Project Financial Statements and Independent Auditor's Report State Agency "Center for Education Projects" Project Implementation Unit of the Ministry of Education, Science, Culture and Sport of the Republic of Armenia EU41nnovation Project (EU41) Grant No. TFOB2692 As of 27 February 2023 and for the period from 30 October 2020 to 27 February 2023 Contents Independent auditor s repor. 3 Statement of financia position 6 Statement of the Project sources and uses of funds 7 Statement of uses of funds by Project activities 8 SOE withdrawa schedule 9 Desigrated account statement 10 Notes to the Project financial statements 13 GrantThornton Independent auditor's :: 4phnl L.ntUL,m 9r report 34".09A6 Grant Thornton CJSC Yerevan Plaza Busness Center 9 rigr Lusavon h Stree Yerev:n 0015 Repubc Amenia T 0 '4 10 50 09 646 To the board of trustees of the State Agency 'Center for Education Projects" Project Implementation Unit of the Ministry of Education, Science, Culture and Sport of the Republic of Armenia, Opinion We have audited the accompanying Project financial statements of EU41nnovation Project (EU41) (the "Project). financed by the International Bank for Reconstruction and Development (the "IBRD) Grant Agreement No. TF0B2692, which comprise the statements of financial position as of 31 December 2021. as of 31 December 2022 and as of 27 February 2023 the statements of the Project sources and uses of funds, the statement of uses of funds by Project activities, the designated account statements as of 31 December 2021 and for the period from 30 October 2020 to 31 December 2021, as of and for the year ended 31 December 2022, as of 27 February 2023 and for the period from 1 January 2023 to 27 February 2023 as well as the statements of expenditures ("SOEs") submitted to the World Bank for the period from 30 October 2020 to 27 February 2023 in support of the Grant Agreement No TF082692 withdrawals, and a summary of significant accounting policies and other explanatory information. In our opinion, the Project financial statements give a true and fair view of the financial position of the EU41nnovation Project (EU41) (Grant Agreement No TFOB2692) as of 31 December 2021 and for the period from 30 October 2020 to 31 December 2021 as of and for the year then ended 31 December 2022. as of 27 February 2023 and for the period from 1 January 2023 to 27 February 2023. and of the funds received and expenses incurred for the year then ended, in accordance with the accounting policies described in note 2 to the Project financial statements, the World Bank guidelines, and the relevant points of the Grant Agreement No. TFOB2692 In addition, in our opinion, the SOEs submitted together with the internal controls and procedures involved in their preparation can be relied upon to support the applications for the Grant Agreement No. TFOB2692 withdrawals. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing ("ISAs ) Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Project Financial Statements section of our report We are independent of the "Center for Education Projects" PIU (the PIU") in accordance with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (the "IESBA Code") together with the ethical requirements that are relevant to our audit of the financial statements in the Republic of Armenia. and we have fulfilled our other ethical responsibilities in accordance with those ethical requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion GrantThornton Emphasis of Matters * We draw attention to note 2 to the Project financial statements, which describes the basis of accounting The Project financial statements are prepared to assist the management of the PIU to meet the requirements of the financial reporting of the World Bank. As a result the Project financial statements may not be suitable for another purpose. Our opinion is not modified in respect of this matter * We draw attention to note 3 to the Project financial statements, which describes that the closing date of the Project is 31 December 2022. Our opinion is not modified in respect of this matter, Responsibilities of Management and Those Charged with Governance for the Project Financial Statements Management of the PIU is responsible for the preparation and fair presentation of these Project financial statements in accordance with the accounting policies described in note 2 to the Project financial statements, the World Bank guidelines. and the relevant points of the Grant Agreement No. TF0B2692, and for such internal control as management determines is necessary to enable the preparation of these Project financial statements that are free from material misstatement, whether due to fraud or error. Those charged with governance are responsible for overseeing the Project's financial reporting process. Auditors Responsibilities for the Audit of the Project Financial Statements Our objectives are to obtain reasonable assurance about wnether the Project 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 our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs 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 Project financial statements. As part of an audit in accordance with ISAs we exercise professional judgment and maintain professional skepticism throughout the audit. We also: * Identify and assess the risks of material misstatement of the Project 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 our 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 "Center for Education Projects' PIU's internal control. GrantThornton * Evaluate the appropriateness of accounting policies and the reasonableness of accounting estimates and related disclosures made by management. * Evaluate the overall presentation, structure and content of the Project financial statements, including the disclosures. and whether the Project financial statements represent the underlying transactions and events in a manner that achieves fair presentation We communicate with the management. among other matters the planned scope and timing of the audit and significant audit findings including any sign ficant deficiencies in interna control that we identify during our audit. Armen Hovhannisyan Emil Vassiyan. FCCA Chief Executive Officer Engagement Partner 6 April 2023 Statement of financial position E~m Ant3lAs of 31 December -r-7r Note 2022 Assets Accumulatec Project expenses 34,099 3 863291 3 863,291 Advances 211.549 - Bank balances 4 245,750 99,884 7 476 Total assets 491.398 3,963,175 3870 767 Funds and iabilities World Bank financing 5 491 583 4,106000 4 106000 Government co-financing 6 - 19273 113 386 Other - 44292 44292 Exchange rate differences 185) (392 415) (392.91 1) Accounts payable - 86,025 Total funds and I!abliies 491 398 3 963 175 3 87C767 The Project financial statements were approved on 6 April 2023 by Grisha Hovhannisyan Armine Khachatryan Acting Director Financial director This statement is to be read in conjunction with the notes to and forming part of the Project financial statements set out on pages 13 to 17 6 the Project sou ces and uses o or ther period or, ceFr the or from 30 p d Ircri period from LAur 2020 'u 31 Dicimbo 202 H )( m Agr,un! No TF 2 a ance as of 30 October 2020 4 uai unrnxp laned dscrepancy La repIernshmenlt adnn the peo 494 491 46