TABLE OF CONTENTS Page SUMMARY Project Background ………………………………………………………………... 2 Scope and Objectives of Audit……………………………………………………. 3 Results of Audit…………………………………………………………………….. 6 PROJECT FINANCIAL STATEMENTS Independent Auditor’s Report…………………………………………………….. 8 Statement of Designated Account………………………………………………… 11 Statement of Sources and Uses of Funds………………………………………… 12 Statement of Cumulative Investments…………………………………………….. 13 Notes to Project Financial Statements……………………………………………. 14 INTERNAL CONTROL STRUCTURE Auditor’s Report……………………………………………………………………… 18 STATEMENT OF DESIGNATED ACCOUNT Auditor’s Report……………………………………………………………………… 20 COMPLIANCE Auditor’s Report………………………………………………………………………. 24 1 Project Background The Government of the Commonwealth of Dominica (GoCD) has secured financing from the International Development Association (IDA) credit and a Crisis Response Window credit for the OECS Regional Health Project. The Project will finance support for health systems and capacity building, support for the reconstruction of health centres, and project management and coordination. The projects became effective on 19 February, 2020 (IDA Credit 64780) and 13 November, 2020 (IDA credit 67300) respectively. Source of Finance Source of Reference Amount Amount Finance (SDR /million) (USD/million) IDA Credit 67300-DM 2.1 3.00 IDA Credit 64780-DM 2.1 3.00 Total 4.2 6.00 Project Objectives The objectives of the Project are to contribute both to the recovery of health facilities affected by Hurricane Maria and to improve the application of resilient building practices in the health sector. The Project consists of the following three components: - Component 1: Improved Health Facilities and Laboratory Capacity. This component focuses on improving the resilience and capacity of select health facilities and laboratories to provide services to manage a public health emergency, including an emerging disease outbreak, extreme weather event or other disaster. The component will support the refurbishment and equipping of select health facilities to ensure continuity of care and improve laboratory infrastructure and equipment with corresponding training. Component 2: Strengthening Public Health Surveillance and Emergency Management This component will support efforts to strengthen public health preparedness, including surveillance and response through improvement of national and regional capacities and promotion of cross-border collaboration. The referral network referred to here is a health network at the facility level where a Smart health facility is networked with facilities that 2 have not been retrofitted to ensure continuity of care following an extreme weather event. Component 3: Will support the critical building blocks for strong implementation and coordination required for implementing this regional project. Specific institutional capacity building activities include technical assistance. The Field Epidemiology Training Program (FETP) represents one area through which investments at the national level can be leveraged. While training participation costs for basic FETP will come out of the respective country project budgets, participation costs for the advanced modules of the FETP will be covered by CARPHA. With respect to project management and coordination, this component will finance personnel necessary for the execution of the project as well as regional coordination platforms for knowledge sharing among the implementing entities and collective monitoring of implementation status. Component 4: Contingency Emergency Response Component (CERC) This component aims to provide immediate surge funding in the event of a public health emergency, such as a disease outbreak. The CERC is only triggered in the case of a public health emergency and when certain actions, as agreed by the Government and Bank teams, are met. These actions can include: (i) the country declares a national public health emergency; and (ii) presents a sound and actionable country-level response plan. This component was triggered due to the Covid- 19 pandemic. Objectives and Scope Objectives The objective of the audit of the project financial statements is to enable the auditor to express a professional opinion on the project’s financial position as at the end of July 1, 2021 and June 30, 2022 and of the income and expenditure for the accounting period ending on that date. The specific objectives of the audit were to:  Issue an opinion on whether the Project financial statements present fairly, in all material respects, the funds received and disbursements made during the year audited in accordance with International Standards of Auditing and in accordance with the respective agreements with the Bank.  Issue an opinion as to whether the supplementary financial information for the Project is fairly presented, in all material respects.  Issue a report with respect to the adequacy of the internal control structure of the implementing institution in regard to the project and the contribution of counterpart funds for the project. 3  Issue an opinion with respect to the Project Management Unit’s (PMU’s) compliance with the terms of the financing agreement and applicable laws and regulations (with regard to the financial aspects).  Issue an opinion as to: (a) whether the expenditures included in the Interim Financial Reports (IFRs) are eligible, and if the information presented in the IFRs is reasonably dependable; (b) whether the accounting and internal control procedures used for the preparation of the IFRs are adequate; and whether Credit funds have been used only for Project purposes, in accordance with the requirements established in the corresponding agreements with the international organizations.  Issue an opinion on the Statement of Reconciliation of the Designated Account. Scope The examination covered project activities for the period July 1, 2021 – June 30, 2022. The examination was guided by the International Standards of Supreme Audit Institutions (ISSAIs) issued by the International Organization of Supreme Audit Institutions (INTOSAI) and conducted in accordance with the World Bank’s requirements. The following methodology was undertaken to meet the objectives of the examination. 1. Planning a) We performed the following:  Understanding the project and its environment by reviewing: - Project Appraisal Document - Operational Manual - World Bank Procurement Guidelines - CERC Manual and Emergency Action Plan - World Bank Financing Agreement - Disbursement letter - Disbursement Guidelines for Investment Project Financing - Estimates of the Government of Dominica 2021-2022  Understanding the nature and characteristics of internal controls relevant to the audit.  Assessed the risk of material misstatement at both financial statement level and assertion level. b) Development of overall audit strategy and audit plan, determining the nature, timing and extent of the audit procedures for each class of transactions, accounts and disclosures. 4 c) We held consultations with the Project Officer and Financial Specialist – Implementation Support Team. 2. Evaluating Internal Control We performed test of controls on the following areas: a) Compliance with applicable legislation b) Receipt and disbursements of project funds c) Designated account reconciliation and Project Bank account Reconciliations d) Data retention and supporting documentation e) Procurement of goods, works and services 3. Substantive audit procedures performed We performed the following substantive audit procedures in order to verify the existence, accuracy and completeness of the following: i. Cash and bank balances Confirmed bank balances at July 1, 2021 and June 30, 2022. ii. Verification of funds received from the World Bank a) Examined monthly bank statements to verify whether amounts received were credited to the appropriate account and included in the bank balance. b) Confirmed funds disbursed by the World Bank. c) Trace the amount received to the bank statement. iii. Verification of expenditure a) We verified the expenditure listed in the financial statements to their supporting documentation. b) The items examined were agreed to invoices, receipts and forms of external documentation iv. Verification of the procurement process a) We examined the World Bank Procurement Guidelines. 5 Results of the Audit Project Financial Statements The Project Sources and Uses of Funds Statement present fairly the financing and expenditure of the project. For the audited period, total expenditure reported was US$ 5,790. Expenditure was eligible for financing as per IDA Credit Number 66850-DM and the project funds were used in accordance with the conditions of the financing agreement. Total revenue reported for the year ended June 30, 2022 was US$ 2,726,748. At the end of the financial year the Designated Account reflected a balance of US$132,875 representing World Bank’s funds. Internal Control Structure In performing our audit, we considered the Project Implementation Unit’s (PIU) int ernal control structure in order to determine our auditing procedures for the purpose of expressing an opinion on the financial statements. Our evaluation included the general control environment and specific internal controls as it related to receipt of funds, bank balances; uses of funds (expenditure), authority to approve and certify payments and compliance with applicable laws and regulations. The following aspects of the control environment were also assessed: i. Segregation of Duties ii. Management and Supervision iii. Competence of Personnel iv. Safeguarding of Fixed Assets v. Accounting & Protection of Records We found the controls to be adequate. However, continuous improvement is needed as the project progresses in the future financial years. As systems become obsolete there would be need for advancement and changes to ensure that the system remains effective. All financial aspects of the Project undertaken by the implementing entities were controlled and verified by the PIU. Compliance with Agreement Terms and Applicable Laws and Regulations In order to obtain reasonable assurance as to whether the financial statements were free from material misstatement, we performed tests of compliance to ensure agreement with the terms of the financing agreement and applicable laws and regulations. We noted the following finding which was not corrected: 6 ● Although reported in the previous audit report, transactions were not inputted on Smart Stream in a timely manner. 7 COMMONWEALTH OF DOMINICA OFFICE OF THE DIRECTOR OF AUDIT Tel: (767) 266 3304 Top Floor, Treasury Building Fax: (767) 448 6834 Hillsborough Street E-mail: audit@dominica.gov.dm Roseau Website: www.audit.gov.dm Commonwealth of Dominica FROM: Director of Audit TO: Permanent Secretary, Ministry of Health, Wellness and New Health Investment DATE: March 3, 2023 SUBJECT: INDEPENDENT AUDITORS’ REPORT ON THE FINANCIAL STATEMENTS Opinion We have audited the accompanying project financial statements of the OECS Regional Health Project (IDA Credit 64780) and (IDA Credit 67300) which comprise the statement of designated account reconciliation, statement of sources and uses of funds and statement of cumulative investments for the year ended June 30, 2022 and a summary of significant accounting policies and other explanatory information on the project financial statements. In our opinion, the accompanying financial statements of the Project for the audited period, were prepared, in all material respects, in accordance with International Public Sector Accounting Standard “Financial Reporting Under the Cash Basis of Accounting” (the “IPSAS”) issued by the International Public Secto r Accounting Standards Board of the International Federation of Accountants, and the World Bank’ Financial Management Sector Board’s Guidelines: Annual Financial Reporting and Auditing for World Bank Financed Activities” (the “WB Guidelines”) 8 Basis of Opinion Our audit was guided by the International Standards for Supreme Audit Institutions (ISSAIs) issued by the International Organization of Supreme Audit Institution (INTOSAI) and conducted in accordance with the World Bank Guidelines. Our responsibilities under those standards are further described below. The Office of the Director of Audit is independent of the Project, in accordance with the Code of Ethics for Auditors employed with the Office of the Director of Audit, Commonwealth of Dominica, and we have fulfilled our responsibilities in accordance with the Code of Ethics. The audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of the project financial statements in accordance with International Public Sector Accounting Standard “Financial Reporting Under the Cash Basis of Accounting” (the “IPSAS”) issued by the International Public Accounting Standards Board of the International Federation of Accountants, and the World Bank’s Financial Management Sector Board’s “Guidelines: Annual Financial Reporting and Auditing for World Bank Financed Activities” (the “WB Guidelines”), and for such internal control as management determines is necessary to enable the preparation of the project financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s responsibilities for the audit of the project financial statements Our responsibility is to express an opinion on these special purpose financial statements based on our audit. The ISSAIs issued by the INTOSAI and the World Bank’s Guidelines, specifically, the Annual Financial Reporting and Auditing for World Bank-Financed Activities require that we comply with ethical requirements as well as plan and perform the audit to obtain reasonable assurance about whether the special purpose financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts represented on, and disclosures in the Financial Statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements whether due to fraud or error. In conducting those risk assessments, the auditor considers internal controls relevant to the entity's 9 preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by program management, as well as evaluating the overall presentation of the financial statements. 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. ……………………………. Maylina Jno. Ville (Mrs.) DIRECTOR OF AUDIT c.c. Project Manager, OECS Health Project Unit 10 OECS Regional Health Project IDA Credit No. 64780-DM; IDA Credit No. 67300-DM Statement of Designated Account National Bank of Dominica (Account No. 281200078– US Dollar Designated Account and Account No. 115004416– Eastern Caribbean Dollar Account) For the year ended June 30, 2022 (Expressed in United States Dollars) Source of financing USD US$ IDA Credit IDA Credit Total 64780-DM 67300-DM 1 Total advanced by World Bank 2,726,747 2,726,747 2 Less: eligible expenditure for the current year ended 30 June 2022 - - - documented by World Bank Less: Total amount documented by World Bank 2,569,768 2,569,768 - 3 Present outstanding amount advanced to the designated account (1 - 2) 156,979 156,979 - 4 Balance of USD designated account and project account per bank 151,052 151,052 - reconciliation statement as at year end 30 June, 2022 - 5 Plus: Eligible expenditure for the current year documented after the year - - - end 6 Plus: Total amount withdrawn and not yet documented 5,712 5,712 - Reason: 7 Plus: Amounts claimed in previous applications not yet credited at date of - - - bank statements Subtotal of previous applications not yet credited - - - 8 Plus: Charges 216 216 9 Total advance accounted for (no. 4 through no. 9) 156,979 156,979 - 10 difference (3 - 9) - - - 11 OECS Regional Health Project IDA Credit No. 64780-DM; IDA Credit No. 67300-DM Statement of Sources and Uses of Funds For the year ended June 30, 2022 (Expressed in United States Dollars) Cu r r en t Per iod Pr ev iou s Per iod (USD) Cu r r en t Yea r En d Cu m u l a t iv e (USD) RECEIPT S A ct u a l A ct u a l A ct u a l IDA Cr edit IDA Cr edit IDA Cr edit IDA Cr edit IDA Cr edit IDA Cr edit Sou r ce of Fin a n cin g T ot a l T ot a l T ot a l 6 4 7 8 0 -DM 6 7 3 0 0 -DM 6 4 7 8 0 -DM 6 7 3 0 0 -DM 6 4 7 8 0 -DM 6 7 3 0 0 -DM Wor l d Ba n k Desig n a t ed A ccou n t - - - 1 ,1 7 8 ,0 7 5 .6 1 1 ,0 2 3 ,0 7 5 .6 1 155,000.00 1 ,1 7 8 ,0 7 5 .6 1 1 ,0 2 3 ,0 7 5 .6 1 1 5 5 ,0 0 0 .0 0 Dir ect Pa y m en t - - 1 ,5 4 8 ,6 7 1 .5 7 1,548,671.57 1 ,5 4 8 ,6 7 1 .5 7 1 ,5 4 8 ,6 7 1 .5 7 - Ret r oa ct iv e Fin a n cin g - - - - - - - - - Ot h er In com e - - - - - - - - - T ot a l Receipt s (A ) - - - 2,726,747.18 2,571,747.18 155,000.00 2,726,747.18 2,571,747.18 155,000.00 LESS EXPENDIT URES Com pon en t 1 - - - - - - - - - Com pon en t 2 - - - - - - - - - Com pon en t 3 - - - - - - - 5 ,7 1 1 .5 2 - Com pon en t 4 -CERC 5 ,7 1 1 .5 2 5 ,7 1 1 .5 2 - 2 ,5 6 9 ,7 6 7 .5 7 2 ,5 6 9 ,7 6 7 .5 7 - 2 ,5 6 9 ,7 6 7 .5 7 2 ,5 6 9 ,7 6 7 .5 7 - Ba n k ch a r g es (In t er est Ex pen se) 7 8 .3 8 7 8 .3 8 - 1 3 7 .2 4 1 3 7 .2 4 - 2 1 5 .6 2 2 1 5 .6 2 - T ot a l Expen dit u r es (B) 5,789.90 5,789.90 - 2,569,904.81 2,569,904.81 - 2,569,983.19 2,575,694.71 - RECEIPT S LESS EXPENDIT URES Net Ch a n g e in Ca sh (A - B) (5,789.90) (5,789.90) - 156,842.37 1,842.37 - 151,052.47 (3,947.53) 155,000.00 BA NK BA LA NCES Open in g Ca sh Ba l a n ces Desig n a t ed A ccou n t 1 5 5 ,3 0 4 .8 0 3 0 4 .8 0 1 5 5 ,0 0 0 .0 0 1 ,0 2 3 ,0 5 3 .5 1 1 ,0 2 3 ,0 5 3 .5 1 - - - - Pr oject A ccou n t 1 ,5 3 7 .5 7 1 ,5 3 7 .5 7 - (7 .4 4 ) (7 .4 4 ) - - - - T ot a l Open in g Ba l a n ce 156,842.37 1,842.37 155,000.00 1,023,046.07 1,023,046.07 - - - - Cl osin g Ca sh Ba l a n ces Desig n a t ed A ccou n t 1 3 2 ,8 7 4 .8 1 (2 ,1 2 5 .1 9 ) 1 3 5 ,0 0 0 .0 0 1 5 5 ,3 0 4 .8 0 3 0 4 .8 0 1 5 5 ,0 0 0 .0 0 1 3 2 ,8 7 4 .8 1 (2 ,1 2 5 .1 9 ) 1 3 5 ,0 0 0 .0 0 Pr oject A ccou n t 1 8 ,1 7 7 .6 6 1 8 ,1 7 7 .6 6 - 1 ,5 3 7 .5 7 1 ,5 3 7 .5 7 - 1 8 ,1 7 7 .6 6 1 8 ,1 7 7 .6 6 - T ot a l Cl osin g Ba l a n ce 151,052.47 16,052.47 135,000.00 156,842.37 1,842.37 155,000.00 151,052.47 16,052.47 135,000.00 12 OECS Regional Health Project IDA Credit No. 64780-DM; IDA Credit No. 67300-DM Statement of Cumulative Investments For the year June 30, 2022(Expressed in United States Dollars) For the year ended 30 June, 2022 Cumulative as at 30 June, 2022 Investment Cost TOTAL IDA Credit IDA Credit TOTAL IDA Credit IDA Credit 64780-DM 67300-DM 64780-DM 67300-DM CERC 1) Drugs 1,021,096 1,021,096 - 1,021,096 1,021,096 - 2) Personal and protective equipment 1,548,672 1,548,672 - 1,548,672 1,548,672 - 2,569,768 2,569,768 - 2,569,768 2,579,768 - Advertising 5,730 5,730 5,730 5,730 Health facilities - - - - - - Professional and consultancy services - - - - - - Machinery and equipment - - - - - - Sundry expenses - - - - - - Vehicles - - - - - - Training - - - - - - Total Investment Costs 2,575,498 2,575,498 - 2,575,498 2,585,498 - 13 NOTES TO THE PROJECT FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2022 1. PRESENTATION OF THE PROJECT FINANCIAL STATEMENTS Basis of preparation These project financial statements have been prepared in accordance with the International Public Sector Accounting Standard (the "IPSAS") "Financial Reporting under the Cash Basis of Accounting" issued by the Public Sector Committee of the International Federation of Accountants, and incorporate the following principal accounting policies, which have been consistently followed in all material respects and comply with the World Bank's Financial Management Sector Board's "Guidelines: Annual Financial Reporting and Auditing for World Bank Financed Activities" (the "WB Guidelines"). Under the cash basis approach income (or expenditure) is recognized when cash is received (or paid) irrespective of when goods or services are received or provided. a. Statement of compliance These project financial statements consist of  Statement of Designated Account  Statement of Sources and Uses of Funds  Statement of Cumulative Investments  Significant accounting policies and other explanatory information b. Basis of measurement These project financial statements have been prepared on the historical cost basis. c. Functional and presentation currency The functional currency is United States Dollars (USD). The amounts expended in Eastern Caribbean Dollars (XCD) are converted to United States Dollars (USD) at exchange rate of 2.6882 for XCD. The reporting currency of the project is United States Dollars (USD). 2. SIGNIFICANT ACCOUNTING POLICIES a. Cash basis of accounting The project financial statements are prepared on a cash basis of accounting. The cash basis of accounting recognizes transactions and events only when cash (including cash equivalents) is received or paid by the Project. The Project financial statements prepared under the cash basis provide readers with information about the sources of cash raised during the period, the purposes for which cash was used and the cash balances at the reporting date. The measurement focus in the project financial statements is balances of cash and changes therein. 14 b. Foreign Currencies Transactions in foreign currencies other than USD and XCD are translated into United States dollars (USD) at the rate of exchange ruling (National Bank of Dominica) at the date of the transaction. Monetary assets and commitments denominated in foreign currencies at the reporting date are translated into United States dollars at the exchange of $2.6882. c. Funds received Funds received are recognized on the cash basis that is at the time when are received. d. Expenses Expenses are recorded on cash basis that is at the time of payment instead of when incurred. e. Sources of funds The funds were provided by the World Bank to the Project by replenishment of special account or through direct payment to the end supplier of goods and/or services. f. Restricted use of funds and other assets The Credit agreements require that the funds available in the Designated Account be restricted to the Project use only. Any project funds available at the end of the Project should be returned to the World Bank. g. Cash and cash equivalents Cash and cash equivalents include cash on hand and due from banks, which can be converted to the corresponding amount of cash in the short term. Cash and cash equivalents as at 30 June 2020 comprise: 2022 2021 $ $ Designated account 132,875 155,305 Project account 18,178 1,538 ------------------------------------------------ 151,053 156,843 -------------------------------- ---------------- 15 The Project maintains two accounts held at the National Bank of Dominica. A foreign currency (USD) #281200078 denoted as ‘Designated Account’ and a Demand Deposit (XCD) account # 115004416 utilized as ‘Project Account’. The project had not made any further request for funding during the financial year 2021/2022 from the World Bank. Project operating cost is being financed by funds received from the financial years 2020/2021 the sum of US $155,000 under IDA funding 67300 (loan) and the sum of US $1,023,076 under IDA 64780(CERC loan). h. Inventory Inventory is valued at lower of cost and net realizable value. Cost is determined on a first in first out basis. Net realizable value represents the selling price in the ordinary course of business less any cost incurred in seeking and distribution. Inventories comprise drugs and personal protection equipment that shall be consumed within a short-term period in the normal business of the entity and is therefore not held for sale. i. Miscellaneous income Bank charges are expensed for issuing monthly bank statements, transfer between accounts and bank balance confirmations. Exchange rate loss occurs when cheques / wire transfer denominated in United States Dollars are expensed from Eastern Caribbean dollars denominated bank account or vice-versa. j. Commitments In normal course of activities, the Project concludes agreements with suppliers of goods, works and service in accordance with the established budget and procurement plan. As at 30 June 2022 the Project had no commitments. k. Inventory Type Opening Purchased Issued Damaged Closing Drugs - 1,021,096 983,833 - 37,263 PPE - 1,548,672 1,548,508 - 164 TOTAL - 2,569,768 2,532,341 - 37,427 2020/2021 Type Opening Purchased Issued Damaged Closing Drugs 37,427 - 37,427 - - PPE 164 - 164 - - TOTAL 37,427 - 37,427 - - 2021/2022 16 l. Cumulative Investment (Sub-categories) for the year ended 30 June 2022 For the year ended 30 June 2022 Cumulative as at 30 June 2022 IDA IDA IDA Credit IDA Credit Credit Credit TOTAL 64780-DM 67300-DM TOTAL 64780-DM 67300-DM Investment Cost CERC: - - - 1,021,096 1,021,096 - 1) Drugs 2) Personal and protective - - - 1,548,672 1,548,672 - equipment - - - 2,569,768 2,569,768 - Advertising 5,730 5,730 5,730 5,730 - Health facilities Professional and consultancy services - - - - - - Machinery and equipment - - - - - - Sundry expenses - - - - - - Vehicles Training - - - - - - Total investment costs 5,730 5,730 - 2,575,498 2,575,498 - 17 COMMONWEALTH OF DOMINICA OFFICE OF THE DIRECTOR OF AUDIT Tel: (767) 266 3304 Top Floor, Treasury Building Fax: (767) 448 6834 Hillsborough Street E-mail: audit@dominica.gov.dm Roseau Website: www.dominica.gov.dm Commonwealth of Dominica FROM: Director of Audit TO: Permanent Secretary, Ministry of Health, Wellness and New Health Investment DATE: March 3, 2023 SUBJECT: INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROLS We have audited the accompanying Statement of Sources and Uses of Funds and other explanatory notes for the OECS Health Project entered into by the World Bank and the Government of the Commonwealth of Dominica for the period ended June 30, 2022 and have issued our report thereon. Our examination was guided by the International Standards of Supreme Audit Institutions (ISSAIs) issued by the International Organization of Supreme Audit Institutions (INTOSAI) and conducted in accordance with the World Bank’s requirements, specifically, the Bank’s Guidelines Annual Financial Reporting and Auditing for World Bank-Financed Activities. Those Standards and the World Bank Guidelines require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the project’s financial statements are free from material misstatement. In planning and performing our audit, we considered the PMU’s internal controls over its financial reporting, by obtaining an understanding of the policies and procedures that govern internal controls, determining whether these controls had been placed in operation, and assessing control risk and performing tests of the PMU’s controls in 18 order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide an opinion on the internal controls. For the purpose of this report, we have classified significant policies and procedures relative to the PMU’s internal control structure in the following categories: 1. Receipts and Disbursements of Funds 2. Cash and Bank Transactions 3. Compliance with Applicable Laws and Regulations 4. Reconciliation with the Central Accounting System (SMARTSTREAM) The management of the PMU is responsible for maintaining effective internal control over its financial reporting. We limited our control testing to those controls necessary to achieve the following control objectives that provide reasonable, but not absolute assurance, that: (1) transactions are properly recorded, processed, and summarized to permit the preparation of the financial statements in accordance with the accounting policies referred to in Note 2 of the financial statements and the World Bank Guidelines and (2) transactions are executed in compliance with laws and regulations that could have a direct and material effect on the financial statements. We found the PIU’s internal control structure to be adequate; however, continuous improvement is needed as the project progresses in the future financial years. As systems become obsolete, there would be need for advancement and changes to ensure that the system remains effective. Any internal control system is at risk of becoming inadequate in future periods and an unqualified opinion may hinder addressing such changes in condition or designs which may render the internal control system inadequate. Though we did not discover any weaknesses that would be material in relation to the financial statements we noted one (1) recommendation made in the previous report relating to transactions being inputted on SmartStream in a timely manner which was not corrected. ……………………………. Maylina Jno Ville (Mrs.) DIRECTOR OF AUDIT c.c. Project Manager, OECS Health Project Unit 19 COMMONWEALTH OF DOMINICA OFFICE OF THE DIRECTOR OF AUDIT Tel: (767) 266 3304 Top Floor, Treasury Building Fax: (767) 448 6834 Hillsborough Street E-mail: audit@dominica.gov.dm Roseau Website: www.dominica.gov.dm Commonwealth of Dominica FROM: Director of Audit TO: Permanent Secretary, Ministry of Health, Wellness and New Health Investment DATE: March 3, 2023 SUBJECT: INDEPENDENT AUDITOR’S REPORT ON THE STATEMENT OF RECONCILIATION OF THE DESIGNATED ACCOUNT Opinion We have audited the Financial Statements of the OECS Health Project financed under International Development Association (IDA) Credit No. 64780-DM; Grant No. 67300- DM entered into by the World Bank and the Government of the Commonwealth of Dominica (GOCD) and executed by the Ministry of Health, Wellness and New Health Investment for the period ended June 30, 2022. In our opinion, the Designated Account Reconciliation reflects the flow of funds for the Designated Account IDA Credit and the funds were used only for the purposes of OECS Health Project for the review period. Basis for Opinion Our audit was guided by the International Standards for Supreme Audit Institutions (ISSAIs) issued by the International Organization of Supreme Audit Institution (INTOSAI) and conducted in accordance with the World Bank Guidelines. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statement section of our report. We are 20 independent of the Project in accordance with the Code of Ethics for Auditors in the SAI of Dominica, and we have fulfilled our other responsibilities in accordance with the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of Management and Those Charged with Governance for the Designated Account Reconciliation Management is responsible for the preparation of the Designated Account Reconciliation in accordance with the financial reporting provisions outlined in the respective legal agreements with the World Bank. Those charged with governance are responsible for overseeing the Project’s financial reporting process. Auditor's Responsibilities for the Audit of the Financial Statements Our objective is to obtain reasonable assurance about whether the Designated Account Reconciliation 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 ISSAIs 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 decision of users taken on the basis of these financial statements. As part of an audit in accordance with ISSAIs, we exercised professional judgment and maintained professional skepticism throughout the audit. We also:  Identified and assessed the risks of material misstatement of the Designated Account Reconciliation, whether due to fraud or error, design and perform audit procedures responsible 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 controls.  Obtained 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. 21  Evaluated the overall presentation, structure and content of the Designated Account Reconciliation, including the disclosures, and whether the Designated Account Reconciliation represents the underlying transactions and events in the manner that achieves fair presentation. We communicated with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any audit findings, including any significant deficiencies in internal control that we identified during our audit. …………………………… Maylina Jno Ville (Mrs.) DIRECTOR OF AUDIT c.c. Project Manager, OECS Health Project Unit 22 Statement of Designated Account National Bank of Dominica (Account No. 281200078– US Dollar Designated Account and Account No. 115004416– Eastern Caribbean Dollar Account) For the years ended June 30, 2022 (Expressed in United States Dollars) PROJECT TOTAL OECS HEALTH 67300 CERC 64780 USD USD USD 1) Opening balance 152,875 155,000 (2,125) 2) Add - - - - Wire transfers from World bank - - - - Deposit - - - - Interest - - - - 152,875 155,000 (2,125) Less Bank transfers to XCD A/c (20,000) (20,000) Less Expenditure - - - - Wire transfer for Consultancy fees - - - - Wire transfer for purchase of inputs - - - - Bank Charges - - - - (20,000) - (20,000) - 3) Closing Balance 132,875 - 135,000 (2,125) 4) Balance per Bank Statement 132,875 - - - 5) Difference (4) (3) 23 COMMONWEALTH OF DOMINICA OFFICE OF THE DIRECTOR OF AUDIT Tel: (767) 266 3304 Top Floor, Treasury Building Fax: (767) 448 6834 Hillsborough Street E-mail: audit@dominica.gov.dm Roseau Website: www.dominica.gov.dm Commonwealth of Dominica FROM: Director of Audit TO: Permanent Secretary, Ministry of Health, Wellness and New Health Investment DATE: March 3, 2023 SUBJECT: INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE WITH LEGAL AGREEMENTS, LAWS AND REGULATIONS Opinion We have audited the Financial Statements of the OECS Health Project entered into by the World Bank and the Government of the Commonwealth of Dominica (GOCD) and executed by the Ministry of Health, Wellness and New Health Investment, for the period ended June 30, 2022 and have issued our report thereon. In our opinion, except for the non-compliance described in the management letter, the results of our tests indicate that with respect to the terms, laws and regulations tested, the PIU complied, in all material respects, with the provision of the laws, regulations, and terms of the grant agreement. With respect to terms, laws and regulations not tested, nothing came to our attention that caused us to believe the PIU has not complied, in all material respects with relevant provisions. Basis of Opinion Our audit was guided by the International Standards for Supreme Audit Institutions (ISSAIs) issued by the International Organization of Supreme Audit Institution 24 (INTOSAI) and conducted in accordance with the World Bank Guidelines. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statement section of our report. We are independent of the Project in accordance with the Code of Ethics for Auditors in the Office of the Director of Audit, and we have fulfilled our other responsibilities in accordance with the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of Management and Those Charged with Governance for Compliance with Agreement Terms and Applicable Laws and Regulations Those charged with governance are responsible for overseeing the Project’s financial reporting process:  The Project Management Unit (PMU) is responsible for compliance with the terms of the grant agreement and applicable laws and regulations to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.  All the accounting records have been made available for the purpose of the audit and all the transactions undertaken by the entity have been recorded in the accounting records and reflected in the financial statements.  All other records and related information which might affect the truth and fairness of, or necessary disclosure in the financial statements, including minutes of directors’ and relevant management meetings, have been made available and no such information has been withheld.  Unrestricted access has been provided to the Office of Director of Audit to those records within the entity.  Responsibility for the design and implementation of internal control to prevent and detect error.  All deficiencies of internal control were declared.  All information in relation to fraud or suspected fraud that affects the entity and involves: Management, Employees who have significant roles in internal control or others where the fraud could have a material effect on the financial statements were declared.  Disclosure of any allegations of fraud, or suspected fraud, affecting the entity’s financial statements communicated by employees, former employees, analysts, regulators or others.  Disclosure of all known instances of non-compliance or suspected non- compliance with the laws and regulations whose effects should be considered when preparing financial statements. 25  Disclosure of all contractual arrangements entered into by the entity with third parties have been properly reflected in the accounting records or, where material (or potentially material) to the financial statements.  Occurrence of any non-compliance with requirements of regulatory authorities that could have a material effect on the financial statements in the event of non- compliance. Auditor’s Responsibilities for the Audit of Compliance with Agreement Terms and Applicable Laws and Regulations As part of obtaining reasonable assurance as to whether the financial statements are free from material misstatement, we performed tests of the Project Implementation Unit’s compliance with certain provisions of the financing a greement and applicable laws and regulations. We communicate with those charged with governance regarding, among other matters, non-compliance with agreement terms and applicable laws and regulations. …………………………………… Maylina Jno Ville (Mrs.) DIRECTOR OF AUDIT c.c. Project Manager, OECS Health Project Unit 26