ADDITIONAL FINANCING FOR PALESTINIAN NGO-IV PROJECT FUNDED BY INTERNATIONAL DEVELOPMENT ASSOCIATION - IDA MANAGED BY NGO DEVELOPMENT CENTER - NDC STATEMENT OF PROJECT ACTIVITIES AND SCHEDULE OF THE MOVEMENTS OF THE PROJECT SPECIAL BANK ACCOUNT FOR THE PERIOD FROM JANUARY 1, 2016 TO DECEMBER 31, 2016 AND INDEPENDENT AUDITOR'S REPORT NGO Development Center (NDC) Additional Financing For Palestinian NGO-IV Project For the Period from January 1, 2016 to December 31, 2016 TABLE OF CONTENTS Page Independent auditor's report 2 Statement of Project Activities 5 Schedule of the Movements of the Project Special Bank Account 6 Notes to the financial information 7 1 pwe Independent Auditor's Report to the Board of Directors of NGO Development Center (NDC) Jerusalem - Palestine Report on the audit of the financial information Our opinion In our opinion, the financial information of the Project titled "Additional Financing For Palestinian NGO-IV" (hereinafter "the Project"), funded by the International Development Association (hereinafter "IDA" or "the Bank"), and managed by NGO Development Center (hereinafter "NDC"), for the period from January 1, 2016 to December 31, 2016, is prepared, in all material respects, in accordance with the basis of accounting described in Note (2) and the terms of the agreement with the IDA to reflect the eligible Project revenues and expenditures to the IDA financing. What we have audited The Project's financial information comprises of: * The statement of project activities during the year ended December 31, 2016; * The schedule of movement of the Project special bank account; and * The notes to the financial information, which include a summary of significant accounting policies. 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 information section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of NDC in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code). We have fulfilled our other ethical responsibilities in accordance with the IESBA Code. Emphasis of Matter - Basis of accounting We draw attention to Note (2) to the financial information, which describes the basis of accounting. The financial information is prepared to provide information to NDC and IDA. As a result, the financial information may not be suitable for another purpose. PricewaterhouseCoopers, Amaar Tower, Level 7, Al-Irsal, Al-Bireh, Palestine T: (972)2 242 023o, F: (972)22420231, www.pwc.com/middle-east Note: From Arab Countries Please dial 97o instead of972 2 pwe Independent Auditor's Report to the Board of Directors of NGO Development Center (NDC) (continued) Responsibilities of management and those charged with governance for the financial information Management is responsible for the preparation of the financial information in accordance with the basis of accounting described in note (2), and for such internal control as management determines is necessary to enable the preparation of financial information that are free from material misstatement, whether due to fraud or error. In preparing the financial information, management is responsible for assessing the entity's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the entity or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the entity's financial reporting process. Auditor's responsibilities for the audit of the Project financial information Our objectives are to obtain reasonable assurance about whether the financial information as a whole is 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 this financial information. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: * Identify and assess the risks of material misstatement of the financial information, 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. * 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 Entity's internal control. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. * Conclude on the appropriateness of 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 NDC's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial information or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause NDC to cease to continue as a going concern. 3 pwC Independent Auditor's Report to the Board of Directors of NGO Development Center (NDC) (continued) 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. ' 1 k u'oopers Palestine Limited Ramallah, Palestine March 9, 2017 4 NGO Development Center (NDC) Additional Financing For Palestinian NGO-IV Project For the Period from January 1, 2016 to December 31, 2016 STATEMENT OF PROJECT ACTIVITIES (All amounts in USD) For the Period Cumulative from January from August 26, 1, 2016 to 2013 to Project Budget December 31, December 31, Notes (Refer to note 1) 2016 2016 Revenues IDA replenishments (3) 5,000,000 1,548,061 5,000,000 Total Revenues 5,000,000 1,548,061 5,000,000 Expenses Goods, consultants' services, (4) including audit and training 358,100 209,585 343,567 Sub-grants (5) 3,420,000 838,449 3,415,402 Incremental operating costs (6) 1,221,900 370,091 1,241,031 Sub-total Expenses 5,000,000 1,418,125 5,000,000 Less: accrued expense - (73,389) (73,389) Add: payments made to prior year accrued expenses - 13,820 Add: prepayments from prior year - 206,705 - Total Expenses - 1,565,261 4,926,611 (Deficit) Excess fund - (17,200) 73,389 Beginning fund balance - 90,589 - Less: due from NDC (7) - (21,555) (21,555) Ending fund balance/Project Special Bank Account Balance - 51,834 51,834 - The notes on pages 7 to 12 are an integral part of the financial information. Mr. Ghassan Kasabreh Mr. Hazem Quneibi Finance Director Manager 5 NGO Development Center (NDC) Additional Financing For Palestinian NG0-IV Project For the Period from January 1, 2016 to December 31, 2016 SCHEDULE OF THE MOVEMENT OF THE PROJECT SPECIAL BANK ACCOUNT (All amounts in USD) For the Period from Cumulative from January 1, 2016 to August 26, 2013 to Notes December 31, 2016 December 31, 2016 Beginning cash balance 90,589 Cash receipts (3) 1,548,061 5,000,000 Cash disbursements (1,586,816) (4,948,166) Excess of cash receipts over cash disbursements 51,834 51,834 Ending cash balance (8) 51,834 51,834 - The notes on pages 7 to 12 are an integral part of the financial information. 6 NGO Development Center (NDC) Additional Financing For Palestinian NGO-IV Project For the Period from January 1, 2016 to December 31, 2016 NOTES TO THE FINANCIAL INFORMATION OF THE PROJECT SPECIAL BANK ACCOUNT (All amounts in USD) NOTE (1) GENERAL NGO Development Center (NDC) was registered with the Ministry of Interior on March 4, 2006 under registration no. (OR 286-B) as a Palestinian Non-governmental Organization (NGO). NDC started its normal activities on July 1, 2006. NDC is working hand-in-hand with Palestinian NGOs and community development organizations to enhance their service delivery and build more capable and representative Palestinian civil society. NDC programs and grants empower Palestinians by providing NGOs the skills, tools and funds they require to address social needs and promote self-reliance in adversity. The organization advocates greater NGO transparency and accountability through the adoption of professional financial and management practices, and promotes sector-wide coordination and sharing of best practice experiences. During 2013, NDC entered into a financing agreement (Grant Number TF015033) with International Development Association (IDA or the Bank) concerning the project titled "Additional Financing for Palestinian NGO-IV " (the Project). Under this agreement; the IDA agreed to grant NDC an amount of USD 5,000,000 to implement the Project over the period of three years; from August 26, 2013 to September 30, 2016. Further, it is worth mentioning that on April 26, 2016, IDA have acceded to extend the original ending date of the project, on September 30, 2016, for additional three months until December 31, 2016. Accordingly, the final budget on the face of the financial information represents the whole budget of the project. The objective of the Project is to provide social services through NGOs to those who are poor, vulnerable or marginalized and to strengthen the institutional capacity of these NGOs. The Project consists of the following parts/components: * Part 1: Grants for services delivery, * Part 2: NGO sector development, and * Part 3: Project management, monitoring and evaluation. NOTE (2) SIGNIFICANT ACCOUNTING POLICIES a) Basis of accounting The Statement of the Project Activities and the Schedule of the Movement of the Project Special Bank Account were prepared under the modified cash basis of accounting. Under this basis, revenues are recognized when received and expenses are recognized when disbursed, modified for yearend accruals and prepayments. b) Special Bank Account As required under the signed agreement with IDA, under section IV A-1 which refers to the provisions of Article III of the Standard Conditions, NDC opened a special bank account for the Project as to make all withdrawals from this account which shall be solely used for the purpose of the Project. c) Foreign currency NDC maintains its books of accounts in USD which is the functional currency of NDC. Transactions denominated in other currencies were translated to USD using the exchange rate prevailing at the date of each transaction. 7 NGO Development Center (NDC) Additional Financing For Palestinian NGO-IV Project For the Period from January 1, 2016 to December 31, 2016 NOTES TO THE FINANCIAL INFORMATION OF THE PROJECT SPECIAL BANK ACCOUNT (All amounts in USD) NOTE (3) IDA REPLENISHMENTS This amount represents the installments received from IDA: For the Period From Inception from January 1, on August 26, 2016 to 2013 to December 31, December 31, Date 2016 2016 Previous Installments - 3,451,939 January 10, 2016 342,368 342,368 February 2, 2016 275,248 275,248 March 20, 2016 283,486 283,486 May 4, 2016 118,889 118,889 June 8, 2016 308,684 308,684 July 24, 2016 219,386 219,386 1,548,061 5,000,000 NOTE (4) GOODS, CONSULTANTS' SERVICES, INCLUDING AUDIT AND TRAINING For the Period Cumulative from January 1, from August 26, 2016 to 2013 to December 31, December 31, Date 2016 2016 Goods 5,190 8,785 Communication 2,387 2,388 Office Supplies 117 117 Hospitality & Hall Rentals 2,352 2,352 Printings & Brochures 6,097 9,911 Transportation 3,502 3,502 Consultancies 168,359 261,331 Legal Fees 4,725 4,725 Translation & Editing 726 726 Audit Fees 12,420 46,020 Office Equipment Supplies 3,710 3,710 209,585 343,567 8 E m ?- Ln o o a en m w v o o o o o t m ( o o i C) n C) n ,t (D i Ln w v- - ::j N o Ln o et c t o Ln Ln L-im en En D o o Fi Lnr DL o 25 n m F- N Zz w (n L n D r- m 't . 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U -o - . - . - -E E * ro z r GJ E-C + - o z E~~~~~~ :ý~ o. z "o_ .o- > o ~m Q) = -o z di k- c >r)O u - .E a - r_ . r_ 5~~4 -- (U OC-) a o< soo o o (2 - o c 0· ' -D 0a i 2 E N a m 2 2 - ¿ ýL o0 4- c :: a - - L" = < a < ' o '¡ . o u 0 - 4os Mgè g m1) m 0 r m g m (4 z <2 u.. z 0- W . w M - ., w < W- w -< c -o NGO Development Center (NDC) Additional Financing For Palestinian NGO-IV Project For the Period from January 1, 2016 to December 31, 2016 NOTES TO THE FINANCIAL INFORMATION OF THE PROJECT SPECIAL BANK ACCOUNT (All amounts in USD) NOTE (6) INCREMENTAL OPERATING COSTS For the Period Cumulative from January 1, from August 26, 2016 to 2013 to December 31, December 31, Date 2016 2016 Staff-salaries and benefits 280,853 1,000,441 Rent, operation and maintenance of office and office equipment 23,498 87,684 Transportation and travel, including per diem allowances 5,857 13,749 Vehicles running cost 7,850 25,469 Office supplies 14,991 26,596 Communication costs 9,980 29,313 Bank charges 517 1,198 Meeting costs 897 7,735 Office administration including printing, translating and advertising 25,648 48,846 370,091 1,241,031 NOTE (7) DUE from NDC This amount represents payments made by mistake from the special bank account to cover NDC general running expenses; this amount was returned back to the special bank account on February 9, 2017. 11 NGO Development Center (NDC) Additional Financing For Palestinian NGO-IV Project For the Period from January 1, 2016 to December 31, 2016 NOTES TO THE FINANCIAL INFORMATION OF THE PROJECT SPECIAL BANK ACCOUNT (All amounts in USD) NOTE (8) PROJECT SPECIAL BANK ACCOUNT BALANCE This represents the balance of USD 51,834 outstanding in the Project special bank account as of December 31, 2016.This bank account details are as follows: Details Bank Bank of Palestine Branch Ramallah- Al Masyoun Account number- IBAN # PS52PALS047106000400013000001 Subsequent to December 31, 2016 and in accordance with the agreement with IDA, NDC should determine the costs related to services not yet rendered to a separate bank account. To that end, NDC transferred the amount of USD 20,810 to the following bank account: Details Bank Bank of Palestine Branch Ramallah- A Masyoun Account number- IBAN # PS25PALS04710600040013000002 12