NATIONAL AUDIT OFFICE BUREAU DU CONTROLEUR GtNE,RAL DES COMPTES DE VANUATU 29 September 2016 Mr. Franz R. Drees-Gross Country Director Level 19, 14 Martin Place Sydney NSW 2000 Australia Dear Franz MANAGEMENT REPORT FOR INCREASING RESILIENCE TO CLIMATE CHANGE NATURAL HAZARDS PROJECT FOR THE YEAR ENDED 31 DECEMBER 2015 Barrett and Partners have now completed the audit of Increasing Resilience to Climate Change Natural Hazards Project for the year ended 31 December 2015 on behalf of the Office of the Auditor-General. Please find attached the final report issued which includes the: - management report; - audit opinion; and - financial statements. Please let me know if you have any questions or wish to clarify any matters raised in the report. Yours sin rely John Path Auditor-General Rue Carnot PMB 9037 Port Vila Republic of Vanuatu South Pacific Tel: + 678 23232 Fax: + 678 26079 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 2015 PO Box 240 V Floor, B&P House Lini Highway Port Vila, Vanuatu Tel: (+678) 22280 Fax: (+678) 22317 Email: servicetap.com.vu Web: www.bap-international.com In Confidence Page 1 Paea CONTENTS EXECUTIVE SUMMARY........ .............. .................. 4 BACKGROUND... .......................5 AUDIT OBJECTIVE... .............................5 SCOPE OF SERVICES......... ...............................6 GENERAL MATTERS7 GENERAL.... MAT.. ......................................... ...........7 AUDIT OPINION.........................8 - 9 APPENDIX 1 -FINANCIAL STATEMENTS& NOTES ...... .......... ...... 10 APPENDIX 2 - MANAGEMENT REPORT....................... ........... 11 APPENDIX 3 - FOLLOW UP PRIOR YEAR AUDIT POINTS........................... 12 In Confidence -ag- 2 Pae 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 USD5,58o,ooo on 14th December 2012 ending December 2018 * Global Facility for Disaster Reduction and Recovery (GFDRR) Grant agreement forUSD2,730,ooo on 12th December 2012 ending March 2016 ( amended extension date 31st December 2017) * European Union (EU) Grant agreement for EUR923,257 on 12th July 2013 ending May 2014 (amended to April 2016) 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. aM The period audited is the year ended 31st December 2015. This will be followed by subsequent fiscal audits. The grant income and expenditure for the audit period is described below: Controlled b entity External Third Part Total vuv VUv vuv RECEIPTS GEF (TFo13810) 46,228,756 95,068,464 141,297,220 GFDRR (TF 013694) 40,368,017 43,519,713 83,887,730 EU (TF o13869) 0 0 0 TOTAL RECEIPTS 86,596,773 138,588,177 225,184,950 PAYMENTS GEF 53,800,283 95,o68,464 148,868,747 GFDRR 52,353,912 43,519,703 95,873,625 EU 23,086,970 0 23,086,970 In Confidence Page 3 Paea ORj TOTAL PAYM ENTS 1291 q,41, 165 p 138 5 i 26 ,8 9, 4 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, i) Designated Account (controlled by entity), iii) Financial statements, and a iv) Compliance with the financing agreement and Vanuatu legislation We achieved the audit objectives by using the World Bank Guidelines i) Annual Reporting a and Auditing, 2) Disbursement Manual and 3) Procurement Policies and Procedures. The audit of the receipts and payment expenditure of VUV86, 596,773 and VUV129, 241,165 respectively which entailed the following: * Samples tested VUV86,596,773 and VUV68,477,241 receipts and expenditure respectively in relation to accuracy and compliance ( including LPOs, imprest, journals and consultancy fees ); a * 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 a Reported findings with risks, recommendations and responses. Summary Findings During our audit we have identified two findings which are included in our detailed management report on 11: Conclusion Apart from the matters highlighted in our management report there are no material or a 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 cot of th increasing Resilience to Climate Change and Natural Hazards Project" (IRCCNH) project implemented by the Government of Vanuatu through the Vanuatu Meteorology and eo 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 UD55v0o 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 USD2,73o,ooo ending March 2016 (extended to 31 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. The contribution of the Government of Vanuatu to this project totals VUV 29.8M and the a Beneficiaries in-kind contribution totals VUV2.2M. 2. The objective of the project is to help increase the resilience of communities in a 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 a Management Unit (PM U) 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. . VARTC has two Project AgreemeneF, 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 early 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 Pg SCOPE OF SERVICES in accordance with the terms of reference the audit will be carried out in accordance with International Auditing Standards and wif include such tests and controls as the Auditor considers necessary under the circumstances so as to allow an 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. a 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 24o: 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 Imp 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 26o: 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 a 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. aI In Confidence .P.age. .. Paea GENERAL MATTERS All external funds have been used in accordance with the conditions of the relevant a 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 necessar 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 aprovisio ns of the releva nt Fina ncing Agreeme nt. 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 2015 and of resources and expenditures for the period ended on that date. a In Confidence Pg a.Pg Audit Opinion on the Increasing Resilience to Climate Change Natural Hazards Project for the year ended 31st December 2015 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 S Audit Act [CAP.241]. The funds received from the World Bank are held in the Government of Vanuatu SDevelopment Fund Account and are administered by the Government of Vanuatu's Meteorological and Ceo-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 S 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 management report on page ii 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 31't December 2015 stated on page 1o is in accordance with International Public Sector Accounting Standards: Financial Reporting under Cash basis of Accounting (IPSAS). Furthermore we are satisfied, a) with the accuracy and propriety of expenditure of the Statement of Cash Receipts and Payments in Appendix 1; a In Confidence -- . Page 8 m b) with the World Bank's procedures and the balance of the Designated Account at period end; and 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 14th September 2016 aI a Paea 症釀 口顫 〕〕！〕 自頭 The original had problem with text extraction. pdftotext Unable to extract text.