GOVERNMENT OF THE REPUBLIC OF SOUTH SUDAN INTERNATIONAL DEVELOPMENT ASSOCIATION (IDA) PRIVATE SECTOR DEVELOPMENT PROJECT TRUST FUND NUMBER: TF011812 FINANCIAL AUDIT REPORT FOR THE YEAR ENDED 30 JUNE 2015 STRICTLY CONFIDENTIAL December 2015 SCANNED Scan date: C-I CONTENTS PAGE INTRODUCTION ............................................................. 1 REPORT OF THE AUDITOR GENERAL OF SOUTH SUDAN ..............3..........3 STATEMENT OF CASH RECEIPTS AND PAYMENTS ...................................4 SIGNIFICANT ACCOUNTING POLICIES............................................ 5 NOTES TO THE FINANCIAL STATEMENTS................................................. 7 FINANCIAL AUDIT FINDINGS...................................................... 8 INTRODUCTION 1. Background The Private Sector Development Project is funded by the International Development Association and administered by the World Bank. The project was established by Grant Agreement No. TF011812 entered into between the Govemment of South Sudan and the International Development Association and is implemented by the Ministry of Finance, Economic Planning, Commerce, Trade and Investment. 2. Project summary SUMMARY OF PROJECT DETAILS Applicant Ministry of Finance, Economic Planning Commerce, Trade and Investment - Republic of South Sudan - Juba Project The objective of the Project is to improve access to finance for Objective private sector development and increase employment opportunities in South Sudan. Project Establishment of Commercially - viable Microfinance components *Institutions Promotion of Micro-entrepreneurship * Mobile Payments regulatory Framework and Trade Integration Policy Support * Institutional Strengthening of the South Sudan Business Forum and Project Management Sectors Economic Sector Project activities South Sudan location Project March 14, 2012 to June 1, 2016. Implementation period two implementation years and eight months. Effective Project implementation period commenced in November 2012. Project value The project cost is US$ 9 million for (2012-2016) Approved grant US$ 9,000,000 Financed by International Development Association (IDA) Acting as Administrator of South Sudan Transitional Trust Fund. Grant date 14 March 2012 Implementing MinistrV of Finance, Economic Planning, Commerce, Trade & agleni Investment - Republic of South Sudan agencies 3. Scope of the Financial Audit Review We have performed the procedures enumerated below with respect to the Private Sector Development Project Statement of Cash Receipts and Payments for the year ended 30 June 2015. To examine whether the Project has complied with the rules for accounting and record keeping of the Grant Agreement with a view to assess whether an efficient and effective expenditure verification of the Financial Report is feasible and to report important exceptions and weaknesses with regard to accounting, record keeping and documentation requirements so that the Project can undertake follow-up measures for correction and improvement for the remaining implementation period of the Action. Consideration of Value as the primary factor used by the Auditor to select expenditure items or classes of expenditure. Use of appropriate judgment in selection of specific expenditure items or classes of expenditure items so as to cover expenses/areas that are unusual or inherently risky or error prone. 7 Exercise professional judgment to obtain sufficient appropriate verification evidence as to whether the expenditure has occurred (reality and quality of the expenditure) and - where applicable - assets exist. The Auditor verifies the reality and quality of the expenditure for a transaction or action by examining proof of work done, goods received or services rendered on a timely basis, at acceptable and agreed quality and at reasonable prices or costs. Evaluation of the internal control environment in order to determine areas of weaknesses in the internal control system and to obtain assurance that the transactions for the action are properly authorized checked and approved by the appropriate personnel. REPORT OF THE AUDITOR GENERAL OF SOUTH SUDAN To Minister of Finance & Economic Planning, Government of the Republic of South Sudan I have audited the accompanying financial statements for the Private Sector Development Project for the year ended 30 June 2015 as set out on pages 5 to 9 which comprise the Statement of Cash Receipts and Payments, a summary of the significant accounting policies and other explanatory notes. Management's Responsibility The Project Management and the Ministry of Finance Public Financial Management Unit are responsible for the preparation of these financial statements in accordance with the International Public Sector Accounting Standards (IPSAS), Financial Reporting Under The Cash Basis of Accounting and for such internal controls as management determines are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor General's responsibility My responsibility is to express an independent opinion on these financial statements based on my audit. I conducted my audit in accordance with International Standards on Auditing. Those Standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of 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 judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers intemal control relevant to the entity's preparation 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 presentation of the financial statements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. Dpinion In my opinion, the financial statements give a true and fair view of the contributions received and expenses paid under this project during the year ended 30 June 2015 in accordance with the International Public Sector Accounting Sta on a cash receipts and disbursements b sis as described in note (i), ounting policies. Amb. Steven Wondu Auditor General, South S dan Na on I Audit Chamber Juba. ,, !z 2015 S This report is solely intended for the information and use of the Government of South Sudan, the World Bank and International donors participating in the South Sudan Transitional Trust Fund. THE REPUBLIC OF SOUTH SUDAN INTERNATIONAL DEVELOPMENT ASSOCIATION (IDA) SOUTH SUDAN PRIVATE SECTOR DEVELOPMET PROJECT TRUST FUND NUMBER: TF011812 STATEMENT OF CASH RECEIPTS AND PAYMENTS FOR THE YEAR ENDED 30 JUNE 2015 YEAR ENDED YEAR ENDED 30.6.2015 30.06.2014 RECEIPTS Notes USD USD Contributions 2 - 6,120,420.37 Other receipts Interest Income 3 - Total receipts - 6,120,420.37 PAYMENTS Payments as per agreement 4 2,316,844.74 2,116,993.74 Other Payments 5 Bank Charges (a) 12,262.88 8,279.63 Withholding Tax (b) ___ Total Payments 2,329,107.62 2 125,273.37 IncreaselDecrease in Cash during the period (2,329,107.62) 3,995,147.00 Cash at the beginning of the period 4,067,283.08 72,136.08 Increase /Decrease in cash during the period (2,329,107.62) 3,995,147.00 Cash at the end of the period 6 1,738,175.46 4,067,283.08 The financial statement on this page was approved for issue by the Project Management on ...2015 and signed on its behalf by: Project oordinator Project Manager The accounting policies on pages 7 to 8 and the notes on pages 9 form an integral part of these financial statements. THE REPUBLIC OF SOUTH SUDAN INTERNATIONAL DEVELOPMENT ASSOCIATION (IDA) SOUTH SUDAN PRIVATE SECTOR DEVELOPMENT PROJECT TRUST FUND NUMBER: TF011812 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015 1. SIGNIFICANT ACCOUNTING POLICIES (i) Basis of preparation These Financial statements for the South Sudan Private Sector Development Project have been prepared in accordance with International Public Sector Accounting Standards (IPSAS) "Financial Reporting under the Cash Basis of Accounting" on a modified cash basis of accounting. The modified cash basis comprises the cash basis of accounting supplemented with additional disclosures. Under the cash basis of accounting, transactions and other events are recognized if and when cash is received or paid. (ii) Reporting Entity The financial statements are for the South Sudan Private Sector Development Project (SSPSDP) of the Republic of South Sudan financed by IDA. (iii) Reporting Currency The reporting currency is United States Dollars (USD). (iv) Foreign Currency,. Transactions in foreign currencies during the reporting period are converted into US dollars at rates ruling on the transaction dates. (v) Contributions Contributions comprise where applicable, cash donations made directly to the Project's Designated bank account by donors (through the World Bank), as well as any payments made directly to suppliers and contractors by the World Bank, on behalf of the Republic of South Sudan under the categories defined in the grant agreement and as procured by the Project. Direct contributions to the Proiect's desi nated bank account Contributions made directly to the Project's designated bank account are recognised upon receipt. Other contributions Any payments made directly to suppliers and contractors are recognised upon payment. (vi) Payments Payments are made in line with the provisions of the grant agreement. Transactions are only recognized in the financial statements if and when payment is made. (vii) Assets Cash and cash equivalents Cash and cash equivalents comprise cash at bank and cash on hand. Receivables Receivables arising from cash payments that are recoverable from implementing State level ministries and third parties, including loans advanced are disclosed in the notes to the financial statements. . [At 30 June 2015 this policy had not been effected]. Fixed assets and inventory Fixed assets and inventory are written off upon purchase. Any amounts on hand at the reporting date are shown at cost in the notes to the financial statements. . [At 30 June 2015 this policy had not been effected]. (Viii) Liabilities Payables Amounts payable are shown in the notes to the financial statements. [At 30 June 2015 this policy had not been effected]. Accruals Accruals representing goods and services that have been rendered to the Project, but for which no invoices have been presented by the suppliers at the reporting date are disclosed in the notes to the financial statements. [At 30 June 2015 this policy had not been effected]. Contingent liabilities Contingent liabilities are possible obligations that arise 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 Ministry. Contingent liabilities may also comprise present obligation that arise from past events but are not recognised either because it is not probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligations or the amount of the obligations cannot be measured with sufficient reliability. [At 30 June 2015 this policy had not been affected]. Commitments Commitments represent goods and services that have been approved and/or contracted, but where no delivery has taken place at the reporting date. Commitments are not recognised in the Statement of Cash Receipts and Payments as liabilities or as expenditure, but rather are disclosed in the notes to the financial statements. [At 30 June 2015 this policy had not been effected]. PAYMENTS AS PER AGREEMENT COMPONENT Year ended Year ended 30.6. 2015 30.6. 2014 Contributions 0 6,120,420.37 Payments as per Agreement Establishment of Viable 829,288.13 1,529,246 Microfinance Institution Promotion of Micro Entrepreneurship 850,765.71 117,529.00 Mobile Payments and Regulatory Framework 208,884.17 3,200.00 Institutional Strengthening of South Sudan Business Forum and Project Management 427,906.73 467,018.74 Total 2,316,844.74 2,116,993.74 OTHER PAYMENTS Stanbic Bank Juba USD Bank Charges Designated Account 12,262.88 8,279.63 CASH BALANCES Stanbic Bank Juba USD Designated Account 1,652,735.98 3,994,814.27 Line Ministry 85,439.48 72,468.81 Total 1,738,175.46 4,067,283.08