2 2a, Chust street, Tashkent, 100077, Uzbekistan R Tel/Fax: (998-71) 262-50-70, 262-50-90, 262-08-47 A E-mail: reception(@ciar.uz; reception@ciargroup.net www.ciar.uz IDA CREDIT No.6110-UZ LIVESTOCK SECTOR DEVELOPMENT PROJECT INDEPENDENT AUDITOR'S REPORT ON SPECIAL PURPOSE FINANCIAL STATEMENTS FOR THE PERIOD FROM JANUARY 1, 2022 TO OCTOBER 31, 2022 1 LENEVA GROUP INTERNATIONAL RACA k 0KLP TSIARFlANS. LLC 2 CONTENTS C O N T E N TS .......... ...................... .. .. .- . . . . . . . . ..--. . -N-.- ..---...--...--. 2 IN DEPENDENT A UDITO R'S REPO RT .................... 3.............. ............................................................... 3 STATEM ENT OF SOURCES AND USES ............. ....................SES................. ........... . .......... 5 STATEMENT OF USES OF IDA FUNDS BY PROJECT COMPONENTS................... ..............................6 ST A T E M E N T O F S O E .................................E................... ....... ........... .............................. B A LA N C E S H E E T ...................................EIT.-8..........--....... I -----. --I-. ----. --...... .-- --*. I .......... I . I STATEMENT OF PROJECT'S USD DESIGNATED ACCOUNTCC............................ __T.9 ...-...... -..-. 9 NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS .......... ................................... . 10 1. PROJECT BACKGROUND ... ............. ......... ....... 10 2. GOING CONCERN . ... ........... .... .... .. . . 12 3, PROJECT ACCOUNTING POLICY .. . 12 4. PRESENTED FINANCIAL STATEMENTS.. .. . .. 13 5. CASH AND CASH EQUIVALENTS ... 14 6. FIXEDAsSETS .... .. 15 7. ADVANCE PROCEDURE .. 15 8. SUB-CREDITS..... ... .. .. . 16 9. RECONCILIATION OF PROJECTS FINANCING .. 16 10. CUMULATIVE EXPENDITURES ...17 11. FINANCIAL COSTS IN THE INVESTMENT PERIOD .17 12. TAXES .17 13. EVENTS AFTER THE REPORTING PERIOD 17 14. STATEMENT OF PROJECTS UZS OPERATNG ACCOUNT .. 18 15, STATEMENT OF PROJECT'S UZS Co-FINANCING ACCOUNT. . 18 SAKiL TSIARFINANS LLC INDEPENDENT AUDITOR'S REPORT To the Management of the State Committee of Veterinary and Livestock Development of the Republic of Uzbekistan We have audited the accompanying Special Purpose Financial Statements (hereinafter - Financial Statements) of the Livestock Sector Development Project (hereinafter - Project), financed from Credit proceeds of the International Development Association (hereinafter - IDA) according to the Financing Agreement No.6110-UZ dated 20 September 2017 (hereinafter - the Financing Agreement), for the period from January 1, 2022 to October 31, 2022. The Special Purpose Financial Statements comprise Statement of Sources and Uses of Funds, Statement of Uses of IDA Funds by Project Components, Statement of SOE, Balance Sheet, Project's Designated Account Statement, and a summary of significant accounting policies and other explanatory information (Notes to the Special Purpose Financial Statements). The Special Purpose Financial Statements have been prepared by the State Committee of Veterinary and Livestock Development of the Republic of Uzbekistan (hereinafter - Committee) according to the International Public Sector Accounting Standards (hereinafter - IPSAS), based on the cash flow method, issued by the International Public Sector Accounting Standards Board of the International Federation of Accountants. Opinion In our opinion, (i) The financial position of the Livestock Sector Development Project as at October 31, 2022 and of the funds received and expenditures for the period from January 1, 2022 to October 31, 2022 are presented fairly in all material respects in the Special Purpose Financial Statements according to the IPSAS-cash basis. (ii) All proceeds of the Financing Agreement utilized only for purposes of the Project in accordance with the Financing Agreement; and no proceeds have been utilized for other purposes; (iii) With respect to SOEs, adequate supporting documentation has been maintained to support claims to the IDA for recovered of expenditures incurred under the Credit and the expenditures comply with objectives stipulated in the Financing Agreement; and (iv) The Project's Designated Account Statement gives a true and fair view of the financial position of the Designated Accounts of the Project as at 31 October 2022 and of the cash flows during the period from January 1, 2022 to October 31, 2022 and complies with the World Bank's guidelines. 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 Committee in accordance with the International Ethics Standards Board of Accountants' Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with this code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Important circumstances - accounting principles and distribution restrictions We draw attention to Note 3 to the Special Purpose Financial Statements, which describes the basis of accounting. The Special Purpose Financial Statements are prepared to assist Committee to comply with the financial reporting provisions on the requirements conditions of the IPSAS-cash basis. As a result, the Special Purpose Financial Statements may not be suitable for another purpose. Other Matter Financial Audit reports and opinions, as ruled by the requirements set by the World Bank, shall be uploaded, published and publicly accessible on the World Bank's website. - I- EiAR OkO¾LP TSIAPINAS LLC 4 Management's Responsibility The management of Committee is responsible for preparation and fair presentation of these special purpose financial statements based on the cash flow basis in accordance with IPSAS-cash basis. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the special purpose 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 judgment 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 Committee 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 Committee 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 report. However, future events or conditions may cause the Committee to cease to continue as a going concern. * Evaluate the overall presentation, structure and content of the financial statement, including the disclosures, and whether the financial statements present the underlying transactions and in a manner that achieves fair presentation. We communicate with the Committee 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. We also provide the Committee management 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. Auditors: TSIAR-FINANS LLC 2a, Chust Street, Tashkent, 100077, Republic of Uzbekistan December 29, 2022 Livestock Sector Development Project IDA Credit No.6110-UZ 5 STATEMENT OF SOURCES AND USES for the period from January 1, 2022 to October 31, 2022 (USD) Cumulative Indicator Note 01.01.2022 - 2021 from the 31.10.2022 beginning of the Project Financing IDA Credit Replenishment to Project's USD Designated Account 7 2 616 111 1 642 500 116 217 575 Total IDA Credit 2616111 1 642500 116217575 Government Funds GOU counterpart financing in cash 5,11 1 641 677 3267096 11 006125 Total Government Funds 1 641 677 3267096 11 006125 TOTAL FINANCING 4257788 4909596 127223700 Expenses Direct Financing Funds Veterinary Services Improvement 913466 344095 1 797723 Credit Line for Private Investments 8 1 470 085 1 492 500 112 300 000 Goods, works, non-consulting service, Training and 344 170 271 070 2111151 Incremental Operating Costs for the Project Government Co-financing 5 14597 62441 275521 Financial costs in the investment period 11 1 627 080 3204655 10 730 604 Total 4369398 5374761 127214999 Exchange rate difference - - - TOTAL EXPENSES 4369398 5374761 127214999 Excess of Receipts over Payments (111 610) (465 166) 8 701 Opening Balance Project's USD Designated Account 109810 571 372 Project's UZS Operation Account 10501 1422 Project's UZS Sub-Account - 12683 Total 5 120311 585477 Net Available Funds 120311 585477 120311 Closing Balance Project's USD Designated Account 7723 109810 7723 Project's UZS Operation Account 978 10501 978 Project's UZS Sub-Account - - - Total 5 8701 120311 8701 Signed half of the Project Management on December 23, 2022 Li O.V. G.S. Plu M PMI Chief Accountant Statement of Sources and Uses is to be read in conjunction with Notes (Pages from 10 to 18) thereto forming an integral part of the Special Purpose Financial statements. � О а г��. �°о � й � ,� w= v N С7 ot� г �� °i �s '^ с.�а о оC°о т � w ._ ° с�, �n а ti � �'- � г�f а с� м L 61 � � � Q c,i е '� С? � � _. ta I Q ' N N гг� с��'1 М �С пL5 сч о и'r м оо ю _ � N� � СО с*'1 т С с г Q о0 с# бэ N �U ._ г Q'� С С ..,, ° м т м � � сп о о вэ w � � � с� � ц� *� с°� °о © °о 4 С� ,�� Е � "' � � с� сз © о � t ° у'� •а о о о о �� о � � о оо с� о , � 'g�cL г� г �n N �' .` � � � ч.+ ��� г i а- � .�. � � � а �' оо Z � V � � о � т � �у о и� о и ! .°- а о сNч а °а i о � � с� � `� "! ° r�`-, �л � о р� т� ° г� сзэ гд оа ,� ом � �. � fy/ г г Г м м � и ... U � � � � � р r� сэ � � Q� � вл +-� г`~- °о � о�`о и ._ а � с°1 й � � с о ' � � � р г� с�а � cW Z ... � т N �� а г г � � � ,..���.. 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'U7 ', � сз� [э � � с 3 �� � ш � о ш � С � � � .v � �- � о �' С� � � � � N � � и Ii С � so � О � � � � '� � й � Ш Vi и Ш t��э Ш �':j �, � � с р � � � � � `' � -О i4 fl � � � 4 т � j � • `-' �с � и � „� пs ц, р р. -б пs с ы ,_ '� О� .�, р,� � � � о а о � с� .� ш пs ой � © ш с_ ш гv j�� ш w. �з ш ° � ro �' � � ш и � и� } � = а+ €т, ° � �.° � .� � и � U .о 4 � ш ш а' � и о�. а U о �, � а -о � ш� ш� ш °�� `У° � ?� �g' �а а, С7 � � �ia Jгл ' а`ш' � iгэ �� игi Livestock Sector Development Project IDA Credit No. 6110- UZ 7 STATEMENT OF SOE for the period from January 1, 2022 to October 31, 2022 (USD) Category The amount of WA total replenishment of WA No. Goods, works, Incremental amount the Designated consultants' Sub-credits operating Account of the services and costs Project Training 91 2547588 2547588 935000 92* 322986 322986 93 1 127819 1 089500 52008 2269326 753567 94* 260858 260858 95* 246345 246345 96* 97355 97355 100 608254 608254 101 556080 729912 147865 1 433857 Total 1 683899 4367000 808126 7786569 2616111 Note., * applications for an advance payment Signed on %half of the Project Management on December 23, 2022 i oV O.V. Gubieva t.S. --------- PMI Chief Accountant PlU Manacl. Statement of SOE is to be read in conjunction with Notes (Pages from 10 to 18) thereto forming an integral part of the Special Purpose Financial statements. Livestock Sector Development Project IDA Credit No.6110-UZ 8 BALANCE SHEET as of October 31, 2022 (USD) Indicator Note as at 31 October as at 1 January 2022 2022 ASSETS Cash and cash equivalents 5 8701 120311 TOTAL ASSETS 8701 120311 FUNDING IDA financing 9 116217575 113601 464 Government Funds 11 006125 9364448 Project cumulative eligible expenditures 10 (127 214 999) (122 845 601) TOTAL FUNDING 8701 120311 Signed on behalf of the Project Management on December 23, 2022 Li O.V. GubievayG S PIU Manager PMI Chief Accountant Balance Sheet is to be read in conjunction with Notes (Pages from 10 to 18) thereto forming an integral part of the Special Purpose Financial statements. Livestock Sector Development Project IDA Credit No.6110-UZ 9 STATEMENT OF PROJECT'S USD DESIGNATED ACCOUNT for the period from January 1, 2022 to October 31, 2022 Account No: 2021 0840 5054 2083 4001 Depositary bank: Tashkent city branch of JSCMB "IPOTEKA-BANK" Address: 15, Mustaqillik Street, Tashkent Related Credit 6110-UZ Currency: USD USD Balance as at January 1, 2022 109 810 Inflow: IDA Financing 2616111 Total inflow: 2616111 Outflow: Conversion to UZS 918 000 Eligible Project's expenditures 1 800 198 Total Outflow: 2718198 Balance as at October 31, 2022 7723 Signed on alf of the Project Management on December 23, 2022 Li O.V. G ubieva S. PIU Manager PMI Chief Accountant Statement of Project's USD Designated Account is to be read in conjunction with Notes (Pages from 10 to 18) thereto forming an integral part of the Special Purpose Financial statements. Livestock Sector Development Project IDA Credit No.6110-UZ 10 NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS for the period from January 1, 2022 to October 31, 2022 1. Project background On September 20, 2017 the International Development Association (hereinafter - IDA, Association) and Republic of Uzbekistan have signed the Financing Agreement and IDA lent to Uzbekistan Credit No.6110-UZ to facilitate implementation of Livestock Sector Development Project in the amount USD 120.0 million, as well as Loan Agreement No.8770-UZ on the allocation of loan funds of the International Bank for Reconstruction and Development (hereinafter - IBRD) in the amount USD 30.0 million. The main objective of the Project is to increase the productivity of the livestock sector, improve access to the farm and dekhkan farms, as well as create new jobs and increase the income of the rural population. Project financing plan is as follows: Source of financing USD IBRD 30000000 IDA 120 000 000 Government of RUz 39 744 350 Beneficiaries 38 078 930 Total 227 823 280 On the basis of Decree No.nfl-3283 of the President of the Republic of Uzbekistan dated 16 September 2017 "On measures of implementation of Livestock Sector Development Project with participation International Bank for Reconstruction and Development and International Development Association" the Ministry of agriculture and water resources of the Republic of Uzbekistan is an executive agency responsible for the timely and full implementation of the Project. Pursuant to the Uzbekistan Presidential Decree No.5418 dated 17th April 2018 "On organizational arrangements on the radical improvement of the system of public governance of agriculture and water economy" it is established that as of 1st July 2018 on the basis of the Rural Restructuring Agency and Centre for implementation of the investment projects in agriculture and water economy shall be established Agency for implementation of the projects in the area of agroindustry and food security (hereinafter - Agency) that will be responsible for assistance in the design and implementation of projects, including investment projects. Uzbekistan Presidential Resolution No.flf-5017 dated 03 March 2021 on additional arrangements to continued government support of the livestock sector designates responsibility for the Agency's livestock projects, relevant PIU rights and obligations, assets and liabilities to the State Committee for Veterinary and Livestock Development (hereinafter - Committee). In order to target and effective use of credit funds and implementation of the Project the Livestock Sector Development Project Implementation Unit (hereinafter - PIU) was created. PIU Key Scope of Objectives includes: * To achieve the goals and objectives of the Project; * To establish and enable Monitoring and Evaluation system for the project implementation; * To ensure the targeted and effective timely disbursement of project funds for the project implementation; * Management of the procurement of goods and services, in line with the World Bank and national regulatory requirements, and others. PIU is located at 36, Shakhrisabz Street, Tashkent, Republic of Uzbekistan. Components of the Project: Component 1 - State investment program and public services (3 mln. US dollars from IDA funds, 5 mln. US dollars from EU funds): Sub-component 1.1 - Strategy, policy and public investment program (2 mln. US dollars from EU funds); Sub-component 1.2 - Strengthening of public services in the livestock sector (3 mln. US dollars from IDA funds, 3 min. US dollars from EU funds). Livestock Sector Development Project IDA Credit No.6110-UZ 11 Component 2 - Upgrading of the livestock supply chain (112.8 min. US dollars from IDA funds, 30 mln. US dollars from IBRD funds and 11 mln. US dollars from EU funds): Sub-component 2.1 - Credit line for private investments (112.8 mln. US dollars from IDA funds and 30 mln. US dollars from IBRD funds); Sub-component 2.2 - Development of the supply chain and market inclusion of small farms (11 mln. US dollars from EU funds). Component 3 - Coordination, management, monitoring and evaluation of the Project (5.2 mln. US dollars from IDA funds). The Project consists of the following parts: Part A: Livestock Sector Public Investment Framework and Public Services Veterinary services improvement, including: (i) provision of technical assistance to improve the legal framework and strategy for development of the veterinary services; (ii) provision of Training and equipment to selected public veterinary agencies to improve disease surveillance and reporting systems, veterinary diagnostics laboratories and standard operating procedures, vaccine storage and distribution facilities, public awareness, and rapid response capacity; (iii) carrying out minor works and provision of equipment for rehabilitation of selected laboratory facilities; and (iv) provision of technical assistance for studies on border control and quarantine, veterinary drug regulation and on animal identification, registration and movement control. Part B: Credit Line for Private Investments 1. Provisions, through selected PFis, of Sub-credits to Beneficiaries. 2. Provision of technical assistance and Training to PFIs on sector-specific loan product development, loan appraisal and monitoring. Part C: Project Coordination, Management, Monitoring and Evaluation 1. Strengthening the RRA's capacity for Project management, monitoring and evaluation, through provision of goods, consultants' services, Training and financial of Incremental Operating Cost. 2. Conduction Project impact assessments at mid-term Project review and prior to the Project closure. 3. Provision of Training to Beneficiaries on Project related safeguards requirements and carrying out public awareness campaign on labor practices in agriculture. IDA Credit proceeds under the Project implementation are available to cover the following eligible costs: IDA Financing No. Category In % (exclusive of In USD Taxes) 1 Goods, works, non-consulting service, consultant's services, 7 7 000 100% Training and Incremental Operating Costs for the Project 2 Sub-credits under Part B.1 of the Project 112 300 000 100% Total 120000000 IBRD Loan proceeds under the Project implementation are available to cover the following eligible costs IBRD Financing No. Category In % (exclusive of InoUSD Taxes) 1 Sub-credits under Part B. 1 of the Project 29925000 100% 2 Front-end Fee 75000 - Total 30000000 Livestock Sector Development Project IDA Credit No.6110-UZ 12 IBRD Loan No.8770-UZ in 2018 was fully disbursed. Therefore, this Special Purpose Financial Statement does not include project revenues and expenditures under IBRD Loan No.8770-UZ. Government proceeds under the Project implementation are available to cover the following eligible costs: GOU Financing No. Indicator In USD In % 1 Other expenditures 296 900 100% 2 Financial costs in the investment period 9875660 100% 3 Exemptions from taxes and duties 29571 790 100% Total 39 744 350 In order to facilitate implementation of the <