0 GrantThornton Zambezi Watercourse Commission Annual Financial Statements 31 March 2020 Zambezi Watercourse Commission NATURE OF OPERATIONS: Zambezi Watercourse Commission is a river basin organization set up by countries that share the Zambezi River Basin. The objective of ZAMCOM is to promote equitable and reasonable utilisation of the water resources of the Zambezi watercourse and the efficient management and development thereof. ZAMBEZI WATERCOURSE TECHNICAL COMMITTEE: Mr. Manuel Quintino (Angola) Mrs. Pauline Mufeti (Namibia) Mr. Aderito Figueria (Angola) Mr. Christopher Munikasu (Namibia) Mrs. Bela Julieta Bongo Chidhumo (Angola) Dr. George Lugomela (Tanzania) Mrs. Bogadi Mathangwane (Botswana) Mrs. Alice Engelbert (Tanzania) Mr. Sydney Kamtukule (Malawi) Mr. Robert K M Sunday (Tanzania) Mr. Hyde Sibande (Malawi) Mr. Kenneth Nyundu (Zambia) Mr. Messias Macie (Mozambique) Mrs. Flora Simumbo (Zambia) Mr. Hilario Pereira (Mozambique) Mr. Tinayeshe Mutazu (Zimbabwe) Mr. Custodio Vicente (Mozambique) Mr. Gilbert Mawere (Zimbabwe) REGISTERED OFFICE: Zambezi Watercourse Commission 128 Samora Machel Avenue HARARE AUDITORS: Grant Thornton Chartered Accountants (Zimbabwe) Registered Public Auditors Camelsa Business Park 135 Enterprise Road Highlands HARARE PRINCIPAL BANKERS: Stanbic Bank of Zimbabwe Limited Minerva branch HARARE Zambezi Watercourse Commission Contents Page Responsibilities of Management and Those Charged with Governance for the Financial Statements 1 Independent Auditor's Report 2-4 Statement of income and expenditure 5 Statement of financial position 6 Statement of changes in funds 7 Statement of cash flows 8 Statement of accounting policies 9 Notes to the financial statements 10-12 These financial statements are expressed in United States Dollars (USD). IA Responsibilities of Management and Those Charged with Governance for the Financial Statements for the gear ended 31 March 2020 It is the Technical Committee's responsibility to ensure that the financial statements fairly present the state of affairs of the Commission. The external auditors are responsible for independently reviewing and reporting on the financial statements. The Technical Committee has assessed the ability of the Commission to continue as a going concern and believe that the preparation of these financial statements on a going concern basis is still appropriate. However, the Technical Committee believes that under the current economic environment a continuous assessment of the ability of the Commission to continue to operate as a 6oing concern will need to b performed to dtermine the continued appropriateness of the going concern assumption that has been applied in the preparation of these financial statements. The financial statements set out in this report have been prepared in accordance with International Financial Reporting Standards (IFRSs]. The statements are based on appropriate accounting policies which are supported by reasonable and prudent judgements and estimates. The Commission's accounting and internal control systems are designed to provide reasonable assurance as to the integrity and reliability of the financial statements and to adequately safeguard, verify and maintain accountability of its assets. Such controls are based on established written policies and procedures and all employees are required to maintain the highest ethical standards in ensuring that the Commission's business practices are conducted in a manner which in all reasonable circumstances is above reproach. Issues that come to the attention of the Technical Committee have been addressed and the members confirm that the system of accounting and internal control is operating in a satisfactory manner. The Commission's financial statements which are set out on pages 5 to 12 were, in accordance with their responsibilities, approved by the Technical Committee on .S.................. 2021 and are signed on its behalf by: Eng. Tinayeshe Mutazu Mr. Michael Mutale Technical Committee Chairperson Executive Secretary 0 GrantThornton 2 INDEPENDENT AUDITOR'S REPORT GCanet " Thr 135 Enterprise Road, Highlands PO Box CY 2619 Causeway, Harare Zimbabwe T +263 0242 442511-4 F +263 0242 442517 /496985 E info@zw.gt.com www.grantthornton.co.zw To the Technical Committee of Zambezi Watercourse Commission Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Zambezi watercourse Commission set out on pages 6 to 12, which comprise the statement of financial position as at 31 March 2020, the statement of income and expenditure, the statement of changes in funds and a summary of significant accounting policies and other explanatory notes. In our opinion, the financial statements present fairly, in all material respects, the financial position of Zambezi Watercourse Commission as at 31 March 2020, and its financial performance and cash flows for the year then ended in accordance with the International Financial Reporting standards (IFRSs). 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 Commission in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Chartered Acountmts Member of Grant Thornton Irtemational Ltd A List of partners may be Inspected at the above address 3 Responsibilities of Management and Those Charged with Governance for the Financial Statements The Technical Committee is responsible for the preparation and fair presentation of the Commission's financial statements in accordance with the International Financial Reporting Standards (IFRS). This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor's Responsibilities for the Audit of the Financial Statements Our 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 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 judgement and maintain professional skepticism throughout the audit. We 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 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 Commission's internal control. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. * 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 Commission'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 financial statements 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 * k report. However, future events or conditions may cause the Commission to cease to continue as a going concern. * 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. * Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Commission to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the Commission audit. We remain solely responsible for our audit opinion. We communicate with those the technical committee 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. We also provide the technical committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. Report on other legal and regulatory requirements In our opinion, the financial statements have been properly prepared, in all material respects, in accordance with the accounting policies and comply with the disclosure requirements of the Commission's Financial Management Policy Guidelines. The engagement partner on the audit resulting in this independent auditor's report is Edmore Chimhowa. Ed more Chimhowa Partner Registered Public Auditor (PAAB No: 0470) . n .......2021 Grant Thornton Chartered Accountants (Zimbabwe) Registered Public Auditors HARARE Statement of income and expenditure for the year ended 31 March 2020 2020 2019 Notes USD USD INCOME Member states contributions 3 615962 320000 Donations 4 766715 2550710 Other income 5 10 3320 Total income 1382687 2874030 EXPENDITURE Audit fees - 5303 Bank charges 7061 12 062 Capacity building - 18250 Currency variance 7524 34588 Information and communiation - 65143 Motor vehicle expenses - 13409 Office establishment costs 6 8857 851 Office operations 52607 59623 Operation and maintenance of Zambezi Water Resources Information Systems(ZAMWIS) - 37245 Partnership for cooperation - 102 637 Personnel costs 515918 489720 Staff relocation allowance - 43209 Travel costs 63028 66443 Value Added Tax (VAT] non refundable 6783 1375 Zambezi Strategic Plan - 934920 Zambezi Water Management information systems 10 236 483 291 Zambezi Watercourse Commission - governance - 73166 ZAMCOM Institutional Development 102815 31371 ZAMCOM -Kwando Project 47 442 - 821 261 2 472 606 SURPLUS FOR THE YEAR 561 426 401 424 Ik Statement of financial position as at 31 March 2020 2020 2019 Notes USD USD ASSETS Current assets Accounts receivable 7 835 4+130 Cash and bank balances 8 182 430 179869 Total assets 183265 183999 FUNDS. RESERVES AND LIABILITIES Funds and reserves Accumulated fund/(losses) 145824 (415602) Current liabilities Accounts payable 9 371441 599 601 Total funds, reserves and liabilities 183265 183999 Eng. Tinageshe Mutazu Mr. Michael Mutale Technical Committee Chairperson Executive Secretary Statement of changes in funds for the gear ended 31 March 2020 Accumulated fund/(losses) USD Balance as at 1 April 2018 (817026) Surplus for the year 401 424 Balance at 31 March 2019 (415 602) Balance as at 1 April 2019 (415 602] Surplus for the year 561 426 Balance at 31 March 2020 145 824 Statement of cash flows for the year ended 31 March 2020 2020 2019 Notes USD USD Cash flows from operating activities Surplus for the year 561 426 401 424 Cash flows generated before changes in working capital 561426 401 424 Working capital changes: Decrease/(Increase) in accounts receivable 3295 (1477) Decrease in accounts payable (562160) (692769) Net cash generated from/(utilised in) operating activities 2 561 (292 B22) Net increase /(decrease) in cash and cash equivalents 2 561 (292 822) Cash and cash equivalents at the beginning of the year 179 869 472 691 Cash and cash equivalents at the end of the gear 182 430 179 869 IO Statement of accounting policies for the Mear ended 31 March 2020 1 Nature of operations Intergovernmental Cooperative Management of Water, promoting equitable and reasoble utilization of the water resources of the Zambezi Watercourse. Registered address 128 Samora Machel HARARE 1.1 Currency The statement of income and expenditure is presented in United States Dollars "USD" which is both the functional and presentation currency for the Commision. 1.2 Donor information The Commission is funded by Danish International Development Fund (DANIDA). The project funding agreement was concluded on the 31st of January 2015. 2 Summary of significant accounting policies The principal accounting policies and disclosures of the Project, which are set out below, have been consistently applied in all material respects. 2.1 Basis of preparation of financial statements The statement of income and expenditure is prepared on the historical cost basis. 2.2 Income 2.2.1 Donations Donation income in cash is recognised on a receipt basis. 2.3 Expenditure Attributable expenditure is recognised on an accruals basis when goods and services have been received. 2.4 Income tax The Project is exempt from paying tax in terms of the Third schedule of the Income Tax Act (Chapter 23:06). Notes to the financial statements for the year ended 31 March 2020 2020 2019 USD USD 3 Member states contributions Angola 90000 80000 Botswano 90000 80000 Malawi 65 772 - Mozambique 150 000 Namibia 90 000 80 000 Tanzania Zambia 130190 80000 Zimbabwe - 615 962 320 000 4 Donations income Cash donations Danish International Development Agency (DANIDA) 192 024 735 230 World Wide Fund (WWF) 82904 67703 Donations in kind CIWA 491787 1747 777 766715 2550710 Donations in kind relate to direct payments made to suppliers by the respective donors. 5 Other income Interest income 10 3320 Other - - 10 3320 6 Office establishment costs Upgrading office equipment 6 917 851 Computer equipment, furniture and fittings 1940 - 8857 881 7 Accounts receivable. VAT refundable 785 785 Staff salary advance - 3 345 Travel advance 50 - 835 4130 Notes to the financial statements for the year ended 31 March 2020 (continued] 2020 2019 USD USD 8 Cash and bank Bank balances 182430 179758 Cash balances - 111 182 430 179 869 9 Accounts payables Leave pay provision 18990 18990 Travel advance refund 132 - Staff salary arrears - 52205 Other payables 18319 528406 37441 599 601 It is the policy of the Commission that all expenditure on non-current assets be expensed in the year of purchase. 10 Going concern considerations The following conditions indicate the existence of a material uncertainty related to going concern: As as at reporting date, the Commission's net assets amounted to USD $ 145 825. Current liabilities exceeded its current assets by USD $ 415 602 in 2019. The following measures are being implemented: i The Commission is stepping up efforts to collect all outstanding subscriptions from the Riparian states amounting to USD $1 536 193. The Commission has engaged its donors with the view to securing more funding. Its donors have indicated their willingness to settle the outstanding strategic plan and ZAMWIS-DSS consultancy fees amounting to USD $ 482 026 before end of the following financial period. It is on this basis that the financial statements have been prepared on a going concern basis. 11 Covid-19 pandemic The World Health Organisation (WHO) declared COVID-19 to be a global pandemic on 11 March 2020. The first cases in Zimbabwe were recorded on the 20th and 21st March 2020, with the first fatality being announced on 23 March 2020. On the 27th of March 2020, the Government of Zimbabwe announced a 21 day lockdown period effective 30 March, 2020. This was subsequently extended to 21 May 2020 and further extended indefinitely. However, some relaxations have been made for some businesses to operate under specified guidelines. Based on current assessment of the financial report information as at 31 March 2020, the Covid-19 pandemic will not significantly impact key assumptions made in the preparation of financial statements as at that date. U+A Notes to the financial statements for the year ended 31 March 2020 (continued) 2.5 Property plant and equipment movement schedule Motor Computer Office Furniture G Vehicles Equipment Equipment fittings Total USD USD USD USD USD Balance as at 1 April 2019 141 427 46 482 62379 19 808 270 096 Additions - 6917 - 1940 8857 Balance as at 31 March 2020 141 427 53 399 62 379 21748 278 954 The buildings occupied by the Zambezi Water Course Commission are being used for free. These assets are valued at cost price, and are subsequently depreciated. 2.5.1 Asset summary ASSETS COST USD Motor Vehicles 141 427 Computers, laptops and software 53 399 Furniture & fittings 21748 Office equipment 62379 Total 278 954 2.5.2 Motor vehicles Purchase CODE Asset Type Description Purchase Date usD ZAMCOM 04 Mitsubishi Pajero-White 2006 35 600 ZAMCOM 03 Mitsubishi Pajero-Green 2006 35 600 ZAMCOM 02 Mitsubishi Pajero-Silver 2006 30 000 245 CD Mitsubishi Pajero-Grey 2016 40227 141 427 I U I__ GrantThornton An instinct for growth %wnwpnithurnton.co.zw ,r - Untn J ånisnd ca hmu sammc i&ri 11vnr-l juraiif ~ twssiitr HikX1,!u tm fnt on vrna u i i. n",sv !rhr tim trant t 1nj n ienmern n xi ,vtd ld d n,1rer In», awt w td ac paarfp. t irs o r a .d rn in n it m wn.r (rs in, jlti ituj p a iraa iip \ < 1l patn r a at (Ne ii tieno a R uered (>ff(se s ' 5 1 : $ d Ul. 1 ldiid n./l9SI