IOAC IN" fff90110 Our Reference: LC821/248/18 Your Reference: Date: 19" December, 2018 Mr Paula Ma'u Chief Executive Officer MEIDECC Nuku'alofa Dear Mr Ma'u Final Audit Report: Pacific Resilience Project for financial yeard ended 30 June 2018 Please find enclosed the Final Audit Report of the Pacific Resilience Project for the financial year ended 30 June 2018. Finally, I would like to take this opportunity to thank the Project Management Unit staff, for their assistance and cooperation during the audit. Yours Sincerely Sisilia Fe'iloaki CA (ANZ) for AUDITOR GENERAL cc: Mrs Balwyn Fa'otusia, CEO - Ministry of Finance & National Planning Mr Maliu Takai, Project Manager (PREP) PACIFIC RESILIENCE PROGRAM (PREP) FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2018 PACIFIC RESILIENCE PROGRAM FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2017 CONTENTS Page(s) 1. Certification by Management 2 2. Auditor's Report 3 3. Statement of Receipts and Payments 4 4. Statement of Comparison of Budget and Actual Amounts 5 5. Notes to the Financial Statements 6 - P 2 PACIFIC RESILIENCE PROGRAM CERTIFICATION BY PROJECT'S MANAGEMENT FOR THE YEAR ENDED 30 JUNE 2018 We certify that the attached financial statements for the Pacific Resilience Program (PREP) comprising of the Statement of Receipts and Payments, Statement of Comparison of Budget & Actual Amounts and Notes forming part of the financial statements for the year from 01 June 2017 to 30 June 2018: a) gives a true and fair view of the matters to which they relate; and b) have been properly drawn up in accordance with the accounting policy described in Note 2 to the financial statements. We are not aware of any circumstances which would render any particulars included in the financial statements to be misleading or inaccurate. Sigau A ignature Mr. Maliu Takai Mr. Vatulele Tuputupu Project Manager Acting Chief Executive Officer Pacific Resilience Program (PREP) MEIDECC Tonga Tonga 17TH December 2018; Nuku'alofa; TONGA 1OAC INDEPENDENT AUDITOR'S REPORT To the Chief Executive Officer Ministry of Meteorology, Energy, Information, Disaster, Management, Environment, Communications and Climate Change Pacific Resilience Program We have audited the accompanying Statement of Cash Receipts and Payments and the accompanying notes to the Financial Statements for the Pacific Resilience Program (PREP) as set out on pages 4 to 9 for the financial period ended 30h June 2018. Management's Responsibility for the Financial Statements Management is responsible for the preparation of the Financial Statement on the cash basis accounting as accordance with the Public Finance Management Act 2002 and fair presentation of the financial statements in accordance with the International Public Sector Accounting Standards (IPSASs), Financial Reporting under the Cash Basis of Accounting and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards of Supreme Audit Institution (ISSAls). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also included evaluating the appropriateness of accounting policies used and reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my unqualified audit opinion. Unqualified Opinion In my opinion, the Financial Statements on pages 4 to 9, have been presented fairly in all material respects the receipts and payments of Pacific Resilience Program for the year ended 30111 June 2018 in accordance with the Public Finance Management Act 2002 and in accordance with International Public Sector Accounting Standards (IPSASs Fin ncial Reporting under the Cash Basis ofAccounting. Sefita Tangi FCPA (Aust) AUDITOR GENERAL 4 PACIFIC RESILIENCE PROGRAM STATEMENT OF CASH RECEIPTS AND PAYMENTS FOR THE YEAR ENDED 30 JUNE 2018 Direct 2017 - 18 FY 201 - O17Lt ACTUAL (TOP Payment TOTAL TOTAL TOTAL to 5)__ __ (TOP 5) (TOPs) (TOPS) Date Sources of Funds IDA 56890 (CREDIT) 1,259,597 1,104,972 2,364,569 2,956,527 5,321,096 IDA D0780 (GRANT) 822,058 - 822,058 589,396 1,41 1,454 TF A0900 (SCCF) 155,057 - 155,057 878,546 1,033,603 TF A1232 (GFDRR) 2,621 2,621 531,526 534.147 Counterpart Funds (Tonga Gov't) - - - Others - - TOTAL 2,239,333 1,104,972 3,344,305 4,955,995 8,300,300 Uses of Funds - By Component 1 Strengthening Early Warning Preparedness 1 1 1 Institutional strengthening of legal & 302,443 302,443 158,363 460,806 regulatory framework Observation Infrastructure, Data Management Systems, Forecasting and 68,176 68.176 1,197,098 1,265,274 1.1.2 Warning Systems Enhancement of the MHEWS Service Delivery 107,568 107,568 398,176 505744 1 1.3 System Total Component 1 478,187 - 478,187 1,753,637 2,231,824 Risk Reduction and Resilient Investment 2 Planning and Preparation 2.1.1 Investment planning and preparation - - - - Investments to strengthen climate and 21.2 disaster resilience 69,409 69,409 3,810 73,219 Total Component 2 69,409 - 69,409 3,810 73,219 3 Disaster Risk Financing 3.1-1 Contingency Emergency Response - - - - 3.1.2 Premiums financing - 1,104,972 1,104,972 2,179,134 3,284,106 3.1.3 Capacity building for Disaster Risk Financing 14,975 - 14,975 - 14,975 Total Component 3 14,975 1,104,972 1,119,947 2,179,134 3,299,081 4 Project Management 4.1.1 Project Manager 101,388 - 101,388 95,550 196,938 41,2 Pro;ect Accountant 68,141 - 68,141 66,178 134,319 4 1.3 Procurement Specialist 45,277 - 45,277 39,155 84,432 4,14 M & E Expert - - - - 4 1 5 Administrative Officer 25,242 - 25,242 18,052 43,294 4.1 6 a) Incremental Operaiing Costs 80,194 80,194 90,050 170,244 Capital Budget (Computers, Equipment & b) Furnitures)2,973 2,973 42,174 45,147 C) Others (including MTR preparation) - - - - 4.1.7 Driver 2,346 2,346 - 2.346 Total Component 4 325,561 - 325,561 351,159 676,720 TOTAL PROJECT EXPENDITURE 888,132 1,104,972 1,993,104 4,287,740 6.280,844 Balance of Receipts over Payments 1,351,201 - 1,351,201 668,255 2,019,456 Plus Opening Balance - 01/07/2017 668,796 Less Prior Year Unswept expenses 277,409 Double Paid vouchers 33,757 Add Gain on Foreign Exchange 98,743 Closing Bank Balance 30/06/2018 1,807,574 6 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2018 1. GENERAL INFORMATION BACKGROUND Tonga, like its pacific neighbouring countries, is highly vulnerable to all forms of hydro- meteorological and geo-hazards as well as climate change extreme events. These events affects socio-economic development, livelihoods as well as natural and built environments. PREP is seen as part of initiatives to provide a solution to combat the adverse effects of these events, in building the resilience of Tonga & participating countries to hydro-meteorological, geo-hazards and climate change extreme events, through strengthening of early warning system and preparedness, risk reduction and resilience investments, and financial protection of participating countries. SOURCES OF FUND TOTAL BUDGET USD$ 16.759M PREP COMPONENTS COMPONENT 1 (USD$11.5M - ); STRENGTHENING EARLY WARNING AND PREPAREDNESS: this involves carrying out activities designed to strengthen institutional and regulatory framework, modernize observation infrastructure and facilities and improve service COMPONENT 2(USD$1.7M - §>); RISK REDUCTION AND RESILIENT INVESTMENTS: involves activities designed to prepare a multi-sectoral resilience investments and feasibility studies for such investments and financing refurbishment of facilities-schools, etc. COMPONENT 3(USD$2.68M - ): DISASTER RISK FINANCING: involves the establishment of contingency emergency response comp (cerc), financing of premiums and capacity building in disaster risk financing. COMPONENT 4(USD$0.9M - iJ; PROGRAM MANAGEMENT: involves strengthening recipient's capacity in program management, coordination and monitoring. 7 2. SUMMARY OF ACCOUNTING POLICIES 2.1 Basis of Preparation The accounts are prepared on the basis of historical Cash Basis IPSAS Financial Reporting Under the Cash Basis of Accounting. The accounting policies have been applied consistently throughout the period. 2.2 Reporting Entity The financial statements are for the Ministry of Meteorology, Energy, Information, Disaster Management, Environment, Climate Change, and Communication (MEIDECC). 2.3 Reporting Currency The reporting currencies are both Tongan Pa'anga (TOP) and some in US Dollars (USD). The Designated. are maintained in USD, although all expenses are paid in TOP hence the Financial Statements are presented in both TOP and some in USD. Project Income (Funding) in the Statements is converted from USD to TOP at the rate on the day tW money is received, and the Direct Payment was converted from USD to TOP using a rate of I TOP = 0.4525 USD. 2.4 FINANCIAL PERIOD The financial statements is for the period from 1st July 2017 to 30th June 2018. 8 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 3. Receipts Funds are received from the World Bank. The amount is based on the Withdrawal Applications from PREP through the Ministry of Finance and National Planning (MoFNP) for approval and transfer from the World Bank. Date Description Source of Ccy Application Funds Amount 28/08/2017 Reimbursement - Withdrawal IDA - Credit TOP 181,040.77 Application - PREP 007 05/09/2017 Reimbursement - Withdrawa IDA - Grant TOP 164,316.72 Application - PREP 006 14/11/2018 Direct Payment - Insurance IDA - Credit TOP 1,104,972.00 19/01/2018 Reimbursement - Withdrawal SCCF TOP 155,057.00 Application - SCCF 02 19/01/2018 Reimbursement - Withdrawa[ GFDRR TOP 2,620.82 Application - GFDRR 02 10/04/2018 CERC - Fund IDA - Credit TOP 539,025.44 10/04/2018 CERC - Fund IDA - Grant TOP 539,025.44 Reimbursement - Withdrawal 23/04/2018 Aication P 009 IDA - Credit TOP 539,530.81 Application - PREP 009 23/04/2018 Reimbursement - Withdrawal IDA - Grant TOP 118,715.39 Application - PREP 010 TOTAL 3,344,304.39 4 Payments Payments relate to all expenditure payments made to suppliers for goods and services relating to PREP. Payments are approved by the CEO of MEIDECC and are paid in accordance with the Program Operational Manual (POM). 30JUNE 30 JUNE 5 CASH AT BANK 2018 2018 (TOP$) (USD$) Designated Account No. 01 -77-645-2041 1,725,481 767,322 Designated Account No. 01-77-645-2042 82,092 36,507 TOTAL 1,807,574 803,828 Exchange rate on 29th June 2018: 0.4447 USD = TOP$ I 9 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 6 Payments by Third Parties Third party is the World Bank. There was I payment made in direct payment, by the World Bank. Source of Application USD Date Description Ccy Amount Fund Equivalents (TOPSI 14/11/2017 Insurance Premium CDi USD 1,104,972 500,000 Credit 7 FACILITY AVAILABLE Funds in historical figures including available balances for the Year. Signed Disbursed to Remaining Amount Date (TOP) Balance IDA Notional - Credit TOP 17,741,935 5,321,096 12,420,839 IDA- Regional - Grant TOP 4,838,710 1,411,454 3,427,256 SCCF - Grant TOP 9,847,312 1,033,603 8,813,709 GFDRR - Grant TOP 3,225,806 534,147 2,691,659 Counterpart Funds (Tongan Gov't) TOP 387,097 - 387,097 TOTAL 36,040,860 8,300,300 27,740,560 8. PROPERTY, PLANT AND EQUIPMENT Property, Plant and Equipment items are stated at cost (TOP $). Opening Addition/(Dis Closing Dosall 3 x Phillips Desktop 6,085 - 6,085 4 x Loptops 6,996 2,973 9,969 3 x Seagate External Drive 753 - 753 2 x TP Link 182 - 182 HP Deskjet Inkjet 181 - 181 Multi- Function Printer - FUJl XEROX 9,801 - 9,801 2 x Overhang Cupboards 701 - 701 3 x Movable Partitions 2,041 - 2,041 EPSON Portable Multimedia Projector 1,601 - 1,601 D-Link Server 1,251 - 1,251 2 x Mazda BT50 151,001 - 151,001 Toyota HIACE (16 Seater) - Diesel 73,857 - 73,857 Mazda BT50 75,501 - 75,501 Scanner 465 - 465 Generators (5) 23,000 - 23,000 Chainsaws (12) 9,360 - 9,360 Two-Stroke Oil (10) 816 - 816 Bar & Chain Oil (12) 390 390 Maintenance Kit ( 12) 2,016 - 2,016 Dust Bins - 100 Ltrs (10) 1,390 - 1,390 Buckets - 20 Ltrs (10) 155 - 155 Kitchen Utensil Sets (30) 1,425 - 1,425 Large Pots - 100 Ltrs (10) 6,950 - 6,950 Water Tanks (10) 16,000 - 16,000 VHF Radios (100) 60,316 - 60,316 Stretchers (12) 7,585 - 7,585 Dewatering Pumps (2) 118,848 - 118,848 Choirs (10) 1,100 - 1,100 AM Transmitter 545,924 - 545,924 Portable Toilets (20) 62,046 - 62,046 Family Tents (100) 282,996 - 282,996 Total 1,470,733 2,973 1,473,706