FEDERAL MINISTRIY OF WATER RESOURCES, ABUJA NATIONAL URBAN WATER SECTOR REFORM PROJECT (NUWSRP III) IDA CREDIT NO 54160 FINANCIAL STATEMENTS AND MANAGEMENT LETTER FOR THE YEAR ENDED 31ST DECEMBER, 2018 CONTENTS PAGES 1. Corporate infornmation 2. Auditors' report 2 3. Accounting policies 4. Balance sheet 5 6 5. Statement Of fund receipt and utilization 6 6. Statement of cash flow 8 7. Notes to the accounts 9 8. Appendix 1 9. Management letter 12 17 FEDERAL MINISRTY OF WATER RESOURCES, ABUJA 3" NATIONAL URBAN WATER SECTOR REFORM PROJECT WORLD BANK IDA 54160 FINANCIAL STATEMENTS YEAR ENDED 31T DECEMBER, 2018 CORPORATE INFORMATION REGISTERED OFFICE: Federal Ministry Of Water Resources, Old Federal Secretariat, Abuja, Nigeria PARTICIPATING AGENCIES Federal Ministry Of Water Resources (FMWR) Supervising Ministry and National Coordinator Federal Ministry of Finance (FMF) Acting on behalf of the Federal Government of Nigeria Project Management Offlee No. 15, Ajesa Street, Wuse II, Abuja, FCT Tel: +234 (0) 9-413-7072 +234 (0) 9-413-7074 Fax: +234 (0) 9-413-3203 Bankers: 1. Access Bank, United Kingdom 2. Central Bank of Nigeria 3. Heritage Bank Plc, Wuse Zone 5, Exp. Centre, Abuja. Auditors The Auditors, Messrs Tajudeen Badejo & Co ( Chartered Accountants) have expressed interest to continue in office as the Extenal Auditor of the project. 2 Tajidecn Badejo & Co (lChartered Accountants) B-34, 2nd Floor, Nkwegu P 0 )Plot No. 1078, Durum tc Area 1, By Old Scretarit, Garki Abuja. Tel: 234 805 9009 038 234 706 8244 660 tajudeenbadejo a hoo.com WWw.tajudeenbadejoan dco.co REPORT OF THE INDEPENDENT AUDITORS TO THE MANAGEMENT OF WORLD BANK ASSISTED 3RD NATIONAL URBAN WATER SECTOR REFORM PROJECT {IDA CREDIT 54160} FOR THE YEAR ENDED 31ST DECEMBER, 2018 We have audited the accompanying project financial statements of the 3rd National Urban Water Sector Reform Project (NUWSRP II) for the year ended 31st December, 2018 as set out on pages 6 to 16 and prepared on the basis of the accounting policies on page 5. The project is financed by the World Bank - IDA Credit No. 54160. Respective responsibilities of the Project Management and Auditors The Management of the World Bank assisted 3rd National Urban Water Sector Reform Project (NUWSRP Ill) is responsible for the preparation of the project financial statements. It is our responsibility to form an independent opinion, based on our audit, on those statements and report our opinion to you. Basis of opinion We conducted our audit in accordance with International Standards on Auditing (ISAs) and World Bank guideline requirements. Those ISAs require that we plan and perform the audit to obtain reasonable assurance about whether the project financial statements are free from material misstatements. An audit includes examination, on a test basis, of evidence supporting the amounts and disclosures in the project financial statements. It also includes an assessment of any significant estimates and judgments made by the Management in the preparation of the project financial statements and of whether the accounting policies are appropriate to the project's circumstances, consistently applied and adequately disclosed as well as evaluating the overall project financial statements presentation. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the project financial statements are free from material misstatements, whether caused by fraud, error or other irregularity. In forming our opinion, we also evaluated overall adequacy of the presentations of the information in the project financial statements, and assessed whether the Project's books of account had been properly kept. Opinion In our opinion, the World Bank assisted 3rd National Urban Water Sector Reform Project (NUWSRP III) books have been properly kept and the project financial statements which are in agreement with the books of accounts, give a true and fair view of the state of affairs of the Project as at 31 December 2018. Statement of Expenditure (SOE) The SOF are in agreement with the books of account and adequate documentations have been maintained to support claims to the World Bank for reimbursements of expenditures that are eligible for financing under the credit agreement. Statement of Special Accounts (SA) The Statements contained on pages 12 to 16 have been prepared on the basis of cash deposits and withdrawals for the purpose of complying with the credit agreement and gives a true and fair view of the beginning and ending balances and account activity for the year ended 31s December, 2018. Badejo Tajud n RC/2013/ICAN/00000004366 Engagement Partner For: Tajudeen Badejo & Co (Chartered Accountants) Abuja. FEDERL MIXISRTY 0OF WATER RESOUREABJJ 31RD NATIONAL URBAN WATER S REORS, ABUJA WORLD BANK IDA 54160 SECTOR REFORM pROJECT FINANCIAL STATEMENT YEAR ENDED 31sr DECEMBER, 2018 ACCOUNTING POLICIES Basis of accounts The accounts have been Prepared under the cash accounting basis. No adjustment have level of prices. 'ect the imact on the accounts of specific price change(s) in the general Exchange rate Transacton in foreign currency are translated to naira at the Central Bank of Nigeria rate of exchange ruling on the dates which the transactin occurred. Balances on special accounts are translate' to naira at the Central Bank Of Nigeria rat of exchange ruling at the balance sheet date ($1 t 306) Fixed assets Fixed assets are stated at cost, no depreciation was made by the project management on the assets.b 5 FEDERAL MINISTRY OF WATER RESOURCESs ABUJA 3ROD AOA U AN WATER SECTOR REFORM PROJECT BALANCE SHEET AS AT 31ST DECEMBER, 2018 Accumulated Accumulated Fixed assets and related expenses Note 2018 2017 Fixed assets N N PrOject related expenses 1 561,751,434 166,165,571 Proectreate epenes2 1,609,327,019 745,271,817 Current assets 2,17,078453 911,437,387 Transfer to IDA project 51290 3 Overpaid allowance 3 39,400 2,600,782 Double payment of tax 3 2,00 Bank and cash 2,102,779 4 4,558,409,614 996,111,125 4, 560,5,73 9 Current liabilities Transfer from IDA project 51290 5 16,540,755 3,209,528 Tax not yet remitted 5 16 3, Deposit 5 38,361,639 5 46,016,432 10 0, 918, 82 3,20T9,528 Net current assets 4,4 59,632,967 995,502,378 Net assets Net asets6,63 0,711, 420 1,06,939,76 Funds World bank World bank drawndown credit 6 595,349,802 595,349,802 Other income 6 5,407,968,128 836,718,128 Exchange reserve account 7 331,693,538 195,650,543 8 295,699,952 279,221,293 8 663011,420 1,906,939,766 The financial statements on pages 2 to 16 were approved by the Management of the National Urban Water Se;or Reform projpqt on ... .. . its behalf**....d signed on ..........---.... National Project Coordinator ..-.... . .-...... lProject Accountant The Notes on pages 10 to 11 form part of these financial statements 6 FEDEAL M TRY OF WATER RESOURCES, ABUJA 3RD NATION URBAN WATER SECTOR REFORM PROJECT WORLD B3ANIK IDA 54160 STATERN p OO FUND RECEIP AND UTILIZATION FOR THlE PERIOD ENDED 31ST DECEMBE, 2018 Receipt For the year For the year Noe 2018 2017 Replenishments fro World BankNote N 2 Received f rom ect 5 1290 6 4,571,250,000 836,718,128 Recer income 5 13,331,227 3,209,528 Tax not yet remitted 7 136,042,995 78,713,712 Deposit 5 38,361,639 Depoit 46,016,432 Refund from IDA project 51290 3 460,782 Exchange gain 3 2,600,782 Net cash inflow for the year 4,82,081734 918,641,368 Utilization Transfer to IDA project 51290 Exchange difference 3 - 2,600,782 Project related expenses 2 - 24,418,184 Purchase of fixed assets for the project 2 864,055,202 5,0 Overpaid allowance 1 395,585,863 Double payment of tax 3 39,400.00 5,159,105 1,6173,245 499,22 1,709 Cash and cash equivalent at 31 Dece r 2018 7ber, 201864 7 FEDERAL MISTRy OF WATER RESOURCES, ABUJA 3RD NATIONAL URBAN WATER SECTOR REFORM PROJECT WORLD BANK IDA 54160 STATEMENT OF CASHFLOW FOR THE PERIOD ENDED 31ST DECEMBER, 2018 For the year For the year 2018 2017 Fund received in the year 2018 201 Replenishment from World Bank Note N 8 Received from IDA project 51290 5 13,331,227.10 3,209,528 Other income 7 136,042,995 78,713,712 Tax not yet remitted 5 38,361,639 - Payments to suppliers and service providers 2 (864,05S,202) (467,043,639) Overpaid allowance 3 (39,400.00) ( Double payment of tax 3 (2,102,779) - Refund from IDA project 51290 3 2,600,782 (,600,782) Net cashflow from operating activities 9 3,895,389,262 28,996,948 Investing activities Purchase of fixed assets 1 (395,585,86( Net cashlflow from investing activities (395,585,863) (5,159,105) (3915,585,863) 5191 Financing activities Exchange gain/loss 8 16,478,659 (24,418,184) Deposit 5 46,016,432 ( Net cashflow from financing activities 6 5( 8 62,495-,091 (14914 Cash and cash equivalent for year 2018 3,562,298,490 419,419,659 Cash and cash equivalent at 1 January, 2018 996,111,125 576,691,466 Cash and cash equivalent at 30 September, 2018 4 558,40 996,111,125 8 FEDERAL MMSTRY OF WATER RESOURCES, ABUJA 3RD NATIONAL URBAN WATER SECTOR REFORM PROJECT WORLD BANK CREDIT 54160 NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31ST DECEMBER, 2018 1 Fixed assets plant and Motorte Officel epnt veils Computr & Furniture equipment and fittings Total Cost e N N N At 1st January, 2018 1,087,142 156,440,1 0 6,046,246 2,592,083 166,165,571 Addition in the year 5 364,934,462 29,891,401 760,000 395,585,863 Accummulated at 31-12-2018 1,, 5 74 5 5 At97 1st3Jnuary 201 At Ist JanuaMh 2017 1 156,440,100 2,695,791 1,870,575 161,006,466 Addition in the year 1,087,142 - 3,350,455 721,508 5,159,105 Accummulated at 31-12-2017 1 ,142 156,440,100 6,046,246 25903 166,165,571 9 FEDERAL MIRSTRY OF WATER RESOURCES, ABUJA 3RD NATONL ""BM WATER~ SECTOR RtFOyROJC WORLD BANK IDA 54160 RPROJECT NOTES TO THE FMANCULATE[ET FOR TM PEROD ENDED 31ST DECEM ER,2018 2 For the year Accummuated Accummulated 2-Project related expenses 2018 2018 Expert technical assistance 1N 2017 Training and Workshop 172,120,664 338,154,496 2 PW running costs 37,859,722 305 166,033,832 Provision ofInfrast t 294,634,188 519,298,96 267,647,194 Bank charges participatig States 340,017,456 419,298,867 224,664,680 Opatioa s e204,583 9,683,466 79,666,010 Operational subvention to participating States 4,079,568 6,9,2 490,489 Com2munication and adverts 15,139,022 1,9,86 3,909,942 --864,055,202 1,69,270974 ,27 3 Current assets """Z4*,27=*=== Refund from IDA project 51290 Overpaid allowance (2,600,782) Double payment of tax 39,400 39,400 2,600,782 22,102,77 4 Cash at bank (Ss8calaco2,142,179 2,600,782 FSA special account 3 - Access Bank UK c/f A secial account 3 - Access Bank UK b/f (98,230,902 4,548,897,902 CBN Counterpart fund account b/f 9,511,713 9,511,713 230,779 CBN Couterpar fund ccountb/f ~L_OL46P,346 ______ 5 Current liabilities 3-6,9,9 10,880,346 Transfer from 'DA Project 51290 Tax not yet remitted 13,331, 227 Deposit 38,361,639 16,540,75 3,209,528 6 World bank releases World bank loan World bank drawndown credit 5,4,9 2 4,7125 o0o 595349,80 4,571,2so~ 6,0337,3 8,36,07,128 Other income 9,6 FGN - Counterpart fund 250000 Exess transfer from IDA project 51290 133,863,005 321, 8 187,95,03 Itestearned208 1 1,2-9 6,405,571 6,405,571 1,99,901,969,1759 39,769 10 8 Exchange reserve accounts Exchange gain/(loss) Balance at 31 December 16,478659 295,699952 279,221,293 16,47,659 295,699,952 27,21,9 9 Net CaSOW from operating activities Pund inflow in the year 470642 Fund outflow for operating activities in teya (4,0,22)2 chnestm z beore Working Capital changes3,856,569,020 Working capital changes Refund from IDA project 51290 Tax not yet remitted 2,600,782 Overpaid allowance 38,361,639 Double payment of tax (39,400.00) (Defcit/surPlus after worklag capital 102,7791 changes 3,895,389,262 11 FEDEMAL MINISTRY OF WATER RESOURCES, ABUJA 3RD NATIONAL URIBAN WATER SECTOR REFORM PROJECT WORLD BANK IDA 54160 TSE ACCESS BANK UK RECONCILIATION STATEMENT SPECIAL ACCOUNTr No. 00115012 APPENDIX TO THE FINANcIAL STATEMNTS 2018 2017 Balance as per bank statement at 31 December Reconciling items Add refund from IDA project 51290 8,548.17 8,548.17 Less unpresented payments - (1,789.20) Less expenditures met from the bal. b/f in the Zero Account (18,749.10) - 1 00.93) 6,758.97 Balance as per cash book at 31 December 14,865,671 ,224 12 FEDERAL~ MMNSTRY OF WATER RESOURCES, A]BIJA 3RD NATIONALJ U1MAN WATER SECTOR REFORM~ PROJECT WORLD BANK IDA 54160 R ZERAGE BAN PLC & CBN RECONCIAON STATEMVIENT ZERO ACCOUNT' Nos. 5900000953 & 0020097561037 APPENDIXj To THE FINANCAL STATEMENTS'~ 2018 2017 Spr D tatement - Heritage Bank Plc N N (5900000953) at 31 December Balance as per Bank Statement - Central Bank of N 13,685.10 13,689.10 (0020097561037) at 31 December 6,9. 5 , Nigeria Total r 9211_ 5,986,486.76 Total82,976.8 6,000,175.86 Reconciling items Amount utilised from tax not yet remitted Less unpresented payments 1,520,424.82 (1,589,716.00) (1,769,716.00) Balance 8 per cash book at 31 December 13,68-.0.,16.66 13 FEDERAL MINISTRY OF WATER RESOURCES, ABUJA 3RD NATIONAL UnAN WATER SECTOR REFORM PROJECT CBN COUNTER.PRT FUND DRAWDOWN ACCOUNTr WORLD BANK IDA 54160 CAN O 1ART FUND RECONCILIATION STATEMENT ACCOUNT~ NO- 0020293661139 APPENDIX TO THE FINANCIAL STATEMENTS 2018 2017 Balance as per Bank Statement - Central Bank of Nigeria at N N 31 ecufiem 8,487,155.59 10,823,173.84 Reconciling items Add transfer from IDA project 51290 13,331,227.10 Less unpresented payments (12,306,67o.0) 3,209,528.10 1,024,55710 ,12.56.00 Balance as per cash book at 31 December 14 FEDERAL MMNSTRY OF WATER RESOURCES, AIBUJA 3RD NATIONAL URBAN WATE SECTOR REFORM PROJECT WORLD BANK ]DA 54160 CUMMULATNE NAIRA TRIAL BALANCE APPENDIX TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31ST DECEMBER, 2018 For the year Accumulated Accumulated 2018 2018 2017 Computer & office equipment N N N Ompur&office u equpm t 29,891,401 35,937,647 6,046,246 Office furniture & fittings 760,000 3,352,083 2,592,083 Motor vehicle 364,934,462 521,374,562 156,440,100 Property, plant and equipment 1,087,142 1,087,142 Expert technical assistance 172,120,664 338,154,496 166,033,832 Training and workshop 37,859,722 305,506,916 267,647,194 Printing and stationeries - P3 10,621,423 16,065,046 5,443,623 Provision of I fructureto participating States 340.017,456 419,683,466 79,666,010 PIU running costs - PIU0174511,8,46 7,6 Commrunicatons ts - Piu 284,012,765 503,233,822 219,221,057 Communication and adverts 15,139,022 19,048,964 3,909,942 Operational subvention to participating States 4,079,568 6,939,238 2,859,670 Bank charges 204,583 695,072 490,489 Overpaid allowance 39,400 39,400 Double payment of tax ,00 ,00 Refund from IDA project 51290 2,102,779 2,102,779 Transfer from other project - IDA project 51290 (13,331,227) (16,540,755) (3,209,528) FSA special account 3 - Access Bank UK, balance b/ (985,230,779) -985,230,779 FSA sPeCial account 3 - Access Bank UK balance c0 4,548,897,902 4,548,897,902 Interest earned World bank drawdown credit (1,929,990) (1,969,759) (39,769) Tax not yet remitted (4,571,250,000) (5,407,968,128) (836,718,128) FGN - Counterpart fund contribution (38,361,639) (38,361,639) Bid proee (133,863,005) (321,818,208) (187,955,203) Bid proceeds (250,000) (1,500,000) (1,250,000) World bank advance - FSA (46,016,432) (46,016,432) CB u tud bank anvance 9,511- (595,349,802) (595,349,802) CB3N Counteqxirt fuznd account balance c/f 9,511,713 9,511,713 CBN Counterpart fund account balance b/f 1,834)() 08036 Excess transfer from IDA project 51290 (10,880,346) (0) 10,880,346 Exchange difference 6 (6,405,571) (6,97) (1,46 59) -295,69952) (292123 15 FEERAL MINITRy ,WAER 3RD,NAIONLTURB O WA RESOURCES, ABUJA NATIONAL URBAN WATER SECTORREPORMPROJECT WORLD~ BANK -IDA 54160REOM OJC CUEMATIVE DOLLAR TRL A APPENDIX TO THE A BALANCE FOR TE PERIOD ENDED 31ST DECEME142018 For tyai Accumulated Accumulated 2018 2018 21 Computer & Oice equipment $ 017 ture & fittings 80,809 96,092 15,282 Motor vehicle & 7,904 7,904 Et tecnical assistance 1,077,225 1,529,509 452,984 Training and workshop 526,794 1,130,113 603,319 Printing and stationerie 57,656 849,374 791,718 Priin o cture to Participating States 30,0 42,772 12,271 P1rus~ nn s~ e atcping tates 1,082,064 1,321,519 239,455 Communication and adverts 498,092 887,009 388,917 OPrTional subvention to participating States 7,812 20,362 Bakcags12,731 21,789 9,058 Ovepd allowance 360 1,926 1,566 Refund from IDA prUfect 51290 129 129 1,566 FSA special account 3 - Access Bank UK (8,548) 142569 ISA specia account 3 - Access Bank UK (4,9 14,865,679 3,48 I4tereA earned(324980 3,497 Replenishnents from World bank (6,327) (6,433) (106) Excess tfer from MA project 51290 (15,000,000) (17,746,709) (2,746,709) 'World bank credit - FSA 3 -(2, 399) (2,99) 0(21,036) 16