Project Financial Statements and
Independent Auditor's Report
State Agency "Healthcare Project Implementation
Unit" of the Ministry of Health of the Republic of
Armenia
Disease Prevention and Control Project
Credit number 5222-AM
As of and for the year ended 31 December 2021
Contents
Independent auditor’s report 3
Statement of cash receipts and payments 5
Statement of uses of funds by Project activities 6
Notes to the Project financial statements 7
Disease Prevention and Control Project
Credit number 5222-AM
As of and for the year ended 31 December 2021
Independent auditor’s
report
Grant Thornton CJSC
Yerevan Plaza Business Center
9 Grigor Lusavorich Street,
Yerevan 0015, Republic of Armenia
T + 374 10 50 09 64/61
To the State Agency “Healthcare Project Implementation Unit” of the Ministry of Health of the Republic of
Armenia,
Opinion
We have audited the accompanying project financial statements of the Disease Prevention and Control Project
(the “Project”), financed by the International Development Association Credit number 5222-AM, which comprise
the statement of cash receipts and payments, the statement of uses of funds by Project activities as of and for
the year ended 31 December 2021, and a summary of significant accounting policies and other explanatory
information.
In our opinion, the project financial statements present fairly, in all material respects, the cash balance of the
Disease Prevention and Control Project as of 31 December 2021 and the cash received and cash paid for the
year then ended in accordance with the International Public Sector Accounting Standards (“IPSAS”) Financial
Reporting Under the Cash Basis of Accounting issued by the International Public Sector Accounting Standards
Board of the International Federation of Accountants, the World Bank guidelines and the relevant points of
Credit number 5222-AM.
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 Project
Financial Statements section of our report. We are independent of the State Agency “Healthcare Project
Implementation Unit” of the Ministry of Health of the Republic of Armenia (the “HPIU”) in accordance with the
International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (the “IESBA
Code”) together with the ethical requirements that are relevant to our audit of the financial statements in the
Republic of Armenia, and we have fulfilled our other ethical responsibilities in accordance with those ethical
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Emphasis of Matters
We draw attention to note 2 to the project financial statements, which describes the basis of accounting. The
project financial statements are prepared to assist the management of the HPIU to meet the requirements of
the financial reporting of the World Bank. As a result, the project financial statements may not be suitable for
another purpose. Our opinion is not modified in respect of this matter.
We draw attention to note 3 to the Project financial statements, which describes that the closing date of the
Project is 30 September 2022. Our opinion is not modified in respect of this matter.
www.grantthornton.am
Statement of uses of funds by
Project activities
As of and for the year ended 31 December 2021
In US dollars
Actual Planned Variance
Year ended As of 31 Year ended As of 31 Year ended As of 31
31 December December 31 December December 31 December December Life of
2021 2021 2021 2021 2021 2021 Project
Part 1: Performance-based
Financing to Improve MCH
Services and NCD Services in
PHC Facilities 396,255 3,126,285 418,182 3,148,212 (21,927) (21,927) 3,524,114
A1 - Performance-based
Payments for MCH and NCD: 368,912 1,922,348 253,160 1,806,596 115,752 115,752 2,038,929
a - Cost for lab and PAP smear
tests implementation 236,961 1,214,864 126,580 1,104,483 110,381 110,381 1,361,396
b - Performance-based incentives
for an agreed list of
performance indicators 131,951 707,484 126,580 702,113 5,371 5,371 677,533
A2 - Performance-based financing
program implementation and
capacity building 27,343 1,203,937 165,022 1,341,616 (137,679) (137,679) 1,485,185
Part 2: Improving Efficiency and
Quality of Selected Hospitals 815,022 29,697,452 1,008,613 29,891,043 (193,591) (193,591) 33,884,383
B1- Modernization of Lori Marz
Hospital Network - 5,361,478 - 5,361,478 - - 5,361,518
B2 - Modernization of "Center of
Hematology named after
Professor Yeolyan" CJSC - 13,347,891 - 13,347,891 - - 13,351,800
B3 - Modernization Cancer
Treatment Services in Armenia - 298,796 - 298,796 - - 298,827
B4 - Hospital Quality Improvement 815,022 10,689,287 1,008,613 10,882,878 (193,591) (193,591) 14,872,238
Part 3: Project Management 149,425 1,939,080 227,720 2,017,375 (78,295) (78,295) 2,081,770
Part 4: Emergency response to
COVID 19 228,959 3,627,864 182,275 3,581,180 46,684 46,684 3,750,000
Total 1,589,661 38,390,681 1,836,790 38,637,810 (247,129) (247,129) 43,240,267
This statement is to be read in conjunction with the notes to and forming part of the project financial statements set out on
pages 7 to 14.
State Agency “Healthcare Project Implementation Unit” of the Ministry of Health of the Republic of Armenia
Disease Prevention and Control Project
Credit number 5222-AM
As of and for the year ended 31 December 2021
6
Notes to the Project financial
statements
1 Activity
The Financing Agreement (Credit number 5222-AM) of the Disease Prevention and Control Project (the
“Project”) was signed on 17 May 2013 between the Republic of Armenia and the International Development
Association (the “IDA”). The total amount of the Loan was agreed to be 22,800,000 SDR. The amendments of
the agreement were signed on 4 March 2015 and 13 March 2018.
The objective of the Project is to improve: (i) increase the detection of selected NCDs at the PHC level and
among pregnant mothers; (ii) improve the efficiency and quality of selected hospitals; and (iii) prevent, detect
and respond to the threat posed by COVID-19.
The Project consists of the following parts:
Part 1: Performance-based financing to improve MCH services and NCD services in PHC facilities.
a) Implementation of the Performance-Based Financing Scheme, through: (a) the reimbursement for
Eligible Screening Tests performed at Eligible PHC Facilities; (b) the provision of Performance-Based
Incentives to Eligible PHC Facilities against their level of performance achieved; and (c) the provision
of additional reimbursement for Eligible Screening Tests performed at Eligible PHC Facilities in cases
where said Eligible PHC Facilities exceed the initial screening targets as set forth in the respective
PHC Performance Agreements and the PBF Manual.
b) Provision of: (a) Operating Costs to SHA for the carrying out the Performance-Based Financing
Scheme; (b) training and capacity building activities to key stakeholders on the implementation of the
Performance- Based Financing Scheme, screening programs & NCD management; (c) essential
equipment for screening programs in PHC facilities and selected hospitals; (d) support for the carrying
out of health promotion activities, including a national public information campaign focused on
promotion of healthy lifestyles, aimed at increasing population's awareness on major risks associated
with NCD; (e) support for short term trainings for PHC providers on NCD screening guidelines; (f) the
support for the implementation of a nation-wide health sector performance assessment survey; (g)
advanced training on colposcopy for obstetricians and gynecologists; (h) cryotherapy medical
equipment to selected hospitals for the management of early stages of cervical cancer; (i) IT
equipment for Eligible PHC Facilities.
Part 2: Improving efficiency and quality of selected hospitals.
a) Provision of support for the modernization of the Marz Hospital Network, through, inter alia: (a) the
provision of medical and waste management equipment, furniture, and supplies to the Vanadzor
Medical center; (b) the rehabilitation of, and provision of medical equipment, medical furniture and
supplies to the Artashat medical center in Ararat marz; (c) the construction of, and provision of
medical equipment, medical furniture and supplies to a new medical center in Sevan and its merger
with the Sevan polyclinic; (d) the provision of medical equipment, medical furniture and supplies to the
Megri regional medical center; (e) the construction of, and provision of medical equipment, medical
furniture and supplies to a new medical center in Vayots Dzor Marz; (f) the construction of, and
provision of medical equipment, medical furniture and supplies to the Martuni medical center in
Gegharkunik Marz; (g) the financing of angiographs at the Gyumri hospital and Nork-Marash
specialized cardiology and cardiac surgery center; (h) the provision of training to clinical staff and
hospital administration for medical centers and hospitals in the Marz Hospital Network.
b) Improvement of the quality of specialized in-patient and out-patient hematological services offered by
the center of hematology “Professor Yeolyan”, through, inter alia: (a) the preparation of the designs
needed for the reconstruction of the center of hematology and the creation of a bone marrow
State Agency “Healthcare Project Implementation Unit” of the Ministry of Health of the Republic of Armenia
Disease Prevention and Control Project
Credit number 5222-AM
As of and for the year ended 31 December 2021
7
transplant center; (b) the carrying out of the necessary civil works for the renovation and
reconstruction of the center; (c) the provision of the necessary medical equipment, furniture and
supplies; (d) the provision of training to clinical staff and hospital administration; and (e) the
development and implementation of treatment standards (in accordance with international standards)
for treatment of blood diseases.
c) Provision of support for the establishment of a new oncology center aimed at providing integrated
oncology services to the Recipient’s population, through, inter alia: (a) the provision of technical
assistance for the design of the oncology center; and (b) the development of clinical protocols and
treatment standards for the oncology center.
d) Provision of support for the improvement of hospital quality, through, inter alia: (a) the development of
a comprehensive cancer registry system; provision of training to hospital personnel on epidemiology
and statistics; and the necessary IT equipment to the statistical department of the oncology center
referred to in (c) above; (b) the provision of technical assistance to NIH for the development of clinical
guidelines and standards for all hospitals in the Recipient’s territory; and (c) the scaling up of the
Quality Improvement Program in all Marzes, through, inter alia, the provision of: (a) training for: (A)
hospital staff in clinical guidelines and standards; (B) managers and hospital quality control
committees in quality management mechanisms and tools; and (C) hospital managers in budget
management; and (b) technical assistance to hospitals to implement the Quality Improvement
Program tools and mechanisms.
Part 3: Project management
Provision of support to the Ministry of Health for the technical and administrative management of the Project,
including the financing of the necessary Operating Costs and audits.
Part 4: Emergency response to COVID-19
In accordance with the amendment to the financing agreement dated 29 March 2020 a new Part 4: Emergency
response to COVID-19 has been added to the Project.
Preventing, detecting and responding to the threat posed by COVID-19, through, inter alia, the procurement of
equipment and supplies to facilitate case management, infection prevention and control, and case detection.
In accordance with the amendment to the Financing Agreement (Credit number 5222-AM), financing of the
Project is implemented through the following categories:
Percentage of
Expenditures
Amount of the to be
Credit financed
Allocated (In (inclusive of
Category SDR) Taxes)
(1) Goods, works, non-consulting services, Operating Costs, Training
and consultants’ services for the Project, including audits 21,367,000 80%
(2) Performance-Based Financing Scheme under Part 1 (a) of the
Project 1,433,000 100%
22,800,000
The Project is co-financed by the Republic of Armenia, as well as by the IDA under the HRITF Grant No
TF014138 letter agreement in an amount of USD 1,800,000, which was signed on 27 September 2013, for the
financing of Part 1 of the Project.
The Project is implemented by the State Agency “Healthcare Project Implementation Unit” of the Ministry of
Health of the Republic of Armenia (the “HPIU”). The HPIU was established as a state agency by the Minister of
Health of the Republic of Armenia decree number 22 dated 17 January 2000, on the basis of the Government
of Armenia decision number N765.
The legal address of HPIU is Komitas Street 49/4, 0051, Yerevan, Republic of Armenia.
The average number of the HPIU staff in 2021 was 11 (2020: 11).
State Agency “Healthcare Project Implementation Unit” of the Ministry of Health of the Republic of Armenia
Disease Prevention and Control Project
Credit number 5222-AM
As of and for the year ended 31 December 2021
8
2 Significant accounting policies
2.1. Statement of compliance
The project financial statements are prepared in accordance with IPSAS Financial Reporting Under the Cash
Basis of Accounting, the World Bank guidelines and the relevant points of the Financing Agreement (Credit
number 5222-AM).
Alternatively, the HPIU presents a statement of financial position of the Project as of the reporting date as an
encouraged additional disclosure, as prescribed in the part 2 of IPSAS Financial Reporting Under the Cash
Basis of Accounting (refer to note 9).
2.2. Project financial statements
The project financial statements include:
a) The statement of cash receipts and payments as of and for the year ended 31 December 2021,
showing the World Bank and counterpart funds separately, and the statement of uses of funds by
Project activities.
b) Accounting policies and explanatory notes (including additional accounting policies and disclosures),
covering
Summary of summary reports or SOEs used as the basis for the submission of withdrawal
applications in the notes, as appropriate;
Statement of designated account in the notes, as appropriate;
Statement of financial position showing accumulated funds of the Project, bank balances,
other assets of the Project, and liabilities, if any, as described in the note 9.
2.3. Functional and presentation currency
The national currency of the Republic of Armenia is Armenian dram. These project financial statements are
presented in US dollars (presentation currency).
In preparing the project financial statements, transactions of Government of Armenia in Armenian drams are
recorded at the rates of exchange defined by the Central Bank of Armenia prevailing on the previous date of
the transaction. Direct payments and special commitments denominated in currencies other than US dollar
from the World Bank funds to the Project's counterparties are recorded at the exchange rate of the client
connection (https://clientconnection.worldbank.org) system. At each reporting date, monetary items
denominated in foreign currencies are retranslated at the rate defined by the Central Bank of Armenia
prevailing on that date, which is 480.14 for US dollar 1 as of 31 December 2021 (31 December 2020: drams
522.59 for US dollar 1). Any exchange rate differences are recognized in the statement of cash receipts and
payments and the accumulated figure of exchange rate difference is disclosed in the Statement of financial
position under “Exchange rate difference” (refer to note 9).
For the presentation of the statement of financial position in the note 9, the balances of bank accounts,
advances and accounts payable denominated in foreign currencies are retranslated at the rate defined by the
Central Bank of Armenia prevailing on reporting date.
State Agency “Healthcare Project Implementation Unit” of the Ministry of Health of the Republic of Armenia
Disease Prevention and Control Project
Credit number 5222-AM
As of and for the year ended 31 December 2021
9
2.4. Expenses
Expenses incurred in the framework of the Project are recognized on the cash basis of accounting, i.e. when
the relevant cash is paid. The expenses are recognized in the statement of cash receipts and payments under
the caption “cash payments”. Additionally, the Project expenses are disclosed in the statement of uses of funds
by Project activities.
2.5. Project financing
Financing received in the framework of the Financing Agreement (Credit number 5222-AM) is recorded in the
statement of cash receipts and payments as “cash receipts” and is recognized at each replenishment. In
addition, the Project funds received are disclosed in the Statement of financial position (refer to note 9).
The World Bank financing
To finance eligible expenditures under the Financing Agreement, the World Bank disburses proceeds from the
Credit account using one or more of the disbursement methods, which are stated below:
a. Reimbursement
The Bank may reimburse the borrower to finance eligible expenditures that the borrower has refinanced from
its own resources.
b. Advance
The Bank may advance loan proceeds into a Designated account of the borrower to finance eligible
expenditures as they are incurred and for which supporting documents will be provided at a later date.
c. Direct payments
The Bank may make payments, at the borrower’s request, directly to a third party for eligible expenditures.
d. Special commitment
The Bank may pay amounts to a third party for eligible expenditures under Special commitments entered into,
in writing, at the borrower’s request and on terms and conditions agreed between the Bank and the borrower.
2.6. Planned annual expenses
As of the end of the year the “Planned Project Expenses” comprise the sum of the amount of “Actual Project
Expenses” as of the end of the previous period and the annual budgeted expenses of the reporting year.
3. Closing date of the Project
According to the amendment of Financing Agreement (Credit number 5222-AM), the closing date of the Project
was defined as 30 September 2022.
4. IDA Fund
In US dollars Year ended 31 As of 31
December 2021 December 2021
SOE and other procedures 1,259,269 29,551,487
Special commitment - 998,464
Designated account advance/(redemption) (999,269) 1,500,731
260,000 32,050,682
State Agency “Healthcare Project Implementation Unit” of the Ministry of Health of the Republic of Armenia
Disease Prevention and Control Project
Credit number 5222-AM
As of and for the year ended 31 December 2021
10
Under the method of “SOE procedures” of financing, the HPIU requests advance to and documentation of
designated account accompanied by the statement of expenditure (SOE).
Under the method of “Other procedures” of financing, the HPIU requests advance to and documentation of the
designated account accompanied by the records evidencing eligible expenditures for payments against
contracts valued at more than the amounts in accordance with the Disbursement Letter and contracts that are
subject to the World Bank’s prior review.
5. SOE withdrawal schedule
For the year ended 31 December 2021
In US dollars
Category
Application No. (1) Goods, works, non-
consulting services,
Operating Costs, Training
and consultants’ services (2) Performance-Based
for the Project, including Financing Scheme under
audits Part 1(a) of the Project Total
NCDP-38 465,511 119,239 584,750
NCDP-39 468,167 206,352 674,519
Total 933,678 325,591 1,259,269
6. Uses of funds by “(1) Goods, works, non-consulting services,
Operating Costs, Training and consultants’ services for the Project,
including audits” category descriptions
The statement of cash receipts and payments discloses the expenses in two categories, one of which is
combined category, as depicted in the Financing Agreement (Credit number 5222-AM). However, for the
convenience of certain users, the breakdown of the uses of funds is disclosed in the table below.
In US dollars Year ended As of 31
31 December December
2021 2021
Works 743,740 10,769,740
Goods 228,959 22,021,019
Consultants' services 104,074 1,836,188
Trainings - 136,021
Operating costs 143,977 1,701,872
1,220,750 36,464,840
State Agency “Healthcare Project Implementation Unit” of the Ministry of Health of the Republic of Armenia
Disease Prevention and Control Project
Credit number 5222-AM
As of and for the year ended 31 December 2021
11
7. Designated account statement
As of and for the year ended 31 December 2021
In US dollars
Opening balance as of 1 January 2021 2,058,262
Add:
Cumulative unexplained discrepancy -
Credit replenishment during the year 260,000
260,000 260,000
Less: Refund to the IDA from the designated account during the
year -
Present outstanding amount advanced to the
designated account (1) 2,318,262
Closing balance as of 31 December 2021 971,896
Add:
Amount of eligible expenditures paid during the year 1,346,366
Amount of ineligible expenditures paid during the year -
1,346,366 1,346,366
Less: Interest earned (if credited into the designated account) -
Total advance accounted for (2) 2,318,262
Discrepancy (1) – (2) to be explained -
State Agency “Healthcare Project Implementation Unit” of the Ministry of Health of the Republic of Armenia
Disease Prevention and Control Project
Credit number 5222-AM
As of and for the year ended 31 December 2021
12
8. Reconciliation between the amounts received by the HPIU and
disbursed by the World Bank
For the year ended 31 December 2021
In US dollars
The World
Category Appl. HPIU Bank Difference
(1) Goods, works, non-consulting
services, Operating Costs,
Training and consultants’ services
for the Project, including audits
NCDP-38 465,511 465,511 -
NCDP-39 468,167 468,167 -
933,678 933,678 -
(2) Performance-Based Financing
Scheme under Part 1 (a) of the
Project
NCDP-38 119,239 119,239 -
NCDP-39 206,352 206,352 -
325,591 325,591 -
Designated account
advance/(redemption)
NCDP-38 (324,750) (324,750) -
NCDP-39 (674,519) (674,519) -
(999,269) (999,269)
Total 260,000 260,000 -
State Agency “Healthcare Project Implementation Unit” of the Ministry of Health of the Republic of Armenia
Disease Prevention and Control Project
Credit number 5222-AM
As of and for the year ended 31 December 2021
13
9. Statement of financial position
As described in the note 2, the policy of the HPIU is to prepare the project financial statements in accordance
with IPSAS Financial Reporting Under the Cash Basis of Accounting. However, the HPIU also has presented a
separate statement of financial position as a disclosure encouraged under IPSAS Financial Reporting Under
the Cash Basis of Accounting.
In US dollars
As of 31 As of 31
December 2021 December 2020
Assets
Designated account 971,896 2,058,262
Advances and prepayments 572,807 735,462
Project expenditures 37,880,157 36,015,108
Total assets 39,424,860 38,808,832
Funds and liabilities
IDA Fund 32,050,682 31,790,682
Government co-financing 7,317,954 7,079,164
Other 11,112 9,768
(47,318)
Exchange rate difference (102,078)
Accounts payable 92,430 31,296
Total funds and liabilities 39,424,860 38,808,832
State Agency “Healthcare Project Implementation Unit” of the Ministry of Health of the Republic of Armenia
Disease Prevention and Control Project
Credit number 5222-AM
As of and for the year ended 31 December 2021
14