THE FEDERAL GOVERNMENT OF SOMALIA Project Name: Somalia Electricity Access Project Implementing Entity (MDA): Ministry of Energy and Water Resources PROJECT GRANT/CREDIT NUMBER TF A9159 Reports and Financial Statements for the financial year ended 31 December 2020 FEDERAL GOVERNMENT OF SOMALIA – Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 Prepared in accordance with the Cash Basis of Accounting Method under the International Public Sector Accounting Standards (IPSAS). Table of Contents ACRONYMS AND ABBREVIATIONS .......................................................................................................... 3 I. PROJECT INFORMATION AND OVERALL PERFORMANCE ............................................................ 4 II. STATEMENT OF PROJECT MANAGEMENT RESPONSIBILITIES .................................................... 13 III. REPORT OF AUDITOR GENERAL ............................................................................................... 15 IV. STATEMENT OF CASH RECEIPTS AND PAYMENTS ..................................................................... 18 V. STATEMENT OF FINANCIAL ASSETS AND LIABILITIES (BALANCE SHEET) .................................... 19 VI. STATEMENT OF CASH FLOWS .................................................................................................. 20 VII. STATEMENT OF BUDGET COMPARISON WITH ACTUALS .......................................................... 21 VIII. STATEMENT OF USES AND APPLICATION OF FUNDS BY COMPONENTS/PROGRAMS ................ 22 IX. GENERAL INFORMATION AND ACCOUNTING POLICIES ............................................................ 23 X. EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS .......................................................... 28 ANNEX 1 - ANALYSIS OF THIRD-PARTY PAYMENTS (DIRECT PAYMENTS) AT THE END OF THE FINANCIAL YEAR 2020 ........................................................................................................................... 34 ANNEX 2 – SUMMARY OF THE PROJECT ASSET (NON – CURRENT ASSETS) REGISTER AT THE END OF THE FINANCIAL YEAR 2020.......................................................................................................... 36 ANNEX 3 – RECEIPTS PER ENTITY VERSUS THE CONFIRMATION AT THE END OF THE FINANCIAL YEAR 2020 .................................................................................................................................... 37 ANNEX 4 – RECONCILIATION BETWEEN APPLICATION FOR WITHDRAWALS AND RECEIPTS FROM THE WORLD BANK AT THE END OF THE FINANCIAL YEAR 2020 .................................................... 38 ANNEX 5 – SFMIS REPORTS AND OTHER SUPPORTING SCHEDULES ....................................................... 39 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 ACRONYMS AND ABBREVIATIONS CoA - Chart of Accounts CPA - Certified Public Accountants EAFS - External Assistance Fiduciary Section FGS - Federal Government of Somalia FY - Financial Year GBP - British Pounds GFS - Government Finance Statistics GPO - General Post Office ICT - Information and Communication Technology IEC - International Electrotechnical Commission IESBA - International Ethics Standards Board for Accountants IPSAS - International Public Sector Accounting Standards IPSASB - International Public Sector Accounting Standards Board ISA - International Standards on Auditing MoEWR - Ministry of Energy and Water Resources MPF - Multi-Partner Fund PDO - Project Development Objective PIU - Project Implementation Unit SEAP - Somalia Electricity Access Project SFMIS - Somalia Financial Management Information System SOS - Somali Shilling USD - United States Dollars Page 3 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 I. PROJECT INFORMATION AND OVERALL PERFORMANCE (a) Name and registered office Name: The project’s official name is Somali Electricity Access Project, Objective: The key objective of the project is The Project Development Objective (PDO) is to expand access to electricity in targeted urban, peri- urban, and rural communities., Address: The project headquarter offices are at the Ministry of Energy and Water Resources, 3rd Floor Mogadishu GPO Building, Corso Somalia, Bondheere District, Mogadishu, Somalia. The address of its registered office is: Ministry of Energy and Water Resources, 3rd Floor Mogadishu GPO Building, Corso Somalia, Bondheere District, Mogadishu, Somalia Contacts: The following are the project contacts Telephone: (252) 612451375 E-mail: abdisalam43@gmail.com . Website: N/A (b) Project Information Project Start Date: The project start date is 01 04 2019 Project End Date: The project end date is 30 06 2022 Project Manager: Abdisalam Abdullahi Project Sponsor: The project sponsor is Multi-Partner Fund (c) Project Overview Line The project is under the supervision of the Ministry of Energy and Water Ministry/Department Resources. of the project Project number TF- A9159-SO Strategic goals of the The strategic goals of the project are as follows: project The Project Development Objective (PDO) is to expand access to electricity in targeted urban, peri- urban, and rural communities. Achievement of The project management aims to achieve the goals through the following strategic goals means: Part 1: Electrification of Households and Small Business through Standalone Solar Home Systems. Improving access among off-grid households and small enterprises, in particular: Page 4 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 • Carrying out a program of activities to facilitate a range of market- building supply-and demand- side interventions, through the provision of Expansion Grants and Seed Grants to solar distributors (collectively, Beneficiaries) for investment to catalyze key solar business functions. • Promoting quality assurance to limit availability of and demand for poor quality and / or counterfeit solar products. • Carrying out consumer awareness and citizen engagement campaigns to improve household understanding and use of quality off-grid solar technology. Part 2: Analytical work for enabling electrification through Solar-Powered/ Hybrid Mini-grids. Carrying out analytic work for development of mini-grid sector, in particular: - Carrying out detailed geospatial mapping to undertake a more comprehensive inventory of the current mini-grid situation in Somalia, identify potential future sites, and estimate future location- specific demand. - Reviewing property rights and land issues pertaining to energy infrastructure investment. - Carrying out pre-feasibility studies for hybridization, operation enhancements, and densification of brown (existing) mini-grid sites. - Carrying out pre-feasibility studies for greenfield (new) sites identified in geospatial mapping. - Developing structuring options for the financing, operation, and ownership of new mini grids. - Defining legal, institutional, and financing arrangements for developing mini grids. Part 3: Technical Assistance, Capacity Building, and Project Management: Strengthening the capacity of the Ministry of Energy and Water Resources (MoEWR) for overall energy sector management, power and access planning, and implementation of future development projects, including: - carrying out required energy sector studies. - developing energy strategies. - Reviewing energy policies. - Carrying out analytical work. - Improving internal MoEWR infrastructure and systems. - Provision of relevant training to staff of the MoEWR, and conducting workshops and study tours; and - Establishing a Federal PIU. Page 5 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 Carrying out needs assessment to identify priority capacity-building interventions for MoEWR and training needs for the relevant staff of MoEWR. Other important The project will be implemented across the entire Somali peninsula, background covering Southern Somalia (Banaadir, Jubbaland, South West State, information of the Hirshabelle and Galmuudug), Puntland, and Somaliland. While there are project tremendous needs with respect to energy access, the fragile and complex operating environment necessitates a selective approach to supporting the effective delivery of affordable and sustainable energy services. Somali’s private sector has impressively stepped up to deliver basic energy services in the aftermath of the protracted conflict of the 1990s. Nevertheless, these enterprises often lack the capital and latest technical, financing, and business model insights to scale their businesses. The core proposition of this project is that by leveraging these incumbent capabilities and activities, the overall quality of services they offer to their customers will be improved, especially as they are provided with technical and financial resources needed to deepen and broaden their geographic footprints. The intention to focus on off-grid standalone solar rather than mini-grids is deliberate considering the limited funding envelope as well as the yet unharnessed potential for the former. Current situation that The project was formed to intervene in the following areas: the project was (i) Southern Somalia (Banaadir, Jubbaland, South West State, formed to intervene Hirshabelle and Galmuudug), (ii) Puntland, and (iii) Somaliland Project duration The project started on 1st April 2019 and is expected to run until 30 June 2022 (d) Bankers The following are the bankers for the current year: (i) Central Bank of Somalia (e) Auditors The project is audited by the Somali Office of the Auditor General. Page 6 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 (f) Roles and Responsibilities Names Title designation Role/Responsibilities Abdiwahid Ibrahim Ahmed Director General, MoEWR Accounting Officer Abdisalam Abdullahi Project Coordinator Project Coordinator/ Expenditure Authorizing Officer Abdiaziz Hassan Arte FM Specialist, PIU, Financial Management MoEWR Liban Ali Ibrahim Procurement Specialist, Procurement PIU, MoEWR Fatuma Osman Farah Accountant General Finance Management/Fiduciary Oversight Abdinasir Ahmed Head of External Financial Consulting Assistance Fiduciary Section (EAFS) Consultants Saleiman S Umar Director General- Ministry Finance Management of Finance Ahmed Abdi Adam (Iraad) Director of Budget Budgeting Tasks Department Mohamud Abdulkadir Arale Director of EAFS Finance Management and payments responsibility Mowliid Mohamed Ali Head of EAFS Accounts Accountant Section (g) Funding summary The Project is for duration of 3 years from 1 April 2019 to 30 June 2022 with an approved budget of US$ 4,600,000 as highlighted in the table below: Below is the funding summary: Source of funds Donor Amount Undrawn Commitment-1 received to date balance to date – April 2019 to – 31 December June 2022 31 December 2020 2020 US$ US$ US$ (A) (B) (A)-(B) Grants Somalia Multi Partner Fund TF A9159 3,150,000.00 $ 923,933 $2,226,067 Somalia Multi Partner Fund TF B3136 1,450,000.00 0 $1,450,000 Total 4,600,000 $ 923,933 $3,676,0067 Page 7 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 (h) Summary of Overall Project Performance: The Somali Electricity Access Project (SEAP) became effective on the 1 of April 2019. The Federal Government of Somalia launched the project on 20 May 2019. Significant progress has been made in implementing the major activities of the project. During the Financial year of 2020, the project has achieved the following key issues: The project has established a grant facility manager to implement the planned activities of supporting the solar providers in Somalia with the provision of grants. The grant facility manager, with the support of the Ministry finalized the evaluation of the Request for Expression of interest from Solar Service Providers. This process was supplemented by several meetings and continuous engagement between IBS team and the Ministry. During the reporting period, Request for business plan was issued to the Solar service providers. The contracted consults to carryout consumers awareness campaign conducted detailed data gathering activity aimed to inform the development of the campaign strategy design and implementation. The consult also submitted rough draft of the campaign tools for the review of the Ministry. The objectives of this assignment is to keep the public informed about the opportunities that modern off-grid solar energy presents and assist them in making informed purchasing decisions. The project has also awarded contract to Kungliga Tekniska Hogskolan Institution in joint venture with Kartoza and Recon Energy to implement a Least cost electrification plan for the country. The Project Implementation Unit facilitated wider stakeholder consultation to gather comprehensive feedback, the Federal member states (FMS) contributed greatly the ongoing activities. Focal points representing all the FMS have been actively engaging the Ministry and the consultants leading this assignment, they are currently collecting data from their respective regions. The Project has also contracted with Noma consultancy to implement consumer awareness raising and stakeholders engagements, the contract has successfully submitted the inception report and has prepared the strategy documents and other resources required. The project is also currently working on the preparation of Electricity sub-transmission and distribution integrated development least cost investment plan. The PIU is finalizing the evaluation of the proposal submitted by different bidders. During the reporting period the project organization several consultation meetings of the Electricity Act, whereby different stakeholders including the private sector, the federal member states representatives and different offices of the Federal Government of Somalia have been invited to add their inputs in the draft electricity act before it is submitted to the council of the Ministers. Page 8 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 (h) Summary of Overall Project Performance: (Continued) The PIU supported two weeklong World Bank mission aimed to discuss the progress status of the Somali electricity access project and the design of the Somali Electricity Sector Recovery Project. During mission the PIU provided several presentations reflecting the implementation status of SEAP project. The preliminary design of the Sector Recovery project was discussed in detail with the private sector and the government. This resulted the initiation of the recruitment process of the environmental specialist, social safeguard expert into strategic environmental and social assessment. The procurement process of these activity currently underway. Further details of the performance of the project are provided in a separate physical progress report. i) Financial statements discussion and analysis 1. Statement of Cash Receipts and Payments This statement describes the cash received and the expenses made during this reporting period. The expenses are recorded category-wise and the details are provided under the notes section. The categories below are based on the charts of accounts (CoA) of the Federal Government of Somalia: - Compensation of employees: USD $ 13,885 - Use of Goods and services: USD $599,385 - Capital Expenditure: USD $ 63,580 Chart 1.1 describes how the payments made towards the different categories. Breakdown of Expenditure by Category 2% 9% Compensationof Employees Use of Goods andservices Capital Expenditure 89% The amounts received during the reporting period are also recorded under this statement of Cash receipts and payments. The Project has received an amount of USD $677,595. This amount consists of USD $433,428 that is received at the Designated Account and USD$244,167 that was directly paid by the World Bank. Below is a chart on the project’s income and expenses during the reporting period. Page 9 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 (h) Summary of Overall Project Performance: (Continued) i) Financial statements discussion and analysis (Continued) 1. Statement of Cash Receipts and Payments Chart 1.2 Project’s Income and Expenses Receipts and Payments 100% 50% 0% Income Expense Net Surplus Amounts 2. Statement of financial assets and liabilities (balance sheet) The Project provided details on the project current assets and liabilities under the statement of financial assets and liabilities. In this reporting period, the project did not have liabilities as shown in the below chart. Chart 2.0 Project Financial Assets and Liabilities Financial Position Liabalities Financial Position Assets 0% 20% 40% 60% 80% 100% Page 10 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 (h) Summary of Overall Project Performance: (Continued) 3. Expenditure per component The Project has disbursed funds totaling USD 676,850 against numerous components that are defined at the Grant Agreement and the Project Appraisal document. The Project has the following components: Component 1: Electrification of Households and Small Business through Standalone Solar Home Systems. Improving access among off-grid households and small enterprises. Component 2: Analytical work for enabling electrification through Solar-Powered/ Hybrid Mini-grids. Component 3: Technical Assistance, Capacity Building, and Project Management During the reporting period the project has disbursed funds as below: Chart 3 the expenditure per component Expenditure per Components 100% 50% 0% … nt … nt ne … ne nt po ne po m po m Co Co m Co Component 1: Electrication of Component 2: Households and Small Component 3: Analytical work for Business through Technical Assistance, enabling electricfication Standalone Solar Home Cpacity Building, and through Solar- Systems. Improving Project Management Powered/ Hybrid Mini- access among off-grid grids households and small enterprises. Expenditure per Components 483145 0 193705 Page 11 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 (h) Summary of Overall Project Performance: (Continued) 4. Statement of budget comparison with actuals The project gives details on the variance between the budget and the actual outturn. From the below chart, there is a significance difference between the budget and the actual outturn, the reason for this is explained below: The significance difference between the Budget and the actual is due to a delay in implementation of the planned activities which was caused by the recruitment process of the key personnel of the PIU i.e. the procurement specialist and the financial management specialist. After these key positions have been filled, the PIU management will make sure to finalize the procurement process of the project planned activities so that the budgeted amounts will be paid against the deliverables of the project. Chart 4 Budget comparison with actual 1800000 1600000 1400000 1200000 1000000 Final Budget 800000 Actual Outturn 600000 Budget Variance 400000 200000 0 Receipts Recurrent Capital Total Surplus -200000 Expenses Expenses Expenses (i) Summary of Project Compliance: There have been no instances of noncompliance with terms and conditions with regards to loan or grant agreements or guarantees which have resulted in cancellation of the assistance or has given rise to an obligation to return the assistance previously given. Page 12 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 II. STATEMENT OF PROJECT MANAGEMENT RESPONSIBILITIES The Accountant General, the Director General (Authorizing Officer) for the Ministry of Energy and Water Resources and the Project Coordinator for Somali Electricity Access Project ((SEAP) 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 year (period) ended on December 31, 2020. This responsibility includes: (i) maintaining adequate financial management arrangements 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 transactions of the Project; (iii) designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of the financial statements, 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. The Accountant General, the Director General for the Ministry of Energy and Water Resources and the Project Coordinator for SEAP accept responsibility for the Project’s financial statements, which have been prepared in accordance with the Cash Basis, International Public Sector Accounting Standards (IPSAS) 2017, and the Funding agreement. The Accountant General, the Director General for the Ministry of Energy and Water Resources and the Project Coordinator for SEAP 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 ended December 31, 2020, and of the Project’s financial position as at that date. The Accountant General, the Director General for the Ministry of Energy and Water Resources and the Project Coordinator for SEAP further confirm the completeness of the accounting records maintained for the Project, which have been relied upon in the preparation of the Project’s financial statements as well as the adequacy of the systems of internal financial control. The Accountant General, the Director General for the Ministry of Energy and Water Resources and the Project Coordinator for SEAP confirm that the Ministry of Energy and Water Resources has complied fully with applicable laws, regulations, procedures and the terms of external financing covenants (where applicable), and that the Project’s funds received during the year under audit were used for the eligible purposes for which they were intended and were properly accounted for. Page 13 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 II. STATEMENT OF PROJECT MANAGEMENT RESPONSIBILITIES (Continued) Approval of the Project financial statements The Project financial statements were approved and signed by the Accountant General, the Director General (Authorizing Officer) for the Ministry of Energy and Water Resources and the Project Coordinator for Somali Electricity Access Project on 30 April 2021 and signed by them as here below: Page 14 Reports and Financial Statements for the year ended 31 December 2020 Jamhuuriyadda Federaalka ‫ﺟﻤﮭﻮرﯾﺔ اﻟﺼﻮﻣﺎل اﻟﻔﺪراﻟﯿﺔ‬ Soomaaliya Xafiiska Hantidhawrka Guud ‫دﯾﻮان اﻟﻤﺮاﻗﺒﺔ اﻟﻌﺎﻣﺔ‬ The Federal Government of Somalia Office of the Auditor General III. REPORT OF AUDITOR GENERAL INDEPENDENT AUDITOR’S REPORT TO THE OFFICE OF THE AUDITOR GENERAL, FEDERAL GOVERNMENT OF SOMALIA for the WB funded PROJECT – SOMALI ELECTRICITY ACCESS PROJECT (SEAP) REF: TF A9159 Opinion We have audited the accompanying financial statements of the Somali Somalia Electricity Access Project (SEAP) set out on pages 18 to 33, which comprise the statement of financial assets as at 31 December 2020, and the statement of receipts and payments, statement of cash flows, and statement of comparative budget and actual amounts for the year then ended, and a summary of significant accounting policies and other explanatory notes. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Somali Electricity Access Project (SEAP) set out on as at 31 December 2020 and of its financial performance and cash flows for the year then ended in accordance with International Public Sector Accounting Standards (Cash Basis), and comply with the Financing Agreements TFA9159. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for Audit of the Financial Statements section of our report. We are independent of the Project in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements, and we have fulfilled our ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Page 15 Reports and Financial Statements for the year ended 31 December 2020 III. REPORT OF AUDITOR GENERAL (Continued) INDEPENDENT AUDITOR’S REPORT TO THE OFFICE OF THE AUDITOR GENERAL, FEDERAL GOVERNMENT OF SOMALIA for the WB funded PROJECT – SOMALI ELECTRICITY ACCESS PROJECT (SEAP) REF: TF A9159 (Continued) Other Information The management for the project are responsible for the other information. The other information comprises project information and overall performance included in the report but does not include the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Public Sector Accounting Standards (Cash Basis) and for such internal control as management determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Project’s ability to continue sustaining services, disclosing, as applicable, matters related to sustainability of services and using the going concern basis of accounting unless the management either intend to terminate the Project, or have no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Statements Our 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 our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs 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 ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We 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 our 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. Page 16 Reports and Financial Statements for the year ended 31 December 2020 III. REPORT OF AUDITOR GENERAL (Continued) INDEPENDENT AUDITOR’S REPORT TO THE OFFICE OF THE AUDITOR GENERAL, FEDERAL GOVERNMENT OF SOMALIA for the WB funded PROJECT – SOMALI ELECTRICITY ACCESS PROJECT (SEAP) REF: TF A9159 (Continued) • 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. • Conclude on the appropriateness of the Management’s use of the going concern 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 Project’s ability to continue sustaining its services. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Project to cease sustaining 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. We communicate with 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 we identify during our audit. _________________________________________ Mohamed M. Ali Auditor General Federal Republic of Somalia Mogadishu, Somalia August, 2021 Page 17 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 IV. STATEMENT OF CASH RECEIPTS AND PAYMENTS [Based on classification of expenditures by nature] Notes 1 January 1 April Cumulative 2020 to 31 2019 to 31 from 1 April December December 2019 to 2020 2019 31 December 2020 US$ US$ US$ RECEIPTS External Assistance Grants 2 677,595 246,338 923,933 TOTAL RECEIPTS 677,595 246,338 923,933 PAYMENTS Compensation of employees 3 13,885 - 13,885 Use of goods and services 4 599,385 173,201 772,586 Capital expenditure 5 63,580 23,055 86,635 TOTAL PAYMENTS 676,850 196,256 873,106 Surplus for the year 745 50,082 50,827 Cash beginning of the year 6 50,082 - - Cash end of the year 6 50,827 50,082 50,827 The accounting policies and explanatory notes to these financial statements form an integral part of the financial statements. The Project financial statements were approved on 30 April 2021 and signed by: Project Accountant. Project Coordinator Name: Abdiaziz Arte Name: Abdisalam Abdullahi Page 18 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 V. STATEMENT OF FINANCIAL ASSETS AND LIABILITIES (BALANCE SHEET) Notes 31 December 31 December 2020 2019 US$. US$. FINANCIAL ASSETS Cash and cash equivalents 6 50,827 50,082 Total financial assets 50,827 50,082 FINANCIAL LIABILITIES Payables - - Total liabilities - - Net financial assets 50,827 50,082 REPRESENTED BY: Accumulated Surplus from the previous years 7 - - Net Surplus for current year 7 50,827 50,082 Total closing balances/Net financial position (Fund Balance). 7 50,827 50,082 The accounting policies and explanatory notes to these financial statements form an integral part of the financial statements. The Project financial statements were approved on 30 April 2021 and signed by: Project Accountant. Project Coordinator Name: Abdiaziz Arte Name: Abdisalam Abdullahi Page 19 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 VI. STATEMENT OF CASH FLOWS 31 December 31 December Notes 2020 2019 US $ US $ Cash flow from operating activities Receipts External Assistance Grants 2 677,595 246,338 Total Receipts 677,595 246,338 Expenses Compensation of employees 3 13,885 - Use of goods and services 4 599,385 173,201 Total Expenses 613,270 173,201 Net cash flows from operating activities A 64,325 73,137 Cash flows from Investing Activities Acquisition of fixed assets 5 63,580 23,055 Net cash flows from Investing Activities B 63,580 23,055 Cash flow from Financing Activities Repayment of borrowings - - Proceeds from borrowings - - Net cash flow from financing activities C - - Net increase in cash and cash equivalents A+B+C 745 50,082 Cash and cash equivalents at beginning of 50,082 - 13 period Cash and cash equivalents at end of period 13 50,827 50,082 The accounting policies and explanatory notes to these financial statements form an integral part of the financial statements. The Project financial statements were approved on 30 April, 2021 and signed by: Project Accountant. Project Coordinator Name: Abdiaziz Arte Name: Abdisalam Abdullahi Page 20 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 VII. STATEMENT OF BUDGET COMPARISON WITH ACTUALS Original Final Actual Budget Percentage Revisions Budget Budget Outturn Variance Variance January - January - January - January - January - January - December December December December December December 2020 2020 2020 2020 2020 2020 RECEIPTS US$ US$ US$ US$ US$ % External Assistance [note 2] 2,179,800 - 2,179,800 727,677 1,452,123 67% Total Cash Receipts 2,179,800 - 2,179,800 727,677 1,452,123 67% Recurrent Expenses Compensation of employees [note 3] 19,500 19,500 (13,885) 5,615 29% Use of goods and services[note 4] 2,141,800 (147,000) 1,994,800 (599,385) 1,395,415 70% Total Recurrent Expenditure 2,161,300 (147,000) 2,014,300 (613,270) 1,401,030 70% Capital Expenditure Capital [note 5] 18,500 147,000 165,500 (63,580) 101,920 62% Total Capital Expenditure 18,500 147,000 165,500 (635,80) 101,920 62% Total Expenditure 2,179,800 - 2,179,800 (676,850) 1,502,950 69% Surplus/ (Deficit) - - - 50,827 The accounting policies and explanatory notes to these financial statements form an integral part of the financial statements. The Project financial statements were approved on 30 April, 2021 and signed by: Project Accountant. Project Coordinator Name: Abdiaziz Arte Name: Abdisalam Abdullahi Page 21 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 VIII. STATEMENT OF USES AND APPLICATION OF FUNDS BY COMPONENTS/PROGRAMS Notes FY 2020 Previous FY 2020 Current Cumulative Years Previous Reporting FY 2020 Inception to Up to 2019 Quarters QTR Cumulative date January April- - October - January- April 2019 – December Septemb December December December 2019 er 2020 2020 2020 2020 US$ US$ US$ US$ US$ Sources of Funds (a) (b) (c) (b)+(c)=(d) (a)+(d)=(e) RECEIPTS Multi Partner Fund – Cash 200,000 324,915 108,513 433,428 200,000 Disbursements Multi Partner Fund - Direct 8.1 46,338 54,229 189,938 244,167 46,338 Payments TOTAL RECEIPTS 2 246,338 379,144 298,451 677,595 246,338 EXPENDITURE BY COMPONENTS/SUB- COMPONENTS/PROGRAMS 1. Electrification of Households and Small Business through Standalone Solar Home Systems - (91,546) (102,159) (193,705) - 2. Analytical work for enabling electrification through Solar- Powered/ Hybrid Mini-grids - - - - - 3. Technical Assistance, Capacity Building and Project Management (196,256) (284,115) (199,030) (483,145) (196,256) TOTAL PAYMENTS (196,256) (375,661) (301,189) (676,850) (196,255) Surplus (deficit) for the year - 745 50,082 Cash beginning of the year – 6 2019 50,082 - Cash end of the year – 2019 6 50,827 50,082 Items of Cash & Bank Balances Changes During the Balance b/f Period Balance c/f Designated Account at CBS 6 50,082 745 50,827 Page 22 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 IX. GENERAL INFORMATION AND ACCOUNTING POLICIES (i) General Information The Somali Electricity Access Project has its offices/headquarters in Mogadishu, the capital of the Federal Republic of Somalia. The principal address of the project is: Ministry of Energy and Water Resources, 3rd Floor Mogadishu GPO Building, Corso Somalia, Bondheere District, Mogadishu, Somalia The principal activity of Somali Electricity Access Project is to provide Access to Electricity and ensure quality government services. The relevant legislation governing Somali Electricity Access Project operations during the reporting period is the Appropriation Act 2020, the Financial and Accounting Procedures Regulations of 1961 of the State as amended 1971 and the financing agreement between the FGS and the Development Partners. (ii) Significant Accounting Policies These are the specific principles, bases, conventions, rules, and practices adopted by the Project in preparing and presenting the financial statements. The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all transactions unless otherwise stated. The following specific policies have been used: (a) Statement of Compliance and Basis of preparation of the accounts The financial statements have been prepared in accordance with Cash-basis International Public Sector Accounting Standards (IPSAS). These financial statements have been authorized for issue by the Accountant General on 30 April 2021. The accounting policies have been applied consistently throughout the period. The presentation and classification of items in the financial statements are consistent from one period to the next. In line with Cash-basis International Public Sector Accounting Standards (IPSAS), the financial statements have been prepared in accordance with Cash-basis International Public Sector Accounting Standards (IPSAS) as prescribed by the International Public Sector Accounting Standards Board (IPSASB). (b) Reporting entity These financial statements are for Somali Electricity Access Project under the Federal Government of Somalia and encompass the reporting entity as specified in the Appropriation Act, 2020. Page 23 Reports and Financial Statements for the year ended 31 December 2019 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 IX. GENERAL INFORMATION AND ACCOUNTING POLICIES (Continued) (ii) Significant Accounting Policies (Continued) (c) Reporting currency The functional currency of the Federal Government of Somalia is the United States dollar (US $) because: (a) government revenues and expenditures are made in that currency; (b) most of the financing is provided in that currency; and (c) bank transactions and balances are principally in the US $. (d) Reporting Period The Somali Electricity Access Project Financial Year runs from 1 January to 31 December, the calendar year. These financial statements are for the period 1 January 2020 to 31 December 2020. This is the first year of the project hence there are no comparative figures. (e) Payments by Third Parties The Somali Electricity Access Project may also benefit from goods and services purchased on its behalf because of cash payments made to third parties during the period. Requests for third party payments are processed using country systems, and at the request of the Project, the donor makes payment directly to a third party (e.g. supplier, contractor, and consultant) for eligible expenditures. Direct payments were processed by the World Bank upon requests from the Project which were formally advised and verified by the Government and included in the financial statements. Note 8.1 and annex 1 provides a further analysis of Third-Party Direct Payments. On the other hand and through direct execution, third parties including donors may make payments to external suppliers outside the country systems and provide goods and services including In- kind donations for example. food aid, big contract of works, vehicles, equipment, technical assistance or personnel services. The payments made by the third parties outside the country systems do not constitute cash receipts or payments managed by the Somali Electricity Access Project even though the entity does benefit from such payments. Such payments are therefore not included in the statement of cash receipts and payments but are reported and disclosed where the financial value of the goods and services received can be reliably verified and determined by Somali Electricity Access Project. (f) Revenue (Recognition of receipts) The Project recognizes all receipts from the various sources when the event occurs, and the related cash has been received by the Government. • Transfers from the Treasury and Other General Government Units/Entities: - Where transfers are received from the Treasury and/or other General Government Units/Entities, these are recognized in the Project books of account when cash is received. Cash is considered as received when payment instruction is issued to the bank and notified to the receiving entity (Project). Page 24 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 IX. GENERAL INFORMATION AND ACCOUNTING POLICIES (Continued) (ii) Significant Accounting Policies (Continued) (f) Revenue (Recognition of receipts) (Continued) • Other receipts: - These include receipts such as proceeds from disposal of assets and refunds. These are recognized in the financial statements the time associated cash is received. • External Assistance: - External assistance is received through grants and loans from multilateral and bilateral development partners. 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 (Project) 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 Includes external loans acquired by the Project and is 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 and in note 2 under Section X of these financial statements. • Other Assistance: - Relates to resources received from Non-governmental organizations and other assistance that is voluntarily provided by, for example, individuals, private entities, and charitable and other organizations (Para 2.1.87 Cash Basis IPSAS 2017). During the year, only external assistance grants were received by the project. (g) Expenses (Recognition of Payments) Payments represent outlays of cash made by the entity or other agencies for and on behalf of the Project. All payments are recognized and included in the financial statements when cash is paid out. • Compensation of employees: - Salaries and Wages, Allowances, Statutory Contribution for employees are recognized in the period when the compensation is paid. Page 25 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 X. GENERAL INFORMATION AND ACCOUNTING POLICIES (Continued) (ii) Significant Accounting Policies (Continued) (g) Expenses (Recognition of Payments) (Continued) • 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 included in the statement of financial assets and liabilities (Balance sheet) as financial liabilities with supporting schedules (detailed notes). (h) Property, Plant and Equipment & other non-current assets (Capital items) Non-current assets principally comprise land, buildings, plant, vehicles, equipment, and any other capital assets controlled by the Project Somali Electricity Access Project. Under the cash basis of accounting, purchases of property, plant, equipment and other non- current assets have been expensed fully in the year of purchase. However, these assets are recorded in Asset Registers at historical cost as a memorandum record. (i) Comparative figures for previous period Where necessary comparative figures for the previous financial year/period have been amended or reconfigured to conform to the required changes in the presentation of the financial statement to ensure full compliance with the Cash Basis IPSAS, 2017. (j) Foreign currency transactions and foreign operations Foreign currency transactions denominated in foreign currencies would be recorded into United States Dollars and incorporated in the statement of cash receipts and payments at the exchange rate ruling on the date of the transaction; Cash balances denominated in foreign currency at the year-end would be translated at the closing rate of exchange with the resulting exchange gains/(losses) dealt with as a reconciling item between the opening and closing cash balances for the financial year. (k) Cash and cash equivalents Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand, deposits held at call with banks, other short-term highly liquid investments, and bank overdrafts. (l) Refunds of previous year receipts and expenditures Receipts refunded from the previous years are recorded as expenditures in the current year. Expenditures refunded from previous years are recorded as receipts in the current year. Page 26 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 IX. GENERAL INFORMATION AND ACCOUNTING POLICIES (Continued) (ii) Significant Accounting Policies (Continued) (m) Employee benefits Employee benefits include salaries, allowances, and other related-employment costs and these have been recognized in the financial statements only when actual payments are made. (n) Contingencies Contingent liabilities are recorded and disclosed when the contingency becomes evident. Contingent assets are neither recognized nor disclosed. (o) Original and final approved budget and comparison of actual and budget amounts The approved budget is developed on the same accounting basis (cash basis), same classification basis (GFS, 2014 economic classification), and for the same period (1 January 2020 to 31 December 2020) as for the financial statements. The original budget of US$ US2,179,800 was approved by Parliament on 31st December 2020 and reallocations were made and included in the supplementary appropriation approved by Parliament on 2 August 2020 following a review in the timing of some of the project activities. The original budget objectives and policies, the subsequent revisions, and the material differences between the budget and actual amounts, are explained more fully under Section I regarding overall performance of the project. The significance difference between the Budget and the actual is caused due to a delay in implementation of the planned activities which was caused by the recruitment process of the key personnel of the PIU i.e. the procurement specialist and the financial management specialist. After these key positions have been filled, the PIU management will make sure to finalize the procurement process of the project planned activities so that the budgeted amounts will be paid against the deliverables of the project. A commitment control system is in place and is implemented through the Somali Financial Management Information System (SFMIS) with adequate system controls to ensure that no expenditure can be incurred more than the approved budget as may be revised. (p) Authorization Date The financial statements of the Project Somali Electricity Access Project were authorized for publication on 30 April 2021 by the Accountant General of the Federal Government of Somalia. Page 27 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 X. EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS 1. Exchange Rates All monetary amounts in the financial statements are expressed in United States Dollars, the transaction and Project reporting currency. The US$ closing rates for major currencies were: Actual Actual 31 December 31 December 2020 2019 US$ US$ Somali Shilling (SOS/US$) 22,500 22,500 British Pound (GBP/US$) 0.641584 0.641584 Euro (Euro/US$) 0.825748 0.825748 2. External Assistance External assistance was received in the form of grants from multilateral donor agencies under agreements specifying the purposes for which the assistance will be utilized, and the grants received from the donor community are not repayable in future. The amounts in the statement of receipts and payments are only recognized when received by and are under the control of the FGS. The amount of external assistance received in 2020 consists of the following. Current FY Current FY 2020 – Current Cumulative balances 2020 - Previous Year balances Reporting (Project-to-date) Quarter (A) Quarter (B) 31 December 31 December As at 31 As at 2020 2019 December 31 December (C= A+B) 2020 2019 (E= C+D) (D) US$ US$. US$ US$ US$ US$ Grants received during the year Somalia Multi-Partner 379,144 298,451 677,595 246,338 923,933 246,338 Fund (MPF) Total grants received 379,144 298,451 677,595 246,338 923,933 246,338 during the year Page 28 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 X. EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS (Continued) 2. External Assistance (Continued) Analysis of the purpose for which the external assistance was received is as follows: Current FY Current FY 2020– Current Cumulative balances 2020 - Previous Year balances Reporting (Project-to-date) Quarter (A) Quarter 4 (B) 31 December 31 December As at 31 As at 2020 2019 December 31 December (C= A+B) 2020 2019 (E= C+D) (D) US$ US$. US$ US$ US$ US$ Grants received during the year Development Assistance 379,144 298,451 677,595 246,338 923,933 246,338 Emergency Assistance - - - - - - Balance of Payments Assistance - - - - - - Military Assistance - - - - - - Trading Assistance - - - - - - Total grants received during the year 379,144 298,451 677,595 246,338 923,933 246,338 Non – compliance with significant terms and conditions: There have been no instances of noncompliance with terms and conditions with regard to loan or grant agreements or guarantees which have resulted in cancellation of the assistance or has given rise to an obligation to return the assistance previously given. Undrawn external assistance – grants The undrawn grant facilities available to fund future operations under binding agreements and where the terms and conditions are to be met, consist of: 31 December 31 December 2020 2019 US$ US$. Multilateral World Bank - Somalia Multi-Partner Fund (MPF) $3,676,067 2,950,000 Total undrawn grant facilities $3,676,067 2,950,000 Page 29 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 X. EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS (Continued) 2. External Assistance (Continued) Undrawn grant facilities include an amount of $3,676,067 from Multilateral Development World Bank Group which is stipulated to expand access to electricity in targeted urban, peri- urban, and rural communities. There are no restrictions imposed on the undrawn grant facilities other than ensuring that the disbursements for any year are planned and budgeted for using country systems. 3. Compensation of employees Principally comprise: Current FY Current FY 2020 - 2020 – Current Cumulative balances Year balances Previous Reporting (Project-to-date) Quarter (A) Quarter 4 (B) 31 December 31 December As at 31 As at 2020 2019 December 31 December (C= A+B) 2020 2019 (E= C+D) (D) US$ US$. US$ US$ US$ US$ Wages and salaries 2,285 11,600 13,885 - 13,885 - Social contributions - - - - - - Other employment costs - - - - - - Total compensation of employee costs. 2,285 11,600 13,885 - 13,885 - 4. Use of goods and services These are mainly: Current FY Current FY 2020 - 2020 – Current Cumulative balances Year balances Previous Reporting (Project-to-date) Quarter (A) Quarter (B) 31 December 31 December As at 31 As at 2020 2019 December 2020 31 Dec 2019 (C= A+B) (E= C+D) D US$ US$. US$ US$ US$ US$. Rent 18,200 - 18,200 - 18,200 - Office materials and other Consumables 2,000 2,000 4,000 12,451 16,451 12,451 Travel Expenses 15,136 27,569 42,705 111,160 153,865 111,160 Training Expenses 22,826 8,402 31,228 0 31,228 0 Professional Fees 241,581 249,833 491,414 46,430 537,845 46,430 Bank Commission 4,903 1,785 6,688 3,160 9,848 3,160 Insurance Charges/ Premium 5,150 0 5,150 0 5,150 0 Total Use of goods and services 309,796 289,589 599,385 173,201 772,586 173,201 Page 30 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 X. EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS (Continued) 5. Capital expenditure – consumption of non-current assets As explained in accounting policy all non-current assets purchased during the year are expensed during the year of purchase [fully depreciated in the year of purchase]. The value of capital expenditure acquired during the financial year and expensed comprise Current FY Current FY 2020 - 2020 – Current Cumulative balances Year balances Previous Reporting (Project-to-date) Quarter (A) Quarter (B) Capital Expenditure 31 December 31 December As at 31 As at 2020 2019 December 31 December (C= A+B) 2020 2019 (E= C+D) (D) ICT Infrastructure, hardware, network, facilities 63,580 - 63,580 15,254 78,834 15,254 Other fixed assets - - - 7,800 7,800 7,800 Total Capital expenditure expensed 63,580 - 63,580 23,055 86,635 23,055 6. Cash and Cash equivalents Comprise cash and bank balances of all bank accounts operated by the project. It also includes petty cash balances held by the Project at the end of the financial year. 31 December 31 December Project Account 2020 2019 US$ US$ The project bank account at the Central Bank of Somalia 50,827 50,082 Cash at hand- Petty Cash - - Total cash and cash equivalents 50,827 50,082 The above amount is restricted to eligible expenditures of the project in line with the financing agreement. 7. Accumulated Funds (Fund Balance/Surplus) The accumulated surplus as at the year-end was as follows: Accumulated surplus (deficits ) 31 December 31 December 2020 2019 US$. US$ At beginning of the year, I January 50,082 - Surplus for the year- see Statement of Cash Receipts & Payments 745 50,082 At end of the year, 31 December 50,827 50,082 Page 31 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 X. EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS (Continued) 8. Other Important Disclosures 8.1: Payments by third parties directly to suppliers – Direct Payments (See also Annex 1) 31 December 31 December Direct Payments 2020 2019 US$ US$. Payments by donors directly to suppliers (grants): Multilateral Agencies 244,167 46,338 Bilateral Agencies - - Total payments by donors directly to suppliers (grants) 244,167 46,338 Description 2020 2019 US $ US $ Construction of buildings - - Construction of civil works - - Supply of goods - - Supply of services 244,167 46,338 244,167 46,338 9. Progress on follow up of recommendations from the Auditor General and other project reviews Below is the recommendation from the previous audit of the project: Audit Finding Auditor Recommendation Status Travel Advances are directly booked PIU team to ensure that staff advances are Implemented in the expense ledgers as soon as cash debited to the staff debtors account awaiting is advanced to the traveler/staff. accountability. As soon as the On submission of the travel accountability is provided to the Financial accountability, any cash balance Specialist, the necessary journal entries unspent is credited to the expense should be processed to clear the staff account and deposited back to the debtors account and book the expenses in project bank account. their individual ledger accounts. The staff advances reconciliation forms should be surrendered to the accounting team as soon as the staff comes back from the field trip for which the travel advance was issued. The accounting team should monitor staff advances to ensure they are reconciled within reasonable timelines. Page 32 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 Audit Finding Auditor Recommendation Status Though the financial statements The financial specialist team could benefit Implemented presented for review were accurate, we from more specialized training in the noted some few weaknesses in the presentation of financial statements. financial report that can be improved on; a) Inconsistency in some numbers presented as decimal points and while others a whole numbers; b) Statement of financial position not included in the financial statements: c) Inconsistency in Budget versus actual comparison numbers: d) Some notes were not included for example cash and cash equivalent note; e) Comparative amounts were not included in the notes. The project audit for the year 2019 is The Project Implementation Unit and the In Progress yet to be completed – 11 months after Office of the Auditor General office should the year end. This effectively means ensure that the project audits are carried out that the audited financial statements in time to ensure that the audit reports are for 2019 will not be submitted in time ready for timely submission to the World (by 30 June 2020) to the World Bank, Bank by end of six months following the in line with the Grant Agreement. end of the financial year. Should there be a delay in submission of the audit reports, the PIU team should proactively communicate to the World Bank on the circumstances and rationale for the delays and obtain approval for lateness. Page 33 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 ANNEX 1 - ANALYSIS OF THIRD-PARTY PAYMENTS (DIRECT PAYMENTS) AT THE END OF THE FINANCIAL YEAR 2020 Total Amount Total amount Paid amount Name of third party Brief transaction description Date of payment paid Comments during the paid Balance year 2019 2020 A B C d=a-c Construction of buildings Sub-Total 0 Construction of civil works Sub-Total 0 Supply of goods Sub-Total 0 Supply of services 1. Abdisalam Moahmud Abdullahi Consultancy Fee for January 2020 20-February-2020 4,525.2 4,525.2 2. Abdisalam Moahmud Abdullahi Consultancy Fee for February 2020 16-March-2020 4,525.2 4,525.2 3. Abdisalam Moahmud Abdullahi Consultancy Fee for March 2020 03-April-2020 4,525.2 4,525.2 4. International Bank of Somalia Grant Manager Contract First Payment 10% 16-April-2020 29,599 29,599 5. Abdisalam Moahmud Abdullahi Consultancy Fee for April 2020 07-May-2020 4,525.2 4,525.2 6. Abdisalam Moahmud Abdullahi Consultancy Fee for May 2020 08-June-2020 6,545.5 6,545.5 7. Abdisalam Moahmud Abdullahi Consultancy Fee for June 2020 06-July-2020 6,545.5 6,545.5 8. International Bank of Somalia Grant Manager Contract Second Payment 20% 15-July-2020 59,200 59,200 Consultancy fee for the Technical advisor for June 9. Faysal Mohamed Ali 2020 23-July-2020 1,353.6 1,353.6 10. Abdisalam Moahmud Abdullahi Consultancy Fee for July 2020 12-August-2020 6,545.5 6,545.5 Consultancy fee for the Technical advisor for July 11. Faysal Mohamed Ali 2020 12-August-2020 3,479.2 3,479.2 Consultancy fee for the Technical advisor for 12. Faysal Mohamed Ali August 2020 03-September-2020 4,319.2 4,319.2 13. Abdisalam Moahmud Abdullahi Consultancy Fee for August 2020 03-September-2020 6,545.5 6,545.5 14. Abdisalam Moahmud Abdullahi Consultancy Fee for September 2020 09-October-2020 6,545.5 6,545.5 Consultancy fee for the Technical advisor for 15. Faysal Mohamed Ali September 2020 06-October-2020 4,319.2 4,319.2 16. University of Washington University Fee for the Project Coordinator 23-October-2020 8,150 8,150 Page 34 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 Total Amount Total amount Paid amount Name of third party Brief transaction description Date of payment paid Comments during the paid Balance year 2019 2020 Consultancy Fee for October 2020 For the Project 17. Abdisalam Moahmud Abdullahi Coordinator 10-November-2020 6,545.5 6,545.5 Consultancy fee for the Technical advisor for 18. Faysal Mohamed Ali October 2020 10-November-2020 4,319.2 4,319.2 Consultancy Fee for November 2020 For the 19. Abdisalam Moahmud Abdullahi Project Coordinator 09-December-2020 6,545.5 6,545.5 Consultancy fee for the Technical advisor for 20. Faysal Mohamed Ali November 2020 09-December-2020 4,319.2 4,319.2 Payment for the Grant Manager for Quarter 2 and 3 21. International Bank of Somalia of 2020 28-December- 2020 49,333.34 49,333.34 Consultancy fee for the Technical advisor for 22. Faysal Mohamed Ali December 2020 and insurance allowance 28-December- 2020 5,310.8 5,310.8 Consultancy Fee for December 2020 For the Project 23. Abdisalam Moahmud Abdullahi Coordinator 28-December-2020 6,545.5 6,545.5 Sub-Total $244,167.54 Grand Total $244,167.54 Page 35 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 ANNEX 2 – SUMMARY OF THE PROJECT ASSET (Non – Current Assets) REGISTER AT THE END OF THE FINANCIAL YEAR 2020 Asset class Historical Cost b/f Additions during the Disposals during the Historical Cost c/f (US$) year year (US$) 1.1.2020 (US$) (US$) 31.12.2020 Office equipment, furniture, and fittings 7,800.00 0.00 0.00 7,800.00 ICT Equipment, Software and Other ICT Assets 15,254.30 0.00 0.00 15,254.30 Total 23,054.30 0.00 0.00 23,054.30 The balance as at the end of the year is the cumulative cost of all assets under the control of the Project. An asset listing is provided separately for asset details. Page 36 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 ANNEX 3 – RECEIPTS PER ENTITY VERSUS THE CONFIRMATION AT THE END OF THE FINANCIAL YEAR 2020 Receipts as per Variance Receipts per Donor Amount Entity Date Received Description Confirmation US$ Amount Amount US$ US$ 20-Feb-20 Direct Payment 4,525 4,525 - 16-Mar-20 Direct Payment 4,525 4,525 - 16-Mar-20 Designated Account 200,000 200,000 3-Apr-20 Direct Payment 4,525 4,525 - 16-Apr-20 Direct Payment 29,599 29,600 (1) 7-May-20 Direct Payment 4,525 4,525 - 8-June-20 Direct Payment 6,546 6,546 - 6-July-20 Direct Payment 6,546 6,546 - 15-July-20 Direct Payment 59,200 59,200 - 23-July-20 Direct Payment 1,354 1,354 - 29-July-20 Designated Account 124,915 124,915 12-Aug-20 Direct Payment 6,546 6,546 12-Aug-20 Direct Payment 3,479 3,479 3-Sep-20 Direct Payment 4,319 4,319 3-Sep-20 Direct Payment 6,546 6,546 9-Oct-20 Direct Payment 6,546 6,546 6-Oct-20 Direct Payment 4,319 4,319 23-Oct-20 Direct Payment 8,150 8,117 33 10-Nov-20 Direct Payment 6,546 6,546 10-Nov-20 Direct Payment 4,319 4,319 12-Nov-20 Designated Account 108,513 108,513 9-Dec-20 Direct Payment 4,319 4,319 9-Dec-20 Direct Payment 6,546 6,546 28-Dec-20 Direct Payment 49,333 49,333 28-Dec-20 Direct Payment 5,311 5,311 28-Dec-20 Direct Payment 6,546 6,546 677,598 677,566 32 Page 37 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 ANNEX 4 – RECONCILIATION BETWEEN APPLICATION FOR WITHDRAWALS AND RECEIPTS FROM THE WORLD BANK AT THE END OF THE FINANCIAL YEAR 2020 Confirmed Withdrawal Actual Date of Application Application Date of Receipt Difference Application Number Receipt Amount Form US$ Amount US$ 13-Feb-2020 S010 4,525 20-Feb-20 4,525 - 01-Mar-2020 S011 4,525 16-Mar-20 4,525 - 22-Mar-2020 APP-DA-01-2020 200,000 16-Mar-20 200,000 26-Mar-2020 S012 4,525 3-Apr-20 4,525 - 06-April-2020 S013 29,599 16-Apr-20 29,600 -1 29-April-2020 S014 4,525 7-May-20 4,525 - 31-May-2020 S015 6,546 8-June-20 6,546 - 29-Jun-2020 S016 6,546 6-July-20 6,546 - 06-Jul-2020 S017 59,200 15-July-20 59,200 - 16-Jul-2020 S018 1,354 23-July-20 1,354 - 28-Jul-2020 APP-DA-02 124,915 29-July-20 124,915 - 30-Jul-2020 S019 6,546 12-Aug-20 6,546 - 03-Aug-2020 S020 3,479 12-Aug-20 3,479 - 31-Aug-2020 S021 4,319 3-Sep-20 4,319 - 31-Aug-2020 S022 6,546 3-Sep-20 6,546 - 03-Oct-2020 S023 6,546 9-Oct-20 6,546 - 03-Oct-2020 S024 4,319 6-Oct-20 4,319 - 07-Oct-2020 S025 8,150 23-Oct-20 8,117 33 03-Nov-2020 S026 6,546 10-Nov-20 6,546 - 03-Nov-2020 S027 4,319 10-Nov-20 4,319 - 08-Nov-2020 APP-DA-03 108,513 12-Nov-20 108,513 - 01-Dec-2020 S028 4,319 9-Dec-20 4,319 - 01-Dec-2020 S029 6,546 9-Dec-20 6,546 - 19-Dec-2020 S030 49,333 28-Dec-20 49,333 - 19-Dec-2020 S031 5,311 28-Dec-20 5,311 - 21-Dec-2020 S032 6,546 28-Dec-20 6,546 - Total 677,598 677,566 32 N.B: The difference between the Bank records and the SFMIS records is due to payment made to the University of Washington through direct payment whereby the actual amount paid to the beneficiary was less than less than $33 dollars from the proforma invoice recorded at the SFMIS. Also the invoice deducted from direct payment made to IBS was reduced by $1 once recording the transaction at the SFMIS. In both cases, the PIU is working with the office of the Accountant General to correct the payments amounts of these vouchers in the SFMIS so that the records are reconciled. Page 38 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 ANNEX 5 – SFMIS reports and other supporting schedules SFMIS Trial Balance Page 39 Reports and Financial Statements for the year ended 31 December 2020 Somali Electricity Access Project Reports and Financial Statements For the year ended December 31, 2020 SFMIS Budget Utilization Report The following SFMIS financial reports and other supporting schedules are provided separately. i. SFMIS Project Bank reconciliations for all bank accounts ii. SFMIS Project Statement of Budget Utilization iii. SFMIS Fixed Asset Register iv. SFMIS statement of sources and application of funds v. SFMIS Direct Payments Listing vi. Schedule of disbursements vii. Contract listing/register Page 40 Reports and Financial Statements for the year ended 31 December 2020