Project Financial Statements REPUBLIC OF MOZAMBIQUE EXECUTIVE SECRETARIAT OF COMMISSION FOR PROFESSIONAL EDUCATION AND TRAINING REFORM TECHNICAL AND VOCATIONAL EDUCATION AND - TRAINING PROJECT Credit Agreement NO 49630 Mz International Development Association - IDA 31 December 2015 EY Building a better EXECUTIVE SECRETARIAT OF COMMISSION FOR PROFESSIONAL EDUCATION AND TRAINING REFORM TECHNICAL AND VOCATIONAL EDUCATION AND TRAINING PROJECT CREDIT AGREEMENT No 49630 INTERNATIONAL DEVELOPMENT ASSOCIATION - IDA CONTENTS PAGE INDEPENDENT AUDITOR'S REPORT 1 -2 STATEMENT OF SOURCES AND USES OF FUNDS 3 STATEMENT OF SPECIAL ACCOUNT 4 DISBURSMENT SUMMARY (STATEMENT OF CREDIT ACCOUNT) 5 NOTES TO THE FINANCIAL STATEMENTS 6 to 12 Ernst & Young Limitada Tel: +258 21 35 3000 Rua Belmiro Obadias Muianga, No 179 Fax: +258 21 32 1984 Caixa Postal 366, E-mail: Ernst&young@mz.ey.com Maputo NUIT 400 006 245 Building a better Mogambique www.ey.com working world INDEPENDENT AUDITOR'S REPORT To the Management EXECUTIVE SECRETARIAT OF COMMISSION FOR PROFESSIONAL EDUCATION AND TRAINING REFORM TECHNICAL AND VOCATIONAL EDUCATION AND TRAINING PROJECT CREDIT AGREEMENT NO 49630 INTERNATIONAL DEVELOPMENT ASSOCIATION - IDA We have audited the accompanying financial statements of Executive Secretariat of Commission For Professional Education And Training Reform technical and Vocational Education and Training Project, financed by Word Bank under IDA - International Development Association Development Credit Agreement 49630, which comprise the Statement of Sources and Uses of Funds as at 31 December 2015 (reflecting total resources of USD 8.854.121, including an opening balance of USD 2.378.647, total direct payments of USD 2.090.591, total uses of USD 8.797.430, and a closing cash balance of USD 56.691), the Statement of Special Account and the Statement of Credit Account for the year then ended, and a summary of significant accounting policies and other explanatory notes. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the basis of accounting set out in Note 4 and with the management guidelines agreed with the Financiers. This responsibility includes designing, implementing and maintaining internal control system relevant to the preparation and fair presentation 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 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 Building a better working world 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 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 Sources and Uses of Funds, the Statement of Special Account and the Statement of Credit Account of the Executive Secretariat of Commission For Professional Education And Training Reform technical and Vocational Education and Training Project as at 31 December 2015, and Disbursements made by IDA, Applications and Expenditure incurred by Executive Secretariat of Commission For Professional Education And Training Reform technical and Vocational Education and Training Project, in accordance with the accounting principles set out in Note 4. We further report as follows: - IDA Funds have been used in accordance with the conditions of the relevant financing agreements; - With respect to SOE's, adequate supporting documentation has been maintained to support claims to the IDA for reimbursements of expenditures incurred; and - Such expenditures are eligible for financing under the Credit Agreement Number 49630 MOZ. Maputo, 25 May 2 16 - ERNST& YOPNG, D EXECUTIVE SECRETARIAT OF COMMISSION FOR PROFESSIONAL EDUCATION AND TRAINING REFORM TECHNICAL AND VOCATIONAL EDUCATION AND TRAINING PROJECT CREDIT AGREEMENT N049630 MZ - IDA STATEMENT OF SOURCES AND USES OF FUNDS FOR THE YEAR ENDED 31 DECEMBER 2015 (Expressed in United States Dollars) CREDIT AGREEMENT NO 49630 - ADDITIONAL FUNDS Notes 2015 2014 Opening cash balance 2.378.647 1,966.386 Add: Sources of funds 5 IDA Funds Direct payments 5.1 2.090.591 4.470.815 Replenishments to Special account 5.1 4.384.883 9.387.419 Total add 6.475.474 13,858,234 8.854.121 15.824.620 Less: Uses of funds 5 Credit account payments 5,2 2.090.591 4.470,815 Special account payments: Reimbursed to IDA Eligible expenditure 5.2 6.706.839 8.975.158 Total less 8.797.430 13.445.973 Closing cash balance Balance as at 31 December 2015 7 56.691 2.378.647 FINANCE AND ADMINISTRATION MANAGER PROJEC MANAGER - EC4MNAER,/_ EXECUTIVE SECRETARIAT OF COMMISSION FOR PROFESSIONAL EDUCATION AND TRAINING REFORM TECHNICAL AND VOCATIONAL EDUCATION AND TRAINING PROJECT CREDIT AGREEMENT N049630 MZ - IDA STATEMENT OF THE SPECIAL ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2015 (Expressed in United States Dollars) IDA CREDIT 49630 ADDITIONAL FUNDS Notes 2015 2014 Opening cash balance 2.378.647 1.966386 Add: IDA Replenishments received: Reimbursement to Special account 5.1 and 6.1 6.475.474 13.858.234 8.854.121 15.824.620 Less: Special account payments: Full amount of eligible expenditure paid 5.2 and 6.2 8.797.430 13445.973 8.797.430 13.445.973 Balance as at 31 December 2015 56.691 2.378.647 FINANCE AND ADMINISTRATION MANAGER PROJECT MANAGER EXECUTIVE SECRETARIAT OF COMMISSION FOR PROFESSIONAL EDUCATION AND TRAINING REFORM TECHNICAL AND VOCATIONAL EDUCATION AND TRAINING PROJECT CREDIT AGREEMENT No 41560 AND 49630 MZ - IDA DISBURSEMENT SUMMARY (STATEMENT OF CREDIT ACCOUNT) FOR THE YEAR ENDED 31 DECEMBER 2015 (Expressed in United States Dollars) Total Credit Disbursements Disbursements Accumulated Budget Balance Agreement in Prior Years Duringthe Year Disbursements as at 31.12.2015 (1) Works 5,818.000 4.356.613 1.477.474 5.834.087 (16.087) (2) Goods 6.641.000 4.513.950 1.624,471 6.138.421 502.579 (3) Consultants services 5.376.000 4.146.556 1.418.384 5.564.940 (188.940) (4) Fundec 3.162.000 1.961.536 - 1.961.536 1,200.464 (5) Operating costs 1.138.000 1.342.922 105.046 1.447.968 (309.968) (6) Unalloc. special account 1.265.000 1.196 - 1.196 1.263.804 Special account - 1.955.493 1.955.493 (1.955.493) 23.400.000 18.278.266 4.625.375 22.903.641 496.359 FINANCE AND ADMINISTRATION MANAGER PRO ECT MANAGER EXECUTIVE SECRETARIAT OF COMMISSION FOR PROFESSIONAL EDUCATION AND TRAINING REFORM TECHNICAL AND VOCATIONAL EDUCATION AND TRAINING PROJECT CREDIT AGREEMENT N049630 MZ DISBURSEMENT SUMMARY (STATEMENT OF CREDIT ACCOUNT) FOR THE YEAR ENDED 31 DECEMBER 2015 (Expressed in Special Drawing Rights - SDR's) 1I INTRODUCTION THE GOVERNMENT OF MOZAMBIQUE (GOM) has launched a TECHNICAL AND VOCATINAL EDUCATION AND TRAINING (TVET) Integrated Reform Program that aims at the establishment and implementation of integrated TVET system to provide relevant and quality TVET to an increasing number of citizens in equitable and sustainable fashion. TECHINICAL AND VOCATIONAL EDUCATION AND TRAINING PROJECT is implemented in a way that guarantees Ownership, commitment and sustainability. The implementation capacity is within the structure of TVET itself under the direct leadership of the Mayor of COREP and his senior management team. The program coordination, monitoring, Financial and procurement functions are undertaken by the project. An ambitious program of institutional restructuring is foreseen under the first component. The period 2006-2011 was for piloting some of the key elements of the new TVET system in up to 4 sectors of the economy and about 18 professional occupations and in the corresponding alignment process in about eleven training providing institutions. In 2011, the TVET Program was granted an extension of 35 months and an additional financing. The Program is financed by Word Bank under IDA - International Development Association Development Credit Agreement 49630 and its closure date is September 2015. The program will strengthen the COREP institutional and financial capacity to support the achievement of long term service delivery goals. The projects composed by four components: a) Component A - Development of an Institutional Framework; b) Component B - Standards-based Qualification and Training System; c) Component C - Quality Improvement in Training Institutions; and d) Component D - Skills Development Fund (FUNDEC - Fund for Development of professionals competences). 2. PERCENTAGE OF EXPENDITURES FINANCED BY THE CREDIT AGREEMENT The percentages of expenditures for items to be financed by Credit are as following: Category % of Expenditures to be financed (1) Works 100% of all expenses (including taxes) (2) Goods 100% of all expenses (including taxes) (3) Consultants services including audits and training and workshops 100% of all expenses (including taxes) (4) Fundec IDA grants under part of the project 100% of all expenses (including taxes) (5) Operating costs 100% of all expenses (including taxes) (6) Unallocated 100% of all expenses (including taxes) EXECUTIVE SECRETARIAT OF COMMISSION FOR PROFESSIONAL EDUCATION AND TRAINING REFORM TECHNICAL AND VOCATIONAL EDUCATION AND TRAINING PROJECT CREDIT AGREEMENT N049630 MZ - IDA STATEMENT OF SOURCES AND USES OF FUNDS FOR THE YEAR ENDED 31 DECEMBER 2015 (Expressed in United States Dollars) 3. SPECIAL ACCOUNT FOR THE IDA CREDIT AGREEMENT The Development Credit Agreement no 49630 requires the opening of a special account in USD. The purpose of the special account is for payment of eligible expenditure. These payments will be subsequently justified to IDA with respective documentation or issuance of SOEs (Statement of Expenditures) for replenishment of the special account or refunding of the initial deposit. The special account was opened at BCI Bank. 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The financial statements, compiled from the Project Unit accounting records, were prepared on a cash basis. Under this basis of accounting, receipts are not recorded until received in cash and disbursements are assigned to the period in which the respective cash payment is made. Foreign currency transactions The accounting records of the Project are maintained in United States Dollars (USD). The statement of receipts and payments is also expressed in United States Dollars (USD) unless otherwise stated. Transactions in other currencies are translated to USD at the official exchange rate ruling at the date of the transaction. Fixed assets Fixed assets acquired by the Project are reflected as expenditure in the year of purchase. Procedures The disbursements of the funds, made available by the International Development Association (IDA), are carried out by direct transfers or by requests for payments sent to the Special Account, which was started with funds made available by IDA, in a bank account of the Project in Maputo ( Banco de Mogambique). EXECUTIVE SECRETARIAT OF COMMISSION FOR PROFESSIONAL EDUCATION AND TRAINING REFORM TECHNICAL AND VOCATIONAL EDUCATION AND TRAINING PROJECT CREDIT AGREEMENT N049630 MZ- IDA STATEMENT OF SOURCES AND USES OF FUNDS FOR THE YEAR ENDED 31 DECEMBER 2015 (Expressed in United States Dollars) 5. SOURCES AND USES OF FUNDS Comprise the direct payments and replenishments incurred for the year under the credit Agreement number 49630. 5.1 Sources - Direct payments and replenishments The amounts recognized in this caption are presented as follows: IDA CREDIT 49630 ORIGINAL FUNDS 2015 2014 Direct payments: Applications 29 to 43 - 4.470.815 Application 49 51.506 - Application 51 47.070 - Application 53 346.726 - Application 66 504.018 - Application 67 12.534 - Application 70 91.700 Application 74 748.587 Application 76 288.450 2.090.591 4.470.815 IDA Replenishments to special account: Applications 29 to 46 - 9.387.419 Application 47 416.514 - Application 48 489.028 Application 50 160,800 Application 52 209.291 Application 54 187.090 - Application 55 345.937 - Application 56 56.165 - Application 57 124.391 Application 58 113.762 Application 59 16.351 Application 60 56.928 Application 62 141.294 - Application 63 416.864 Application 64 257.560 - Application 64 215.610 - Application 65 367.381 Application 68 152.262 - Application 69 657,655 - 4.384.883 9.387.419 6.475.474 13.858.234 EXECUTIVE SECRETARIAT OF COMMISSION FOR PROFESSIONAL EDUCATION AND TRAINING REFORM TECHNICAL AND VOCATIONAL EDUCATION AND TRAINING PROJECT CREDIT AGREEMENT N049630 MZ - IDA STATEMENT OF SOURCES AND USES OF FUNDS FOR THE YEAR ENDED 31 DECEMBER 2015 (Expressed in United States Dollars) 5.2 Uses - credit accounts and special account payments The amounts recognized in this caption are analyzed as follows: IDA CREDIT 49630 ORIGINAL FUNDS 2015 2014 Credit account current year payments: Applications 27 to 43 - 4.470.815 Application 49 51.506 - Application 51 47.070 Application 53 346.726 Application 66 504.018 Application 67 12,534 Application 70 91.700 Application 74 748.587 Application 76 288.450 - 2.090.591 4.470.815 Special account current year reimbursement to IDA: Applications 30 to 47 - 8.744.815 Application 48 489.028 - Application 50 160,800 Application 52 209.291 - Application 54 251.184 230.343 Application 55 865.937 - Application 56 140.465 Application 57 124.391 - Application 58 60.170 - Application 58 53.591 - Application 59 16.351 - Application 60 56.928 - Application 62 141.294 - Application 63 416.864 - Application 64 257.560 Application 64 215.610 Application 65 367.381 Application 68 167.368 Application 68 152.262 - Application 69 730.728 Application 71 313.816 Application 72 801.427 Application 73 370.359 Application 75 266,882 - Application 77 73.010 Accruals 4,142 - 6.706.839 8.975.158 8.797.430 13.445.973 EXECUTIVE SECRETARIAT OF COMMISSION FOR PROFESSIONAL EDUCATION AND TRAINING REFORM TECHNICAL AND VOCATIONAL EDUCATION AND TRAINING PROJECT CREDIT AGREEMENT N049630 MZ - IDA STATEMENT OF SOURCES AND USES OF FUNDS FOR THE YEAR ENDED 31 DECEMBER 2015 (Expressed in United States Dollars) 6. REPLENISHMENT AND PAYMENTS In this captions are analysed the amounts of application and payments made during the year: 6.1 The summary of application request, replenished and not replenished during the year under the credit agreement 49630 is presented as follows: Application Requested Replenished Not Replenished Replenished (USD) (USD) (USD) (SDR) Direct payment: Application 49 51.506 51.506 - 36.436 Application 51 47.070 47.070 34.378 Application 53 346.726 346.726 - 248.674 Application 66 504.018 504.018 - 362.822 Application 67 12,534 12.534 - 8.963 Application 70 91.700 91.700 - 65.299 Application 74 748.587 748.587 - 542.113 Application 76 288.450 288.450 - 207.221 2.090.591 2.090.591 - 1,505.906 Replenishments: Application 47 - 416.514 (416.514) 293.225 Application 48 489.028 489.028 - 347.107 Application 50 160.800 160.800 - 116.829 Application 52 209.291 209.291 - 150.105 Application 54 251 .184 187.090 64.094 132.977 Application 55 865.937 345.937 520,000 246.434 Application 56 140.465 56.165 84.300 40.010 Application 57 124.391 124.391 - 88.340 Application 58 60.170 60.170 - 42.864 Application 58 53.591 53,591 - 37.988 Application 59 16.351 16.351 - 11,574 Application 60 56.928 56.928 - 40.312 Application 62 141.294 141.294 - 100.574 Application 63 416.864 416.864 - 298.793 Application 64 257.560 257.560 - 182.476 Application 64 215.610 215.610 - 152.756 Application 65 367.381 367.381 - 264.113 Application 68 167,368 - 167,368 - Application 68 152,262 152.262 - 107.055 Application 69 730.728 657,656 73.072 465.937 Application 71 313.816 - 313.816 - Application 72 801.427 - 801.427 Application 73 370.359 - 370.359 Application 75 266.882 - 266.882 Application 77 73.010 - 73.010 Accruals 4.142 - 4.142 - 6.706.839 4.384.883 2.321,956 3,119.469 8.797.430 6.475.474 2.321.956 4.625.375 EXECUTIVE SECRETARIAT OF COMMISSION FOR PROFESSIONAL EDUCATION AND TRAINING REFORM TECHNICAL AND VOCATIONAL EDUCATION AND TRAINING PROJECT CREDIT AGREEMENT N049630 MZ - IDA STATEMENT OF SOURCES AND USES OF FUNDS FOR THE YEAR ENDED 31 DECEMBER 2015 (Expressed in United States Dollars) 6.2 Special account payments by categories made during the year are presented as follows: IDA CREDIT 49630 ADDITIONAL FUNDS Consultants Operating Total In Application Works Goods services Fundec costs USD 48 347.724 129.869 734 - 10.701 489.028 49 - - 51.506 - 51.506 50 - 35.328 86.617 - 38.855 160.800 51 - - 47.070 - 47,070 52 - 38.377 140.266 - 30.649 209.292 53 - - 346.726 - 346.726 54 - - 251.184 - 251.184 55 608.410 80.501 177.026 - 865.937 56 - 31.864 108.601 - 140.465 57 - 124,391 - 124.391 58 - 60.170 - 60.170 58 - 53.591 - - 53.591 59 - 16.351 - 16,351 60 - 56,928 - - 56,928 62 - 141.294 - - 141.294 63 - 416864 - - 416.864 64 - 257,560 - - 257.560 64 - 215.610 - - 215.610 65 10,975 158.528 188.593 - 9.286 367.382 66 504.018 - - - - 504.018 67 - - 12.534 - 12.534 68 9179 - 158.189 - 167,368 68 - 152,262 152.262 69 229.834 20.151 480.743 - 730.728 70 - - 91,700 - 91.700 71 - 259.358 54.458 - 313.816 72 - 149.813 274.267 18,017 359.330 801.427 73 144.443 - 213.566 - 12,349 370,358 74 748.587 - 748.587 75 184.018 - 77.383 - 5.481 266.882 76 288.450 - - - 28.450 77 - - 72,791 - 218 73.009 Accruals - - 4.142 - - 4.142 3.075.638 2.398.810 2.838.096 18.017 466.869 8.797430 EXECUTIVE SECRETARIAT OF COMMISSION FOR PROFESSIONAL EDUCATION AND TRAINING REFORM TECHNICAL AND VOCATIONAL EDUCATION AND TRAINING PROJECT CREDIT AGREEMENT No49630 MZ - IDA STATEMENT OF SOURCES AND USES OF FUNDS FOR THE YEAR ENDED 31 DECEMBER 2015 (Expressed in United States Dollars) 7. CLOSING CASH BALANCE The Closing balance as at 31 December 2015 is represented by: IDA Credit 49630 IDA Credit 49630 (31-Dec-2015) 31-Dec-2014 Banks: Special account in USD 20.909 2.110.457 Special account in MZM 2 102 Interest (3.315) (2.555) 17.596 2.108.004 Other CDIs (payments in transit) 39,095 270.643 56.691 2.378.647 8. TAXATION The tax authorities have Faculty reviewing the tax position of the Project for the period of five (5) years, which may result in eventual adjustments due to a different interpretations and/or non-compliance with the application legislation, namely: Employee tax (IRPS) and withholding tax. The Project management believes that have fulfilled all tax obligations the Project is subject, so any adjustments that declared, arising from these reviews, it is not expected to have an effect on the financial statements taxable. 9. EVENTS AFER THE REPORTING PERIOD There are no material subsequent events after the balance sheet date that may influence the reading and interpretation of financial statements as at 31 December 2015. FINANCE AND ADMINISTRATION MANAGER PROJECT MANAGER