Barrett & Partners Chartered Accountants & Business Advisers AUDIT OF THE FINANCIAL STATEMENTS FOR THE INCREASING RESILIENCE TO CLIMATE CHANGE NATURAL HAZARDS PROJECT (GRANT Nos TF095486, TF013810, TF013694 AND TF013869) for the year ended 31st December 2018 PO Box 240 11' Floor, B&P House Lini Highway Port Vila, Vanuatu Tel: (+678) 22280 Fax: (+678) 22317 Email: service@bap.com.vu Web: www.bap-international.com In Confidence Page 1 CONTENTS EXECUTIVE SU...... -4 BA CKG RO U ND..........................................................................GROUN-.5 A U D IT O BJECTIVE................................................................. ... -...55 SCO PE O F SERVICE5............................................................................6 GENERAL MATTER.7 A U D IT O PIN IO N ............................................................................. 8 -9 APPENDIX 1 - FINANCIAL STATEMENTS & NOTES .................................... lo APPENDIX 2 - MANAGEMENT REPORT....................................................11 APPENDIX 3 - FOLLOW UP PRIOR YEAR AUDIT POINTS.............................. 12 In Confidence Page 2 EXECUTIVE SUMMARY Barrett and Partners has been engaged by the Office of the Auditor General to carry out an audit of the Increasing Resilience to Climate Change and Natural Hazards project, funded by the World Bank for the Government of Vanuatu. These funds are administered by the Vanuatu Meteorological and Geo-hazard Department. The following financing agreements were approved; * Global Environment Facility (GEF)Grant agreement for USD5,580,000 on 14th December 2012 ending December 2018 * Global Facility for Disaster Reduction and Recovery (GFDRR) Grant agreement for USD2,730,000 on l2th December 2012 ending March 2o6 (amended extension date 31st December 2017) * European Union (EU) Grant agreement for EUR923,257 on 12tb July 2013 ending May 2014 (amended to April 2016). A grant agreement amendment dated28th January made available addition funds of EURO973,750 making a total grant of EUR1,897,0o7. The objective of the project is to increase the resilience of communities in Vanuatu to the impacts of climate variability and change and natural hazards on food and water security as well as livelihoods. The period audited is the year ended 31st December 2018. This will be followed by a final audit for 2019. The grant income and expenditure for the audit period is described below: Controlled by entity External Third Party Total VUV VUV VUV RECEIPTS GEF (TFo13810) 79,160,336 103,276,718 182,437,054 GFDRR (TF 013694) 0 0 0 EU (TF 013869) 0 0 0 TOTAL RECEIPTS 79,160,336 103,276,718 182,437,054 PAYMENTS GEF 72,043,345 103,276,718 177,909,063 GFDRR 8,374,665 0 8,374,665 EU 0 0 0 TOTAL PAYMENTS 83,0,418,010 103,276,718 183,694,728 In Confidence Page 3 The objective of the audit is to enable us to express our opinion on the accuracy, validity, and completeness of the following: i) Statements of Expenditure, ii) Designated Account (controlled by entity), iii) Financial statements, and iv) Compliance with the financing agreement and Vanuatu legislation We achieved the audit objectives by using the World Bank Guidelines 1) Annual Reporting and Auditing, 2) Disbursement Manual and 3) Procurement Policies and Procedures. The audit of the receipts and payment expenditure of VUV182, 437,054 and VUV183,694,728 respectively which entailed the following: * Samples tested loo% and 75% receipts-and expenditure respectively in relation to accuracy and compliance (including LPOs, imprest, journals and consultancy fees); * Sample tested direct payment advices ( external third party) * Reviewed the content, consistency and compliance of financial statements and supporting notes; * Reviewed the balance and procedures for the Designated Account; * Compliance with Finance Agreement and Vanuatu Financial Regulations; * Compliance with International Public Sector Accounting Standards (IPSAS); and * Reported findings with risks, recommendations and responses. Summary Findings During our audit we have identified one finding which are included in our detailed management report on page 11: Conclusion Apart from the matters highlighted in our management report there are no material or significant matters which need to be drawn to the attention of the Stakeholders of the Financing Agreements. In Confidence Page 4 BACKGROUND 1. The Government of Vanuatu has received the following grants towards the cost of the "Increasing Resilience to Climate Change and Natural Hazards Project" (IRCCNH) project implemented by the Government of Vanuatu through the Vanuatu Meteorology and Geo- hazards Department (VMGD) of its Ministry of Climate Change and Natural Disasters: * World Bank grant TF 013810 from the Global Environment Facility (GEF)trust fund signed 14 December 2012 in the amount of USD5,580,ooo ending Dec 2018; * World Bank grant TF 013694 from the Global Facility for Disaster Reduction and Recovery (GFDRR) trust fund signed 12 December 2012 in the amount of USD2,730,ooo ending March 2016 (extended to 31st December 2017); and * World Bank grant TF 013869 from the European Union Global Climate Change Alliance (EU-GCCA-V) trust fund signed 12 July 2013 for the amount of EUR923, 257 ending April 2016. A grant agreement amendment dated 28th January made available addition funds of EUR0973,750 making a total grant of EUR1,897,oo7. The contribution of the Government of Vanuatu to this project totals VUV 29.8M and the Beneficiaries in-kind contribution totals VUV2.2M. 2. The objective of the project is to help increase the resilience of communities in Vanuatu to the impacts of climate variability and change and natural hazards on food and water security as well as livelihoods. 3. The Vanuatu Meteorology and Geo-Hazards Department (VMGD), through its Project Management Unit (PMU) is responsible for overall project management. Project Implementation Agencies include the National Disaster Management Office (NDMO), Rural Water Supplies (RWS), the Department of Agriculture and Rural Development (DARD), the Vanuatu Agricultural Research and Technical Centre located in Santo (VARTC), and the Department of Local Authorities (DLA). 4. VARTC has two Subsidiary Agreements, one for the EU funds signed 13 September 2013 and another for the GEF funds signed 4 February 2013. 5. VARTC has two Project Agreements, one for the EU funds signed 8 May 2013 and another for the GEF funds signed 14 December 2012. 6. The project is currently estimated to be completed by 2019. OBJECTIVE The objective of the audit of the project financial statements is to enable the auditor to express an opinion on the accuracy, validity and completeness of the Statements of Expenditure, designated account and the financial statements and on whether transactions were in accordance with the financing agreement and Vanuatu legislation. The project transaction ledger and contract ledger provide the basis for preparation of the project financial statements and are established to reflect the financial transactions in respect of the project. In Confidence Page 5 SCOPE OF SERVICES In accordance with the terms of reference the audit will be carried out in accordance with International Auditing Standards and will include such tests and controls as the Auditor considers necessary under the circumstances so as to allowan audit opinion to be formed. It is highly desirable that the Auditor be familiar with the Guidelines: Annual Financial Reporting and Auditing for World Bank Financed Projects (June 2003). The Auditor should also be familiar with the Bank's Disbursement Manual and Procurement Policies and Procedures. These documents may be obtained from the Project Team. The Auditor shall submit the audit report no later than six (6) weeks after receiving the financial statements for each period at the end of the Financial Year, to the Project Director (VMGD Director) as the Government of Vanuatu (the Client) designated agent. In carrying out the audit, special attention should be paid to the following: General Matters, Statements of Expenditure, Designated Accounts, as well as the following: Fraud and Corruption: Consider the risks of material misstatements in the financial statements due to fraud as required by ISA 240: The Auditor's Responsibility to Consider Fraud in an Audit of Financial Statements. The auditor is required to identify and assess these risks (of material misstatement of the financial statements) due to fraud, obtain sufficient appropriate audit evidence about the assessed risks; and respond appropriately to identified or suspected fraud; Laws and Regulations: In designing and performing audit procedures, evaluating and reporting the results, consider that noncompliance by the implementing agency with laws and regulations may materially affect the financial statements as required by ISA 250: Consideration of Laws and Regulations in an Audit of Financial Statements; Governance: Communicate audit matters of governance interest arising from the audit of financial statements with those charged with governance of an entity as required by International Standards on Auditing 260: Communication of Audit Matters with those Charged with Governance; and Risks: In order to reduce audit risk to an acceptable low level, determine the overall responses to assessed risks at the financial statement level, and design and perform further audit procedures to respond to assessed risks at the assertion level as required by Internal Standard on Auditing 330: the Auditor's Procedures in Response to Assessed Risks. In Confidence Page 6 GENERAL MATTERS All external funds have 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 they were provided. Goods and services financed have been procured in accordance with the relevant Financing Agreement. All necessary supporting documents, records, and accounts have been kept in respect of all project activities including expenditures reported via quarterly Financial Reports. Clear links should exist between the project account records and reports presented to the Bank. The Designated Accounts have been used and maintained in accordance with the provisions of the relevant Financing Agreement. The project financial statements have been prepared in accordance with and consistently applied cash basis per International Public Sector Accounting Standards (IPSAS) and give a true and fair view of the financial situation of the project as at 31 December 2018 and of resources and expenditures for the period ended on that date. In Confidence Page 7 Unqualified Audit Opinion on the Increasing Resilience to Climate Change Natural Hazards Project for the year ended 31st December 2018 The Auditor-General is the auditor of all public funds. The Auditor-General has appointed Barrett & Partners as auditors pursuant to Section 24(1) of the Expenditure Review and Audit Act [CAP.241]. The funds received from the World Bank are held in the Government of Vanuatu Development Fund Account and are administered by the Government of Vanuatu's Meteorological and Geo-hazards Department. It is the responsibility of the Government to ensure funds are managed in accordance with Government financial regulation and in accordance with the finance agreement. Our audit is to provide an opinion on the Annual Project Financial Statements, Statement of Expenditures, Designated Account and Compliance of the Increase Resilience to Climate Change Natural Hazards funded by the World Bank. In forming our opinion we carried out appropriate tests with regard to materiality in accordance with the audit objectives and in conjunction with Financial Regulations, World Bank requirements and grant agreement to provide opinions in relation to matters in the above paragraph. Audit Opinion In our opinion apart from the matters highlighted in the management report on page 11 we are satisfied that the financial position, results of operations and cash flow of the Annual Project Financial statement for the Increase Resilience to Climate Change Natural Hazards Project for the year ended 31st December 2018 stated on page 10 is in accordance with International Public Sector Accounting Standards: Financial Reporting under Cash basis of Accounting (I PSAS). Furthermore we are satisfied, a) with the accuracy and propriety of expenditure of the Statement of Cash Receipts and Payments in Appendix 1; b) with the World Bank's procedures and the balance of the Designated Account at period end; and In Confidence Page 8 c) with the compliance in accordance with the Public Finance and Economic Management Act [CAP 244], The Government Tenders Act [CAP 245] and the Vanuatu Financial Regulations. Barrett & Partners 7th April 202 In Confidence Page 9 Q � N b!1 rб Са. 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'� � ° *-' � и д •и � -b о "-, °i о � а а ц��' � й Q. �� � � � � и � � � й � `q �' о п; � '� `ш о � � \ ш о� й п� о"~' � Cs � и и J 'tз и os тз ц, ш 7 �.. ы р� +� б� � i.,. � � и ,i д и� и-� .ы. "� Ст -� с � � Q �� � � Й о v �''� С Q N о.. р ш �+., о � � Х а � .� .� � � � о � °�.' � о �; ш � � о а. с� Q '" REPUBLIC OF VANUATU/RtPUBLIQUE DE VANUATU jsn.at, VANUATU METEOROLOGY AND GEO-HAZARDS DEPARTMENT f D9PARTEMENT DE LA MtTtOROLOGIE ET DES GtORISQUES DE VANUATU Phone: (678) 24686, 22932 VOIP: 5305 Fax: (678) 22310 Email: adrnin@Drneteo.gov.vu Website: www.meteo.gov.vu Address: PMB 9054, Lini Highway, Port Vila, Vanuatu (Address correspondence to Director) (Toute correspondancedoitftre envoy6e ou Directeur) FINANCIAL STATEMENTS FOR THE INCREASING RESILIENCE TO CLIMATE CHANGE AND NATURA.L HAZARDS (IRCCNH) PROJECT GEF GRANT No. TFO 13 8 10 GFDRR GRANT No. TF013694 EU GCCA-V-B GRANT No. TF013869 GEF PG No. TF095486/94403 (VANUATU) For the Year Ended 31 December 2018 1 REPUBLIC OF VANUATU/RPUBLIQUE DE VANUATU VANUATU METEOROLOGY AND GEO-HAZARDS DEPARTMENT DtPARTEMENT DE LA METEOROLOGIE ET DES GtORISQUES DE VANUATU Phone: (678) 24686, 22932 VOIP: 5305 Fax: (678) 22310 Email: admin@meteo.gov.vu Website: www.meteo.gov.vu Address: PMB 9054, Lini Highway, Port Vila, Vanuatu (Address correspondence to Director) (Toute correspondance doit 6tre envoye ou Directeur) Table of Contents Statement of Cash Receipts and Payments 3 Statement of Comparison of Budget and Actual 5 Statement of Accounting Policies and Notes 6 1. Accounting Policies 6 2. Cash Receipts (VUV) 9 3. Cash Payments (VUV) 10 4. Cash Balance 10 5. Employee Entitlements 10 6. Budget 13 7. Commitments 13 8. VARTC 13 9. Imprests 13 10. Property Plant & Equipment 15 11. Related Parties 15 12. Creditors 15 13. Authorization Date 15 2 REPUBLIC OF VANUATU/REPUBLIQUE DE VANUATU VANUATU METEOROLOGY AND GEO-HAZARDS DEPARTMENT DEPARTEMENT DE LA MtTtOROLOGIE ET DES GtORISQUES DE VANUATU Phone: (678) 24686, 22932 VOIP: 5305 Fax: (678) 22310 Email: admin(Dmeteo.gov.vu Website: www.meteo.gov.vu Address: PMB 9054, Lini Highway, Port Vila, Vanuatu (Address correspondence to Director) (Toute correspondonce doit6tre envoyde ou Directeur) GOVERNMENT OF VANUATU VANUATU METEOROLOGICAL AND GEO-HAZARDS DEPARTMENT FINANCIAL STATEMENTS FOR THE INCREASING RESILIENCE TO CLIMATE CHANGE & NATURAL HAZARDS PROJECT (GRANT Nos. TF 95486, TF 94403, TF 013810, TF 013694, TF 013869) FOR THE YEAR ENDED 31 DECEMBER 2018 STATEMENT OF CASH RECEIPTS AND PAYMENTS - BY DONOR, CATEGORY AND COMPONENT (VUV) (1) Notes 2018 2017 Cumulative CASH RECEIPTS 1. TFs 95486/94403 (GEF) (Direct Payments) - - 12,731,243 2. TF 013810 (GEF) Designated Account 2 79,160,336 64,966,085 273,371,154 Direct Payments 2 103,276,718 52,388,961 243,950,449 Total 182,437,054 117,355,046 517,321,603 3. TF 013694 (GFDRR) Designated Account 2 - 48,135,858 174,602,086 Direct Payments 2 4,985,845 115,136,844 Total - 53,121,703 289,738,930 4. TF 013869 (EU) Designated Account 2 - - 129,881,070 Direct Payments 2 31,869,642 Total - - 161,750,712 TOTAL CASH RECEIPTS Designated Account 1, 2 79,160,336 113,101,943 577,854,310 Direct Payments 1,2 103,276,718 57,374,806 403,688,178 Grand Total 182,437,054 170,476,749 981,542,488 CASH PAYMENTS BY CATEGORY & COMPONENT As per attached schedule 3 183,694,728 142,416,432 959,912,785 CASH RECEIPTS LESS CASH PAYMENTS (1,257,674) 28,060,317 21,629,703 IMPRESTS 9 934,120 381,914 2,635,180 ADVANCES - - NET CHANGE IN CASH (2,191,794) 27,678,403 18,994,523 AMOUNTS COMMITTED - - ADD OPENING CASH BALANCE AS AT 1 JANUARY 21,186,317 (6,492,086) - CLOSING CASH BALANCE AS AT 31 DECEMBER 4 18,994,523 21,186,317 18,994,523 3 REPUBLIC OF VANUATU/REPUBLIQUE DE VANUATU VANUATU METEOROLOGY AND GEO-HAZARDS DEPARTMENT DEPARTEMENT DE LA METEOROLOGIE ET DES GEORISQUES DE VANUATU Phone: (678) 24686, 22932 VOIP: 5305 Fax: (678) 22310 - Email: admin(ameteo.gov.vu Website: www.meteo.gov.vu Address: PMB 9054, Lini Highway, Port Vila, Vanuatu (Address correspondence to Director) (Toute correspondance doit dtre envoyde ou Directeur) GOVERNMENT OF VANUATU VANUATU METEOROLOGICAL AND GEO-HAZARDS DEPARTMENT FINANCIAL STATEMENTS FOR THE INCREASING RESILIENCE TO CLIMATE CHANGE & NATURAL HAZARDS PROJECT (GRANT Nos. TF 95486, TF 94403, TF 013810, TF 013694, TF 013869) FOR THE YEAR ENDED 31 DECEMBER 2018 STATEMENT OF CASH RECEIPTS AND PAYMENTS - BY DONOR, CATEGORY AND COMPONENT {VUV) (2) Notes 2018 2017 Cumulative CASH PAYMENTS 3 1. TFs 95486/94403 (GEF) - 12,731,243 2. TF 013810 (GEF) Category 1 175,320,063 83,121,862 468,332,317 component 1.1 (Ledger 1B, PMU) 32,508,287 10,077,868 155,473,612 Component 1.2 (Ledger 1E, NDMO) 675,700 (1,442,175) 675,700 Component 1.3 (Ledger 1H, GeoH) 7,840,854 - 7,840,854 Component 2.1 (Ledger 2B, OLA) 2,932,140 (4,932,538) 9,142,637 Component 2.2 (Ledger 2E, DLA) 129,327,129 16,919,105 146,246,234 Component 3.2 (Ledger 3E, DARD) 103,889 4,378,450 38,076,174 Component 4.1 (Ledger 4B, DGMWR) 1,932,064 15,993,746 42,529,388 Component 4.2 (Ledger 4E, DGMWR) - 42,127,406 68,347,718 Category 2 4,324,889 27,359,583 Component 3 1 (Ledger 313, VARTC) - 4,324,889 27,359,583 Total 175,320,063 87,446,751 495,691,900 3. TF 013694 (GFDRR) Category 1 8,374,665 54,969,681 279,727,829 Component 1.1 (Ledger 1A, PMU) 679,565 24,441,505 67,046,501 Component 1.2 (Ledger 10, NDMO) - 11,071,039 80,985,864 Component 1.3 (Ledger 1G, GeoH) 7,770,850 5,827,393 100,734,948 Component 2.1 (Ledger 2A, DLA) (75,750) 3,962,207 30,960,516 Component 2.2 (Ledger 2D, DIA) - 9,667,537 10,011,101 Total 8,374,655 54,969,681 289,738,930 4. TF 013869 (EU) Category 1 - - 109,141,872 Component 1.1 (Ledger iC, PMU) - - 66,578,899 Component 2.1 (Ledger 2C, DLA) - - 4,646,101 Component 3.2 (Ledger 3F, DARD) - - 33,799,129 Component 4.1 (Ledger 4C, DGMWR) - - 4,117,743 Component 4.2 (Ledger 4F, DGMWR) - Category 2 - - 52,608,840 Component 3.1 (Ledger 3C, VARTC) 52,608,840 Category 3 - Component 2.2 (Ledger 2F, DLA) - - Total .- 161,750,712 TOTAL CASH PAYMENTS 183,694,728 142,416,432 959,912,785 TFs 95486/94403 - - 12,731,243 TFs 013810, 013694 & 013869 Component 1 - Institutional Strengthening for CCA & DRM 49,475,256 r 49,975,630 479,336,378 Component 2 - Increasing Community Resilience 132,183,519 25,616,311 201,006,589 Component 3 - Promotion of improved Technologies 103,889 8,703,339 151,843,726 Component 4 - Rural Water Security 1,932,064 58,121,152 114,994,849 Grand Total 183,694,728 142,416,432 959,912,785 4 REPUBLIC OF VANUATU/REPUBLIQUE DE VANUATU VANUATU METEOROLOGY AND GEO-HAZARDS DEPARTM ENT 0 DEPARTEMENT DE LA METEOROLOGIE ET DES GtORISQUES DE VANUATU . Phone: (678) 24686, 22932 VOIP: 5305 Fax: (678) 22310 Email: admin@meteo.gov.vu Website: www.meteo.gov.vu Address: PMB 9054, Lini Highway, Port Vila, Vanuatu (Address correspondence to Director) (Toute correspondance doit 6tre envoyee au Directeur) GOVERNMENT OF VANUATU VANUATU METEOROLOGICAL AND GEO-HAZARDS DEPARTMENT FINANCIAL STATEMENTS FOR THE INCREASING RESILIENCE TO CLIMATE CHANGE & NATURAL HAZARDS PROJECT (GRANT Nos. TF 95486, TF 94403, TF 013810, TF 013694, TF 013869) FOR THE YEAR ENDED 31 DECEMBER 2018 STATEMENT OF COMPARISON OF BUDGET AND ACTUAL - BY CATEGORY AND COMPONENT (VUVI Notes 2018 2017 Cumulative 3, & Budget Actual Variance Budget Actual Variance Lifetime Budget Actual 1. TFs 95486/94403 (GEF) 12,731,243 12,731,243 2. TF 013810 (GEF) Category 1 Component 1.1 (Ledger 1B, PMU) 32,508,287 32,508,287 10,077,868 10,077,868 169,047,499 155,473,612 Component 1.2 (Ledger 1E, NDMO) 675,700 675,700 - - 1,442,175 (1,442,175) 7,691,136 675,700 Component 13 Ledger 1H, GeoH) 7,840,854 7,840,854 6,870,052 7,840,854 Component 2.1 (Ledger 2B, DLA) 2,932,140 2,932,140 4,932,538 (4,932,538) 5,822,484 9,142,637 Component 2.2 (Ledger 2E, DLA) 129,327,129 129,327,129 - 16,919,105 16,919,105 - 165,724,702 146,246,234 Component 3.2 (Ledger 3E, DARD) 103,889 103,889 4,378,450 4,378,450 35,421,000 38,076,174 Component 4.1 (Ledger 4B, DGMWR) 1,932,064 1,932,064 - 15,9193,746 15,993,746 - 42,480,000 42,529,338 Component 4.2 (Ledger 4E, DGMWR) - - 42,127,4D6 42,127,406 71,220,000 68,347,718 Category 2 Component 3 1 (Ledger 3B,VARTC) - - 4,324,889 4,324,889 - 27,359,000 27,359,583 Total 175,320,063 175,320,063 - 87,446,751 87,446,751 531,635,873 495,691,900 3. TF 013694 (GFDRR) Category 1 Component 1.1 (Ledger 1A, PMU) 679,565 679,565 - 24,441,505 24,441,505 - 67,046,501 67,046,501 Component 1 2 (Ledger 10, NDMD) - - 11,071,039 11,071,039 80,985,864 80,985,864 Component 1.3 (Ledger 10, GeoH) 7,770,850 7,770,850 5,827,393 5,827,393 - 100,734,948 100,734,948 Component 2 1 (Ledger 2A, DLA) 75,750 75,750 3,962,207 3,962,207 30,960,515 30,960,516 Component 2.2 (Ledger 20, CLA) -- 9667,537 9,667,537 -10,011101 10,011,101 Total 8,374,665 8,374,665 - 54,969,681 54,969,681 - 289,738,930 289,738,930 4. TF 013869 (EU) Category 1 Component 1 1 (Ledger 1C, PMU( . 66,566,000 66,578,899 Component 2.1 (Ledger 2C, DLA) - 4,645,000 4,646,101 Component 3 2 (Ledger 3F, CARD) - 33,796,000 33,799,129 Component 4.1 (Ledger 4C, DGMWR) - 4,115,000 4,117,743 Component 4.2 (Ledger 4F, DGMWR) - - - - Category 2 Component 3.1 (Ledger 3C, VARTC) - - - - - - 52,603,000 52,608,840 Category 3 Component 2.2 (Ledger 2F, DLA) - - - Total - - 161,725,000 161,750,712 TOTAL BUDGET AND ACTUAL 183,694,728 183,694,728 - 142,416,432 142,416,432 - 995,831,046 959,912,785 5 Government of Vanuatu Vanuatu Meteorology and Geo-hazard Departnent Financial Statements for the Increasing Resilience to Climate Change and Natural Hazards Project (GEF PG No TF 095486/94403), GEF Grant No. TF 013810, GFDRR Grant No. TF013694, EU GCCA-V-B Grant No. TF013869) For the Year Ended 31 December 2018 Statement of Accounting Policies and Notes 1. Accounting Policies Basis of Preparation The financial statements of the project have been prepared in accordance with the requirement of the Public Finance & Economic Management Act (Cap 244) which includes the requirement to comply with generally accepted accounting practice. The financial statements have been prepared in accordance with Cash Basis IPSAS "Financial Reporting under the Cash Basis of Accounting". There have been no changes in accounting policies during the financial year. Reporting Entity These financial statements are prepared specifically for a project that is managed by the Vanuatu Meteorology and Geo-Hazards Department (VMGD). The project was prepared through one grant (GEF TF No.95486/94403) and has been funded through three grants from (i) the Global Environment Facility (GEF TF No.13810; US$ 5,580,000), (ii) the Global Facility for Disaster Reduction and Recovery (GFDRR TF No.13694; US$ 2,730,000) and (iii) the European Union (EU TF No.13869; Euro 923,257) and implemented through the World Bank. An additional EU grant of Euro 973,750 was made available, through a grant agreement amendment dated 28 January 2016 (making a total EU grant of Euro 1,897,007; closure date of April 2016). The VMGD forms part of the Government of Vanuatu (GoV). VMGD provides meteorological, geo-hazards and climate change adaptation services to the people of Vanuatu. The project's ultimate objective is to help increase the resilience of communities in Vanuatu to the impacts of climate variability and change and natural hazards on food and water security as well as livelihoods. To this end, VMGD with the support of the World Bank has successfully secured funding from the three above-mentioned donors to address these needs. Under the Grant Agreements, different Categories of expenditure are provided for as follows: GEF GFDRR EU Components US$ Components US$ Components Euro Category 1 1, 2, 3.2, 4 5,265,000 1, 2 2,730,000 1, 2.1, 3.2, 4 1.198,750 Category 2 3.1 315,000 None 3.1 450,000 Category 3 None None 2.2 248,257 Total 5,580,000 2,730,000 1,897,007 6 Government of Vanuatu Vanuatu Meteorology and Geo-hazard Department Financial Statements for the Increasing Resilience to Climate Change and Natural Hazards Project (GEF PG No TF 095486/94403), GEF Grant No. TF 013810, GFDRR Grant No. TF013694, EU GCCA-V-B Grant No. TF013869) For the Year Ended 31 December 2018 During 2017, the Grant Agreements for GEF and GFDRR were amended and the Category allocations were amended, with effect from the start of the agreements. The allocation of expenditure by Category is managed accordingly through the component/subcomponent structure. The project activities and budget is managed according to the component/subcomponent structure, within the above Category limits. The ledgers established in the GoV's Smart Stream system are organised according to the subcomponents under the four main components described below. Each subcomponent under each grant relates to activities implemented through the specific agencies, as follows: PMU - Project Management Unit (under VMGD): Component 1.1 DARD - Department of Agriculture and Rural Development: Component 3.2 DGMWR - Department of Geology, Mines and Water Resources: Component 4.1 and 4.2 VARTC - Vanuatu Agricultural Research and Technical Centre: Component 3.1 DLA - Department of Local Authorities: Component 2.1 and 2.2 NDMO - National Disaster Management Office: Component 1.2 GeoH - Geo Hazards Department: Component 1.3 The grant agreements identified the budget activities according to the following four components to be implemented under the project: 1 Institutional strengthening for climate change adaptation and disaster risk management This includes activities to strengthen the PMU, the NDMO and the early warning systems. 2 Increasing community resilience on active volcanic islands and in coastal areas This includes activities to increase the ability of stakeholders at national, regional and community levels to work together to enhance disaster and climate resilience in rural communities. 3 Promotion of improved technologies of food crop production and resilience to climate change This includes activities to support the Project implementing agency (VARTC), and Vanuatu in general, to develop approaches, strategies and technologies for adapting to climate change and responding to food security and market demands. 4 Rural water security: increase access to secure water supply This includes activities to support Vanuatu to increase access to secure water supply. The project's accounting operates within the GoV's Smart Stream system, with additional data capture and reporting functions to accommodate the project's requirements such that payments are allocated against the respective Category and Component, and reported accordingly. 7 Government of Vanuatu Vanuatu Meteorology and Geo-hazard Department Financial Statements for the Increasing Resilience to Climate Change and Natural Hazards Project (GEF PG No TF 095486/94403), GEF Grant No. TF 013810, GFDRR Grant No. TF013694, EU GCCA-V-B Grant No. TF013869) For the Year Ended 31 December 2018 During 2015, following a review of the structure and organization of the project, certain operational costs were consolidated under Component 1.1. The closure date of the project is set as 30 June 2019, being the closing date for the GEF grant (having been extended by six months from 31 December 2018); a further four months is available for settling expenditures incurred by 30 June 2019. The GFDRR funding was closed on 31 December 2017, and all final GFDRR reporting to WB was completed by 30 April 2018. The EU funding was closed on 30 April 2016, and all final EU reporting to WB was completed by 31 August 2016. As part of the closure of the EU funding, certain expenses previously allocated to GEF/GFDRR (including for prior years) were reallocated to EU. Accounting Period IPSAS cash accounting standards require that general purpose financial statements be prepared at least annually (IPSAS cash para 1.4.1). These financial statements cover the fiscal year 2018. The balance of undrawn grants as at 31 December 2018 is as follows: GEF US$ 753,228, which is approximately VUV 86 million GFDRR NIL - closed December 2017 EU NIL - closed April 2016 Currency Reporting Currency The reporting currency is Vanuatu Vatu (VUV). Foreign Currency In-country payments made in foreign currencies and reported in these financial statements have been converted to VUV by the National Bank of Vanuatu at the applicable rate as of the date of transaction. Direct Payments made in foreign currencies and reported in these financial statements have been converted to VUV based on the exchange rate as per www.xe.com as of the transaction value date. The in-country fund receipts transferred from the World Bank were all in VUV. The three grants mentioned above are denominated in US$ (GEF and GFDRR) and Euro (EU). Withdrawals are charged against the grants, in the respective grant currency, based on exchange rates applied by the World Bank. Cash and Cash Equivalents Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash, which are subject to an insignificant risk of changes in value. Direct Payments made by World Bank VMGD also benefits from payments made directly by the World Bank. These payments do not constitute in-country cash receipts and payments of VMGD, but do benefit VMGD. They 8 Government of Vanuatu Vanuatu Meteorology and Geo-hazard Department Financial Statements for the Increasing Resilience to Climate Change and Natural Hazards Project (GEF PG No TF 095486/94403), GEF Grant No. TF 013810, GFDRR Grant No. TF013694, EU GCCA-V-B Grant No. TF013869) For the Year Ended 31 December 2018 are disclosed as Direct Payments in the Statement of Cash Receipts and Payments, and in these Notes. 2. Cash Receipts (VUV) Details of the cash receipts for 2018, for the GEF grant, are given in the following table: SUMMARY OF CASH RECEIPTS FOR 2018 (TF 013810, GEF) WB Value Date VUV 1. Designated Account Component 1.1 (Ledger 1B, PMU) 38,400,766 13-Apr-2018 10,000,000 Transfer from Ledger 4B (15/4/18) 3,000,000 Transfer to Ledger 1H (31/5/18) (400,000) 20-Aug-2018 5,000,000 30-Nov-2018 10,400,383 10-Dec-2018 10,400,383 Component 1.3 (Ledger 1H, GeoH) 7,400,000 13-Apr-2018 7,000,000 Transfer from Ledger 18 (31/5/18) 400,000 Component 2.1 (Ledger 2B, DLA) (10,000,000) Transfer to Ledger 2E (15/1/18) (10,000,000) Component 2.2 (Ledger 2E, DLA) 46,359,570 Transfer from Ledger 28 (15/1/18) 10,000,000 02-Feb-2018 7,267,288 13-Apr-2018 4,105,777 20-Aug-2018 6,986,505 30-Nov-2018 9,000,000 * 10-Dec-2018 9,000,000 * Component 4.1 (Ledger 4B, DGMWR) (3,000,000) Transfer to Ledger 1B (15/4/18) (3,000,000) Unallocated as at 31/12/18 - Total Designated Account 79,160,336 2. Direct Payments VANUATU AGRICULTURAL SUPPLIES 24-Jan-2018 24,048,455 ESQAL LTD 17-Apr-2018 6,095,505 WILCO HARDWARE 04-Jun-2018 9,248,843 WILCO HARDWARE 16-Aug-2018 3,983,300 ON WHEELS LTD 07-Sep-2018 6,646,431 MA BUILDERS COMPANY 01-Oct-2018 23,997,312 ALUBAT LTD T/A PTH VANUATU 15-Nov-2018 7,765,160 MA BUILDERS COMPANY 23-Oct-2018 6,285,312 MA BUILDERS COMPANY 14-Nov-2018 5,068,800 MA BUILDERS COMPANY 11-Dec-2018 10,137,600 Total Direct Payments 103,276,718 Duplicate replenishments 9 Government of Vanuatu Vanuatu Meteorology and Geo-hazard Department Financial Statements for the Increasing Resilience to Climate Change and Natural Hazards Project (GEF PG No TF 095486/94403), GEF Grant No. TF 013810, GFDRR Grant No. TF013694, EU GCCA-V-B Grant No. TF013869) For the Year Ended 31 Decenber 2018 The Designated Account (DA) is the local, entity-managed, account; funds are transferred from World Bank periodically, from which payments are made. Direct Payments are made by World Bank directly to the supplier/consultant, based on the official request of the authorized signatories of the project. VMGD receives the funds, which are managed by the VMGD/PM U, through the centralized Smart Stream system. Under this arrangement VMGD has control of the funds and carries out the implementation of the project. PMU makes payments on their behalf after appropriate authorization and documentation provided by VMG D. In the context of the project's operations, given that funds are drawn down from the grant as required in order to meet ongoing expenditure requirements, reporting of budget (including comparison of budget and actual) for Cash Receipts, as well as reporting of Debtors, are not appropriate and are not included in these Financial Statements and accompanying Notes. 3. Cash Payments (VUV) The summary of payments is given in the Statement of Cash Receipts and Payments, and is further detailed - by donor/subcomponent/category and by direct payment/designated account - in the table on page 11. During 2016, certain expenses from 2015 and 2016 that had previously been booked against GEF/GFDRR, were transferred to EU prior to the closure of the EU grant. These adjustments are reflected in the project books in 2016 and are reflected in these financial statements in the cumulative figures. Expenditures made in 2016 for micro-projects, and originally charged against Component 2.1, were adjusted in 2017 to Component 2.2 (VUV 5.582 million). 4. Cash Balance The closing cash balance in these financial statements is reconciled with the balances in the GoV Smart Stream ledgers as at 31 December 2018. The closing cash balance is summarized in the table on page 12. The net cash balance as at 31 December 2018 for GFDRR is NIL, and the duplicate receipt of VUV 2,157,572 posted into the GFDRR project books in Smart Stream is not included. 5. Employee Entitlements No provision is required for employee entitlements, as the project has no employees with entitlements under the Employment Act. 10 о � � с � ._- .__...___.._._ М 4 г.� о V г� tl' � а3 оо т с� ,-i v оо �о гi N еЛ л rn т ' о ' ц1 п о rs о и т м г- оо +-+ оо т о и�t � о м rn о гц v v т {,J" �v и ш г� оо ш пi н м г� и т и оо rn и �-ь г� ао л,� r� оо r. � �-i � т�п а ti и ш v; r� tп �о й й�r о л р оо �о т г� ся м � М сл. Р h t а� г� N i и т v аг7 т �о� л И h V и ы о ,�-i п и ct +д оа .� гv о и т т г� о rn г� т о п и и г� л +д qr � 1-� Гч й�л г� о7 �в еа пг ов г� а; г� о с� о о м гд � т� сг r.i pi �-ч т и �r м а и rv огз и оо о т ,� ш ш т и vs s} �-н л N �--� �ч О� r� . 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Government of Vanuatu Vanuatu Meteorology and Geo-hazard Department Financial Statements for the Increasing Resilience to Climate Changeand Natoral Hazards Project (GEF PG No TF 095486/94403), GEF Grant No. TF 013810, GFDRR Grant No. TF013694, EU GCCA-V-B Grant No. TF013869) For the Year Ended 31 Decein ber 2018 CLOSING CASH BALANCE AS AT 31 DECEMBER 2018 jVUV) 2018 2017 AS PER AS ER FINANCIAL AS PER FINANCIAL SMARTSTREAM ACCRUALS STATEMENTS STATEMENTS 1. TFS 95486/94403 (GEF) - - 2. TF 013810 (GEF) Component 1.1 jLedger 1B, PMU) 20,366,369 1,492,900 21,859,269 17,10,706 Component 1.2 jLedger 1F, NDMO) (622,050) (622,050) - Component 1.3 Ledger 1H, GeOH) (440,854) (440,854) Component 2.1 JI-edger 2B, DLA) 748,315 748,315 14,318,200 Component 2.2 (Ledger 2E, DLA) 16,879,329 1,956,181 18,83S,SIO 1,075,060 Component 3.2 (Ledger 3E, DARD) (3,964,573) (3,864,573) 3,864,573 Component 4.1 (Ledger 4B, DGMWR) 238,883 238,883 5,274,836 Component 4.2 (Ledger 4E, DGMWR) (17,831,423) (17,831,423) (17,831,423) Component 3.1 (Ledger 38, VARTC) 590,026 590,026 590,026 Unallocated (Imprests) (518,580) (518,580) (434,080) Not Allocated in SmartStrearn - - Tota I 1S,54S,442 3,449,081 18,994,523 14,078,632 3. TF 013694 (GFDRR) Component 1.1 (Ledger 1A, PMU) 709,922 174,760 884,682 1,236,185 Component 1.2 (Ledger 1D, NDMO) 1,191,066 1,181,066 1,181,066 Component 1.3 (Ledger 1G, Gec,H) (5,679,619) 5,679,619 1,459,631 Component 2.1 (Ledger 2A, DLA) 5,477,748 5,477,748 S,101,118 Component 2.2 (Ledger 2D, DLA) 797,895 797,895 797,99S Unallocated (Imprests) (504,200) (504,200) 1588,700) Duplicate Receipts (2,157,572) (2,157,572) (2,157,572) Not Allocated in SmartStrearn 78,062 Total (174,760) 174,760 7,107,685 4. TF 013869 (EU) Component 1.1 (Ledger 1C, PMU) - - Component 2.1 (Ledger 2C, DLA) Component 3.2 (Ledger 3F, DARD) Component 4. 1 (Ledger 4C, DGMWR) Component 4,2 (Ledger 4F, DGMWR) Component 3.1 JI-edger 3C, VARTC) Component 2.2 (Ledger 2F, DLA) Unallocated (Imprests) Not Allocated in SmartSt(earn - Total - - - - TOTAL CLOSING CASH BALANCE 15,370,682 3,623,841 18,994,523 21,186,317 Note: Cash Balance "As Per SmartStrearn" [s after the taking up of Journals to 31 December 2018 12 Government of Vanuatu Vanuatu Meteorology and Geo-hazard Department Financial Statements for the Increasing Resilience to Climate Change and Natural Hazards Project (GEF PG No TF 095486/94403), GEF Grant No. TF 013810, GFDRR Grant No. TF013694, EU GCCA-V-B Grant No. TF013869) For the Year Ended 31 December 2018 6. Budget The approved budget is developed on the same accounting basis (cash basis), same classification basis, and for the same period during which withdrawals from the grant accounts were made (Year Ended 31 December 2018) as for the financial statements. It encompasses the same entities as the financial statements. The lifetime budget in VUV as per these financial statements is as per the budget and procurement plan dated November 2018. The remaining budget available is expected to be utilised over the remaining period of the project, taking account of the closure date of GEF. All the 2018 actuals were considered as 2018 budget. The budget is monitored as lifetime budget. The lifetime budget is monitored against the likely amount of VUV to be generated from the US$/Euro grants, to ensure that the grants are not over-committed. 7. Commitments The outstanding (unpaid) contract commitments, as at 31 December 2018 is VUV43,171,712 (2017 - VUV 41,697,319) as follows: 2018 2017 Component 1 5,422,872 26,139,865 Component 2 37,748,840 12,071,625 Component 3 0 0 Component 4 0 3,485,829 Total 43,171,712 41,697,319 All commitments are due before the end of the project. Commitments for contracts in currencies other than VUV have been converted to VUV using the exchange rate as at 31 December 2018. 8. VARTC VARTC has a subsidiary agreement with the Government of Vanuatu and had operated its own bank accounts until early 2017, when these were closed. 9. Imprests As at 31 December 2018, imprests totalling VUV 2,635,180 (2017 - VUV 1,701,060) had not been retired yet, as per the following summary and the detailed table on the following page. Government of Vanuatu Vanuatu Meteorology and Geo-hazard Department Financial Statements for the Increasing Resilience to Climate Change and Natural Hazards Project (GEF PG No TF 095486/94403), GEF Grant No. TF 013810, GFDRR Grant No. TF013694, EU GCCA-V-B Grant No. TF013869) For the Year Ended 31 December 2018 Summary of Imprest Movements 2018 2017 1. Opening cumulative balance 1,701,060 1,319,146 2. Movements During the Year 2(a) New imprests for the year 11,802,665 8,249,035 2(b) Retired imprests for the year (10,589,410) (7,249,523) 2(c) Refunded imprests for the year (279,135) (617,598) Net movement for the year 934,120 381,914 Closing Cumulative Balance 2,635,180 1,701,060 GOVERNMENT OF VANUATU VANUATU METEOROLOGICAL AND GEO-HAZARDS DEPARTMENT FINANCIAL STATEMENTS FOR THE INCREASING RESILIENCE TO CLIMATE CHANGE & NATURAL HAZARDS PROJECT (GRANT Nos. TF 013810, TF 013694, TF013869) FOR THE YEAR ENDED 31 DECEMBER 2018 IMPRESTS SUMMARY FOR THE YEAR ENDED 31 DECEMBER 2018 Cumulative Net Cumulative Date of Balance Imprests Retired Refund Movement Balance Name Advance 31/12/2017 2018 2018 2018 2018 31/12/2018 1. TF 013810 (GEF) ABM (Fuel - NDMO) 17/02/2016 200,000 200,000 (200,000) - ABM (Fuel - DARD) 23/09/2014 50,000 50,000 (50,000) - RWS - duplicate air fares paid 2013 184,080 - 184,080 ABM (Fuel - NDMO) (Note] 4/09/2014 250,000 250,000 (250,000) - ObedTabi (Note) 19/01/2017 84,500 - 84,500 Florence lautu (Note] 14/11/2017 880 880 (880) - Worwor Athanase (Note) 30/11/2017 631,600 630,695 905 (631,600) - Mark Bethel (Note) 20/12/2017 300,000 299,200 800 (300,000) - JanvIon Cevard 5/01/2018 471,600 238,500 233,100 Samuel Lnparus 9/02/2018 355,200 315,030 40,170 - - Rebecca laken 20/02/2018 106,400 106,060 340 - - Florence latu 19/03/2018 412,300 409,900 2,400 - - Samuel Lrparus 28/03/2018 74,000 74,000 - - - Mark Bethel 28/03/2018 794,000 794,000 - - Samuel Lnparus 23/04/2018 540,800 540,800 - Brian Vukeala 26/04/2018 232,000 232,000 - Humao T Sele 17/05/2018 683,600 683,600 - - - Julius Mala 22/05/2018 194,600 194,360 240 Eslyn Garaebiti 29/05/2018 55,500 55,500 - lakar Tess 28/06/2018 574,065 574,000 65 Gwendoline 5/07/2018 98,500 98,500 - - - Samuel Lnparus 19/07/2018 695,800 695,800 - Humao T Sele 25/07/2013 856,000 856,000 - - Samuel Lnparus 10/08/2018 455,600 455,600 - - - Florence latu 13/08/2018 281,600 281,515 85 Gwendoline 16/08/2018 664,000 664,000 - - - Brian Vukeala 16/08/2018 559,500 SS9,500 Joseph Joel 23/08/2018 268,000 268,000 -- lakar Tess 11/09/2018 360,000 - - 360,000 360,000 Florence latu 25/09/2018 408,800 - - 408,800 408,800 Samuel Lnparus 26/09/2018 400,400 400,400 - - - Humao T Sele 22/10/2018 521,800 - - 521,800 521,800 Rebecca taken 9/11/2018 331,800 331,650 150 - - Samuel Lnparus 14/11/2018 330,800 330,800 - - - Gwendoline 16/11/2018 208,000 - - 208,000 208,000 Rebecca laken 12/12/2018 868,000 - 868,000 868,000 1,701,060 11,802,665 10,589,410 279,135 934,120 2,635,180 14 Gover-nment of Vanuatu Vanuatu Meteorology and Geo-hazard Department Financial Statements for the Increasing Resilience to Climate Change and Natural Hazards Project (GEF PG No TF 095486/94403), GEF Grant No. TF 013810, GFDRR Grant No. TF013694, EU GCCA-V-B Grant No. TF013869) For the Year Ended 31 December 2018 10. Property, Plant & Equipment Payments for Property Plant & Equipment (PPE) are charged fully as disbursements under the respective Component, and included in the Statement of Cash Receipts and Payments, at cost; these are recorded in a PPE Register, for the purposes of inventory control. 2018 2017 Cumulative Provincial Disaster Buildings 44,981,715 Vehicles 13,437,000 Tractors & Implements 15,847,844 Office Equipment 888,445 4,613,418 IT Equipment 8,885 5,813,049 Furniture & Other Minor Items 1,577,419 Tools 107,620 107,620 TOTAL 107,620 897,330 86,378,065 There is no PPE purchased on hire purchase schemes and no depreciation is being charged. Not included above are transmission and other goods and materials provided to Geo-hazard stations, emergency materials provided to district agencies for onward distribution to beneficiaries, and items provided as part of micro-projects. 11. Related Parties There were no related party transactions during the year. The ultimate owner of the project is Vanuatu Government through the VMGD, as set out in the Grant Agreement. 12. Creditors There was a total amount of VUV 3,449,081 for 2018 invoices, which were paid in 2019 (2017 - VUV 17,591,716). 13.Authorization Date The financial statements were authorized for issue on 31 May 2019 by Mike Waiwai for VMGD and the Director General of the Ministry of Climate Change. Mr Mike Sam WAIW Mrs Esline GRAR 16- ~5el . Ah v~ c"'Va& Director of Director General 11 Change 7' April 2020 liP 70th April 2020