I MIUM1 9"~Cane M MA-q-4 bc17V) The Federal Democratic Republic of Ethiopia Audit Services Corporation I INDEPENDENT AUDITORS' REPORT ON THE FINANCIAL STATEMENTS OF THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA MINISTRY OF FINANCE AND ECONOMIC COOPERATION ONE WASH NATIONAL PROGRAM We have audited the accompanying financial statements of One WASH National Program of the Federal Democratic Republic of Ethiopia, Ministry of Finance and Economic Cooperation, financed under IDA Credit no.53860 ET, which comprise the balance sheet as at 7 July 2016, and the statement of sources and uses of funds and the designated account statements for the year then ended and a summary of significant accounting policies and other explanatory information. Responsibility for the Financial Statements The Ministry of Finance and Economic Development 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 based on a modified cash basis of accounting and for such internal control as it 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 I 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 I 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. 2 251 - 011-5 5 15i2 2 Fix 21-01 1-5513033 E-ina:i: ASC c-ze!iond.coln -7 572 0 251-011 1-55350 12 251-0 1 -53 0 15 U 25-011553516 I Opinion In our opinion the financial statements give a true and fair view of the financial position of One WASH National Program of the Federal Democratic Republic of Ethiopia, Ministry of Finance and Economic Cooperation, Financed under IDA Credit no. 53860 as at 7 July 2016 and of its financial performance and its sources and uses of funds for the year then ended in accordance with the Ethiopian Government Manual of the Federal Accounting System based on a modified cash basis of accounting. Reports on other requirements As required by the World Bank guidelines we report that, to the extent we can assess:- - during the year IDA funds have been used in accordance with the conditions of the relevant financing agreements and only for the purposes for which the financing were provided; - counter-part funds have been provided and used in accordance with the financing agreement and only for the purposes for which the financing was provided; - goods, works and services financed have been provided in accordance with the relevant financing I agreements and disbursement letters; - all necessary supporting documents, records and accounts have been maintained in respect of all Project's activities; the funds disbursed covered expenditures that are eligible for financing under IDA Credit No. 53860 ET; - there was a clear linkage between the books of account and the financial statements; - our examination revealed no weaknesses or irregularities in the systems of internal controls over financial expenditure other than those mentioned in the management letter; - designated accounts have been maintained in accordance with the provisions of the financing agreement and funds disbursed out of the said accounts were used only for the purpose intended in the financing agreement; and Reports on other requirements (continued) a - with respect to IFR based withdrawal applications submitted during the year ended 7 July 2016 and listed on page 14 in our opinion; a) the applications together with the procedures and internal controls involved in their preparation, can be relied upon to support the relevant withdrawals; b) adequate supporting documentation has been maintained to support claims to the World Bank for reimbursements of expenditures incurred; and c) which expenditures are eligible for financing under IDA Credit No. 53860 ET. 3 January 2017 I 2 I 1 1 MINISTRY OF FINANCE AND ECONOMIC COOPERATION ONE WASH NATIONAL PROGRAM (OWNP) BALANCE SHEET AT 7JULY 2016 I 7 July 2015 Note Birr Birr 3 ASSETS Current Assets Debtors 3 244,339,686 99,285,613 Cash and Bank Balances 4 867,727,936 731,021,925 1,1 12.067,622 830,307,538 Current Liabilities Creditors 5 347,559.268 25,804,998 I NET CURRENT ASSETS 804.502,540 REPRESENTED BY Accumulated Fund 6 764,508,354 I I The notes on pages 10 to 14 form an integral part of these financial statements. I I I I I I 1 I MINISTRY OF FINANCE AND ECONOMIC COOPERATION ONE WASH NATIONAL PROGRAM (OWNP) IDA CREDIT NOS. 53860 ET STATEMENT OF SOURCE AND USES OF FUNDS I T FOR THE YEAR ENDED 7 JULY 2016 Cumulative From 4 November Year 2013 to Year ended 7 July 2016 ended 7 July 2016 Birr 7 Julv 2015 B irr Birr FINANCING Credit from IDA Q885 PPA 114,619,248 - Initial Advance IDA 53860 581,777,297 1,012,861,345 431,084,048 DFID Assistance - 636,873,587 636,873,587 ADB 599,807,514 599,807,514 - UNICEF Assistance 18,398,613 38,472,913 20,074,300 Community Contribution 183,948,115 239,560,446 55,612,330 Gain on foreign exchange 8,485,338 20,739,887 12,103,905 TOTAL FINANCING 1,392,416.877 2,662,934,940 1,155,748,170 PROJECT EXPENDITURE Works 1,110,956,700 1,390,733,783 279,777,083 Goods 102,541,189 136,267,058 31,242,777 Consultancy services 42,769,567 68,922,003 22,391,121 Training 101,453,458 170,450,007 65,479,827 Operating costs 74.690,149 132,053,735 53,562,481 1 TOTAL PROJECT EXPENDITURE 1,432,411,063 1,898,426,586 452,453,289 (DEFICIENCY) EXCESS OF FINANCING OVER EXPENDITURE 374 703,294,881 1 I The notes on pages 10 to 14 form an integral part of these financial statements. I I I 4 I 1 1 MINISTRY OF FINANCE AND ECONOMIC COOPERATION ONE WASH NATIONAL PROGRAM (OWNP) USD DESIGNATED ACCOUNT STATEMENT FOR THE YEAR ENDED 7 JULY 2016 For year ended July 7, 2016 Account number 01001013/00493 Depository bank National Bank of Ethiopia Address Addis Ababa, Ethiopia Related credit and Grant DFID Grant No. 53860 ET Currency USD I Ethiopian USD Birr Beginning Balance 8 July 2015 2,862,000.00 58,916,559.60 Advance from DFID - I Advance from UNICEF 875,000.00 18,398,612.50 Fund available for use 3,737,000.00 77,315,172.10 Less: Payments Transfer to Birr account 3,675.000.00 76.934,582.50 62,000.00 380,589.60 Add:- Gain on foreign exchange - 972,920.00 I Ending balance 07 July 2016 62,000100 1 1 The notes on pages 10 tol4 form an integral part of these financial statements. I I I I 1I U 1 I MINISTRY OF FINANCE AND ECONOMIC COOPERATION ONE WASH NATIONAL PROGRAM (OWNP) USD DESIGNATED ACCOUNT STATEMENT FOR THE YEAR ENDED 7 JULY 2016 I For year ended July 7, 2016 Account number 01001013/000479 Depository bank National Bank of Ethiopia Address Addis Ababa, Ethiopia Related credit and Grant IDA Loan No. 53860 ET Currency USD Ethiopian USD Birr Beginning Balance 8 July 2015 566,603.20 11,663,980.15 Reimbursement From IDA 27,584,131.07 581,777.297.06 Fund available for use 28,150,734.27 593,441,277.21 Less: Transfer to Birr account 27,767,513.86 587,584.368.93 383,220.41 5,856,908.28 Add:- Gain on foreign exchange - 2,509.099.84 Ending balance 07 July 2016 383220.41 I I The notes on pages 10 to 14 form an integral part of these financial statements. I I I I I 1 6 I 1 1 MINISTRY OF FINANCE AND ECONOMIC COOPERATION ONE WASH NATIONAL PROGRAM (OWNP) USD DESIGNATED ACCOUNT STATEMENT OFOR THE YEAR ENDED 7 JULY 2016 For year ended July 7, 2016 Account number 01001013/000502 Depository bank National Bank of Ethiopia Address Addis Ababa, Ethiopia Related credit and Grant AfDB Loan No. 2100150031945 Currency USD Ethiopian USD Birr Initial Advance from AfDB 24,814,166.82 512,504,357.25 Reimbursement From AfDB 4, 022,908.87 87,303,156.84 Fund available for use 28,837,075.69 599,807,514.09 Less: Transfer to Birr account 24,800,000.00 516,678,240.00 4,037,075.69 83,129,274.09 I Add:- Gain on foreign exchange - 5,003,317.88 Ending balance 07 July 2016 4,037,075.69 88,132,59. I The notes on pages 10 to 14 form an integral part of these financial statements. I I I I I 1I I MINISTRY OF FINANCE AND ECONOMIC COOPERATION ONE WASH NATIONAL PROGRAM (OWNP) DESIGNATED POOL BIRR ACCOUNT STATEMENT FOR THE YEAR ENDED 7 JULY 2016 I For year ended July 7, 2016 Account number 01001010/40662 Account Name One National WASH Program Depository bank National Bank of Ethiopia Address Addis Ababa, Ethiopia Related Grant IDA Credit No. 53860 Currency Ethiopian Birr Ethiopian Birr I Beginning balance - 8 July 2015 27,196,401 Transfer from IDA 587,584,369 Transfer from UNICEF 76,934,582 Transfer from AFDB 516,678,240 Fund available for use 1,208,393,592 I Less:- Fund transfer to program implementers Tigray 228,127,498 Afar 12,930,897 Amhara 258,755,045 Oromiya 324,482,255 Somalia 76,314,521 Benshangul 21,964,173 SNNP 183,644,651 Gambela 1,514,236 Hareri 13,137,895 Dire Dawa 8,541,813 MOH 12,036,669 MOE 5,000,000 MOWR WRDF 27,648,391 MOFEC 8.3 14.684 Total Transfer 1,182,412,728 Bank Service charge 2,938,484 Total Transfer & bank service charge 1,185,351,212 I Cash at Bank 23,042,380 I The notes on pages 10 to 14 form an integral part of these financial statements. I 8 I 1 I MINISTRY OF FINANCE AND ECONOMIC COOPERATION ONE WASH NATIONAL PROGRAM (OWNP) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 7 JULY 2016 1. BACKGROUND The objective of the project is to increase access to improved water supply and sanitation services for residents in participating woredas, towns and communities in the territory of the Recipient. The project consists of the following parts:- Part 1: Rural Water Supply, Sanitation and Hygiene - Construction and rehabilitation of community water supply schemes in participating woredas and towns. - Construction and rehabilitation of water and sanitation facilities in school and health facilities in participating woredas and communities. - Promotion of improved hygiene and sanitation practices in participating communities. - Capacity building to strengthen and sustain the capacity of participating woredas to effectively plan, implement and manage their water supply, sanitation and hygiene facilities. Capacity building to strengthen and sustain the capacity of participating woredas to effectively operate their water supply and sanitation facilities. - Capacity building for respective water, health and education regional bureaus and woreda offices to create a critical mass of well trained and skilled facilitators to mobilize communities for behavior change and demand creation to sustain changes. Part 2: Urban Water Supply, Sanitation and Hygiene - Rehabilitation and reconstruction of urban water production, treatment and distribution systems. - Preparation of a Nation Urban Sanitation Strategy, supporting studies on urban sanitation and priority sanitation investments in participating towns. - Activities to strengthen the capacity of participating water boards/committees and operators to effectively manage their water supply and sanitation facilities. I I I I 1 9 I I I MINISTRY OF FINANCE AND ECONOMIC COOPERATION ONE WASH NATIONAL PROGRAM (OWNP) NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 7 JULY 2016 2. SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies adopted by the Program, which are consistent with those applied in the previous year, are stated below. a) Basis of preparation These financial statements have been prepared in accordance with Ethiopian Government Manual of the Federal Accounting System based on a modified cash basis of accounting. I c) Currency These financial statements are presented in Birr. Transactions in foreign currency are I translated into Birr at the approximate rate of exchange prevailing at the date of the transaction. Balances in foreign currencies at the balance sheet date are translated at the rate of exchange prevailing on that date. I I I I I I I I I 10 I MINISTRY OF FINANCE AND ECONOMIC COOPERATION ONE WASH NATIONAL PROGRAM (OWNP) NOTES TO THE FINANCIAL STATEMENTS (continued) AT 7 JULY 2016 I 3. ADVANCES I _2015 Birr Birr Advance payments to:- Letter of Credit 7,220,033 - Contractors 196,973,448 67,513,271 Suppliers 2,041,478 1,772,000 Consultants 6,970,795 11,934,735 Purchase advance 9,265,732 11,594,076 Others advances with in government 19,474,794 5,293,464 Others 2,393,406 1,178,067 I244,339,68 4. CASH AND BANK BALANCES I 2015 Birr Birr USD Special Account No 1001013/00479/ 8,366,008 11,663,980 USD Special Account No 1001013/00493/ 1,353,509 58,916,560 1 USD Special Account No 1001013/00502/ 88,132,592 - Ethiopian Birr Designated Account 17,238,961 27,196,401 Other Birr bank account 736,618,683 612,568,493 Cash on hand 16.018,183 20,676,491 867,727,936 73.2.2 5. ACCOUNTS PAYABLE 2015 Birr Birr Contractors 25,949,801 4,913,250 Other payable within government 120,616,607 1,590,506 Taxes payable 12,258,684 1,756,069 Others payable 188,734,176 17,545,173 1 I I MINISTRY OF FINANCE AND ECONOMIC COOPERATION ONE WASH NATIONAL PROGRAM (OWNP) NOTES TO THE FINANCIAL STATEMENTS (continued) AT 7 JULY 2016 I 6. ACCUMULATED FUND Birr Balance at 8 July 2015 804,502,540 Add: Excess of Expenditure over Financing (39,994,186) Ending Balance 7 July 2016 16105A 3 7. DATE OF AUTHORIZATION Channel One Programs Coordinating Directorate Director of The Federal Democratic Republic of Ethiopia, Ministry of Finance and Economic Cooperation authorized the issue of these financial statements on 3 January 2017. I I I I I I I I I I 12 I MINISTRY OF FINANCE AND ECONOMIC COOPERATION ONE WASH NATIONAL PROGRAM (OWNP) IFR BASED WITHDRAWAL SCHEDULE FOR APPLICATIONS Submitted during the YEAR ENDED 7 July 2016 I Withdrawal application Equivalent in No. USD Birr I IDA WASH 11 -005 13,037,636.72 273,292,333.40 IDA WASH 11 - 006 14,278,980.49 302,681,544.73 IDA SP- 005 267,513.86 5,803,418.93 ADB -001 24,814,166.82 512,504,357.25 ADB - 002 4,022,908.87 87,303,156.84 UNICEF - 500,000 10,412,950 UNICEF - 375,000 7,985,662.50 157,296,206.76 1,199823.65 I I I I I I I I I 1 MINISTRY OF FINANCE AND ECONOMIC COOPERATION ONE WASI! NATIONAL PROGRAM (OWNP) RECONCILATION FROM FIRST TO FOURTI! QUARTER OF 2016 INTERIM FINANCIAL REPORTS (IFRS) WITI! THE PERIOD END STATEMENT OF SOURCE AND USES OF FUNDS AND THE BALANCE SIEET 1S 2"n 3 r 4th Cumulative Year uat 2 4 November 2013 ended Ouarter Ouarter Ouarter Ouarter to July 7, 2016 Birr Birr Birr Birr Birr Opening balance 804,502,540.26 Sources Collection from financers 522,917,307.25 273,292,333.40 3 10,667,207.23 93,106,575.77 1,199,983,423.65 Collection from government 4,206421.13 3487,065.92 163 384,62283 12,870,005.86 183 948II _7_4 contribution Total collection 527,123,728.38 276,779,399.32 474,051,830.06 105,976,581.63 2,188,434,079.65 Gain on foreign exchange 5,360,353.64 60,425.20 2,240,214.96 824,343.93 8,485,337.73 Total sources Expenditures Program expenditures July 168,876,367.33 194,264,426.20 3 1 1,774,101.49 757,496,167.45 1,432,1 1,062.47 7,20 16 Excess of sources over Expenditure 764,508,354.91 Over Cash at bank 851,709,754.02 Cash on hand 16,018,182.80 Advance 244,339,686.02 Payables (347,559,267.93) 764,508,354.91 14