FEERAL DEMOCATC FI REPUBLIC OF ETHIOPIA MINISTRY OF FINANCE Ref. No The World Bank Ethiopia Country Office Addis Ababa Dear Sir, Subject:-Submission of Ethiopian Public Financial Management Project (PPM) annual financial audit report for the period ended July 7, 2021 (EFY 2013) Attached, herewith, please find the annual financial audit report for the year ended July 7, 2021 (EFY 2013). > Annual Audit Findings and Recommendations (One Copy) > Independent auditors' report on Financial Statements (One Copy) > Independent Auditors report on designated and Pool birr account Statement. Thank you for usual Cooperation a Id ;T anding. Sincerely Yours, C.C * Channel One Programs Coordinating Directorate * PFM Follow up MoF 251-11-155 24 00,22 66 98 P.O.Bo 195107ao MoP_Ethopia P21 1OX 190501037 251-11-156 01 24,85 14 96 ( facebook.comMoFEDet 251.11-155 00 81,83 86 89 XqtF 1 AA') tKI 4:Ap,rt* 251-11-155 11 38 mofed,gov,et on&r*.r &.ezve %Ph&.AyR T lv The Federal Democratic Republic of Ethiopia Audit Services Corporation INDEPENDENT AUDITOR'S REPORT ON THE FINANCIAL STATEMENTS OF MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT PROJECT IDA CREDIT No. 5766-ET We have audited the accompanying financial statements of Ministry of Finance, Public Financial Management Project, financed under IDA credit No. 5766-ET, which comprise the balance sheet as at 7 July 2021, and the statement of sources and uses of funds for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements The Project's management is responsible for the preparation and fair presentation of these financial statements in accordance with the Ethiopian Government's Manual of the Federal Accounting System which is based on a modified cash basis of accounting and, for such internal controls as management determines is necessary to enable the preparation of financial statements that are 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 from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of 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 sufficient and appropriate to provide a basis for our audit opinion. 251-011-5515222 Fax 251-011-5513083 E-mail:asc@ascethiopia.com L15720 251 -011-5535012 website WrN.ascettiopia.com 251-011-5535015 251-011-5535016 INDEPENDENT AUDITOR'S REPORT ON THE FINANCIAL STATEMENTS OF MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT PROJECT IDA CREDIT No. 5766-ET (continued) Opinion In our opinion, the financial statements give a true and fair view of the financial position of Ministry of Finance, Public Financial Management Project, financed under IDA Credit No. 5766- ET as at 7 July 2021 and of its sources and uses of funds for the year then ended in accordance with the Ethiopian Government's Manual of the Federal Accounting System which is based on a modified cash basis of accounting. Report on Other Requirements As required by the World Bank Guidelines and the terms of reference for financial audit, we report that, to the extent we can assess, a) All external financing has been used in accordance with the conditions of the relevant financing agreements with due attention to economy and efficiency, and only for the purposes for which the financing was provided; b) Goods, works and services financed have been procured in accordance with the relevant financing agreements; c) All necessary supporting documents, records and accounts have been maintained in respect of all project activities; d) Designated accounts have been maintained in accordance with the provisions of the relevant financing agreements, and funds disbursed out of the accounts were used for the purposes intended in the financing agreement; e) National laws and regulations have been complied with, and that the financial and accounting procedures approved for the Project were followed and used; and f) Financial performance of the Project is satisfactory. 29 December 2021 2 MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT PROJECT IDA CREDIT No. 5766-ET BALANCE SHEET AS AT 7JULY 2021 2021 2020 Notes Ethiopian Birr Ethiopian Birr CURRENT ASSETS Accounts receivable 3 1,637,818 2,769,805 Cash and bank balances 4 2 )987 199,084542 28,05 201,854.347 CURRENT LIABILITIES Accounts payable 5 2,631,033 1,012,881 Taxes payable 6 395,11 56483 LQ6 684 1,169 364 NET CURRENT ASSETS 21 REPRESENTED BY FUND BALANCE 7 2 ;M0,6 The notes on pages 7 to 10 form an integral part of these financial statements MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT PROJECT IDA CREDIT No. 5766-ET STATEMENT OF SOURCES AND USES OF FUNDS FOR THE YEAR ENDED 7JULY 2021 Cumulative from 8 July 2016 2021 to 7July 2021 2020 SOURCES Ethiopian Birr Ethiopian Birr Ethiopian Birr IDA - IFR Procedures 55,083,450 786,602.945 268,236,062 Gain on foreign exchange 42,70,407 87,94,239 __ 97,353,857 874,577.184 304,141.436 USES Expenditure Manaqement and information system support 50,030,156 493,022,445 193,096,676 Strengthening Accountability Institution 40,360,469 152,219,158 38,430,791 Program Management, Monitoring and Evaluation 5,416,094 _710346 0 8Z72,07 95,806,719 672,345..063 240.19,474 EXCESS OF SOURCES OVER USES The notes on pages 7 to 10 form an integral part of these financial statements 4 MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT PROJECT IDA CREDIT No. 5766-ET DESIGNATED ACCOUNT STATEMENT For year ended 7 July 2021 Account number 0100101300538 Depository bank National Bank of Ethiopia Address Addis Ababa, Ethiopia Related credit IDA 5766-ET Currency USD 2021 2020 USD Ethiopian Birr USD Ethiopian Birr Beginning balance - 7 July 2020 2,472,246.03 86,631,703.71 1,979,877.39 57,291,514.05 Advance received - IFR Procedures 1,500900000 55,08389488 2 3,972,246.03 141,715,153.71 11,148,272.27 325,527,575.70 Less: Transfer to Birr account 5,000,000.00 156,097,900.00 Transfer to MoF - Finance 000.00 14,204,780.00 3,676,026.24 116,325,13222 3,592,246.03 127,510,373.71 8,676,026.24 272,423,032.22 2,472,246.03 53,104,543.48 Add: Gain on foreign exchange 29,949264.97 33,527,160.23 Ending balance - 7 July 2021 3,592,246.03 1.21 1 5 MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT PROJECT IDA CREDIT No. 5766- ET SCHEDULE OF MOVEMENTS IN BIRR ACCOUNT For year ended 7 July 2021 Account number 0100101040680 Depository bank National Bank of Ethiopia Address Addis Ababa, Ethiopia Currency Ethiopian Birr 2021 2020 Ethiopian Birr Ethiopian Birr Beginning balance - 7 July 2020 56,379,754 16,449 Transfer from USD designated Account 564879,75 156,097,900 75,867,643 172,942,860 Less: Transfers to Project imprementing agencieF - (Regions and other Government offices) Tigray - 1,345,187 Afar - 2,935,394 Amhara - 8,652,095 Oromia - 5,816,761 Somali - 4,756,496 Benshangul Gumuz 498,912 SNNPR - 355,028 Gambella - 589,986 Harari - 225,444 Dire Dawa - 345,275 Addis Ababa 6,362,256 Ministry of Finance - Finance 40,000,000 70,000,000 Office of the Federal Auditor General (OFAG) Public Procurement and Property Administration - Agency (PPPAA) 19,635,000 11,290,027 Accounting and Auditing Board of Ethiopia 2100 _300 59,868,100 116,172,861 Bank service chargee Ending balance - 7 July 2021 6 MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT PROJECT IDA CREDIT No. 5766-ET NOTES TO THE FINANCIAL STATEMENTS 1. PROJECT INFORMATION The Federal Democratic Republic of Ethiopia and the International Development Association (IDA) entered into an agreement dated 17 March 2016 to finance the Public Financial Management Project. The latter agreed to extend to the former a credit in an amount equivalent to SDR 23,900,000 to assist in financing the mentioned Project. The objective of the Project is to improve the efficiency, transparency and accountability of Public expenditures of the Government at the federal and regional levels. The Project consists of the following parts: Part A: Improving Expenditure management and Information System Part B: Strengthening Accountability Institutions Part C: Project Management, Monitoring and Evaluation. The effective date of the Project is 18 May 2016 and its closing date shall be 7 Apri 2021 prior to one year extension up to 7 April 2021 granted by the World Bank. 2. SIGNIFICANT ACCOUNTIG POLICIES The principal accounting policies adopted by the Project 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. b) Currency These financial statements are presented in 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 the exchange rates ruling at the balance sheet date, 7 MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT PROJECT IDA CREDIT No. 5766-ET NOTES TO THE FINANCIAL STATEMENTS (continued) 3. ACCOUNTS RECEIVABLE 2021 2020 Ethiopian Birr Ethiopian Bir Advance to Government and Regional Offices 1,372,105 2,363,092 Purchase advance 261,313 401,56 Other advances 21314 514 4. CASH AND BANK BALANCES USD Account No.0100101300538 157,459,639 36,631,704 Birr Account No. 0100101040680 15,999,544 56,379,754 Ministry of Finance - Finance 11,451,716 25,435,423 Public Procurement and Property Administration Agency 17,783,496 10,042,701 Office of the Federal Auditor General 9,148,243 1 Accounting and Auditing Board of Ethiopia 185,730 104,239 Cash at bank at Regional Offices 64j37 11258,553 203,544,262 199,000,617 Cash on hand 225 5. ACCOUNTS PAYABLE Payable to Government Offices 633,386 971,230 Other payable 6,367 91230 4 1A5 _ 8 MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT PROJECT IDA CREDIT No. 5766-ET NOTES TO THE FINANCIAL STATEMENTS (continued) 6. TAXES PAYABLE 2021 2020 Ethiopian Birr Ethiopian Birr Value added tax 325,507 141,432 Withholding tax 70,441 7. ACCUMULATED FUND Ethiopian Birr Balance at 7 July 2020 200,684,983 Add: Excess of financing over expenditure for the year 1,547j138 202.232.121 8. DATE OF AUTHORIZATION The Director, Channe One Programs Coordinating Directorate of the Ministry authorized the issue of these financial statements on 29 December 2021. 9 ANNEX MINISTRY OF FINANCE PUBLIC FINANCIAL MANAGEMENT PROJECT IDA CREDIT No. 5766-ET IFR WITHDRAWAL SCHEDULE for applications submitted during the year ended 7 July 2021 Apliati.on Amount requested Amount disbursed Eguivalent in No. USD USD Ethiopian Birr PFM-19 L55.0.000 10