 69,720.55 Returned training cost IDA 15,105-80 22,165.51 Returned training cost TF 161.24 Deposit from operating account PIU 383,11 3,331.94 Deposit from operating account RBA 18 525.41 Deposit from petty cash 17.62 Insurance for vehicle 141.41 Deduct: Goods and non consulting services 968,627.56 175,233.68 Consultant's services 2,205,225.76 2,703,199.11 Training and workshops 334,875.82 418,865.49 Incremental operating cost 27,148 29 7,201.63 Transfer to operating account PIU 84,749.60 83,125.90 Transfer to designated account AUSAID TF01 6382 52541 75.54 Replenishment of operating account RBA 17 46,636.43 49,132.44 Replenishment of operating account RBA 18 47,437-36 49,938.97 Replenishment of operating account RBA 20 49,02950 48,935.94 Bank charges 425.10 218.53 Expenses for bid 495.00 Ending balance as at 31 December 2015 1,517,793.12 2,369,310.26 PART B: Bank reconciliation Ending balance as at 31 December 2015 1,517,793.12 2,369,310.26 Add: Disbursed but not claimed 1,183,448.47 401,258.16 Bank charges 1,937.50 2,324.16 Exchange differences 466.38 709.87 Balance of Operating accounts (PIU & RBA) 2,397.29 6,162.81 Balance of petty cash 11316 1.04 Expenses related to bid 551.17 1,623.44 Deduct: 0.00 Interest income 205,012-09 274,970.00 Income for bid documents 1,695.00 1,695.00 Received from Designated account AISAID TF016382 4,724.74 Total advance for designated account 2,500,000.00 2,500,000.00 Approved Prepared Enhba r B Ariuncheg Coordi FM Specialists. PIU THE GOVERNMENT OF MONGOLIA & INTERNATIONAL DEVELOPMENT ASSOCIATION LOAN 4888-MN MINING INFRASTRACTURE INVESTMENT SUPPORT PROJECT: P118109 AUDITED STATEMENT OF OPERATING ACCOUNT PIU (For the period of 01 January 2015 to 31 December 2015) lin US Dollar/ December 31, 2014 December 31, 2015 PART A-TRANSACTION OF ACCOUNT Beginning balance as at 01 Jan 2015 4,240.81 2,333.93 Add: Designated account IDA 4888-MN 84,749.60 83,125.90 Designated account AUSAID TF016382 22,916.73 Interest income 110.86 103.86 Refund for travel balances 2,056.05 Income for bid 1,200.00 Exchange difference 147.23 Deduct: Training and workshops IDA 21,041,25 22,436,71 Training and workshops TF 18,036.08 Incremental operating cost 66,629.65 56,199.21 Replenishment of petty cash 1,654.57 256.20 Transfer to designated account IDA 4888-MN 383.11 3,331.94 Transfer to designated account AUSAID TF016382 1,874.28 Opening of the bank account for RBA 17 10.94 Bank charges 51.73 109.44 Expenses related bid 399.37 538.61 Exchange difference 260.23 Vehicle expenses by insurance 141.41 Ending balance as at 31 December 2015 2,333.93 5,296.31 Approved b Prepa Eh Ariunchibeg./ Coordinat IU FM Specialists, PIU THE GOVERNMENT OF MONGOLIA & INTERNATIONAL DEVELOPMENT ASSOCIATION LOAN 4888-MN MINING INFRASTRACTURE INVESTMENT SUPPORT PROJECT: P118109 AUDITED STATEMENT OF OPERATING ACCOUNT FOR THE RBA UMARD GOBlIN GUVEET- KHALKHIIN DUNDAD TALIIN (For the period of 01 January 2015 to 31 December 2015) lin US Dollar/ December 31, 2014 December 31, 2015 PART A-TRANSACTION OF ACCOUNT Beginning balance as at 01 Jan 2015 - 6.07 Add: Designated account IDA 4888-MN 46,636.43 49,132.44 Designated account AUSAID TF016382 5,445.18 1,068,42 Transfer from Operating account PIU 10.94 - Intereat income 82.90 Exchange difference 25.42 Deduct: Training and workshop 5,445.18 Incremental operating cost 46,628.90 50,219.84 Bank charges 6.26 5.61 Exchange difference 6.14 Ending balance as at 31 December 2015 6.07 89.80 Approved b Prepared En kh r. Ariunc imeg Coordina P1 FM Specialists, PIU THE GOVERNMENT OF MONGOLIA & INTERNATIONAL DEVELOPMENT ASSOCIATION LOAN 4888-MN MINING INFRASTRACTURE INVESTMENT SUPPORT PROJECT: P118109 AUDITED STATEMENT OF OPERATING ACCOUNT FOR THE RBA GALBA-UUSH- DOLOOD's GOV[ (For the period of 01 January 2015 to 31 December 2015) /in US DoIIar/ December 31, 2014 December 31, 2015 PART A-TRANSACTION OF ACCOUNT Beginning balance as at 01 Jan 2015 36.78 Add: Designated account IDA 4888-MN 47,437.36 49,938.97 Designated account AUSAID TF016382 7,257.85 54334 Interest income on bank balances 26.11 2574 Exchange difference Deduct: Incremental operating cost 54,091.43 49,811.97 Transfer to Designated account IDA 4888-MN 525.41 Bank charges 26.26 Exchange difference 41.4 0.19 Ending balance as at 31 December 2015 36.78 735.67 Approved by Prepared Enkhbaatar. B FM Spri al i Coordinator PIU FM Specialists, PIU D 0j THE GOVERNMENT OF MONGOLIA & INTERNATIONAL DEVELOPMENT ASSOCIATION LOAN 4888-MN MINING INFRASTRACTURE INVESTMENT SUPPORT PROJECT: P118109 AUDITED STATEMENT OF OPERATING ACCOUNT FOR THE RBA ALTAIN UVUR GOBI (For the period of 01 January 2015 to 31 December 2015) lin US Dollar/ December 31, 2014 December 31, 2015 PART A-TRANSACTION OF ACCOUNT Beginning balance as at 01 Jan 2015 20.51 Add: Designated account IDA 4888-MN 49,029.50 48,935.94 Designated account AUSAID TF016382 9,736.91 - Interest income on bank balances 20.80 21.86 Deduct: Incremental operating cost 57,858.03 48,901.92 transfer to Designated account AUSAID TF016382 822.55 - Bank charge 33.42 32.35 Exchange difference 52.70 3.01 Ending balance as at 31 December 2015 20.51 41.03 Approved Prepared -nkhb a Aniunclimrn .2 Coordinr FM Specialists, PIU L) THE GOVERNMENT OF MONGOLIA & INTERNATIONAL DEVELOPMENT ASSOCIATION LOAN 4888-MN MINING INFRASTRACTURE INVESTMENT SUPPORT PROJECT: P118109 AUDTED STATEMENT OF PETTY CASH (For the period of 01 January 2015 to 31 December 2015) /in US dollar/ December 31, 2014 December 31, 2015 PART A- OPERATION OF ACCOUNT Beginning balance as at 01 Jan 2015 291.40 113.16 Add: Operating account PIU 1,654.57 256.20 Exchange difference 6.50 Delete: Incremental operating ost 1,669.89 324.35 Designated account IDA 4888-MN 17.62 Expenses related to bid 151.80 38.66 Exchange difference 5.31 Ending balance as at 31 December 2015 113.16 1.04 Approved b Prepared Enkhl Ariunchi6eg. Coordina or FM Specialists, PIU Si NOTES TO AUDITED FINANCIAL REPORTS For the period from 01 January of 2015 to 31 December of 2015 These notes are part of the auditor's report and should be presented. 1. Project introduction Project name Mining Infrastructure Investment Support Project Project address Arig Center 401, 1st khoroo, P c dSukhbaatar District, Ulaanbaatar Mongolia. Fund and credit number IDA loan 4888 MN lndplementing Agency Ministry of Finance, Ministry of l e AMining Infrastructure, Ministry of Nature, Environment and Tourism of Mongolia, Ministry of Roads, Transportation, Construction and Urban Development, National Development and Reform Commission, National Water Commission Date of the agreement 24mays2011 IDA 24 May 2011 TF 30 April 2014 & 14 April 2015 STF Project period P jIDA 2011.11.21-2016.09.30 TF 2014.04.30-2016.09.30 Credit Number IDA Credit 4888 MN Grant Number TF016382 G Project cost 16 million Special Drawing Right (SDR) equal to 25 million US dollars Grant amount was 2.1 million US dollar. Grant amended on 14 April 2015 amount were approved by 4,050 million US dollar 0 0 0 .0 0 The objective of the Project The objective of the Project is to facilitate investments in infrastructure to support mining and downstream processing activities, regardless funding sources, and to build local capacity to prepare and of transact infrastructure projects In accordance with Financing agreement dated on 24 May 2011, IDA shall credit an amount of 16.0 (sixteen) million special drawing right. A grant agreement dated on 30 April 2014 for additional funding of Mongolia- Australia Partnership for Sustainable Development Trust Fund which is managed by EBRD and IDA (World Bank) shall grant an amount of 2,1 million (two point one) million US dollars as requested by Government of Mongolia. The grant agreement amended on 14 April 2015 in the amount 4.05 ( four point zero five) million US * dollars. Credit and trust fund proceeds shall disburse against eligible expenditures according to the following table: Ain XMR G Categories Fund schedule 925000 Goods and non consulting services 13175 000 Consulting services - - - -1 225 0(00 Training and workshop 6725 000' incremental operating cost 675000 AlAdvance 16..000..000 Loan J 15 ooE] I in US dollars/ TotalloanFund schedule Goods and non consulting services - 20 000 Consulging services -230 000 Training and w orkshop -10000 Incremental operatung cost 100 Advance 4 050000 Loan4000 The Project consists of the 4 componentss: Part 1: Support for infrastructure Investments Prepare infrastructure investment plans, including the determination of priority infrastructure needs: * based on regional mining development through planning, feasibility and business cases, a conduct feasibility studies for priority mining-related infrastructure projects in the energy, transport, information technology and communications, water, housing and social sectors, logistics and border crossing facilities and value-added activities, * including technical assessments, such as engineering designs, geotechnical surveys, economic and financial analysis, environmental and social impact evaluations. * In connection of government and private sector: o Analyses and reviewing recipient's legal and regular framework, developing private investment and financing plans o determining appropriate allocation of risks and underlying commercial principles for transactions o undertaking market sounding to gauge investor appetite * facilitate the export of mineral resources: I i . o finalizing ongoing transactions with investors o strengthening the legal frameworks o developing national standards for infrastructure development o facilitating transnational agreements Part II: Capacity Building and Knowledge Transfer Training and Advocacy Programs Carry out staff skills development, including Training and Workshops, for relevant ministries and agencies, on basic principles, practices techniques on project preparatory activities, including technical and engineering reviews, technical designs, drawings and specifications; economic evaluations and cost-benefit analysis; financial assessments and forecasting; environmental and social impact evaluations; legal and regulatory reviews; further assessments of potential PPPs to determine viability and market soundings. Carry out staff skills development, including Training and Workshops, for relevant ministries and agencies in preparation for transactions with investors, including PPP transactions, carry out conferences and other communication mechanisms to promote awareness of government officials and the local business community about investment opportunities and the use of PPPs. Consultants Contract full-time and part-time consultants to strengthen abilities of government officials to prepare terms of reference and carry out feasibility studies, including support to, strategic planners, engineers, technical specialists, economists, and environmental and social experts. Contract full-time and part-time consultants to develop the capacity of government officials to prepare transactions with the private sectors, including legal counsel, institutional specialists, economic and financial specialists, implementation specialist and local staff to support preparation of PPPs transactions. Contract full-time and part-time consultants to develop a framework to manage contingent liabilities, develop methodology and criteria for issuing guarantees, a process for approving them, and structure to limit the Government's overall exposure. Part Il: Strengthening Groundwater Management Provide support to strengthen the capacity of local authorities to manage groundwater resources in Southern Mongolia by making operational a new institutional structure in Southern Mongolia with responsibility for establishing at least two (2) groundwater management councils and at least two (2) groundwater management administrations in water basins 17, 18 and 20, preparing groundwater management and monitoring plans, carrying out groundwater explorations, developing a data exchange protocol, monitoring bore hole installations, monitoring and enforcing compliance with licenses to abstract groundwater and reviewing water resource pricing based on economic principles. Component 4. Project management Establishment of a Project Management Unit at the Ministry of Finance to implement and manage the Project. 0 Framework of the Financing Agreement, a Project Steering Committee (PSC) and a Project In the Implementation Unit (PIU) have been established a a) PSC is responsible for inter alia: Providing guidance on the use of Project funds and approve procurement plans; soliciting input and cooperation from the relevant ministries and government agencies to prepare infrastructure projects that have cross-sectoral impacts, * and for projects involving private investment, providing policy guidance to ensure that these are planned, developed and implemented in a comprehensive and coordinated manner. 5 b) PIU is responsible for all aspects associated with implementing the Project, including inter alia procurement of all goods and services; financial management and * reporting, and disbursements; the effective and timely implementation of the environmental and social management framework all and environmental and social safeguards * requirements; and Project monitoring and reporting. * 2. ACCOUNTING POLICY Will include following Recipient's financial statements developed from World Bank, according to project financial statement prepare method. 1. Balance sheet 2. Statement of Project implementation expenditure 1 Consist of reports by activity 3. Statement of Project implementation expenditure by component 4. Designated account statement, Designated account reconciliation statement 5, Notes for statements Received financing and uses of the Project's financial statements are prepared on the cash basis of 2 Basis of presentation accounting. Recording of the Project accounting should be made according to Financial Management Manual approved by the World Bank. Reporting currency in US dollar. It shall record those Measurements of payments in togrog to be converted by exchange rate statement that has exchange USD for the purpose of replenishment. Account balance should be presented by the cumulative 4 Presentation of the report amount for the period beginning 1t January 2015 to 31 December 2015 in Project financial statement 5 Monitoring organization World Bank, Ministry of Finance and National Audit office 6 Information System "Info Systems" accounting software is used to keep 6 Information System _record and report. Has Designated Account in USD account should be opened in banks after World bank's approval. The ceiling of the Bank Accounts are as follows: 7 Bank accounts 1. IDA Credit - 2,500,000 USD 2. Grant- 400,000 USD 3. PIU- 20,000 US dollars 4. RBA- operating account balance Chart of accounts The project has a chart of accounts for the each 0 8 Chaortif accunc component and the categpry Reporting to WB in US dollar and Ministry of finance in 9 R i cthe Mongolian National orog C 0 0 * Income recognized when cash received. Listed income deposits in the bank: * 10 Income a) Fund from WB b) Interest income on bank balances c) Nonrefundable bidding document fee - _______________dL Exchange gain ____ * Disbursement recognized as an expenditure when paid 11 Expenditure according to the purpose one time replenishment ceiling sis 250,000 US dollar and for Grant application ceiling shall be USD 50,000 ____ eProcurement procedure of the World Bank should be adhered in the procurement of goods, and services. The following methods should follow according to 12 ocurkan of goods, procurement plan of the reporting period. 12wrsadservices 1 . National Competitive Bidding 2a50,000< 200,000 2. Shopping <50,000 3. Direct Contracting-all contracts regardless of contract value __ Should adhere to the consultant's service procedureOf the World Bank. The following methods should be followed according to procurement plan of the reporting period. Companies: 3Procurement Of 1 . Quality-cost based selection aUS,D5 13 onsltnt' srvies 2. Less-cost selection- Assignment meeting requirement of Pare 3.6 of Consulting guideline. 3. Consultant's Qualification Selection- Assignment dmeeting the requirement of Par , 3.7 of Consultant guideline o4. Individual Consultant Selection -Assignment umeeting_the_equirement of Para. 5.1 and 5.3 3. NOTES TO FINANCIAL STATEMENTS 1. Cash and cash equivalent 1.1 Petty cash/i USl o ar [te M Beginning balance Increase Decrease IEnding balance OPLatty cash 113.16 25620 368.32 1.04 jTotal 113.16 256.20 368.32 1.04 1.2 Cash at the bank the ~ ~ ~ ~ ~ ~ ~ ~ t Worl BakDh owigmtoss olabe Bank narne Account type Accounticode Beginning Increase Decrease Ending Tfollowed ac ordingopn balance pocrmetplno balance Ba ofr onglavorn Designated account (USP 410033797 151779312 4 3B7939.38 3538422.24 2389310.28 Sate fund (311 Designated account (LS 104905890 34340091 1774 560.63 1 812354.10 305 607. 2rade and tlevelopcnt Operational account 410033796 2333.93 101449 103184.11 5296.31 rqreBank of Moara 3iogrog).6 ofConsulting gui Stame fun RBA 17 Operational account 3 tr20 h ru424 607 50283.76 3 0200.03 9.80 (logrog)_ _ _ _ _ _ _ _ __ _ _ _ _ Operaliguidacciun Stae fn OA S pertioalac4un Idividual Conulan Selection -Assignment6 State fun 111A 20 Opationai 21000344169 m51 48 957.80 4P837.28 41 03 Total 163 12 3 8. 60090.92 260 T6 1C ahattebn 0nU olr Bak a eA c uiy e A c un cd2nra eD ce s T0k n e retDsgae con UD 1039 1 9 2 437998 35B422 6302 w Note: Exchange rate used 1995.98 MNT, closing rate of the 30 Dec 2016 at the Mongol bank web site. 2. The accumulated expenditures of project ______________________ _________________________________ / In US Dollarsel Categories In the year 2015 As at 01 Jan 2015 IDA-4888-MN TF016382 As at 31 Dec 2015 Goods and non consulting services 1 068 142.22 175 233.68 1 020 119.22 2 263 495.12 Consulting services 3074713.32 2703 199.11 618 338.37 6 396 250.80 Training and workshop 1 093 773.32 419 136.69 137 225.86 1 650 135.87 Incremental operating cost 358 398.66 212 658.92 25 639.02 596 696.60 Total 5595027.52 3 510 228.40 J 1 801 322.47 10 906 578.39 IDA 4888 MN In uS Dollars/ Project expenditures Categories Bugdet. Schedule of the a 01J In the year 2015 at the 31 Dec 2015 expnses in 2015 loan % Goods and non consulting services 1 445 312 50 1 068 14222 175 233.68 1 24337590 12% Consulting services 2058593750 284587514 270319911 554907425 13% Training and workshop 1 914 062.50 1 065 14052 419 13669 1 484 27721 22% incremental operating cost 1 054 687 50 34691272 21265892 559 571 64 20% Total 25 000 000.00 5 326 070.60 3510 228.40 8 836 299.00 35% B Trust fund TF01 6382 3 In US Dollars/ Accumulated expenditures Categories Budget As at the 01 Jan As at the 31 Dec Bugdet, 2015 In the year 2015 expnses in Goods and non consulting services 1 12000000 - 102011922 102011922 91% Consulting services 2 500 000.00 228 838.18 618 338.37 847 17655 34% Training and workshop 31000000 28 632,80 137 225.86 16585866 54% Incremental operating cost 120 000.00 11 485.94 2563902 37 124.96 31% Total 4050000.00 268 956.92 1 801 322.47 2070 279.39 51% Note: It has recommended and will be corrected through listed in questioner paper at project level that financial statement presented less than confirmed expenses at World Bank due to duplications of withdrawal application by amount US $604.95 in the accumulated expenses financed by TF016382. 3. Other expenses Exchange difference ________________________ _______________________________IIn1 US Dollarl Accumulated Accumulated In the total as at 01 total as at 31 year 2015 Bank name Account type Account code Jan 2015 Dec 2015 ED Trade and Devebprnant Bark nolia Operatirg accounts PAU 410033797 (0.17) (0.17) Trade and Devebpment Bank of Mngola Operating accounts PNJ 410033795 (345,58) (260 23) (605 81) Slate fund Operating accounts RBA 17 300200114624 (6,14) 25.42 19.28 State fund Operating accounts RBA 18 10S801088358 (41.44) (0.19) (41.63) Statefund Operaling accounts RBA 20 210000344169 (5270) (3.01) (55.71) Ptty cash (20.52) (5.31) (25.83) Total (48.38) (243.49) (709.87) 4. Source of funds IDA- 4888 MN Total financing Balance as at 31 Doc Currency type Loan amount At the 01 Jan in the year At the 31 Dec 2016 2016 2016 2016 in US Dollar 2500000000 6642622.11 4292418.72 10 935 04083 44% 11941 736.06 48% in XDR 1600000000 432396086 3058387.75 7 382 348.61 46% 8 617 651.39 !4% Trust Fund-TF016382 Financing Total fund As at the 01 jan In the year As at the 31 dec Remaining as at Currency type 2015 2015 2015 % 31 Dec 2015 In US dollar 4050000 12 540.64 1 753 364.98 2 365 905.62 58% 1 684 094.38 5. Other sources and expenses Incremental operating expenses Expenses Itern As at 01 Jan 2016 In the year 2015 As at 31 Dec 2015 Salary 46 648.20 36452.33 85 10053 Connnication 15 908.22 8 389.32 2429754 Stationery 1558037 8035.54 2361591 Rent 10214410 43839.20 145 983 30 Trip- local 91 864.75 93 806 37 185 691.12 Fuel 28419.42 19425.43 47 844.85 Advertisetment 39487.39 2605567 65543.06 Translation fee 1 214.80 . 1 214 80 Office supply 15050.14 2294.10 1734424 Cleaning 61.27 6127 Total 358 398.66 236 297.96 696 696.62 The interest income 3 _in US Dollarl in the Year As at 3 Dec 2015 Bank name Accounttype Accouninumber AsatOlJan2015 2815 Trade and Development Bank of ldngola . w' 410033797 204 666.06 6972055 274 386 61 State Fund Bank of Iingolia PU ' . B=" w RI 104900058906 - 1514649 15148 49 Trade and Development Bank of vongolia Operational account (in 410033796 299.12 103.86 402 98 _________________togrog) _ _ _ _ State Fund Bank of Mngoa RBA 17 Operational account (in 300200114824 82 90 82,90 logrog) _ _ _ _ _ _ _ _ Slate Fund Bank of Lngolla RBA 18 Operational account (i 108801088358 2611 28 74 54.85 togrog) __R____unt__in -_______ State Fund Bank of ingolia RA 20 Operational account ( 210000344169 20.80 21.86 42 66 Total ________ _ 205012.09 85106.40 200118.49 Tota 0 Q * The bank service fee hIn IS DollarI In the Year Bank name Account type Account number As at 01 Jan 2015 2015 As at 31 Dec 2015 Trade and Developrnnt Bank at MDngola Designated bank account 410033797 1 767.18 21836 1 985 54 Stale Fund Bank of Ingolia PIJ Desgnated bank account 104900058906 101.01 280.64 442 55 Stal Fun Ban ofWonglia lLJ (in USD) Trade and Developnent Bank of Mngola Operational account (in 41DD33796 125.26 109.44 234.70 State Fund Bank of longolia RBA 17 Operational account (i 300200114624 6.26 5.61 11.57 State Fund Bank of l:rngoia RBA 18 ainal account (ki 108801088358 26.26 - 26.26 Stale Fund Bank of Mongolia RBA 20 Operational account (i 210000344169 3342 32.35 65.77 torog) = 2______ Total 2120.29 646.40 276669 The bid income and expenses SIin US Dollar/ Item As at the 01 Jan 2015 2015 As at the 31 Dec 2015 Income f or bid 1 695 00 1 695.00 Expenses foir BID 551.17 1 072.27 1 623.44 Total 1 143.83 (1 072.27) 71.56 El O 0 0 0 O 0 D .0 口 觔 〕！今 O 口 D D 口 一～~----－中－－一－-，化 D D \ !，州／, 4n O D 다 0 …－…’:-－「’길 E E E 2 Lb w ø ø r- CL CL CL C4 0 r, C2 90 ed d uli C5 0 4M to C2 U) C2 CD Ln N Cb CD w Q ø CO W> CO CD r- cn N r_ Z CG cn LU 0 ql* CL CY z cý C» iG b 3 3 9 8 ? ? < Ld Ld &d 00 J a. 0 cý 0 0 in C4 cm C4 N cq z EL LU non ch 0 rq Ch n z C! W2 Z uý M0w" 9 9 LL. C-i 0 åg < Lu z ZZ w w IL CL IL (L CL a. (L 2 - LU z a. LU -S o w o w 'E Cy 0 > CY w LU 12 -i cý Ch 2 2 Ln 'r C,4 C,4 C4 U) C2 m 0 m ý:k cs uý LL. o a£ CY CB W C cp z z a u gu s re .5, r m c u> - -? :9 52 -J 2 ' c 2 E ø É CL Le r m cn 'arg- 3 =5 Ej cP C CL C CL CL l E 8 .9 Q COL E C 0 a Info for procurements implementation Amount Qty Those procurements in implementation stage as at 31 Dec 2015 4789 164 15.00 Those procurements in implemented as at 31 Dec 2015 186 697 8.00 Those procurements in postponed at 31 Dec 2015 12904500 19.00 Those procurements in terminated as at 31 Dec 2015 2 232000 6.00 Those terminated procurements are requested by Ministry of Environment, Green Development and Tourism that cancelation due to project were implemented before or the project was funded by different sources. Those postponed procurements are slow progress of establishment of evaluation committee or slow progress of selection process of the companies that will prepare TOR for feasibility study. Some postponed procurements on the TOR preparation due to solve the issue raised by Russia on the location of some project, to organize environment assessment in public that has advised by the World Bank. Info for contract implementation Amount Qty Those contracts in implementation stage as at 31 Dec 2015 4789 163.99 15 Those contracts in implemented as at 31 Dec 2015 249782.42 21 Those contracts in postponed at 31 Dec 2015 4417295.65 8 Those contracts in terminated as at 31 Dec 2015 365 000.00 9 Notes for postponed contract: To develop Feasibility Study for extension of Coal Mine- the two technologies Minex model is given only developed only as specified in the contract to make Mongolian standard model and resource estimate in the first model. And Ministry of Mining was requested to postpone of meeting of till resolved contentious issues licenses Ministry of Energy. Drilling work didn't finish within the year due weather changes, and work postponed till May for next year for installation of equipment for ground water management. Contract amended based on the Ministry of Environment, Green Development and Tourism for additional request on installment of server for network summarize of the info provided from ground water. 0 0 0 O O 0 0 0 0 O 0