REPUBLIC OF KENYA AGA OFFICE OF THE AUDITOR-GENERAL Enhancing Accountability REPORT OF THE AUDITOR-GENERAL ON KENYA PRIMARY EDUCATION DEVELOPMENT PROJECT (GRANT NO. TF018863) FOR THE YEAR ENDED 30 JUNE, 2021 STATE DEPARTMENT FOR EARLY LEARNING AND BASIC EDUCATION Project Name: KENYA PRIMARY EDUCATION DEVELOPMENT PROJECT Implementing Entity: STATE DEPARTMENT FOR EARLY LEARNING & BASIC EDUCATION PROJECT GRANT ID: P146797 CREDIT NUMBER: TF018863 AND TFB0830 ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE, 2021 Prepared in accordance with the Cash Basis of Accounting Method under the International Public Sector Accounting Standards (IPSAS) Kenya Primary Education Development Project. Reports and Financial Statements For the financial year ended 30 June 2021 TABLE CONTENTS 1. PROJECT INFORMATION AND OVERALL PERFORMANCE ......................................................... 2. STATEMENT OF PERFORMANCE AGAINST PROJECT'S PREDETRMINED OBJECTIVES ..... x 3, CORPORATE SOCIAL RESPONSIBILITY STATEMENT/SUSTAINABILITY REPORTING ....... xii 4. STATEMENT OF PROJECT MANAGEMENT RESPONSIBLITIES ...............................................xii 6. REPORT OF THE INDENDENT AUDITOR ON THE PRIEDE PROJECT .......................................xiv 7. STATEMENT OF RECEIPTS AND PAYMENTS FOR THE YEAR ENDED 30 JUNE 2021.............1 8. STATEMENT OF FINANCIAL ASSETS AS AT 30 JUNE 2021..........................................................2 9 STATEMENT OF CASHFLOW FOR THE YEAR ENDED 30 JUNE 2021 .......................................3 10, STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS................................4 FOR THE YEAR ENDED 30 JUN E 2021.................................................................................................. .4 11. SIGNIFICANT ACCOUNTING POLICIES........................................................................................5 12. NOTES TO THE FINANCIAL STATEMENTS...............................................................................13 13. OTHER IM PORTANT DISCLOSURES............................................................................................24 14. PROGRESS ON FOLLOW UP OF PRIOR YEAR AUDITOR'S RECOMMENDATIONS ..................25 15. ANN E X ESEX.ES........ ...... .. ........ ....-.29.....- ..- ..--- .....- .....................-........-....--..-I-.- ................"I ..'......29 Kenya Primary Education Development Project Reports and Financial Statements For the financial year ended 30 June 2021 1 . PROJECT INFORMATION AND OVERALL PERFORMANCE 1.1 Name and registered office Name The project's official name is Kenya Primary Education Development Project. Objective The key objective of the project is to improve early grade mathematics competency and to strengthen management systems at school and national levels. Address The project headquarters office is located in Nairobi County, Kenya. The address of its registered office is: Jogoo House, Harambee Avenue, Nairobi. Contacts: The following are the project contacts P.0 Box 30040, 00100 NAIROBI Hi Kenya Primary Education Development Project Reports and Financial Statements For the financial year ended 30 June 2021 PROJECT INFORMATION AND OVERALL PERFORMANCE (Continued) 1.2 Project Information Project Start Date: The project start date is 08.07.2015 Project End Date: The project end date is 31.12.2021 Project Manager: The project manager is M/S Martha Ekirapa Project Sponsor: The project sponsor is International Development Association, Global Partners of Education and Government of Kenya which will contribute 10% of the entire grant of USD 97.875M 1.3 Project Overview line Ministry/State Department of the The project is under the supervision of State Department project for Early Learning & Basic Education. Project number P146797 Strategic goals of the project The strategic goals of the project are as follows: (i) The project activities are aligned with the Government's strategic objective of providing quality basic education for Kenya's sustainable development Achievement of strategic goals The project management aims to achieve the goals through the following means: (i) Improvement in basic mathematics competency level of Grade 2 pupils (ii) Number of participating schools completing top two priorities of School Improvement Plans (SIP) (iii) EMIS data for primary education published annually from 2016 (iv)NASMLA for standard 3 pupils conducted and disseminated in 2015 and 2018 Other important background The project has completed its third year of information of the project implementation iii Kenya Primary Education Development Project. Reports and Financial Statements For the financial year ended 30 June 2021 Current situation that the project was The project was formed to intervene in the following areas: fopnmed to intervene (i) Improving early grade learning competencies (ii) Strengthening systems at schools and national levels for improving primary education service delivery Project duration The project started on 8 July 2015 and is expected to run until 31 December 2021. iv Kenya Primary Education Development Project. Reports and Financial Statements For the financial year ended 30 June 2021 PROJECT INFORMATION AND OVERALL PERFORMANCE (Continued) 1.4 Bankers The following are the bankers for the current year: (i) Designated account: Central Bank of Kenya I lead Office, Haile Selassie Account No. 1000241349 Central Bank of Kenya Head Office, Haile Selassie Account No. 1000241322 Central Bank of Kenya Head Office, Haile Selassie Account No. 1000449788 (ii) Project Accounts: Central Bank of Kenya Haile Selassie Account No. 1000307404 Central Bank of Kenya Haile Selassie Account No. 1000307398 Central Bank of Kenya Haile Selassie Account No. 1000307412 Central Bank of Kenya Haile Selassie Account No. 1000465069 1.5 Auditors: The project is audited by the: Auditor-General Anniversary Towers, University Way P.O. Box 30084 Nairobi v Kenya Primary Education Development Project. Reports and Financial Statements For the financial year ended 30 June 2021 1.6 Roles and Responsibilities List the different people who will be working on the project. This list would include the project manager and all the key stakeholders who will be involved with the project. Also, record their role, their positions, and their contact information. Names Title designation Key qualification Responsibilities Martha Project Coordinator Educationist Overall programme tkirapa coordination. Hellen Boruett Head of Component 1 Educationist Management of component 1 activities Peter Gachathi Head of Component 2 Educationist Management of component 2 activities Sebastian Head of Component 3 Educationist Management of component 3 Owanga activities Bartholomew Head of Component 4 Educationist Management of 4 component Lumbasi activities V - r._ �.� ":� б� О� rf Й �; �,� � , � э у� v, й � vi `ew-, � `" -' �`` � х оо �с : -�° � ; � и ц' l� г� и � О �С `.С:' � :��_�t .: � [� n •? �.5 '�"f.. 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Reports and Financial Statements For thefinancialyear ended 30 June 2021 PROJECT INFORMATION AND OVERALL PERFORMANCE (Continued) 1.8 Summary of Overall Project Performance: Budget; performance against actual amounts for current year was only 65 percent. Cumulatively, the disbursement is relatively at 92 percent and actual expenditure of 91 percent compared to the project remaining life which is now 6 months Progress . . . . . ....... Component I 0eveloped the School Based Teacher Support (SBTS) operationalization Key result manual for Grade 1, 2 & 3. Supported KICD in the development of the Improvement of early grade Diploma Primary Teacher Education (M)Curriculum designs under CBC mathematics competency framework for SNE&D Com"o ent 2 Kev result Pro ;rcss Strengthening school management Annual Schools Audit, Training of Head teachers and BOM on and accountability financial management, Documentary of SIP good practices, Appraisal of teachers under TPAD is ongoing and helping improve teacher's management. Co ponent 3 result Pro yess [ terc nnigthhenning eappacity foorr NESSP report finalised, Education sector analysis report finalised, evidence-based policy development NHIF and SFDE utilising NEMIS data for capitation, Capacity at national level. building of Education officers on NEMIS, MLA studies undertaken for pupils in class 3 and 7. Com onent 44 Kev result Progress Project Coordination, we undertook capacity building of RDE, CDEs, both MOE and TSC Communication, Monitoring and and CPCs, Hosted the GPE annual meeting, Implementation Support Evaluation Mission in march, Internal Financial audit, Preparation of virtual Implementation Mission 1.9 Summary of Project Compliance: i) The project has complied fully with the financing agreement with the IDA in terms of utilization of donor funds. ix Kenya Primary Education Development Project. Reports and Financial Statements For the financial year ended 30 June 2021 2. STATEMENT OF PERFORMANCE AGAINST PROJECT'S PREDETRMINED OBJECTIVES PRIEDE Project aims at improving Early Grade Mathematics (EGM) Competency and Strengthening Management Systems at School and National levels. The parent Project estimated to cost KShs 9,724,000,000 is funded jointly by GPE at KShs. 8, 840,000,000 and GOK- KShs. 884,000,000. In FY 2019/2020 the project received additional financing (AF) from the GPE to the tune of Ksh. 975, 000,000. The grant has enabled achievement of pupil/text book ratio of 1:1 in Mathematics for grade I and 2 as a result of distribution of 10 Million, five hundred thirty-nine thousand and seventy-three (10,539,073) books to pupils in grade 1 & 2 in public schools, as at June 15th, 2019. EGM books distributed in FY 2018/2019 were reviewed and aligned to CBC. Out of the distributed EGM books 21, 987 were adapted to suit special needs learners in the areas of Hearing Impaired (HI), Physically Impaired (PI), Low Vision (LV) and Totally Blind (TB). During the period under review an average of 102,000 Early Grade teachers were trained on EGM methodologies in alignment to Competency Based Curriculum (CBC). Curriculum support officers (CSOs) facilitated the provision of pedagogical support to the teachers through lesson observations, with a cumulative of 31,803 observation done as at 30th June 2019. The End Line Early Grade Mathematics Assessment (EGMA) study was conducted during the period, which revealed that percentage of grade 2 learners achieving 50% benchmark in subtraction improved with 2.8% as compared to the Baseline study. Also during the period under review the project supported KICD to develop the PTE curriculum designs as well as adapt the same for learners with special needs. To consolidate the gains achieved from the project in learning of Mathematics at Early Grade, a manual was developed to guide on the roll out of School Based Teacher Support (SBTS) initiative. In order to strengthen school management systems during the period under review, the project facilitated training for head teachers and five BOM members from the 4000 target SIP schools on preparation of school improvement plans and management of school resources. Two Hundred and fifty (250) school auditors were also capacity build on risk-based audit approach. The auditors then have been carrying out onsite full-fledged audits in the 4000 SIP schools to establish the accounting and management of resources at school level. The Kenya National Examination Council KNEC carried out KCPE school specific analysis in the years 2013, 2014, 2015, 2016, 2017, 2018 and 2019. The reports for the 4,000 pilot schools were disseminated on the KNEC website. Additionally, the KCPE specific analysis reports for more than 22,000 primary schools were made available on KNEC website (www.knec.ac.ke). The reports provide feedback to schools on the areas of strength and weakness. The reports provide schools with information needed to identify schools' priorities and strategies when developing a School Improvement Plan (SIP) with aim of improving on the learning achievement. In addition, the project supported TSC to carry out regular teacher appraisals using the TPAD system which enhanced instructional supervision among head teachers, CSOs, TSC field officers and this resulted in improved teacher preparation and increased pupil/teacher contact. The TPAD tools have been reviewed. Also, hardware and software infrastructure to support the online system at National and County levels procured. Based on the satisfactory SIPs, the Ministry disbursed KShs. 500,000 (1st Tranche KShs. x Kenya Primary Education Development Project Reports and Financial Statements For the financial year ended 30 June 2021 300,000 & 2nd Tranche 200,000) to each of the 4000 target schools, totalling to KShs. 2 Billion. All the 4,000 (100 %)] SIP schools reported to have completed utilizing the grant on implementing the identified top priorities. This enabled provision of supplementary text books benefiting a total of 1,934, 583 pupils in classes 3-8 and a total of 34,737 teachers. The grant has also enabled improvement of learning environment through renovation of classrooms, sanitary facilities and water harvesting in the schools. As a result, most of the schools recorded a positive deviation in 2017, 2018 and 2019 KCPE, implying that improved governance, managqment, and accountability systems at school level had proportionate positive influence on achievement of learning outcomes. Full-fledged audit of the 4,000 SIP schools was conducted. From the good practices emanating from the SIP process, Policy Guidelines and a simplified operational manual on management of learners' capitation grants and other school funds was developed. During the period under review, the project facilitated development of National Education Management Information System (NEMIS), a one stop centres for education data that is authentic and reliable in real time. This is key in policy development and decision making as it guides resource allocation, monitoring usage and promoting prudent utilization. Data collection exercise using NEMIS system developed started on 23rd January 2018 and is ongoing. KNEC conducted studies to monitor learning which included: NASMLA class 3 studies (2016 & 2018), MLA form 2 (2018) and NASMLA class 7 (2019). The project also supported the development of the NESSP (2018-2022) and the ESA. A draft statistical booklet for 2017, 2018 and 2019 has been compiled. The project has also been supporting the conduct of education quality dialogues across the country, forums where reports on learning achievements from various studies are disseminated, stakeholders establish issues ailing the learning and identify strategies for improvement. The National Education Quality Assurance and Standards Framework (NEQASF) has been developed. The framework will operationalize the work of the Quality Assurance and Standards Directorate. During the year under review, capacity building of the Project staff at the MOE Headquarters, Counties, TSC and KNEC was undertaken. This enhances institutional roles for sustainability of the gains realized from the Project implementation. xl Kenya Primary Education Development Project Reports and Financial Statements For the financial year ended 30 June 2021 3. CORPORATE SOCIAL RESPONSIBILITY STATEMENT/SUSTAINABILITY REPORTING The Project is well aligned with the Global Partnership for Education goals of ensuring that all children master basic literacy and numeracy by early grades; and building national systems that have capacity and integrity to deliver, support and assess education quality. Also, the project resources will be targeted more to the most marginalized groups, including schools with children with disabilities, schools in rural and nomadic communities in the Arid and Semi-Arid Lands (ASAL) with low female enrolment as well as schools in urban poor settlements. 1. Sustainability strategy and profile - The Project will use Government systems to ensure sustainability of the activities beyond the project life. The Early Grade Mathematics roll out is nation-wide, with all public schools being exposed to the EGM textbooks and teaching methodologies. This will sustain the gains realized. 2. Environmental performance and potentially affected social groups. Various strategies of addressing social issues have been clearly elaborated in the two documents. An Environmental and Social Management Framework (ESMF) and VGMF have been prepared in consultation with key stakeholders 3. Employee welfare A full-time project coordination unit has been put in place throughout the entire period of the project. This team comprises of Government employees who are facilitated in terms of their welfare by Government. However, for day-to-day operations, the Project caters for it. 4. Market place practices- The Project strictly adheres to the GOK and World bank procurement practices and Issues of disclosure of information are strictly followed. 5. Community Engagements- The implementation of project activities involved participation of a majority of key education stakeholders. Involvement of parents, Politicians, entire Government leadership has been quite helpful in sustaining the Project gains. xi Kenya Primary Education Development Project Reports and Financial Statements For the financial year ended 30 June 2021 4. STATEMENT OF PROJECT MANAGEMENT RESPONSIBILITIES The Principal Secretary for the Ministry of State Department of Basic Education and the Project Coordinator for Kenya Primary Education Development Project are responsible for the preparation and presentation of the Project's financial statements, which give a true and fair view of the state of affairs of the Project for and as at the end of the financial year ended on 30 June 2021. This responsibility includes: (i) maintaining adequate financial management arrangement and ensuring that these continue to be effective throughout the reporting period; (ii) maintaining proper accounting records, which disclose with reasonable accuracy at any time the financial position of the Project; (iii) designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of the financial statement, and ensuring that they are free from material misstatements, whether due to error or fraud; (iv) safeguarding the assets of the Project; (v) selecting and applying appropriate accounting policies; and (vi) making accounting estimates that are reasonable in the circumstances. The Principal Secretary for the Ministry of State Department of Basic Education and the Project Coordinator for Kenya Primary Education Development Project accept responsibility for the Project's financial statements, which have been prepared on the Cash Basis Method of Financial Reporting, using appropriate accounting policies in accordance with International Public Sector Accounting Standards. The Principal Secretary for the Ministry of State Department of Basic Education and the Project Coordinator for Kenya Primary Education Development Project are of the opinion that the Project's financial statements give a true and fair view of the state of Project's transactions during the financial year/period ended 30 June 2021, and of the Project's financial position as at that date. The Principal Secretary for the Ministry of State Department of Basic Education and the Project Coordinator for Kenya Primary Education Development Project further confirm the completeness of the accounting records maintained for the Project, which have been relied upon in the preparation of the Project financial statements as well as the adequacy of the systems of internal financial control. The Principal Secretary for the Ministry of State Department of Basic Education and the Project Coordinator for Kenya Primary Education Development Project confirm that the Project has complied fully with applicable Government Regulations and the terms of external financing covenants, and that Project funds received during the financial year/period under audit were used for the eligible purposes for which they were intended and were properly accounted for. 5. APPROVAL OF THE PROJECT FINANCIAL STATEMENTS The Project financial statements were approved by the Principal Secretary for the Ministry of State Department of Ba ic Education and the Project Coordinator for Kenya Primary Education Development Project on 22 ' 4 Zth. 2021 and signed by them. Principal Secretary Project Coordinator Project Accountant: DR. JULIUS JWAN MARTHA EKIRAPA FREDRICK AOKO ICPAK Member Number: 17566 xiii REPUBLIC OF KENYA Telephone: +254-(20) 3214000 HEADQUARTERS E-mail: info@oagkenya.go.ke Anniversary Towers Website: www.oagkenya.go.ke Monrovia Street ('OFFICE OF THE AUDITOR-GENERAL P.O. Box 3oo84-00100 Enhancing Accountabilit NAI ROBI REPORT OF THE AUDITOR-GENERAL ON KENYA PRIMARY EDUCATION DEVELOPMENT PROJECT (GRANT NO. TF018863) FOR THE YEAR ENDED 30 JUNE, 2021 - STATE DEPARTMENT FOR EARLY LEARNING AND BASIC EDUCATION I draw your attention to the contents of my report which is in three parts: A. Report on the Financial Statements that considers whether the financial statements are fairly presented in accordance with the applicable financial reporting framework, accounting standards and the relevant laws and regulations that have a direct effect on the financial statements. B. Report on Lawfulness and Effectiveness in Use of Public Resources which considers compliance with applicable laws, regulations, policies, gazetted notices, circulars, guidelines and manuals and whether public resources are applied in a prudent, efficient, economic, transparent and accountable manner to ensure government achieves value for money and that such funds are applied for intended purpose. C. Report on Effectiveness of Internal Controls, Risk Management and Governance which considers how the entity has instituted checks and balances to guide internal operations. This responds to the effectiveness of the governance structure, the risk management environment, and the internal controls developed and implemented by those charged with governance for orderly, efficient and effective operations of the entity. An unmodified opinion does not necessarily mean that an entity has complied with all relevant laws and regulations, and that its internal control, risk management and governance systems are properly designed and were working effectively in the financial year under review. The three parts of the report are aimed at addressing the statutory roles and responsibilities of the Auditor-General as provided by Article 229 of the Constitution, the Public Finance Management Act, 2012 and the Public Audit Act, 2015. The three parts of the report, when read together constitute the report of the Auditor-General. REPORT ON THE FINANCIAL STATEMENTS Qualified Opinion I have audited the accompanying financial statements of Kenya Primary Education Development Project set out on pages 1 to 23, which comprise the statement of financial assets and liabilities as at 30 June, 2021, and the statement of receipts and payments, Report ofthe Auditor-General on Kenya Primary Education Development Project (Grant No. TF018863)jbr the year ended 30 June, 2021 - State Department for Early Learning and Basic Education statement of cash flows and statement of comparison of budget and actual amounts for the year then ended, and a summary of significant accounting policies and other explanatory information in accordance with the provisions of Article 229 of the Constitution of Kenya and Section 35 of the Public Audit Act, 2015. I have obtained all the information and explanations which, to the best of my knowledge and belief, were necessary for the purpose of the audit. In my opinion, except for the effect of the matter described in the Basis of Qualified Opinion section of my report, the financial statements present fairly, in all material respects, the financial position of the Kenya Primary Education Development Project as at 30 June, 2021, and of its financial performance and its cash flows for the year then ended, in accordance with International Public Sector Accounting Standards (Cash Basis) and comply with the Grant Agreements No. TF018863 dated 4 June, 2015 and TFOBO830 dated 6 January, 2020 between the Republic of Kenya and International Development Association and the Public Finance Management Act, 2012. Basis for Qualified Opinion Purchase of Goods and Services- Consultancy Services Note 12.4 to the financial statements includes an amount of Kshs.37,600,000 in respect of consultancy. The amount includes payments amounting to Kshs.6,300,000 made to a consultant at a rate of Kshs.525,000 per month. However, the contract provided in support of the payments, signed on 2 November, 2017, was for a period of four months and for a lumpsum payment of Kshs.3,997,350 and hence not valid to support the payments. No evidence was provided to support the basis of payment of Kshs.525,000 per month. In the circumstances, the accuracy of purchase of goods and services as at 30 June, 2021 could not be ascertained. The audit was conducted in accordance with International Standards of Supreme Audit Institutions (ISSAls). I am independent of Kenya Primary Education Development Project in accordance with ISSAI 130 on Code of Ethics. I have fulfilled other ethical responsibilities in accordance with the ISSAI and in accordance with other ethical requirements applicable to performing audits of financial statements in Kenya. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my qualified opinion. Emphasis of Matter 1.0 Financial Statements 1.1 Unreconciled Special Account Statement The statement of receipt and payments for the year ended 30 June, 2021 reflects proceeds from domestic and foreign grants totalling to Kshs.764,770,270 as further disclosed under Note 12.2 of the financial statements. However, the corresponding Report ofthe Auditor-General on Kenya Primary Education Development Project (Grant No. TF018863) for the year ended 30 June, 2021 - State Department for Early Learning and Basic Education 2 account balance reflected in the special account statement as at 30 June, 2021 amount to Kshs.732,441,683 resulting to an unexplained variance of Kshs.32,328,587. Key Audit Matters Key audit matters are those matters that, in my professional judgment, are of most significance in the audit of the financial statements. There were no key audit matters to communicate in my report. Other Matter Budgetary Control and Performance The Project's final budget for the year under review totalled Kshs.1,175,000,000 and actual expenditure totalled Kshs.766,078,770 resulting to an under-expenditure of Kshs.408,921,230, equivalent to 35% of the budget. The under-absorption of the approved budget meant that many of the Project's activities planned for the year were not implemented. As a result, attainment of the Project's goals may not be possible. Other Information The Management are responsible for the other information, which comprises the statement of corporate social responsibility and the statement of Project management responsibilities. The other information does not include the financial statements and my auditor's report thereon. My opinion on the consolidated financial statements does not cover the other information and I do not express any form of assurance or conclusion thereon. REPORT ON LAWFULNESS AND EFFECTIVENESS IN USE OF PUBLIC RESOURCES Conclusion As required by Article 229(6) of the Constitution, based on the audit procedures performed, except for the matter described in the Basis for Qualified Opinion section of my report, I confirm that, nothing else has come to my attention to cause me to believe that public resources have not been applied lawfully and in an effective way. Basis for Conclusion The audit was conducted in accordance with ISSAI 4000. The standard requires that I comply with ethical requirements and plan and perform the audit to obtain assurance about whether the activities, financial transactions and information reflected in the financial statements are in compliance, in all material respects, with the authorities that govern them. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my conclusion. Report ofthe Auditor-General on Kenya Primary Education Development Project (Grant No. TFO 18863) for the year ended 30 June, 2021 - State Department for Early Learning and Basic Education 3 REPORT ON EFFECTIVENESS OF INTERNAL CONTROLS, RISK MANAGEMENT AND GOVERNANCE Conclusion As required by Section 7(1)(a) of the Public Audit Act, 2015, based on the audit procedures performed, except for the matter(s) described in the Basis Qualified Opinion section of my report, I confirm that, nothing has come to my attention to cause me to believe that internal controls, risk management and overall governance were not effective. Basis for Conclusion The audit was conducted in accordance with ISSAI 2315 and ISSAI 2330. The standards require that I plan and perform the audit to obtain assurance about whether effective processes and systems of internal control, risk management and overall governance were operating effectively, in all material respects. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my conclusion. Responsibilities of Management and those Charged with Governance Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Public Sector Accounting Standards (Cash Basis) and for maintaining effective internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error and for its assessment of the effectiveness of internal control, risk management and governance. In preparing the financial statements, Management is responsible for assessing the Project's ability to sustain services, disclosing, as applicable, matters related to sustainability of services and using the applicable basis of accounting unless Management is aware of the intention to terminate the Project or to cease operations. Management is also responsible for the submission of the financial statements to the Auditor-General in accordance with the provisions of Section 47 of the Public Audit Act, 2015. In addition to the responsibility for the preparation and presentation of the financial statements described above, Management is also responsible for ensuring that the activities, financial transactions and information reflected in the financial statements are in compliance with the authorities which govern them, and that public resources are applied in an effective way. Those charged with governance are responsible for overseeing the Kenya Primary Education Development Project financial reporting process, reviewing the effectiveness of how the entity monitors compliance with relevant legislative and regulatory requirements, ensuring that effective processes and systems are in place to address key roles and responsibilities in relation to governance and risk management, and ensuring the adequacy and effectiveness of the control environment. Report ofthe Auditor-General on Kenya Primary Education Development Project (Grant No. TF018863) for the year ended 30 June, 2021 - State Department for Early Learning and Basic Education 4 Auditor-General's Responsibilities for the Audit The audit 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 my opinion in accordance with the provisions of Section 48 of the Public Audit Act, 2015 and submit the audit report in compliance with Article 229(7) of the Constitution. 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 and weakness 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. In addition to the audit of the financial statements, a compliance audit is planned and performed to express a conclusion about whether, in all material respects, the activities, financial transactions and information reflected in the financial statements are in compliance with the authorities that govern them and that public resources are applied in an effective way, in accordance with the provisions of Article 229(6) of the Constitution and submit the audit report in compliance with Article 229(7) of the Constitution. Further, in planning and performing the audit of the financial statements and audit of compliance, I consider internal control in order to give an assurance on the effectiveness of internal controls, risk management and governance processes and systems in accordance with the provisions of Section 7(1)(a) of the Public Audit Act, 2015 and submit the audit report in compliance with Article 229(7) of the Constitution. My consideration of the internal control would not necessarily disclose all matters in the internal control that might be material weaknesses under the ISSAls. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Because of its inherent limitations, internal control may not prevent or detect misstatements and instances of non-compliance. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the Kenya Primary Education Development Project policies and procedures may deteriorate. As part of an audit conducted in accordance with ISSAls, I exercise professional judgement and maintain professional skepticism throughout the audit. I 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 my opinion. The risk of not detecting a material misstatement resulting from Report ofthe Auditor-General on Kenya Primary Education Development Project (Grant No. TFO18863) for the year ended 30 June, 2021 - State Department for Early Learning and Basic Education 5 fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Management. * Conclude on the appropriateness of the 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 Project's ability to continue to sustain its services. If I conclude that a material uncertainty exists, I am required to draw attention in the auditors report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my audit report. However, future events or conditions may cause the Project to cease to continue to sustain its services. * 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 and business activities of the Project to express an opinion on the financial statements. * Perform such other procedures as I consider necessary in the circumstances. I communicate with the 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 are identified during the audit. I also provide Management with a statement that I 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 my independence, and where applicable, related safeguards. CPA Na; CBS AUDITOR-GENERAL Nairobi 24 December, 2021 Report of the Auditor-General on Kenya Primary Education Development Project (Grant No. TF018863) for the year ended 30 June, 2021 - State Department for Early Learning and Basic Education 6 и _ �г м � � м � �г. м о - t- и l '1 � й . i` '"у '? � � с'', `�` �'3.1 � м ���. ос r- ' - м, м � м й I М о '^ ' '�,-�, �' й а о n j � о �с r v м �r: .д р' � г�Oи� � г-- v � м V 3С � I N ��� � � r v�/ ГJ' N �} � Т � Yi � r1 ,' . . .. .. ...� . � - Св ..... ,,,,, �/� ва-� �' о � N ' � z � � оо й: -�-га I о' =т а ы �� N а л � �,I х, � И� � у о i °� � д W - �О ^7 м�I � г v0 1С � х � м , ь- Т �л . �? О С+ � '" - = U п.� N M1р -{ г� _ цi ао V ] �+ ,. м � г- I ^ г�, е•7 � Q U� �. и tr ,. М [V � г°� �_ ` 1 �❑�¢' f � •о р� W „� .* 'r iI � � А � м �-.II 1 м � G[i.,C� U А�j м гмл `и�! � i М .. 1�ч "�' - р ." W м м rI � м R: �-__ � д � � _ � W и оо м ' ............. о'� - а� т г� r и м. 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Oi I'� W Я N N �О М М 0 ,/. в� Zi F+K �-r v'j О 1/1 ^' °� о �а•� � � � �' � �� �. '►� � Е,,,� Q О � ,r ... "' ы ап � � � W W а `� о .°Д � � о °' � -s� � 7. Я. сд +S'"'S- и ""' � �, �� и W� � �� � о с� и Z �..+ 0 ы_ G? ,,,� �) ��� 'Г+` �."� OJ х Ls+ L 'G О и •С � +и-` г`= U � � � �4 � 'О � � � � д 0 г�л � � и W WJ N СЛ у�� E-t О �' � G � � .�, tiд у и с � � •� гл � е� а� и и �� i/1 Lй :О � гл и н .��. у у' 4-� ¢`л � �+и.+ Сб � Сд t-� Ct �� � R.� д, G. � ы ai � ш � � � �•� � й�-•� � ы� � � ti �1 '+1 ^�1 С •U �' •г�J V 7 � � с�д й в�+ 7�. N � � с�б скj � 6.1 � +�-` ..�� 'Ci ° � z�a г�с� aat�� F с� � й¢��с� о�� z,, ад Kenya Primary Education Development Project. Reports and Financial Statements For th efinancial year ended 30 June 2021 1 LSIGNIFICANT ACCOUNTING POLICIES The principal accounting policies adopted in the preparation of these financial statements are set out below: 11.1 Basis of Preparation 11.2 Statement of compliance and basis of preparation The financial statements have been prepared in accordance with Cash-basis IPSAS financial reporting under the cash basis of accounting, as prescribed by the PSASB and set out in the accounting policy note below. This cash basis of accounting has been supplemented with accounting for; a) receivables that include imprests and salary advances and b) payables that include deposits and retentions. The financial statements comply with and conform to the form of presentation prescribed by the PSASB. The accounting policies adopted have been consistently applied to all the years presented. 11.3 Reporting entity The financial statements are for the PRIEDE Project under National Government of Kenya. The financial statements encompass the reporting entity as specified in the relevant legislation PFM Act 2012. 11.3.1 Reporting currency The financial statements are presented in Kenya Shillings (KShs), which is the functional and reporting currency of the Project and all values are rounded to the nearest Kenya Shilling. 5 Kenya Primary Education Development Project. Reports and Financial Statements For the financial year ended 30 June 2021 11.4 Significant Accounting Policies h) Recognition of receipts The Project recognises all receipts from the various sources when the event occurs, and the related cash has actually been received by the Government. i) Transfers from the Exchequer Transfer from Exchequer is be recognized in the books of accounts when cash is received. Cash is considered as received when payment instruction is issued to the bank and notified to the receiving entity. ii) External Assistance External assistance is received through grants and loans from multilateral and bilateral development partners. iii) Other receipts These include Appropriation-in-Aid and relates to receipts such as proceeds from disposal of assets and sale of tender documents. These are recognized in the financial statements the time associated cash is received. b) Donations and grants Grants and donations shall be recognized in the books of accounts when cash is received. Cash is considered as received when a payment advice is received by the recipient entity or by the beneficiary. In case of grant/donation in kind, such grants are recorded upon receipt of the grant item and upon determination of the value. The date of the transaction is the value date indicated on the payment advice. 6 Kenya Primary Education Development Project. Reports and Financial Statements For the financial year ended 30 June 2021 Significant Accounting Policies (Continued) 0) Proceeds from borrowing )3orrowing includes Treasury bill, treasury bonds, corporate bonds, sovereign bonds and external loans acquired by the Project or any other debt the Project may take on will be treated on cash basis and tecognized as a receipt during the year they were received. 4) Undrawn external assistance These are loans and grants at reporting date as specified in a binding agreement and relate to funding for the Project currently under development where conditions have been satisfied or their ongoing 8atisfaction is highly likely and the project is anticipated to continue to completion. An analysis of the Project's undrawn external assistance is shown in the funding summary e) Recognition of payments The Project recognises all payments when the event occurs, and the related cash has actually been paid out by the Project. i) Compensation of employees Salaries and Wages, Allowances, Statutory Contribution for employees are recognized in the period when the compensation is paid. ii) Use of goods and services Goods and services are recognized as payments in the period when the goods/services are consumed and paid for. If not paid for during the period where goods/services are consumed, they shall be disclosed as pending bills. 7 Kenya Primary Education Development Project Reports and Financial Statements For the financial year ended 30 June 2021 Significant Accounting Policies (Continued) iii) Interest on borrowing Borrowing costs that include interest are recognized as payment in the period in which they incurred and paid for. iv) Repayment of borrowing (principal amount) The repayment of principal amount of borrowing is recognized as payment in the period in which the repayment is made. The stock of debt is disclosed as an annexure to the consolidated financial statements. v) Acquisition of fixed assets The payment on acquisition of property plant and equipment items is not capitalized. The cost of acquisition and proceeds from disposal of these items are treated as payments and receipts items respectively. Where an asset is acquired in a non-exchange transaction for nil or nominal consideration and the fair value of the asset can be reliably established, a contra transaction is recorded as receipt and as a payment. A fixed asset register is maintained by each public entity and a summary provided for purposes of consolidation. This summary is disclosed as an annexure to the consolidated financial statements. f) In-kind donations In-kind contributions are donations that are made to the Project in the form of actual goods and/or services rather than in money or cash terms. These donations may include vehicles, equipment or personnel services. Where the financial value received for in-kind contributions can be reliably determined, the Project includes such value in the statement of receipts and payments both as receipts and as payments in equal and opposite amounts; otherwise, the contribution is not recorded. 8 Jenya Primary Education Development Project. Reports and Financial Statements For the financial year ended 30 June 2021 Significant Accounting Policies (Continued) g) Cash and cash equivalents Cash and cash equivalents comprise cash on hand and cash at bank, short-term deposits on call and highly liquid investments with an original maturity of three months or less, which are readily convertible to known amounts of cash and are subject to insignificant risk of changes in value. Bank account balances include amounts held at the Central Bank of Kenya and at various commercial banks at the end of the financial year. For the purposes of these financial statements, cash and cash equivalents also include short term cash imprests and advances to authorised public officers and/or institutions which were not surrendered or accounted for at the end of the financial year. Restriction on cash Restricted cash represents amounts that are limited/restricted from being used to settle a liability for at least twelve months after the reporting period. This cash is limited for direct use as required by stipulation. Amounts maintained in deposit bank accounts are restricted for use in refunding third part deposits. h) Accounts receivable For the purposes of these financial statements, imprests and advances to authorised public officers and/or institutions which were not surrendered or accounted for at the end of the financial year is treated as receivables. This is in recognition of the government practice where the imprest payments are recognized as payments when fully accounted for by the imprest or AIE holders. This is an enhancement to the cash accounting policy. Other accounts receivables are disclosed in the financial statements. 9 Kenya Primary Education Development Project. Reports and Financial Statements For the financial year ended 30 June 2021 Significant Accounting Policies (Continued) i) Contingent Liabilities A contingent liability is: a) A possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or b) A present obligation that arises from past events but is not recognised because: i) It is not probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation; or ii) The amount of the obligation cannot be measured with sufficient reliability. Some of contingent liabilities may arise from: litigation in progress, guarantees, indemnities. Letters of comfort/ support, insurance, Public Private Partnerships, The Entity does not recognize a contingent liability but discloses details of any contingencies in the notes to the financial statements unless the possibility of an outflow of resources embodying economic benefits or service potential is remote. Section 89 (2) (i) of the PFM Act requires the National Government to report on the payments made, or losses incurred, by the county government to meet contingent liabilities as a result of loans during the financial year, including payments made in respect of loan write-offs or waiver of interest on loans j) Contingent Assets The Entity does not recognize a contingent asset, but discloses details of a possible asset whose existence is contingent on the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Entity in the notes to the financial statements. Contingent assets are assessed continually to ensure that developments are appropriately reflected in the financial statements. If it has become virtually certain that an inflow of economic benefits or service potential will arise and the asset's value can be measured reliably, the asset and the related revenue are recognized in the financial statements of the period in which the change occurs. Significant Accounting Policies (Continued) 10 Kenya Primary Education Development Project Reports and Financial Statements For the financial year ended 30 June 2021 k) Pending bills Pending bills consist of unpaid liabilities at the end of the financial year arising from contracted goods or services during the year or in past years. As pending bills do not involve the payment of cash in the reporting period, they recorded as 'memorandum' or 'off-balance' items to provide a sense of the overall net cash position of the Project at the end of the year. When the pending bills are finally settled, such payments are included in the statement of receipts and payments in the year in which the payments are made. 1)Budget The budget is developed on a comparable accounting basis (cash basis), the same accounts classification basis (except for accounts receivable - outstanding imprest and clearance accounts and accounts payable - deposits, which are accounted for on an accrual basis), and for the same period as the financial statements. The Project's budget was approved as required by Law and National Treasury Regulations, as well as by the participating development partners, as detailed in the Government of Kenya Budget Printed Estimates for the year. The Development Projects are budgeted for under the MDAs but receive budgeted funds as transfers and account for them separately. These transfers are recognised as inter-entity transfers and are eliminated upon consolidation. A high-level assessment of the Project's actual performance against the comparable budget for the financial year/period under review has been included in an annex to these financial statements. m) Third party payments Included in the receipts and payments, are payments made on its behalf by to third parties in form of loans and grants. These payments do not constitute cash receipts and payments and are disclosed in the payment to third parties' column in the statement of receipts and payments. Significant Accounting Policies (Continued) 11 Kenya Primary Education Development Project. Reports and Financial Statements For the financial year ended 30 June 2021 n) Exchange rate differences The accounting records are maintained in the functional currency of the primary economic environment in which the Project operates, Kenya Shillings. Transactions in foreign currencies during the year/period are converted into the functional currency using the exchange rates prevailing at the dates of the transactions. Any foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statements of receipts and payments. o) Comparative figures Where necessary comparative figures for the previous financial year/period have been amended or reconfigured to conform to the required changes in financial statement presentation. p) Subsequent events There have been no events subsequent to the financial year/period end with a significant impact on the financial statements for the year ended 30 June, 2021. q) Errors Material prior period errors shall be corrected retrospectively in the first set of financial statements authorized for issue after their discovery by: i. Restating the comparative amounts for prior period(s) presented in which the error occurred; or ii. If the error occurred before the earliest prior period presented, restating the opening balances of assets, liabilities and net assets/equity for the earliest prior period presented. 12 Kenya Primary Education Development Project. Reports and Financial Statements For the financial year ended 30 June 2021 12.0. NOTES TO THE FINANCIAL STATEMENTS 12.1 RECEIPTS FROM GOVERNMENT OF KENYA These represent counterpart funding and other receipts from government as follows: 2020/21 2019/20 Cumulative Cumulative Prior to Date Year KShs KShs KShs KShs Counterpart funding through State 1Deartment for Basic Education _ Counterpart funds 183,036,399 194,001,143 Other transfers from government - entities J1183.036.399 194,001.143 13 Kenya.Primary Education Development Project. Reports and Financial Statements For the financial year ended 30 June 2021 NOTES TO THE FINANCIAL STATEMENTS (Continued) 12.2 PROCEEDS FROM DOMESTIC AND FOREIGN GRANTS During the 12 months to 30 June 2021, we received grants from donors as detailed in the table below: Name of Donor Date Amount Grants Grants Grants Total amount in KShs received received received in Received in kind in donor cash as direct currency payment* FY 2020/21 FY 2019/20 KShs KShs KShs KShs KShs Grants Received fron Partners of Education GPE-Category 1 700,597,946 700,597,946 576,810,278 GPE-Calegory 2 64,172,324 - 64,172,234 - Total 764,770,270 764,770,270 576,810,278 * The direct payment grants represent payments for goods and services done directly by the donor on behalf of the project. Projects should ensure that the adequate documents and support document is requested from the donors to support this grant. 14 Kenya Primary Education Development Project. Reports and Financial Statements For the financial year ended 30 June 2021 NOTES TO THE FINANCIAL STATEMENTS (Continued) NOTES TO THE FINANCIAL STATEMENTS (Continued 12.3 MISCELLANEOUS RECEIPTS TOTAL RECEIPTS Cumulative Cumulative to- date Prior Year Restated Receipts Receipts FY 2020/21 FY 2019/20 controlled by controlled the entity in by third Cash parties KShs KShs KShs KShs KShs KShs Cash deposits 3,288,173 3,288,173 Net cashbook 3,490,539 3,490,539 Adjustments Other counties Refunds 4,966,388 4,966,388 Counties Refund 1,870,226 1,870,226 17,536,978 459,413,873 457,543,647 1,870,226 17 411573 469,288,747 15 Kenya Primary Education Development Project. Reports and Financial Statements For the financial year ended 30 June 2021 NOTES TO THE FINANCIAL STATEMENTS (Continued) 12.4 PURCHASE OF GOODS AND SERVICES Total Payments Cumulative Cumulative to- date Prior Year _______________ _________ _________Restated Payments Payments FY 2020121 FY 2019/20 made by the made by Entity in third Cash parties KShs KShs KShs KShs KShs KShs Utilities, supplies and 101,906,451 101,906,451 services Communication, supplies 2,236,000 2,236,000 2,002,000 14,737,698 12,501,698 and services Domestic travel and 44,871,525 44,871,525 16,989,040 328,558,186 283,686,661 subsistence Foreigzn travel and 24,677,735 24,677,735 1,176,960 73,241,763 48,564,028 subsistence Printing, advertising and 20,644,783 20,644,783 67,457,119 984,769,394 964,124,611 information supplies & services Training expenses 29,015,540 29,015,540 - 112,334,713 83,319,173 Hospitality supplies and 4,814,339 4,814,339 3,892,827 32,625,491 27,811,152 services Transfer to Foreign affairs - - - 2,377,593 2,377,593 Other operating expenses - 187,100 187,100 1,101,100 5,580,250 5,393,150 flights Routine maintenance - 3,600,087 3,600,087 32,119,478 58,436,075 54,835,988 vehicles and other ICT equipment Consultancy services: - 37,600,000 37,600,000 52,616,718 522,813,431 485,213,431 Technical and professional services Total ____3 2 2,237,381,045 ____ 16 Kenya Primary Education Development Project. Reports and Financial Statements For the financial year ended 30 June 2021 NOTES TO THE FINANCIAL STATEMENTS (Continued) 12.5 ACQUISITION OF NON-FINANCIAL ASSETS Total Payments Cumulative to-date Payments Payments FY 2020/21 FY 2019/20 made by the made by Entity in third parties Cash KShs KShs KShs KShs KShs Purchase of vehicles & other - - 22,440,720 transport equipment ICT Equipment, software and 5,384,343 5,384,343 - 425,411,226 ICT asset Purchase of office furniture & - 17,375,510 27,501,687 eneral equipment Acquisition of other intangible - - - assets Total 5,384,343 17.3755 4 3 3 17 Kenya Primary Education Development Project. Reports and Financial Statements For the financial year ended 30 June 2021 NOTES TO THE FINANCIAL STATEMENTS (Continued) 12.6 TRANSFERS TO OTHER GOVERNMENT ENTITIES During the 12 months to 30 June 2021, we transferred funds to reporting government entities as shown below: Total Payments Cumulative to-date Payments Payments FY 2020/21 FY 2019/20 made by made by third the Entity parties in Cash KShs KShs KShs KShs KShs Transfers to National Government entities Kenya National Examination 80,493,206 80,493,206 86,219,097 418,371,315 Council Teachers Service Commission 108,739,783 108,739,783 20,064,581 252,514,511 189,232,989 189,232,989 106,283,678 670.885,826 Transfers to County Government Various county Governments 403,814,329 403,814,329 24,672,162 3,775,617,474 TOTAL 593,047,318 593,047,318 130,55,840 We have confirmed that the beneficiary institutions have received the funds and have recorded these as inter-entity receipts. 18 Kenya Primary Education Development Project. Reports and Financial Statements For the financial year ended 30 June 2021 NOTES TO THE FINANCIAL STATEMENTS (Continued) 12.7 OTHER GRANTS AND TRANSFERS AND PAYMENTS Total Payments Cumulative Cumulative Prior to-date Year Payments FY FY 2019/20 made by the 2020/21 Entity in Cash KShs KShs KShs KShs KShs Transfers to lower 1,999,800,000 1,999,800,000 levels of government e.g schools Miscellaneous Payments Total 1,999,800,000 1,999,800,000 19 Kenya Primary Education Development Project. Reports and Financial Statements For th gfinancial year ended 30 June 2021 NOTES TO THE FINANCIAL STATEMENTS (Continued) 12.8 CASH AND CASH EQUIVALENTS rCASH AND CASH EQUIVALENTS C/FWD FY 2020/21 FY 2019/20 KShs KShs Bank accounts (Note 12.8A) 617,065,918 695,286,660 Outstanding imprests and advances (Note 12.8B) 109,693,435 41.689,505 Total 726,759,353 736,976,165 The project has 4 project accounts spread within the project implementation area and 3 foreign currency designated accounts managed by the National Treasury as listed below: 12.8A Bank Accounts Project Bank Accounts Foreign Currency Accounts Central Bank of Kenya A/c No 1000241349 - 205,849.81 Central Bank of Kenya A/c No 1000241322 970,854.04 Central Bank of Kenya A/c No 1000449788 - - Total Foreign Currency balances - 1.176.703.85 Local Currency Accounts Central Bank of Kenya A/c No 1000387947 422,217,152 585,962,074 Central Bank of Kenya A/c No 1000387955 162,538,766 98,359,842 Central Bank of Kenya A/c No 1000387904 - 10,964,744 Central Bank of Kenya A/c No 1000465069 32.310,000 - Total local currency balances 617.065.918 695 286660 Total bank account balances 617,065.918 696.463,363.85 20 Kenya Primary Education Development Project. Reports and Financial Statements For the financial year ended 30 June 2021 NOTES TO THE FINANCIAL STATEMENTS (Continued) Special Deposit Accounts The balances in the Project's Special Deposit Account(s) as at 30 June 2021 are not included in the Statement of Financial Assets since they are below the line items and are yet to be drawn into the Exchequer Account as a voted provision. Below is the Special Deposit Account (SDA) movement schedule which shows the flow of funds that were voted in the year. These funds have been reported as loans/grants received in the year under the Statement of Receipts and Payments. Special Deposit Accounts Movement Schedule (i) A/C Name A/c No 1000241322 Opening balance 970,854.04 - Total amount deposited in the account 5,172,915.59 970,854.04 Total amount withdrawn (as per Statement of Receipts & 6,143,769.63 Payments) Closing balance (as per SDA bank account reconciliation 970,854.04 attached) (ii) Alc Name [A/c No 1000241349] Opening balance (as per the SDA reconciliation) 205,849.81 205,849.81 Total amount deposited in the account 380,407.80 - Total amount withdrawn (as per Statement of Receipts & 586,257.61 Payments) Closing balance (as per SDA bank account reconciliation 0 205,849.81 attached) The Special Deposit Account(s) reconciliation statement(s) has (have) been attached as Annex to support these closing balances. 21 Yenya Primary Education Development Project. Reports and Financial Statements For the financial year ended 30 June 2021 NOTES TO THE FINANCIAL STATEMENTS (Continued) 12.8B: BREAKDOWN OF IMPRESTS AND ADVANCES Name of Officer or Amount Due Date of Amount Balance Balance Institution Taken Surrender Surrendered 2021 2020 Kshs Kshs Kshs Kshs a b c=a-b Various county 475,770,462 Various 417,998,058 57,772,404 12,977,722 Governmnents TSC 118,277,746 Various 108,739,783 9,537,963 18,409,037 KNEC 122,097,246 Various 80,493,206 41,604,040 10,30Z 746 COVID 19 Project 287,000 - 287,000 Staff Imprest 492,028 492,028 outstanding 716,924,482 607,231,047 109,693,435 41,689,505 12.9 FUND BALANCE BROUGHT FORWARD CASH AND CASH EQUIVALENTS B/FWD 2020/21 2019/20 KShs KShs Bank accounts 695,286,660 338,104,683 Outstanding imprests and advances 41,689,505 130,210,818 Total 736,976,165 468,315,501 22 Kenya Primary Education Development Project Reports and Financial Statements For the finan cial year ended 30 June 2021 NOTES TO THE FINANCIAL STATEMENTS (Continued) 12.10 PRIOR YEAR ADJUSTMENT Bank account Balances -10,964,744 -10964744 Cash in hand Accounts Payables - - Receivables 186,206 186,206 - Others (spec i) - - - -10,778,538 -10,778,538 12.11 CHANGES IN RECEIVABLE Outstanding Imprest/advance as at lF July, 2020 (A) 41,689,505 130,210,818 Imprest/advance issued during the year (13) 675,234,977 166,805,105 Imprest/advance surrendered during the Year (C) (607,231, 04 7) (25 5 ,3 26,418) Net changes in account receivables D= A+B+C 109,693,435 41,689,505 23 Kenya Primary Education Development Project Reports and Financial Statements For the financial year ended 30 June 2021 13. OTHER IMPORTANT DISCLOSURES Compensation of Employees Use of goods and services - 37,133,403 Subsidies Transfers to Other Government Units Other grants and transfers - - Social Security Benefits - Acquisition of Assets _ - - Finance Costs, including Loan Interest - Repayment of principal on Domestic and Foreign borrowing - Other Payments - TOTAL 37,133,403 24 Kenya Primary Education Development Project. Reports and Financial Statements For the financial year ended 30 June 2021 14.PROGRESS ON FOLLOW UP OF PRIOR YEAR AUDITOR'S RECOMMENDATIONS The following is the summary of issues raised by the external auditor, and management comments that were provided to the auditor. We have nominated focal persons to resolve the various issues as shown below with the associated time frame within which we expect the issues to be resolved. Our counties opening balance as at ISt July 2020 was Kshs 95,453,747 which differed with counties closing balances as at 30th June 2019. At as per our Unexplained Variances in Transfers to records, Kshs 95,453,747 Other Government Entities: The statement is the correct counties of receipts and payments reflects transfers to opening balance and this other government entities totalling Kshs. is evidenced by what was 130,955,840. Included in the balance are received from counties in expenditures incurred by County Directors form of unspent AIE of Education totalling Kshs. 24,672,162. balances of Kshs However, aggregate balances derived from 93,233,047.95 in the first records maintained by the respective County and second quarter of the Governments and submitted to the State financial year 2019/2020. Department for Early Learning and Basic The variance between Education amount to Kshs. 63,543,005 our balances and the Not which differs from the sum of Kshs. counties balances was Resolved 95,453,747 derived from the expenditure caused by the following; schedules availed for audit. The difference, * Failure by some amounting to Kshs. 31,910,742, between the counties to two sets of records has not been explained. capture all the Consequently, the accuracy and disbursed AIEs completeness of transfers to other in their vote government entities totalling Kshs. 130,955,840 reflected in the statement of book receipts and payments for the year ended 30 management June, 2020 has not been confirmed. systems during the financial year resulting to declaration of wrong closing balances at 30th June2019. * Receipt of 25 Kenya Primary Education Development Project. Reports and Financial Statements For the financial year ended 30 June 2021 counties unspent AIE balances in the first quarter of 2019/2020 financial year. Whereas counties cashbooks as at 30th June 2019 had nil and lesser balances, our counties reconciliation statements had higher balances because of the unspent AIE balances which remained as unpresented cheques in the various counties bank reconciliations statements as at 30th June 2019. The unpresented cheques however, cleared in the first and second quarter of the subsequent financial year 2019/2020 and the balances reconciled. Analysis of the unspent AIEs balances received, bank transfer RTGS and bank 26 Kenya Primary Education Development Project Reports and Financial Statements For the financial year ended 30 June 2021 statements are available for your review. (ANNEX 410A, 410B, 410C) During the financial year 2019/2020, the project received an exchequer release of Kshs 539,676,875 from the Unreconciled Special Account Statement national treasury and The statement of receipts and further made direct pay to MFI Solution Ltd payments for the year ended 30 June, through world bank of 2020 reflects proceeds from domestic Kshs 37,133,403. This gives a total of Kshs and foreign grants totalling Kshs. 576,810,278 which is the 576,810,278 as further disclosed total foreign grant received in this financial under Note 11.4 to the financial year. The variance of 411 statements. However, the identical Kshs 36,594,206 is caused Not 31/12/2021 by direct payment Kshs Resolved account balance reflected in the 37,133,403 and loss in special accounts statement as at 30 Kenya shillings against the dollar of Kshs of June, 2020 amounted to Kshs- 539,197 which were 540,216,072 resulting to a variance never factored in the special accounts of Kshs. 36,594,206 which, however, statement during the had not been reconciled at the time of year. Copies of exchequer notification and payment audit voucher of the direct payment made to MFI Solution Ltd are available for your review. (ANNEX 411 A, 411B) Budgetary Control and Performance The Project's final budget for the year under review totalled Kshs. 562,417,338 and 412 ,actual expenditure totalled Kshs. 31/12/2021 325,686,592 resulting to an under- expenditure of Kshs. 236,730,746 equivalems to 58% of the budget. I 27 Kenya Primary Education Development Project. Reports and Financial Statements Vor the financial year ended 30 June 2021 The high under-absorption of the approved budget meant that many of the Project's activities planned for the year were not implemented. As a result, attainment of the Project's goals and objectives was hampered. No plausible explanation has been provided by Management for the underperformance. Principal Secretary Project Coordinator DR. JULIUS JWAN MARTHA EKIRAPA Date Date 28 Kenya Primary Education Development Project Reports and Financial Statements For thefinancial year ended 30 June 2021 15. ANNEXES ANNEX 1 - VARIANCE EXPLANATIONS - COMPARATIVE BUDGET AND ACTUAL AMOUNTS a b c=a-b d=bla % Receipts Transfer from Government entities - - - - Covid 19 Proceeds from domestic pandemic & and foreign grants closure of 1,175,000,000 764,770.270 410,229,730 65% schools Proceeds from borrowings - Miscellaneous receipts - 1,870,226 - - Total Receipts 1,175,000,000 766,640,496 410,229,730 - Payments Compensation of employees---- Purchase of goods and Covid 19 services pandemic & closure of 466,215,326 167,647,109 298,568.217 37% schools Social security benefits - - - Acquisition of non- financial assets 5,384,343 5,384,343 - - Transfers to other Covid 19 government entities pandemic & closure of 703,400,331 593,047,318 110,353,013 84% schools I Other grants and transfers - -_- Total payments 1,175,000,000 766,078,770 408,921,230 - 29 Kenya Primary Education Development Project. Reports and Financial Statements For the financial year ended 30 June 2021 ANNEX 2 - SUMMARY OF FIXED ASSET REGISTER Land Buildings and structures Transport equipment 22,440,720 - - - 22,440,720 Office equipment, 27,451,687 - - - furniture and fittings 27,451,687 ICT Equipment. 420,026,883 5,384,343 - - 425,411,226 Other Machinery and Equipment Total 469,919,290 5,384,343 475,303,633 APPPENDICES i. Signed confirmations from beneficiaries in Transfers to Other Government Entities ii. Bank Reconciliations statement as at 30P June 2021 iii. Board of Survey Report iv. Special Deposit Account(s) reconciliation statement(s) 30