MINISTRY OF ROADS AND HIGHWAYS TRANSPORT SECTOR IMPROVEMENT PROJECT (TSIP) (P1 51026 )(Cr no IDA 6081 OGH) STTEMENT OF FINANCIAL STATEMENT AS AT 31ST DECEMBER, 2020 TABLE OF CONTENTS PAGE REFERENCE GENERAL INFORMATION 1-2 INDEPENDENT AUDITORS' REPORT ON TSIP COMPONENT '1' FINANCIAL STATEMENTS 3-5 STATEMENT OF FINANCIAL POSITION 6 STATEMENT OF SOURCES AND USES OF FUNDS 7 STATEMENT OF ACTIVITY AND VARIANCE REPORT BY EXPENDITURE CATEGORY 8 NOTES TO THE FINANCIAL STATEMENTS 9 - 13 TSIP Financial Statements for the year ended 31 December 2020 Page 1 MINISTRY OF ROADS AND HIGHWAYS MRH TRANSPORT SECTOR IMPROVEMENT PROJECT IDA LOAN NUMBER: IDA60810-GH GENERAL INFORMATION PROJECT BACKGROUND Transportation infrastructure is identified as a key focus area to drive economic growth and sustainable poverty reduction in the second Ghana Shared Growth and Development Agenda (GSGDA II) which centers on: (a) Enhancing Competitiveness of the Private Sector, (b) Infrastructure and Human Settlement Development; (c) Human Development, productivity and employment; and, (d) Transparent, Responsive and Accountable Governance, among others. Objectives: Transport Sector Improvement Project (T.S.I.P) was designed to support Government of Ghana to; (a) reduce travel time on selected parts of the classified road network in northern Ghana; (b) promote road safety; and (c) strengthen the institutional management of the transport sector to ensure an integrated, efficient, cost-effective and sustainable transportation system responsive to the needs of society, supporting growth and poverty reduction and capable of establishing and maintaining Ghana as a transportation hub of West Africa. Source of funding- The International Development Association (IDA) will provide an amount of US$150 million as a five-year credit facility to support the transport sector in Ghana. The funding arrangement will employ an Investment Project Financing (IPF) instrument which will be executed using Output and Performance Based Road Contracts. IDA Loan Amount: US$ 150 million Component I: US$133.8 million Component II: US$7.3 million Component III: US$9.0 million Approval date: 06/062017 Start date: 06/07/2017 Completion date: 30/06/2023 Implementation Agencies: Ministry ofRoads and Highways - Component I, II and III Ghana Highways Authority - Component I, II and III Ministry of Transport - Component II and III TECHNICAL IMPLEMENTATION Mr. Edmund Offei-Annor, Ag. Chief Director MRH-Chairman COMMITTEE Mrs. Mabel Sagoe, Ag. Chief Director (MOT) -Co-Chairperson Mrs. Rita Ohene Sarfoh, Director Policy and Planning MRH - Member Mrs. Irene Messiba, Director Policy Planning Monitoring and Evaluation (MOT) - Member TSIP Financial Statements for the year ended 31 December 2020 Page 1 Mrs. Angela Dannson, Director Policy Planning Monitoring and Evaluation (MoFA) - Member Mr.. Rosby Kome-Mensah, Monitoring and Evaluation MRH- Member Mr. K. N Akosah-Koduah, Deputy Director Maintenance (DFR) - Member Mr. David Sitsofe Addo, Director Planning (GHA) - Member Ms. Sauda Ahmed, Head of WB Unit - Member Mr. George Kodwo Addison, TSIP Project Coordinator Mr. Samuel Banini, AIT Head (MRH) Mr. Prosper Amewode, AIT Head (MOT) Mr. Emmanuel N. Antwi, AIT Head (GHA) Mr. Andreas Attakpah, Project Accountant MRH Mr. Daniel Soglo, Project Accountant (MOT) Mr. Frank Amarquaye, Project Accountant (GHA) ADDRESS Ministry of Roads and Highways P.O. Box M 57, Accra AUDITORS Ghana Audit Service Post Office Box M 96, Accra BANKERS Bank of Ghana TSIP Financial Statements for the year ended 31 December 2020 Page 2 AUDIT SERVICE In case of reply the number and date of the letter should be quoted My Ref No.GAD/GEN.ADM/21/26 Your Ref No: ............................ P. O. Box ... .... ..6 Good Governance Tel: 233 (0) 302 664920/28/29 andAccountability a.... ................. .. Fax: 233 (0) 302 6751495 Website: www.ghaudit.org ......30.............1IM ............ 2021 THE CHIEF DIRECTOR, MINISTRY OF ROADS AND HIGHWAYS ACCRA INDEPENDENT AUDITOR'S REPORT MINISTRY OF ROADS AND HIGHWAYS MRH TRANSPORT SECTOR IMPROVEMENT PROJECT IDA LOAN NUMBER: IDA60810-GH REPORT ON THE PROJECT FINANCIAL STATEMENTS We have audited the financial statements of the Transport Sector Improvement Project (TSIP) under the International Development Agency (IDA) Loan referenced IDA60810- GH which, comprises the statement of financial position as at 31 December, 2020, the statement of sources and uses of funds for the year ended 31 December, 2020 which, have been prepared under the historical cost convention and on the basis of the accounting policies set out in Note 1. Management's responsibility for the financial statements The financial statements for Project are the responsibility of the Management of the TSIP under the Ministry of Roads and Highways (MRH). The Management of TSIP is responsible for the preparation and fair presentation of these financial statements in accordance with generally accepted and accounting practice and IDA Loan referenced IDA60810-GH as well as for such internal control as management determined is necessary to enable the preparation of the financial statements free from material misstatement whether due to fraud or error. This responsibility includes designing, maintaining adequate financial management arrangements and ensuring that these continue to be effective throughout the reporting period; maintaining proper accounting records, which disclose with reasonable accuracy at any time of the financial position of the Programme; 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 fraud or error; safeguarding the assets of the programme; selecting and TSIP Financial Statements for the year ended 31 December 2020 Page 3 applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor's responsibility Our responsibility is to express an independent opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards of Supreme Auditing Institutions (ISSAls) and the guidelines in the Loan Financing Agreement. Those standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance on whether the Financial Statements are free from material misstatement whether caused by fraud, other irregularity or error. An audit includes performing procedures to obtain audit evidence about the amounts and disclosures in the Financial Statements. The procedures selected depend on the auditor's judgment, including the assessment of the risk of material misstatement of the Financial Statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity's preparation and fair presentation of the programme financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Management, as well as evaluating the overall presentation of the financial statements. We believe that we have obtained sufficient appropriate audit evidence to provide a basis for our audit opinion. Opinion In our opinion, the Financial Statements for Project present fairly, in all material respects, the financial position of TSIP as at 31 December 2020, and the results of its operations for the period then ended in accordance with the provisions of the Loan Financing Agreement (IDA Loan referenced IDA60810-GH and the accounting policies set out in Note 1 of the programme financial statements. Report on compliance In addition, Management has complied, in all material respects, with the covenants of the Financing Agreement (IDA Loan referenced IDA60810-GH and the applicable Government Regulations, and that the funds received during the period under audit were used for the eligible purposes for which they were intended and were properly accounted for as at the year ended 31 December, 2020. TSIP Financial Statements for the year ended 31 December 2020 Page 4 Restriction of use This report is intended solely for the use of the Management of the project, IDA, and the Government of Ghana, and should not be used for any other purpose. BENJAMIN d. CODJOE DEPUTY AUDITOR-GENERAI/CGAD for: Ag. AUDITOR-GENERAL TSIP Financial Statements for the year ended 31 December 2020 Page 5 MINISTRY OF ROADS AND HIGHWAYS MRH TRANSPORT SECTOR IMPROVEMENT PROJECT IDA LOAN NUMBER: IDA60810-GH STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2020 NOTES 2020 2019 US$ US$ Non- Current Assets Current Assets Bank /Cash 6 8,792,042.00 4,316,844.00 Total Assets 8,792,042.00 4,316,844.00 Financed by IDA Fund 7 8,792,042.00 4,316844.00 Ag. Chief Director, MRH Project Aceountant, MRH Mr. Edmund Offei-Annor Mr. Andreas Attakpah Date: Date: The attached notes 1 to 7 form an integral part of these financial statements. TSIP Financial Statements for the year ended 31 December 2020 Page 6 The attached notes 1 to 7 form an integral part of these financial statements. MINISTRY OF ROADS AND HIGHWAYS MRH TRANSPORT SECTOR IMPROVEMENT PROJECT IDA LOAN NUMBER: IDA60810-GH STATEMENT OF SOURCES AND USES OF FUNDS FOR THE PERIOD ENDED 31 DECEMBER 2020 Cumulative Total 2020 2019 2020 NOTE US$ US$ US$ Balance as at 1 January 4,316,844.00 4,750,000.00 4,750,000.00 Receipts: Replenishment to IDA Loan 10,495,544.00 4,823,597.00 15,319,141.00 Designated A/C Total Project Receipts 14,812,388.00 9,573,597.00 20,069,141.00 Uses of Funds Road Assets Preservation (Comp. 1) 3 4,878,481.00 2,015,018.00 6,893,499.00 Improve Road Safety (Comp. II) 4 281,401.00 2,546,360.00 2,827,761.00 Institutional Strengthening and Capacity Building (Comp. III) 5 860,465.00 695,374.00 1,555,839.00 Total Project Expenditure 6,020,347.00 5,256,752.00 11,277,099.00 Balance as at 31 December 8,792,042.00 4 8,792,042.00 Reconciliation Analysis Bank balance in the Designated 8792,042 4 52 A/C TSIP Financial Statements for the year ended 31 December 2020 Page 7 The attached notes 1 to 7 form an integral part of these financial statements. MINISTRY OF ROADS AND HIGHWAYS MRH TRANSPORT SECTOR IMPROVEMENT PROJECT IDA LOAN NUMBER: IDA60810-GH STATEMENT OF ACTIVITY AND VARIANCE REPORT PER COMPONENT FOR THE YEAR ENDED 31 DECEMBER 2020 Budget Actual Variance Project Budget Expenditure Category US$ US$ US$ Road Assets Preservation (Component I) 125,000,000.00 6,832,923.00 118,106,501.00 Improved Road Safety (Component 11) 8,000,000.00 2,827,761.00 5,172,239.00 Institutional Strengthening and Capacity Building (Component III) 17,000,000.00 1,555,839.00 15,444,161.00 Total(s) 150,000,000.00 11,277,099,00 138,722,901.00 TSIP Financial Statements for the year ended 31 December 2020 Page 8 MINISTRY OF ROADS AND HIGHWAYS MRH TRANSPORT SECTOR IMPROVEMENT PROJECT IDA LOAN NUMBER: IDA60810-GH NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 1. Significant Accounting Policies The following are summary of the significant accounting policies adopted in the preparation of the financial statements: Basis of accounting The financial statements have been prepared on IPSAS cash basis and under the historical cost convention. This means that revenue and expenditures are recognized in the financial statements only when they are receive and paid for respectively. Under the historical cost convention, assets and liabilities are reflected or disclosed in the financial reports at the cost incurred or price paid at the time of transaction. Property, plant and equipment All Property, Plant and Equipment acquired or constructed under all sources of funding have been written off as an expense in the Statement of Sources and Uses of funds.. Depreciation No depreciation has been charged in the financial statements. Revenue and expenditure Revenues are recognised when funds are received from IDA and expenditures are accounted for in the year when goods, works and services are incurred and paid. Donor/Financier Funds received are accounted for on cash basis. Foreign currency exchange Foreign currency translation for funds received from IDA are converted using the actual spot exchange rate at the conversion from special to local account. The reporting currency is in United States Dollar. TSIP Financial Statements for the year ended 31 December 2020 Page 9 2. Receipts 2020 2019 Cumulative Receipts from the US$ US$ US$ Bank during the 10,495.544.00 4,823,597.00 14,812,388.00 year 3. Road Assets Preservation (Component I) This relates to the administrative, field operating activities, goods and services, consultancy services and the construction of roads in respect of Road Assets Preservation. Opening balance Additions during Closing the year balance 1 January, 2020 31 December, 2020 US$ US$ US$ Development Of Road Asset Management System Goods 345,477.00 345,477.00 Consultancy and non- 1,667.00 291,320.00 292,987.00 consultancy services Improve assets management on Trunk road network: Consultancy and Non- 2,928,595.00 1,996,196.00 4,924,791.00 Consultancy Improve assets management on Feeder roads: Goods 241,120.00 195,095.00 436,215.00 TSIP Financial Statements for the year ended 31 December 2020 Page 10 Works 1,685,101.00 1,685,101.00 Consultancy and Non- 338,692.00 365,292.00 703,984.00 Consultancy 3,510,0704.878.481.00 8388,55500 4. Improve Road Safety (Component II) This expenditure category relates to all expenses incurred under the Project with the objective of improving road safety in Ghana. Opening Additions during Closing balance the year balance 1 January, 2020 31 December, 2020 US$ US$ US$ Support to NRSA (MOT): Goods 1,139,428.00 1,139,428.00 Consultancy and Non- 1,497,610.00 81,413.00 1,612,500.00 Consultancy services Support to NRSA (GHA): Goods 171,865.00 171,865.00 Support to DVLA (MOT): Consultancy and Non- 28,123.00 28,123.00.00 Consultancy services 2,637,038.00 2,918,439.00 TSIP Financial Statements for the year ended 31 December 2020 Page 11 5. Institutional Strengthening and Capacity Building (Component III) This expenditure relates to a public expenditure review of the Road Agencies and the Road Fund with the objective of changing the mode of operations of the Agencies and also addressing capacity short falls through targeted capacity development programs. Opening Additions during Closing balance the year balance 1 January, 2020 31 December, 2020 USD USD USD Support to MRH: Training and operating cost 119,336.00 67,996.00 187,332.00 Support to MOT Goods - 8,561.00 8561.00 Training and operating cost 91,236.00 52,980.00 144,216.00 Support to MRH: Training and operating cost 376,814.00 26,297.00 522,447.00 Support to GHA-Capacity Building: Training and operating cost 151,952.00 12,000.00 163,952.00 Support to MRH-Project Management: Training and operating cost 288,976.00 298,353.00 587,329.00 Support to MoT-Project Management: Goods 344,000.00 44,778.00 388,778.00 Works 226,925.00 226,925.00 Training and operating cost 57,110.00 33,746.00 90,856.00 TSIP Financial Statements for the year ended 31 December 2020 Page 12 Support to GHA-Project Management: Training and operating cost 309,382.00 86,384.00 395,766.00 1,738,806.00 860,465.00 2,716,162,00 6. Bank and cash balances This represents available cash and cash equivalents for the continuation of the Project and to settles any related liabilities. 7. IDA Funds 2020 2019 US$ US$ Balance c/f 8,792,042.00 TSIP Financial Statements for the year ended 31 December 2020 Page 13