I I M-1Ifl r'CaD&- MA-4- W76T The Federal Democratic Republic of Ethiopia Audit Services Corporation I INDEPENDENT AUDITOR'S REPORT TO THE SUPERVISING AUTHORITY OF ADDIS ABABA WATER AND SEWERAGE AUTHORITY WATER SUPPLY AND SANITATION PROJECT OFFICE We have audited the financial statements of Addis Ababa Water and Sewerage Authority, Water Supply and Sanitation Project Office, which comprise the balance sheet as at 7 July 2016 and the statement of sources and uses of funds for the year then ended, and a summary of significant accounting policies and other explanatory information. Project Office's Responsibility for the Financial Statements The Project Office is responsible for the preparation of financial statements that give a true and fair view in accordance with the accounting policies described in note 2 to the financial statements and 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 from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on 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 presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 2 151-011-5515222 Fax 251-011-55130 3 E-mail: ASC ethionet.com E 5720 251-011-5535012 251-011-5535015 25 1-0 11-5 53 5016 I I INDEPENDENT AUDITOR'S REPORT TO THE SUPERVISING AUTHORITY OF ADDIS ABABA WATER AND SEWERAGE AUTHORITY WATER SUPPLY AND SANITATION PROJECT OFFICE (continued) Opinion In our opinion, the financial statements give a true and fair view of the financial position of Addis Ababa Water and Sewerage Authority, Water Supply and Sanitation Project Office, as at 7 July 2016 and of its sources and uses of funds for the year then ended in accordance with I the accounting policies described in note 2 to the financial statements. Reports on Other Requirements As required by the World Bank guidelines we report that, to the extent we can assess:- - during the year IDA funds have been used in accordance with the conditions of the relevant financing agreements and only for the purposes for which the financing was provided; goods, works and services financed have been provided in accordance with the relevant financing agreements and disbursement letters; - all necessary supporting documents, records and accounts have been maintained in respect of all Project activities; - our examination revealed no weaknesses or irregularities in the systems of internal controls over financial expenditure other than those mentioned in the management letter; I - with respect to statements of expenditure submitted during the year ended 7 July 2016 listed on page 9, in our opinion a) the statements, together with the procedures and internal controls involved in their preparation, can be relied upon to support the relevant withdrawals; b) adequate supporting documentation has been maintained to support claims to IDA for reimbursements of expenditures incurred; and c) which expenditures are eligible for financing under IDA Credit No. 4292- ET, IDA Credit No. 5115-ET and IDA Grant No. H287-ET. I 4 January 2017 I I I 2 I ADDIS ABABA WATER AND SEWERAGE AUTHORITY WATER AND SANITATION DEVELOPMENT AND REHABILITATION I PROJECT OFFICE BALANCE SHEET AS AT 7 JULY 2016 I AAWSA Addis Ababa City IDA Own Source Government 2016 2015 Ethiopian Ethiopian Ethiopian Ethiopian Ethiopian Notes Birr Birr Birr Birr Birr CURRENT ASSETS Letters of credit 343,050,384 102,962,165 2,961,736,458 3,407,749,008 2,474,313,404 Stock 58,174,138 32,508,993 323,019,393 413,702,524 207,836,067 European Union 209,142 - 2,184,579 2,393,721 2,393,721 Debtors 3 266,988,186 203,475,452 602,997,009 1,073,460,647 1,207,865,536 I Cash and bank balances 4 125.134,016 14,324,132 - 139.458,148 138.000,524 793.555,866 353,270,741 3,889,937,439 5.036,764,047 4,030,409,252 LIABILITIES Retentions payable 17,729,712 3,582,954 90,201,218 111,513,884 155,905,148 Grace period payables - ,145,302 5,145,302 142,609,955 Other creditors 5 9.050,838 375,60 63,939,939 73,366,437 83,846380 26,780,551 3,958,614 159,286,460 190,025,624 382,361,483 NET ASSETS 766,775316 34%R2,128 3,730,650,979 4,846,738,423 3,648,047,768 I I ACCUMULATED FUND 6 766.775.316 349.312.128 3.730.650.979 4,846.738,423 3,648,047,762 The notes on pages 7 to 10 form an integral part of these financial statements. I I I I 3 U I I ADDIS ABABA WATER AND SEWERAGE AUTHORITY WATER AND SANITATION DEVELOPMENT AND REHABILITATION PROJECT OFFICE SOURCES AND USES OF FUNDS FOR THE YEAR ENDED 7 JULY 2016 AAWSA Addis Ababa IDA Own Source City Government 2016 2015 Notes Ethiopian Birr Ethiopian Birr Ethiopian Birr Ethiopian Birr Ethiopian Birr SOURCES Addis Ababa Water and Sew,erave proceeds from Chinese soft loan - - 249,334,046 249,334,046 82,547,748 IDA Grant-1-1287-ET SOE withdra%%al 7,813,171 - - 7,813,171 179,359,898 IDA Credit-4292-ET Direct payments -- - - 9,813,028 SOE -wNithdraN\ al 27,602,062 - - 27,602,062 IDA Credit-5115- ET Direct palment 115,577,993 - - 115,577,993 25,061,251 SOE withdrawal 250,516,575 - - 250,516,575 107,885,069 French Development Agency - - - 15,442,602 Addis Ababa Water and SexNerage Authority 7,913,774 - 7,913,774 150,268,764 Addis Ababa Cit\ Government - 2,684,974,696 2,684,974,696 1,914,747,486 Gain on foreign exchange 8.092,009 - - 8.092.009 14,915.552 409,601,810 , 2,934,308,742 3,351,824,325 2,500,041,399 USES Works and goods 7 304,652,966 27,493,493 1,629,985,902 1,962,132,362 1,593,835,437 Consultancy 30,103,179 - 124,398,597 154,501,777 25,423,118 Trainini 1.346,042 - 332,861 1,678,903 154,379 I Operatin costs 329400 - 34491230 34.820,630 33 ,931 ,438 336.431,588 27.493,493 1,789,208,591 2,153,133,672 1,653,344,372 EXCESS OF SOURCES OVER USES 71I0-22 (19.579.720) 1 1,198,690,653 846,697.027 The notes on pages 7 to 10 form an integral part of these financial statements. I I * I ADDIS ABABA WATER AND SEWERAGE AUTHORITY URBAN WATER SUPPLY AND SANITATION PROJECT I IDA CREDIT NO. 4292-ET, IDA CREDIT NO. 5115-ET and IDA GRANT NO. H287-ET DESIGNATED ACCOUNT STATEMENT 7 JULY 2016 I I For year ended 7 July 2016 Account number 0101191300006 (02615013576000) Depository bank National Bank of Ethiopia Address Addis Ababa, Ethiopia Currency USD Equivalent in USD Ethiopian Birr Balance at 7 July 2015 4,916,582.55 101,192,610.39 Add:- Replenishments during the year 13.529.140.94 285.944,339.81 18,445,723.49 387,136,950.20 Less:- Payments for goods and services 6,852,343.42 145,820,477.61 Transfer to Birr account 5,908.935.07 125,312.499.91 12,761.278.49 271,132,977.52 5,684,445.00 116,003,972.68 Add:- Gain on exchange rate fluctuation - 8,092,009.23 Balance at 7 July 2016 5,684,445.00 124,095,981.91 I5 1 I I I I I 5 I I ADDIS ABABA WATER AND SEWERAGE AUTHORITY WATER SUPPLY AND SANITATION PROJECT OFFICE NOTES TO THE FINANCIAL STATEMENTS I 1. PROJECT OFFICE INFORMATION The Water Supply and Sanitation Project Office was established in May 2008 by the Addis Ababa Water and Sewerage Authority to administer the Authority's projects. The Office is in Addis Ababa, Ethiopia, with projects throughout the city. There are currently 40 projects. I 2. SIGNIFICANT ACCOUNTING POLICIES a) Basis of preparation These financial statements have been prepared on a modified cash basis of accounting whereby non-monetary assets, excluding stock, are expensed when acquired and monetary assets and liabilities and stock are carried at historical cost. b) Currency These financial statements are presented in Birr. Transactions in foreign currency are translated into Birr at the approximate rate of exchange prevailing at the date of the transaction. Cash balances denominated in foreign currencies are translated I into Birr at the exchange rates ruling at the balance sheet date. c) Income Income is recognized when received or receivable. d) Letters of credit Letters of credit represent balances still outstanding on the unutilized portions of open letters. e) Stock Stock is valued on the basis of actual cost. I I I 6 I I ADDIS ABABA WATER AND SEWERAGE AUTHORITY WATER AND SANITATION DEVELOPMENT AND REHABILITATION PROJECT OFFICE NOTES TO THE FINANCIAL STATEMENTS (continued) 1 3 DEBTORS AAWSA Addis Ababa IDA Own Source City Governmen 2016 2015 Ethiopian Birr Ethiopian Birr Ethiopian Birr Ethiopian Birr Ethiopian Birr Advance payments to contractors 183,455,586 15.359,178 374.612,623 573,427,387 849,879.346 Inter-fund receivable 80.628,462 161,362,677 83,264,058 325.255,198 243,708.498 Advances and prepayments 193,771 23,360,861 130,825,480 154,380.113 95,949,481 Sundry 2,295,500 3,382,530 14,273,297 19,951,327 18,295.473 Staff 414.867 2155 10205 44,2 2.88 246964 1. 07 86Q3336 4 CASH AND BANK BALANCES AAWSA AA City IDA Own Source Government 2016 2015 Ethiopian Birr Ethiopian Birr Ethiopian Birr Ethiopian Birr Ethiopian Birr US dollar accounts 124,095.982 - - 124.095.982 101,192.610 Birr accounts 138,03 14324,132 - 15.362166 36.807.914 - 13.245814-a 138.000524 I AAWSA AA City IDA Own Source Government 2016 2015 Ethiopian Birr Ethiopian Birr Ethiopian Birr Ethiopian Birr Ethiopian Birr 5 OTHER CREDITORS Taxes payable 7,079,103 987,926 24,361.661 32.428,690 47,334,753 Suppliers - - 7,613,018 7,613,018 7.613,018 Suspense 1,965,793 2.965,411 4,931,204 4.931,204 Contractors - 18,613.170 18,613.170 4,863,303 Payable to IDA project (884.806) 3.416,734 2.531,927 9,677,792 Sundry 5.942 22,540 69.945 7248.427 946,30 I I I ADDIS ABABA WATER AND SEWERAGE AUTHORITY WATER AND SANITATION DEVELOPMENT AND REHABILITATION PROJECT OFFICE NOTES TO THE FINANCIAL STATEMENTS (continued) 1 AAWSA Addis Ababa City 6 ACCUMULATED FUND IDA Own Source Government Ethiopian Ethiopian Ethiopian Ethiopian Birr Birr Birr Birr Balance at 7 July 2015 693,605,093 368,891,848 2,585,550,828 3,648,047,769 Excess of sources over uses 73,170,222 (19,579,720) 1,145,100,152 1,198,690,654 Balance at 7 July 2016 266.77.315 32117306508 4,846,738.423 I AAWSA Addis Ababa 7 WORKS AND GOODS IDA Own Source City Governmei 2016 2015 Ethiopian Ethiopian Ethiopian Ethiopian Ethiopian Birr Birr Birr Birr Birr Construction in progress - buildings - - 36,503,116 36,503,116 36,503,116 - infrastructure 304,652,966 10,976,363 1.510,241,547 1,825,870.877 1,347,758,945 Compensation paid to farmers - - 8,402,425 8,402,425 27,961,086 Plant and machinery - 3,620,408 7,551,121 11,171,528 828,202 Vehicles - 12,896,723 67,287,694 80,184,417 193,475,292 Furniture and fixtures - - - - 1580 I 304.652.966 1121493~ 1.2.8.0 1.6.3.6 1.0.4.2 1 8 DATE OF AUTHORIZATION The Project Office Manager authorized the issue of these financial statements on 4 January 2017. I I I I 1 I ADDIS ABABA WATER AND SEWERAGE AUTHORITY URBAN WATER SUPPLY AND SANITATION PROJECT IDA CREDIT NO. 4292-ET, IDA CREDIT NO. 5115-ET AND GRANT NO. H287-ET SOE WITHDRAWAL SCHEDULE FOR STATEMENTS OF EXPENDITURE submitted during the YEAR ENDED 7 JULY, 2016 Categories Works and eoods Training and Application number consultancv Total Total Birr Birr Birr USD I Grant No. H287-ET AAWSP-47 6,167,562.67 1,645,608.32 7,813,170.99 371,602.76 Sub Total 6,d1,5627 1,6459608.32 37371.602.76 Credit No. 5115-ET AAWSP-44 27,236,201.07 235,342.24 27,471,543.31 1,333,971.55 AAWSP-45 15,352,100.19 61,280.00 15,413,380.19 740,678.92 AAWSP-46 19,652,904.77 2,820,432.37 22,473.337.14 1,069,257.68 AAWSP-47 29,435,835.79 29,435,835.79 1,399,999.80 AAWSP-51 41,876,478.27 41,876,478.27 1,978.142.16 AAWSP-49 15,261,372.00 15,261,372.00 720,000.00 AAWSP-54 85,281,550.12 85,281,550.12 3,983,723.00 AAWSP-57 7.861.434.79 5,441,643.00 13,303,077.79 612,59.33 Sub Total 241957,877.00 8,55697. 250516,574.61 11,838132.44 Credit No. 4292-ET AAWSP-44 6,038,955.16 6,038,955.16 293,241.42 AAWSP-47 19,707,246.05 1,855,860.59 21.563,106.64 1,025,564.39 Sub Total 25.746,201.21 1,855,860.59 27,602,06.80 1.318,805.81 Grand Total 273.871.640.88 12,060,166.52 285,931,807.40 13J28541AL 1 1 I I * 9 U