The Federal Democratic Republic of Ethiopia Audit Services Corporation INDEPENDENT AUDITOR'S REPORT ON THE FINANCIAL STATEMENTS OF MINISTRY OF FINANCE OF THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA CLIMATE ACTION THROUGH LANDSCAPE MANAGEMENTE PROGRAM We have audited the accompanying financial staements of Ministry of Finance, Climate Action through Landscape Management Program, financed under IDA Grant D482-ET, which comprise thle balance sheet as at 7 July 2021, and the statement Of sources and uses of fun ds for the period then ended and a summary of significant accounting policies and other explanatory infornatiod Management's Responsibitly for the Financial Statements The Ministry of Finance is responsible for the preparation and fair presentation of these financial statements in accordance with the Ethiopian Governmeit's Manual of the Federal Accountin System which is based on a modified cash basis of accounting and for such internal contr-ol azs the Ministry determines is necessary to enable the Preparation of financial statements that arc free from material misstatement, whether due to fraud Or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit, We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comPlY with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free fro material misstatement An audit involves performing procedures to obtain audit evidence about the amounts and discosude inlud financ sasementns. The procedures selected depend on the auditor's judgment, including the assessment of the risks f material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements 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 entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is suffci te to provide a basis for our audit opinion. 417' S251-011-5515222Fa 571553Emi.sc 251-011-5535012 Fax 251-011-5513083 E-mai a ascethiopia.corn 25720 251-011-5535015 website V/W .scethiopia.com 251-011-5535016 INDEPENDENT A FINANCA STATNO PR MNIL sT~AI~J OS TRE p EEtLDMc~T EULCO ANS- JENT opORT ON Tup ETHIOPIA OF FINANCE CLIMATE ACTION THROUG LADSAP (continued) THROUGH AN ECApE RPUBLIC OF OpninIANAGEMENT PROGRAM1 111 opinlion AnN In, our opinion, the fincilsae Ifinuriion tinancil-n ate ments give a true and fair view of the Minsty f innce CimteAci Through Landscap M Vniew~ Ogrhe financed Under,oi o IDA grant D482-T, as at 7 July 2021 and of its soucPe Management Pro franch podithn ended in accordance with the Ethiopian Governnents Mes ando the Fe A in Syse hihibaeon a modified cash basis of accounting.AarlOfteFdalcou epor o othrequirement As requires by the terms of reference for the audit of the Program We repor that, to the extert we Canr w rastthtstotesxtntw a) IDA Funds have been Provided and used in accordance with thec Programmatic~j Priorities and activities agreed, with dUe attention to conony et n eflciency, and o111Y for the Purposes for which they were provided; b) Goods, works and services financed have been procured in accordance with the relevani g0Veinental financial and procurement policy; c) All necessary supporting documents, records, and accounts have been maintained in respect of all fund activities; d) Designated Accounts have been maintained in accordance with the provisions of the relevant financing arrangement and funds disbursed out of the Accounts were used according to the joint financing arrangement; e) National laws and regulations have been complied with, and that the financial and accounting procedures of Ethiopian Government were followed and used; f) Financial performance of the Program is satisfactory. 5 January 2022 2 N F MINISTRY OF FINANCE CLIMATE ACTION THROUGH LANDSCAPE MANAGEMENT PROGRAM BALANCE SHEET AS AT 7 JULY 2021 2020 ASSETS Birr Birr CURRENT ASSETS Accounts receivable 3 221,668,035 184,206,047 Cash and bank 4 531018l600 353058 936 balances CURRENT 5,531,849,635 3,714,764,983 LIABILITIES Accounts payable 5 668 92,114,86 NET CURRENT jdL7.97 3.622.650.597 ASSETS REPRESENTED BY FUND BALANCE 6 2 5997 The notes on pages 7 to II form an integral part of these financial statements. 3 INISTRy NANCE STATEMENT TSGSN LAND CLAJT ATON S HO ,SAP "-NL'rItM1ENr PI?OGJR I'R HEV DD AI O 0fsRCFV AND USES OV FUNDS FOR flyYEA ENED JUtLY2021 Cumulative from 8 April 2020 To 7 July 2021 SOURCES IDA grant Brr2 Gain on foreign exchange 2,583,714,388 Birr 2566641,93,50659 3 922945,52 -J -"-'+ '-_ 397245220422 USES Participatory Watershed Managernen 710,243,050 Rural Land Administration Verifstration 710,123,050 Ceon tral Statistical Agency 212,8957,714 2,29450 400,4 financial managenent 1,139,946 1,224,306 20,0 Ministry Of Peace, capacity building 4,36 Verification(FEACC) 12,303,174 58,64,320 4,36 Bank service charge 6,500,000 5,30 4 -41 7_74 9,2 95 7_749,295 EXCESS OF SOURCES OVER USES 17 The notes on pages 7 to 11 form an integral part of these financial statements. 4 MINISTRY OF FINANCE CLIMATE ACTION THROUGH LANDSCAPE MANAGEMENT PROGRAM IDA GRANT DESIGNATED ACCOUNT STATEMENT For period ended 7 July 2021 Account number 0100101300573 Depository bank National Bank of Ethiopia Address Addis Ababa, Ethiopia Related grant IDA, D482-ET Currency USD USD Ethioia Br Beginning balance-8 July 2020 29,073,641.30 1,018,789,816.34 IDA Grant Received 59136,078.10 2_$ij14j8827 Deduct: 88,209,719.40 3,602,504,204.61 Transfer to MOA Dollar account 3,898 991.32 160,159a529.30 Gain on foreign exchange 84,310,728.08 3,442,344,675.31 Ending balance - 7 July 2021 84.310z728.08 3 695609.o06.o8 5 MJNISTRY0OF FINANCE PAAEE IMAT CTION TURDUGH LANDS DESIGNATED ACCOUNT STATEMENT RA For period ended Account number 7 Depository bank7July 2021 Address0100071300348 Address Related grant National Bank Of Ethiopia CRlency Addis Ababa, Ethiopia IDA, D482-ET USD Transfer from MO IDA Dollar Deduct. 3,898,991.32 Advance pynnst UPe 160,1593529.30 Avnepayments to Suppliers Gan3 822 471.95 160 183-,046.53 Gain on foreign exchange 76,519.37 (23,51723) 23,5 7g23) Ending balance -7 July 2021 76519.37 6 MINISTRY OF FINANCE CLIMATE ACTION THROUGH LANDSCAPE MANAGEMENT PROGRAM NOTES TO THE FINANCIAL STATEMENTS 1. PROGRAM INFORMATION The Federal Democratic Republic of Ethiopia and the International Development Association (IDA) entered into an agreement on 15 June 2019 to finance a Programn, Climate Action through Landscape Management Program (CALM). IDA has agreed to extend a grant fund equivalent to SDR 360,900,000 towards financing this Program. The Program became effective on 8 April 2020 and will be closed on 7 July 2024. The objective of the Program is to increase adoption of sustainable land management practices and expand access to secure land tenure in non-rangeland rural areas. The Program consists of the following activities: . Participatory Watershed Management Scaling up participatory watershed management activities to reduce land degradation, including: (a) Development of capacity at the federal, regional and Woreda levels for participatory watershed management; (b) Sustainable Land Management (SLM) -related research at the federal and regional levels; (c) Strengthening of the policy, institutional and regulatory framework for SLM; (d) Building the SLM knowledge base; and (e) Management, monitoring and reporting of Ethiopian Strategic Investment Framework (ESIF) interventions for watershed management. I. Rural Land Administration Carrying out the following to improve rural land tenure security: (a) Preparation and issuance of Second Level Landholding Certificates (SLLCs) (which includes quality assurance, verification against first level land holding certificates, and issuance to land holders) 7 MINISTRy OF FINANCE CLIMIATE ACTION TH-ROUGH LAND)SCApEMAGENTPO M NOTES TO THE FINANCIAL AENA NAEMENT PROGRA I. PROGIZAM INFORMATION (b) Installation and operation of the Natural nformation System LI a f ral Land AdWsratio levels;) dmnstato els; at the federal , regional and Woreda Deveopmet Ofcapacity at the federal, einladWrd ees (d) Strengthening.of p isegional and Wor eda l rural land adminicy, ustitutional and regulatory framework f (e) Managenet monitori sand reporting of ESIF intervention for This audit covers the special purpose grant part of the expenditure fram r asw thespciic udetlne expenditure at the Ministry ofa(oA hc contributes to the Pr mexpenditure framework The s ific budget lies Lt l MoA that contribute to the Program expenditure frameworksr e a c tre MoA)cwix expenditure incurred during the Period are: along dg e espetive Budge code 11341002 Providing Agricultural Extension 4,846,953.96 Service 11341005 Providing Support to Increase Crop Production and Productivity 6,498,32447 11341011 Intensifying Natural Resource Development and Utilization 193,148,944.71 11341012 Providing Support to Rural Land Administration and Utilization System 8,940,877.28 2. SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies adopted by the Program are stated below: a) Basis of preparation These financial statements have been prepared in accordance with the Ethiopian Government's Manual of the Federal Accounting System which is based on a modified cash basis of accounting. /n MINISTRY OF FINANCE CLIMATE ACTION THROUGH LANDSCAPE MANAGEMENT PROGRAM NOTES TO THE FINANCIAL STATEMENTS (continued) 2. SIGNIFICANT ACCOUNTING POLICIES b) Currency These financial statements are presented in Ethiopian Birr. Transactions in foreign currencies are translated into Birr at the approximate rates of exchange prevailing at the dates of the transactions. Foreign currency balances are translated into Birr at exchange rates ruling at the balance sheet date 9 i MINISTRY OF FINANCE CLIMATE ACTION THROUGH LANDSCAPE MANAGEMENT PROGRAM NOTES TO THE FINANCIAL STATEMENTS (continued) 3. ADVANCE PAYMENTS 2020 Birr Birr Advance within government offices 33,558,321 156,020,600 Advance to contractors 6,059,978 19,378,464 Advance to suppliers 170,607,887 2,535,916 Purchase advance 2,986,609 331,858 Sundry 8455240 5939,20 221,68,035184,206X047 4. CASH AND BANK BALANCES 2020 Birr Birr USD Designated Account No. 0100101300573 3,695,609,006 1,018,789,816 USD Designated Account No. 0100101300348 3,354,089 Ministry of Finance, pool Birr account 1,000,432,204 1,829,111,189 Ministry of Agriculture 120,619,118 148,953,715 Central Statistical Agency 20,698,903 32,394,926 Ministry of Peace - 12,305,054 Ministry of Finance-Finance 1,735,734 2,850,000 FEACC 2,250 Total cash at regional offices 467,730,296 10 MINISTRY OF FINyANyCE CLiMTE ACIN THROUGH JLANiDSCAPE MWANAGMN RGA N TTo THEi FINYANCIAL. STATEMENTs (contjineETPRGA 5. ACCOUNTS PAYABLE Payable Within government Offices Birr Sundry creditors n6 9 2020 Other deposits 9,711,273 Birr Farmily Payable 692,769 -,816,559 Retention 4,752 5,758197 17,848 754 9- 6. FUND BALANCE Birr Balance at 8 July 2020 3,622,650,597 ADD; Excess of Sources over Uses for the year 1895297370 Balance at 7 July 2021 5-1 7.947.967 7. DATE OF AUTHORIZATION The Director, Channel One Programs Coordinating Directorate of the Ministry authorized the issue of these financial statements on 5 January 2022. 11 '