C. I V I' Th1CNI, C 11, 1 LNII) Ti K) AUDIT REPORT ON THE ANNUAL FINANCIAL STATEMENTS OF PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT AND PUBLIC SECTOR MODERNISATION PROJECT FOR THE YEAR ENDED 31 MARCH 2022 AUDITOR GENERAL P.O. BOX 502 MASERU 100 LESOTHO di GOVERNMENT OF LESOTHO MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT AND PUBLIC SECTOR MODERNISATION PROJECT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2022 Prepared in accordance with the Cash Basis of Accounting Method under the International Public Sector Accounting Standards (IPSAS) GOVERNMENT OF LESOTHO MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2022 Table of Contents 1. P R O JE C T IN F O R M A T IO N ............................ ...s........................................................................................................2 2. STATEMENT OF PROJECT MANAGEMENT RESPONSIBILITIES..............................................................SI6 3. REPORT OF THE INDEPENDENT AUDITORS ON THE PFMR.......................................................................7 4. STATEMENT OF RECEIPTS AND PAYMENTS FOR THE PERIOD ENDED 31 MARCH 2021 ................ 11 5. STATEMENT OF FINANCIAL ASSETS AND LIABILITIES AS AT 31ST MARCH 2021.............................12 6. STATEMENT OF CASHFLOW FOR THE PERIOD 31ST MARCH 2021 ........................................................13 7. STATEMENT OF COMPARATIVE EXPENDITURE BUDGET AND ACTUAL AMOUNTS..........................14 8. NOTES TO THE FINA NC IAL STATEM ENTS ...................................................................................................ATi.15 7 . 9 . P E N D IN G G B IL L S ......................................................................................................... ...........................,...... . .... 2 2 ANNEXURE 1 - VARIANCE EXPLANATIONS - COMPARATIVE BUDGET AND ACTUAL EXPENDITURE....23 ANNEXURE 2 - DETAILS OF UNPRESENTED PAYMENTS ...............................................................................24 ANNEXURE 3 - SUMMARY OF DIRECT PAYMENTS ....................................................................................... 25 ANNEXURE 4 - SUMMARY OF SPECIAL ACCOUNT ACTIVITIES......................................................................26 F7 ANNEX URE 5 - SUM M ARY O F RFUN DS ............................................................................................................ 27 ANN EXURE 6 - FIXED ASSETS REG ISTER ............................................................................................................ 28 H 71 GOVERNMENT OF LESOTHO MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2022 1. PROJECT INFORMATION 1.1. Name and registered office Name: The project's official name is the Public Financial Management Reform Project and Public Sector Modernisation Project. Objective: The key objective of the project is to support the implementation of both civil service and public financial management reforms. Address: Room 3044 3rd floor Finance House Government Complex Maseru Lesotho Contacts: Libeo Monethi (Mr.) Project Coordinator (a.i) Assistant Monitoring & Evaluation, & Quality Control Tel: (+266) 28324748 128328974 Fax: (+266) 22310281 1.2. Project information Project Start Date: The PSM project started in 25th May 2016, PFMR project started in April 2014 Project End Date: PFMR project end date is 30th June 2021 and PSM project end date is 30th November 2021 (with four months grace period) Project Manager: Mr Libeo Monethi 1.3. Project Overview Department of the The project is under the supervision of the Government of Lesotho, Ministry of project Finance, Planning Unit. 2 GOVERNMENT OF LESOTHO MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2022 Project background and The Public Financial Management (PFMR) Secretariat was set up within the 7 strategic goals Ministry of Finance under the Planning Unit to support the coordination and reform across a wide range of the stakeholders/components and ensure that harmony amongst different components is maintained. Underpinning the reform priorities adopted by government in the Public Financial Management information, budget execution and financial accountability, the Government of Lesotho is supported by the African Development Bank (ADB), World Bank (WB), and European Union. To improve the quality and timeliness of public financial management, the EU drew the Reform Action Plan (PFMRAP) (2012-2017/18) to implement the Public Financial Management Reforms across eight (8) Components with leaders nominated for each department and agency involved in the reform project. The PFMR Secretariat support these two key projects: A. Public Sector Modernisation Project (PSM) - USD 10m This is a World Bank funded project which was approved in May 2016/17 and involves four components: i) Strategic Planning and Fiscal Management; ii) Strengthening the Human Resources Management; iii) Improving Statistical Capacity and iv) Strategic Implementation Support. For purposes of these Financial Statements, the project is treated as component 9 following the order of the components 1-8 under the PFM Reform Project. B. The Public Financial Management Reform Project (PFM) The PFM Reform process is supported by three Development Partners as follows: 1. The World Bank - USD 5.5m which covers: - Component 5 - Accounting and Fiscal Reporting fully compliant with the regulatory framework and accounting standards. The PFM World Bank support was concluded in June 2019. 2. The African Development Bank - USD 3.8m which covers: - Component 4 - The internal control Framework is strengthened to ensure operational efficiency and effectiveness. - Component 6 - Public Procurement aligns with International best practice in efficiency and transparency. 3 GOVERNMENT OF LESOTHO MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2022 - Component 7 - External Audit and Parliamentary oversight and scrutiny activities are compliant with INTOSAI standards and best practices. - Component 8 - Governance and institutional Management of PFM Reforms improved to facilitate ownership, monitoring and evaluation of progress. 3. The European Union The support from EU was in the form of Financial and Technical Assistance managed by the EU, and covered the following components, EU support was concluded in June 2018: - Component 1- PFM Regulatory Framework updated to underpin PFM Reforms. - Component 2 - Transparency and effectiveness of policy orientation of the budget assured. -Component 3 - Cash flow forecasts a major determinant of internal debt and financial Investment. The support arrangement under this component involves direct funding of the IMF Technical Assistance by the EU. - Component 8 - Governance and institutional management of PFM Reforms improved to facilitate ownership, monitoring and evaluation of progress. Current situation that The project was formed to support the coordination across a wide range of the project was formed stakeholders to ensure that harmony is maintained in the following areas: to manage (i) Public Sector Modernisation Project (PSM); and (ii) The Public Financial Management Reform Project (PFM) Project duration The PSM project started on 25th May 2016 and is expected to be completed in 30 November 2021. The PFM project was started in May 2014 and was completed in 30th June 2021 1.4. Bankers The following are the bankers for the current financial year: 1, Central Bank of Lesotho 2. Standard Lesotho Bank 3. First National Bank Lesotho 1.5. Auditors The project is audited by the Office of the Auditor General 4 GOVERNMENT OF LESOTHO MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2022 1.6. Funding summary The Project is multi funded; below is the summary of key funders for both projects: * Public Sector Modernisation; and * Public Financial Management Reform The Public Financial Management Reform Secretariat (PFMRS) maintains accounts in respect of funding provided by donors: ADB, IDA and EU). Source of funds Donor Commitment Donor currency (i) Grant Grant from The African Development Bank US$ 3.8 Million Funds from The World Bank (lFMS) US$ 5,5 Million Funds from The World Bank (PSMP) US$ 10 Million Funds from The European Union Note 1 (ii) Counterpart funds Government of Lesotho Note 2 Note 1: The European Union support was in the form of Financial and Technical Assistance managed by the EU. Note 2: The Government of Lesotho commitment is in the form of Institutional Support including payment of project related salaries and related costs, and taxation payments to tax authorities., 5 GOVERNMENT OF LESOTHO MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2022 2. STATEMENT OF PROJECT MANAGEMENT RESPONSIBILITIES The Director for the Planning Unit in the Ministry of Finance and the Project Coordinator for the PFMR Secretariat are responsible for the preparation and presentation of the Project's financial statements, which give a true and fair view of the state of affairs of the Project for and as at the end of the financial year (period) ended on March 31, 2022. This responsibility includes: (i) maintaining adequate financial management arrangement and ensuring that these continue to be effective throughout the reporting period; (ii) maintaining proper accounting records, which disclose with reasonable accuracy at any time the financial position of the Project; (iii) designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of the financial statement, and ensuring that they are free from material misstatements, whether due to error or fraud; (iv) safeguarding the assets of the Project; (v) selecting and applying appropriate accounting policies; and (vi) making accounting estimates that are reasonable in the circumstances. The Director for the Planning Unit in the Ministry of Finance and the Project Coordinator for the PFMR Secretariat accept responsibility for the Project's financial statements, which have been prepared on the Cash Basis Method of Financial Reporting, using appropriate accounting policies in accordance with International Public Sector Accounting Standards. The Director for the Planning Unit in the Ministry of Finance and the Project Coordinator for the PFMR Secretariat are of the opinion that the Project's financial statements give a true and fair view of the state of Project's transactions during the financial year/period ended 31st March, 2022 , and of the Project's financial position as at that date. Director for the Planning Unit in the Ministry of Finance and the Project Coordinator for the PFMR Secretariat further confirm the completeness of the accounting records maintained for the Project, which have been relied upon in the preparation of the Project financial statements as well as the adequacy of the systems of internal financial control. Director for the Planning Unit in the Ministry of Finance and the Project Coordinator for the PFMR Secretariat confirm that the Project has complied fully with applicable Government Regulations and the terms of external financing covenants, and that Project funds received during the financial year/period under audit were used for the eligible purposes for which they were intended and were properly accounted for. Approval of the Project financial statements The Project financial statements were approved by the Director for the Planning Unit in the Ministry of Finance and the Project Coordinator for the PFMR Secretariat on _2022 and signed by them. PROJECT COORDINATOR (a.i) DIRECTOR- ANNING UNIT (a.i) MINISTRY OF FINANCE MINISTRY OF FINANCE 6 OFFICE OF THE AUDITOR - GENERAL P.O. BOX 502, MASERU 100 LESOTHO PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT AND PUBLIC SECTOR MODERNISATION PROJECT - MINISTRY OF FINANCE FOR THE YEAR ENDED 31 MARCH 2022 Opinion JEO & Associates, under section 24 (1) of the Audit Act have audited the financial statements of Public Financial Management Reform Project and Public Sector Modernisation Project ("Project") set out on pages 11 to 33, which comprise the statement of Cash Receipts and Payments for the year ended, 31 March 2022, Statement of Financial Assets and Liabilities, Statements of cash Flows and the Statement of Comparative Expenditure Budget and Actual Amounts for the year then ended, as well as notes to the financial statements comprising a summary of significant accounting policies and other explanatory information. In my opinion, the accompanying financial statements present fairly, in all material respects, the financial performance and cash flows of the Project for the year ended 31 March 2022, in accordance with International Public Sector Accounting Standards (IPSASs). Basis for Opinion I conducted my audit in accordance with International Standards on Auditing (ISA). My responsibilities under those standards are further described in the Auditor's Responsibilities for independent of the Organisation in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to audit of the financial statements in Lesotho, and I have fulfilled my other ethical responsibilities in accordance with these requirements and the IESBA Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Key Audit Matters Key audit matters are those matters that, in my professional judgment, were of most significance in my audit of the financial statements of the current 4th floor * Finance House * High Court Road * Maseru * Lesotho Telephone (+266) 22323904/22314247 * Fax (+266) 22310366 7 period. There were no key audit matters identified during the course of audit. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with IPSASs, 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. In preparing the financial statements, management is responsible for assessing the Project's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Project or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Project's financial reporting process. Auditor's Responsibilities for the Audit 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 audit 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 ISA 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 an audit in accordance with ISA, 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 7 r From the matters communicated with those charged with governance, I determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. I describe these matters in my audit report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, I determine that a matter should not be communicated in my report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. MAFANI C. MASOABI (MRS) DATE: 20 SEPTEMBER 2022 ACTING AUDITOR-GENERAL OF1OF HE AUItlpij- * UITOR MA2R 10 Esor202 30 5 no 30 0 MAEn GOVERNMENT OF LESOTHO MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2022 4. STATEMENT OF RECEIPTS AND PAYMENTS FOR THE PERIOD ENDED 31 MARCH 2022 7Head ThirdII Treasury Total Total I Notes Controlled Accounts Party 2022 2021 Cumulative Accounts Accounts RECEIPTS LSL LSL LSL LSL LSL LSL Transfer from Government of 8.2 48 994 449 12 064 912 - 61 059 361 4234 009 92 739 290 Lesotho Proceeds from Domestic and Foreign 8.3 24563 512 - 21 430 24 584 942 42 526 649 262 449 125 Grants Miscellaneous 30 458 - - 30 458 214 732 209 202 Receipts 8.4 TOTAL RECEIPTS 73 588 419 12 064 912 21 430 85 674 761 46 975 390 355 397 617 PAYMENTS Compensation of 8.5 - 4 536 020 - 4 536 020 4 118 085 43 945 445 Employees Purchase of Goods 8.6 22 681 873 7 528 892 - 30 210 765 7 238 750 72 794 668 Purchase of Services 8.7 54 125 623 - 21 430 54147053 29755097 220 248 493 Payment for 8.8 349 578 - - 349 578 602 912 9 737 584 Operating Costs Payment for Works 8.9 - - - - - 842 735 Transfers to Funder 8.10 2 569 - - 2 569 25 376 3 251 952 TOTAL PAYMENTS 77 159 643 12 064 912 21 430 89,245 985 41 740 221 350 820 877 Foreign Gains/Losses 8.11 829 938 - 829 938 -3099 883 Net Increasel Decrease In Cash -2741 286 2135286 And Cash Equivalent Cash And Cash 7 533 246 5 397 960 Equivalent At Beginning Of The Year Net Increase! -2741 286 2135286 Decrease In Cash And Cash Equivalent Cash at the end of 8.12 4791960 7533246 the Year I I The accounting policies and explanatory notes to these financial statements are an integral part of the financial statements. 11 7 7 7t GOVERNMENT OF LESOTHO MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2022 5. STATEMENT OF FINANCIAL ASSETS AND LIABILITIES AS AT 31ST MARCH 2022 Head Note Contrlead Treasury Third Party 2022 2021 Note Controlled Accounts Accounts Accounts_ LSL LSL LSL LSL LSL REPRESENTED BY: Cash and Cash 7533246 7533246 5397960 Equivalents B/Fwd Total Receipts 73 588 419 12 064 912 21 430 85 674 761 46 975 390 Total Payments (77 159 643) (12 064 912) (21 430) (89 245 985) (41 740 221) Foreign Exchange 829 938 - - 829 938 -3 099 883 Difference NET FINANCIAL 4 791 960 - - 4 791 960 7 533 246 POSITION Bank Balances 8.12 4791 960 - - 4791 960 7 533 246 TOTAL FINANCIAL 4 791 960 - - 4 791 960 7 533 246 ASSETS 12 I GOVERNMENT OF LESOTHO MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2022 6. STATEMENT OF CASHFLOW FOR THE PERIOD 31ST MARCH 2022 Head Third Controlled Treasury Party 2022 2021 , Accounts , Accounts Accounts LSL LSL LSL LSL LSL CASHFLOW FROM OPERATING ACTIVITIES Receipts for Operating Income Transfer from Government of Lesotho 48994449 12064912 - 61 059361 4234009 Proceeds from Domestic and Foreign Grants 24563512 - 21430 24584942 42526649 Miscellaneous Receipts 30458 - - 30458 214732 Payments for operating expenses Compensation of Employees - 4536020 - 4536020 4118085 Purchase of Services 54 125 623 - 21 430 54 147 053 29 755 097 Payment for Operating costs 349 578 - - 349 602 912 578 Payment for Works - Transfers to Funder 2569 - - 2569 25376 Net Cash Flow from Operating Activities 19113218 7528892 - 26639541 12473920 CASHFLOW FROM INVESTING ACTIVITIES Acquisition of Assets 22 681 873 7 528 892 - 30 210 765 7 238 750 Net cash flows from Investing Activities 22 681 873 7 528 892 - 30210765 7238750 CASHFLOW FROM BORROWING ACTIVITIES Foreign Gains/Losses 829 938 - - 829 938 (3 099 883) Net cash Flow from Financing Activities 829 938 - - 829 938 (3 099 883) NET INCREASE IN CASH AND CASH -2741 286 - - -2741 286 2 135 286 EQUIVALENT Cash and Cash Equivalent at BEGINNING of the 7 533 246 - - 7 533 246 5 397 960 year Cash and Cash Equivalent at END of the year 4 791 960 - - 4 791 960 7 533 246 71 13 7 7' GOVERNMENT OF LESOTHO MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2022 7. STATEMENT OF COMPARATIVE EXPENDITURE BUDGET AND ACTUAL AMOUNTS Budget % of Approved Actual.Utlsio Budget per Component Utilisation Utilisation Budget Expenditure Variance to Variance Budget Component 6 325,000 235,650 -89 350 27% Component 8 8919289 8749636 -169 653 2% Component 9 95016339 80260699 -14755640 16% Total Payments 104 260 628 89 245 985 -15 014 670 14% Transferred to funder 2 569 2 569 - - Total 104 263 197 89 248 554 -15 014 670 14% 17% of Budget Approved Actual Utilisation Cost per nature Util isatioin Vainet Budget Expenditure Variance Variance to Budget Purchase of Goods 42,180,000 30210765 -11 969 235 -28% Purchase of Services 56 946 797 54 147 053 -2 799 744 -5% Payment for Operating Costs 533,831 349 578 -184 253 -35% Compensation of Employees 4,600,000 4 536 020 -63 980 -1% Total Payments 104 260 628 89245985 -15 014 670 14% Transferred to funder 2 569 2 569 - Total 104263197 89248554 -15014670 14% Note: The period of the Approved Budget for all donors is from 1st April 2021 to 31st March 2022 and the budget is classified in accordance with the expenditure components and categories. The significant budget utilisation/performance differences in the last column are explained in Annexure 1. 171 14 1 F GOVERNMENT OF LESOTHO MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2022 8. NOTES TO THE FINANCIAL STATEMENTS The principal accounting policies adopted in the preparation of these financial statements are set out below: 8.1 Statement of compliance and basis of preparation The financial statements have been prepared in accordance with and comply with International Public Sector Accounting Standards (IPSAS) - Cash Basis. The standard provides that when an entity adopts cash basis IPSAS for the first time, the reporting entity is provided with a transitional provision of up to two years' period from the effective date of adoption, to adopt all its accounting policies. The Secretariat adopted the cash basis IPSAS on 1st April 2017. The financial statements are presented in Lesotho Loti, which is the 4unctional and reporting currency of the Project and all values are rounded to the nearest one Maloti In order to satisfy the reporting requirements of the donors some transaction may be reported in foreign currencies. The accounting policies adopted have been consistently applied to all of the years presented. The financial statements have been prepared on the cash basis following the Government's standard chart of accounts. The cash basis of accounting recognises transac:ions and events only when cash is received or paid out by the Project. Recognition of income and expenses The Project recognises all income from the various sources when the event occurs and the related cash has actually been received by the Project. In addition, the Project recognises all expenses when the event occurs and the related cash has actually been paid out by the Project. ii. In-kind donations in-kind donations are contributions made to the Project in the form of actual goods and/or services rather than in money or cash terms. These donations may include vehicles, equipment or personnel services. Where the financial value of in-kind donations can be reliably determined, the Project includes such value in the statement of receipts and payments both as revenue and as an expense in equal and opposite amounts; otherwise, the donation is not recorded. 15 71 GOVERNMENT OF LESOTHO MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2022 iii. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and cash at bank. Bank account balances include amounts held at the Central Bank of Lesotho and at various commercial banks at the end of the financial year/period. For the purposes of these financial statements, cash and cash equivalents also include short term cash imprests and advances to authorised public officers and/or institutions which had not been surrendered or accounted for at the end of the financial year/period. iv. Banking arrangements The Accountant-General authorizes the opening and use of a Designated Account (as part of the GOL Development Fund), denominated in United States Dollars (US$) and Euro, at the Central Bank of Lesotho (CBL) to receive the funds from IDA and ADB, respectively. Local project expenditures are paid from a designated commercial bank account. Foreign currency project expenditures are paid directly from the Designated Account at the CBL. Funds flow arrangements Upon effectiveness of the financing agreement and submission of a withdrawal application, the Bank disburses an initial amount not exceeding US$ 200,000 based on the work plan for three months. Subsequent disbursements are made on the basis of withdrawal applications and Statements of Expenditures. Direct Payments a) The Direct Payment disbursement method, involves direct payments from the loan/grant account on behalf of the Project to the suppliers of goods and services that have a value above a set threshold; b) The Reimbursement disbursement method, whereby the government/donor makes payments for eligible expenditures and submits withdrawal application for reimbursement. Third party payments A schedule of Direct payments/ Payments by Third Parties made under the different financing agencies has been provided as ANNEXURE 3 and have been denoted in functional currency, classified in their respective components and categories. The amounts classified as direct payments [7, have also been treated as receipts from the donors who made such payments. Other Heading Descriptions * Head Controlled Accounts: Transactions and Balances controlled by Spending Unit / Project Implementing Unit (PIU) * Treasury Accounts: Transactions Managed through the IFMIS and The Treasury controlled bank accounts that comprise the core Treasury Single Accounts (TSA) * Third Party Accounts: Bank Accounts and Transactions that are controlled by Third Party (e.g donors) -Direct payments 16 H7 1n: GOVERNMENT OF LESOTHO MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2022 V. Pending bills Pending bills consist of unpaid liabilities at the end of the financial year/period arising from contracted goods or services during the year/period or in past years/periods. As pending bills do not involve the payment of cash in the reporting period, they are simply disclosed as an Annex to the financial statements. When the pending bills are finally settled, such payments are included in the statement of receipts and payments in the year in which the payments are made. Vi. Budget The budget is developed on the same accounting basis (cash basis), the same accounts classification basis, and for the same period as the financial statements. The period of the approved budget for all donors is from 1st April 2021 to 31st March 2022 and the budget is classified in accordance with the expenditure components and categories. A high-level assessment of the Project's actual performance against the comparable budget for the financial year under review has been included in an annexure to these financial statements. Vil. Exchange rate differences The accounting records are maintained in the functional currency of the primary economic environment in which the Project operates, Lesotho Maloti. Transactions in foreign currencies during the year/period are converted into the functional currency using the exchange rates prevailing at the dates of the transactions. Any foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statements of receipts and payments. The rate used for conversion of Maloti to dollars or euros during the year, is that which was prevailing on the date when the dollar or euro amount was transferred from the Special Account at the Central Bank of Lesotho (CBL), to the Maloti account, and for reporting purposes that rate is used until that batch of 7l funds is exhausted. Foreign Direct Payments/ Payments by Third parties on behalf of the project were translated using the spot exchange rate, i.e. the rate reported as value date by the donor. 17 GOVERNMENT OF LESOTHO MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2022 Exchange rate differences (continued) The Employee compensation payments made by The Government of Lesotho were translated at the rate ruling on the day the payment was made. In cases where the rate for 25th was not provided by the CBL, the rate closest to the 25th was used. The foreign denominated bank balances at year-end were translated at the closing rate provided by the Central Bank of Lesotho. The exchange rate as at 31/03/2022, (being the last working day in March 2022) was USD 1: LSL14.4667 and the closing rate for the Euro was EUR 1: LSL16.1605. Gains and losses on exchange are dealt with in the Cash Receipts and Payment Statement. Vili. Comparative figures Where necessary comparative figures for the previous financial year/period have been amended or reconfigured to conform to the required changes in financial statement presentation. iX. Subsequent events There have been no events subsequent to the financial year/period end with a significant impact on the financial statements for the year ended March 31, 2022. r GOVERNMENT OF LESOTHO MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2022 8.2 RECEIPTS FROM GOVERNMENT OF LESOTHO These represent counterpart funding and other receipts from government as follows: 2022 2021 Cumulative LSL LSL to-date Government of Lesotho - Ministry of Finance 48 994 449 608 030 67 840 099 Grants received as direct payment 12064912 3553979 17370757 Total 61 059361 4234009 85210856 8.3 PROCEEDS FROM DOMESTIC AND FOREIGN GRANTS During the 12 months to 31 March 2022 we received grants from donors as detailed in the table below: Amount received in Grants Received donor received as direct Name of Donor currency in cash payments* Total in LSL 2022 2021 Cumulative EURIUSD LSL LSL LSL LSL to-date Grants Received from Multilateral Donors Grant from The African Development Bank 1 500 - 21 430 21 430 7 528 355 46 392 337 Funds from The World Bank (IFMS) - - - - - 61 656 064 Funds from The World Bank(PSMP) 1 682 324 - - 24 563 512 34 998 294 149 148 999 Funds from The European Union - - - - - 5 230 295 Total 24584942 42526649 262449125 * The direct payment grants represent payments for goods and services done directly by the donor on behalf of the project. - Third Party controlled Accounts 8.4 MISCELLANEOUS RECEIPTS V 2022 2021 Cumulative LSL LSL LSL 311-106 Unused Funds - PSMP - 189356 209202 311-109 Refunds/Reimbursables 30000 - 30518 311-110 Unused Funds - PFM - - 5365 311-112 Other Incomes 458 25376 77818 30458 214732 273862 19 GOVERNMENT OF LESOTHO MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2022 8.5 COMPENSATION OF EMPLOYEES m1 2022 2021 Cumulative LSL LSL E m p lo y e e c o m p e n s a t io n 4 5 3 6 020 4 1 1 8 085 4 3 9 4 5 4 4 5 4 536 020 4118085 43945445 8.6 PURCHASE OF GOODS 2022 2021 Cumulative LSL LSL to-date Computer Equipment 30 210 765 489 581 48 855 855 Office Equipment - 6749169 16891 327 Motor Vehicles - - 7 047 486 30210765 7238750 72794668 8.7 PURCHASE OF SERVICES 2022 2021 Cumulative LSL LSL to date Consulting and related services 49 936 289 29 642 571 181 430 770 Software licensing related services 4 005 675 - 13 450 584 Training and related services 205 088 112 526 24 411 116 Other professional services, risk, and other - - 956 023 54147053 29755097 220 248493 8.8 PAYMENT FOR OPERATING COSTS 2022 2021 Cumulative 7 LSL LSL to-date Rental - Vehicles for hire and fuel - 19 129 3 397 037 Payment of other operating costs 349 578 583 783 6 340 547 349578 602912 9737584 20 GOVERNMENT OF LESOTHO MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2022 8.9 PAYMENT FOR WORKS 2022 2021 Cumulative LSL LSL to-date Demolish/Construction of Fire proofing wall 490 000 Upgrade of cooling system and other costs 352 735 842 735 8.10 TRANSFER TO FUNDER During the 12 months period to 31st March 2022, we transferred funds to the funding entities as shown below: 2022 2021 Cumulative to date LSL LSL LSL Transfers to the Funder - European Union - - 2002103 Transfers to the Funder - Government of Lesotho 2569 25376 1 247280 Transfers to the Funder - World Bank - - 167199 TOTAL 2569 25376 3251 952 8.11 FOREIGN EXCHANGE GAIN/LOSSES 2022 2021 LSL LSL Exchange rate losses/gains (net) 829 938 (3 099 883) 829 938 (3 099 883) 21 r'n GOVERNMENT OF LESOTHO MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2022 8.12 CASH AND CASH EQUIVALENTS 2022 2021 LSL LSL Bank Accounts Foreign Currency Accounts PFMRS Special Account (EUR) - ADB. A/C No.:100008-EUR-9405-02 3 629 3948 PSMP Special Account (USD)-IDA A/C No.:100008-USD-9405-26 16 566 7 276 408 Total Foreign Currency balances 20195 7280356 Local Currency Accounts PFMRS Local Account (LSL) - ADB. A/C No.:0140075458301 - 4215 PFMRS Local Account Lesotho Govt. A/C No.:0140091509901 4 770 384 43931 PSMP Local Account (LSL)-IDA A/C No.:62676074869 1 381 174 745 Total local currency balances 4 771 765 222 891 Accounts Receivable - (Recovery of Funds from Suppliers) - 30 000 Total Cash and Cash Equivalents 4 791 960 7 533 246 The Foreign Currency Bank Accounts are translated at the following closing rates at year end: Exchange Rate: LSL/USD = 14.4667 (2021: 14.9176) Exchange Rate: LSL/EUR = 16.1605 (2021: 17.4881) Note: In the prior year Accounts Receivable was separately disclosed in Annexure 2. 9. PENDING BILLS 2022 2021 UNPRESENTED PAYMENTS - Annexure 2 LSL LSL Local Accounts 397 628 USD USD Special Accounts - 22 GOVERNMENT OF LESOTHO MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2022 ANNEXURE I - VARIANCE EXPLANATIONS - COMPARATIVE BUDGET AND ACTUAL EXPENDITURE Budget % of Approved Actual Utigisaton Budget per Component Utilisation Utilisation Budget Expenditure Variance to Variance Budget Component 6 325,000 235,650 -89 350 27% Component 8 8919289 8749636 -169 653 2% Component 9 95016339 80260699 -14755640 16% Total Payments 104 260 628 89 245 985 -15 014 670 14% Transferred to funder 2569 2569 - - Total 104263197 89248554 -15014670 14% % of Budget Approved Actual Utilisation Cost per nature Utilisation Budget Expenditure Variance to Variance Budget Purchase of Goods 42,180,000 30210765 -11 989 235 -28% Purchase of Services 56946797 54 147053 -2799744 -5% Payment for Operating Costs 533,831 349 578 -184 253 -35% Compensation of Employees 4,600,000 4536020 -63 980 -1% Total Payments 104 260 628 89 245 985 -15 014 670 14% Transferred to funder 2 569 2 569 - - Total 104263197 89248554 -15014670 14% BUDGET VARIANCES Variances were mainly due to the following Reasons: Significant delays in the commencement of the entire project implementation process from inception resulted in ambitious plans in later years in order to meet the targets. Delays in execution of activity plans resulted in most activities lagging behind schedule due to prioritization preferences of beneficiaries. Postponement of planned activities causing major delay on project implementation 23 GOVERNMENT OF LESOTHO MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2022 ANNEXURE 2 - DETAILS OF UNPRESENTED PAYMENTS Account Bank Account 2022 2021 Local Account LSL LSL AfDB 111-101 AfDB LSL-0140075458301 PSM 111-106 IDA LSL-62676074869 - GOL 111-108 GoL LSL-0140091509901 397628 Special USD USD Account PSM 111-107 IDA USD-100008-USD-9405-26 - Fl2 24 GOVERNMENT OF LESOTHO MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2022 ANNEXURE 3 - SUMMARY OF DIRECT PAYMENTS 2022 2021 Government of Lesotho LSL LSL Component 8 Employee Costs 4536020 3553979 Component 9 Goods 7 528 892 Total 12064912 3553979 African Development Bank USD USD Component 4 Services - 11,994 Component 6 Services - 82 168 Component 7 Goods - 159 600 Services - 25 313 Component 8 Goods - 109 309 Services 21 430 68 125 Total 21 430 456 508 The World Bank USD USD Component 5 Goods Services Component 9 Goods - Total 25 GOVERNMENT OF LESOTHO MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2022 ANNEXURE 4 - SUMMARY OF SPECIAL ACCOUNT ACTIVITIES CURRENCY OF SPECIAL EURO USD USD ACCOUNT ADB PFMR-WB PSMP-WB 2022 2021 2022 2021 2022 2021 ADVANCE TO SPECIAL ACCOUNT AfDB Funds - 347847 - IDAl Fr1dQs-IFMiIQ -- IDA- Funds- PSI.11P - i-- .42 243 995 Total - 347 847 - - 1682324 999995 Add: REPLENISHMENTS(Cumulative) ADB - - - IDA-PFMR - - IDA-PSMP- - - 487773 2080179 Sub-total (b) - - - - 487 773 2 080 179 TRANSFERS TO LOCAL CURRENCY ACCOUNTS ADB - 97800 - IDA-PFMR - IDA-PSMP - - -20000 Sub-total (c) - 97 800 20000 Less: OTHER PAYMENTS 'Dier pa. nients 24947-6 -- 2 16t46250 Bank charges 345 - - 1 50' 2 314 Sub-total (d) 249 821 - - 2168952 2572401 Net Designated Account 226 - - 1 145 487 773 26 I GOVERNMENT OF LESOTHO MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2022 ANNEXURE 5 - SUMMARY OF REFUNDS Account Accounts Receivable 2022 2021 LSL LSL 1, Accounts Receivable - ( Recovery of Funds from - 30 000 Suppliers) 7 30000 Summary of amounts receivable from suppliers that were inaccurately paid included in the cash and cash equivalents. 72 r 27 GOVERNMENT OF LESOTHO MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2022 'SS4VT29 REG STE79,' Z i' Mi i. ll În-n- bl1. ? P aa PDveTs 'cc.. s r.. L'"-I.... '' .: ? ."I• .N r,iä 4" • •" .. " i. .Z..'"...u II. Ir..I.J |,J S_ I~ ~ SI w. - . ·i. y Iný..- ..... W D..... ID PSMPDSK03 Crde51 A & NIA 06.072017 21 568,40, Finrnce Housc 3R io PM - WE - PedeosIal Floor Room' S>orc [DA PSMPDSKOO4 WyCilr N/A 05.09.2017 285960,00 A frica H-ouse Rellico Ledluku RF-W PSMPD005 uc k N/A 05.09.2017 7940,0b Afric Hous Rofikse LeduktI fDA 1 [l " .. . huu .. *a i. E '- .. •i"io . ..1. . . 1. .- 1. . Munngerini PSMPLco" Work:tn> NA 05.09.2017 7,50,00 AriM Hou R1iloc LWduku i WE Credloc IDA AdriniOtrative [PSMP - WI-: PSMPFLCOO4 Workstation with N/A 05.09.207 7-42,00 Africn House Rofilo Leduka MCbin.t Snrge ~ 1/ k C00*9 ir Riloll 11 P M -il WB - PSMPFC 1005 hicDo N/A 05.07.2017 6 945,00 Afri.... .os RuiM"11dukai 11DA Gov. Compiex I,/Back C-hr Fi-nace ous> 2 [ 3. psM - WE - dSMPCH RO2 IfQi 043 N,A 06.07.2017 DE9,00 Floor Ru,,r 3044 Thel Mh I [DA "l_______ Grecn Gov. Comupiex >'PSMP'CH R02 N/142EA 06.07.2017 2 590,00 Treliso Makorn'ID Gov Comple H 1G k LeoN-,07,217 29 Fin2n5c I 3rdI PSMP - WE - Char 042 Flk.r Ruom 3044 IDA Gav. compl-x Hä... L-clw jinricc 2.-d [PSMp - WII - PSMPCH>R11Hhlck Ld;Ie E/A 06.07.2017 2591,00 Tvcpio Lebl,u Cflait 042 Niie Room,0F, ,[k l 30;44 2.m b iIDA Oirýen H/Ick pSM- _ w1 - PSMPCHROOS Execulivo NrA 0.07.2017 6 77M,40 Af-ia- House Rctilvp L.daka DA L-nther Chalr Cý/B3ack P lSMPl - WI3 - PSMPCIIROO6 1xccuivc NA 06.07.2017 6778,40 AIi'ica llome Reliloc Luuk I WA Lether Chak PSMPCHR1x37 B N,A K6.K7.2017 12 000. A-ica 1use Reilo L.duka i PsMPC:11~ miighB-k N,A 05.09.2017 2 30,00 A1.ila House Riilo Lcukn PSMPCiIRD09 M.mi Higl> Bock NrA 05.09.2017 2 830,00 Atricu P-lous, R.ilo L-luka PSMP - WE - PSMP - WB3 - PSMCH .,i H ighi Buclk NMA 05.09.2017 2 %8 30,0C0 AffH-a Ho.us. R.11lo- L.dukuaQ Ps1CH11 cluci ID Roll Mc2 i aHigh B4ck NiA 05.09.2017 2 830,00 Ai H llous > Rilow Ldika FMu WE- Clvi,1. IDA PSMPCHR012 M rd isBock N;A 05.09.2017 2 830,00 Africa ioc Roriloc L Idukn DA on-rd Yktoc i :'SMP'- WE- PSMPCHIdR0d3 NA 05,09.2017 I 190,00 'Al-lo Hous RAoc ldu Ilka psmpc-1R<014 C.n- d it N;A 05,09,201L7 1 (90,0Q Ar Hu R1..sIflI- L lsmu,a IDA Chnir Onoseod VioroPSMPF- WB-. PSMPCVRk1 N;A 05.09.2017 t >90,00 Afrien House Rloie Leduka piD Ck;ir ____ IDA Cuncrnl ietu> [SMP' - WB - PSMPCHR07Cnvd Vir N,A 05.09.2017 l L90,00 A ric r-ou, Reflic LleukanlM PSP111 Climir [_______ DA PSMPlCHR017 ConId Viors N;A 05.09.20 17 I 190,00 A&ien Hious. kflileo Lcduka PSMP WB ich-il,____ IDA Ca oncord VisnL.-SMP - WB - PsMPCIHROI Clird NA 05.09.2017 1 190,00 Africa [olue Renhlco Lodukn IDA SMCI01Ccncrd Nito 05,09,2017 1>90,00 AIcuIen Holilo 1-.kl SM Chlair IDA. .. S SMP - WB - PSMPCHR020CnrVir NA 05.09.2>17 1 190,0 Africn Huase Rfll», Leduku I Chai GOVERNMENT OF LESOTHO MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2022 ASSE TS REGISTER CDw_ Dle.qP - SLi-.iu-t U t1uancJed By| P.\MPEIID IAL LIIARD DRI\ E PSMP- WB- PSMPE-ID002 Transecntd 2T3 E 27.10.2017 4 100,00 Africa House R.Leduka IDA PSMP - WB3- PSMPEHDO03 Transcend 2TB E 27.10.2017 4 100,00 Africa House R.Leduka IDA PSMPEHD004 Transcend 2TB E 27.10.2017 4 100,00 Africa -ouse R.Leduka IDA W13 - TsPSMP WB- PSMPEHDOOS Transcend 2TB E 27.10.2017 4 100,00 Africa House R.Leduka IDA WB - 1PSMP - WB - PSM4PEH-D006 Tra nscend 2BE 27J10.2017 4 0,0Africa H-ouse R.Leduka ID PSMPEHD07 T27,10.2017 4 100,00 Africa House R.Leduka IA FPSMPEHD008iTranscend ITBE 03.09.2020 1___ ________ 300,0 Rom 044 oF .Ta ID PSMP - WB - PSMPEHDOO Transcend lTB 03.09.2020 1 300,00 Room 3044 MoF Ta IDA fl ___ _ _ ___ ________ __ ___MOF . PSMP - W PSMPEHDO09 Transcend IT13 E 03.09.2020 1 300,00 Room 3044 MoF Ti.Mohlejane IDA 1,PSMP- WB- PSMPEHDI01 Transcend ITB E 03.09.2020 1 300,00 Room 3044 MoF Ish.Mohloai IDA PSMP- WB- PSMPEHDOI2 TranscendITBE 03.09.2020 1 300,00 Room 3044 MoF Libo. M IDA 11 PSMP - WB - PSMPEHD013 Transcend ITB E 03.09.2020 1 300,00 Room 3044, MoF Office IDA 32 PSPHOMTaaei T 30.02 300 Ro 04 o 1 m B GOVERNMENT OF LESOTHO MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2022 ASSETS REGISTER oId,I Char. n rnnc 4%5ei __ Mf."¶~*, rCe -Ls~L qd Pr n[tn.. i Chair H/Back Gov. Complex SMPPMUCHRO big chief Flexi N/A 26.08.2019 3 990,00 Finance House 3rd Thabiso Seteng MP - WB - arm 4x4 ber Floor Room 3044 IDA Green Chair H/Back Gov. Complex SMPPMUCHRO morris Flexi arm NfA 26.08.2019 2980,00 Finance House 3rd Karabelo Tau PSMP - WB - Floor Room 3044 IDA bondtlirbik 'Green Black Support Gov. Complex Back Fellowes Finance House 3rd PSMP - WB - FlSMPPMUSB]FO professional NtA 26.08.2019 1 280,00 ForRm304 Karnbelo Tan D PrfsinlFloor Room 3044 IDA Mesh Green Black Support Gov. Complex SMPPMUSBFOC 1ack lowes N/A 26.08.2019 I 280,00 Finance Iouse 3rd ThabLso Seleteng PSMp - WB PrfsinlFloor Room 3044 ID A Mesh Green Black Support Gov. Complex SMPPMUSBFO( acksFelowes N/A 26.08.2019 1 280,00 Fince HOuSe43rd Ishmael Mobloai - WB FTprofessional Floor Room 3044 IDA I Mesit Green Chair H/back Gov. Complex SMPPMUCHRO(Rocoeo N/A 22.06.2020 3440,00 Finance House 3rd T,Mohejone PSMP - WB - ChrArms PUBk Floor Room 3044 IDA I_ Green Chair H/back Gov. Complex SMPPMUCHROI Rococo N/A 22.06.2020 3440,00 Finance House 3rd Rrtshopile PSMP - WB ChrArms PUBlk Floor Room 3044 IDA Green ] HEATERS Cov. Complex 12 FIN Oil Finance House 3rd PSMP - WB - PSMPHTOOI hetrN/A 03,08.2020 1 450,00 FKara belo Tau heater Floor Room 3044 IDA Green Gov, Complex Fl13 FIN Oil Finscec Flousu 3rd PsMP - WB - PSMPHT002 h3 N/A 03.08.2020 1 450,00 Thabiso Seleteng heater Floor Room 3044 IDA Green Gov. Complex PSMPHT003 14 FIN Oil N/A 03,08.2020 1 450,00 Finance Flouse 3rI Tanki Mohjanc PSMP - WB - heater Floor Room 3044 IDA Groon Gov. Complex PSMPHTO04 15 FIN Oil Finance House 3rd epile/Mosit mp- W - N/A 031082020 I 450,00 Retsheilost heater Floor Room 3044 IDA Green 33