m AUDIT OF THE RESOURCES MANAGED AD U$ED " FOR THE PERIOD 25 NOVEMBER 2014 TO 31 D EBR-201-61 BY THE MINISTRY OF AGRICULTURE UNDER THE FLOOD RISK MANAGEMENT PROJECT CREDIT NUMBER 5474-GY AUDITORS: AUDIT OFFICE 63 HIGH STREET KINGSTON GEORGETOWN GUYANA AUDIT OF THE RESOURCES MANAGED AND USED FOR THE PERIOD 25 NOVEMBER 2014 TO 31 DECEMBER 2016 BY THE M[NISTRY OF AGRICULTURE UNDER THE FLOOD RISK MANAGEMENT PROJECT CREDIT NUMBER 5474-GY TABLE OF CONTENTS PAGE 1. TRANSMITTAL LETTER ... ... ... .i. 2. AUDITOR'S OPINION ON THE FINANCIAL STATEMENTS STATEMENT ii-iv OF SOURCES AND USES OF FUNDS, STATEMENT OF CUMULATIVE INVESTMENTS AND THE ASSET REGISTER 3. AUDITED FINANCIAL STATEMENTS.. ... 1-8 4. AUDITOR'S OPINION ON THE ELIGIBILITY OF EXPENDITURES .... 9-1 1 5. AUDITOR'S OPINION ON DESIGNATED ACCOUNT ... ..........12-14 RECONCILIATION 6. AUDITOR'S OPINION ON COMPLIANCE WITH THE LEGAL 15-17 AGREEMENT AND THE RELEVANT LAWS AND REGULATIONS 7. COMPLIANCE WITH FINANCING AGREEMENT ............ 18-20 8. MANAGEMENT LETTER ... ... ... ... ... 14-26 MR (v) 285/DA:15/1/2017 28 June 2017 Ms. Joylyn Nestor-Burrowes Permanent Secretary (ag) Ministry of Agriculture Regent & Vlissengen Roads Georgeaown. Dear Ms. Nestor-Burrowes, AUDIT OF TI-E RESOURSES MANAGED AND USED FOR THE PERIOD 25 NOVEMBER 2014 TO 31 DECEMBER 2016 BY THE MINISTRY OF AGRICULTURE UNDER TI IE FLOOD RISK MANAGEMENT PROJECT CREDIT NUMBER 5474-GY l forward herewith two (2) copies of the audited financial staternents for the above-mentioned Project for the period 25 November 2014 to 31 December 2016, together with the Report of the Auditor General and Management Letter thereon. Should you need any clarification or explanation, please do not hesitate to let me know. With kind regard,. Yours sincerely, ie Pyle "'Audit Manager * Fors>ditor Gerrai em 900QIaat10 4 t 63c /% tc 286/IDA:15/1/2017 28 June 2017 Mr. Armando E. Guzman Task Team Leader International Development Association 1850 1 Street N.W Washington D.C 20433 USA. Dear Mr. Guzman, AUDIT OF THE RESOURSES MANAGED AND USED FOR THE PERIOD 25 NOVEMBER 2014 TO 31 DECEMBER 2016 BY THE MINISTRY OF AGRICULTURE UNDER THE FLOOD RISK MANAGEMENT PROJECT CREDIT NUMBER 5474-GY I forward herewith one (1) copy of the audited financial statements for the above-mentioned Project for the period 25 November 2014 to 31 December 2016, together with the Report of the Auditor General and Management Letter thereon. Should you need any clarification or explanation, please do not hesitate to let me know. With kind regards. Yours sincerely, *Audi Manager * FoLAuditor G al 9 UNA AG: 642017-I 28 June 2017 REPORT OF THE AUDITOR GENERAL ON THE STATEMENT OF SOURCES AND USES OF FUNDS, STATEMENT OF CUMULATIVE INVESTMENTS AND THE ASSET REGISTER FOR THE FLOOD RISK MANAGEMENT PROJECT (CREDIT NUMBER 5474-GY) FOR THE PERIOD 25 NOVEMBER 2014 TO 31 DECEMBER 2016 Opinion I have audited the Financial Statements, which comprise the Statement of Sources and Uses of Funds, Statement of Cumulative Investments, the Asset Register and a summary of significant accounting policies for the Flood Risk Management Project for the period 25 November 2014 to 31 December 2016. In my opinion, the financial statements present fairly, in all material respects, Statement of Sources and Uses of Funds, Statement of Cumulative Investments and the Asset Register for the period 25 November 2014 to 31 December 2016. in accordance with the Cash Basis; International Public Sector Accounting Standards (IPSAS). Basis for Opinion I conducted my audit in accordance with International Standards on Auditing (ISAs) issued by the International Federation of Accountants (IFAC), the International Standards of Supreme Audit Institutions (ISSAls) and the Audit Act 2004. My responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of my report. I am independent of the Project in accordance with the ethical requirements that are relevant to my audit of the financial statements in Guyana, and I have fulfilled my other ethical responsibilities in accordance with these requirements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. Responsibilities of Management and those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the Cash Basis; IPSAS and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Financial Reporting under the Cash Basis of Accounting recognizes transactions and acts only when the cash (and/or cash equivalent) is received or disbursed by the Project, and not when they give rise to, accrue or originate rights or obligations although there was no cash movement. Those charged with governance are responsible for overseeing the Project's financial reporting process. Auditor's Responsibilities for the A udit of the Financial Statements My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and ISSAIs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of my audit in accordance with the ISAs and ISSAls, I exercise professional judgment and maintain professional skepticism throughout the audit. I also: * Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion. forgery, intentional omissions. misrepresentations, or the override of internal control. * Obtain an understanding of internal control relevant to the audit 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 Project's internal control. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. WIl I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit. K 1,174.H05 I6 IT DIFFERENCE(3. 9) I1 EXPLANATIONOF ANY DIFFERENCE SIOWN IN LINE 10 Dhunes war.lames -iyn esr-4rrowes Project oardinator yyne Seret ry(gwP) Flood Risk Management Project The accompanying notes form an integral part of these Financial Stalements 3 MINISTRY OF AGRICULTURE AGRICULTURE SECTOR DEVELOPMENT UNIT(ASOU) FLOOD RISK MANAGEMENT PROJECT CREDIT NO. 5474-GY FIXED ASSETS REGISTER Date of . Purchase Asset # Asset Category Description of Assets Serial # Location Aimount Condition of Asset .Canon DR.Mi60 Heavy Duty 18108/2015 ASDUFRMPIOE/001 OFFICE EQUIPMENT Document Scanner FQ31200 M.0 A 394 100, Working Condition Canon Image Runner Monochrome Copier. Scanner r 06/10/15 ASDU.FRMPIOE1002 OFFICE EQUIPMENT and Printer FOP95031 ASOL 820 400, Working Cond-ton Cyberpower CP1500AVRLCD 06/10/15 ASDU1FRMP/OE0O3 OFFICE EQU1PMENT UPS .attery __ COACO20DI1117 ASDU 32.400 Working Condition HP ScanJet 7500 Network 06)10/15 ASDUiFRMPIOEIDO4 OFFICE EQUIPMENT Scanner CNCCF42OGF ASDU 39 Workin ondition HP Scan-et 7500 Network 05/10/15 ASDU;FRMPIOE/005 OFFICE EQUIPMENT Scanner CN341EF067 ASDU 398.400 Working Condition 06/10/15 ASDUFRMP/OE1006 OFFICE EQUIPMENT DelI PowerEe T720 Server CSDW9Y1 M.O.A 11.224200 Working Condition 1Tripplite Line Conditioner w.th 06/10/15 ASDUJFRMP/OE/007 OFFICE EQUIPMENT Voltage Regulator 223AYOLC614800607 M.OA 65400 Working Condition 'Canon Image Runner . Monochrome Coper, Scanner 06110/15 ASOU.'FRMPIOE/008 OFFICE EQUIPMENT and Pnnter FQP80129 M O.A 820.400 Working Condition EPSON PowerLite 1262 . 18/1212015 ASDU.iFRMP1OE/009 OFFICE EQUIPMENT Multimedia Prolector TTHK4500539 ASDU 258.597 Working Condition Polar Hot & Cold F;oor model Excellent Working 05108/16 ASDUZFRMP/OE/010 OFFICE EQUIPMENT Waler Dsizonser I1Dvolls NIL M.O.A 48,720 Condition I Excellent Working 241082015 ASDU:FRMP/OEs0i OFFICE EQUIPMENT 12000blu AC Unit NL ASOU 140.000 Condition Excellent Working 17/11120161 ASDU/FRMP/OE1012 OFFICE EQUIPMENT Panasonic Black Microwave 6AN4140305 ASDU 31.995, Condition Dell Latitude 3450 Notebook 0W10/15 ASDU.iFRMP/COM/001 COMPUTERS Comtter __.._i_._ 9JTXK52 M O.A 298,300 Working Condition Dell Latitude 3450 Notebook 0/10/15 ASDUFRMPICOM1002 COMPUTERS Computer 20TXK52 ASDU 298.300 WorkIng Condition Dell Latitude 3450 Notebook 06/10115 ASDUiFRMPICOM1003 COMPUTERS Computer 2SKOSY1 MOA 298,300 Working Condition Dell Latitude 3450 Notebook 0611015 . ASDUlFRMP/COWoo4 COMPUTERS Computer 7LKOSY1 ASDU 298.300 Working Condition I4 Drawer Cabinet LegaJ. 52h i t.*_allS ASDUlFRMP/OFl00i OFFICE FURNITURE x 25d Black 8GOK62 M O.A 83.520 WorkinCnition . ' 4 Drawer Cabinet Legal, 52h * 11108115 ASOUIFRMP/OFl003 OFFICE FURNITURE x 25d. Biack 8GDKB4 ' ASDU 83 5201 Working Condition 4 Drawer Cabinet, Legal 52h I iQw1t ASDUFRMP.1OF1004 OFFICE FURNITURE x 25d. Black GDKB3 M O.A 83520 Working Condition 4200 Executive Chair (Black pl 10/12115 . ASDUIFRMP)OF/002 OFFICE FURNITURE Fabncl NIL ASDU 40.000 Working Condition 4200 Executive Chair (Stack ''115 ASOUfFRMP0Floo5 OFFICE FURNITURE Fabric) IL ASDU 40.000 Working Conditin Wit' MINISTRY OF AGRICULTURE AGRICULTURE SECTOR DEVELOPMENT UNIT(ASDUh FLOOD RISK MANAGEMENT PROJECT CREDIT NO. 5474-GY FIXED ASSETS REGISTER Date of Purchase Asset # Asset Category Description of Assets Serial # Location Amount Condition of Asset Hydromet Excellent Working 1610120t6 ASDUIFRMPIFEI0O1 FIELD EQUIPMENT Hydromt Instruments NIL Office 3.574.239 Condition Hydromet Excellent Working -1610612016 ASDUIFRMPIFE/002 FIELD EQUIPMENT Hydromet Instruments NIL Office 3.574.239 Condition m Hydromet Excellent Working 18BDa/2016 ASDUIFRMPIFE1014 FIELD EQUIPMENT Hydromet Instruments NIL Office 1,625,200 Condition Eng # DB5S8TIS 528953EN Chesse#. DHKCEBACHG Excellent Working 09109116 ASDUIFRMPIFE/003 FIELD EQUIPMENT Long Reach Excavatc 1 0018443 EDWC 29.000.000 Condition Eng# DB58TIS 629666EN, Chasse# DHKCEBACEG Excellent Working 09109)16 ASDUlFRMPIFE1004 FIELD EQUIPMENT Long Reach Excavator 0018489 EDWC 29,000,000 Condition Eng #* DB58TIS 629651 EN, Chasse# DHKCEBACAG Excellent Working 09109115 ASOUIFRMPIFE/005 FIELD EQUIPMENT Long Reach ExcavatGr 0018486 EDWC 29.000,000 Condition Eng.#- DB58TIS 629663EN. Chasse#: DHKCEBACKG Excellent Working 9109116 ASDU/FRMPIFE/006 FIELD EQUIPMENT Long Reach Excavalor 0018496 EDWC 29.000,000 Condition Eng # DB58TIS 629467EN. Chasse# DHKCEBACEG Excellent Working 09109116 ASDU)FRMPiFE1007 FIELD EQUIPMENT Long Reach Excavator 0018492 EDWC 29.000.000 Condition Eng # DBSTIS 629646EN Chasse# DHKCEBACCG Excellent Working 09109115 ASDUlFRMPIFEtO08 FIELD EQUIPMENT Long Reach Excavator 0016504 EDWC 29,000,000 Condition I -Eng #: DBS8TIS 0018509EN. Chasse#: DHKCEBACCG Excellent Working 09109/16 ASDU1FRMPFE009 FIELD EQUIPMENT Short Reach Excavator 0018509 EDWC 25.500,000 Condition Unifloat Pontoons with Mud JHIG8F GCAAH. Excellent Working 161112016 ASOUIFRMPIFE1010 FIELD EQUIPMENT Bins & 3" Trash Water Pump 5017614 EDWC 53 105 905 Condition Unifloat Pontoons with Mud JHIG8F GCAAH. Excellent Work ng 1811112016 ASDUIFRMPIFEI1I FIELD EQUIPMENT Bins & 3Trash Water Pump 5017615 EDWC 53.105.905 Condition Unifloat Pontoons with Mud JHIG8F GCAAH- Excellent Work!ng 01/1216 ASDUlFRMPlFE/012 FIELD EQUIPMENT Bins & 3"Trash Water Pump 4909931 FDWC 53.105 905 Condit on Unifloal Pontoons with Mud JHIG8F GCAAH- Excellent Working 01)12116 ASDUiFRMP1FE1013 FIELD EQUIPMENT Bins & 3" Trash Water Pump 4909900 EDWC 53,105,905 Condition TOTAL I . 426,854,0701 JAN 10 ?p'17 PREPARED BY: DATE: JAN.1 0 ?_17 VERIFIED BY: a Lo/ DATE; JAN 102017 6 GOVERNMENT OF GUYANA MINISTRY OF AGRICULTURE - ASDU FLOOD RISK MANAGEMENT PROJECT IDA CREDIT NO. 5474 - GY NOTES TO THE FINANCIAL STATEMENT FOR THE PERIOD 25 NOVEMBER 2014 TO 31 DECEMBER 2016 1. Description of the Project The Flood Risk Management Project (FRMP) IDA Financing No. 5474-GY is an agreement between the Co-operative Republic of Guyana (the Recipient) and the International Development Association (the Association). The agreement was signed on October 10, 2014 with the Project Implementation start date being 31 August 2014 and its Implementation end date as 31 January 2019. The total cost of the project is a credit of Seven million, seven hundred thousand Special Drawing Rights (SDR7, 700,000.) equivalent to Eleven Million, eight hundred and ninety thousand United States Dollars. (USD11, 890,000.) The date of effectiveness being November 25, 2014 The Recipient of the funds under the FRMP is the Ministry of Finance. The Project is .. implemented by the Ministry of Agriculture, Agriculture Sector Development Unit (ASDU). The objective of the Project is to reduce the risk of Flooding in the low-lying areas of the East Demerara. The project consists of the following parts: Component 1: Priority Works for Flood Risk Reduction (USD 10.3 Million) * Upgrading critical sections of the East Demerara Water Conservancy (EDWC) Dams to the criteria set forth in the Construction Supervision and Quality Assurance Plan including rehabilitation of the embankment and associated regulators and Installation of surveillance equipment. * Carrying out priority flood risk reduction investments in the East Coast Demerara Drainage System, by improving pumping capacity in three areas being Lusignan, Buxton- Vigilance and Hope/Enmore * Support the supervision of the construction and quality assurance for the investments based on the construction Quality Assurance Plan. Component 2: Institutional Strengthening for Flood Risk Reduction (USD 0.5 Million) * Improvement of EDWC Dams safety systems of the Recipient Ministry of Agriculture (MOA) , including preparation and implementation of: (a) the Construction Supervision and Quality Assurance Plan; (b) the Operation, Maintenance and Surveillance Plan; (c) the Instrumentation Plan; and (d) the Emergency Preparedness Plan. Support the MOA in the use and expansion of the hydrology and hydraulic modelling of the EDWC and coastal drainage system through the carrying out of the following activities: (a) hydraulic and hydrological modeling; (b) specialized training in hydraulic and hydrological modelling, use of remote sensing tools and data management; and (c) information technology support for data management. * Support a series of communications activities as part of the MOA's ongoing efforts in the disaster risk management and drainage and irrigation sectors. These activities will include: (a) carrying out of public meetings in the Project area on Project implementation progress ;(b) carrying out of workshops on Project implementation activities; and (c) preparation and distribution of information materials related to the progress of the Project. Component 3: Project Management and Implementation Support Support Project management and implementation activities by the ASDU, including reporting and auditing activities. 2. Basis of Preparation The Financial Statements have been prepared in accordance with International Public Sector Accounting Standards (IPSAS) with particular emphasis on Cash Basis Financial Reporting under the Cash Basis of Accounting which recognizes transactions and events only when cash is received or paid by the Project. The Project's accounting records are maintained in both United States Dollars (US$) and Guyana Dollars (G$), with US$ being the presentation currency. Local currency transactions during the year are translated at the Bank of Guyana exchange rate on the date the funds are transfer to the local account. The average rate of exchange as at December 31, 2016 was 206.50 to IS$ 1.00. There was no foreign exchange gain or loss during the financial year. 3. Available Cash Balances Opening Balances -25 November 2014 USS Bank of America Account No. 1901-6-60058 - 0 Bank of Guyana Account No.0162700428016 - 0 Total 0 Closing Balances -31 December 2016 USS Crown Agents Bank Account No. 33681112 - 9,109.81 Bank of Guyana Account No. 0162700428016 - 99,098.17 Total 108,207.98 4. Designated Account (a) In accordance with the Disbursement letter the Designated Account was established to deposit advances withdrawn from the Credit to facilitate eligible expenditure. During the period under review advances made by World Bank to the Designated Account in the sum of US$2,657,628.46 through withdrawal Application No. I & 2 (b) During the period under review, disbursements were made for a total amount of US$2.74 1,728.09 as follows: i. Documented Expenditure amount for a total sum of US$1,482,823.30 through withdrawal Application No. 2,3,4,5,6 ii. Direct Payments were made to Consultant & Contractor for a total sum of - US$192,307.61 through Withdrawal Application I & 7 in. Expenditure made during current period under review documented after 31 plDecember 2016 for a total sum of US$1,066,597.18 through Withdrawal Application No. 8 5. Sources and Use of Funds The Statement of Sources and Uses of Funds shows a detailed breakdown of funds received and expended for the period under review. 6. Exchange Rate Gain/Loss During the period under review therc was a total budget deficit of US$1.539M due to the decline in the exchange rates SDR versus US dollars from 1.5442 as at 10 October 2014 to 1.34433000. as at 31 December 2016. Loan Amount XDR Ince tionXDUS Iclin7,700,000, 11,890,000. USD e uivalent as at 31 December 2016 10,343,410. Loss due to XDR movement 1,343,410. 1,546,590. 7. Key Management Personnel The overall responsibility for the implementation the project lies with the Permanent Secretary, coordinated by the Project Coordinator, Project Engineer, Procurement Officer, Finance Officer, Driver and other personnel from the accounting, engineering and Administrative sections of the ASDU Nq AG: 64/2017-2 28 June 2017 REPORT OF THE AUDITOR GENERAL ON THE ELIGIBILITY OF EXPENDITURES FOR THE FLOOD RISK MANAGEMENT PROJECT (CREDIT NUMBER 5474-GY) FOR THE PERIOD 25 NOVEMBER 2014 TO 31 DECEMBER 2016 Opinion I have audited the Requests for Reimbursement of Expenditure submitted for the period 25 November 2014 to 31 December 2016, in support of credit withdrawals tinder Financing Agreement Credit Number 5474-GY. In my opinion, the expenditures submitted for replineshment were eligibile to be replenished from the funds of the Project and internal controls and procedures used in the preparation of the requests for reimbursement can be relied upon to support each request. Basis for Opinion I conducted my audit in accordance with International Standards on Auditing (ISAs) issued by the International Federation of Accountants (IFAC), the International Standards of Supreme Audit . Institutions (ISSAls) and the Audit Act 2004. My responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of my report. I am independent of the Project in accordance with the ethical requirements that are relevant to my audit of the financial statements in Guyana, and I have fulfilled my other ethical responsibilities in accordance with these requirements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. 9 Responsibilities of Management and those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the Cash Basis; International Public Sector Accounting Standards (IPSAS) and that expenditures reported are eligibile for financing and funds have been used only for Project purposes. Financial Reporting under the Cash Basis of Accounting recognizes transactions and acts only when the cash (and/or cash equivalent) is received or disbursed by the Project, and not when they give rise to, accrue or originate rights or obligations although there was no cash movement. Those charged with governance are responsible for overseeing the Project's financial reporting process. Auditor's Responsibilities for the A dit ofthe Financial Statements My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and ISSAIs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of my audit in accordance with the ISAs and ISSAls, I exercise professional judgment and maintain professional skepticism throughout the audit. I also: * Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. * Obtain an understanding of internal control relevant to the audit 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 Project's internal control. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. 110 I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit, AUITOR GE RAL AUDIT OFFICE 63 HIGH STREET KINGSTON GEORGETOWN GUYANA. II -..i r -dY r";t - X/ i, mrte1( / AG: 64/2017-3 28 June 2017 REPORT OF THE AUDITOR GENERAL ON THE DESIGNATED ACCOUNT RECONCILIATION STATEMENT FOR THE FLOOD RISK MANAGEMENT PROJECT (CREDIT NUMBER 5474-GY) FOR THE PERIOD 25 NOVEMBER 2014 TO 31 DECEMBER 2016 Opinion I have audited the Designated Account Reconciliation Statement and the Project Account, for the Flood Risk Management Project. This statement is the responsibility of the Flood Risk Management Project. In my opinion, the Designated Account Reconciliation Statement and the Project Account, used for managing the funds provided by the World Bank, present fairly the availability of funds for the period 25 November 2014 to 31 December 2016, as well as the transactions made during the same year, in accordance with the financial reporting provisions outlined in the Project's legal agreement. Basisfor Opinion I conducted my audit in accordance with International Standards on Auditing (ISAs) issued by the International Federation of Accountants (IFAC), the International Standards of Supreme Audit Institutions (ISSAls) and the Audit Act 2004. My responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statement section of my report. I am independent of the Project in accordance with the ethical requirements that are relevant to my audit of the financial statement in Guyana, and I have fulfilled my other ethical responsibilities in accordance with these requirements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. Responsibilities of Management and those Charged with Governance Jr the Financial Statement Management is responsible for the preparation and fair presentation of these financial statement in accordance with the Cash Basis; International Public Sector Accounting Standards (IPSAS) and for such internal control as management determines is necessary to enable the preparation of financial statement that are free from material misstatement, whether due to fraud or error. Financial Reporting under the Cash Basis of Accounting recognizes transactions and acts only when the cash (and/or cash equivalent) is received or disbursed by the Project, and not when they give rise to, accrue or originate rights or obligations although there was no cash movement. Those charged with governance are responsible for overseeing the Project's financial reporting process. Auditor : Responsibilities for the Audit ofthe Financial Statement My objectives are to obtain reasonable assurance about whether the financial statement as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and ISSAIs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statement. As part of my audit in accordance with the ISAs and ISSAls, I exercise professional judgment and maintain professional skepticism throughout the audit. I also: * Identify and assess the risks of material misstatement of the financial statement, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. * Obtain an understanding of internal control relevant to the audit 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 Project's internal control. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. 13 I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit. f HA UD TOR GENERAt PGUYAVkN AUDIT OFFICE 63 HIGH STREET KINGSTON GEORGETOWN GUYANA. )4 AG: 64/2017-4 28 June 2017 REPORT OF THE AUDITOR GENERAL ON THE COMPLIANCE WITH THE LEGAL AGREEMENT AND THE RELEVANT LAWS AND REGULATIONS FOR THE FLOOD RISK MANAGEMENT PROJECT [CREDIT NUMBER 5474-GY) FOR THE PERIOD 25 NOVEMBER 2014 TO 31 DECEMBER 2016 Opinion I have audited the Statement of Sources and Uses of Funds, and the Statement of Cumulative Investments for the period 25 November 2014 to 31 December 2016, for the Flood Risk Management Project. entered into by the Government of Guyana and the International Development Association, executed by the Ministry of Agriculture, and have issued my report thereon dated 28 June 2017. 99 In my opinion, the financial statements. for the period 25 November 2014 to 31 December 2016, present fairly, in all material respects, with the Financing Agreement with Credit Number 5474- GY, I have examined Articles II to IV, of the Agreement. Basis for Opinion I conducted my audit in accordance with International Standards on Auditing (ISAs) issued by the International Federation of Accountants (IFAC), the International Standards or Supreme Audit institutions (ISSAIs) and the Audit Act 2004. My responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of my report. I am independent of the Project in accordance with the ethical requirements that are relevant to my audit of the financial statements in Guyana, and I have fulfilled my other ethical responsibilities in accordance with these requirements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. P1 15 Responsibilities of Management and those Charged with Governance for the Financial Staleents e-o hFnni Management is responsible for the preparation and fair presentation of these financial statements in accordance with the Gosh Basis: International Public Sector Accounting Standards (IPSAS) and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Financial Reporting under the Cash Basis of Accounting recognizes transactions and acts only when the cash (and/or cash equivalent) is received or disbursed by the Project, and not when they give rise to, accrue or originate rights or obligations although there was no cash movement. Those charged with governance are responsible for overseeing the Project's financial reporting process, Auditor 's Responsibilites for the A udit of the Financial Statements My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and ISSAls will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of my audit in accordance with the ISAs and ISSAls, I exercise professional judgment and maintain professional skepticism throughout the audit. I also: SIdentify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations. or the override of internal control. * Obtain an understanding of internal control relevant to the audit 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 Project's internal control. pq * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. 16 I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit. . A A A1I GENER AUDIT OFFICE 63 HIGH STREET KINGSTON GEORGETOWN GUYANA. PR PR 17 ea MINISTRY OF AGRICULTURE - ASDU FLOOD RISK MANAGEMENT PROJECT IDA CREDIT NO. 5474 - GY FOR THE PERIOD ENDING 31 DECEMBER 2016 Compliance with Financing Agreement 20 Article 11- Financing According to this Article, the Recipient may withdrawal the proceedings of the Financing in accordance with Section IV of Schedule 2 to this Agreement. During the period under review, the amounts withdrawn were in accordance with Section IV of Schedule 2 to the Financing Agreement. Therefore, the requirement of this Article was met. 2.03 This Article stipulates that the Maximum Commitment Charge Rate payable by the Recipient on the Unwithdrawn Financing Balance is one-half of one percent (/2 of 1%) per annum. It was observed during the period tinder review that the Maximum Commitment Charge Rate payable by the Recipient did not exceed that stipulated in the Financing Agreement Therefore, the requirement of'this Article wyas met. 2.04 The Service Charge payable by the Recipient on the Withdrawn Credit Balance shall be equal to three-fourths of one-percent (% of 1%) per annum. . During the period under review, the Service Charge payable by the Recipient on the Withdrailn Credit Balance did not exceed that stipulated in the Financing Agreement and therefore, the requirement of this Article itas met. The Interest Charge payable by the Recipient on the Withdrawn Credit Balance shall be equal to one and a quarter percent (1.25%) per annum. During the period under review, the Interest Charge payable by the Recipient on the Withdrawm.n Credit Balance did not exceed that stipulated in the Financing Agreement and therefore, the requirement of this Article was met. is 2.06 The Payment Dates are June I and December I in each year. The Government of Guyana paid to the Association, the sums of USS 11,174.36 on I December M' 2015, USS 25,827.32 on I June 2016 and USS 26,535.35 on I December 2016 Therefore, the requirement ofthis Article was met. 2.07 The principal amount of the Credit shall be repaid in accordance with the repayment schedule set forth in the Agreement. According to the repayment schedule, the amounts to be paid to the Association are due in June and December each year, with the first repayment on I December 20/9 and the last on i June 2039. Therefore, the requirements were not applicable during the period. 2.08 The Payment Currency is United States Dollars. The anount paid as Service Charge was in United States Dollars and therefore, the requirement ofthis Article was met. Article III - Project LU The Recipient declares its commitment to the objective of the Project. To this end, the Recipient shall carry out the Project through its Ministry of Agriculture in accordance with provisions of Article IV of the General Conditions. The Recipient declared its commitment to the objective of the Project and the activities of the Project were undertaken through the Minisiy ofAgricuhure. The requirements ofthisArticle uw'ere therefore met. 3.02 According to this Article, the Recipient shall ensure that the Project is carried out in accordance with the provisions of Schedule 2 of the Financing Agreement, During the period under review, the activities ofthe Project iwere carried out in accordance with the provisions ofSchedule 2 of the Financing Agreement. 19 Article IV - Effectiveness: Termination 4.01 The Additional Conditions of Effectiveness consist of, namely, that the Project Operations Manual has been adopted by the Recipient pursuant to Section I.C. 1 of Schedule 2 to this Agreement. During the period under review it was observed that the Recipient through the Minisry of Agriculture has prepared and adopted the Operational Manual and is executing the Project in accordance with the terms ofthe Operations Annal. 4.02 Without prejudice to the provision of the General Conditions, the Effectiveness Deadline is the date ninety (90) days after the date of this Agreement, but in no case later than the date eighteen (18) months after the Association's approval of the Financing, which expires on December 4, 2015. It was observed that the Project date of effectiveness was on 25 November 2014 which did not exceed the expired date in the Financing Agreement and therefore, the requirement of this Article was idly net. 4.03 For purpose of Section 8.05(b) of the General conditions, the date on which the obligations of the Recipient under the Agreement (other than those providing for payment obligations) shall terminate is twenty years after the date of this Agreement. 20