ZAMBIA PREPARATION OF THE FORESTRY INVESTMENT PROGRAMME INVESTMENT PLAN- PROJECT PREPARATION GRANT No. TFX02862 FINANCIAL STATEMENTS FOR THE YEAR ENDED 31st DECEMBER, 2018. THEAUD TOR GENERAL PG B.OX 50071 LUSAKA -/AMB A VIINISTR OFZ 0 NAT IONAL I ) IV A)PM NT I A.NNIN( ZAMBIA PREPARATIONOF THE FORESTRY INVESTMENT PROGRAMME INVESTMENT PLAN PROJECT - PROJECT PREPARATION GRANT NO. TFA02862 FINANCIAL STATEMENTS FOR THE YEAR ENDED 31st DECEMBER 2018 MINISTRY OF NATIONAL DEVELOPMENT PLANNING ZAMBIA PREPARATION OF THE FORESTRY INVESTMENT PROGRAMME INVESTMENT PLAN PROJECT - PROJECT PREPARATION GRANT NO. TFA02862 Contents Page Contents n Statement of Programme Management's Responsibilities.... .................................................. 2 Independent A uditor's Report..............................................- .............- ............................3-5 Statement of Sources and Utilization of Funds for the Year Ended 3P't December 2018.............. 6 Notes to the Statement of Sources and Utilization of Funds for the Financial for the Year Ended 31 " D ecem ber 20 18 ....................................................-7-1.......... ....... .................................. .7-10 Page 1 MINISTRY OF NATIONAL DEVELOPMENT PLANNING ZAMBIA PREPARATIONOF THE FORESTRY INVESTMENT PROGRAMME INVESTMENT PLAN PROJECT - PROJECT PREPARATION GRANT NO. TFA02862 Statement of Programme Management's Responsibilities The Controlling Officer for the Ministry of National Development Planning is responsible for the preparation of the Statement of Sources and Utilization of Funds for Zambia Forestry Investment Program Investment Plan Project which gives a true and fair view of the state of affairs of Zambia Forestry Investment Program Investment Plan Project - Project Preparation Grant (FIP-PPG). In preparing the Statement of Sources and Utilization of Funds, the Project Management: * selects suitable accounting policies and then applies them consistently * makes judgments that are reasonable and prudent; and * follows the International Public Sector Accounting Standards (I PSASs) Cash Basis of Accounting. The Statement of Sources and Utilization of Funds is prepared on a Cash Basis of Accounting in accordance with IPSASs. The Project Management is responsible for ensuring that the FIP PPG project keeps accounting records, registers and other relevant documents which disclose with reasonable accuracy at any time the financial position and activities of the project as required by the Financing Agreement. Management is responsible for taking reasonable steps for the prevention and detection of errors, fraud and other irregularities. The Project Management is also responsible for the systems of internal controls designed to provide reasonable, but not absolute assurance as to the reliability of the financial statements and to adequately safeguard, verify and maintain accountability for assets, and to prevent and detect material misstatements. The systems are implemented and monitored by suitably trained personnel with appropriate segregations of authority and duties. Nothing has come to the attention of the Project Management to indicate that any material breakdown in the functioning of these controls, procedures and systems has occurred during the year under review. All project transactions for the Financial Year 2018 were concluded on 31t October 2018, which was the Application Deadline date, while the Financial Year ended on 31s "December 2018. In the opinion of the Project Management, the Statement of Sources and Utilization of Funds is drawn up so as to present fairly the financial activities for the year ended 31 s December 201 8. Signed on behalf of the Programme Management by: Chola J. Chabala Chitembo K. Chunga Permanent Secretary - DPA National Coordinator - PPCR Ministry of National Development Planning Ministry of National Development Planning D ate:.Dt . . . . ..--- .. -. ..... . D ate........ . Page | 2 OFFICE OF THE AUDITOR GENERAL INDEPENDENT AUDITOR'S REPORT HAILE SELASSIE AVENUIE. LONGACRES P.0 BOX 50071 LUSAKA, ZAMBIA E-Mail:> Website:www.ago.gov.zn Telephone: +260252611/252771 To the Permanent Secretary - Ministry of National Development Planning Report on the Audit of the Financial Statements Opinion I have audited the financial statements of the Zambia Forestry Investment Program Investment Plan Project - Project Preparation Grant (FIP - PPG) under the Ministry of National Development Planning which comprise the Statement of Sources and Utilization of Funds for the financial year ended 31" December 2018 and notes to the financial statements, including a summary of significant accounting policies as set out on pages 5 to 9. In my opinion, the accompanying financial statements of the Zambia Forestry Investment Program Investment Plan Project - Project Preparation Grant are prepared, in all material respects, in accordance with International Public Sector Accounting Standards (IPSASs) Cash Basis of Accounting and the Grant Agreement No.TFOA2862 between International Bank for Reconstruction and Development (IBRD - World Bank) and Government of the Republic of Zambia (GRZ). Basis for Opinion I conducted my audit in accordance with International Standards of Supreme Audit Institutions (ISSAls). My responsibilities under these standards are further described in the Auditor's Responsibilities for the audit of the Financial Statements section of my report. I am independent of the FIP - PPG under the Ministry of National Development Planning in accordance with the International Organization of Supreme Audit Institutions (INTOSAI) Code of Ethics together with the ethical requirements that are relevant to my audit of the Financial Statements in Zambia, and I have fulfilled my other ethical responsibilities in accordance with these requirements and the INTOSAI Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation of the financial statements in accordance with International Public Sector Accounting Standards (IPSASs) Cash Basis of Accounting and for such Page 3 OFFICE OF THE AUDITOR GENERAL 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. Those charged with governance are responsible for overseeing the Project's financial reporting process. Auditor's Responsibilities for the Audit of the Financial Statements My 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. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISSAIs will always detect a material misstatement 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. As part of an audit in accordance with ISSAls, I exercise professional judgment 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. * Obtain an understanding of internal control relevant to the audit 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 Project's internal control. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. * 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, I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit. I also provide those charged with governance 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. Page 4 OFFICE OF THE AUDITOR GENERAL Report on Other Legal and Regulatory Requirements In my opinion, the financial statements of the FIP - PPG under the Ministry of National Development Planning as at 31" December 2018, have been properly prepared in accordance with the provisions of the International Bank for Reconstruction and Development (IBRD - World Bank) Financing Agreement. Davison K. Mendamenda ACTING AUDITOR GENERAL OFFICE OF THE AUDITOR GENERAL DAT..... ...2019 Page 5 MINISTRY OF NATIONAL DEVELOPMENT PLANNING ZAMBIA PREPARATION OF THE FORESTRY INVESTMENT PROGRAMME INVESTMENT PLAN PROJECT - PROJECT PREPARATION GRANT NO. TFA02862 Zambia Preparation of the Forestry Investment Program Investment Plan Project IBRD Trust Fund No. TF0A2862 Statement of Sources and Utilization of Funds for the Year Ended 3Pt December 2018 2018 2017 Cumulative ZMW USS$ ZMW US$5 US$5 NOTES SOURCES OF FUNDS Opeing Cash Balances 245,899.59 24,607.68 - - - 2eipts from World bank (IBRD) 4 1,514,941.84 137,950.23 470,094.17 48,060.50 186,010.73 Total Cash Available 1,760,841.43 162,557.91 470,094.17 48,060.50 186,010.73 Less: Utilization of Funds by Category Goods, Non-Consulting Services, Consultants Services, Workshops and Operating Costs 5.1 1,838,868.29 167,446.89 204,562.00 20,913.58 188,360.47 Total Expenditure 1,838,868.29 167,446.89 204,562.00 20,913.58 188,360.47 Surplus(Deficit) for the period (78,026.86) (4,888.98) 265,532.17 27,146.92 (2,349.74) Foreign Exchange Gain/(Loss) 6 78,026.86 4,888.98 (19,632.58) (2,539.24) 2,349.74 Net Cash Available - - 245,899.59 24,607.68 - Represented by cash and cash equivalent Bank Balances 7 - - 245,899.59 24,607.68 - Chola J. Chabala Chitembo K. Chunga Permanent Secretary - DPA National Coordinator - PPCR Ministry of National Development Planning Ministry of National Development Planning D ate:. .................. ... . .. D ate:...... . ............ ... Page 6 MINISTRY OF NATIONAL DEVELOPMENT PLANNING ZAMBIA PREPARATION OF THE FORESTRY INVESTMENT PROGRAMME INVESTMENT PLAN PROJECT - PROJECT PREPARATION GRANT NO. TFA02862 NOTES TO THE STATEMENT OF SOURCES AND UTILIZATION OF FUNDS FOR THE FINANCIAL FOR THE YEAR ENDED 31 DECEMBER 2018 1. Background On 23" November 2016, the Government of the Republic of Zambia and International Bank for Reconstruction and Development (World Bank) signed a Project Preparation Grant Agreement - TFOA2862 for the Zambia Preparation of the Forestry Investment Program Investment Plan Project under the Ministry of National Development Planning. The objectives of the Project was to develop an investment plan for the Zambia REDD+ Strategy while also meeting the objectives of the Forestry Investment Program. The Project consists of the following activities. i. Preparing an Investment Plan for the National REDD + Strategy including conducting related surveys and studies. ii. Carrying out of public consultations, knowledge exchange and preparation and dissemination of knowledge products. iii. Capacity building of the Recipients agencies involved in the implementation of National REDD+ Strategy iv. Supply of office equipment. v. Financing of operating costs associated with the implementation of the Project. The Project Preparations started in December 2016. However, project activities only began in 2017. The Project Designated Account denominated in US Dollars is maintained at Bank of Zambia, Lusaka, while a Kwacha operations account is held at Zambia National Commercial Bank, Acacia Branch. Funds from the Word Bank are remitted in the Designated Account and transferred into the Kwacha Account for operations using the Bank of Zambia ruling exchange rate at the time of the transfer. The Project Preparation Grant has one category for Goods, Non-Consulting Services, Consultants Services, Workshops and Operating Costs. The Statement of Sources and Utilization of Funds has been prepared for the Financial Year ended 31 " December 2018 in relation to the 10 Months period to 31 October 2018, the Application Deadline for payments under the Project. Page 7 MINISTRY OF NATIONAL DEVELOPMENT PLANNING ZAMBIA PREPARATION OF THE FORESTRY INVESTMENT PROGRAMME INVESTMENT PLAN PROJECT - PROJECT PREPARATION GRANT NO. TFA02862 2. Statement of Compliance The Statement of Sources and Utilization of Funds have been prepared in accordance with International Public Sector Accounting Standards (IPSAS) Cash Basis of Accounting. 3. Significant Accounting Policies Significant accounting policies adopted in the preparation of these financial statements and applied in all material respects, are set out below: 3.1 Basis of Financial Statement Preparation The Statement of Sources and Utilization of Funds was prepared under historical cost convention. 3.2 Sources of Funds The source of funds for the project represent amounts received from the International Bank of Reconstruction and Development Association (IBRD) - World Bank during the accounting period. The total agreed project preparation grant amount is US$250,000 for the project preparation period from 23'" November 2016 to 30'h June 2018. During the year ended 3 1 December 2018, US$137,950.23 (ZMW 1,514,941.84) was received under the grant. 3.3 Exchange Rates The annual average exchange rate used for translating US$ amounts into ZMW was ZMWIO.9818/$ and the closing bank balances were translated using the Bank of Zambia closing mid-rate as at 31s" December 2018 which was KI 1.9248/S. 4. Opening Balances and Cash Receipts from IBRD 2018 2017 ZMW USS ZMW US S Designated Account (BOZ) 150,461.59 15,057.00 Operating Account (Zanaco) 95,438.00 9,550.68 - Total 245,899.59 24,607.68 - Page 8 MINISTRY OF NATIONAL DEVELOPMENT PLANNING ZAMBIA PREPARATION OF THE FORESTRY INVESTMENT PROGRAMME INVESTMENT PLAN PROJECT - PROJECT PREPARATION GRANT NO. TFA02862 Funds received during the 12 months to 31" December 2018 2018 2017 Date Amounts Received Date Amounts Received ZMW US$ ZMW US$ 15.06.2018 286,429.06 26,082.16 19.04.2017 391,252.00 40,000.00 11.10.2018 1,228,512.77 111,868.07 01.12.2017 78,842.17 8,060.50 Total 1,514,941.83 137,950.23 Total 470,094.17 48,060.50 5. Utilization of Funds Utilization of funds represents amounts paid during the accounting period and no provisions arc made for accrued expenses. Expenses, apart from advances, are recognized at the time they are paid; advances are expensed when they are retired. 5.1Goods, Non-Consulting Services, Consultants Services, Workshops and Operating Costs The following is the breakdown for Category I items - Goods, Non-Consulting Services, Consultants Services, Workshops and Operating Costs undertaken during the 12 Months period to 3l1" December 2018: 2018 2017 ZMW US$ ZMW US$ Goods . Non-Consulting Services 330,600.00 30,104.35 - - Consultants Services 278,199.29 25,332.76 - - Workshops and Operating Costs 1,230,069.00 112,009.78 204,562.00 20,914 Total Expenditure 1,838,868.29 167,446.89 204,562.00 20,914.00 6. Foreign Currency Exchange Difference 2018 2017 ZMW US$ ZMW US$ Total Cash Balances and Receipts 1,760,841.43 162,557.91 470,094.17 48,060.50 Total Expenditure (Note 5.1) (1,838,868.29) (167,446.89) (204,562.00) (20,913.58) Page 9 MINISTRY OF NATIONAL DEVELOPMENT PLANNING ZAMBIA PREPARATION OF THE FORESTRY INVESTMENT PROGRAMME INVESTMENT PLAN PROJECT - PROJECT PREPARATION GRANT NO. TFA02862 Total Cash Balances and Receipts Less Expenditure (78,026.86) (4,888.98) 265,532.17 27,146.92 Less: Actual Closing Cash - - Balances (See Note 7) 245,899.59 24,608.68 Foreign Currency Exchange Difference 78,026.86 4,888.98 (19,632.58) (2,538.24) 7. Cash and Cash equivalent (Closing Cash Balances) There were no cash balances at 31 " December 2018: ZMW us1$ Designated Account (BOZ) Operating Account (Zanaco) Total 8. Contingent liabilities There were no contingent liabilities as at 3 1" December 2018. 9. Post Reporting Period events There were no significant events after the balance sheet date requiring adjustment to the accounts or disclosure. Page 1 10