REPUBLIC OF KENYA Email:oagOoaftenya.golke COAST REGION HUB ebai:ag@oakena.goke P.O. Box 95202 - 80100 Website: www.kenao.go.ke MOMBASA OFFICE OF THE AUDITOR-GENERAL ADL/12Pil91201(1) 05 January 2021 The Chief Principal 4o Kenya Coast National Polytechnic CIVEA.L v P.O. Box 81220-80100 Kisauni Street-Tononoka 0 5 JAN 202 MOMBASA Attn: Mrs. Anne M. Mbogo 22o-so1oo Dear Sir/Madam REPORT OF THE AUDITOR-GENERAL ON THE FINANCIAL STATEMENTS OF EAST AFRICA TRANSFORMATION AND REGIONAL INTEGRATION PROJECT (EASTRIP) IDA CREDIT No 6334-KE FOR THE YEAR ENDED 30 JUNE 2020 - KENYA COAST NATIONAL POLYTECHNIC Enclosed herewith please find one (1) set of audited financial statements of East Africa Transformation and Regional Integration Project (EASTRIP) IDA Credit No 6334-KE for the year ended 30 June 2020 - Kenya Coast National Polytechnic duly certified and with the seal of the Auditor-General affixed thereon for your retention and necessary action. Yours faithfully Justus 0. Okumu FOR: AUDITOR-GENERAL óFFICE OF THE AUDITOR-GENERAL Enhancing Accountability REPORT OF THE AUDITOR-GENERAL ON EAST AFRICA SKILLS TRANSFORMATION AND REGIONAL INTEGRATION PROJECT (CREDIT NO. IDA 6334-KE) FOR THE NINE (9) MONTIiS PERIOD ENDED 30 JUNE, 2020 KENYA COAST NATIONAL POLYTECHNIC Project Name: EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT (EASTRIP) KENYA COAST NATIONAL POLYTECHNIC PROJECT CREDIT NUMBER: 6334-KE ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED JUNE 30, 2020 (9 MONTHS) Prepared in accordance with the Cash Basis of Accounting Method under the International Public Sector Accounting Standards (IPSAS) POASTO 9202.MOIASA 1 2 NOV M2020 ReCEF IlA:> COST 'LJRt v EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2020 (9 MONTHS) CONTENTS PAGE 1. PROJECT INFORMATION AND OVERALL PERFORMANCE.........................................................................ii 2 STATEMENT OF PERFORMAMCE AGAINSTS PROJECTS PREDETERMINED OBJECTIVES---------------vi 3. CORPORATE SOCIAL RESPONSIBILITY STATEMENT-----------------------------------------------------------------vii 4. STATEMENT OF PROJECT MANAGEMENT RESPONSIBILITIES............................................................viii 5, REPORT OF THE INDEPENDENT AUDITORS ON THE xxxx PROJECT.............................. ............... ix 6. STATEMENT OF RECEIPTS AND PAYMENTS FOR THE PERIOD ENDED 30TH JUNE 2020 ................. 10 7. STATEMENT OF FINANCIAL ASSETS AS AT 30TH JUNE 2020.................................................................' 11 8. STATEMENT OF CASIFLOW FOR TIE PERIOD 30TH JUNE 2020 ............................................................ 12 9. STATEMENT OF COMPARATIVE BUDGET AND ACTUAL AMOUNTS.......................... ........................ 13 10. N OTES TO TI-IE FINANCIAL STATEM ENTSATEENT.1..............................................._............................................. 14 I1. PROGRESS ON FOLLOW UP OF PRIOR YEAR AUDITOR'S RECOMMENDATIONS--------------------------24 12. ANNEX 1- VARIANCE EXPLANATIONS- COMPARATIVE BUDGET AND ACTUAL AMOUNTS...25 ANNEX 2A- ANALYSIS OF PENDING BILLS....................................................................26 ANNEX 2B- ANALYSIS OF PENDING BILLS STAFF BILLS..................................................27 ANNEX 2C- ANALYSIS OF OTHER PENDING BILLS PAYABLES..........................................28 ANNEX 3- SUMMARY OF FIXED ASSET REGISTER..........................................................29 ANNEX 4- CONTINGENT LIABILITIES REGISTER ............................................................30 13. APPENDICES 1- BANK RECONCILIATION STATEMENT-----------------------------------------------------31 1 EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2020 (9 MONTHS) 1. PROJECT INFORMATION AND OVERALL PERFORMANCE 1.1 Name and registered office Name: East Africa Skills for Transformation and Regional Integration Project Objective: The key objective of the project is to increase the access and improve the quality of TVET programs in selected Regional Flagship TVET Institutes and to support regional integration in East Africa. Address: The project headquarters office is Ministry of Education, Kenya The address of its registered office is: Kenya Coast National Polytechnic P.0 Box 81220 Code 80100 Mombasa, Kenya Contacts: The following are the project contacts Telephone: (254) 0710389727, 0712725554 E-mail: info(kenvacoastpoly.ac.ke Website: Evw.kenvacoastpoly.cke 1.2 Project Information Project Start Date: The project start date is 16/9/2019 Project End Date: The project end date is 31/12/2024 Project Manager: The project manager is Anne M Mbogo (Mrs) Project Sponsor: The project sponsor is World Bank 1.3 Project Overview Ministryof The project is under the supervision of the Ministry of Education. State Education/State department of Vocational & Technical Education. Departmentof Vacationaland TechnicalTraining Project number 6334-KE Strategic goals of the The strategic goals of the project are as follows: project i. Produce highly skilled, competent and self-driven operators and middle level human resource for industrial growth. ii. Generate applied knowledge, innovations and technological 11 EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2020 (9 MONTHS) solutions for solving practical problems in the workplace. iii. Provide extension services to the community and society in general. iv. Strengthen good governance and effective management of the Polytechnic. v. Enhance existing linkages and collaborations and develop new ones vi. Enhance regional integration Achievement of The project management aims to achieve the goals through the following strategic goals means: (i) Establishment of project implementation unit (ii) Establishment of Industry Advisory Board (iii) Number of Student enrolment at the polytechnic in programmes aimed at meeting needs of the priority sector (iv) Number of demand driven programmes developed and accredited by the national TVET accreditation agencies or certified by industry (v) Training staff in the Polytechnic who have industrial attachment (vi) Teaching staff who undertake exchange in TVET institutes in another country (vii) Number of memoranda of understanding signed with institutions and industry (viii) Tracer studies conducted annually Other important The project is targeting marine transport and port logistics where the main background aim would be to use the industry advisory board to ensure the programmes information of the implemented meet the industry demands. project 111 EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2020 (9 MONTHS) Current situation that The project was formed to intervene in the following areas: the project was i. Lack of modern equipment for the Centre formed to intervene ii. Lack of capacity for some trainers in specialized maritime programmes iii. Inadequate staff iv. Inadequate workshops and labs v. Low enrolment in marine engineering and logistics vi. Few linkages with industry vii. Lack of student accommodation Project duration The project started on 18/12/2018 and is expected to run until 31 December 2024 1.4 Bankers Equity Bank Moi Avenue MOMBASA 1.5 Auditors Auditor General Office of Auditor General Anniversary Towers, University Way P. 0 Box 30084 GPO 00100 Nairobi, Kenya The project is audited by the Auditor General 1.6 Core Project Team, Roles and Responsibilities Names Designation Key Qualification Responsibilities BED Anne M Mbogo (Mrs) Chief Principal BA Accounting Officer MBA Kevin Ochieng HOD Mechanical. B.Educ(Technology) Centre Leader CPA Clerkson 0 Financial Controller BA Project Accountant Bolo MBA iv EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2020 (9 MONTHS) Names Designation Key Qualification Responsibilities t' BED, Masters in Ag Deputy Dean of .M r Magdaline Kituku Stuets Project Planning & Industrial Liaison Students_ Management P B.Sc.(Environmental Environmental Poul Omnollo HOD MedicalHelhSin)matr Health Science) matters Elphas Muge Ag Dean of Students Degree in supplies Monitoring chain Management &Evaluation Senior Procurement Bsc in Supply Chain Dorothy Nyagitari Oficer Management, MSC in Procurement Procurement BED, Master in Gender and Social Jane W.Kariuki Dean of Students Education Safeguards OTHERS Show Kalama Deputy Principal- B.Educ(Arts) Bank Signatory SoKaaaAdm. Bank______Signatory_________ AdCPA Peter Musili Accountant C Bank Signatory I _B.com(Fmance) 1.7 Funding summary The Project is for duration of 5 years from 16/9/2019 to 31/12/2024 with an approved budget of EUR 9,280,000 equivalents to KShs 1,080,000,000 as highlighted in the table below: Below is the funding summary: Source of funds Donor Commitment- Amount received to date - Undrawn balance to (20/2/2020) date (30/6/2020) Donor KShs Donor KShs Donor KShs currency currency currenfiU (A) (A) (B) (B1') (A)-(B) (A ')-(B' (i) Grant World_Bank 9,280,000 1,080,000,000 1,718,523.10 200,000,000 7,561,476.9 880,000,000 (ii) Loan (iii) Counterpart funds Total 9,280,000 1,080,000,000 1,718,523.10 200,000,000 7,561,476.9 880,000,000 V EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2020 (9 MONTHS) 1.8 Summary of Overall Project Performance: Kenya Coast National Polytechnic received from the World Bank, through The Ministry of Education, Ksh 200,000,000 (USD 2,000,000) being Advance payment for the project. The actual amount so far spent totalling to Ksh 682,997 (USD 6,829.97) on recurrent expenditure and Ksh 1,111,520 (USD 11,115.2 on capital expenditure specifically spent on acquisition of office furniture and office fittings. Total amount unspent carried forward to the next semester is Ksh 198,205,483 (USD 1, 982, 054.83). The absorption rate is 0.897 which is far much blow the expectation. This was due to late receipt of the disbursement of funds from the Ministry of Education and thereafter the outbreak of Covid-19 pandemic that brought to the stand still all the activities. Well-furnished World Bank office for the project was established. Members of the implementing team and that of the advisory board were formed and were actively engaged in their respective functions. 1.9 Summary of Project Compliance i) The Polytechnic attained its readiness(DLII) having Established Project Implementation Units under DLR 1.1 and Industrial Advisory Board under DLR 1.2 ii) The Polytechnic opened Project Account which was submitted to the World Bank through the Ministry of Education. iii) Developed strategic Investment Plan and project implementation guidelines iv) At the start there was a challenge of how the procurement of items for the establishment of the project office and also employment of staff to man the project office. 2 STATEMENT OF PERFORMAMCE AGAINST PROJECT'S PREDETERMINED OBJECTIVES The project predetermined key objective is to increase the access and improve the quality of TVET programs in the Polytechnic and to support regional integration in East Africa. The Polytechnic Industrial Advisory board was established to assist improvement of the quality of the programmes offered and also to enhance recruitment of both local and regional students. Members of the project implementation unit were appointed by the Project Manager. Objectives of the project as per the program plan are as follows: a) Establishment of project implementation unit which was established b) Establishment of Industry Advisory Board which was established c) Number of Student enrolment at the polytechnic in programmes aimed at meeting needs of the priority sector which could not have been achieved due to covid-19 pandemic outbreak by 30 June 2020. Vi EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2020 (9 MONTHS) d) Number of demand driven programmes developed and accredited by the national TVET accreditation agencies or certified by industry which could not be achieved due to covid-19 pandemic outbreak by 30 June 2020. e) Training staff in the Polytechnic who have industrial attachment. This was not achieved. f) Teaching staff who undertake exchange in TVET institutes in another country. This was not achieved. g) Number of memoranda of understanding signed with institutions and industry. This was achieved h) Tracer studies conducted annually. This was not achieved. 3. CORPORATE SOCIAL RESPONSIBILITY STATEMENT The project has component on outreach for non-project TVET. Originally we had planned to support lamu TVC so that they can start maritime programmes. Since Lamu TVC is not yet operational, we have decided to support nearby institutions through capacity building of faculty and sharing of resourses. This is being done through MOU. The institutions we have selected to support include: Ahmed shahame Mwidani TVC, Likoni TVC and Ukunda youth polytechnic. Plans are underway to develop the partnership agreements and work plan. vii EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2020 (9 MONTHS) 4. STATEMENT OF PROJECT MANAGEMENT RESPONSIBILITIES The Project Manager for Kenya Coast National Polytechnic and the Project Centre Leader for EASTRIP 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 period ended on June 30, 2020. 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. Th, Prje MaagrforKya Coast National, Polyteclnic and te Project Centre Ieadr f EASTRIP 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 Project Managei for Kenya Coast Natiunal Polytechnic and the Project Centre Leader Fo EASTRIP 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, 2020, and of the Project's financial position as at that date. The Project Manager for Kenya Coast National Polytechnic and the Project Centre Leader for EASTRIP 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 Project Manager for Kenya Coast National Polytechnic and the Project Centre Leader for EASTRIP 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 period under audit were used for the eligible purposes for which they were intended and were properly accounted for. Approval of the Project financial statements The Project financial statements were approved by the Project Manager for Kenya Coast National Polytechnic and the Project Centre Leader for EASTRIP project on 14/10/2020 an signed by them. Pro ject Ma ager Pro-ject eentre Lead&r PrAit c u nt. Name: Anne M Mbogo (Mrs) Name: Kevin Ochieng Name: Clerkson Bolo iCPAK 5067 Vill REPUBLIC OF KENYA Telephone: +254-(2o) 3214000 HEADQUARTERS E-mail: info@oagkenya.go.ke Anniversary Towers Website: www.oagkenya.go.ke Monrovia Street OFFICE OF THE AUDITOR GENERAL P.O. Box 30o84-00100 Enhancing Accountability NAIROBI REPORT OF THE AUDITOR-GENERAL ON EAST AFRICA SKILLS TRANSFORMATION AND REGIONAL INTEGRATION PROJECT (CREDIT NUMBER: IDA 6334-KE) FOR THE NINE (9) MONTHS PERIOD ENDED 30 JUNE, 2020 - KENYA COAST NATIONAL POLYTECHNIC REPORT ON THE FINANCIAL STATEMENTS Opinion I have audited the accompanying financial statements of East Africa Skills Transformation and Regional Integration Project set out on pages 10 to 24, which comprise the statement of financial assets as at 30 June, 2020, and the statement of receipts and payments, statement of cash flows and statement of comparative budget and actual amounts for the nine (9) months period then ended, and a summary of significant accounting policies and other explanatory information in accordance with the provisions of Article 229 of the Constitution of Kenya and Section 35 of the Public Audit Act, 2015. I have obtained all the information and explanations which, to the best of my knowledge and belief, were necessary for the purpose of the audit. In my opinion, the financial statements present fairly, in all material respects, the financial position of the East Africa Skills Transformation and Regional Integration Project as at 30 June, 2020, and of its financial performance and its cash flows for the nine (9) months period then ended, in accordance with International Public Sector Accounting Standards (Cash Basis) and comply with the Financing Agreement No.6334-KE dated 18 December, 2018 between International Development Association (IDA) and the Republic of Kenya and the Public Finance Management Act, 2012. Basis for Opinion The audit was conducted in accordance with International Standards of Supreme Audit Institutions (ISSAls). I am independent of East Africa Skills Transformation and Regional Integration Project Management in accordance with ISSAI 130 on Code of Ethics. I have fulfilled other ethical responsibilities in accordance with the ISSAI and in accordance with other ethical requirements applicable to performing audits of financial statements in Kenya. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Key Audit Matters Key audit matters are those matters that, in my professional judgment, are of most significance in the audit of the financial statements. I have determined that there are no Key Audit Matters to communicate in my report. Report of the Auditor-General on East Africa Skills for Transformation and Regional Integration Project (IDA Credit Number: IDA 6334-KE) for the nine (9) months period ended 30 June, 2020 - Kenya Coast National Polytechnic Other Matter 1. Budgetary Controls and Performance The statement of comparative budget and actual amounts reflects total actual receipts of Kshs.200,000,000 against actual expenditure of Kshs.1,794,517 resulting to an overall under absorption of Kshs.198,205,483 or 99%. The under absorption is attributed to late disbursement of funds and the outbreak of Covid-1 9 pandemic. This implies that the funds were lying idle impacting negatively on service delivery to the public. 2. Project Implementation According to the statement of performance against the project's predetermined objectives, the project aims to achieve eight (8) thematic objectives. However, audit review of the approved work plan for the year under audit revealed that the following planned activities had not been implemented as at 30 June, 2020: No. Component Activity 1 Strengthening Govemance Conduct training for council and administration & key and Management staff on project operation Sensitization on project expectations Review and revise the strategic plan and master plan Conduct intemational benchmarking for top management and key staff Formulate project management measures/regulations (Guidelines) Conduct monitoring and inspection of the project Provide students scholarship 2 Institutionalizing Industry Organize stakeholder forums Linkages Industry Advisory Committee in operation Establish collaboration with local industries Establish students' attachment with industries Arrange graduate intemship Establish Alumni Association Conduct tracer study Engage part time trainers from industries Establish linkage with overseas industries and intuitions 3 Developing Market Relevant Carry out training needs assessment and Competency-Based Train staff on CBET curriculum development Training Programs Develop CBET curriculum Train assessors Develop digital programmes/online courses 4 Conduct training needs assessment Report of the Auditor-General on East Africa Skills for Transformation and Regional Integration Project (IDA Credit Number: IDA 6334-KE) for the nine (9) months period ended 30 June, 2020 - Kenya Coast National Polytechnic 2 No. Component Activity Training of School Managers Long term professional training abroad and locally for and Teachers new programs Train managers to build capacity (domestic and abroad) Train staff to improve the capacity of profession, pedagogy, IT and entrepreneurship (abroad) Train staff to improve the capacity of profession, pedagogy, IT and entrepreneurship (domestic) Improve research and innovation capacity 5 Upgrading Key Training Conduct extension, repair and rehabilitation of existing Facilities and Equipment facilities with support of expert services Construct hostel facilities with consultancy of expert services Construct training restaurant and staff quarters with consultancy from expert services Construct academic, administration, workshops and labs complex with consultancy of expert services Upgrade sewerage, water, electrical and ICT infrastructure and establish E-learning platform and expert services Procure training equipment with consultancy of expert services Procure project vehicles 6 Outreaching and Support for Conduct marketing and rebranding to attract local & Non-Project National TVET regional students Although the Management has attributed the state of affairs to late disbursement of funds and the outbreak of Covid-19 Pandemic, the project is clearly behind schedule. Delayed implementation of planned activities could adversely affect achievement of intended project activities within the set time limit. REPORT ON LAWFULNESS AND EFFECTIVENESS IN USE OF PUBLIC RESOURCES As required by Article 229(6) of the Constitution, based on the audit procedures performed, except for the matters described in the Basis for Conclusion on Lawfulness and Effectiveness in Use of Resources section of my report, I confirm that, nothing else has come to my attention to cause me to believe that public resources have not been applied lawfully and in an effective way. Basis for Conclusion 1. Staff Secondment The Kenya Coast National Polytechnic Management redeployed key personnel to various key roles in the management of the project as detailed below: Report of the Auditor-General on East Africa Skills fbr Transformation and Regional Integration Project (IDA Credit Number: IDA 6334-KE)for the nine (9) months period ended 30 June, 2020 - Kenya Coast National Polytechnic 3 Current Position in the No. Name Polytechnic Project Position 1 Rosalia Dzombo Procurement Officer Procurement Specialist 2 Paul Omolo Department, Medical Service Environment and Social Safeguards Officer 3 Magdelene Kituku Department, Secretarial and Project Industrial Liaison Liberal Studies Officer 4 Kevin Ochieng Centre Leader - Maritime Centre leader transport and Port Logistics 5 Elphas Muge Business and Media Studies Monitoring and Evaluation Officer 6 Clerkson Bolo Financial Controller Finance Officer However, the appointment letters did not clearly indicate how the man hours would be shared between the Institution and the Project. According to the Polytechnic's staff establishment structure, the Institution is grossly understaffed thus casting doubt on the ability of the staff to deliver on additional roles. The staff capacity might therefore, affect the effectiveness of implementing the project to achieve the set objectives. The audit was conducted in accordance with ISSAI 4000. The standard requires that I comply with ethical requirements and plan and perform the audit to obtain assurance about whether the activities, financial transactions and information reflected in the financial statements are in compliance, in all material respects, with the authorities that govern them. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my conclusion. REPORT ON EFFECTIVENESS INTERNAL CONTROLS, RISK MANAGEMENT AND GOVERNANCE Conclusion As required by Section 7(1)(a) of the Public Audit Act, 2015, based on the procedures performed, except for the matters described in the Basis for Conclusion on Lawfulness and Effectiveness in Use of Resources section of my report, I confirm that, nothing has come to my attention to cause me to believe that internal controls, risk management and overall governance were not effective. Basis for Conclusion The audit was conducted in accordance with ISSAI 2315 and ISSAI 2330. The standard requires that I plan and perform the audit to obtain assurance about whether processes and systems of internal control, risk management and overall governance were operating effectively, in all material respects. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my conclusion. Report of the Auditor-General on East Africa Skills for Transformation and Regional Integration Project (IDA Credit Number: IDA 6334-KE) for the nine (9) months period ended 30 June, 2020 - Kenya Coast National Polytechnic 4 Responsibilities of Management and those Charged with Governance Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Public Sector Accounting Standards (Cash Basis) and for maintaining effective internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error and for its assessment of the effectiveness of internal control. In preparing the financial statements, Management is responsible for assessing the ability of Project to continue to sustain services, disclosing, as applicable, matters related to sustainability of services and using the applicable basis of accounting unless Management intends to terminate Project or to cease operations. Management is also responsible for the submission of the financial statements to the Auditor-General in accordance with the provisions of Section 47 of the Public Audit Act, 2015. In addition to the responsibility for the preparation and presentation of the financial statements described above, Management is also responsible for ensuring that the activities, financial transactions and information reflected in the financial statements are in compliance with the authorities which govern them, and that public resources are applied in an effective manner. Those charged with governance are responsible for overseeing the financial reporting process, reviewing the effectiveness of how the entity monitors compliance with relevant legislative and regulatory requirements, ensuring that effective processes and systems are in place to address key roles and responsibilities in relation to governance and risk management, and ensuring the adequacy and effectiveness of the control environment. Auditor-General's Responsibilities for the Audit The audit objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes my opinion in accordance with the provisions of Section 48 of the Public Audit Act, 2015 and submit the audit report in compliance with Article 229(7) of the Constitution. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISSAls will always detect a material misstatement and weakness when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. In addition to the audit of the financial statements, a compliance audit is planned and performed to express a conclusion about whether, in all material respects, the activities, financial transactions and information reflected in the financial statements are in compliance with the authorities that govern them, and that public resources are applied in an effective way, in accordance with the provisions of Article 229(6) of the Constitution and submit the audit report in compliance with Article 229(7) of the Constitution. Report ofthe Auditor-General on East Africa Skills fbr Transformation and Regional Integration Project (IDA Credit Number: IDA 6334-KE) for the nine (9) months period ended 30 June, 2020 - Kenya Coast National Polytechnic 5 Further, in planning and performing the audit of the financial statements and audit of compliance, I consider internal control in order to give an assurance on the effectiveness of internal controls, risk management and governance processes and systems in accordance with the provisions of Section 7(1)(a) of the Public Audit Act, 2015 and submit the audit report in compliance with Article 229(7) of the Constitution. My consideration of the internal control would not necessarily disclose all matters in the internal control that might be material weaknesses under the ISSAls. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Because of its inherent limitations, internal control may not prevent or detect misstatements and instances of noncompliance. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate. As part of an audit conducted in accordance with ISSAls, I exercise professional judgement and maintain professional skepticism throughout the audit. I also: * Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Management. * Conclude on the appropriateness of the Management's use of the applicable basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of Project to continue to sustain its services. If I conclude that a material uncertainty exists, I am required to draw attention in the auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my audit report. However, future events or conditions may cause the Project to cease to continue to sustain its services. * Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. * Obtain sufficient appropriate audit evidence regarding the financial information and business activities of Project to express an opinion on the financial statements. * Perform such other procedures as I consider necessary in the circumstances. Report of the Auditor-General on East Africa Skills for Transformation and Regional Integration Project (IDA Credit Number: IDA 6334-KE) for the nine (9) months period ended 30 June, 2020 - Kenya Coast National Polytechnic 6 I communicate with the Management regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that are identified during the audit. I also provide Management with a statement that I have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on my independence, and where applicable, related safeguards. Nancy Gahu AUDITOR-GENERAL Nairobi 28 December, 2020 Report of the Auditor-General on East Africa Skills for Transformation and Regional Integration Project (IDA Credit Number: IDA 6334-KE) for the nine (9) months period ended 30 June, 2020 - Kenya Coast National Polytechnic 7 EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2020 (9 MONTIHS) 6. STATEMENT OF RECEIPTS AND PAYMENTS FOR THE PERIOD ENDED 30 JUNE 2020 KShs KShs KShs KShs KShs RECEIPTS World Bank 10.3 200,000,000 -- ----- 000 TOTAL RECEIPTS _ _ 200,000.000 ------ ----- 200,000.000 PAYMENTS - _____ ___________ _____ Compensation of 10.4 enployees 10.4 112,937 ---- 1 12.937 Purchase of goods and 10.5 services 570,060 -------- --- ---- 570,060 Acquisition of non- financial assets0.6 1,111,520 I. l 1 1,520 TOTAL PAYMENTS 1,794,517 ---- 1794,517 SURPLIIS/(DEFICIT) 198,205,483 -------- --------i -------- 198.205.483 The accounting policies and explanatory notes to these financial statements are an integral part of the financial statements. Project Manager Project Centre Leader Project cco ta Name: Anne M Mbogo (Mrs) Name: Kevin Ochieng Name: Clerkson Bolo ICPAK 5067 10 EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2020 (9 MONTHS) 7. STATEMENT OF FINANCIAL ASSETS AS AT 30 JUNE 2020 F INANCIAL ASSET1S Cash and Cash Equivalents Bank Balances 10.7 198,205,483 -- Total Cash and Cash Equivalents 198,205,483 -- Total Financial Assets 198,205,483 REPRESENTED BY i Surplus (Deficit) for the year 10.8 198,205,483 --- NET FINANCIAL POSITION 198,205,483 ----- The accounting policies and explanatory notes to these financial statements form an integral part of the financial statements. The financial statements were approved on 14/10/2020 and signed by: Project Manager Project Centre Leader Project an Name: Anne M Mbogo (Mrs) Name: Kevin Ochieng Name: Clerkson Bolo ICPAK 5067 11 EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2020 (9 MONTHS) 8. STATEMENT OF CASHFLOW FOR THE PERIOD 30 JUNE 2020 Receipts from operating activities World Bank grant 10.3 200,000,000-- Total receipts 200,000,000 Payments from operating activities Compensation of employees 10.4 (112,937---- Purchase of goods and services 10.5 (570,060) --I Totalments from operating activities (682,997) Net cash flow from operating activities 199,317,003 --- CASHFLOW FROM INVESTING ACTIVITIES Acquisition of Assets 10.6 1,11,520--- Net cash flows from Investing Activities (1,1 11,520) - NET INCREASE IN CASH AND CASH EQUIVALENT (1,794,517) ----- Cash and cash equivalent at 20 February 2020 10.3 200,000,000 - Cash and cash equivalent at 30 June 2020 10.7 198,205,483 --- The accounting policies and explanatory notes to these financial staternents form an integral part of the financial statements. The entity financial statements were approved on 14/10/2020 and signe by: Project Manager Project Centre Leader Project Acc12a Name: Anne M Mbogo (Mrs) Name: Kevin Ochieng Name: Clerkson Bolo ICPAK 5067 12 EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2020 (9 MONTHS) 9. STATEMENT OF COMPARATIVE BUDGET AND ACTUAL AMOUNTS Receipts World Bank grant 200.000,000 200,000,000 200,000,000 ------ Proceeds from dornestic and --- --- foreign grants ----- ------ ----- ---- Total Receipts 200,000,000 200,000,000 200,000,000 Payments Compensation of employees 700,000 700,000 112,937 587,063 16.13 Purchase of goods and services 7,000,000 7,000,000 570,060 6,429,940 8,14 Strategic and Master plan 5,000,000 5,000,000 j-- 5,000,000 Training program 10,000,000 10,000,000 10,000,000 - Acquisition of non-financial 117,500,000 117,500,000 1 ,11,520 1 16,388,480 0.95 assets 1600,01 Industrial Linkages 6,000,000 -- 6,000,000 Project vehicie 10,000,000 ------ 10,000,000 - 10,000,o00 - Repair and Rehabilitation 10,000,000 10,000,000 --- 10,000,000 - Capacity Building for staff 17,000,000 17,000,000 1- Marketing 2,400,000 2,400,000 --- 2,400 ,000 - Benchmarking 9,000,000 9,000,000 9,000,000 1 Monitoring and Evaluation 400,000 400,000 --0---- 400,000 - Consultancy services 5,000,000 5,000,000 -- 5,000,000 - Total Payments 200,000,000 200,000,000 1,794,517 198,205,483 0.897 Project Manager Project Centre Leader Project Acc nta Name: Anne M Mbogo (Mrs) Name: Kevin Ochieng Name: Clerkson olo ICPAK 5067 13 EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2020 (9 MONTHS) 11). NOTES TO THE FINANCIAL STATEMENTS SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies adopted in the preparation of these financial statements are set out below: 10.1 Basis of Preparation 10.1.1 Statement of compliance and basis of preparation The financial statements have been prepared in accordance with Cash-basis IPSAS financial reporting under the cash basis of Accounting, as prescribed by the PSASB and set out in the accounting policy note below. This cash basis of accounting has been supplemented with accounting for; a) receivables that include imprests and salary advances and b) payables that include deposits and retentions. The financial statements comply with and confonn to the form of presentation prescribed by the PSASB. The accounting policies adopted have been consistently applied to all the years presented. 10.1.2 Reporting entity The financial statements are for the Project number 6334-Ke under National Government of Kenya. The financial statements encompass the reporting entity as specified in the relevant legislation PFM Act 2012 . 10.1.3 Reporting currency The financial statements are presented in Kenya Shillings (KShs), which is the functional and reporting currency of the Project and all values are rounded to the nearest Kenya Shilling. 10.2 Significant Accounting Policies a)Recognition of receipts The Project recognises all receipts from the various sources when the event occurs, and the related cash has actually been received by the Government. *Transfers from the Exchequer Transfer from Exchequer, if any, is be recognized in the books of accounts when cash is received. Cash is considered as received when payment instruction is issued to the bank and notified to the receiving entity. * External Assistance External assistance, if any, is received through grants and loans from multilateral and bilateral development partners. 14 EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2020 (9 MONTHS) SIGNIFICANT ACCOUNTING POLICIES (Continued) Donations and grants Grants and donations shall be recognized in the books of accounts when cash is received. Cash is considered as received when a payment advice is received by the recipient entity or by the beneficiary. In case of grant/donation in kind, such grants are recorded upon receipt of the grant item and upon determination of the value. The date of the transaction is the value date indicated on the payment advice. Proceeds from borrowing Borrowing includes Treasury bill, treasury bonds, corporate bonds, sovereign bonds and external loans acquired by the Project or any other debt the Project may take on will be treated on cash basis and recognized as a receipt during the year they were received. Undrawn external assistance These are loans and grants at reporting date as specified in a binding agreement and relate to funding for the Project currently under development where conditions have been satisfied or their ongoing satisfaction is highly likely and the project is anticipated to continue to completion. An analysis of the Project's undrawn external assistance is shown in the funding summary Other receipts These include Appropriation-in-Aid and relates to receipts such as proceeds from disposal of assets and sale of tender documents. These are recognised in the financial statements the time associated cash is received. b) Recognition of payments The Project recognises all payments when the event occurs, and the related cash has actually been paid out by the Project. Compensation of employees Salaries and Wages, Allowances. Statutory Contribution for employees are recognized in the period when the compensation is paid. Use of goods and services Goods and services are recognized as payments in the period when the goods/services are consumed and paid for. If not paid for during the period where goods/services are consumed, they shall be disclosed as pending bills. Interest on borrowing Borrowing costs that include interest are recognized as payment in the period in which they incurred and paid for. 15 EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2020 (9 MONTHS) SIGNIFICANT ACCOUNTING POLICIES (Continued) Repayment of borrowing (principal amount) The repayment of principal amount of borrowing is recognized as payment in the period in which the repayment is made. The stock of debt is disclosed as an annexure to the consolidated financial statements. Acquisition of fixed assets The payment on acquisition of property plant and equipment items is not capitalized. The cost of acquisition and proceeds from disposal of these items are treated as payments and receipts items respectively. Where an asset is acquired in a non-exchange transaction for nil or nominal consideration and the fair value of the asset can be reliably established, a contra transaction is recorded as receipt and as a payment. A fixed asset register is maintained by each public entity and a summary provided for purposes of consolidation. This summary is disclosed as an annexure to the consolidated financial statements. c) In-kind donations In-kind contributions are donations that are made to the Project in the form of actual goods and/or services rather than in money or cash terns. These donations may include vehicles, equipment or personnel services. Where the financial value received for in-kind contributions can be reliably determined, the Project includes such value in the statement of receipts and payments both as receipts and as payments in equal and opposite amounts; otherwise, the contribution is not recorded. d) Cash and cash equivalents Cash and cash equivalents comprise cash on hand and cash at bank, short-tern 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 Kenya and at various commercial banks at the end of the financial year. 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 were not surrendered or accounted for at the end of the financial year. Restriction on cash Restricted cash represents amounts that are limited/restricted from being used to settle a liability for at least twelve months after the reporting period. This cash is limited for direct use as required by stipulation. Amounts maintained in deposit bank accounts are restricted for use in refunding third part deposits 16 EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2020 (9 MONTHS) SIGNIFICANT ACCOUNTING POLICIES (Continued) e) Accounts receivable For the purposes of these financial statements, imprests and advances to authorised public officers and/or institutions which were not surrendered or accounted for at the end of the financial year is treated as receivables. This is in recognition of the government practice where the imprest payments are recognized as payments when fully accounted for by the imprest or AlE holders. This is an enhancement to the cash accounting policy. Other accounts receivables are disclosed in the financial statements. f) Contingent Liabilities A contingent liability is: a) A possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or b) A present obligation that arises from past events but is not recognised because: (i) It is not probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation; or (ii) The amount of the obligation cannot be measured with sufficient reliability. Some of contingent liabilities may arise from: litigation in progress, guarantees, indemnities. Letters of comfort/ support, insurance, Public Private Partnerships. The Entity does not recognize a contingent liability but discloses details of any contingencies in the notes to the financial statements unless the possibility of an outflow of resources embodying economic benefits or service potential is remote. Section 89 (2) (i) of the PFM Act requires the National Government to report on the payments made, or losses incurred, by the county government to meet contingent liabilities as a result of loans during the financial year, including payments made in respect of loan write-offs or waiver of interest on loans g) Contingent Assets The Entity does not recognize a contingent asset, but discloses details of a possible asset whose existence is contingent on the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Entity in the notes to the financial statements. Contingent assets are assessed continually to ensure that developments are appropriately reflected in the financial statements. If it has become virtually certain that an inflow of economic benefits or service potential will arise and the asset's value can be measured reliably, the asset and the related revenue are recognized in the financial statements of the period in which the change occurs. 17 EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2020 (9 MONTHS) h) Pending bills Pending bills consist of unpaid liabilities at the end of the financial year arising from contracted goods or services during the year or in past years. As pending bills do not involve the payment of cash in the reporting period, they recorded as 'memorandum' or 'off-balance' items to provide a sense of the overall net cash position of the Project at the end of the year. 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. i) Budget The budget is developed on a comparable accounting basis (cash basis), the same accounts classification basis (except for accounts receivable - outstanding imprest and clearance accounts and accounts payable - deposits, which are accounted for on an accrual basis), and for the same period as the financial statements. The Project's budget was approved as required by Law and National Treasury Regulations, as well as by the participating development partners, as detailed in the Government of Kenya Budget Printed Estimates for the year. The Development Projects are budgeted for under the MDAs but receive budgeted funds as transfers and account for them separately. These transfers are recognised as inter-entity transfers and are eliminated upon consolidation. 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. j) Third party payments Included in the receipts and payments, are payments made on its behalf by to third parties in form of loans and grants. These payments do not constitute cash receipts and payments and are disclosed in the payment to third party's column in the statement of receipts and payments. k) Exchange rate differences The accounting records are maintained in the functional currency of the primary economic environment in which the Project operates, Kenya Shillings. Transactions in foreign currencies during the year/period are converted into the functional currency 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 18 EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2020 (9 MONTHS) SIGNIFICANT ACCOUNTING POLICIES (Continued) the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the statements of receipts and payments. 1) 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. m) Subsequent events There have been no events subsequent to the financial period end with a significant impact on the financial statements for the period ended June 30, 2020. n) Errors Material prior period errors shall be corrected retrospectively in the first set of financial statements authorized for issue after their discovery by: i. Restating the comparative amounts for prior period(s) presented in which the error occurred; or ii. If the error occurred before the earliest prior period presented, restating the opening balances of assets, liabilities and net assets/equity for the earliest prior period presented. 19 EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2020 (9 MONTHS) NOTES TO THE FINANCIAL STATEMENTS (Continued) 10.3 PROCEEDS FROM DOMESTIC AND FOREIGN GRANTS During the 12 months to 30 June 2020 we received grants from donors as detailed in the table below: Grants Received from Bilateral Donors (Foreign Governments) World Bank 20/2/2020 1,718.523 1 200,000,000 ------- ------- 200,000,000 -------- Grants Received from Multilateral Donors (International Organisations) Grants Received from Local Individuals and organisations Total- f--___I-----~ ------ -----I-- ------- Total 1.718.523.1 200,000.000 -_ ------- 200000.000 ------- 20 EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2020 (9 MONTIHS) NOTES TO TIIE FINANCIAL STATEMENTS (Continued) 10.4 COMPENSATION OF EMPLOYEES KShs KShs KShs KShs KShs Basic wages of temporary i 108,617 ----- 08,617 1 -----08,617 emuployees Copulsoy national,320 -------- 4,320 4320 social security schemes Total 112,937 -------- 112,937, --- - 112,937 10.5 PURCHASE OF GOODS AND SERVICES KShs KShs KShs KShs KShs Communication, supplies and services 63,360 -- 63,360 -- 63,360 Domestic travel and subsistence -0 -- ------ ------- ------- - -11110 Financial Cost 600 -- 600 -- 600 Hospitality supplies and services 506.100 -- 506,100 ---- 506,100 Total 570,060 -- 570,060 -- 570,060 21 EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2020 (9 MONTHS) NOTES TO THE FINANCIAL STATEMENTS (Continued) 10.6 ACQUISITION OF NON-FINANCIAL ASSETS Purchase of office furniture & Kh SsKh SsKh general equipment 1, 1 11,520] 1---- 1, 11 1,520 -----111,2 _- - 1 5 ------- Total 19-0'8 K- KS The expenditure is for furniture acquisition and fittings 10.7 CASH AND CASH EQUIVALENTS CARRIED FORWARD The project has one project accounts as listed below: 10.7.1 A Bank Accounts Project Bank Accounts Forei2n Currency Accounts Central Bank of Kenya 1,703,103.5 -------- Total Foreign Currency balances 1,703 103.5 -------- Local Currency Accounts Central Bank of Kenya ----5-- ------] Equity Bank A/C No.0250279469130 198,205,483 Total local currency balances 198,205,483 --- Total bank account balances 198,205,483- EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2020 (9 MONTHS) NOTES TO THE FINANCIAL STATEMENTS (Continued) 10.8 FUND BALANCE CARRIED FORWARD Accumulated Surplus'Deflcit 198,205,483 --------- 23 EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2020 (9 MONTHS) 11. PROGRESS ON FOLLOW UP OF PRIOR YEAR AUDITOR'S RECOMMENDATIONS I he following is the summary of issues raised by the external auditor, and management comments that were provided to the auditor. We have nominated focal persons to resolve the various issues as shown below with the associated time frame within which we cxpcct the issues to be resolved. 0 -1 Guidance Notes: (i) Use the same reference numbers as contained in the external audit report; (ii) Obtain the "Issue/Observation" and "management comments", required above, from final external audit report that is signed by Management; (iii) Before approving the report, discuss the timeframe with the appointed Focal Point persons within your entity responsible for implementation of each issue: (iv) Indicate the status of "Resolved" or "Not Resolved" by the date of submitting this report to National Treasury. 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