LIBERIA WILL RISE AGAIN DIASPORA ENGAGEMENT PROGRAM World Bank Funded Project: Grant No. TF 12105 Independent Auditor’s Report and Financial Statements For the Nine Months ended March 31, 2016 Assurance | Tax | Advisory Liberia Will Rise Again Diaspora Engagement World Bank funded Project Independent Auditor’s Report and Financial Statements For the Nine Months ended March 31, 2016 TABLE OF CONTENTS CONTENTS PAGE GENERAL INFORMATION 1 AUDITOR’S REPORT 2-3 STATEMENT OF RECEIPTS & PAYMENT 4 STATEMENT OF FUND BALANCE & CASH STATUS 5 STATEMENT OF FINANCIAL POSITION 6 NOTES TO THE FINANCIAL STATEMENTS 7-11 AUDITOR’S REPORT ON STATEMENTS OF EXPENDITURE 12-13 SUMMARY OF STATEMENTS OF EXPENDITURE 14 AUDITOR’S REPORT ON DESIGNATED ACCOUNT 15 PROJECT DESINATED ACCOUNTS RECONCILIATION 16 MANAGEMENT LETTER 17-23 CONCLUSION 24 Liberia Will Rise Again Diaspora Engagement World Bank funded Project Independent Auditor’s Report and Financial Statements For the Nine Months ended March 31, 2016 GENERAL INFORMATION PROJECT MANAGEMENT TEAM Project Financial Management Unit: Dr. Christopher Sokpor, Unit Manager Project Financial Management Unit (PFMU) Dr. Hussein Salia Senior Project Accountant Subozu Kollie Senior Assistant Project Internal Auditor Registered Office: Project Financial Management Unit (PFMU) Ministry of Finance and Development Planning Broad and Mechlin Streets Monrovia, Liberia Project Implementation Unit: Lloyd Scott Project Coordinator Liberia Will Rise Again-Ministry of State without Portfolio Client Address: Ministry of States without Portfolio Capitol Hill, Liberia Bankers: Liberian Bank for Development & Investment 9th Street Sinkor Monrovia, Liberia Auditors: Baker Tilly Liberia Limited (Member of Baker Tilly International) Certified Public Accountants Kings Plaza 2nd-4th Floors Broad Street Monrovia Page 1 PFMU King Plaza 2nd – 4th Floors Broad Street P. O. Box 10-0011 1000 Monrovia 10 Liberia T: +231 (0) 886 514 965 F: +1 905 469 0986 info@bakertillyliberia.com www.bakertillyliberia.com AUDITOR’S REPORT To: Lloyd Scott Project Coordinator Ministry of States without Portfolio Capitol Hill, Liberia Monrovia-Liberia We have audited the financial statements of Liberia Will Rise Again Diaspora Engagement project funded by World Bank’s GRANT No. TF 12105 and implemented by Ministry of States without Portfolio. These financial statements comprise the project statement of financial position as at March 31, 2016 and the related statements of receipts and payment and statement of changes in fund balance & cash status for the Fiscal Year then ended. These financial statements are prepared in accordance with the accounting policies and other explanatory notes as set out on pages 6 to 9. Management’s Responsibility The Project’s management is responsible for the preparation and fair presentation of these Financial Statements in accordance with Cash Basis International Public Sector Accounting Standards (IPSAS) and in the manner required by the Project Grant Agreement. This responsibility includes: designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the Financial Statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to t he 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. Partners: G. Fonderson (Executive Chairman), T. Joseph (Managing Partner), A. Fumbah An independent member of Baker Tilly International Liberia Will Rise Again Diaspora Engagement World Bank funded Project Independent Auditor’s Report and Financial Statements For the Nine Months ended March 31, 2016 An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates (if any) made by management as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of World Bank Grant No. TF 12105 as at March 31, 2016 in accordance with International Public Sector Accounting Standards (IPSAS). (Certified Public Accountants) July 29, 2016 Monrovia Page 3 Liberia Will Rise Again Diaspora Engagement World Bank funded Project Independent Auditor’s Report and Financial Statements For the Nine Months ended March 31, 2016 STATEMENT OF RECEIPTS AND PAYMENTS DURING THE FISCAL YEAR (JULY 1, 2015 TO MARCH 31, 2016) 1 July 1 July 2015 to 2014 to 31 March 30 June In United States Dollars Note 2016 2015 Funds Available Opening Fund balance 100,371 Receipts for the period( Grant No. TF12105) 4 99,019 98,569 Total Funds Available for Current Year 199,390 98,569 PAYMENTS Development Networking/Coordination Capacity 5 25,504 - of the Diaspora Designing Diaspora Engagement Interventions 6 78,084 - Project Management 36,655 1,802 Total Expenditure 140,243 1,802 Excess of Receipts Over Payments 59,147 100,371 The notes on pages 7to 11 are integral part of these project financial reports. Page 4 Liberia Will Rise Again Diaspora Engagement World Bank funded Project Independent Auditor’s Report and Financial Statements For the Nine Months ended March 31, 2016 STATEMENT OF FUND BALANCE AND CASH STATUS FOR THE FISCAL YEAR ENDED MARCH 31, 2016 In United States Dollars Notes 2016 2015 A. FUND BALANCE Balance of Project Fund 100,371 88,389 Add: Total Receipts during the period 99,019 11,982 Total fund available for operations 199,390 100,371 Less: Total payments during the period 140,243 - Balance of project funds at the end of the year 59,147 100,371 B. CASH STATUS: Cash on advance 1,500 - Cash at bank 57,647 100,371 Total cash on hand and in bank 59,147 100,371 Difference between A and B - - At the close of the project on March 31, 2016, there were outstanding commitments of US$18,150 which were settled after the close of the project, and the balance of the project fund of US$40,997 was returned to the Bank on June 21, 2016. The notes on pages 7to 11 are integral part of these project financial reports. Page 5 Liberia Will Rise Again Diaspora Engagement World Bank funded Project Independent Auditor’s Report and Financial Statements For the Nine Months ended March 31, 2016 STATEMENT OF FINANCIAL POSITION AS AT MARCH 31, 2016 In United States Dollars 1 July 2015 1 July 2014 to 31 to 30 June Notes March 2016 2015 Assets Cash and cash equivalents 8 59,147 100,371 - Total assets 59,147 100,371 The financial statements on pages 4 to 6 were approved by the Project Management Team on __________ 2016 and were signed on their behalf by: __________________ ______________________ Christopher Sokpor Lloyd Scott PFMU Manager Project Coordinator-LWRAP The notes on pages 7to 11 are integral part of these project financial reports. Page 6 Liberia Will Rise Again Diaspora Engagement World Bank funded Project Independent Auditor’s Report and Financial Statements For the Nine Months ended March 31, 2016 NOTES TO FINANCIAL STATEMENTS 1. Background and Information of the Project The objective of this IDF operation is to strengthen the capacity of the Government of Liberia's (GOL) Diaspora Affairs Unit (in the Office of the Minister of State without Portfolio) to design and implement the country Diaspora Engagement Program. 2. Use of Grant Proceeds The table below sets out the categories of items to be financed out of the grant proceeds, the allocation of the amounts of the grant to each category and the percentage of expenditures for items to be financed in each category: Amount of Grant Allocated % of Expressed in expenditure to US$ be financed Category Goods 17,600 100 Consultants Services 331,800 100 Training 93,600 100 Total 443,000 All categories of expenditure shown in these financial statements are fully financed by the World Bank through the International Trust Fund (ITF) 3. THE AUDIT We have been engaged by the Ministry of Finance and Development Planning, Project Financial Management Unit to audit the financial statements of World Bank Grant No. TF012105, prepared by the PFMU under the Ministry of Finance and Development Planning in accordance with the terms of reference annexed to our contract. 3.1 Audit Objectives The aim of the audit is to certify and express an opinion on the following: i. the project financial statements and related notes to these financial statements. ii. the statements of expenditure (SOE) - for the Nine Months ended 31 March 2016; and iii. the Statement of Designated Account as at 31 March 2016. Page 7 Liberia Will Rise Again Diaspora Engagement World Bank funded Project Independent Auditor’s Report and Financial Statements For the Nine Months ended March 31, 2016 3.2 Audit Scope The scope of this audit covered the expenditure stated in the Statements of Expenditure of the Project for the Nine Months 31 March 2016. This includes payments from funds transferred by World Bank for the project and direct payments processed by the World Bank at the request of the PFMU. 3.3 Audit Process and Methodology We assessed the risks of material errors or misstatements in the expenditure stated in the SOE, whether caused by error or fraud. Where necessary we designed and performed further audit procedures to address risks identified. This work involved an assessment of the risks that: i. the SOE is not reliable i.e. that it does not present, in all material respects, the actual expenditure incurred for the Project in conformity with applicable contractual conditions; ii. the Project funds provided by the World Bank have not, in all material respects, been used in conformity with applicable contractual conditions; iii. fraud and irregularities can occur or have occurred which have an impact on Project expenditure and which are not detected and corrected in a timely manner; and iv. the relevant Contractual Conditions of the Project are not complied with 4. Significant Accounting Policies Basis of accounting The financial statement have been prepared in accordance with the Cash Basis International Public Sector Accounting Standards (IPSAS) and in the manner required by the Project Grant Agreement as required by the World Bank’s Operating Policies and Procedures and PFMU’s Financial Management manual. This implies that all expenditures are expensed whether they are revenue or capital in nature and income is recognized when funds are received from the World Bank. Reporting currency Financial reports have been presented in United States Dollars. Transactions denominated in other currencies are translated into United States Dollars and recorded at the rate of exchange ruling at the date of transactions. Balances denominated in other currencies are translated into United States Dollars at the rate of exchange prevailing on the reporting date. Goods and works Goods and works (fixed assets) are expensed on acquisition, but a comprehensive fixed assets register is maintained to account for and monitor those assets. Page 8 Liberia Will Rise Again Diaspora Engagement World Bank funded Project Independent Auditor’s Report and Financial Statements For the Nine Months ended March 31, 2016 NOTES TO FINANCIAL STATEMENT (continued) Grant Grant from World Bank is held in a deferred income account when received and are only recognized in the Project’s income statement when utilized. In United States Dollars 1 July 2014 1 July 2015 to to 30 June 31 March 2016 2015 4. Grant Analysis of revenue is as follows: LWRA/MOF/001 - 88,389 LWRA/MOF/002 - 10,180 LWRA/MOF/TF1205 99,019 - 99,019 98,569 5. Development Networking/Coordination Capacity of the Diaspora L. Scott sal Oct. 5,000 - L. Scott fees in the US 3,500 - L. Scott sal No. 5,000 - L. Scott sal Dec. 5,000 - Llyod Scott- Sal 5,000 - L. Scott sal sept 2,004 - 25,504 - Page 9 Liberia Will Rise Again Diaspora Engagement World Bank funded Project Independent Auditor’s Report and Financial Statements For the Nine Months ended March 31, 2016 NOTES TO FINANCIAL STATEMENT (continued) In United States Dollars 1 July 2014 to 1 July 2015 to 30 June 6. Designing Diaspora Engagement Interventions 31 March 2016 2015 Anthony J. Quowonkpa 3,536 - Lloyd F. Z. Scott 3,150 - Lloyd F.Z. Scott 3,536 - Edwin Paye Kakia 3,536 - Paye S. Gbelayan 3,536 - B.V. Davies Sal.Oct,2015 3,800 - Eagle Electrical Corp 1,596 - Super Cold Service 1,750 - Brussels Airlines 18,810 - Abratha P. Doe 4,330 - Anthony J. Quiwonkpa 4,330 - Edwin Kakia 4,330 - Llod F. Scott 4,330 - Lloyd F. Scott 2,000 - Lloyd F. Scott 1,654 - Paye S. Gbelayan 4,330 - Sylveser M. Grigsby 4,330 - B.V.DaviesSal.11Jan-20jan 2,500 - crown Graphics, Inc. 2,700 - 78,084 - Page 10 Liberia Will Rise Again Diaspora Engagement World Bank funded Project Independent Auditor’s Report and Financial Statements For the Nine Months ended March 31, 2016 NOTES TO FINANCIAL STATEMENT (continued) In United States Dollars 1 July 2015 1 July 2014 to 31 March to 30 June 7. Project Management 2016 2015 Bank charges for JULY 30 - Bank charges for AUG 30 - Bank charges for SEPT 30 - Lib observer advert 1,050 - New Demo advertisemnt 1,050 - Bank charge for October 30 - Dennis Y. Bus refurbishin 663 - L. Scott catering service 1,654 - BANK CHARGES NOV 30 - Bank charges DEC 30 - Love Tours-air tickets 7,880 - LWRAP Petty cash 1,500 - TRANSFER FEE 158 - ASR Int catering 10,500 - Love Travel & Tour airfar 9,422 - Bank charges for Jan 30 - ComNet- Website 2,904 - Bank charges for Feb 30 - Bank charges for Mar 30 - Adjustments for difference between intermediary bank charges and petty cash (396) - 36,655 - 8. Cash & Bank Cash on advance 1,500 - Cash at bank 57,647 - 59,147 - Page 11 Liberia Will Rise Again Diaspora Engagement World Bank funded Project Independent Auditor’s Report and Financial Statements For the Nine Months ended March 31, 2016 King Plaza 2nd – 4th Floors Broad Street P. O. Box 10-0011 1000 Monrovia 10 Liberia T: +231 (0) 886 514 965 F: +1 905 469 0986 info@bakertillyliberia.com www.bakertillyliberia.com AUDITOR’S REPORT ON STATEMENTS OF EXPENDITURE To: Lloyd Scott Project Coordinator Ministry of States without Portfolio Capitol Hill, Liberia Monrovia-Liberia We have audited the Statements of Expenditure (SOE) of Liberia Will Rise Again Diaspora Engagement project funded by World Bank’s GRANT No. TF 12105 and implemented by Ministry of States without Portfolio for the Nine Months ended 31 March 2016 submitted to the World Bank to request for fund and in support of application for reimbursement of expenditure in accordance with the Grant Agreement dated June 29, 2012 as set out on pages 14 to 16. Management’s Responsibility The Project Financial Management Units management is responsible for the preparation and the fair presentation of these Statements of Expenditure in accordance with Cash Basis International Public Sector Accounting Standards (IPSAS) and in the manner required by the Project Grant Agreement. This responsibility includes: designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the Financial Statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these Statements of Expenditure based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates (if any) made by management as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Partners: G. Fonderson (Executive Chairman), T. Joseph (Managing Partner), A. Fumbah An independent member of Baker Tilly International Liberia Will Rise Again Diaspora Engagement World Bank funded Project Independent Auditor’s Report and Financial Statements For the Nine Months ended March 31, 2016 Opinion In our opinion, the Statements of Expenditure, along with the supporting summary sheets and information submitted are reliable and in respect of withdrawals for the purpose of the program in accordance with the provisions of World Bank Grant No. TF12105. (Certified Public Accountants) July 29, 2016 Monrovia Page 13 Liberia Will Rise Again Diaspora Engagement World Bank funded Project Independent Auditor’s Report and Financial Statements For the Nine Months ended March 31, 2016 SUMMARY OF STATEMENT OF EXPENDITURE In United States Dollars 1 July 2015 to 31 March 2016 Grant Received: LWRA/MOF/008 29-Oct-15 21,428 LWRA/MOF/009 1-Dec-15 64,966 LWRA/MOF/010 12-Jan-16 12,626 Total Received 99,019 Amount Spent: Development Networking/Coordination Capacity of the Diaspora Unit 25,504 Designing Diaspora Engagement Interventions in Socio-Economic Dev’t 78,084 Operation Expenses including Audit of the IDF Grant 36,655 140,243 Excess of Expenditure Over Income (41,224) Balance as at July 1, 2015 100,371 Balance as at March 31,2016 59,147 Page 14 Liberia Will Rise Again Diaspora Engagement World Bank funded Project Independent Auditor’s Report and Financial Statements For the Nine Months ended March 31, 2016 King Plaza 2nd – 4th Floors Broad Street P. O. Box 10-0011 1000 Monrovia 10 Liberia T: +231 (0) 886 514 965 AUDITORS’ REPORT ON STATEMENT OF DESIGNATED ACCOUNT F: +1 905 469 0986 info@bakertillyliberia.com To: Lloyd Scott www.bakertillyliberia.com Project Coordinator Ministry of States without Portfolio Capitol Hill, Liberia Monrovia-Liberia We have audited the Designated Account Statement (United States Dollar Account No. 001USD21320509413) of World Bank Trust Fund Grant No. TF012105 titled “Liberia Will Rise Again established under the Diaspora Engagement Program” dated July 1, 2015 for the Nine Months ended 31 March 2016. The Designated Account Statement preparation and fair presentation is the responsibility of the Project Management Team. This responsibility includes: designing, implementing, and maintaining internal control relevant to the fair presentation of the Special Account Statement that is free from all material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting estimates (if any) that are reasonable in the circumstances. Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (ISA) insofar as these standards can be applied in the specific context of a contractual compliance audit. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the designated account is free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the designated account statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Statement. The accompanying designated account statement was prepared on the basis of cash deposits and withdrawals for the purpose of complying with the Grant Agreement. We believe our audit provides a reasonable basis for our opinion. Opinion: In our opinion, the receipts have been properly accounted for and withdrawals were made for the purpose of the project in accordance with the provisions of the International Bank for Reconstruction and Development IDF Grant No. TF 012105. (Certified Public Accountants) July 29, 2016 Monrovia Partners: G. Fonderson (Executive Chairman), T. Joseph (Managing Partner), A. Fumbah An independent member of Baker Tilly International Liberia Will Rise Again Diaspora Engagement World Bank funded Project Independent Auditor’s Report and Financial Statements For the Nine Months ended March 31, 2016 PROJECT DESIGNATED ACCOUNT STATEMENT Account Number: 001USD21320509413 Account Type: Current Account Depository Bank: Liberia Bank for Development and Investment Address: 9th Street, Sinkor Monrovia, Liberia Related Grant Agreement: World Bank (IDA) Grant No. TF 12105 Currency: United States Dollar In United States Dollars 2016 Total IDA Grant received 199,390 _______ Total grant income reported 199,390 Amount spent 140,243 _______ Balance as at March 31, 2016 59,147 LESS: Outstanding Commitments Bank Charge - April-June (Including Transfer fee) 180.00 Lion Stationery Furniture 13,700.31 Audit Fees 2015 & 2016 4,270.00 18,150 Balance Returned (Reference 299298) 40,997 Page 16 Liberia Will Rise Again Diaspora Engagement World Bank funded Project Independent Auditor’s Report and Financial Statements For the Nine Months ended March 31, 2016 King Plaza 2nd – 4th Floors Broad Street P. O. Box 10-0011 1000 Monrovia 10 Liberia T: +231 (0) 886 514 965 F: +1 905 469 0986 info@bakertillyliberia.com www.bakertillyliberia.com MANAGEMENT LETTER To: Lloyd Scott Project Coordinator Ministry of States Without Portfolio, R. L. Capitol Hill, Liberia Monrovia-Liberia Dear Sir: During the course of our audit of the financial statements of the Liberia Will Rise Again project for Nine Months ended March 31, 2016 a number of matters arose which we consider should be brought to your attention. Accompanying this letter is a memorandum noting these points together with any recommendations we have for possible improvements which could be made. These matters came to light during the course of our normal audit tests which are designed to assist us in forming our opinion on the financial statements. Our tests may not necessarily disclose all errors or irregularities and should not be relied upon to do so. However, if any irregularity did come to our attention during our audit tests, we would, of course, inform you immediately. A system of grading the management report observations on the operation and accounting issues has been used as follows: Grade 1: Observations are those which are particularly significant and the involvement of Management may be required for their resolution. Grade 2: Observations are those which may have a significant impact on the control environment. Grade 3 Observations are less significant than grades 1 and 2 but nevertheless merit attention. This report has been prepared for the sole use of the management of Project Financial Management Unit (PFMU) and must not be shown to third parties without our prior consent. No responsibilities are accepted by Baker Tilly Liberia towards any party acting or refraining from action as a result of this report. Partners: G. Fonderson (Executive Chairman), T. Joseph (Managing Partner), A. Fumbah An independent member of Baker Tilly International Liberia Will Rise Again Diaspora Engagement World Bank funded Project Independent Auditor’s Report and Financial Statements For the Nine Months ended March 31, 2016 We would be grateful if you could enter the organization’s comments against each point under the "Management’s Comment" column of the memorandum and return it to us in due course. Finally, we would like to express our thanks to all members of the organization's staff who assisted us in carrying out our work. Yours faithfully, For: BAKER TILLY LIBERIA LIMITED (Certified Public Accountants) Arthur W.B Fumbah; MPA, CA, FCITG PARTNER July 29, 2016 Monrovia Page 18 Liberia Will Rise Again Diaspora Engagement World Bank funded Project Independent Auditor’s Report and Financial Statements For the Nine Months ended March 31, 2016 1. Absent of Comprehensive Diaspora Engagement Program Observations Annex A:Scope of Service of the Program coordinator provides that “The rationale of the IDF grant is to strengthen the capacity of the newly formed Diaspora Engagement Unit to communicate, undertake consultation and outreach, and design a comprehensive Diaspora Engagement Program.”. During our review, we did not sight and Comprehensive Diaspora Engagement program that service as the basis for the numerous outreaches undertaken during the period under review. The proposed Diaspora Engagement Program supposed to be formulated with inputs and feedback from consultations with members of the Liberian Diaspora and insights drawn from global practices. Grade 2 Implications Absent of a comprehensive Diaspora Engagement Program would deny assurance that the main objective of the program was achieved. Recommendations The management of the Liberia Diaspora Engagement Program should ensure that a comprehensive Diaspora Engagement Program is produce to facility formulation of National Strategy and Policy to address the critical gaps in post-conflict reconstruction and transformation that will harness the financial and intellectual capital of the Liberian Diaspora. Management’s Comment Per the Project documents and work plan, the Draft National Comprehensive Diaspora Engagement Program Policy was to have been written AFTER an exhaustive list of activities, including multiple Study tours and Consultative Dialogues and this was to conclude at the end of an eighteen month time-frame (by December 2016); subsequent to the Program’s expiration in early 2016, the donor agreed to hire a Draft Policy Consultant to draft the Comprehensive Diaspora Engagement Program as they still sought additional funding for the continuation of the program. In fact, prior to the official expiration of the Program on January 31, 2016, the donor had promised to address this concern; in March, 2016, the donor informed us that funding was made available out of the Public Sector Modernization Program (PSMP) for the hiring of the Policy Draft Consultant for up to July 31, 2016. Unfortunately, the supervising agency for this process, the CSA, was unable to finalize the hiring of the Consultant prior to July 31, 2016. In July 2016, the donor agreed to extend this deadline for up to sixty (60) working days for the Consultant to prepare this policy, after his hire. Unfortunately, as of the writing of this report, the Assistant (and Acting) Project Coordinator of the PSMP, Darlington Smith, at the CSA has willfully failed and refused to act on this important policy mandate and objective of the President, despite repeated attempts to get him to appreciate the urgency of time. We are waiting for the CSA to finalize and sign the contract with the Consultant (Mr. Melvin Crawford) who has already been identified, selected and negotiated with so that this work can be done. Page 19 Liberia Will Rise Again Diaspora Engagement World Bank funded Project Independent Auditor’s Report and Financial Statements For the Nine Months ended March 31, 2016 2. Outstanding Petty Cash Liquidation Report Observations Section C: “Records and Accounts” of the Terms of Reference of the Program Coordinator requires that “The Consultant shall keep, and shall cause its Sub-Consultants to keep, accurate and systematic records and accounts in respect of the Services, which will clearly identify all charges and expenses.” During our review, we observed that there is outstanding petty cash liquidation report relating to Cash advanced made by Project Financial Management Unit (PFMU) in the form of petty cash to Ministry of Ministry of States without Portfolio in the amount of US$1,500. relate to expenditure incurred from balance on Designated Account for the Nine Months ended 31 March 2016. We observed that the liquidation report of said amount US$ 1,500 remain outstanding which represents the Un-liquidated cash balance of Designated Account as of 31 March 2016. Grade 2 Implications Absent of petty Cash Liquidation Report, program expenses could be understated with corresponding overstatement of cash balance at the end of the period. Recommendations The management of the Liberia Diaspora Engagement Program should ensure that a petty Cash Liquidation report is promptly submitted to the Project Financial Management Unit to facilitate proper bookkeeping of the project account. Management’s Comment The Petty Cash report was subsequently submitted by the Project Coordinator and it has since been analyzed and recorded appropriately into the Sun Accounting Systems. Page 20 Liberia Will Rise Again Diaspora Engagement World Bank funded Project Independent Auditor’s Report and Financial Statements For the Nine Months ended March 31, 2016 3. Foreign Travel Reports not signed Observations One of the good qualities of the financial information is its value to represent what it purports to represent. Meaning, it should show what really are present and what really happened, as the case may be. Good report should contained adequate or full disclosure of all necessary information, fairness and freedom from bias, and no inaccuracies and omissions. The reports submitted to us by the project coordinator pertaining to foreign travels undertaken during the period under review, it was observed that none of the reports were signed by relevant authority within the Ministry of States without Portfolio. Grade 2 Implications The lack of full disclosure of necessary information such as authorized signature could cause doubt on the accuracy of the report. Recommendations Management should ensure that all information emanating from the ministry should bear the authorized signature to enhance the quality of the information provided in said report. Management’s Comment All World Bank Travels are approved by the Task Team Leader (TTL) and duly executed by the Project Coordinator. PFMU accept travel reports that are signed by the Coordinator based on the clearance provided by the TTL. The World Bank only queries travels which are not cleared by the TTL. The project coordinator is the appropriate signature for the authorization of project’s expenditure including foreign travels. This procedure was fully adhered to in this instance. Page 21 Liberia Will Rise Again Diaspora Engagement World Bank funded Project Independent Auditor’s Report and Financial Statements For the Nine Months ended March 31, 2016 4. No evidence of payment of withholding tax on salaries and contract Observation Section 200 (a) of the revised Revenue Code of Liberia provides that “An annual income tax is hereby imposed on the annual taxable income of every natural person resident in Liberia (including resident Liberian citizens employed by an embassy, a diplomatic mission, or international organization”. During our Financial Statements audit of the entity for the period under review, we sighted no withholding for salary payments made to the program personnel including the coordinator. Besides; there was also no withholding on payments made to local contractors. Grade 1 Implication This implies management may be in violation of section 200 and 1028 of the revenue code of Liberia which states that personal income tax should be held on individual’s salary and services performed respectively. Recommendation we therefore, recommend that management meet up with its tax obligations. Management’s comments The Consulting Services Manual of the World Bank states that: “The Loan Agreement and the disbursement letter outline the procedures to be followed for the loan, including retroactive financing provisions. The Bank normally finances the full amount of the foreign and local cost of consultant service contracts’ net of local taxes as far as these can be identified.” Additionally, the revised Consultant Guidelines of the World Bank adds that: “2.26 Financial negotiations shall include clarification of the Consultant’s tax liability in the Borrower’s country (if any) and how this tax liability has been or would be reflected in the contract.” Consultants negotiated with the Project Implementation Unit (PIU) and signed contracts whose monthly payments are net of taxes. Taxing the amount net of tax would be a violation of their contract which has legal implications. Moreover, the funding provided by the donors has components and several deliverables attached to them. With an approved budget, spending is allowed for several line items in the budget. An attempt to gross up any contract sum will have a negative impact on the project’s deliverables because the funds available will be reduced. Going forward, the PIU will be alerted into incorporating the tax component when signing new contract (addendum). What we then envisage is consultants asking for their contract that were previously net of tax to be grossed up in order to cover the tax component. Page 22 Liberia Will Rise Again Diaspora Engagement World Bank funded Project Independent Auditor’s Report and Financial Statements For the Nine Months ended March 31, 2016 5 No competitive bidding documents for website contract Observation Prudent procurement of goods and services requires a judicious, economic and efficient use of project resources and to ensure that public procurement is carried out in a fair, transparent and non-discriminatory manner. This principle is key in both PFMU and Liberian Procurement guides. During our Financial Statements audit of the entity for the period under review, we observed that there was no competitive bidding for the awarding of website building and design contract for Liberia Will Rise Again. Grade 1 Implication This implies management has violated the PFMU and PPCC procurement laws which require competitive bidding in awarding services-related contracts to contractors. Recommendation we recommend that management adhere to the prudent procurement practices outlined in both PPCC law and PFMU procumbent guides in awarding contracts. Management’s comments All Procurements activities carried out during the project implementation were duly implemented in compliance with the donor’s regulation which was verified by PFMU based upon which Payment was made to the website designer. PFMU does not make any payment without reviewing the procurement process from the PIU’s end. The procurement process for hiring the website designer was duly followed. Page 23 Liberia Will Rise Again Diaspora Engagement World Bank funded Project Independent Auditor’s Report and Financial Statements For the Nine Months ended March 31, 2016 GENERAL CONCLUSION We thank you very much for giving us the opportunity to serve you and we do hope that your entity will derive tangible benefits from this aspect of our audit. Many thanks to the Management and Staff of PFMU-Liberia Will Rise Again Project for the level of cooperation and cordiality accorded us during the course of this audit. Page 24