Suleiman & Co. Certified Public Accountants - License No. 205 Correspondent Firm of RSM International in East Jerusalem, West Bank and Gaza THE PALESTINIAN MINISTRY OF FINANCE Project Title FINANCE FOR JOBS PROJECT PHASE- II (TF0A5297, TF0A5114, TF0A8159 & TF0B5070) Funded by INTERNATIONAL DEVELOPMENT ASSOCIATION (IDA) Implemented by DEVELOPMENT ALTERNATIVES, Inc. (DAI GLOBAL, LLC) Financial Statements For the Year Ended December 31, 2023 And Independent Auditor's Report Ramallah Al Masyoun Taj Mahal building No. 10 phone 970 2 297-5576 Fax 970 2 297-5577 E-mail: info@suleimanco.com The Palestinian Ministry of Finance Finance for Jobs Project Phase- II (TF0A5297, TF0A5114, TF0A8159 & TF0B5070) Funded by the International Development Association Financial Statements for the Year Ended December 31, 2023 Table of Contents Page No. Independent Auditor’s Report 2-3 Statement of Balance Sheet 4 Statement of Sources and Uses of Funds 5 Designated Bank Account Statement – F4J II- 5297 6 Designated Bank Account Statement – SPF- 5114 7 Designated Bank Account Statement – AF 1- 8159 8 Designated Bank Account Statement – AF 2- 5070 9 Notes to the Project Financial Statements 10-14 1 Suleiman & Co. Certified Public Accountants - License No. 205 Correspondent Firm of RSM International in East Jerusalem, West Bank and Gaza Independent Auditor’s Report To the Development Alternatives, Inc. Global, LLC Ramallah Opinion We have audited the Financial Statements of “Finance for Jobs Project Phase- II” (TF0A5297, TF0A5114, TF0A8159 & TF0B5070) (hereinafter “the Project”), which comprise the Statement of Balance Sheet funded by the International Development Association (hereinafter “IDA”) and implemented by Development Alternatives Inc. (hereinafter “DAI Global, LLC”) as at December 31, 2023, and the related Statement of Sources and Uses of Funds, Designated Bank Account Statements for the year ended December 31, 2023, and Notes to the Financial Statements, including a summary of significant accounting policies. In our opinion, the accompanying Financial Statements present fairly, in all material respects, the Balance Sheet of the Project as at December 31, 2023, and the related Statement of Sources and Uses of Funds, Designated Bank Account Statements for the year then ended in accordance with the accounting standards described in Note 2. 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 Financial Statements section of our report. We are independent of the DAI Global, LLC in accordance with the ethical requirements that are relevant to our audit of the Financial Statements in areas under the jurisdiction of the Palestinian Authority, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other Matters Based on our review, in all material respects: 1. The Project expenditures reimbursed on basis of Statements of Expenditures (SOE) are eligible to the Grant Agreement and are reflected on the Financial Statements. 2. The Designated Bank Account has been used exclusively for payment of eligible expenditures as reflected in the Financial Statements. 3. The Project’s accounting system (books and records), established and maintained by the DAI Global, LLC to record the financial transactions of the Project, provides the basis for preparation of the Project’s Financial Statements; 4. Internal control over financial reposting involved in the preparation of replenishments, direct payments, payments through special commitments, and reimbursements can be relied upon to support the related withdrawals. 5. The Project was in all material respects in compliance with the laws, regulations, guidelines and provisions governed by the Grant Agreement. 6. Procurement Guidelines have been properly applied in accordance with the Project’s Grant Agreement. 2 Suleiman & Co. Certified Public Accountants - License No. 205 Correspondent Firm of RSM International in East Jerusalem, West Bank and Gaza 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 Accounting Standards described in Note 2, 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. DAI Global, LLC is responsible for overseeing the Project’s financial reporting process. Auditor’s Responsibilities for the Audit of the Financial Statements The objectives of our audit are to obtain reasonable assurance about whether the Project Financial Statements taken 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 Financial Statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: 1. 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 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. 2. 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. 3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. 4. Evaluate the overall presentation, structure and content of the Financial Statements, including the disclosures, and whether the Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation. We 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 we identify during our audit, if any. Suleiman & Co.- Certified Public Accountants Ismail Suleiman, CPA, License number 131/2000 Ramallah, May 2, 2024 Ramallah Al Masyoun Taj Mahal building No. 10 phone 970 2 297-5576 Fax 970 2 297-5577 E-mail: info@suleimanco.com 3 The Palestinian Ministry of Finance Finance for Jobs Project Phase- II (TF0A5297, TF0A5114, TF0A8159 & TF0B5070) Funded by the International Development Association Financial Statements for the Year Ended December 31, 2023 Statement of Balance Sheet (All amounts in USD) Note 2023 2022 Assets Current assets Cash at banks 7 591,979 962,907 Total current assets 591,979 962,907 Total assets 591,979 962,907 Liabilities and fund balance Current liabilities Accrued payroll tax 6,777 3,157 Total current liabilities 6,777 3,157 Total liabilities 6,777 3,157 Fund balance 7 585,202 959,750 Total liabilities and fund balance 591,979 962,907 The accompanying notes form an integral part of these Financial Statements. 4 The Palestinian Ministry of Finance Finance for Jobs Project Phase- II (TF0A5297, TF0A5114, TF0A8159 & TF0B5070) Funded by the International Development Association Financial Statements for the Year Ended December 31, 2023 Statement of Sources and Uses of Funds (All amounts in USD) Cumulative up to Note 2023 2022 December 31, 2023 Fund balance- beginning of year 959,750 975,041 - Sources of funds Advance payment 3 - - 1,843,814 Direct payments 3 2,956,340 330,000 8,389,340 Replenishments received 3 1,959,217 3,689,491 7,769,390 Total sources of funds 4,915,557 4,019,491 18,002,544 Uses of funds Category 1: DIB 4 1,549,980 2,688,289 6,249,868 Category 2: ICF 4 2,657,826 330,000 8,090,826 Category 3: EEMG 4 - - - Category 4: Project management 4 1,082,299 1,016,493 3,076,648 Total uses of funds 5,290,105 4,034,782 17,417,342 Change in fund balance (374,548) (15,291) 585,202 Fund balance- end of year 7 585,202 959,750 585,202 The accompanying notes form an integral part of these Financial Statements. 5 The Palestinian Ministry of Finance Finance for Jobs Project Phase- II (TF0A5297, TF0A5114, TF0A8159 & TF0B5070) Funded by the International Development Association Financial Statements for the Year Ended December 31, 2023 Designated Bank Account Statement- F4J II- 5297* IBAN PS63 PALS 0458 3202 1140 0130 0100 0 Bank account number 0458 / 3202114 / 001 / 3001 / 000 Depository bank Bank of Palestine Address Ramallah Related loan/ credit TF0A5297 Currency U.S. Dollar (USD) Note 2023 2022 Balance- beginning of year 365,954 399,520 Receipts during the year 3 684,170 2,751,202 Total 684,170 2,751,202 Deduct Payments for project expenditures from designated bank account 5 1,050,124 2,784,768 Total 1,050,124 2,784,768 Balance- end of year 7 - 365,954 *The trust fund A5297 has two bank accounts, one for disbursements on project management category and a suffix account number 3202114-001 for disbursements on DIB category only. The accompanying notes form an integral part of these Financial Statements. 6 The Palestinian Ministry of Finance Finance for Jobs Project Phase- II (TF0A5297, TF0A5114, TF0A8159 & TF0B5070) Funded by the International Development Association Financial Statements for the Year Ended December 31, 2023 Designated Bank Account Statement- SPF- 5114 IBAN PS28 PALS 0458 3202 1130 0130 0100 0 Bank account number 0458 / 3202113 / 001 / 3001 / 000 Depository bank Bank of Palestine Address Ramallah Related loan/ credit TF0A5114 Currency U.S. Dollar (USD) Note 2023 2022 Balance- beginning of year - - Receipts during the year 3 - - Total - - Deduct Payments for project expenditures from designated bank account 5 - - Total - - Balance- end of year 7 - - The accompanying notes form an integral part of these Financial Statements. 7 The Palestinian Ministry of Finance Finance for Jobs Project Phase- II (TF0A5297, TF0A5114, TF0A8159 & TF0B5070) Funded by the International Development Association Financial Statements for the Year Ended December 31, 2023 Designated Bank Account Statement- AF 1- 8159 IBAN PS10 PALS 0458 3204 7010 0130 0100 0 Bank account number 0458 / 3204701 / 001 / 3001 / 000 Depository bank Bank of Palestine Address Ramallah Related loan/ credit TF0A8159 Currency U.S. Dollar (USD) Note 2023 2022 Balance- beginning of year 346,993 330,458 Receipts during the year 3 - 738,660 Total - 738,660 Deduct Payments for project expenditures from designated bank account 5 346,993 722,125 Total 346,993 722,125 Balance- end of year 7 - 346,993 8 The Palestinian Ministry of Finance Finance for Jobs Project Phase- II (TF0A5297, TF0A5114, TF0A8159 & TF0B5070) Funded by the International Development Association Financial Statements for the Year Ended December 31, 2023 Designated Bank Account Statement- AF 2- 5070 IBAN PS11 PALS 0458 3209 4180 0130 0100 0 Bank account number 0458 / 3209418 / 001 / 3001 / 000 Depository bank Bank of Palestine Address Ramallah Related loan/ credit TF0B5070 Currency U.S. Dollar (USD) Note 2023 2022 Balance- beginning of year 249,960 249,956 Receipts during the year 3 1,275,047 199,629 Total 1,275,047 199,629 Deduct Payments for project expenditures from designated bank account 5 933,028 199,625 Total 933,028 199,625 Balance- end of year 7 591,979 249,960 9 The Palestinian Ministry of Finance Finance for Jobs Project Phase- II (TF0A5297, TF0A5114, TF0A8159 & TF0B5070) Funded by the International Development Association Financial Statements for the Year Ended December 31, 2023 Notes to the Project Financial Statements (All amounts in USD) 1. The Project and its Financing The Palestinian Liberation Organization (PLO), For the benefit of the Palestinian Authority (PA), and the International Development Association (the World Bank), acting as an administrator of the Trust Fund for Gaza and West Bank, signed a Trust Fund Grant Agreement dated September 27, 2017 (the Grant Agreement), whereby the world made a grant, to the PA in an amount equals to USD 8,000,000, grant number TF0A 5297 and USD 1,500,000, grant number TF0A 5114. An additional grant agreement number TF0B 5070 was signed on March 31, 2021 in an amount equals to USD 10,000,000. During 2021, an additional grant number TF0A 8159 was signed in an amount of USD 5,000,000. To finance a project entitled “Finance for Jobs Project- Phase II” (the Project). In accordance with the Grant Agreement, the PA shall cause the Project to be carried out jointly by the Palestinian Ministry of Finance (MoF) and a Project Implementation Agreement agency. The categories to be financed by the World Bank and the percentage of expenditure for items to be financed in each category, are as follows: Percentage of Amount Expenditure Category (USD) to be financed Cat 1: DIB Payments under Component 1 5,750,000 100% Cat 2: ICF Payments under Component 2 14,250,000 100% Cat 3: EEMG under Component 1 - - Cat 4: Project Management 4,000,000 100% Unallocated 500,000 100% 24,500,000 The objective of the Project is to test the effectiveness of selected financial inventions. 2. Summary of Significant Accounting Policies The Project Financial Statements are prepared under the historical cost convention. Significant accounting policies follow: • Basis of accounting The Project Financial Statements are prepared using modified cash basis of accounting, which is a comprehensive basis of accounting other than International Financial Reporting Standards (IFRS). Under this basis of accounting, sources of funds are recognized when related cash is received from the World Bank and uses of funds are recognized when incurred. • Foreign currency The Project’s basic functional currency is the United States Dollar (USD). Transactions that are expressed or denominated in other currencies were translated to USD using exchange rates in effect at the time of each transaction. Differences arising from the fluctuations in exchange rates were treated as exchange gains or losses in the Statement of Sources and Uses of Funds and Designated Bank Account Statement. 10 The Palestinian Ministry of Finance Finance for Jobs Project Phase- II (TF0A5297, TF0A5114, TF0A8159 & TF0B5070) Funded by the International Development Association Financial Statements for the Year Ended December 31, 2023 Notes to the Project Financial Statements – continued (All amounts in USD) 3. Sources of Funds Up to December 31, 2023, DAI received the following payments from the World Bank: Withdrawal Application (WA) Advance Number Description Payment Category 1 Category 2 Category 3 Category 4 Total Cumulative amount up to December 31, 2022 1,843,814 4,221,885 5,433,000 - 1,588,288 13,086,987 2023 F4J 2- 5297 F4JS II GA-17 January 18, 2023 - 684,170 - - - 684,170 - 684,170 - - - 684,170 AF 2- 5070 F4JS II AF 2-3 March 28, 2023 - - - - 684,560 684,560 Direct Payment to 3FCO F4JS II AF 2-4 Trading and Industry Company - - 360,000 - - 360,000 Direct Payment to Mada Al F4JS II AF 2-5 Arab for General Services - - 183,000 - - 183,000 Direct Payment to Mahmoud F4JS II AF 2-6 Abu Daqqa General Trading - - 250,000 - - 250,000 Direct Payment to Saif Aldiin F4JS II AF 2-7 Abu Eita and Sons - - 400,000 - - 400,000 F4JS II AF 2-8 September 6, 2023 - - - - 590,487 590,487 Direct Payment to Mahmoud F4JS II AF 2-9 Abu Daqqa General Trading - - 250,000 - - 250,000 Direct Payment to Petra for F4JS II AF 2-10 Glass Company - - 335,000 - - 335,000 - - 1,778,000 - 1,275,047 3,053,047 AF 1- 8159 Direct Payment to Mada Al F4JS II AF 1-10 Arab for General Services - - 561,340 - - 561,340 Direct Payment to Mada Al F4JS II AF 1-12 Arab for General Services - - 617,000 - - 617,000 - - 1,178,340 - - 1,178,340 Cumulative amount up to December 31, 2023 1,843,814 4,906,055 8,389,340 - 2,863,335 18,002,544 11 The Palestinian Ministry of Finance Finance for Jobs Project Phase- II (TF0A5297, TF0A5114, TF0A8159 & TF0B5070) Funded by the International Development Association Financial Statements for the Year Ended December 31, 2023 Notes to the Project Financial Statements – continued (All amounts in USD) 4. Uses of Funds This item represents the following: 2023 2022 Cumulative up to Category 1 Category 2 Category 3 Category 4 Total Total December 31, 2023 SPF- 5114 DIB - - - - - - 1,499,692 Outstanding bank charge - - - - - - 176 - - - - - - 1,499,868 F4J 2- 5297 DIB 1,049,980 - - - 1,049,980 2,688,289 4,250,000 ICF - - - - - 2,750,000 Operating costs, Management fees - - - 144 144 93,969 1,000,000 1,049,980 - - 144 1,050,124 2,782,258 8,000,000 AF 2- 5070 DIB 500,000 - - - 500,000 - 500,000 ICF 1,340,826 1,340,826 - 1,340,826 Operating costs, Management fees - - - 876,979 876,979 199,625 1,076,648 500,000 1,340,826 - 876,979 2,717,805 199,625 2,917,474 AF 1- 8159 ICF - 1,317,000 - - 1,317,000 330,000 4,000,000 Operating costs, Management fees - - - 205,176 205,176 722,899 1,000,000 - 1,317,000 - 205,176 1,522,176 1,052,899 5,000,000 Total 1,549,980 2,657,826 - 1,082,299 5,290,105 4,034,782 17,417,342 12 The Palestinian Ministry of Finance Finance for Jobs Project Phase- II (TF0A5297, TF0A5114, TF0A8159 & TF0B5070) Funded by the International Development Association Financial Statements for the Year Ended December 31, 2023 Notes to the Project Financial Statements – continued (All amounts in USD) 5. Payments for Project Expenditures Below is reconciliation of the Project expenditures shown in the Designated Bank Account Statement with the Project expenditures shown in the Statement of Sources and Uses of Funds: 2023 2022 SPF-5114 F4JS II-5297 AF 1-8159 AF 2-5070 Total Total Total uses of funds per Statement of Sources and Uses of funds - 1,050,124 1,522,176 2,717,805 5,290,105 4,034,782 Deduct: amount directly spent from Mada Al Arab for General Services - - (1,178,340) (183,000) (1,361,340) - Amount directly spent from 3FCO Trading and Industry Company - - - (360,000) (360,000) - Amount directly spent from Mahmoud Abu Daqqa General Trading - - - (500,000) (500,000) - Amount directly spent from Saif Aldiin Abu Eita and Sons - - - (400,000) (400,000) - Amount directly spent from Petra for Glass Company - - - (335,000) (335,000) - Amount directly spent from BITC Garden for Agricultural Market - - - - - (330,000) Accrued payroll tax as of December 31, 2023 - - - (6,777) (6,777) (3,157) Add: Accrued payroll tax as of December 31, 2022 - - 3,157 - 3,157 4,780 Other accrued expenses as of December 31, 2021 - - - - - 113 Payments as reported in Designated Bank Account Statement - 1,050,124 346,993 933,028 2,330,145 3,706,518 6. Reconciliations Between World Bank Records (Client Connection) and DAI Records Cumulative up to 2023 2022 December 31, 2023 Cash at bank- beginning balance 962,907 979,934 - Project account per the client connection Advance payment transferred to DAI - - 1,843,814 Category 1: DIB 684,170 2,665,831 4,906,055 Category 2: ICF 2,956,340 330,000 8,389,340 Category 3: EEMG - - - Category 4: Project management 1,275,047 1,023,660 2,863,335 4,915,557 4,019,491 18,002,544 Project account per DAI Global, LLC records Category 1: DIB 1,549,980 2,688,289 6,249,868 Category 2: ICF 2,657,826 330,000 8,090,826 Category 3: EEMG - - - Category 4: Project management 1,082,299 1,016,493 3,076,648 Cash at bank- ending balance 591,979 962,907 591,979 Accrued payroll tax as of December 31, 2023 (6,777) - (6,777) Accrued payroll tax as of December 31, 2022 3,157 (3,157) - Accrued payroll tax as of December 31, 2021 - 4,780 - Other accrued expenses - 113 - 5,878,464 4,999,425 18,002,544 Difference - - - 13 The Palestinian Ministry of Finance Finance for Jobs Project Phase- II (TF0A5297, TF0A5114, TF0A8159 & TF0B5070) Funded by the International Development Association Financial Statements for the Year Ended December 31, 2023 Notes to the Project Financial Statements – continued (All amounts in USD) 7. Fund Balance – End of Year The fund balance at December 31, 2023 & 2022 represents the following: 2023 2022 SPF-5114 F4JS II-5297 AF 1-8159 AF 2-5070 Total Total Cash maintained in the USD designated bank account - - - 591,979 591,979 962,907 Accrued payroll tax - - - (6,777) (6,777) (3,157) - - - 585,202 585,202 959,750 14