Safety Net and Skill Development Project Ministry of Agriculture and Food Security PROJECT GRANT NO. IDA 5284 ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED JUNE 30th Jun 2017 Prepared in accordance with the Cash Basis of Accounting Method under the International Public Sector Accounting Standards (IPSAS) Safely Net and Skill Development Project Reports and Financial Statements For the financial year ended June 30, 2017 Contents 1. PROJECT INFORMATION AND OVERALL PERFORMANCE..................................................i. 1.1 Safety Net and Skill Development Project......................r_t......................................................i 1.2 P roject Info rm ation ............................................... . _................................................................... 1.3 P roject O verview ..............................................................................................._ ................... _ 1 .4 B a n k e rs ......................................................................-.................. ....................... .... ...........................ii 1 .5 A u d ito rs ................................................................................................................... ........................... ii 1.6 R o les and R espo ns ib ilities .............................................................................................................. ii 1.7 F u nd in g s um m ary .................. ........................................................................ ........................... i1ii 1.8 Summary of Overall Project Performance: ...............................................................................1ii 2. STATEMENT OF PROJECT MANAGEMENT RESPONSIBILITIES.......................................... 2.1 Approval of the Project financin statements ........................................................................... 3. REPORT OF THE INDEPENDENT AUDITORS ON THE SAFETY NET AND SKILLS D EV E LO P M E N T P R O JEC .................................................................................................................... 3.1 Responsibility for the FinancialStatements .............................................................................. 3.2 A u d ito r's R espo ns ibiity................................................................................................................... ii 3.3 O p in io n .......................................................................i....................................................................3. Oi 4. STATEMENT OF RECEIPTS & PAYMENTS FOR THE PERIOD ENDED 30TH JUNE 2007 .3 5. STATEMENT OF FINANCIAL ASSETS AND LIABILITIES AS AT 30TH JUNE 2017 .............4 6. STATEMENT OF CASHFLOW FOR THE PERIOD 30TH JUNE 2017.......................................5 7. STATEMENT OF COMPARATIVE BUDGET AND ACTUAL AMOUNTS....................................6 8. NOTES TO THE FINANCIAL STATEMENTS................................................................................7 8.1 Statement of compliance and basis of preparation ...................................................................7 8.2 Proceed from Domestic and Foreign Grant.......................................................................... 8.3 CA TEG O RY 2 N ote.......... ...............................ote.1......................................................................... 0 8.4 CATEGORY 2.1 - ACQUISITION OF NON FINANCIAL ASSET................................................1 9. ANNEX 1- VARIANCE EXPLANATIONS -COMPARATIVE BUDGET & ACTUAL AMOUNTS 13 Safety Net and Skill Development Project Reports and Financial Statements For the financial year ended June 30, 2017 1. PROJECT INFORMATION AND OVERALL PERFORMANCE 1.1 Safety Net and Skill Development Project Ministry of Agriculture and Food Security Ministry Complex-Juba South Sudan Name: The project Official name is Safety Net and skill Development Project. Objective: To provide access to income opportunities and temporary employment to the poor and vulnerable and put in place building blocks for a social protection system. Address: Project Implementation Unit (PIU) Ministry of Agriculture and Food Security Ministries Complex - Juba Republic of South Sudan Contacts: The following are the project contacts Telephone: (+211938 161 952 E-mail: 1.2 Project Information Project Start Date: 21st Jun Dec, 2013 Project End Date: 31 Dec, 2017 Project Manager: The Manager is Mr. Luka Kiwanuka Project Sponsor: The project sponsor is International Development Association 1.3 Project Overview Line Ministry The project is under the supervision of Ministry of Agriculture and Food. Project number P 143917 Strategic goals of the The strategic goals of the project are as follows: project (i) Provide access to income opportunities and temporary employment to the poor and vulnerable and put in place building blocks for a social protection system. Achievement of The project management aims to achieve the goals through the following strategic goals means: (i) Engagement of the implementing partners (ii) Coordination and supervision of technical implementation of the Safety net and Skills Development Project Reports and Financial Statements For the financial year ended June 30, 2017 project activities. Other important Nearly two years after independent South Sudan finds itself in a volatile background situation, facing formidable developmental challenges. The IDA identified information of the the importance of social protection and initiated the Safety Net and Skills project Development Project in order to achieve country's developmental objectives. The project was established by Grant Agreement to IDA 5284, entered between the Government of South Sudan and the International Development Association, and is implemented by the Ministry of Agriculture and Food Security. Ministry of Labour, Public Service and Human Resource Development and the Ministry of Gender, Child and Social Welfare. Current situation that The project was formed to intervene in the following areas: the project was (i) supporting social protection system and capacity building formed to intervene (ii) provision of income to youths and women from poor households (iii) provide youth from poor and vulnerable households with access to livelihood opportunities Project duration The initial implementation period was from 21St Jun 2013 to 3111 Dec 2017. However, due to insecurity that interrupted the project activities, decision has been taken to extend the implementation period. 1.4 Bankers The following are the bankers for the current year: (i) USD Account CFC Stanbic Bank West Yat Branch (ii) SSP Account CFC Stanbic Bank West Yat Branch 1.5 Auditors The project is audited by South Sudan Audit Chamber and a private Auditor 1.6 Roles and Responsibilities Distribution of roles and responsibilities is as tabulated below; Names Title designation Key qualification Responsibilities Mathew Gordon Udo Undersecretary Overseeing the project activities George Leju Lugor Project Coordinator Extension Supervisor/Coordinator Management of the Luka Kiwanuka Project Manager Crop Scientist project ii Safety net and Skills Development Project Reports and Financial Statements For the financial year ended June 30, 2017 1.7 Funding summary The Project is for a duration of 38 months from 131 Nov 2014 to 30h Dec 2017 with an approved budget of US$ 21,000,000 equivalents to SSP 2,457,000,000 as highlighted in the table below Source of funds Donor Commitment- Amount received to IUndra-vin balance to date - (3011.Jun2017) dlate (3(0".Jun 201l7) Donor SSP Donor SSP Donor SSP cuirrency Currency cuirrener (A) (.4A (B) (B") (4)-(B) .4')-fB') (i) Grant USD IDA 5284 21,000,000 2,457,000,000 2,544,272 297,679,919 18,455,728 2,159320,176 Total ____ 1.8 Summary of Overall Project Performance: Before this financial year budget, SNSDP had a budget running from Jan - Dec 2016. The Government budget however runs to end in Jun. In order to be in line with the Government financial year, SNSDP drew its budget from the remaining six months (Jul-Dec 2016) and adjusted with the contracts in first six months of 2017. The total amount of the budget for the fiscal year was 2,696,486, and the total expenditure during the period was USD 966,550 which is 36%, representing 64% under expenditure. Only USD 441,694 (24%) was spent out of the USD 1,866,667 budgeted for public works and wages transfers. These activities could not be carried out due to insecurity that led to one implementing partners terminating a contract worth 610,668 for public works and wages transfer. Officer operating expenditure was only 18%. . The cumulative project disbursement was only USD 2,544,273 (12%) from the total project fund of USD 21,000,000. The undisbursed balance of USD 18,455,727 may not be spent within the remaining six months to close the project by 31/12/2017. The contracts have been executed within the budget allocation and through procurement procedures to attain money value. In term of finances, the project is within the limits provided. However, the insecurity incident of 2016 impacted adversely on achievement of output within the timeline planned. Identified project implementation challenges. I- Limited market for the supply of goods and services 2- Exchange rate issue. 3- Security concern affecting project activities 4- Limited finance personal. An accountant is required to support the two finance staffs in managing the four projects under the Ministry of Agriculture and Food Security iii Safety Net and Skill Development Project Reports and Financial Statements For the financialyear ended June 30, 2017 2. STATEMENT OF PROJECT MANAGEMENT RESPONSIBILITIES The Undersecretary for the Ministry of Agriculture and Food Security and the Project Coordinator for the Safety Net and Skill Development Project are responsible for the preparation and presentation of the Project's financial statements, which give a true and fair view of the state of affairs of the Project for and as at the end of the financial year ended on June 30, 2017. This responsibility includes: (i) maintaining adequate financial management arrangement and ensuring that these continue to be effective throughout the reporting period; (ii) maintaining proper accounting records, which disclose with reasonable accuracy at any time the financial position of the Project; (iii) designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of the financial statement, and ensuring that they are free from material misstatements, whether due to error or fraud; (iv) safeguarding the assets of the Project; (v) selecting and applying appropriate accounting policies; and (vi) making accounting estimates that are reasonable in the circumstances. The Undersecretary for the Ministry of Agriculture and Food Security and the Project Coordinator for the Safety Net and Skills Development Project accept responsibility for the Project's financial statements, which have been prepared on the Cash Basis Method of Financial Reporting, using appropriate accounting policies in accordance with International Public Sector Accounting Standards. The Undersecretary for the Ministry of Agriculture and Food Security and the Project Coordinator for The Safety Net and Skills Development Project are of the opinion that the Project's financial statements give a true and fair view of the state of Project's transactions during the financial year/period ended June 30, 2017, and of the Project's financial position as at that date. The Undersecretary for the Ministry of Agriculture and Food Security and the Project Coordinator for Safety Net and Skills Development Project further confirm the completeness of the accounting records maintained for the Project, which have been relied upon in the preparation of the Project financial statements as well as the adequacy of the systems of internal financial control. The Undersecretary for the Ministry of Agriculture and Food Security and the Project Coordinator for The Safety Net and Skills Development Project confirm that the Project has complied fully with applicable Government Regulations and the terms of external financing covenants, and that Project funds received during the financial year/period under audit were used for the eligible purposes for which they were intended and were properly accounted for. 2.1 Approval of the Project financial statements The Project financial statements were approved by the Undersecretary for the Ministry of Agriculture and Food Security and the Project Coordinator for Safety Net and Skills Development Project on this ... .... . 1 8 and signed by them. Undecre Project Coordinator ate DateJ4, t Safety net and Skills Development Project Reports and Financial Statements For the financial year ended June 30, 2017 3. REPORT OF THE INDEPENDENT AUDITORS ON THE SAFETY NET AND SKILLS DEVELOPMENT PROJECT REPORT ON FINANCIAL STATEMENTS We have audited the accompanying financial statements of Safety Net and Skills Development Project, set out on pages 1 to 10 which comprise the statement of receipts and payments for the financial year/period ended June 30, 2017, and a summary of significant accounting policies and other explanatory notes. 3.1 Responsibility for the Financial Statements The Undersecretary for the Ministry of Agriculture and Forestry (MAF) and the Project Coordinator for Safety Net and Skills Development project are responsible for the preparation and fair presentation of these financial statements in accordance with International Public Sector Accounting Standards (IPSAS). This responsibility 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 accounting policies, and making accounting estimates that are reasonable in the circumstances. 3.2 Auditor's Responsibility Our responsibility is to express an independent 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 depended on our professional judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we considered the internal controls relevant to the company's preparation and fair presentation of the financial statements in order to design audit procedures that were appropriate in the circumstances, but not for the purpose of expressing an opinion on the company's internal controls. An audit also includes evaluating the appropriateness of accounting polices used and the reasonableness of accounting estimates made by the 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. 3.3 Opinion In our opinion, the accompanying financial statements give a true and fair view of the state of financial affairs of the Safety Net and Skills Development Project for the financial year/period ended June 30, 2017 in accordance with International Public Sector Accounting Standards (IPSAS) Auditor General, REPUBLIC OF SOUTH SUDAN Date Safety net and Skills Development Project Reports and Financial Statements For the financial year ended June 30, 2017 4. STATEMENT OF RECEIPTS & PAYMENTS FOR THE PERIOD ENDED 30TH JUNE 2017 Cumulative 2016/17 2015/16 to Date Receipt USD USD USD Transfer from IDA 5284 519,587 594,570 2,544,273 Total Financing 519,587 594,570 2,544,273 Available for Utilization 519,587 594,570 2,544,273 Project Expenditure by Category Category 2: Goods, Works, consulting . & non Consu ting Services 966,550 1,427,704 2,437,477 Total Expenditure 966,550 1,427,704 2,437,477 Surplus /Deficit for the Year (446,963) (833,134) 106,796 The accounting policies and explanatory notes to these financial statements are an integral part of the financial tement Undersecret Project Coordinator Date Date 3 Safety net and Skills Development Project Reports and Financial Statements For the financial year ended June 30, 2017 5. STATEMENT OF FINANCIAL ASSETS AND LIABILITIES AS AT 30TH JUNE 2017 Financial Assets Note 2016/17 2015/16 USD USD Cash and Cash Equivalents Bank Balances 8.12A 106,705 508,025 Cash Balances Imprests and Advances 8.12C 90 6,941 106,795 514,966 REPRESENTED BY: Cash and cash equivalents 8.13 514,966 1,348,100 b/fwd. Surplus/Deficit for the year (446,963) (833,134) Adjustments of expense refunded UNOP 8.14 38,792 NET FINANCIAL POSITION 106,795 514,966 The accounting policies and explanatory notes to these financial statements form an integral part of the financial temet The financial statements were approved on....... 2018 and signed by: Underse ar Project Coord inator Date Date 4 Safety net and Skills Development Project Reports and Financial Statements For the financial year ended June 30, 2017 6. STATEMENT OF CASHFLOW FOR THE PERIOD 30TH JUNE 2017 Statement of Cash Flow for the Period 30th Jun 2017 Receipts for operating income: USD Proceeds from IDA 5284 133,107 Payment from Operating Expense by Category Goods, Works, Consulting, consu ting Operating cost and Trainings 580,070 Net Cash Flow from Operating Expense (446,963) Cash Flow from Investing Activities Acquisition of Assets/Interest earned 0.00 Net Cash Flow from Investing activities 0.00 Cash flow from Borrowing Activities: Proceeds from Foreign Borrowing 0.00 Net cash flow from Financing activities 0.00 Net Increase/ Decrease in Cash and Cash Equivalent (446,963) Add: Opening Balance 01/7/2016 514,966 Add Adjusting Entr -Expense refunded by UNOPS 38,792 Cash and Cash Equivalent at the end of period 30th Jun 2017 106,795 The accounting policies and explanatory notes to these financial statements form an integral part of the financial statements. The entity financial statements were approv on. 2018 and signed by: Undereth Project Coordinator Date Date 5 Safety net and Skills Development Project Reports and Financial Statements For the financial year ended June 30, 2017 7. STATEMENT OF COMPARATIVE BUDGET AND ACTUAL AMOUNTS Receipts/Payments Original Actual on % of Item Budget Adjustments Final Budget Comparable Variance V Basis A B c=a+b d e=d-c f=e/c % Receipts I Transfer from IDA 5284 2,587,387 109,100 2,696,487 519,587 -2,176,899.85 -81% Total Receipts Payments Paymnts T II 1-1,729,936 Category 2 2,587,386 109,100 2,696,486 966,550 -64% Total Payments Note. The significant budget utilisation/performance differences in the last column are explained in Annex 1 to these financ 1 statements. Und,xecret y Project Coordinator 6Dat 6 Safety net and Skills Development Project Reports and Financial Statements For the financial year ended June 30, 2017 8. NOTES TO THE FINANCIAL STATEMENTS The principal accounting policies adopted in the preparation of these financial statements are set out below: 8.1 Statement of compliance and basis of preparation The financial statements have been prepared in accordance with and comply with International Public Sector Accounting Standards (IPSAS) with particular emphasis on Cash Basis Financial Reporting under the Cash Basis of Accounting. The financial statements are presented in United $tates Dollars, which is the functional and reporting currency of the Project and all values are rounded to the nearest one Dollar. The accounting policies adopted have been consistently applied to all of the years presented. The financial statements have been prepared on the cash basis following the Government's standard chart of accounts. The cash basis of accounting recognises transactions and events only when cash is received or paid out by the Project. i. Recognition of revenue and expenses The Project recognises all revenues from the various sources when the event occurs and the related cash has actually been received by the Project. In addition, the Project recognises all expenses when the event occurs and the related cash has actually been paid out by the Project. i. In-kind donations In-kind donations are contributions made to the Project in the form of actual goods and/or services rather than in money or cash terms. These donations may include vehicles, equipment or personnel services. Where the financial value of in-kind donations can be reliably determined, the Project includes such value in the statement of receipts and payments both as revenue and as an expense in equal and opposite amounts; otherwise, the donation is not recorded. iii. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and cash at bank, short-term deposits on call and highly liquid investments with an original maturity of three months or less, which are readily convertible to known amounts of cash and are subject to insignificant risk of changes in value. Bank account balances include amounts held at the Central Bank of South Sudan and/or at various commercial banks at the end of the financial year/period. For the purposes of these financial statements, cash and cash equivalents also include short term cash imprests and advances to authorised public officers and/or institutions which had not been surrendered or accounted for at the end of the financial year/period. 7 Safety net and Skills Development Project Reports and Financial Statements For the financial year ended June 30, 2017 SIGNIFICANT ACCOUNTING POLICIES (Continued) iv. Pending bills Pending bills consist of unpaid liabilities at the end of the financial year/period arising from contracted goods or services during the year/period or in past years/periods. As pending bills do not involve the payment of cash in the reporting period, they are simply disclosed as an Annex to the financial statements. When the pending bills are finally settled, such payments are included in the statement of receipts and payments in the year in which the payments are made. v. Budget The budget is developed on the same accounting basis (cash basis), the same accounts classification basis, and for the same period as the financial statements. The Project's budget was, approved as required by Law and regulations issued by the Ministry of Finance and Economic Planning, as well as by the participating development partners, as detailed in the Government of South Sudan Budget Printed Estimates for the year. A high-level assessment of the Project's actual performance against the comparable budget for the financial year/period under review has been included in an annex to these financial statements. vi. Exchange rate differences The accounting records are maintained in United States Dollars, which is the main currency used for major payments under the Project. A smaller percentage of payments are however made in the South Sudanese Pound (SSP). Those transactions are converted into the United States Dollars using the exchange rates prevailing at the dates of the transactions. Any foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in the local currency are recognised in the statements of receipts and payments. vii. Comparative figures Where necessary comparative figures for the previous financial year/period have been amended or reconfigured to conform to the required changes in financial statement presentation. viii. Subsequent events There have been no events subsequent to the financial year/period end with a significant impact on the financial statements for the year ended June 30, 2017 8 Safety net and Skills Development Project Reports and Financial Statements For the financial year ended June 30, 2017 8.2 Proceed from Domestic and Foreign Grant During the 12 months to 30 June 2017 we received funding from Development Partner in form of Loan Amount Grants Grants Date received in d received Gat Name of Donor r received received Total amount in SSP received donor cash as direct in kind currency payment* FY2017 FY22017 US$ UUSS US US$ SSP Grant IDA Grant No. 5284 Sept,2016 213,734 213,734 25,006,844.07 IDA Grant No. 5284 Oct-16 100,570 100,570 11,766,690 IDA Grant No. 5284 Dec-17 72,176 1 72,176 8,444,629 IDA Grant No. 5284 Jun-17 133,107.00 133,107 15,573,519 Total 133,107.00 386,480 519,587 60,791,683 *. The direct payment grants represent payments for goods and services done directly by the donor on behalf of the project. Projects should ensure that the adequate documents and support document is requested from the donors to support this grant. 9 Safety net and Skills Development Project Reports and Financial Statements For the financial year ended June 30, 2017 8.7 NOTES TO THE FINANCIAL STATEMENTS (Continued) 8.3 CATEGORY 2 Note 2016/7 2015/16 Cumulative USD $ USD $ USD $ Goods 2.1 26,593 375,400 375,801 Public Works & Wages TRF 2.2 441,694 498,756 940,450 Consultancy 2.3 420,567 319,393 766,001 Trainings 2.4 28,709 47,261 91,183 Operating Expense 2.5 48,8 186.895 264.043 Total 966,550 1.422.704 2.437 The Safety Net and Skills development project has only two categories. Only part of skills Development in component three (3.2) is category 1. The others are all category two. Above is the break down for category two which is comprise of goods, works, consulting, non-consulting services. 8.4 CATEGORY 2.1 - ACQUISITION OF NON FINANCIAL ASSET Jun-17 Jun-16 Accumulative Category 2:1 Note USD $ USD $ USD 5 Office furniture and Equipment 86,418 86,418 Office Vehicle and Motor Bikes 239,765 213,573 MIS Information System 26,593 32,502 59,095 QuickBooks Acct System 16,714 16,714 Grant Total 26,593 375,400 375,801 10 Safety net and Skills Development Project Reports and Financial Statements For the financial year ended June 30, 2017 NOTES TO THE FINANCIAL STATEMENTS (Continued) 8.7 CATEGORY 2. Other Grants and Transfers and Payments Note Jun-17 Jun-16 Accumulative USDS USDS USD$ Wages Transfer 127,391,0 129,998.0 257,389.0 Transfer to Implementing Partners 314,303.4 368,758.0 683,061.4 Total Transfers 441,694.4 498,756.0 940,450.4 11 Safety net and Skills Development Project Reports and Financial Statements For the financial year ended June 30, 2017 8.12A CASH AND CASH EQUIVALENTS C/FWD (Continued) US$ US$ Bank Account Jun-17 Jun-16 Foreign Currency Accounts CfC Stanbic Bank [A/c NO 0200000076127] 104,339.93 57,855 Local Currency Accounts CfC Stanbic Bank [A/c No 02000000755651 2,365 67,878 Total Bank Balance 106,705 125,733.0 8.12D Cash and Cash Equivalent US$ US$ Jun-17 Jun-16 Location I PIU Juba/MAFS 90 8,976 12 Safety net and Skills Development Project Reports and Financial Statements For the financialyear ended June 30, 2017 9. ANNEX 1- VARIANCE EXPLANATIONS -COMPARATIVE BUDGET & ACTUAL AMOUNTS % of Actual on Budget Utilisation Budget Comparable Utilisation Variance to Variance Basis Variance Final Budget a b c=a-b d=c/a % RECEIPTS DURING THE YEAR/PERIOD The project was suspended IDA 5284 81% andno fund could be 2,696,486.00 .519;587 2,176,899 released PAYMENTS DURING THE YEAR/PERIOD CATEGORY: 2 This was ptyment for Goods 2.1 - 26,593 0% previous work (26,593) done/outstanding bill Public works & Wage transfer 2,2 76% Project suspended and there 1,866,667 441,694 1,424,973 were no activities Some of the consultant Consultancy 2.3 25% contract were not renewed 559,100 420,567 138,533 due to the proiect suspension Training and Workshops 2.4 - 28,799 (28,799) Operating Expense 2.5 270,719 48,987 221,732 82% ause t es n Total payments s 2696,486. 966,640 1,719,846 64% Explanation for variance beyond 50% (2.2) The July 2016 conflict in Juba affected the public work activities leading to poor budget absorption. (2.4) (2-5) with the suspension of major activities and non-renewal of most consultants' contract, the operating expense decreased greatly. 14