Restricted THE REPUBLIC OF THE UNION OF MYANMAR OFFICE OF THE AUDITOR GENERAL OF THE UNION DEPARTMENT OF INSPECTION AUDIT REPORT ON MYANMAR FINANCIAL SECTOR DEVELOPMENT PROJECT FUNDED BY THE WORLD BANK’S LOAN IMPLEMENTED BY FINANCIAL REGULATORY DEPARTMENT MINISTRY OF PLANNING, FINANCE AND INDUSTRY FOR 2019-2020 FY Date: 5 May 2021 Restricted Contents Audit Para Page Particular From To From To 1 2 3 4 5 6 1 Audit Opinion 1 2 1 - 2 Basis for Opinion 3 - 1 - 3 Emphasis of matter 4 - 1 - 4 Management’s responsibility for financial statements 5 6 2 - 5 Auditor’s responsibility 7 8 2 - Restricted 1 Audit report on the financial statements of the Myanmar Financial Sector Development Project (MFSDP) funded by the World Bank’s loan, and implemented by the Financial Regulatory Department for the 2019-2020 FY Audit Opinion 1. We have audited the financial statements of the Myanmar Financial Sector Development Project (MFSDP) funded by the World Bank’s loan, implemented by the Financial Regulatory Department for the 2019-2020 FY including the Sources and Uses of Funds Statement, Statement of uses of Funds by Component, Statement of Uses of Funds by Category, Statement of Expenditures and summary of Significant Accounting Policies. 2. In our opinion, cash receipts and payments for the 2019-2020 FY are fairly presented in all material respects, and the financial statements have been prepared in accordance with IPSASs-Cash Basis for public sector. Basis for opinion 3. We have audited the financial statements of the Myanmar Financial Sector Development Project (MFSDP) funded by the World Bank’s loan, and implemented by the Financial Regulatory Department for the financial year 2019-2020 in accordance with International Standards of Supreme Audit Institutions (ISSAIs). Our responsibilities under those standards are further described under the Auditor’s responsibility for the audit of the financial statements section of our report. We are independent of the entity in accordance with ethical requirements. We have fulfilled our other ethical responsibilities in accordance with these requirements objectively and independently. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion. Emphasis of Matter 4. Regarding the financial statements of the Myanmar Financial Sector Development Project (MFSDP) funded by the World Bank’s loan, and implemented by the Financial Regulatory Department for 2019-2020 FY, we draw attention of management to the followings and we assume that these are fundamentals to user’s understanding of financial statements. Our opinion is not modified with respect to this matter. (A) Spending was less than the Annual Work Plan (B) Received loan should be spent effectively, and initial estimates of, altering and transferring DLI expenditures were not eligible. (C) Complete notes were not described in the financial statements in accordance with the provisions in Project Operational Manual and IPSAS-Cash Basis. (D) When the Interim Unaudited Financial Report for the previous year was prepared, the balance of OA-012439 was converted using the exchange rate as at the day of transferring loan from USD Account to MMK Account instead of the exchange rate as at the day of closing balance, similarly, withholding tax 2% and 2.5% were converted using the exchange rate as at the day of transferring loan from USD Account to MMK Account instead of the exchange rate as at the day paid to the Internal Revenue Department. Therefore, variances had occurred and such variances have not been adjusted in the IFR for the financial year 2019-2020. Restricted 2 Management’s responsibility for the financial statements 5. The project management has the responsibility to prepare financial statements in accordance with the IPSASs-Cash Basis for public sector and to make those financial statements free from material misstatements, whether due to fraud or error and to maintain a strong system of internal control. It also has the responsibility to follow Financing Agreement, Financial Management Manual and Operational Manual. 6. The project administration has the responsibility to monitor the financial reporting process of the project. Auditor’s Responsibility 7. The auditor has the responsibility to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements, and to express an appropriate audit opinion on the financial statements based on audit findings in accordance with the International Standards of Supreme Audit Institutions (ISSAIs) and in compliance with ethical requirements. 8. During the course of the audit, we performed the auditing process depends on the auditor’s judgment and assessment to obtain evidence about the amounts and disclosures in the financial statements of the Myanmar Financial Sector Development Project (MFSDP) including the Sources and Uses of Funds Statement, Statement of uses of Funds by Component, Statement of Uses of Funds by Category, Statement of Expenditures for the 2019-2020 FY and summary of Significant Accounting Policies and so on. We believe that the audit evidence we have obtained is sufficient and appropriate to provide basis for our audit opinion. Khaing Khaing Aung Director General Date: 5 May 2021 Restricted