The Federal Democ-atic Rep.ub i of Ethiopia Audit Services Corporation I INDEPENDENT AUDITORS' REPORT ON THE FINANCIAL STATEMENTS OF INDUSTRIAL PARKS DEVELOPMENT CORPORATION COMPETITIVENESS AND JOB CREATION PROJECT We have audited the financial statements of Industrial Parks Development C3rporation, Competitiveness and Job Creation Project financed by The International DEvelopment Association (IDA) Credit No. 5451-ET, which comprise the balance sheet as at 7 July 2015 and the statement of sources and uses of funds and designated account statem nt for the period from 31 July 2014 to 7July 2015, and a summary of significant accounting p)licies and other explanatory information. *3 Project management's Responsibility for the Financial Statements The Project Management of the Industrial Parks Development Corporation is resp nsible for the preparation of financial statements that give a true and fair view in accordance with the modified cash basis of accounting described in note 2 to the financial statements ar d for such 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. 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 about whether the financial statements are free fron material misstatement. An audit involves performing procedures to obtain audit evidence about the am unts and disclosures in the financial statements. The procedures selected depend on thE auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentati n of the financial statements in order to design audit procedures that are appropria e in the circumstances, but not for the purpose jf 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 made by manageme t, as well * as evaluating the overall presentation of the financial statements. U51: INDEPENDENT AUDITORS' REPORT ON THE FINANCIAL STATEMENTS OF INDUSTRIAL PARKS DEVELOPMENT CORPORATION COMPETITIVENESS AND JOB CREATION PROJECT (Continued) We believe that the audit evidence we have obtained is sufficient and appropriate o provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financia position of Industrial Parks Development Corporation, Competitiveness and Job creation Project financed under IDA Credit No. 5451-ET as at 7 July 2015 and of its sources and uses of flnds for the period then ended in accordance with the modified cash basis of accounting. Report on Other Requirements In our opinion, - during the year all the external funds have been used in accordance with the c nditions of the relevant financing agreement and only for the purposes for which the fin ncing was provided; - goods, works and services financed have been provided in accordance with t e relevant financing agreement and disbursement letters; - all necessary supporting documents, records and accounts have been maintained in respect of all Project activities; - the Designated Account has been maintained in accordance with the provis ons of the financing agreement and funds disbursed out of the Account were used oily for the purposes intended in the financing agreements; - the funds disbursed covered expenditures that are eligible for financing under IDA Credit No. 5451-ET; - there was a clear linkage between the books of account and the financial statem nts; with respect to the statement of expenditure submitted during the period en ed 7 July 2015 and shown on page 8, in our opinion, a) the statement, together with the procedures and internal controls involved in its preparation, can be relied upon to support the relevant withdrawals; b) adequate supporting documentation has been maintained to support cla ms to IDA for reimbursements of expenditures incurred; and c) which expenditures are eligible for financing under IDA Credit No. 5451-ET. 23 November 2015 * 2 INDUSTRIAL PARKS DEVELOPMENT CORPORATION COMPETITIVENESS AND JOB CREATION PROJECT IDA CREDIT NO. 5451-ET BALANCE SHEET AS AT 7 JULY 2015 2014 Notes Birr Birr ASSETS CURRENT ASSETS Debtors 1,431,779 208 Cash and bank balances 3 200,748,605 13 142,327 202,180,384 13 142,535 CURRENT LIABILITIES Taxes payable 256,983 14,150 Accruals 507,882 - 764,865 l4l150 NET ASSETS 201,415,519 13 128,3u REPRESENTED BY FUND BALANCE 201,415,519 13 1238 I3 INDRSTRIAL PARKS DEVELOPMENT CORPORATION COMPETITIVENESS AND JOB CREATION PROJECT IDA CREDIT NO. 5451-ET STATEMENT OF SOURCES AND USES OF FUNDS FOR THE PERIOD FROM 31 JULY 2014 TO 7 JULY 2015 Cumulative 7 November 2013 Period ended to 7 July 2015 30 July 2014 Notes Birr Birr Birr SOURCES IDA Credit -Initial deposit 186,521,693 199,850,35 3 13,328,665 -SOE procedure 31,051,382 42,042,101 10,990,719 Gain on foreign exchange 6,378,016 6,760,86) 382,853 TOTAL SOURCES 223,951,091 248,653,32 24,702,237 USES Goods 20,613,707 21,027,871 414,171 Consultancy Services 11,473,407 21,661,69 10,188,292 Training and Workshop 220,633 688,98( 468,347 Operating Costs 4 3,356,210 3 859 25: 503,042 TOTAL USES 35,663,957 47,237,80 11,573,852 EXCESS OF SOURCES OVER USES 1884287,134 201,415_51c 13,128,385 I 4 INDUSTRIAL PARKS DEVELOPMENT CORPORATION COMPETITIVENESS AND JOB CREATION PROJECT IDA CREDIT NO. 5451- ET DESIGNATED ACCOUNT STATEMENT For period ended 7 July 2015 Account number 0100401300006 Depository bank National Bank of Ethiopia Address Addis Ababa, Ethiopia Related Credit IDA Credit No. 5451- ET Currency USD Equivalent USD Rate In Ethiopian Birr Beginning balance (PPA No.Q868- ET) 30 July 2014 650,354.24 Additional Deposit 9,349,645.76 10,000,000.00 Id World Bank replenishments -Application No. CJC 007 610,604.88 -Application No. CJC 008 921,81725 1,532,422.13 11,532,422.13 Deduct: Payments for:- -Goods 1,043,579.12 -Consultancy 529,033.83 -Training and Workshop 11,085.32 -Operating Costs 202,481.01 -Transfer to Birr account 10.51 1,796,770.79 Ending balance - 7 July 2015 9735651.34 2951 2000416,02 I 5 61,048 INDUSTRIAL PARKS DEVELOPMENT CORPORATION COMPETITIVNESS AND JOB CREATION PROJECT IDA CREDIT No. 5451- ET NOTES TO THE FINANCIAL STATEMENTS 7 JULY 2015 1. PROJECT INFORMATION The objective of the project is to contribute to job creation by attracting investments and improving competitiveness of enterprises in the Targeted Industrial Parks and their linked domestic enterprises. The financing agreements, IDA Credit No. 5451-ET has been made between the Federal Democratic Republic of Ethiopia and The International Mevelopment Association (the World Bank) on 20 May 2014 as amended and restated on 21 May 2015. The loan would be for forty (40) years with a ten (10) years grace perio I for a total amount of SDR 161,600,000. 2. SIGNIFICANT ACCOUNTING POLICIES a) Basis of preparation These financial statements have been prepared on a modified cash basis whereby non-monetary assets are expensed when acquired and monetary assets and liabilities are carried at fair value. b) Currency These financial statements are presented in Birr. Transactions in foreign currency are translated into Birr at the approximate rate of exchange prevailing a the date of the transaction. Cash balances denominated in foreign currencies are tr nslated into Birr at the exchange rates ruling at the balance sheet date. 3. CASH AND BANK BALANCES I:!014 Birr Birr I6 National Bank of Ethiopia, USD designated account 0100401300006 200,416,172 12795,264 Commercial Bank of Ethiopia, Birr Account 1000072828848 328,744 347,063 Cash on hand 3,689 - 200,748,605 13 4 * 6 10 INDUSTRIAL PARKS DEVELOPMENT CORPORATION COMPETITIVENSS AND JOB CREATION PROJECT IDA CREDIT No. 5451- ET NOTES TO THE FINANCIAL STATEMENTS (Continued) 7 JULY 2015 4. OPERATING COSTS 2014 Birr Birr Salary and employees benefits 2,079,012 225,000 Cash indemnity allowance 1,350 - Transport allowance 46,597 4,096 Travelling and per diem 290,390 45,570 Office Supplies 122,158 6,900 Postage, telephone, facsimiles and internet 17,631 - Fuel and lubricants 39,339 - Entertainment 8,926 48,091 Vehicle insurance 92,676 - Advertising and Promotion 243,476 54,080 Bank service charge 140,491 91,475 Audit fee 23,000 - Office rent 235,411 - Repair and maintenance 2,123 27,830 Sundry 1363 - 33 5210 503-402 5. DATE OF AUTHORIZATION The Industrial Parks Development Corporation authorized the issue of these fir ancial statements on 23 November 2015. 7 I INDUSTRIAL PARKS DEVELOPMENT CORPORATION COMPETITIVENESS AND JOB CREATION PROJECT IDA CREDIT No.5451 - ET SCHEDULE OF SoES' Submitted during the PERIOD FROM 31 JULY 2014 TO 7 JULY 2015 Traininq Consultants' and Operating Application Goods Services Workshops Costs Total Ethiopian No. USD USD USD USD USD Birr CJC - 001* - - - - 9,349.645.76 186,521.693.00 CJC - 007 572,812.18 31,439.65 - 6,353.05 610,604.88 12,181,321.11 CJC - 008 461,190.28 315,590.75 1,085.32 133,950.90 921,817.25 8,870,060.02 1,034,002.46 347,030.40 1,085.32 140,303.95 1,532,422.13 1,051,381.13 10.882.067.89 217.573,074.13 * Initial deposit I8