M I N IS'I'RY OII IIINA]VCE I) IiI'A IT'I'M IiN'I' OF FISCAL POLICY lrR(),t IiC't' I M I)LUMENTATION LINIT (pIU) I we PUBI,IC IIINANCE, MANAGEMENT REFORM PR0JIICT (PFMRP) FINANCIAL STATEMENTS FOR THE YEAR ENDED 81 DECEMBER zoza I t l A & I www.pwc.com/la J I I MINISTRY OF FINANCE DEPARTMENT OF FISCAL POLICY PROJECT IMPLEMENTATION UNIT (PIU) PUBLIC FINANCE MANAGEMENT REFORM PROJECT (PFMRP) FINANCIAL STATEMENTS FOR THE YEAR ENDED g1 DBCEMBER 2o27. CONTENTS PAGE(S) Statement by the Project management 1 Independent auditor's report 2-4 Statement of receipts and disbursements 5-6 Statement of fund balance 7 Notes to the financial statements 8-u ll MINISTRY OF FINANCE I DEPARTMENT OF FISCAL POLICY PROJECT IMPLEMENTATION I.INIT (PIU) il PUBLIC FINANCE MANAGEMENT REFORM PROJECT (PFMRP) FINANCIAL STATEMENTS FOR THE YBAR ENDED g1 DECEMBER zozr lt Statement by the Project management 1t The Government of Lao PDR (GoL) is strengthening the management of its public finances through establishing guiding principles-and policies fir improvei public finance management (llM). As part of its objectiveJo_ strengthen the manag"-.rrt of its public finances, the I\iinistry lt of Finance (MoF) has adopted the Vision to 2o3o a.rd prblic Finaice Development Strategy to zoz5 (PFM Strategr) to improve policy consistency, efficiency, transparency and ,."orrrtu6'itity in public expenditure and revenue management by strengihening institutional syste*, u.,i. capacity, as well as ll _making progress towards meeting ippropriate international financial management standards. To support implementation of the PFM Strategz, the GoL has received a EUR r.5 million grant from the European Union (EU) through the worta bank to support in the implementation of the Public Finance Management Reform Project Trust pund ltr;, fro- iis effectiveness to 13 March 2022. Refer to World Bank notice date 14 Decemb et 2ci27 of extension the closing date for 13 March 2o22to 13 July zozz with no grace period. On behalf of the Project: Chittakone Savathdy Head of Project Implementation Unit Deputy Head of Project Implementation Unit Date: zz February zozz Date: zz February zozz I I } we I INDBPENDBNT AUDITOR'S REPORT I TO THE PROJBCT MANAGER OF PUBLIC FINANCE MANAGEMENT REFORM PROJECT (PFMRP) I Our opinion I In our opinion, the financial statements of Public Finance Management Reform Project (PFMRP or the Project) for the year ended 3r December 2o2L are prepared, in all material respects, in accordance with the accounting policies described in Note 2 to the financial statements. I Whatwe have audited I The Project's financial statements comprise: the statement of receipts and disbursements for the year ended 3r December 2o2t I . . the statement of fund balance as at 31 December zozr, and the notes to the financial statements, which include significant accounting policies and other explanatory information. I Basis for opinion I 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 I the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. I Independence We are independent of the Project in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board forAccountants (IESBA Code). We have fulfilled our other ethical responsibilities in accordance with the IESBA Code. Emphasis of Matter - Basis of accounting and restriction on distribution and use We draw attention to Note 2 to the financial statements, which describe the basis of accounting. The financial statements are prepared in accordance with accounting policies described in Note 2 to the financial statements. As a result, the financial statements may not be suitable for another purpose. Our report is intended solely for the PFMRP and donors and should not be distributed to or used by parties other than the PFMRP and donors. Our opinion is not modified in respect of this matter. i PriceuaterhouseCoopers (Lao) SoIe Company Limited. 4th lloor, Atlianz Building, 39 Lane Xang Auenue, PO Box 7oo3, VientianeLao PDR, Telephone : + 856 zt zzz7t8-9, Facsimile: + 856 zt 222725, wtow.otoc.com,/la 2 I I pwc Responsibilities of the director for the financial statements I The director is responsible for the preparation of the financial statements in accordance with accounting policies described in Note z1o the financial statements, and for such internal control as the director determines is necessaryto enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the director is resp_onsible for assessing the Project's abiiityto continue as a going concern, disclosing, as applicable, matters related to going conc_ern and using the going basis of accounting unless the director either intends to liquidate "o.rcem the Projeit or tb cease operations, or has no realistic alternative but to do so. ,j Auditor's responsibilities for the audit of the financial statements ,j Our objectives are to obtain reasonable assurance about whether the financial statements as a whole ire 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 ,l is not a guaiantee that an audit conducted in accordance with ISAS will always detect a material misstate*ment 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 scepticism throughout the audit. We also: T Identify and assess the risks of material misstatement of the financial statements, whether due to iraud or error, design and perform audit procedures responsive to those risks, and T 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 I one resulting from erroi, 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 t expressing an opinion on the effectiveness of the Project's internal control. Eriluate th" ,pp.opriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Director. Conclude on the appropriateness of management's use of the going concern basis of T accounting and, baied on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Project's ability I to continue as a going concern. If we conclude that a material uncertainty exists, we are required to drawittention in our auditor's report to the related disclosures in the financial stalements or, if such disclosures are inadequate, to modify our opinion. Our conclusions I are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Programme to cease to continue as a going concern. I t pricewaterhouseCoopers (Lao) Sote Company Limited. 4th Floor, Allianz Building, 33 Lane Xang Auenue, T pO Box 7oog, Vieniane Lao PDR, Telephone : + 8g6 zt zzz7t9-g, Facsimile: + 856 zt 222723, wtow.pwc.com/la 3 I I } pwc We communicate with the Project's management 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. I (Lao) Sole Company Limited I I I Vientiane Capital, Lao PDR Date: zz February zozz I I T I t t I T PricewaterhouseCoopers (Lao) SoIe Company Limited.4th Floor, Allianz Building,33 Lane Xang Auenue, PO Box 7oo3, Vientiane Lao PDR, Telephone : + 856 zt zzz7t8-9, Facsimile: + 856 zt 222723, wwwewc.com/la 4 t I MINISTRY OF FINANCE I DEPARTMENT OF FISCAL POLICY PROJECT IMPLEMENTATION UNIT (PIU) I PUBLIC FINANCE MANAGEMENT REFORM PROJECT (PFMRP) STATEMENT OF RECEIPTS AND DISBURSEMENTS I FOR THE YEAR ENDED 81 DECEMBER zozr Cumulative For the Cumulative I to Bl December year ended 3r Decemer to 81 December 2020 2()21 202L t RECEIPTS USD USD USD t Designated account replenishment Direct disbursements 962,679 1O4,858 1,10671533 4C'8,743_ 4o8,743 t,37t,4t8 ro4,858 tr476rz76 DISBURSEMENTS T Improved domestic revenue mobilization zz8,9oo 25,844 254,744 Enhanced budget preparation and execution and interoperability of T government PFM systems 330,690 289,642 6zo,33z Strengthened public procurement 155,109 52,5o4 zo7,6t3 Public financial management reform and ,l program coordination z66,gg7 47,298 3L4,235 98r,686 415,288 l^1396r9z4 I Surplus/(Deficit) of receipts over disbursements _____9o,sgz ____ (6,s4s) 79'352 I I t I Phirany Phissamay Chittakone Savathdy Deputy Head of Project Implementation Head of Project Implementation Unit J Unit Date: zz February zozz Date: zz February zozz ,l I ,l The accompanylng notes on pages 8 to u form an integral part of the statements of receipts, disbursements and fund balance 5 ll MINISTRY OF FINANCE DEPARTMENT OF FISCAL POLICY PROJECT IMPLEMENTATION UNIT (PIU) PUBLIC FINANCE MANAGEMENT REFORM PROJ I]CI' (PFMRP) ,l STATEMENT OF RECEIPTS AND DISBURSEMENTS FOR THE YEAR ENDED 81 DECEMBER zozr :I 2021 2020 USD USD ,ll RECBIPTS Designated account replenishment 4o8,743 t45,6o7 ,ll Direct disbursements ro4,858 4o8,743 25O1465 DISBURSEMENTS ,ll Improved domestic revenue mobilization 4 25,844 rB6,96o Enhanced budget preparation and execution and interoperability of government PFM systems 5 289,642 271,224 .I Strengthened public procurement 6 52,5o4 136,895 Public financial management reform and program coordination 7 47,298 135,550 ,,f 415,288 73O1629 Deficit of disbursements over receipts (6,5+S) (48o,t64) It. ,,1 ,,1 ,l Chittakone Savathdy ,] Proj ect Implementation Unit Deputy Head of Project Implementation Unit Date: zz February zozz Date: zz February zozz tr t. r l The accompan)'lng notes on pages 8 to rr form an integral part of the statements of receipts, disbursements and fund balance. MINISTRY OF FINANCB T DEPARTMENT OF FISCAL POLICY PROJECT IMPLEMENTATION UNIT (PIU) I PUBLIC FINANCE MANAGEMENT REFORM PROJECT (PFMRP) STATEMENT OF FUND BAI.ANCE AS AT 81 DECEMBER zozr T 2021 2020 t FUND BAI.ANCE Note USD USD I Opening fundbalance Deficit of disbursements over receipts Closing fund balance 8s,897 (6,sqs) 566,o6r (48o,t64) _______J9,3,52 ________ao,sgz I Represented by: t Cash on hand cash at banks and advance Cash on hand Cash at banks zz8 8s,897 78,69r t Advance 433 79,352 8s,897 I t I I I Head of Project Implementation Unit Date: zz February zozz Chittakone Savathdy Deputy Head of Project Implementation Unit Date: zz February zozz I I I I t t The accompanying notes on pages 8 to rr form an integral part of the statements of receipts, disbursements and fund balance. I T I MINISTRY OF FINANCE DEPARTMENT OF FISCAL POLICY PROJECT IMPLEMENTATION UNIT (PIU) I PUBLIC FINANCE MANAGEMENT REFORM PROJECT (PFMRP) l NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 91 DECEMBER zozr 1. GENERRAL INFORIvTA*TION OF THE PROJECT I The Government of Lao PDR (GoL) is strengthening the management of its public finances through establishing guiding principles and policies for improved public finance l management (PFM). As part of its objective to strengthen the management of its public finances, the Ministry of Finance has prepared a comprehensive Public Finance Management Development Strategy to 2o2S to improve policy consistency, efficiency, I transparency and accountability in public expenditure and revenue management by strengthening institutional systems and capaci$, as well as making progress towards meeting appropriate international financial management standards. The GoL has received a EUR r.5 million grant from the European Union to support in the : implementation of MoF's Public Finance Management Development Stratery to zoz5by improving the legal framework and institutional capacity for budget preparation and I execution, revenue management, and public procurement. The Project Implementation Unit (PU) was established in December zor8. Under the oversight of the MoF's PFM Reform Secretariat, the PIU will be responsible for the T implementation of the E-FITS Project (PT6ZSSD and the PFM Reform Grant (Pr6Z66r). The PIU will be the central executing agency, responsible for overall implementation t monitoring, fiduciary oversight, and provision of technical, procurement, and financial management support to MoF implementing departments responsible for the technical implementation of project / program components. Furthermore, the PIU will be responsible for the preparation of work plans and for the provision of logistics, I administration and coordination across implementing departments. I SIGNIFICANT ACCOUNTING POLICIES The Project will adopt 'modified cash basis' of accounting and will use "double entry" recording methodology to record transactions. The accounting system should be T computerized using appropriate accounting software which is to be tailored according to the requirements of the Project. Adequate accounting books and records will be I maintained and monitoredbythe FM Consultant. I I l I I 8 I I I MINISTRY OF FINANCB DEPARTMENT OF FISCAL POLICY PROJECT IMPLBMENTATION T.'NIT (PIU) t PUBLIC FINANCB MANAGEMENT REFORM PROJECT (PFMRP) NOTBS TO THB FINANCIAL STATEMENTS I FOR THE YEAR BNDED 81 DECEMBER zozr SIGNIFICANT ACCOI]NTING POLICIES (CONTINUED) I The project will be following the accounting policies: I a) The accounting system will be based on a modified cash basis of accounting in which revenues and expenses are recorded when cash is actually received or paid out. Where cash advance is issued, it will be recognized as receivables and are recorded I as expense only after the liquidation and presentation of documents, receipts are recognized when received rather than when earned and expenditures are recognized when paid rather than when incurred and this is also recorded in the audited I financial statements presented by External Auditors; b) Accounting transactions will be recorded in the US Dollars in parallel with Lao Kip (local currency' and entered into the Project accounting system. Transactions t arising in other foreign currencies shall be translated at the exchange rates ruling at transaction dates into US Dollars. I c) Monetary assets and liabilities denominated in other foreign currencies at the balance sheet date are translated at the rate of exchange ruling at the balance sheet date. All exchange differences are dealt with in the receipts and expenditure account. t d) The financial statements are prepared under the historical cost basis. No depreciation will be charged for the fixed assets as these items are expensed in full I during the month of purchase and at the end of the project life all assets will be transferred to the Government of Lao PDR in line with the Government asset management policy. I e) A separate Fixed Assets Register will be maintained by the Project to ensure that all money expended purchasing assets are recorded in detail listing date in use, location and condition and person responsible for the asset. I The reports may be presented requirements of the Project. in US Dollars which is in accordance with the T J. DESIGNATED ACCOTINT REPLENISHMENT 2021 2020 T Receipt date USD USD zo November 2ozo r45,6o7_ 16 March zozr 4C8,743 T 4o8,743 t4516o7 I I t 9 I I MINISTRY OF FINANCE I DEPARTMENT OF FISCAL POLICY pno.lncr TMPLEMENTATTON LINrT (PIU) I PUBLICFINANCEMANAGEMENTREFoRMPRoJECT(PFMRP) NOTES TO THE FINANCIAL STATEMENI'S l FOR THE YEAR ENDED 3r DECEMBER zozr 4. IMPROVED DOMESTIC REVENUE MOBILIZATION 2020 202L t USD t6,47t USD tr,56o Consulting service t 7,858 L75,4OO_ Training andworkshoP 1,515 Increasemental oPerating cost 186,96o -----?E'84L t AND ENHANCED BUDGET PREPARATION AND EXECUTION iNrBnopERABrLiTY oF covBRNMENT PFM sYsrEMS I 2021 2020 USD USD t Goods ,4r,ora 6g,7Tr tt8,t67 Consulting service* 8r,87o z7,gz9 Training and workshoP T Increasemental oPerating cost 19,o86 7,4L6 z8q.6az 27Lr224 t *Consulting services were paid for and' mainly covered support fot-l!'-"-P.ttparation system (FMIS) and software and implementation of a finaricial *urug"rnunt information development. 6. STRENGTHENEDPUBLICPROCUREMENT 2021 2020 USD USD l Consulting service* Training andworkshoP Increasemental oPerating cost 33,488 Ll,717 7,299 31,2OO to5,6z7 68 136,895 t salary' ------52r5o4 " This mainly covers the consultant'q I l I I t 10 t MINISTRY OF FINANCE I DEPARTMENT OF FISCAL POLICY PROJECT IMPLEMENTATION UNIT (PIU) I PUBLIC FINANCE MANAGEMENT REFORM PROJECT (PFMRP) NOTES TO THE FINANCIAL STATEMENTS I FOR THE YEAR ENDED 81 DECEMBBR eozr 7. PUBLIC FINANCIAL MANAGEMENT REFORM AND PROGRAM I COORDINATION 2()21 2020 I Goods Consulting service USD ,+,sso USD 22,349 8,46s t Training and workshop* Increasemental operating cost 2t,9L2 10,536 92,574 tz,t6z _____a,29p_ ________1gE,5Eq I * Training and workshop mainly cover supports for technical working group on public finance management reform and workshop for national treasury staff. t 8. CASHATBANKS 2021 2020 T USD USD Cash at designated account 27,372 32,379 t Cash at operating bank account 51,319 ---:9,o9! 53,518 t --_9o,s9z T T I I I I T T ll I