I. EAST AFRICAN COMMUNITY I I I I I AUDIT REPORT FOR THE PROJECT- MEDICINES REGULATORY HARMONIZATION I IDA GRANT NUMBER TF0 10846 I I I December 2015 II I I I I I I I I I East African Community (EAC) Project- Medicines Regulatory Harmonisation (MRH) Audit Report for the year ended 30th June 2015 I TABLE OF CONTENTS PAGE I Organizational information 2 I Report of the Secretary General 3 Statement EAC Secretariat responsibilities 9 I Report of the independent auditor 10-11 I Statement of financial performance 12 Statement of financial position 13 I Statement of cash flows 14 I Statement of comparison of budgeted and actual expenditure 15-16 Special Designated account activity 17 I Notes to the financial statements 18-33 I I I I I I I I I I INNOVEX ©2015 1 j Page I I I East African Community (EAC) Project- Medicines Regulatory Harmonisation (MRH) Audit Report for the year ended 30th June 2015 I ORGANISATION INFORMATION CHIEF OFFICERS Juvenal Ndimurirwo. Director of Finance Dr. Stanley Sonoiya Principal Health Officer I Jane Mashingia Patrick Mwesigye Senior Health Officer Senior Health Officer Daniel Murenzi eHealth and Informatics Officer I Justine Katesigwa Nancy Cherotich Project Accountant Pharmaceutical Program Assistant I REGISTERED OFFICE East Africa Community P.O Box 1096 EAC Headquarters I Afrika Mashariki Road Arusha Tanzania I AUDITORS INNOVEX Auditors 8 Kilimani Road I Ada Estate, Kinondoni P. 0 . Box 75297 Dares Salaam , Tanzania I Email : admin@innovexdc.com Website : www.innovexdc.com I BANKERS Designated bank account KCB Bank Tanzania Limited Account No. 3300705770 I P.O Box 4605 Arusha , Tanzania I I I I I I I INNOVEX ©2015 2 1Pa g e I I I East African Community (EAC) Project- Medicines Regulatory Harmonisation (MRH) REPORT OF THE SECRETARY GENERAL FOR THE YEAR ENDED 30TH JUNE 2015 I 1. Background of the project I The East African Commun ity (EAC) herein after referred to as the (Recipient or EAC) is a regional inter-governmental organization of the five Partner States, namely: the Republic of Kenya , the Republic of Uganda, the Republic of Burundi , the Republic of I Rwanda and the United Republic of Tanzania . The East African Community is currently implementing a regional project on harmonisation of Medicines Regulation (EAC-MRH ) in collaboration with six (6) National I Medicines Regulatory Authorities (NMRAs) namely Burundi Department of Pharmaceuticals and Medical Laboratories (DPML) , Kenya Pharmacy and Poisons Board (PPB) , Rwanda Pharmacy Task Force (PTF) , Tanzania Food and Drugs Authority I (TFDA), Zanzibar Food and Drugs Board (ZFDB) and Uganda National Drug Authority (N DA) . I The recipient has received a financial Grant to im plement the East African Community Medicines Regulatory Harmonization Project. The project is aimed at establishing harmonized regulatory processes for registering medicines in the region and ultimately I increases availability of safe and efficacious medicines of assured quality for treatment of priority diseases. I The Grant is administered by the International Bank for Reconstruction and Development /International Development Association ("the World Bank") , wh ich is also a financial administrator of the Global Medicines Regulatory Harmonization Initiative implemented by regional economic communities and supported by the African Union - I New Partnership for Africa 's Development (NEPAD) Agency, the World Health Organization (WHO), the Pan African Parliament (PAP) , the Bill and Melinda Gates Foundation (BGMF) , the UK Department for International Development (DFID) and the I Cl inton Health Access Initiative (CHAI). The total estimated budget for the implementation of the East African Community I Medicines Regulatory Harmonization Project is USD 10 million , distributed in two phases, Phase I (3 Years) - USD 5.5 Million and Phase II (2 Years) - USD 4.5 Million . 2. Project description The objective of the Project is to harmonise medicines registration systems and to im prove efficiency and enhance transparency in medicine registration among the EAC partner states. The project constitutes the first phase of the program and consists of the following parts: I Part 1: Regional coordination and capacity building for medicines regulatory harmonisation I Part 2: Institutional development and strengthening of the national medicines regulatory authorities. I The East African Community Medicines Regulation Harmonization (EAC-MRH) Project will be implemented over a five-year period . A two phased approach has been agreed upon for implementation of the project with clearly defined results for each phase. I I INNOVEX ©2015 3J Pa g e I East African Community (EAC) Project- Medicines Regulatory Harmonisation (MRH) REPORT OF THE SECRETARY GENERAL FOR THE YEAR ENDED 30TH JUNE 2015 I 2. Project description (continued) I The first phase will involve a three year Grant of USD 5.5 Million to the EAC Secretariat and support Medicines Registration Harmonization among six (6) EAC Partner States National Medicines Regulatory Authorities . Successful achievement of agreed results in I the first phase and additional commitments from the Development Partners supporting Multi Donor Trust Fund (MDTF) will determine the second phase Grant. I The Multi Donor Trust Fund (MDTF) will also provide direct financing fo r the World Health Organization (WHO) and African Union-NEPAD Agency who will be responsible fo r providing technical assistance to EAC Secretariat and NMRA's and support I advocacy, coordination and enhance political comm itment and support for enactment of relevant po licies and regulatory framework. Successful implementation of the EAC MRH I Project will set an example for other Regional Economic Communities (RECs) in Africa to realize the benefits of medicines regulation for their populations. I 3. Project goal The project goal is to harmonize medicines registration systems within the East African Community to facilitate access to safe, efficacious and quality essential Medicines for I treatment of conditions of Publ ic Health importance. 4. Project objectives I The project objectives are as follows i) To implement an agreed common techn ical document for reg istration of Medicines in the EAC Partner States I ii) To implement a common information management system fo r Medicines registration in each of the EAC Partner States ' NMRAs wh ich are linked in all I Partner States and EAC Secretariat iii) To implement a quality management system in each of the EAC Partner States' NMRAs I iv) To bui ld regional and national capacity to implement Medicines reg istration harmonization in the EAC v) To develop and implement a framework fo r mutual recognition I vi) To create a platform for information sharing on the harmonized med icines registration system to key stakeholders at national and regional level. I 5. GMRH I grant agreement A Global Medicines Regulatory Harmonisation Initiatives Trust Fund Grant Ag reement I for the East African Community for Medicines Regulatory Harmonisation Project was signed between East African Community and International Development Association on 21 March 2012. I I I INNOVEX ©2015 4 1Page I I ~~ - East African Community (EAC) Project- Medicines Regulatory Harmonisation (MRH) REPORT OF THE SECRETARY GENERAL FOR THE YEAR ENDED 30TH JUNE 2015 1 6. Performance for the year I The EAC Medicines Regulatory Harmonisation Project results of the year are shown in the statement of financial performance and statement of financial position on pages 13- 14. I 7. Achievements during the year The following are the major achievements during the year: I • Conducted the 51h project steering committee meeting for oversig ht and governance in Bujumbura, Burundi in august 2014. • Conducted the 6th project steering comm ittee meeting for oversight and I governance in Kigal i Rwanda in March 2015. • The draft harmonized guidelines for Medical registration was approved by the council of ministers EAC/CM29/Decision 036 in September 2014 in Arusha I • Pharmaceutical symposium was conducted during the 5th East African Health and scientific conference and international exhibition and trade fair • First and second NMRAs forum meetings to guide on implementation were held in I Bujumbura and Kigal i Rwanda in august 2014 and march 2015 respectively • GMP training on sterile medical products was done in May 2015 in Entebe Uganda I • Two Health sectoral council meetings of ministers of health , that gives overall governance were held in Arusha and Kampala • African Medicines Regulatory harmonization donors roundtable for financial I mobilization was done in Arusha • AMRH-Fundraising road show (EAC-Sec, BMGF, GIZ, NEPAND and WB) was done in June 2015. I • Registration of 32 medicinal products by NDA-Uganda , using EAC Harmonized Technical Guidelines(CTD) • Registration of 350 medicinal products using EAC-harmonized technical I guidelines by PPB-Kenya • Development of a draft project proposal on strengthening and harmonization of regulation of medical devices and diagnostics in the EAC-partner states, has been considered and approved by EAC-MRH programme steering committee I • Development of a draft concept note on the registration of new vaccines in the EAC in the EAC-Partner states, and has been considered and approved by EAC- MRH programme steering committee . I • Participated and updated ICH on the implementation of EAC-CTD and harmonized technical guidelines and requirements . • Integrated information management system minimum user requ irements test I acceptance conducted • EAC-Harmonized technical guidelines and requirements national domestication . I 8. Future plans The major activities for the upcoming phase are : • Joint medicinal product applications assessment and registration ; I • Joint Good Manufacturing Practice lnspection(GMP) regional and international ; • Training of pharmaceutical industry on the use of EAC harmonized guidelines; • Conducting joint audits for Quality Management system ; I I INNOVEX ©2015 5 I Pa g e I I [I East African Community (EAC) Project- Medicines Regulatory Harmonisation (MRH) REPORT OF THE SECRETARY GENERAL FOR THE YEAR ENDED 30TH JUNE 2015 I 8. Future plans (continued) I • Facilitating twinning programme, attachments to stringent Regulato ry Authorities (SRAs) , capacity and information exchange; • Domestication of the integrated information management system to support I automation of regulatory functions in the NMRAs and at EAC secretariat; • Developing a reg ional pharmaceutical pol icy , legislation and regu latory framework; I • Sourcing resources and funds fo r the implementation of harmonization of pharmacovigilance systems in the EAC-partner states; • Sourcing resources and funds for the implementation of harmonized regu latory for I medical devices and diagnostic in the EAC-partner states; • Development of regional pharmaceutical policy and legal and regu latory framework including the mutual recognition framework; and • Development of harmonized tools for medicines safety monitoring and overall I guidelines on pharmacovigilance. 9. Corporate governance I The implementation of the project is vested with the Steering Committee. The Steering comm ittee is responsible for providing overa ll guidance and oversight ove r project preparation and implementation and to approve the Annual Work Plans and Budgets. I The Steering Committee is composed of senior representatives from the Secretariat and from Partner States. The Steering Committee met twice during the year under review. I 10. Risk management and internal control The EAC Secretariat accepts final responsibil ity for the risk management and internal control system of the project. It is the task of management to ensure that adequate I internal financial and operational control systems are developed and maintained on an ongoing basis in order to provide reasonable assu rance regarding : • The effectiveness and efficiency of operations; I • The safeguarding of the project's assets; • Compliance with signed grant agreement and other applicable laws and regulations ; I • The reliability of accounting records ; and • Responsible behaviors towards all stakeholders. I The efficiency of any internal control system is depended on the strict observance of prescribed measures. There is always a risk of non-compliance of such measures by staff. Whilst no system of internal control can provide absolute assu rance against misstatement or losses, the project's system is designed to provide the EAC Secretariat I with reasonable assurance that the procedures in place are operating effectively. The EAC Secretariat at assessed the internal control systems throughout the financial year that ended 30 June 2014, and is of the opinion that they met the accepted criteria. I 11. Management structure The Project Coordinating Team within the Health Department of the Secretariat, I including financial management, procurement, health , accounting , and monitori ng and evaluations and informatics specia lists to assist the Secretariat carry out its tasks in the project. The current management team has been disclosed on page 3. I I INNOVEX ©2015 6 1Pa g e I East African Community (EAC) Project- Medicines Regulatory Harmonisation (MRH) REPORT OF THE SECRETARY GENERAL FOR THE YEAR ENDED 30THJUNE 2015 I 12. Employees' welfare I Management- Employees' Relationship Currently the EAC MRH Project has ten employees. The relationship between the I employees and management was good . There were no unresolved complaints . EAC Secretariat is equal opportunity employer. It gives equal access to employment opportunities and ensures that the best available person is appointed to any given I position free from discrimination of any kind and without regard to factors like gender, marital status, tribes , religion , nationality and disability which does not impair ability to discharge duties . I Medical Assistance The EAC Secretariat has arranged medical facility which is available to all recruited staff I and their immediate family members. Currently this service is provided by AAR (T) . Persons with Disability I The recruitment policy of the EAC Secretariat does not discriminate against persons with disabilities, rather the ability to discharge their responsibility. I Employee Benefit Plan EAC Secretariat employment contracts provides for gratuity benefit at a rate of 25% of the basic salaries for the term of employment at the end of the contract. I 13. Gender parity The EAC Secretariat has no gender bias. Men and women are equally eligible for holding any office of the EAC Secretariat provided that they possess the required I qualifications and proven competence. Currently the EAC MRH Project team is made up of three females and seven males. I 14. Related party transactions Transactions with related parties are disclosed under Note 11 to the financial statements. I 15. Accounti ng policies A summary of key accounting policies is in Note 2 to the financial statements and were I consistently applied during the year under review. 16. Environmental control programme I The East Africa Community (EAC) preserves the environment through tree planting within and outside its offices and is committed to making sure that all internal and external surroundings of its offices are clean . I 17. Political and charitable donations The Medicines Regulatory Harmonization (MRH) project did not make any political and I charitable donations. I I INNOVEX ©2015 71 Page I I I East African Community (EAC) Project- Medicines Regulatory Harmonisation (MRH ) REPORT OF THE SECRETARY GENERAL FOR THE YEAR ENDED 30TH JUNE 2015 I 18. Prejudicial issues I In the opinion of the EAC Secretariat, there are no serious unfavourable matters that can affect the MRH project. I 19. Corporate social responsibilities The EAC encourages employees' initiatives on participating in corporate social responsibilities activities. However during the period under review the EAC Secretariat I did not engage in any corporate social responsibility activities. 20. Independent auditors I M/s INNOVEX Auditors were appointed to carry out the audit of the EAC- MRH project for the period ended 30 June, 2015. The Auditors have expressed willingness to I continue in office. .. I I I I I I I I I I I I INNOVEX ©2015 81 Page I I ~~~~- -East African :ommu-nity (EAC) I Project- Medicines Regulatory Harmonisation (MRH) FOR THE YEAR ENDED 30TH JUNE 2015 STATEMENT OF EAC SECRETARIAT RESPONSIBILTIES I The EAC Secretariat is responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position and performance of the project and which enable them to ensure that the financial statements comply with I the International Public Accounting Standards. Th is includes the maintenance of adequate accounting records and internal controls , the selection and application of accounting policies , and safeguarding of the assets of the project. They are also I responsible for safeguarding the assets of the project and hence for taking reasonable steps for the prevention and detection of fraud , error and other irregularities. I The EAC Secretariat confirms that suitable accounting policies have been used and applied consistently , and reasonable and prudent judgment and estimates have been made in the preparation of the financial statements for the period from 151 July 2014 to 30 June 2015 . The EAC Secretariat also confirms that the International Public Sector I Accounting Standards have been followed and that the financial statements have been prepared on the going concern basis. I Nothing has come to the attention of the management to indicate that the project will not remain a going concern for at least the next twelve months from the date of this statement. II I Approved by the management on ... their behalf by; I· 1.;} . ~!:'0......... .....~. ~--~ ·· ·· · · and signed on • I Amb. Dr. Richard Sezibera Secretary General I Juvenal Ndimurirwo (ACCA) Director of Finance I I I I I I I INNOVEX ©2015 9 ! Pa g e I I I I INN ~t.vEX 'lA~ I INNOVEX Auditors 8 Kil imani Road , Ada Estate, Kinondoni If ear the French Embassy] PO Box 75297 I Dares Salaam , Tanzania Mobile: +255 715 540949 Land li ne: +255 22 2664099 Fax: +255 22 2664098 I Ema il: admin@innovexdc.com Website : www.1nnovexdc.com I The Secretary General East Africa Community EAC Headquarter, Afrika Mashariki Road I P. 0 . Box 1096 Arusha Tanzan ia I REPORT OF THE INDEPENDENT AUDITOR ON THE PROJECT FINANCIAL STATEMENTS I We have audited the accompanying project financia l Statements and the special designated account for the Medicine Regulatory Harmonization Project (MRHP) implemented by East African Community (EAC) Secretariat, for the period from 151 July 2014 to 30 June 2015, which I comprises of the statement of financial position , statement of financial performance, statement of designated accounts and statement of cash flows and the explanatory notes set on pages 18 to 33. I EAC Secretariat's responsibility for the financial statements The EAC Secretariat is respons ible for the preparation and fair presentation of these financial statements in accordance with International Public Sector Accounting Standa rds (IPSAS) - I Accrual basis. This respons ibility includes designing , implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate I accounting policies and making accounting estimates that are reasonable in the circumstances. 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 (ISAs) . Those standards require that we comply with ethical requirements and plan and perform the audit to I obtain reasonable assurance whether the project financial statements and the special designated accounts are free from material misstatement. I An audit involves performing procedures to obtain audit evidence about the amounts and disclosu res in the financial statements. II I I INNOVEX ©2015 10 1Page I I I REPORT OF THE INDEPENDENT AUDITOR ON THE PROJECT FINANCIAL STATEMENTS I 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 I 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 I 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. I We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion . I Unqualified opinion In our opinion , the financial statements and the special designated account presents fairly , in all I material respects , the credit received and the expenses incurred by the Project fo r the period from 1 July 2014 to 30 June 2015 and its financial position as at the end of the period in accordance with the International Public Sector Accounting Standards. I Report on Other Legal and Regulatory Requi rements In our opinion , proper accounting records for the project have been kept by the East African Community and the financial statement referred to the preceding paragraph are in agreement I with the accounting records and have generally complied with terms of the financing agreement with International Development A sociation (IDA) . I I INNOVEX Auditors ~/ol}~rb Certified Public Accountants Dar es Salaam ate ... I Christopher Mageka , CPA - PP I I I I I I I INNOVEX ©2015 11 JPage I II East African Community (EAC) I Project- Medicines Regulatory Harmonisation (MRH) STATEMENT OF FINANCIAL PERFROMANCE FOR THE YEAR ENDED 30TH JUNE 2015 I NOTES 2014/15 2013/14 I REVENUE USD USD Grants income 3 1,919,762 1,827 ,351 I EXPENDITURE Personnel costs 4 548,602 608 ,572 I Training/workshop expenses Depreciation expense 5 1,269,072 102,088 1,202 ,096 16,683 I Surplus 1,919,762 1,827 ,351 I I I I The independent auditors· report is on pages 10 and 11 I I I I I I I I INNOVEX ©2015 121 Page I East African Community (EAC) Project- Medicines Regulatory Harmonisation (MRH) STATEMENT OF FINANCIAL POSITION AS AT 30TH JUNE 2015 I NOTES 2014/15 2013/14 USD USD I ASSETS Non-current assets Property and equipment 6 197,906 299 ,053 I Current assets 19,118 I Accounts receivable Cash and cash equivalents 7 8 46,900 11 ,876 353 ,987 58,776 373,105 Total assets 256,682 672 ,158 LIABILITIES Current liabilities Deferred grant 9 126,575 252 ,321 I Trade payables Accruals and other payables 10 11 54,943 75,164 367,497 52,340 Total liabilities 256,682 672 ,158 I The not s on PJ(.. 18 to l3 form an integral part of these financial statements. The financial stateme s onJPages 12 to j 6 were approved by the EAC Secretariat on . .J.± ~~. b~ I 2015 an w (e signed an it behalf by: I urirwo (ACCA) I Director of Finance I The independent auditors· report is on pages 10 and 11 I I I I I INNOVEX ©2015 13 1Page I I 1 1 -- ~~- ~ - - ,----- East African Community (EAC) 1 Project- Medicines Regulatory Harmonisation (MRH) STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30TH JUNE 2015 I NOTES 2014/15 2013/14 USD USD I CASH FLOWS FROM OPERATIONG ACTIVITIES Surplus of income over expenditure Depreciation 102,088 16,683 I Adjusted for movements in working capital: Increase in accounts receivable (27,782) (12 ,705) (125,746) I (Decrease)/increase in deferred income Increase in accruals and other payables 22,824 233,841 345 ,034 Decrease in trade payables {312,554} {55 ,942} Net cash generated from operating activities (341 '171) 526 ,911 Cash flow from investing activities Purchase of property and equipment {940} {270,260} Cash generated from investing activities {940} {270,260} I Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of (342, 111) 256 ,65 1 I the year Cash and cash equiva nts at end of year 8 353,987 11,876 97 ,336 353 ,987 I I I imurirwo (ACCA) Director o Finance I The independent auditors' report is on pages 10 and 11 I I I I I INNOVEX ©2015 14 1Page I I East African Community (EAC) I Project- Medicines Regulatory Harmonisation (MRH) STATEMENT OF COMPARISON OF BUDGET AND ACTUAL EXPENDITURE FOR THE YEAR ENDED 30TH JUNE 2015 I Description of Activity Annual Actual to Variance Budget Notes Budget 30th June Utilization I Staff salary and other Amount USD 2015 USD USD % benefits 613 ,925 548,602 18,913 97% I Assessment of EAC food safety & nutrition policies 217 ,410 186,754 30,656 86% Review and develop I harmonized pharmaceutical policies Development of database I 92 ,000 82 ,904 9,096 90% network platform 60 ,000 60,000 0% I Conduct retreat Facilitate NMRAs obtain ISO 22 ,200 16,756 5,444 75% Certification 128 ,100 103,290 24,810 81% I Participate to EAC medicine harmonization activities Techn ical exchange and 21 ,400 16,499 4,901 77% capacity building I programmes Train ing NMRAs to 47,850 35,067 12,783 73% 15 implement risk based I approaches Support NMRAs on office operations cost 115,200 36,000 102,181 17,813 13,019 18,187 89% 49% To map the registration of I GMP processes Develop database I network 84,000 57 ,345 26 ,655 68% software platform 60,000 60 ,000 0% I To process visa appl ication To participate international fora to 9,000 24 ,650 4,825 16,682 4,175 7,968 54% 68% Facilitate project I coord ination Procurement of reference 25 ,100 9,926 15,174 40% 15 materials 70,000 17,713 52 ,287 25% I Acquire video and photo cameras Capacity building of EAC & 3,500 3,500 0% 15 NMRAs through train ing 249,308 216 ,210 33 ,098 87% 15 I Joint assessment and evaluation of dossiers 280,000 238 ,280 41 ,720 85% Facilitate Steering I committee meetings National stakeholder consu ltative meetings on 85 ,320 53 ,161 32 ,159 62 % 15 gu idelines 57,250 44,960 12,290 79% I Regional stakeholders meetings on new guidelines Communication equipment 82 ,850 48,706 34,144 59% 70,000 70,000 0% 15 I Total 2,455,063 1,817,674 637,389 74% I INNOVEX ©2015 15j Page I I r - I East African Community (EAC) Project- Medicines Regulatory Harmonisation (MRH) I STATEMENT OF COMPARISON OF BUDGET AND ACTUAL EXPENDITURE FOR THE YEAR ENDED 30TH JUNE 2015 ' I The notes on pag~8 to 33,form an integral part of these financial statements. The financial statements pajles 12 to J6 ~ere approved by the EAC Secretariat on ...ta-J:::~;~~. I 2015 and w e gned on i6; half by: I Am b. I The independent auditors· report is on pages 10 and 11 I I I II I I I I I I I I I INNOVEX ©2015 161 Page I I II - .--- -- - - East African Community (EAC) 1 Project- Medicines Regulatory Harmonisation (MRH) STATEMENT OF SPECIAL ~DESIGNATED) ACCOUNT ACTIVITY FOR THE YEAR ENDED 30 H JUNE 2015 I Notes 2014/15 Cumulative I US$ U$$ Opening balance as at 1st July 2014 8 353,987 353,987 I Total amount deposited by World Bank 1,793,521 1,793,521 Total amount deposited of unspent imprests 113,658 113,658 I Total funds available 2,261 ,166 2,261 ' 166 I Deduct: Total amount withdrawn including bank charges (2 ,240, 120) (2,240, 120) I Closing balance per bank statement as at 30 June 2015 21 ,046 21 ,046 I Unpresented cheques issued out which cleared after yearend (9, 170) (9 , 170) I Closing balance per ash book as at June 2015 8 11,876 11,876 I ' I I I The independent auditors· report is on pages 10 and 11 I I I I I INNOVEX ©2015 171 Page I I .--- ' I _ __ _ ~-- -- East African Community (EAC) 1 Project- Medicines Regulatory Harmonisation (MRH) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2015 I 1. GENERAL INFORMATION The East African Community (EAC) is a regional inter-governmental organization of the five Partner States, namely: the Republic of Kenya, the Republic of Uganda , the Republic of I Burundi, the Republic of Rwanda and the United Republic of Tanzania . The East African Commun ity is currently implementing a regional project on harmonisation of Medicines Regulation (EAC-MRH) in collaboration with six (6) National Medicines Regu latory Authorities (NMRAs) . The registered office is EAC Headquarters, Afrika Mashariki Road , P.O. Box 1096, I Arusha , Tanzania . 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES I The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented , unless otherwise stated . I a. Statement of compliance The financial statements have been prepared in accordance with International Publ ic Sector I Accounting Standards. b. Basis of preparation I The accompanying financial statements have been presented on an accrual basis of accounting while the budget has been prepared using cash basis of accounting . Accrua l basis means a basis of accounting under which transactions and other events are recognized when they occur I (and not only when cash or its equivalent is received or paid) . Therefore , the transactions and events are recorded in the accounting records and recogn ized in the financial statements of the periods to which they relate . Accrual accounting allows for revenue to be recognized when I earned and expenses to be recognized when goods or services are received , without regard to the rece ipt or payment of cash. Budgetary accounting allows for compli ance with the requ irements for and controls over the use of Development Partners budgeted fu nds . I c. Significant accounting policies The financial statements have been prepared on a going concern bas is, they also comply with International Public Sector Accounting Standards (IPSASs) for the accrual basis of accounting I in as far as the IPSASs so far adopted are concerned ; otherwise IASs/IFRSs are still appl icable". The following IPSASs which are appl icable to the EAC have been adopted. IPSAS 1: Preparation of financial statements; I IPSAS 2: Cash flow statements; IPSAS 3: Accounting pol icies , changes in accounting estimates and errors; IPSAS 4: The effects of foreign exchange rates ; I IPSAS 9: Revenue from exchange transactions ; IPSAS 12: Inventories; IPSAS 17: Property and equipment; I IPSAS 19: Provisions , contingent liabilities and contingent assets; IPSAS 20: Related party disclosures; IPSAS 23: Revenue from Non-Exchange Transactions; I I I I INNOVEX ©2015 181 Page I I .------ 1 1 ---- - ~- - - East African Community (EAC) I Project- Medicines Regulatory Harmonisation (MRH) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2015 I c. Significant accounting policies (continued) IPSAS 24: Presentation of budget information in financial statements ; IPSAS 31 : Intangible assets ; and IPSAS 25: (Employee Benefits) has not been complied with in full because of the need to I streamline the current policy on plan assets and obligations and the need to change the policy on the accounting treatment on interest earned on gratuity. I The accounting policies have been applied consistently throughout the period . d. Adoption of new and revised international public sector accounting standards I (i) New and revised IPSASs effective for the year ended 30 June 2015 I The following new and revised IPSASs have been applied in the current year and had no material impact on the amounts reported in these financial statements. I Name of standard Changes made to the standard Amendments to IPSAS Paragraphs 21 , 53 and 54 were amended and parag raph 53A 1, Presentation of added by Improvements to IPSASs 2014, issued in January I Financial Statements 2015.An entity shall apply those amendments for annua l financial statements covering periods beginning on or after January 1, 2015 . Earlier application is encouraged . If an entity applies the I amendments for a period beginning before January 1, 2015, it shall disclose that fact. The amendments are on the m1n1mum comparative information I required in respect of the preceding period . They require that except when an IPSAS permits or requires otherwise , an entity shall present comparative information in respect of the previous I preceding period for all amounts reported in the financial statements. An entity shall include comparative information for narrative and descriptive purposes if it is relevant to an I understanding of the current period 's financial statements. The amendments to the standard have no impact on the financial I performance and position of the project. Amendments to IPSAS Paragraphs 17, 50 and 72 were amended and paragraphs 78A I 17, Property, Plant, and Equipment and 106A added by Improvements to IPSASs 2014 issued in January 2015. An entity shall apply those amendments prospectively for annual financial statements covering periods beginning on or after January 1, 2015. Earlier application is I encouraged . If an entity applies the amendments for a period beginning before January 1, 2015, it shall disclose that fact. I For recognition purposes , items such as spare parts , stand-by equipment and servicing equipment are recognized in accordance with IPSAS 17 when they meet the definition of property, plant, I and equipment. Otherwise, such items are classified as inventory . I INNOVEX ©2015 191 Page I I 'I East African Community (EAC) I Project- Medicines Regulatory Harmonisation (MRH) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2015 I Name of standard Changes made to the standard For the revaluation model , when an item of property, plant, and I equipment is revalued , the carrying amount of that asset is adjusted to the revalued amount. At the date of the reval uation , the asset is treated in one of the following ways : I • The gross carrying amount is adjusted in a manner that is consistent with the revaluation of the carrying amount of the asset. For example, the gross carrying amount may be restated by reference to observable market data or it may I be restated proportionately to the change in the carrying amount. The accumulated depreciation at the date of the revaluation is adjusted to equal the difference between the I gross carrying amount and the carrying amount of the asset after taking into account accumulated impairment losses; or • The accumulated depreciation is eliminated against the I gross carrying amount of the asset. The amount of the adjustment of accumulated depreciation forms I part of the increase or decrease in carrying amount that is accounted for as follows : • If the carrying amount of a class of assets is increased as a I result of a revaluation , the increase shall be cred ited directly to revaluation surplus. However, the increase shall be recognized in surplus or deficit to the extent that it I reverses a revaluation decrease of the same class of assets previously recognized in surplus or deficit, or • If the carrying amount of a class of assets is decreased as a result of a revaluation , the decrease shall be recognized I in surplus or deficit. However, the decrease shall be debited directly to revaluation surplus to the extent of any credit balance existing in the revaluation surplus in respect I of that class of assets. On the depreciable amount and depreciable period , the I amendments introduces an additional factor to be considered in determining the useful life of an asset. The expected future reductions in the selling price of an item that was produced using I an asset could indicate the expectation of technical or commercial obsolescence of the asset, wh ich , in turn , might reflect a reduction of the future economic benefits or service potential embodied in I the asset. On the depreciation method, the amendments states that a depreciation method that is based on revenue that is generated by I an activity that includes the use of an asset is not appropriate. The revenue generated by an activity that includes the use of an asset generally reflects factors other than the consumption of the I economic benefits or service otential of the asset. For exam le, 20 I Page I INNOVEX ©2015 I I , - - - -- - - --· ---·---- - II East African Community (EAC) I Project- Medicines Regulatory Harmonisation (MRH) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2015 I Name of standard Changes made to the standard revenue is affected by other inputs and processes, selling activities and changes in sales volumes and prices . The price component of I revenue may be affected by inflation, which has no bea ri ng upon the way in which an asset is consumed . The amendments to the standard have no impact on the financial I performance and position of the project. Amendments to IPSAS Paragraphs 40, 42 and 44 were amended and paragraph 40A I 28, Instruments: Financial added by Improvements to IPSASs 2014 issued in January 2015. An entity shall apply those amendments for annual financial Presentation statements covering periods beginning on or after January 1, I 2015. Earlier application is encouraged . If an entity applies the amendments for a period beginning before January 1, 2015, it shall disclose that fact. I The amendments requires that interest, dividends , losses and gains relating to a financial instrument or a component that is a I financial liability shall be recognized as revenue or expense in surplus or deficit. Distributions to holders of an equity instrument shall be recognized by the entity directly in net assets/equity. I Transaction costs incurred on transactions in net assets/equity shall be accounted for as a deduction from net assets/equity. Income tax relating to distributions to holders of an equity I instrument and to transaction costs of an equity transaction shall be accounted for in accordance with the relevant international or national accounting standard dealing with income taxes . I The amendments to the standard have no impact on the financial performance and position of the project. I Amendments to IPSAS Amendments to clarify the revaluation methodology of the carrying 31, Intangible Assets amount and accumulated amortization when an intangible asset is I revalued , and to clarify acceptable methods of amortizing intangible assets, as a result of the Annual Improvements to IFRSs 2010-2012. Paragraphs 79, 91 and 97 were amended and I paragraphs 97A, 978, 97C and 131A added by Improvements to IPSASs 2014 issued in January 2015. These amendments are applied prospectively for annual financial statements covering periods beginning on or after January 1, 2015.Earlier application is encouraged . If an entity applies the amendments for a period beginning before January 1, 2015, it shall disclose that fact. The amendments to the standard have no impact on the financial performance and position of the project. I I Page I INNOVEX ©2015 21 I I II East African Community (EAC) I Project- Medicines Regulatory Harmonisation (MRH) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2015 I d. Adoption of new and revised international public sector accounting standards (contin ued) I (ii) New IPSASs in issue but not yet effective for the period ended 30 June 2015 The Project has not applied the following new and IPSAS that have been issued but are not yet I effective. The Project will apply these standards, if applicable, when they become effective. IPSAS 34 Separate Financial Statements I IPSAS IPSAS IPSAS 35 36 37 Consolidated Financial Statements Investments in Associates and Joint Ventures Joint Arrangements I IPSAS 38 Disclosure of Interests in Other Entities IPSAS 34 Separate financial statements I IPSAS 34 prescribes the accounting and disclosure requirements for investments in controlled entities, joint ventures and associates when an entity prepares separate financial statements. It requires an entity that prepares and presents financial statements under the accrual basis of accounting to apply this Standard in accounting for investments in controlled entities, joint I ventures and associates when it elects , or is required by regulations , to present separate financial statements . However, this Standard does not mandate which entities produce separate financial statements. It applies when an entity prepares separate financial statements that I comply with International Public Sector Accounting Standards (IPSASs). This Standard applies to all public sector entities other than Government Business Enterprises (GBEs) . I An entity shall apply this Standard for annual financial statements covering periods beginning on or after January 1, 2017 . Earlier application is encouraged . If an entity applies this Standard for a period beginning before January 1, 2017 , it shall disclose that fact and apply IPSAS 35 , I IPSAS 36, IPSAS 37, and IPSAS 38 at the same time . This Standard applies to all public sector entities other than Government Business Enterprises I (GBEs) . The EAC Secretariat is of the opinion that the standard will not be appl icable for the Project. I IPSAS 35 Consolidated financial statements The Standard establishes principles for the presentation and preparation of consolidated I financial statements when an entity controls one or more other entities. It requires an entity (the controlling entity) that controls one or more other entities (controlled entities) to present consolidated financial statements. It defines the principle of control , and establishes control as I the basis for consolidation and sets out how to apply the principle of control to identify whether an entity controls another entity and therefore must consolidate that entity. It also sets out the accounting requirements for the preparation of consolidated financial statements; and defines I an investment entity and sets out an exception to consolidating particular controlled entities of an investment entity. This Standard does not deal with the accounting requirements for public sector combinations and their effect on consolidation , including goodwill arising on a public sector combination . I I INNOVEX ©2015 221 Page I I East African Community (EAC) I Project- Medicines Regulatory Harmonisation (MRH) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2015 I d. Adoption of new and revised international public sector accounting standards (continued) I (ii) New IPSASs in issue but not yet effective for the period ended 30 June 2015 IPSAS 35 Consolidated financial statements (continued) I An entity shall apply this Standard for annual financial statements covering periods beginning on or after January 1, 2017. Earlier application is encouraged . If an entity applies this Standard for a period beginning before January 1, 2017, it shall disclose that fact and apply IPSAS 34, Separate Financial Statements, IPSAS 36 , IPSAS 37 , and IPSAS 38 at the same time . I This Standard applies to all public sector entities other than Government Business Enterprises (GBEs) . I The EAC Secretariat is of the opinion that the standard will not be applicable for the Project. I IPSAS 36 Investments in associates and joint ventures IPSAS 36 prescribes the accounting for investments in associates and joint ventures and sets out the requirements for the application of the equity method when accounting for investments I in associates and joint ventures . It shall be applied by all entities that are investors with significant influence over, or joint control of, an investee where the investment leads to the holding of a quantifiable ownership interest. I The Standard provides the basis for accounting for ownership interests in associates and joint ventures that is, the investment in the other entity confers on the entity the risks and rewards I incidental to an ownership interest. This includes ownership interests arising from investments in the formal equity structure of another entity. A formal equity structure means share capital or an equivalent form of capital , such as units in a property trust. Quantifiable ownership interests I I may also include ownership interests arising from other investments in which the entity's ownership interest can be measured reliably (for example , interests in a partnership). Where the equity structure of the other entity is poorly defined , it may not be possible to obtain a reliable measure of the ownership interest. I An entity shall apply this Standard for annual financial statements covering periods beginning on or after January 1, 2017. Earlier application is encouraged. If an entity applies this Standard for I a period beginning before January 1, 2017, it shall disclose that fact and apply IPSAS 34, IPSAS 35, IPSAS 37, and IPSAS 38, Disclosure of Interests in Other Entities, at the same time . I This Standard applies to all public sector entities other than Government Business Enterprises (GBEs) . I The EAC Secretariat is of the opinion that the standard will not be applicable for the Project. I I I INNOVEX ©2015 23 1 Page I 'I East African Community (EAC) I Project- Medicines Regulatory Harmonisation (MRH) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2015 I d. Adoption of new and revised international public sector accounting standards (continued) I (iii) New IPSASs in issue but not yet effective for the period ended 30 June 2015 /PSAS 37 Joint arrangements The standard establishes principles for financial reporting by entities that have an interest in I arrangements that are controlled jointly (i. e. joint arrangements). It requires an entity that is a party to a joint arrangement to determine the type of joint arrangement in wh ich it is involved by assessing its rights and obl igations and to account for those rights and obligations in I accordance with that type of joint arrangement. The standard shall be applied by all entities that are a party to a joint arrangement. I An entity shall apply this Standard for annual financial statements covering periods beg inning on or after January 1, 2017 . Earlier application is encouraged . If an entity applies th is Standard for a period beginning before January 1, 2017, it sha ll disclose that fact and apply IPSAS 34, I IPSAS 35, IPSAS 36 and IPSAS 38, Disclosure of Interests in Other Entities, at the same time. This Standard applies to all publ ic sector entities other than Government Business Enterprises I (GBEs). The EAC Secretariat is of the opinion that the standard will not be applicable for the Project. I IPSAS 38 Disclosure of interests in other entities The standard requires an entity to disclose information that enables users of its financial statements to evaluate the nature of, and risks associated with , its interests in controlled I entities, unconsolidated controlled entities, joint arrangements and associates, and structured entities that are not consol idated ; and the effects of those interests on its fin anci al position , financial performance and cash flows . This Standard shall be applied by an entity that has an I interest in controlled entities; joint arrangements (i. e. joint operations or joint ventures); associates; or structured entities that are not consolidated . This Standard does not apply to the following : I a) Post-employment benefit plans or other long-term employee benefit plans to which IPSAS 25; b) Employee Benefits applies and an entity's separate financial statements to which IPSAS I 34, Separate Financial Statements, applies; c) An interest held by an entity that participates in, but does not have joint control of, a joint arrangement unless that interest results in sign ificant influence over the arrangement or I is an interest in a structured entity; and d) An interest in another entity that is accounted for in accordance with IPSAS 29, Financial Instruments: Recognition and Measurement. I An entity shall apply this Standard for annual financial statements covering periods beginning on or after January 1, 2017. Earlier application is encouraged . I Th is Standard applies to all public sector entities other than Government Business Enterprises (GBEs). I The EAC Secretariat is of the opinion that the standard will not be appl icable for the Project. I INNOVEX ©2015 24 1Page I East African Community (EAC) I Project- Medicines Regulatory Harmonisation (MRH) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2015 I d. Use of estimates The financial statements in conformity with IPSAS 3 - Accounting Policies, Changes in Accounting Estimates and Errors, requires management to make estimates and assumptions that, affect the reported amounts of assets and liabilities and the disclosure of the reported I amounts of revenues and expenses during the reporting period . Actual results cou ld differ from these estimates. I e. Donations and grants The financial statements in conformity with IPSAS 23 - Revenue from Non-Exchange Transactions, require management to recognize liabilities from transfers with restrictions I (conditions) over the period of which economic benefits will be received from such transfers , with disclosure of such restricted contributions from Development Partners. Most of the assistance given to the Project by the Development Partners is in relation to specific projects or I programmes. Hence , they are considered as restricted contributions . Restricted contributions are recognized as Revenue over the periods necessary to match them with the related costs, which they are intended to compensate on a systematic basis. I Grants related to assets are presented in the statement of financial position as deferred revenue , which is recognized as revenue on a systematic and rational basis over the useful life I of the asset. f. Foreign currency transactions The financial statements are prepared in conformity with IPSAS 4 - The Effects of Changes in I Foreign Exchange Rates that requires management to disclose effects of foreign currency transactions in their financial statements. In accordance with IPSAS 4 and related definition , the presentation currency of the Project, currency in which its financial statements are prepared , is I the United States Dollar. The Project has its Presentation currency , the United States Dollar, and Tanzanian shillings as I its functional currency and hence uses the following procedure to translate its foreign currency transactions into the Presentation currency for reporting purpose; a. monetary assets/liabilities are translated at current exchange rate I b. Non-monetary assets/liabilities measured at historical cost are translated at historical exchange rate c. Non-monetary assets/liabilities measured at current value are translated at the exchange I rate at the date when the current value was determined. Owners' interest accounts are translated at historical exchange rate Revenues/expenses other than those expenses related to non-monetary items (as in (a) and (b) I above) are translated at the exchange rate that existed when transactions took place (for practical reasons, average rates may be use) (b) expenses related to non-monetary assets, such as depreciation (fixed assets) and amortization (intangible assets) are translated at the I exchange rate used to translate the related assets. This procedure above is descriptive of the Temporal Method of translating foreign exchange transactions where the exchange translation adjustment gains/losses are shown in the financia l statements usually under the Operating I Income/Expenses or Non-operating Income/ Expenses section of the Statement of the financial Performance. I I INNOVEX ©2015 25 1 Page I I I East African Community (EAC) I Project- Medicines Regulatory Harmonisation (MRH) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2015 I f. Interest earned The financial statements are prepared in conformity with IPSAS 9 - Revenue from Exchange Transactions, requires management to treat such revenue as revenue for the year. Such I interest comprises mainly interest from banks , for operating accounts and fixed deposits. g. Property, plant and equipment The financial statements in conformity with IPSAS 17 - Property, Plant, and Equipment, I requires management to treat the assets of the Project as follows - Property and equipment are initially recorded at purchase cost plus direct attributable cost. Where an item of property and equipment comprises major components having different useful lives, they are accounted for I separately. Subsequent expenditures are capitalized only when they increase the current economic benefits I and meet the recognition criteria . Expenditure incurred to replace a component of item of property and equipment is accounted for separately and capitalized while the major replaced component is derecognized . All other expenditure items, which do not meet recognition criteria, I are recognized in the statement of financial performance as expenses as they are incurred. Property and equipment are derecognized when no economic benefits are expected from its use or disposal. The disposal methods applied include; sale , or scrapping. Gains or losses on I disposal of property , plant and equipment are determined by comparing net disposal proceeds if any with the carrying amount. These gains or losses are not considered in arriving at the operating surplus or deficit for the year, instead are taken to the statement of changes in I statement of financial performance h. Depreciation I The financial statements in conformity with IPSAS 1 - Presentation of Financial Statement and IPSAS 17- Property, Plant and Equipment recognize depreciation in the Statement of Financial Performance. Management charges depreciation to the Statement of Financial Performance on a straight-line basis to write off the cost of property, plant and equipment to their residual values I over their expected useful lives. No depreciation is provided on the land . Depreciation for Property and Equipment purchased during the year is apportioned proportionately to the remaining period of the year. Property and equipment acquired during the year is depreciated I from the date when it is available for use and cease to be depreciated at earlier of the date that the asset is derecognized . I Annual depreciation rates applied during the financial year are as follows : Computer equipment 33.33% Telecommun ication equipment 33.33% I Office equipment Office furniture 25.00% 12.50% I i. Taxation Article 4 Section (1) subsection (d) of the Headquarters Agreement between East African Community and the United Republic of Tanzania states that: "The Secretariat, its property , I assets, income and transactions shall be exempt from all direct taxation including sales tax and from Customs Duties and prohibitions, restrictions on imports and exports in respect of articles imported or exported by Secretariat for its official use. I I INNOVEX ©2015 26 1 Page I I r I East African Community (EAC) Project- Medicines Regulatory Harmonisation (MRH) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2015 i. Taxation (continued) The Secretariat shall also be exempt from any obligation relating to payments, withholding or collection of any tax or duty provided that such assets and other property shall not be sold within I the United Republic of Tanzania except in accordance with conditions agreed to with the Government". The same treatment is expected to be accorded to property, assets, income and transactions of Projects implemented by EAC. I j. Presentation of the budget information The financial statements in conformity with IPSAS 24 requires management of a public sector entity to show comparison of budget amounts arising from execution of the budget to be I included in the financial statements of the entity which are required to , or elect to , make publicly available their approved budget for which they are, therefore, held publicly accountable. The Project prepares its financial statements clearly indicating the actual expenditure in comparison I with the approved budgetary provisions and in so doing fully complies with this Standard . The statement of comparison of budgeted and actual amounts has been presented using accrual basis of accounting . I k. Employee benefits Employment contracts provided for gratuity benefit at a rate of 25% of the basic total salaries for I the term of employment. The gratuity benefit is charged to the statement of financial performance on accrual basis . I. Cash and cash equivalents I Cash and cash equivalents includes cash in hand and demand and short term deposits, with maturities of three months or less from the date of acquisition, that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value , net of I bank overdrafts. Bank overdraft if any, are shown within borrowings in the current liabilities in the statement of financial position . 3. GRANTS INCOME 2014/15 2013/14 USD USD Amount released from deferred grant to statement of financial performance (Note 9) 1,817,674 1,810,668 Recycled from capital grant (Note 9) 102,088 16,683 1,919,762 1,827 ,351 4. STAFF COSTS Basic Sal Staff 291,352 288 ,940 Housing allowance-staff 112,800 112,050 Transport allowance-Staff 28,800 31 ,958 I . Overtime-non-established Staff Medical cover-Staff Life insurance-Staff 10 21,505 21,297 18,652 19,058 Gratuity-staff 72,838 71 ,917 I Settlement-non established staff 548,602 65,997 608 ,572 I I INNOVEX ©2015 27 1 Page I I I East African Community (EAC) I Project- Medicines Regulatory Harmonisation (MRH) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2015 I 5. TRAINING/WORKSHOP EXPENDITURE 2014/15 2013/14 USD USD I Advertising Hiring of vehicle Library supplies 4,300 17,725 3,742 56,414 I Conference facilities Conference I workshop participation fee Air ticket within EAC-staff 36,971 49,827 29,553 43,072 19,008 16,531 Air ticket within EAC-delegates 133,551 159,651 I International air ticket - delegates Airport transfers 11,659 2,250 7,851 9,116 DSA and accommodation- staff 140,795 322 ,128 I DSA and accommodation- delegates International DSA- staff 696,745 496,469 3,415 International DSA- delegates 5,187 I Production of workshop materials Support NMRA Burundi office renovation 35,997 10,000 Contracted professional services 91,799 19,932 I Audit fee Office operations expenses 7,000 1,523 7,000 11 ,762 Exchange differences I Other workshops sundries 9,377 1,269,072 10,818 1,202 ,096 I I I I I I I I I INNOVEX ©2015 281 Page I I --------------------- East African Community (EAC) Project- Medicines Regulatory Harmonisation (MRH) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2015 6. PROPERTY AND EQUIPMENT 2014/2015 Computer Telecommunication Other office Other office Office Total Equipment Equipment Equipment fixture & Furniture fittings USD USD USD USD USD USD Cost At start of year 45,918 242 ,935 13,413 18,736 321 ,003 Additions 328 612 940 At end of year 45,918 242 ,935 13,413 328 19,348 321 ,943 Depreciation At start of year 18,406 796 27 2,720 21 ,949 Charge for the year 15,305 80,970 3,353 41 2,419 102,088 At end of year 33 ,711 81 ,766 3,381 41 5,139 124,037 Net book value 30/6/2015 12,208 161,169 10,032 287 14,210 197,906 2013/2014 Computer Telecommunication Other office Other office Office Total Equipment Equipment Equipment fixture & Furniture fittings USD USD USD USD USD USD Cost At start of year 39,790 10,953 50,743 Additions 6,128 242 ,935 13,413 7,783 270,259 At the end of yea r 45,918 242 ,935 13,413 18,736 321 ,003 Depreciation At start of year 4,183 1,084 5,267 Additions 14,223 796 27 1,636 16,682 At the end of year 18,406 796 27 2,720 21 ,949 Net book value 30/6/2014 27,512 242,139 13,386 16,016 299,053 INNOVEX ©2015 II I I East African Community (EAC) I Project- Medicines Regulatory Harmonisation (MRH) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2015 II 7. ACCOUNTS RECEIVABLE 2014/15 2013/14 USD USD I VAT receivables Housing advance Staff imprests 7,682 39,218 5,821 2,000 11 ,297 46,900 19,118 I Total 8. CASH AND CASH EQUIVALENTS I USD bank balance 9. DEFERRED GRANT 11,876 353 ,987 I Balance as at 1 July 2015 Amount received from World Bank (Note 9a) Amount released to the statement of financial performance 252,321 1,794,016 (1 ,817,674) 18,873 2,060,799 (1,810,668) (102,088} {16 ,683} I Depreciation amortized over the useful life of the assets (Note 6) Balance as at 30 June 2015 126,575 252 ,321 I 9 a. CASH RECEIPTS FROM WORLD BANK Installment 1st Installment Date received 04/08/2014 95,988 164,118 2nd installment 02/09/2014 339,519 245,985 I 3rd installment 4th installment 15/10/2014 04/12/2014 118,358 198,899 267,462 145,572 5th installment 27/01/2015 410,838 278,554 I 6th installment 7th installment 11/12/2014 20/05/2015 240,330 389,589 230,311 306,717 8th installment 30/04/2014 77 ,169 I 9th installment 1Oth installment 25/06/2014 25/06/2014 286,909 58 ,004 1,793,521 2,060,799 I Other income (bank interest) 495 1,794,016 2,060 ,799 I 10. TRADE PAYABLES Jr Electronics Limited 1,250 2,835 Creative Media Company Ltd 1,755 I Kibo Palace Hotel Charleston travel ltd 7,310 3,215 Demo Interiors 90 I Pa lace Hotel Arusha lnnovex Auditors 1,234 14,000 6,614 1,234 7,000 lmprests Payable I Trisha and More Sun Safari Club Hotel Tanzania Standards ( N) Ltd 1,322 1,854 721 RwandAir 407 I I INNOVEX ©2015 30 1 Page I II East African Community (EAC) Project- Medicines Regulatory Harmonisation (MRH) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2015 10 TRADE PAYABLES (continued) 2014/15 2013/14 USD USD Uganda Travel Bureau 2004 Limited 13,753 38,831 Winglink Travel Agent One Off Suppliers 8,530 6,955 Dimensions Technologies Systems 240,331 I DPML Burundi Mallory International Ltd 10,000 53,199 54,943 367,497 I 11. ACCRUALS AND OTHER PAY ABLES Staff salary 35,480 22 ,976 I EAC current account Reimbursable payables 22,989 16,694 29,364 75,163 52 ,340 I 12. Budget performance reconciliation Total expenditure per budget performance 1,817,674 1,810,668 I Total expenditure per income/expenditure statement Difference(Depreciation)(Note 6) 1,919,762 (102,088) 1,827,351 (16 ,683) I The accompanying financial statements have been presented on an accrual basis of accounting , while the budget has been prepared using cash basis of accounting . The difference of total expenditure between the budget performance and statement of financial performance is I made up of depreciation charge during the year which is a non-cash item. 13. PRIOR PERIOD ADJUSTMENTS I Prior period adjustments relates to corrections of various expenses relating to the prior period as detailed below: Debit/Credit I Adjustment for audit fee for the last year that was not accounted for during USD (7,000) 2013/14 I Reversal of air ticket liability from UTB(2004) and Winglink Travel for 2012/13 wrongly booked as liability in 2013/14 6,607 (393) I 14. RELATED PARTY TRANSACTIONS AND BALANCES The related parties are the key management of the project and the members of the Project I Steering Committee. The management of the project were paid salaries amounting to USD 548,602 (2013/2014: 608 ,572). There were no outstanding balances with related parties. The Steering Committee was not paid any remuneration . I I I Page I INNOVEX©2015 31 I I ~. - 1 East African Community (EAC) I Project- Medicines Regulatory Harmonisation (MRH) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2015 I 15. EXPLANATION OF VARIANCE BETWEEN BUDGET AND ACTUAL EXPENDITURE Description of Actual Variance Explanation I Activity Annual Budget Amount to 30th June 2015 I Support NMRAs on office USD 36,000 USD 17,813 USD 18,187 The NMRAs contributed some of the funds for operational/running expenses during operations cost the year for the project leading to this I Facilitate project 25,100 9,926 positive variance . 15,17 4 The NMRAs contributed some of the funds coordination for operational/running expenses during I the year for the project leading to this positive variance . Procurement of 70 ,000 17,713 52,287 The project bought the reference materials I reference materials during the FY 2014, this year it decided to subscribe to publishers as a means of saving costs . I Acquire and cameras video photo 3,500 3,500 The camera that was bought last year is still working perfectly and we decided not to buy a new one. We decided to I Regional stakeholders 82 ,850 48,706 reallocate this budget to other activities. 34,144 The activities were carried out with support from other partners, therefore savings we meetings on recorded on this budget line. I new guidelines Communication 70,000 70,000 The equipment was not procured thereby equ ipment leading to this positive variance . I 16. COMMITMENTS The Project did not have any commitments as at 30 June 2015. I 17. CONTINGENT LIABILITIES The EAC issued two local purchase orders to two suppliers for procuring , configuring and I installation of the Information Management System for Medicines Registration on 26th June 2015 without cancelling the other one (MFI Document Solutions Ltd on 26th June 2015 through LPO # 07783 worth $ 183,919.28 value added tax inclusive and to the Copy Cat (Tanzania) Ltd I on the 26th of June 2015 through LPO # PONSEC/001703 worth $ 179,132 value added tax exclusive) . The recommendation to award the tender to the lowest evaluated supplier was not approved by the Procurement Committee as it rejected the procedures that were used. I However, the EAC ended up issuing local purchase orders to two suppliers; i.e. the first one to Copy Cat (Tanzania) Ltd and later, the second one to MFI Document Solutions. This was contrary to the requirements of paragraph 2.49 on evaluation and comparison of bids I as the lowest evaluated bid was not properly determined and paragraph 2.59 on the award of the contract as the contract was awarded to more than one supplier. I I INNOVEX ©2015 321 Page I I II East African Community (EAC) Project- Medicines Regulatory Harmonisation (MRH) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30THJUNE 2015 I 17. CONTINGENT LIABILITIES (continued) Furthermore, MFI Document Solutions that had already delivered the equipment on the 301h of October 2015, recollected the goods in November 2015 after the procedure was cancelled by I the Procurement Committee. There is likelihood that both suppliers may institute legal proceedings against the EAC in respect of cancellation of LPOs worth $183,919 .28 for MFI Document Solutions Ltd and $179 ,132 for The Copy Cat (Tanzania) Ltd respectively. I 18. COMPARATIVES Wherever considered necessary, comparative figures have been reclassified to conform to changes in presentation in the current year. I I 19. EVENTS AFTER REPORTING DATE There were no events after reporting date. I I I I I I I I I I I I I INNOVEX ©2015 33 1 Page