Government of Tonga Programmatic Preparation Advance No. IDA V196-TO Statement of Receipts and Disbursements for the period 24 May 2018 to 30 June 2020 Tonga Programmatic Preparation Advaonce No. IBA VI96-TO Contents Pages Executing Agency's Report 3 Auditor's Report 4-5 Statement of Receipts and Disbursements 6 Notes to and forming part of the Statement of Receipts and Disbursements 7-10 C\l Tonga Programmatic Preparation Advance No /0A V196-TO EXECUTING AGENCY'S REPORT In my opinion, the accompanying statement of receipts and disbursements for the period covering 24 May 2018 and ending 30 June 2020 set out on page 5 gives a true and fair view of its status of funds as at 30 June 2020 and the funds disbursement for the period then ended. Signed in acco e resolution of the said fund. O0NG N Balwyn Fa'otusia Chief Executive Officer for Finance Tono Prog P rmparation Advancn No. /DA VI96 TO 1OAC Auditor General's Report To the Chief Executive Officer, Ministry of Finance PROGRAMMATIC PREPARATION ADVANCE IDA V196-TO We have audited the accompanying financial statements of the IDA V196-TO: Programmatic Preparation Advance, for the financial period ended 30 June, 2020 which comprise of the Statement of Receipts and Disbursement and Notes to the Account. Management's Responsible for the Financial Statements According to the Public Finance Management Act 2002 and the project's agreement dated 30`1 June, 2015, management is responsible for the preparation and presentation of the financial statements in accordance with the International Public Sector Accounting Standards, (IPSAS). This responsibility includes design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that are free from material misstatement, whether due to fraud and error. In addition to the responsibility for the preparation and presentation of the financial statement described above, management is also responsible for ensuring that activities, financial transactions, and information reflected in the financial statements are in compliance with the authorities which government them. Auditor General's Responsibility Our responsibility is to express an opinion on the financial statements based on our audit. We conducted the audit in accordance with the International Standards of Supreme Audit Institutions, (ISSAs). 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 misstatement. In addition to the responsibility to express an opinion on the financial statements, our responsibility includes expressing an opinion on whether the activities, financial transactions and information reflected in the financial statements are, in all material respects, in compliance with the project's agreement. This responsibility includes performing procedures to obtain audit evidence about whether the project's expenditures have been applied to the purposes intended by the project's agreement. Such procedures include the assessment of the risks of material non-compliance. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions. Po Box 50, Tupon College Old Boys Building, Nuku 'alofa, Tonga, South West Pacif c Telephone: (676)21-600 1 Facsimile: (676) 23-749 1 Email: toag.info@audiL.gov.to Website: vNvv.akudiLgov.to Opinion In our opinion, the financial statements of the project, IDA Vi96-TO: Programmatic Preparation Advance for the financial period ended 30'h June, 2020 are prepared, in all material respects, in accordance with the International Public Sector Accounting Standards, IPSAS. Opinion on Compliance In our opinion, in all material respects, the activities, financial transactions and information reflected in the financial statements are in compliance with authorities which govern them. Q4A0 0C o Sefita Tangi F P I AUDITOR GENE N`' Dated: 2nd June, 2021 2 GOVERNMENT OF TONGA PROGRAMMATIC PREPARATION ADVANCE NO. IDA Vi 96-TON STATEMENT OF RECEIPTS AND DISBURSEMENTS OF FUND FROM THE DESIGNATED ACCOUNT (USD) NO. 01-77-645-2046 FOR THE PERIOD ENDED 30 June 2020 Notes USD ($) RECEIPTS: 2.5 Drawdown No. PPA 00 1 400,000.00 Drawdown No. PPA 002 336,630.00 Drawdown No. PPA 004 311,565.68 Total Receipts 1,048,195.68 DISBURSEMENTS: Skills and Employment for Tongans Project (SET) 2.6.1 11,346.89 *Central Services Unit (CSU) 2.6.2 59,496.63 Tonga Pathway to Sustainable Oceans Project (PSOP) 2.6.3 178,919.48 Tonga Climate Resilient Transport Project (TCRTP) 2.6.4 394,228.50 Total Disbursements 643,991.50 Foreign Exchange Loss 4 4,381.27 Total Disbursements plus Exchange Loss 648,372.77 Cash Balance as at 30 June 2020 5 399,822.91 Ad To7gng!an I~rprtu N o, IDA V1DI6-TO Notes to the Statement of Receipts and Disbursements 1. GENERAL INFORMATION The Government of Tonga through the Implementing Agencies - Ministry of Internal Affairs (MIA), Ministry of Infrastructure (MOI), Ministry of Fisheries and Ministry of Finance, has received an advance from the International Development Association under its Project Preparation Facility. The Programmatic Preparation Advance (PPA) IDA V196-TO was to assist with the preparation activities of proposed World Bank Financed projects in Tonga. The PPA Agreement was declared effective on 24th May 2018. 2. SUMMARY OF ACCOUNTING POLICIES 2.1 Basis of Preparation The Statement of Receipts and Disbursements are prepared on the basis of historical Cash Basis IPSAS Financial Reporting Under the Cash Basis of Accounting. The Accounting policy have been applied consistently throughout the period. 2.2 Reporting Entity The Statement of Receipts and Disbursements are for the Ministry of Finance. 2.3 Reporting Currency The reporting currency is United States Dollars (USD). 2.4 Cash Cash Balance in the Statement of Receipts and Disbursements comprise of cash at bank only, please refer to note 4. 2.5 Receipts Advances are received from the project's bank account at the World Bank. The amount is based on the Withdrawal Application from Central Services Unit (CSU) through the Ministry of Finance (MOF) for approval and transfer from the World Bank to the project's main USD designated bank account at the National Reserve Bank of Tonga. 2.6 Disbursements Disbursements are payments relating to all transfer payments made to and from the individual PPA accounts that were set-up to facilitate expenditure payments relating to Cz preparation activities for the World Bank financed projects under the IDA 18 such as Tonga Progranmatic Preparation Advance No. /DA V196-TO Skills and Employment Training (SET) Project including CSU, Tonga Pathway to Sustainable Oceans Project (TPSOP) and Tonga Climate Resilience Transport Project (TCRTP). Transfer Payments are approved by the CEO for Finance. 2.6.1 Transfer of Funds to and from SET TOP Bank Account Date USD Amount Exchange Rate TOP Amount 28.09.2018 116,630.00 0.4440 262,680.18 25.03.2019 (102,389.59) 0.4304 237,886.91 14,240.41 Less: Exchange Loss 2,893.52 11,346.89 2.6.2 Transfer of Funds to and from CSU USD Bank Account Date USD Amount Exchange Rate TOP Amount 16.10.2018 63,000.00 0.4405 143,019.30 28.01.2019 23,370.00 0.4481 52,153.54 17.04.2019 (26,449.08) 0.4471 59,156.97 59,920.92 Less: Exchange Loss 424.29 59$496.63 2.6.3 Transfer of Funds to and from TPSOP TOP Bank Account Date USD Amount Exchange Rate TOP Amount 12.09.2018 20,000.00 0.4390 45,558.09 27.03.2019 178,821.40 0.4493 398,000.00 16.08.2019 (19,106.19) 0.4364 45,339.79 179,715.21 Less: Exchange Loss 795.76 178,919.48 Tonga Progrmmatic Preparalon Advance No. lA VI 96- TO 2.6.4 Transfer of Funds to and from TCRTP TOP Bank Account Date USD Amount Exchange Rate TOP Amount 10.08.2018 200,000.00 0.4438 450,653.45 07.12.2018 200,000.00 0.4495 444,938.82 08.11.2019 (5,503.77) 0.4364 (12,611.76) 394,496.23 Less: Exchange Loss 267.73 394,228.50 3. FINANCIAL PERIOD This Statement of Receipts and Disbursements covers the years starting 24 May 2018 and ending 30 June 2020 (26 months). 4. FOREIGN EXCHANGE LOSS The PPA Designate Account is denominated in USD whereas the PPA Operational Accounts are in TOP. Therefore, the transfer to and from PPA USD Designated Account will always have a risk of either a gain or loss in foreign exchange. During the audit period, the foreign exchange loss incurred amounts to USD4,381.30 as per table below. A B C Exchange Exchange Exchange Rate at the Loss= A-C Closing Rate at Closing date of (USD) Project Disbursement+ Period Description Balances U5D closing Date Balances TOP Transfer back USDAmount Disbursement Exchange Loss Reimburse fund from SET Project to PPA 105,283.11 0.4439 237,129.13 0.4318 102,389.59 2,893.52 11,346.89 14,240.41 March 2019 DA Reimburse fund from CSU Project to PPA 26,873.37 0.4374 61,431.23 0.4305 26,449.08 424.29 59,496.63 59,920.92 June 2019 DA Reimburse fund September fromTPS0Pto 19,901.92 0.4389 45,339.79 0.4214 19,106,16 795.76 178,919.48 179,715.24 2019 PPA DA Reimburse fund from TCRTPto 5,771.50 0.4379 13,178.70 0.4176 5,503.77 267.73 394,228.50 394,496.23 June 2020 PPADA Total 153,448.60 4,381.30 643,991.50 648, 80 Tn Cd Tonga Pro ct,,mmitic Preparaition AcI vanco No. IDA VItOG-TO 5. CASH AT BANK Balance as at 301 June 2020 for the PPA Designated Account is USD399,822.91. The balance should be at USD400,000.00 however due to transfer payment movements between USD and TOP bank accounts, the variance of USD177.09 is attributed to exchange rate losses and for Materiality purpose, this is not considered a material difference. O Tonga Prograr;nnah Preparation Advance No IDA V796-TO