U U U U KUTRDISTAN REGIONAL GOVERNMENT U MINISTRY OF PLANNING - GENERAL DIRECTORATE OF CAPITAL INVESTMENT BUDGET U MODERNIZATION OF PUBLIC FINANCIAL MANAGEMENT SYSTEMS * PROJECT (P151357) - COMPONENT 3 * STATEMENT OF CASH RECEIPTS ANDI PAYMENTS M FOR THE YEAR ENDED 31 DECEMBER 2022 K H U H U H W. H U U U H U U H U GENERAL DIRECToRATE OF CAPITAL INVESTMENT BUDGET MQDERNIZATION OF PUBLIC FINANCIAL MANAGEMENT SYSTEMS PROJECT - COMPONENT 3 STATEMENT OF CASH RECEIPTS AND PAYMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 PAGES INDEPENDENT AUDITOR'S REPORT STATEMENT OF CASH RECEIPTS AND PAYMENTS 1 NOTES TO THE STATEMENT OF CASH RECEIPTS AND PAYMENTS 2-8 U U U K I U U U U I U U U U U I U U U I U U W W * pwe In preparing the Statement, management is responsible for assessing the Project ability to continue as a going concern, disclosing, as applicable, matters relating 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 financial reporting process. Auditor's responsibilities for the audit of the Statement of Cash Receipts and Payments Our objectives are to obtain reasonable assurance about whether the Statement as a whole is 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 this Statement. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: * Identify and assess the risks of material misstatement of the Statement, 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 Entity's internal control. * Conclude on the appropriateness of management's use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the Statement or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Entity to cease to continue as a going concern. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates, if any, and related disclosures made by management. * Evaluate the overall presentation, structure and content of the Statement, including the disclosures, and whether the Statement represents 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 PricewaterhouseCoopers "Jordan" L.L.C - Erbil Branch xouseCoo, Erbil, Iraq 17 May 2023 PricewaterhouseCoopers "Jordan" - Erbil Bra , e Business Complex, Building C5, Section 8, Fourth Floor, Erbil, Kurdistan, Republic of Iraq T: + 964 (0) 770 465 3377, www,Pwc.com/me * pwe In preparing the Statement, management is responsible for assessing the Project ability to continue as a going concern, disclosing, as applicable, matters relating 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 financial reporting process. Auditor's responsibilities for the audit of the Statement of Cash Receipts and Payments Our objectives are to obtain reasonable assurance about whether the Statement as a whole is 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 this Statement. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: * Identify and assess the risks of material misstatement of the Statement, 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 Entity's internal control. * Conclude on the appropriateness of management's use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the Statement or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Entity to cease to continue as a going concern. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates, if any, and related disclosures made by management. * Evaluate the overall presentation, structure and content of the Statement, including the disclosures, and whether the Statement represents 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 PricewaterhouseCoopers "Jordan" L.L.C - Erbil Branch Erbil, Iraq 17 May 2023 PricewaterhouseCoopers "Jordan" - Erbil Branch, Empire Business Complex, Building C5, Section B, Fourth Floor, Erbil, Kurdistan, Republic of Iraq T: + 964 (0) 770 465 3377, www.pwc.com/me GENERAL DIRECTORATE OF CAPITAL INVESTMENT BUDGET MODERNIZATION OF PUBLIC FINANCIAL MANAGEMENT SYSTEMS PROJECT - COMPONENT 3 STATEMENT OF CASH RECEIPTS AND PAYMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 Cumulative from the For the year For the year Inception ended 31 ended 31 date to 31 December December December Notes 2022 2021 2022 USD USD USD CASHi RECEIPTS Direct payments to contractors 3 239,742 408,383 1,867,608 Transfers from the World Bank 4 55,855 47,429 733,716 291597 455,812 2,601,324 CASH PAYMENTS Public investments management strengthening (175,820) (302,191) (1,592,130) Public procurement modernization (74,593) (113,oo8) (413,793) Project management and reform coordination (43,893) (40,174) (322,420) (294,3o6) (455,373) (2,328,343) Net increase /(decrease) in bank balance 1,291 439 272,981 Bank balance at 1 January 5 271,690 271,251 - Bank balance at 31 December 5 272,981 271,690 272,981 4ahdi Abdullah Mohammed Hiday ubaker General Director of Ca tment Budget an ro e tor U * H The attached notes from 1 to 7 are an integral part of this financial statement U U U U U GENERAL DIRECTORATE OF CAPITAL INVESTMENT BUDGET MODERNIZATION OF PUBLIC FINANCIAL MANAGEMENT SYSTEMS PROJECT -COMPONENT 3 NOTES TO THE STATEMENT OF CASH RECEIPTS AND PAYMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (i) GENERAL INFORMATION 1.1 General inforimation The Republic of Iraq was granted a loan for the amount of USD 41.5 million from the World Bank - International Bank for Reconstruction and Development (the "World Bank") for the implementation of Modernization of Public Financial Management System Project in Iraq and Kurdistan Region. The loan agreement number 8683-IQ (the "Agreement") of the Modernization of Public Financial Management Systems Project was signed between the Republic of Iraq and the World Bank on 2o December 2016 ( the "Inception date") with a project implementation period between the years 2017 and 2021. The loan is repayable by the Republic of Iraq between 15 March 2022 and 15 September 2026 in the form of 1o semi-annual repayments. The objective of the project is to improve financial information management and transparency, cash management, public investment management and public procurement modernization at selected federal and governorate agencies. The Modernization of Public Financial Management Systems Project is distributed into Component 1, 2, and 3. Component 3, Public Investment Management and Public Procurement at the Kurdistan Regional Government level (the "Project"), is distributed to the General Directorate Capital Investment Budget - Ministry of Planning - Kurdistan Regional Government (GDCIB). GDCIB's share of the total loan, under Component 3, is USD 4.59 million. GDCIB is responsible for directing the economic development of Kurdistan Region by setting priorities for capital investment budget and approving funding for projects. 1.2 Project Information The primary objectives of the project are: * Modernization and strengthening of Kurdistan Region's public investment management system, including through: (i) the carrying out of an efficiency and functional review of the General Directorate of Capital Investment Budget within Ministry of Planning Kurdistan Region; (ii) updating and improving project appraisal methodologies and guidelines, including instructions, guidelines and templates; (iii) strengthening and further development of the Kurdistan Development Management System (KDMS) through the establishment of an integrated bank of investment projects, to support investment planning and decision making, to track and monitor investments, and to serve as an investment project registry; and (iv) capacity building. * Modernization and strengthening of public procurement in Kurdistan Region, through: (i) supporting the implementation of procurement regulations, including strengthening the capacity of policy unit functions, the development of a complaints mechanism system, and provision of training to relevant agencies; (ii) development and rollout of standard bidding documents and framework agreements; (iii) the establishment of an electronic procurement portal; and (iv) capacity building and professionalization of the public sector procurement workforce and for private sector stakeholders. GDCIB will implement the above under the Project Coordination Unit (PCU) based in the Ministry of Planning - Kurdistan Region. A Project Management Team (PMT) has been established to manage the project during its 5 years implementation period. The PMT is responsible for implementation, management and planning, procurement and financial management and reporting according to the World Bank guidelines and ptocedures in coordination with the PCU. A * 2 U B K K GENERAL DIRECTORATE OF CAPITAL INVESTMENT BUDGET MODERNIZATION OF PUBLIC FINANCIAL MANAGEMENT SYSTEMS PROJECT - COMPONENT 3 NOTES TO THE STATEMENT OF CASH RECEIPTS AND PAYMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies have been applied consistently throughout the years. 2.1 Basis of preparation The Statement of Cash Receipts and Payments was prepared under the cash basis of accounting as defined by the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants (IFAC). Under the cash basis of accounting, cash receipts are recognized when cash is received and cash payments are recognized when payments are made. U 2.2 Foreign currency transactions The United States Dollar (USD) is the project reporting and functional currency. The books of accounts are held in USD. Transactions denominated in other currencies are translated to USD using the exchange rate prevailing at the date of transactions. 2.3 Receipts Cash receipts represents balances transferred from the World Bank and deposited into the project's designated bank account with Trade Bank of Iraq. Cash receipts are recognized when cash is received. 2.4 Payments 5 Disbursements represents cash payments incurred in the normal course of the Project operations. Payments are recognized when the disbursements are made. 2.5 Capital expenditures Capital expenditures incurred to acquire fixed and other assets are recognized in the statements of Cash Receipts and Payments when the payment is made for these assets. 2.6 Provisions Provisions are not recognized when there is an existing legal or contractual obligation as results of the Project operations. Provisions are recognized in the statements of Cash Receipts and Payments when the provision payment is made. 2.7 Contingent liabilities Contingent liabilities are not disclosed in the statements of Cash Receipts and Payments. Liabilities are recognized when the payment is made. (3) DIRECT PAYMENTS To CONTRACTORS The World Bank makes payments directly to third parties (suppliers, contractors, or consultants) for eligible expenditures. The entity only controls the amounts paid to the project's designated bank account; other amounts paid directly by the World Bank to contractors are under the control of the World Bank. The following direct payments were made by the World Bank to a contractor: 3 U * 3 K U K W W GENERAL DIRECTORATE OF CAPITAL INVESTMENT BUDGET MODERNIZATION OF PUBLIC FINANCIAL MANAGEMENT SYSTEMS PROJECT - COMPONENT 3 NOTES TO THE STATEMENT OF CASH RECEIPTS AND PAYMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 During the year From the ended 31 Inception date to Date December 2021 31 December 2021 USD USD 17 April 2018 4,950 24 May 2018 - 9,900 24 May 2018 - 11,750 6 July 2018 - 1,650 14 August 2018 - 29,050 1o February 2018 - 7,695 13 November 2018 - 15,628 12 July 2018 - 12,000 18 January 2019 - 19,400 31 January 2019 - 62,514 2 April 2019 - 7,500 26 April 2019 - 134,175 12 July 2019 - 4,192 2 August 2019 - 7,500 24 September 2019 - 134,175 16 January 2020 - 147,592 16 January 2020 - 98,394 23 January 2020 - 12,388 11 February 2020 - 7,500 26 May 2020 - 24,777 6 July 2020 - 73,796 5 August 2020 - 49,197 2 September 2020 - 7,500 2 October 2020 - 44,725 14 October 2020 - 14,025 14 October 2020 - 44,725 28 October 2020 - 44,725 24 November 2020 - 33,036 4 December 2020 - 68,o74 13 December 2020 - 79,162 20 December 2020 - 7,788 17 February 2021 14,025 14,025 1o May 2021 23,364 23,364 20 May 2021 7,500 7,500 21 July 2021 16,939 16,939 21 July 2021 79,162 79,162 3 September 2021 23,364 23,364 7 September 2021 7,500 7,500 1o September 2021 9,500 9,500 3o November 2021 19,000 19,000 2 December 2021 63,330 63,330 2 December 2021 144,699 144,699 408,383 1,627,866 4 U * 4 U K B K GENERAL DIRECTORATE OF CAPITAL INVESTMENT BUDGET MODERNIZATION OF PUBLIC FINANCIAL MANAGEMENT SYSTEMS PROJECT - COMPONENT 3 NOTES TO THE STATEMENT OF CASH RECEIPTS AND PAYMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 During the year From the ended 31 Inception date to Date December 2022 31 December 2022 USD USD From the Inception date to 31 December 2021 - 1,627,866 17 February 2022 38,000 38,000 17 March 2022 28,500 28,500 15 June 2022 63,330 63,330 14 July 2022 14,450 14,450 20 July 2022 12,388 12,388 15 September 2022 15,000 15,000 21 December 2022 68,o74 68,o74 239,742 1,867,608 (4) TRANSFERS FROM THE WORLD BANK Funds received for the Project from the World Bank that were deposited into the designated bank account with the Trade Bank of Iraq to finance eligible Project expenditures were as follows: During the year From the ended 31 Inception date to Date December 2021 31 December 2021 USD USD 26 September 2017 - 280,000 13 March 2018 - 21,376 2 April 2018 - 42,559 15 May 2018 - 6,723 23 May 2018 - 40,055 6 June 2018 - 14,291 13 August 2018 - 50,671 15 August 2018 - 14,134 18 September 2018 - 7,834 11 November 2018 - 5,100 11 November 2018 - 18,557 1 February 2019 - 23,437 17 April 2019 - 6,517 30 May 2019 - 6,587 1 August 2019 - 42,352 1 October 2019 - 6,172 11 December 2019 - 19,621 11 March 2020 - 10,546 13 November 2020 - 13,900 16 February 2021 8,748 8,748 3 September 2021 23,604 23,604 3o November 2021 15,077 15,077 47,429 677,861 5 * B W K U GENERAL DIRECTORATE OF CAPITAL INVESTMENT BUDGET MODERNIZATION OF PUBIC FINANCIAL MANAGEMENT SYSTEMS PROJECT - COMPONENT 3 NOTES TO THE STATEMENT OF CASH RECEIPTS AND PAYMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 During the year From the ended 31 Inception date to Date December 2022 31 December 2022 From the Inception date USD USD to 31 December 2021 - 677,861 22 February 2022 8,309 8,309 23 August 2022 27,909 27,909 28 November 2022 19,637 19,637 55,855 733,716 I(t) CASH AND BANK BALANCiS The balance of the bank account with Trade Bank of Iraq balances were as follows: As at 31 December As at 31 December 2022 2021 USD USD Cash at bank 272,981 271,690 272,981 271,690 K6 U K U K K U U U B * 6 U U K (6) CoNrRACrS From the Inception date to 31 December 2022, the following contracts were entered into including contract amounts committed, amounts paid, and remaining balances. Contract Amount Amount (Over)/Under Budget line description Contract date reference committed paid Budget USD USD USD Subcomponent 3.2 - Public procurement modernization 27 November 2017 KRG-MOP-REF-3 90,000 77,160 12,840 Subcomponent 3.3 - Project management and reform coordination 20 December 2017 KRG-MOP-REF-9 40,000 38,475 1,525 Subcomponent 3.3 - Project management and reform coordination 29 November 2017 KRG-MOP-REF-io 40,000 20,385 19,615 Subcomponent 3.2 - Public procurement modernization 24 January 2018 KRG-MOP-REF-13 15,000 8,000 7,000 Subcomponent 3.2 - Public procurement modernization 26 March 2018 KRG-MOP-REF-i6 40,000 39,597 403 Subcomponent 3.2 - Public procurement modernization 4 April 2018 KRG-MOP-REF-17 75,000 75,141 (141) Subcomponent 3.3 - Project management and reform coordination 28 May 2018 KRG-MOP-REF-18 100,000 25,000 75,000 Subcomponent 3.1 - Public investment management system strengthening 2 September 2018 KRG-MOP-REF-21 100,000 78,142 21,858 Subcomponent 3.2 - Public procurement modernization 3o August 2018 KRG-MOP-REF-23 20,000 18,506 1,494 Subcomponent 3.1 - Public investment management system strengthening 17 January 2019 KRG-MOP-REF-19 1,382,337 1,382,335 2 Subcomponent 3.3 - Project management and reform coordination 17 March 2019 KRG-MOP-REF-15 40,000 34,000 6,ooo Subcomponent 3.3 - Project management and reform coordination 12 May 2019 KRG-MOP-REF-26 5,000 4,630 370 Subcomponent 3.1 - Public investment management system strengthening 1 December 2019 KRG-MOP-REF-27 100,000 99,617 383 Subcomponent 3.3 - Project management and reform coordination 19 July 2020 KRG-MOP-REF-28 75,000 42,500 32,500 Subcomponent 3.2 - Public procurement modernization 6 December 2020 KRG-MOP-REF-29 100,000 90,010 9,990 Subcomponent 3.2 - Public procurement modernization 2 July 2021 KRG-MOP-REF-33 100,000 103,369 (3,369) 7 Contract Amount Amount (Over)/Under Budget line description Contract date reference committed paid Budget USD USD USD Subcomponent 3.3 - Project management and reform 7 February 2022 KRG-MOP-REF-42 5,500 4,100 1,400 Subcomponent 3.1 - Public investment management system 9 August 2022 KRG-MOP-REF-19 15,000 15,000 - strengthening (Amended) Subcomponent 3.3 - Project management and reform 2o December 2020 KRG-MOP-REF-44 32,500 - coordination -32,500 2,375,337 2,155,967 219,370 (7) AuHIoRIZATIoN DATE This financial statement of the Project for the year ended 31 December 2022 were authorized for issuance by the management on 17 May 2023. 8 . . . - ■ ■ ■ . ■ . other suPPlementaw In角rmation . schedule。f Actual versus Budgeted ■Cash Receipts and Par肌ents ■ ■ ■ ■ ■ ■ . ■ . ■ . . ■ ■ . ■ . ■ . ■ ■ . GENERAL DIRECTORATE OF CAPITAL INVESTMENT BUDGET MODERNIZATION OF PUBLIC ]FINANCIAL MANAGEMENT SYSTEMS PROJECT - COMPONENT 3 SCHEDULE OF ACTUAL VERSUS BUDGETED CASH RECEIPTS AND PAYMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (UNAUDITED) Oup audit of the accompanying Statement of Cash Receipts and Payments of the Modernization of Public Financial Management Systems Project - Component 3 for the General Directorate of Capital Investment Budget for the year ended 31 December 2022, has been made primarily for the purpose of expressing an opinion on the statement taken as a whole. The Schedule of Actual Versus Budgeted Cash Payments (the "Schedule") as set out on the following page is presented for analysis purposes only. Accordingly, we do not express any opinion thereon. Budget variances, if any, are subject to World Bank approval. Actual - Until 31 December (Over)/Under Budget 2022 Budget USD USD USD Subcomponent 3.1 - Public investment management system strengthening 2,000,000 1,592,131 407,869 Subcomponent 3.2 - Public procurement modernization i,8oo,ooo 413,793 1,386,207 Subcomponent 3.3 - Project management and reform coordination 400,000 322,419 77,581 4,200,000 2,328,343 1,871,657 9