ARMENIA RENEWABLE RESOURCES AND ENERGY EFFICIENCY FUND ENERGY EFFICIENCY PROJECT GEF GRANT NUMBER TF012163 SPECIAL PURPOSE FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR'S REPORT For the year ended 31 December 2014 YEREVAN June 2015 TABLE OF CONTENT Page INDEPENDENT AUDITOR'S REPORT ..............................................................................................3 STATEMENT OF FINANCIAL POSITION ..........................................................................................5 STATEMENT OF SOURCES AND USES OF FUNDS.........................................................................6 STATEMENT OF USES OF FUNDS BY PROJECT ACTIVITY.........................................................7 SUMMARY OF SUMMARY REPORTS AND SOES...........................................................................8 STATEMENT OF DESIGNATED ACCOUN ......................................................................................9 NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS...............................................10 ANNEX 1. RECONCILIATION BETWEEN THE AMOUNTS SUBMITTED BY THE PROJECT AND DISBURSED BY THE WORLD BANK.....................................................................................15 Energy Efficiency Project Special Purpose Financial Statements for the year ended 31 December 2014 2 "SOS-AUDIT" LTD INDEPENDENT AUDITOR'S REPORT N 54 On the special purpose financial statements of "Energy Efficiency Project" for the year ended 31 December 2014 To the management of Armenia Renewable Resources and Energy Efficiency Fund (the Fund) We have audited the accompanying special purpose financial statements of "Energy Efficiency Project" (the Project) financed by the GEF Grant Number TF012163, which comprise the Statement of Financial Position as at 31 December 2014, the Statement of Sources and Uses of Funds, the Statement of Uses of Funds by Project Activity, Summary of summary reports and SOEs, the Statement of Designated Account for the year ended 31 December 2014, and a summary of significant accounting policies and other explanatory notes. Management's Responsibility for the Financial Statements The management of the Fund is responsible for the preparation and fair presentation of these special purpose financial statements in accordance with the basis of accounting described in the Note 2 accompanying these special purpose financial statements, and for such internal control as management determines is necessary to enable the preparation of special purpose financial statements that are free from material misstatements, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these special purpose financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing as issued by International Auditing and Assurance Standards Board. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the special purpose financial statements are free from material misstatement. An audit involves performing procedures to obtain reasonable audit evidence about the amounts and disclosures in the special purpose financial statements. The procedures selected depend on the auditor's judgment including the assessment of the risk of material misstatement of the special purpose 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 special purpose financial statement 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 the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the special purpose financial statements. P-pnnL 9np4wp PhqGbu UUwouh Uunghwg4w6 UOrlwO 99; p. bphw 0037, U.SliqpwGjw 38/55; 9bn.' (+37410) 20 11 51; 'bwpu' (+37410) 20 11 50; www.sosaudit.am; tt-4inuuL' info@sosaudit.am An Associate of the Crowe Horwath Business Alliance 38/55 A.Tigranyan, 0037 Yerevan, RA; Tel.: (+37410) 20 11 51; Fax: (+37410) 20 11 50; www.sosaudit.am; E-mail: info@sosaudit.am "SOS-AUDIT" LTD We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Opinion In our opinion, 1. the special purpose financial statements present fairly in all material respects the financial position of the Project as at 31 December 2014, as well as the sources and uses of funds for the year ended 31 December 2014 in accordance with the basis of accounting described in the Note 2 accompanying these special purpose financial statements; 2. funds have been used in accordance with the conditions of the Global Environment Facility (GEF) Grant Agreement TF012163 dated 20 April 2012 signed between the Republic of Armenia and International Bank for Reconstruction and Development (IBRD), and World Bank related guidelines, with due attention to economy and efficiency, and only for the purposes for which the financing was provided; 3. supporting documents, records and accounts have been maintained to support claims for reimbursement of expenditures incurred. Expenditures included in the withdrawal applications and reimbursed against are eligible for financing under the GEF Grant Agreement TF012163. 4. the Designated account used has been maintained in accordance with the provision of the GEF Grant Agreement TFO 12163, and World Bank related guidelines. "SOS-Audit" LLC 8 June 2015 Mf' h ryan Nazik Chitchyan VA2aor Auditor RpnnL Inpqwp PhqGbu UUwGufl Uunghwgqw6 UGrIwd 99; p. bphw0 0037, U.Slqpw0jw 38/55; 9b.' (+37410) 20 11 51; 'bwpu' (+37410) 20 11 50; www.sosaudit.am; tt-*inuun' info@sosaudit.am 4 An Associate of the Crowe Horwath Business Alliance 38/55 A.Tigranyan, 0037 Yerevan, RA; Tel.: (+37410) 20 11 51; Fax: (+37410) 20 11 50; www.sosaudit.am; E-mail: info@sosaudit.am STATEMENT OF FINANCIAL POSITION Energy Efficiency Project GEF Grant TF012163 As at 31 December 2014 31.12.2014 31.12.2013 Note USD USD ASSETS AND EXPENDITURES Cash and cash equivalents Designated account (GEF Grant TF012163) 50,588.99 93,150.11 Cash in transfer - 41,144.88 Total Cash 50,588.99 134,294.99 Prepayments 354,559.24 37,480.52 Cumulative project expenditures 3 1,898,590.81 874,083.51 Foreign exchange gain 29,507.07 - Total Assets and Expenditures 2,333,246.11 1,045,859.02 FUNDS AND LIABILITIES Accounts payable 4 - 43,966.13 Foreign exchange loss - 1,578.05 Funds GEF Grant TF012163 6 1,141,227.68 624,369.27 GoA co-financing 125,548.85 64,140.09 Financing from Revolving funds 1,059,098.28 304,461.63 Other 7,371.30 7,343.85 Total Funds 2,333,246.11 1,000,314.84 Total Funds and Liabilities 2,333,246.11 1,045,859.02 The special purpose financial statements were approved by the management of Armenia Renewable Resources and Energy Efficiency Fund and signed on its behalf on 8 June 2015. The accompanying notes form an integral part of these special purpose financial statements. Tamara Ba y Roza Manucha yan Director Financial Manager Energy Efficiency Project Special Purpose Financial Statements for the year ended 31 December 2014 5 °о °о °о * о А °о о о pQ., о � � �о .� г. 1д N cv о � � `^• о t� � о �. er e�i � cNi °O м � �� и � w Э 0_ ,� oNO b Z U м �О .� Q � `�' с� о > л � о r С °O м � � � N И а у� 00 �О � � r1 C1�i � си0, � Й � ^' (� и О > N И и О г .� � ОО ОО ��рΡ � А ОО � р �j � м � N �- � U � � � О О л ед t� N � с_ о и о � ео О $. 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N аи, .°: ' � ..� � ' �а г� v .. , � v .. �с оо оС .� о �N � � й �_� й �"� ° А г+�i � о�р Н Q ; м � .. � 5 �� V в � N о м° д, м � � с о� й й � О � � N V ы t� N О 1(����jj � "'� а ; �,, а f� °- и � � а й `�' ы � G4 о = � й `� гр � л с � � = � � и С W � Qu' ы и � о, о и д � � Q fi �Н Гг� °"' О ° w й °' �л � "� м �. ` ' � о, � о е м о. � г �. � n� [� �� д С � fi "�VА z UрZt W Е" у 4 г�'"�л W д[�L\, д "" N � ?ë, � Z1 � � О С С � т у� н �° �, �� а о �� 01 ¢, �3V�� а� ° О �v4 о°� Е'� fi� о� о п о о с' �•°- 01 г/� гг1 С� гг � U Г� U F * г"� W �� � SUMMARY OF SUMMARY REPORTS AND SOEs Energy Efficiency Project GEF Grant TF012163 For the year ended 31 December 2014 In USD Application N Expenditure category Total Value date 1. Energy Efficiency 2. Goods, consultants' services Investments under Part A of and Operating Costs under the Project Part B of the Project 7 52,853.08 80,607.74 133,460.82 27-Jun-2014 8 92,420.49 13,960.38 106,380.87 14-Oct-2014 Adjustment WA8 (78,460.11) 78,460.11 - 27-Oct-2014 9 70,581.89 5,835.10 76,416.99 27-Oct-2014 10 134,620.72 - 134,620.72 30-Oct-2 14 11 51,796.53 14,182.48 65,979.01 12=Dec-2014 Total 323,812.60 193,045.81 516,858.41 Energy Efficiency Project Special Purpose Financial Statements for the year ended 31 December 2014 8 STATEMENT OF DESIGNATED ACCOUNT Energy Efficiency Project GEF Grant TF012163 For the year ended 31 December 2014 Designated Account GEF Grant TF012163 Currency USD Account number 900000910175 Bank Central Treasury 4 Tigran Mets str., 1-st floor, Yerevan Location Republic of Armenia, 0010 2014 USD 1. Opening balance 93,150.11 Add: 2. Cumulative opening discrepancy - 3. GEF advance/replenishment 516,858.41 Less: 4. Refund to GEF from DA - 5. Present outstanding amount advanced to DA 610,008.52 6. DA closing balance as at 31.12.2014 50,588.99 Add: 7. Amount of eligible expenditures paid 559,419.53 8. Service charges (if debited into DA) - Less: 9. Interest earned (if credited into DA) - 10.Total advance/replenishment accounted for 610,008.52 11. Discrepancy (5)-(10) - Energy Efficiency Project Special Purpose Financial Statements for the year ended 31 December 2014 9 NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS Energy Efficiency Project GEF Grant TF012163 For the year ended 31 December 2014 1. General Information 1.1. Project Financing According to the Agreement concluded between the Republic of Armenia and International Bank for Reconstruction and Development (IBRD) on 20 April 2012, IBRD acting as an Implementing Agency of the Global Environment Facility (GEF) provided the Republic of Armenia GEF Grant TF012163 in the amount of 1,820,000 United States dollars (USD). Grant was provided for implementation of Energy Efficiency Project (the Project). The Project financing agreement became effective on 10 August 2012. The Closing date for the expenditures to be financed by the Grant is set on 30 June 2015. The grace period for withdrawal applications is set on 31 October 2015. 1.2. Project objectives The objective of the Project is to reduce energy consumption in social and other public facilities through the removal of barriers to the implementation energy efficiency investments in the public sector. The Project consists of the following parts: A - Energy Efficiency Investments in Public Facilities, B - Technical Assistance 1.3. Project Budget The Project is being financed by the following sources: - International Bank for Reconstruction and Development (IBRD), - The Government of the Republic of Armenia (GoA), - Financing from Revolving funds of the RA Taxes are covered through the Government of Armenia (GoA) co financing. IBRD Government Revolving fund Total Category of the RA USD USD USD USD Component 1- Energy Efficiency 700,000 140,000 6,000,000 6,840,000 Investments in Public Facilities Component 2- Technical Assistance 1,120,000 160,000 540,000 1,820,000 Total 1,820,000 300,000 6,540,000 8,660,000 1.4. Project Implementation The Project is implemented by Armenia Renewable Resources and Energy Efficiency Fund (the Fund) The Fund activity address is: 32 Proshyan str., Ist lane, Yerevan 0019, Republic of Armenia. Energy Efficiency Project Special Purpose Financial Statements for the year ended 31 December 2014 10 2. Accounting policy 2.1 Preparation and presentation offinancial statements The special purpose financial statements have been prepared based on the accrual basis of accounting and presented in accordance with Financial Management Manual for World Bank Financed Investment Operations (March 2010): RM 3 - Financial Reporting and Auditing. In accordance with the accrual bases of accounting the expenditure is recognized when the transaction occur (expense incurred), and not only when cash or its equivalent is received or paid. The transactions are recorded in the accounting records and recognized in the special purpose financial statements of the periods to which they relate. The special purpose financial statements consist of: - Statement of financial position, - Statement of sources and uses of funds, - Statement of uses of funds by project activity, - Summary of summary reports and SOEs, - Statement of designated account, - Notes to the special purpose financial statements. Reporting currency of special purpose financial statements is US dollar (USD). 2.2 Foreign currency transactions Project accounts are maintained and transactions are made in USD and Armenian Drams (AMD). Transactions denominated in local currency are translated into USD as follows: - Contributions of the RA Government expressed in AMD are translated into USD at the L average exchange rate at currency market issued by the Central Bank of Armenia (CBA) at the date of transfer. - Payments to contractors and suppliers expressed in AMD are translated into USD at the average exchange rate at currency market issued by the CBA at the date of payment. - Monetary assets and liabilities are translated into USD at the average exchange rate at currency market issued by the CBA at the reporting date. - Transaction and translation exchange differences (gains/losses) are recognized and presented in financial statements in net as an Exchange difference. The average exchange rate at currency market issued by the CBA as at 31 December 2013 is 1 USD =405.64 AMD The average exchange rate at currency market issued by the CBA as at 31 December 2014 is 1 USD =474.97 AMD 2.3 Taxes The Project related taxes and mandatory payments are calculated and paid in accordance with tax regulations of the Republic of Armenia. Energy Efficiency Project Special Purpose Financial Statements for the year ended 31 December 2014 11 н b о~р �,�, А v~ н � и F � м v�i аO1о .� н О И И м {. Q 00 � � � ,i7 � м N l� О � � � г� о. � � N С оо �л � м; R � � с � � м � 'Z5 Ём й`" � й � � � о � � � оо �в � и У а � N а � °O r и Q Г� g и �о � о и и м оо � � о�о м й С � � � и м с� и Ct � м � м .-+ `д м v ао � С7 � д о°�^ v м � W ио. � м о°� еиЧ c�i � F, и м о� в � о� Ol N О М У � N и .�, � у А � Й Й `' и г . � � � й о ° � � � v � v эг � и И � ! s, А v, � у и N N U О � ° � L � �р р� 1� О у ор о� и И v �, . л ,� о� ,.r о �� � С д омо М н С о р � � n0 О N � й � � �' д � О а� •р �i U д й � � CS и �н а А й N � ° О � � о�о оOOо r Tf д � ~ � я, � � � � о � V д'' м l� 00 1� "O О � `� � ri о '" � С7 N� N м Й fi и [.�Li Г.оt. � О о�0 � � L 'V Е"' N f+f � � и � "Lf � С 'b ,✓ С � � с `� s v ё о i! у � ь' � гV а� �, Е � СО и v i О iд С ь. ^й � � � т О �,,, . С� f�, v >' А- `�' �° 'ZS д v� ь�• С.� � 7 TS L д М w �,� � � ,v 4 г 'с> и �, �L Zt М С W Q � U � � и,Q,Q fi W СлUсд и С г�q ��О с° $�a��i °�' �`�'?, W b С7 �,'о � .�ц �'с°�, � ,-: � c�i О а н .� � ��, `° 4. Accounts payable 31.12.2014 31.12.2013 USD USD Goods, consultants' services and Operating Costs under Part B of the Project 43,966.13 Total -- 43,966.13 5. Prepayments 31.12.2014 31.12.2013 USD USD Energy Efficiency Investments under Part A of the Project 354,559.24 37,471.65 Goods, consultants' services and Operating Costs under Part B of the Project - 8.87 Total 354,559.24 37,480.52 6. Financing 6.1 GEF Grant TF 012163 financing Reporting year As at 31.12.2014 2014 Cumulative USD USD Advance - 150,000.00 SOE and Summary Reports 516,858.41 991,227.68 516,858.41 1,141,227.68 Total financing budget 1,820,000.00 Percentage of finance provided as at 31 Dec 2014 63% 6.2 Government financing Reporting As at 31.12.2014 year 2014 Cumulative USD USD Contributions in cash 61,408.76 125,548.85 61,408.76 125,548.85 Total financing budget 300,000.00 Percentage of finance provided as at '1 Dec 2014 42% Energy Efficiency Project Special Purpose Financial Statements for the year ended 31 Decemher 2014 13 6.3 Financing from Revolving funds Reporting As at 31.12.2014 year 2014 Cumulative USD USD Contributions in cash 754,636.65 1,059,098.28 754,636.65 1,059,098.28 Total financing budget 6,540,000.00 Percentage of finance provided as at 31 Dec 2014 16% 7. Expenditure budget execution Cumulative Expenditures Total as at 31 Dec 2014 budget Execution Project components USD USD % Component 1- Energy Efficiency Investments in Public Facilities 1,398,419.17 6,840,000 20% Component 2- Technical Assistance 500,171.64 1,820,000 27% Total 1,898,590.81 8,660,000 22% 8. Non submitted expenditures Expenditures incurred during the reporting year in the total amount of 99,411.01 USD were not submitted to WB for reimbursement as at date of signing these special purpose financial statements. Energy Efficiency Project Special Purpose Financial Statements for the year ended 31 December 2014 14 ANNEX 1. RECONCILIATION BETWEEN THE AMOUNTS SUBMITTED BY THE PROJECT AND DISBURSED BY THE WORLD BANK Energy Efficiency Project GEF Grant TF012163 For the year ended 31 December 2014 In USD Category Appl. N Fund WB Difference 1. Energy Efficiency 7 52,853.08 52,853.08 - Investments under Part A of the Project 8 13,960.38 92,420.49 78,460.11 Adjustment WA8 - (78,460.11) (78,460.11) 9 70,581.89 70,581.89 10 134,620.72 134,620.72 11 51,796.53 51,796.53 323,812.60 323,812.60 2. Goods, consultants' 7 80,607.74 80,607.74 services and Operating Costs under Part B of the Project 8 92,420.49 13,960.38 (78,460.11) Adjustment WA8 - 78,460.11 78,460.11 9 5,835.10 5,835.10 - 11 14,182.48 14,182.48 193,045.81 193,045.81 Total 516,858.41 516,858.41 Energy Efficiency Project Special Purpose Financial Statements for the year ended 31 December 2014 15