S.Y Audit Office Address: 655 Sirorot Road, Sateng Subdistrict, Mueang District, Yala Province, tel 085-1882274 Independent Auditor's Report To: Project Director of the Socio-Economic Reintegration Project in Southern Thailand Opinion We have audited the financial statement of SOCIO-ECONOMIC REINTEGRATION PROJECT IN SOUTHERN THAILAND (TFOBO231) implemented by Hilal Ahmar Foundation (HAF), which comprises the Receipt and Disbursement Report, Designated Account Report, the Statement of Expenditure (SOEs) and Detailed Statement of Income for the period from January 1, 2021 to September 30, 2021, and Notes to the Financial Statements including significant accounting policy. In our opinion, the financial statements are prepared in accordance with the requirements for the preparation of financial statements as set out in the Financial Management Manual for Socio- Economic Reintegration Project in Southern Thailand (TFOBO231) Clause 5, Clause 5.2, Clause 5.2.1 and Clause 5.2.2, applying a cash basis, prepared by Hilal Ahmar Foundation for the Socio-Economic Reintegration Project in Southern Thailand (TFOBO23 1) dated 15 November 2019 Basis for Opinion We conducted our audit in accordance with Thai Standards on Auditing. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statement of the Project implemented by the HAF. In the report, the Auditor's responsibility for auditing the Financial Statements of the Socio- Economic Reintegration Project in Southern Thailand (TFOBO231) implemented by the Hilal Ahmar Foundation, is independent from Hilal Ahmar Foundation (HAF) in accordance with the Federation of Accounting Professions' the Code of Ethics for Professional Accountants as prescribed by the Federation of Accounting Professions. We have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of Matter As discussed in Notes 3.2.1, to the Project financial statements, the financial statements are prepared in accordance with the cash basis of accounting. The financial statements are prepared specifically for the Project in compliance with the provisions for the preparation of financial statements under the funding support contract referred to above. As a result, the financial statements may not be utilized for other purpose. These financial statements are prepared for information only for the Hilal Ahmar Foundation and the World Bank. Our opinion has not changed due to this matter. Responsibilities of Management for the Financial Statements Hilal Ahmar Foundation is the implementing entity of the project and is responsible for the preparation of these financial statements in accordance with requirements for the preparation of financial statements of the project stipulated in the Financial Management Manual for Socio - Economic Reintegration Project in Southern Thailand (TFOB023 1) clause 5, 5.2, 5.2.1 and 5.2.2, using a cash basis in preparing the financial statements, dated November 15, 2019. Hilal Ahmar Foundation determines thenecessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error. 2 In the preparation of the financial statements of te Socio - Economic Reintegration Project in Southern Thailand (TFOBO231), Hilal Ahmar Foundation is responsible for assessing the project's abilityto continue operating (as appropriate) and the use of accounting criteria for the continuous managementunless the management intends to terminate the project or stop the operation or is unable to continue the business. 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 anaudit conducted in accordance with Thai Standards on Auditing 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 Project financial statements. As part of an audit in accordance with Thai Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: * Identify and assess the risks of material- misstatement of the financial statements, whether due to fraud or error, designs and performs audit procedures responsive to those risks, and obtains audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. * Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Project internal control as implemented by the HAF. * Evaluates the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management. * Concludes on the appropriateness of 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 as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the 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 the auditor's report. However, future events or conditions may cause the Project to cease to continue as a going concern. * 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 have communicated 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. The report is intended for the information of the Hilal Ahmar Foundation and the World Bank. (Miss Sarinya ingsaman Certified Public Accountant Registration No. 8573 S.Y Audit Office 30 October 2021 3 Hilal Ahmar Foundation Socio-Economic Reintegration Project in Southern Thailand (SERP) Receipt and Disbursement Report For the period from I January 2021 to 30 September2021 For the period from For the period from January 1,2021 September 13.2019 Items Notes to September 30, 2021 to September 30, 2021 US dollar baht USdolar baht Receipt:- I.Beginning Balance 57,248.53 1.698.439.50 - - 2.Receipt Fund received from the World Bank 5 310372.66 9,326,698.40 1.235.781.20 37.170,440.93 Interest earned 43.27 1369.93 20130 4.508.69 Difference of Exchange rate - 466,512.74 - 1.102,665.71 Total revenue 367,664.46 11.493,020.57 1.235,982.50 38.277,615.33 Disbursement:- Sub-grants 6 137.40 4.100.00 432,856.39 13,204,100.00 Consultant's services 7 155.807.05 4,820.767.50 400,699.81 12.462387.50 Goods 8 - - 26393.50 828305.00 Trainig and workshop expenses 58,812.78 1.771,052.03 121,595.53 3.669.540.07 Operating COsts 36.434.35 1,138,506.81 137,964.39 4354.688.53 Total expenditure 251.191.58 7,734.426.34 1.119.509.62 34.519.021.10 Revenue over (under) expenditures 116.472.88 3.758594.23 116.472.88 3.758.594.23 Reconcile the balance as of September 30, 2021 Cash at Bank - US dothr 4 116.472.88 3,758,579.84 116,472.88 3,758,579.84 Cash at Bank - Thai Baht 4 0.46 1439 0.46 14.39 Total balance 116,473.34 * 3,758,594.23 116,473.34 3,758.594.23 * The different ofUS Dolar 0.46 because ofrounding and exchange rate Notes to the financial statements are an integral part ofthese fimamial statements. Certified statement (Mr. Iskandar ngsab) Project Director ofthe Socio-Economic Reintegration project in Southern Thailand 4 Hilal Ahimar Foundation Socio-Economic Reintegration Project in Southern Thailand (SERP) Designated Account Report Forthe period from I January 2021 to30 September2021 Account Name: Hilal Ahmar Foundation (Socio-Economic Reintegration Project) Account No: 800-028760-127 Krung Thai Bank Public Company Limited, Charoen Pradit Branch Address No. 23/1 Nong Chik Road, Sabarang Subdistrict, Mucang Pattani District, Pattani Province 94000 For the period from For the period from January 1,2021 September 13,2019 Items Notes to September 30, 2021 to September 30, 2021 US dollar US dollar Balance as of January 1, 2021 57,248.53 Add Fund received from World Bank 5 310,372.66 1,235,781.20 Interest earned 43.27 201.30 Total Income 367.664.46 1,235,982.50 Less Sub-grants 6 137.40 432,856.39 Consultants services 7 155,807.05 400,699.81 Goods - 26,393.50 Training and Workshop Expenses 58,812.78 121,595.53 Operating Costs 36,434.35 137,964.39 Total Expenses 251,191.58 1,1 19,509 62 Total 116,472.88 116,472.88 Balance as of 30 September 2021 4 I 16,472.88 * I16,472.88 * Converted to Bath 3,758,579.84 (US Dollar 116,472.88*32.27) Notes to the financial statements are an integral part of these financial statements. 5 Hilal Ahmar Foundation Socio-Economic Reintegration Project in Southern Thailand (SERP) Statement of Expenditure (SOEs) For the period from I January 2021 to 30 September2021 For the period from 1 January 2021 to 30 September2021 Unit: USD Disbursement Category Items Total Category2 Category I Sub-grants 137.40 - 137.40 Consultant's services - 155,807.05 155,807.05 Goods - - Training and workshop expenses 58,812.78 58,812.78 Operating costs - 36,434.35 36,434.35 137.40 251,054.18 251,191.58 For the period from 13 September2019 to 30 September2021 Unit: USD Disbursement Category Items Total Category2 CategoryI Sub-grants 432,856.39 - 432,856.39 Consultant's services - 400,699.81 400,699.81 Goods - 26,393.50 26,393.50 Training and workshop expenses - 121,595.53 121,595.53 Operating costs - 137,964.39 137,964.39 432,856.39 686,653.23 1,119,509.62 Notes to the financial statements are an integral part of these financial statements. 6 Hilal Ahmar Foundation Socio-Economic Reintegration Project in Southern Thailand (SERP) Statement of Income For the period from I January 2021 to 30 September 2021 US dollar baht Income Initial Advance 310,372.66 9,326,698.40 Difference of Exchange rate - 466,512.74 hiterest earned 43.27 1,369.93 Total revenue 310,415.93 9,794,581.07 Expenditure Consultant's services Individual Consultant 137,783.06 4,254,767.50 Corporate Consultant 10,989.77 350,000.00 Coordination fee 7,034.22 216,000.00 Total Expenditure 155,807.05 4,820,767.50 Training, Workshop and Public Awareness Meterial supplies 252.47 7,669.00 Accommodation 7,967.63 243,510.00 Travel 9,585.79 293,336.80 Trainers and fcilitators 1,525.15 45,500.00 Other expenses related to the training course 213.63 6,404.00 Meal 14,628.20 447,541.00 Meeting room rental fee '2,081.23 63,600.00 Domestic meeting expenses Travel expenses for attendees 6,085.29 185,41 1.64 Meals and snacks 1,490.27 45,622.00 Accommodation cost 2,494.07 75,960.00 Other related expenses 939.50 26,687.50 Utilities such as water bills, electricity bills 741.68 24,183.23 Employer's contribution to social security 2,891.42 89,040.00 Accident insurance for project staff 3,143.43 93,800.00 Miscellaneous expenses 4,186.81 104,786.86 Maid wages 586.21 18,000.00 Total Training, Workshop and Public Awareness 58,812.78 1,771,052.03 7 Sub-grants Provided financial support IPBs 137.40 4,100.00 Total Sub-grants 137.40 4,00.00 Incrmenttal Operating Cost/IOC Cost of materials, equipment, stationery 1,955.33 65,572.00 Advertising costs 8,760.49 275,060.00 Office rent 3,947.20 120,000.00 Allowance/Compensation 499.66 15,168.49 Program fee 264.86 20,132.99 Document translation fee 9,667.77 302,400.00 Phone bill 318.10 8,359.00 Bank fees 392.11 11,494.74 Travel expenses, taxi rental fees, expressway fees, water bills 3,614.85 107,993.50 Car rental 2,457.03 78,000.00 Food and beverage 4,552.62 134,189.00 Bank interest tax 4.33 137.09 Total Incrementtal Operation Cost/IOC 36,434.35 1,138,506.81 Total Cost 251,191.58 7,734,426.34 Revanue over (under) expenditures 59,224.35 2,060,154.73 8 Hilal Ahmar Foundation Socio-Economic Reintegration Project in Southern Thailand (SERP) Notes to Financial Statements For the period from 1 January 2021 to 30 September 2021 1.Background Thailand's four southernmost provinces, which historically formed part of an independent Malay Sultanate that was annexed by the Kingdom of Siam in 1909, are the center of a protracted sub-national conflict. Since the region's incorporation into Thailand, the local Malay Muslim population, which today represents about 75 percent of the total population in the area, has been experiencing a sense of social and economic exclusion, discrimination and marginalization. Violent resistance against the government's assimilation policies and perceived domination of the state in the Deep South occurred over several periods during the second half of the 20 century, before the late 1980s. The current phase of the insurgency began to reemerge in the late 1990s, and since 2004 violent events have resulted in more than 7,000 deaths and 13,000 injuries in the region. The drivers of this violence, including a strong sense of historical injustice and resentment against the perceived impunity of agents of state violence, fuel the conflict that presents profound challenges to the social and economic development of the region. Southern Thailand continues to lag behind the rest of country on important social and economic indicators. The Southern Border Provinces Administration and Development Policy 2017-2019, prepared by the National Security Council, explicitly recognizes the complexity and sensitivity of the causes of the conflict. It outlines a number of objectives and related initiatives to achieve its vision of a society "safe and free from any conditions contributing to violence" where "everybody's way of life is protected and improved on the basis of a multi-cultural society, with participation in a sustainable peace-building process". A critical challenge for the government's policy in the south is supporting the transition of combatants to civilian life. Its "Bringing People Home" program, started in 2009, has to date served about 3,000 beneficiaries (active combatants, individuals in non-combat support roles, and sympathizers) through a multi-sectoral approach that includes judicial elements, skills training, livelihoods support and grants for reintegration support in areas of return. However, it suffers fram institutional fragmentation, is insufficiently responsive to the varying needs of former combatants (often referred to as "returnees"), and is primarily security driven. This constrains the ability of beneficiaries to undertake social or livelihood activities. There has not yet been a systematic effort to review costs and assess socio- economic outcomes. In addition, there are gaps in important areas, in particular with regard to treatment for post-traumatic stress disorder, the involvement of communities in the reintegration process, and the involvement of private sector stakeholders. As a result, the program has been perceived negatively among both beneficiaries and communities. The government has recognized the shortcomings of the current program and the importance of successful reintegration of former combatants in the broader context of peace and government strategy and policy. It has thus requested World Bank support to test options for enhancing its approach. This technical support will capitalize upon the World Bank's extensive experience in supporting peace- building measures in southern Thailand for over a decade, its standing as an inclusive and respected 9 41 partner for peace-building in the region, and its global experience in the area of demobilization and reintegration of former combatants. 2.Project Objective and Approach The objective of the Project is to assist the government to pilot an enhanced socio-economic reintegration process for selected former combatants. The Project will pilot a new approach to reintegration with a focus on social and economic measures. and delivered through inclusive and transparent delivery modalities. The aim of the Pilot is to test new approaches and civilian implementation modalities that should improve the socio-economic reintegration experience of former combatants. If the Project is deemed successful, the government will have at its disposal a set of social and economic support processes, and an implementation arrangement with systems and procedures that it can draw upon in the future. At the same time, would-be former combatants will have better prospects for a viable return to civilian livelihoods, a clearer understanding of reintegration support they can expect, and a better understanding of how and by whom it will be delivered. 3. Basis for Preparation of Financial Statements 3.1 Withdrawal of Grant proceeds Hilal Ahmar Foundation has opened a Designated Account with a limit of 500,000.00 US dollars at Krung Thai Bank Public Company Limited, Charoen Pradit branch, Muang District, Pattani Province. The account name is Hilal Ahmar Foundation Socio- Economic Reintegration Project in Southern Thailand), Account number 800-0-28760-127 in USD currency to receive the grant fund from the World Bank. In addition, the project will open a current account for the efficient flow of funds and activities in local currency. The project's current account will be opened in Thai baht. The utilization of the Designated Account is subject to World Bank disbursement regulations/guidelines as for the project intended purpose.The payment of expenses must be based on actual incurrence and will be replenished on a monthly or quarterly basis. The fund transfer from the Designated Account to the individual/community who are the beneficiaries of the project will follow the payment schedule of the sub-project contracts. This process will be operated through Designated Account to the project's Operating Account and then to the individual and/ or community accounts who are the project's beneficiaries. Its aim is to avoid-thexchange rate fluctuations. The project fund will be disbursed from the designated account to the project's operating account only when the sub-grant disbursement will be made to the beneficiaries of the project. 10 3.2 Significant accounting policies 3.2.1.Basis for presentation of financial statements The accounting of project's financial statements was prepared in the form of the Receipt and Disbursement Report and Designated Account Report. The cash basis of accounting is used for the project record as specified in the Financial Management Manual, prepared by Hilal Ahmar Foundation. which. is mutual agreed and accepted by the World Bank. The preparation of the financial statements of the project consists of the Receipt and Disbursement Report. Designated Account Report, Statement of Expenditure (SOEs) and the detailed Statement of Income. 3.2.2.Foreign currency translation The financial statements are presented in US Dollars. The withdrawals from designated account presented as US Dollar converted to Thai baht at the exchange rate on the transaction date. Expenditure in baht currency during the accounting period are converted into US dollars using the exchange rate on the withdrawal date and the amounts on first-in, first-out basis. 4.Cash at Bank Funds received from the World Bank will be deposited in a savings account (Designated Acconut) - Krung Thai Bank Public Company Limited, Charoen Pradit Branch, Muang District, Pattani Province, account number 800-0-28760-127,a US dollar account. Current/Operating account number is 929-6-01645-2 for expenses paid by cheque into the account in Thai baht. US dollar I January to 13 September 2019 to 30 September 2021 3 b Stmer 2021 Designated Account-Krungthai Bank USD: 800-0-28760-127 116,472.88 55.347.98 SOperating Account - Krung Thai Bank Thai Baht :929-6-01645-2 0.46 .1 658.59 Total ____ Note To present an accumulated expenditure incurred by the project, an accounting balance is lower than the bank balance as follows; US dollar Bank reconciliation - Current account no.929-6-01645-2 3 Senuga o Bank balance 4,648.73 Less Accrual expense - an external audit fee 4,648.27 Book balance - * The difference of 0.46 US Dollar because of rounding and exchange rate II 5.Fund received from the World Bank US dollar Transferred date I January tQ 13 September 2019 to 30 September 2021 30 Septemter 2021 23 February 2021 310,372.66 310,372.66 31 Janua 2020 0.00 500,000.00 12 June 2020 0.00 179,228.54 14 August 2020 0.00 60,512.68 20 October 2020 0.00 69,610.36 18 November 2020 0.0( 116,056.9( Total 31J72. 1 35,781.2C 6.Sub-grants US dollar I January to 13 September 2019 to 30 September 2021 30 September 2021 Provided financial support to 200 IPBs 137.40 326,813.57 Provided fund support to 16 community sub-projects 106.042.8 Total 137.4 432,856.3 7.Consultant' services It is the expenses related to the project officers, Consultation fees for the Occupational Office, Coordination Fees, and Officers visiting the inspection area US dollar I January to 13 September 2019 to 30 September 202_ 30 September 2021 Individual consultant 137,783.06 368,274.9C Corporate consultant 10,989.77 14,202.38 Coordination fee 7.034.22 18,222.53 Total ___807_0__400_699.8 12 8.Goods It is the cost of purchasing personal computer, office accessories, speakers, digital cameras and software program for carrying out project activities US dollar 1 January to 13 September 2019 to 30 September 2021 30 September 2021 Office Supplies 0.0 21,403.77 office Decoration 0.0( 4,106.74 Speaker/Digital Camera 0.0 882.9 Total z2 3 13 9.Fixed asset register The following is a list of project fixed assets as of 30 September 2021: Unit: US Dollar No. Item Date of purchase Amount Price Responsible Unit Office Supplies 1 Notebook Computer 23 Mar. 20 3 2,768.45 HAF 2 Projector 23 Mar. 20 3 1,208.71 HAF 3 Voice Recorder 25 Mar. 20 13 1,713.80 HAF 4 Anti-Virus Software 26 Mar. 20 5 165.16 HAF 5 10.5 Inch Tablet 24 Aug. 20 2 1,614.26 HAF 6 8 Inch Tablet 24 Aug.20 20 7,124.80 HAF 7 Portable Power Bank 24 Aug. 20 22 392.22 HAF 8 Router 3 Oct. 19 2 98.71 HAF 9 Desktop Computer 25 Nov 19 5 3,935.14 HAF 10 Uninterruptible Power Supply 25 Nov 19 5 274.28 HAF II Document Printer 25 Nov 19 4 1,463.70 HAF 12 Desk Phone/Fax 25 Nov 19 1 148.11 HAF 13 Office Software 25 Nov 19 8 496.43 HAF Total 21,403.77 Office Decoration I Chair 25 Dec 19 7 475.92 HAF 2 Table (3.5- 4 Feet) 25 Dec 19 7 1,033.21 HAF 3 Conference Room Table 25 Dec 19 6 406.58 HAF 4 Meeting Room Chair 25 Dec 19 30 309.78 HAF 5 Filing Cabinet 25 Dec 19 4 632.46 HAF 6 Printer Stand 25 Dec 19 3 338.82 HAF 7 Reception Chair 25 Dec 19 1 645.37 HAF 8 Whiteboard , 25 Dec 19 1 264.60 HAF Total 4,106.74 14 No. Item Date of Amount Price Person in charge Speaker/Digital Camera I Speaker 25 Mar. 20 3 361.22 HAF 2 Digital Camera 26 Mar. 20 1 521.77 HAF Sub-Total 882.99 Total 26,393.50 1O.Compliance with the conditions of the grant agreement The performance of the work is in accordance with the terms of the contract without significant flaws. 11.Approval of the financial statements These financial statements have been approved for issuance by S.Y Audit Office on 30 October 2021. 15