Suleiman & Co. Certified Public Accountants - License No. 205 Correspondent Firm of RSM International in East Jerusalem, West Bank and Gaza THE PALESTINIAN MINISTRY OF FINANCE Project Title FINANCE FOR JOBS PROJECT I (TF0A1490) Funded by INTERNATIONAL DEVELOPMENT ASSOCIATION (IDA) Implemented by DEVELOPMENT ALTERNATIVES, Inc. GLOBAL, LLC Financial Statements for the Period from January 1, 2021 to March 31, 2022 and Independent Auditor's Report Ramallah Al Masyoun Taj Mahal building No. 10 phone 970 2 297-5576 Fax 970 2 297-5577 E-mail: info@suleimanco.com The Palestinian Ministry of Finance Finance for Jobs Project I (TF0A1490) Funded by International Development Association Financial Statements for the Period from January 1, 2021 to March 31, 2022 Table of Contents Page No. Independent Auditor’s Report 2-3 Statement of Balance Sheet 4 Statement of Sources and Uses of Funds 5 Designated Bank Account Statement 6 Notes to the Project Financial Statements 7-12 Annex I 13 1 Suleiman & Co. Certified Public Accountants - License No. 205 Correspondent Firm of RSM International in East Jerusalem, West Bank and Gaza Independent Auditor’s Report To The Development Alternatives, Inc. Global, LLC Ramallah Opinion We have audited the Financial Statements of “Finance for Jobs Project” (TF0A1490) (hereinafter “the Project”), which comprise the Statement of Balance Sheet funded by the International Development Association (IDA) and implemented by Development Alternatives Inc. (hereinafter “DAI Global, LLC”) as at March 31, 2022, and the related Statement of Sources and Uses of Funds, Designated Bank Account Statement for the period from January 1, 2021 to March 31, 2022, and notes to the Financial Statements, including a summary of significant accounting policies. In our opinion, the accompanying Financial Statements present fairly, in all material respects, the Balance Sheet of the Project as at March 31, 2022, and the related Statement of Sources and Uses of Funds, Designated Bank Account Statement for the period then ended in accordance with the accounting standards described in note 2. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Project in accordance with the ethical requirements that are relevant to our audit of the Financial Statements in areas under the jurisdiction of the Palestinian Authority, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other Matters Based on our review, in all material respects: 1. The Project expenditures reimbursed on basis of Statements of Expenditures (SOE) are eligible to the Grant Agreement and are reflected on the Financial Statements. 2. The Designated Bank Account has been used exclusively for payment of eligible expenditures as reflected in the Financial Statements. 3. The Project’s accounting system (books and records), established and maintained by the DAI Global, LLC to record the financial transactions of the Project, provides the basis for preparation of the Project’s Financial Statements; 4. Internal control over financial reposting involved in the preparation of replenishments, direct payments, payments through special commitments, and reimbursements can be relied upon to support the related withdrawals. 5. The Project was in all material respects in compliance with the laws, regulations, guidelines and provisions governed by the Grant Agreement. 6. Procurement Guidelines have been properly applied in accordance with the Project’s Grant Agreement. 2 Suleiman & Co. Certified Public Accountants - License No. 205 Correspondent Firm of RSM International in East Jerusalem, West Bank and Gaza Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of these Financial Statements in accordance with accounting standards described in note 2, and for such 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. DAI Global, LLC is responsible for overseeing the Project’s financial reporting process. Auditor’s Responsibilities for the Audit of the Financial Statements The objectives of our audit are to obtain reasonable assurance about whether the Project Financial Statements taken 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: 1. 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. 2. 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 Project’s internal control. 3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. 4. 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. 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, if any. Suleiman & Co.- Certified Public Accountants Ismail M Suleiman, CPA License number 131/2000 Ramallah, May 5, 2022 Ramallah Al Masyoun Taj Mahal building No. 10 phone 970 2 297-5576 Fax 970 2 297-5577 E-mail: info@suleimanco.com 3 The Palestinian Ministry of Finance Finance for Jobs Project (TF0A1490) Funded by International Development Association Financial Statements for the Period from January 1, 2021 to March 31, 2022 Statement of Balance Sheet (All amounts in USD) As of As of March 31, December 31, Note 2022 2020 Assets Current assets Cash at bank 8 1,202 85,954 Total current assets 1,202 85,954 Total assets 1,202 85,954 Liabilities and fund balance Fund balance Fund balance 8 1,202 85,954 Total liabilities and fund balance 1,202 85,954 The accompanying notes form an integral part of these Financial Statements. 4 The Palestinian Ministry of Finance Finance for Jobs Project (TF0A1490) Funded by International Development Association Financial Statements for the Period from January 1, 2021 to March 31, 2022 Statement of Sources and Uses of Funds (All amounts in USD) For the period from January 1, 2021 to Cumulative to March 31, March 31, Note 2022 2020 2022 Fund balance – beginning of year 85,954 42,407 - Sources of fund Advance payment 3 - - 500,000 Replenishments received 3 434,616 1,110,390 4,500,000 Total sources of fund 434,616 1,110,390 5,000,000 Uses of funds Category 1: Matching Grants under 4& Part A of the project Annex I 284,371 401,312 1,137,668 Category 2: Goods, Non-consulting Services, Management Fees, and Incremental Operating Costs Training under Part B and C of the project: : Part A: Matching Grants 4 Part A: Matching Grants 2,582 6,872 40,044 Part B: ICF & Capacity Building 4 106,849 166,394 1,491,858 Part C: Project Management 4 37,593 395,455 1,883,276 Fixed Fee 4 88,092 96,691 445,922 Petty cash not yet credit (119) 119 - Currency variances loss - - 30 Total uses of funds 519,368 1,066,843 4,998,798 Change in fund balance (84,752) 43,547 1,202 Fund balance – end of year 8 1,202 85,954 1,202 The accompanying notes form an integral part of these Financial Statements. Training 5 The Palestinian Ministry of Finance Finance for Jobs Project (TF0A1490) Funded by International Development Association Financial Statements for the Period from January 1, 2021 to March 31, 2022 Designated Bank Account Statement IBAN PS18 PALS 0458 2222 8700 0130 0100 0 Bank Account number 0458 / 2222870 / 001 / 3001 / 000 Depository bank Bank of Palestine Address Ramallah Related loan/ credit TF0A1490 Currency U.S. Dollar (USD) As of As of March 31, December 31, Note 2022 2020 Balance – beginning of period/ year 85,954 42,834 Receipts during the period/ year 3 434,616 1,110,390 Total 520,570 1,153,224 Deduct Payments for project expenditures from designated bank account 5 519,368 1,067,270 Total 519,368 1,067,270 Balance – end of period/ year 8 1,202 85,954 The accompanying notes form an integral part of these Financial Statements. 6 The Palestinian Ministry of Finance Finance for Jobs Project (TF0A1490) Funded by International Development Association Financial Statements for the Period from January 1, 2021 to March 31, 2022 Notes to the Project Financial Statements (All amounts in USD) 1. The Project and its Financing The Palestinian Liberation Organization (PLO), for the benefit of the Palestinian Authority (PA), and the International Development Association (the World Bank), acting as an administrator of the Trust Fund for Gaza and West Bank, signed a Trust Fund Grant Agreement dated March 10, 2016 (the Grant Agreement), whereby the world made a grant, to the PA in an amount equals to USD 5,000,000, grant number TF0A 1490, To finance a project entitled “Finance for Jobs Project I” (the Project). In accordance with the Grant Agreement, the PA shall cause the Project to be carried out jointly by the Palestinian Ministry of Finance (MoF) and a Project Implementation Agreement agency. Accordingly, an Implementation Agreement dated November 20, 2016 (the Implementation Agreement), has been signed between the MoF and Development Alternatives, Inc. Global, LLC (DAI Global, LLC) under which DAI Global, LLC has been contracted as the Project Implementation Agency (PIA). The effective date of the Grant Agreement is November 30, 2016. The categories to be financed by the World Bank and the percentage of expenditure for items to be financed in each category, is as updated by the amendment to the Grant Agreement dated July 17, 2017, are as follows: Allocated Percentage of Amount Expenditure Category (USD) to be financed Category 1: Matching Grants under Part A of the Project 1,500,000 100% Category 2: Goods, Non-consulting Services, Consultants Services, Management Fees, Training and Incremental Operating Costs under Part B and C of the Project. 3,500,000 100% 5,000,000 The objective of the Project is to test the effectiveness of selected financial inventions. The Project consists of the following parts: Part A: Entrepreneurship Ecosystem Matching Grant Provision of Matching Grants to Beneficiaries to build their business development capacity and their business advisory capacity. Part B: Capacity Building 1. Building a pipeline of job-focused private sector investments through conducting feasibility assessments on said private investments; and developing and utilizing a cost- benefit analysis methodology in conducting said assessments. 2. Supporting a program of activities to support the market preparation and related capacity building activities to assist the recipient to issue a development-impact bond instrument. 3. Supporting a program of activities to develop capacity of the MoF to enable it to: (a) effectively engage with the private sector to collaborate on innovative solutions to job creation; (b) better understand market failures and risks of the private sector; and (c) assess, develop, and manage innovative financing instruments. 7 The Palestinian Ministry of Finance Finance for Jobs Project (TF0A1490) Funded by International Development Association Financial Statements for the Period from January 1, 2021 to March 31, 2022 Notes to the Project Financial Statements – continued (All amounts in USD) 1. The Project and its Financing – continued Part C: Project Management Strengthening the capacity of DAI Global, LLC for project management, coordination, monitoring and evaluation, including, inter alia, fiduciary control and oversight, environmental and social safeguards assessment, and preparation of project reports. 2. Summary of Significant Accounting Policies The Project Financial Statements are prepared under the historical cost convention. Significant accounting policies follow: • Basis of accounting The Project Financial Statements are prepared using modified cash basis of accounting, which is a comprehensive basis of accounting other than International Financial Reporting Standards (IFRS). Under this basis of accounting, sources of funds are recognized when related cash is received from the World Bank and uses of funds are recognized when incurred. • Foreign currency The Project’s basic functional currency is the United States Dollar (USD). Transactions that are expressed or denominated in other currencies were translated to USD using exchange rates in effect at the time of each transaction. Differences arising from the fluctuations in exchange rates were treated as exchange gains or losses in the Statement of Sources and Uses of Funds. 8 The Palestinian Ministry of Finance Finance for Jobs Project (TF0A1490) Funded by International Development Association Financial Statements for the Period from January 1, 2021 to March 31, 2022 Notes to the Project Financial Statements – continued (All amounts in USD) 3. Sources of Funds Up to March 31, 2022, DAI received the following payments from the World Bank: Withdrawal Application (WA) Date of Number Fund Transfer Advance Payment Replenishment Total Cumulative amount up to December 31, 2020 500,000 4,065,384 4,565,384 For the period from Jan 1, 2021 to Mar 31, 2022 F4JS-20 February 21, 2021 - 413,897 413,897 F4JS-21 October 13, 2021 - 20,719 20,719 Amount received during the period - 434,616 434,616 Cumulative amount up to March 31, 2022 500,000 4,500,000 5,000,000 9 The Palestinian Ministry of Finance Finance for Jobs Project (TF0A1490) Funded by International Development Association Financial Statements for the Period from January 1, 2021 to March 31, 2022 Notes to the Project Financial Statements – continued (All amounts in USD) 4. Uses of Funds This item represents the following: For the period from January 1, 2021 to March 31, 2022 2020 Part A: Part B: Matching Capacity Part C: Project Cumulative up to Grant Building Management Total Total March 31, 2022 Category 1: Matching Grants (A) & Annex I 284,371 - - 284,371 401,312 1,137,668 Category 2: Goods, Non-consulting Services, Consultants’ Services, Management Fees, Training and Incremental Operating Costs 2,582 106,849 125,685 235,116 665,412 3,861,100 286,953 106,849 125,685 519,487 1,066,724 4,998,768 A) During year 2021, payments made to grantees amounted to USD 284,371 namely to: Ibtikar Funds (211,096), Flow Funds (73,275). 5. Payments for Project Expenditures Below is reconciliation of the Project expenditures shown in the Designated Bank Account Statement with the Project expenditures shown in the Statement of Sources and Uses of Funds: For the period from January 1, 2021 to March 31, 2022 2020 Total uses of funds per Statement of Sources and Uses of Funds 519,487 1,066,724 Add: Accrued payroll tax as of December 31, 2020 - 427 Add: Petty cash not yet credit - 119 Deduct: Petty cash as of December 31, 2020 (119) - Payments as reported in Designated Bank Account Statement 519,368 1,067,270 10 The Palestinian Ministry of Finance Finance for Jobs Project (TF0A1490) Funded by International Development Association Financial Statements for the Period from January 1, 2021 to March 31, 2022 Notes to the Project Financial Statements – continued (All amounts in USD) 6. SOE Procedures (Payments from Designated Bank Account) Payments from designated bank account represent amounts disbursed by DAI under the Project for the following disbursement categories: Withdrawal Application (WA) Number Payment Method Category 1 Category 2 Total Cumulative amount up to December 31, 2020 853,297 3,625,984 4,479,281 For the period from Jan 1, 2021 to Mar 31, 2022 Payment from designated bank F4JS-21 account 101,160 82,842 184,002 Payment from designated bank F4JS-22 account 183,211 152,274 335,485 Total Client connection up to March 31, 2022 284,371 235,116 519,487 DAI records as of March 31, 2022 1,137,668 3,861,100 4,998,768 11 The Palestinian Ministry of Finance Finance for Jobs Project (TF0A1490) Funded by International Development Association Financial Statements for the Period from January 1, 2021 to March 31, 2022 Notes to the Project Financial Statements – continued (All amounts in USD 7. Reconciliations Between World Bank Records (Client Connection) and DAI Records For the period from January 1, 2021 to Cumulative up to March 31, 2022 2020 March 31, 2022 Cash at bank- beginning balance 85,954 42,834 - Project account per the client connection Advance payment transferred to DAI - - 500,000 Replenishments received 434,616 1,110,390 4,500,000 434,616 1,110,390 5,000,000 Project account per DAI Global, LLC records Category 1: Matching grants under part A of the project 284,371 401,312 1,137,668 Category 2: Goods, Non-consulting services, consultants' services, management fees, training and incremental operating cost under part A, B and C of the project 235,116 665,412 3,861,100 Petty cash not yet credited (119) 119 - Add; Accrued payroll tax beginning balance - 427 - Currency variances loss - - 30 519,368 1,067,270 4,998,798 Cash at bank as of March 31, 2022 & December 31, 2021 1,202 85,954 1,202 8. Fund Balance – End of Year The fund balance at March 31, 2022 & December 31, 2020 represents the following: As of March 31, As of December 31, 2022 2020 Cash maintained in the USD designated bank account 1,202 85,954 1,202 85,954 12 The Palestinian Ministry of Finance Finance for Jobs Project (TF0A1490) Funded by International Development Association Financial Statements for the Period from January 1, 2021 to March 31, 2022 ANNEX I Summary of payments made by F4J I Project to key grantees and their sub-grantees during the Period under part A of the Project are: A Ibtikar 1 Kenz $ 29,054 2 Inggez $ 31,506 3 Gamiphy $ 39,049 4 Play3arabi $ 9,569 5 Logestechs $ 64,299 6 Tawazon $ 18,242 7 360 MOMS $ 16,006 8 Ibtikar $ 3,371 Total $ 211,096 B Flow 1 Hakini $ 14,250 2 Deelzat $ 14,250 3 Amal $ 14,992 4 Crownox $ 14,909 5 Shadana Yoga $ 10,925 6 Flow $ 3,948 Total $ 73,275 We have audited all payments stated above, including supporting documents related to each payment, which were submitted to F4J I management by Grantees. 13