I'77IH* '"I'th*tC Ref. No The Federal Democratic Republic of-Ethiopia +- jD"r3- o I Ministry of Finance Date e World Bank Ethiopia Country Office Addis Ababa 04 JAN 2019 Dear Sirs: Subject: Submission of General Education Quality Improvement Project-II IDA Cr.No.53150, GPE Grant No. TF 016684,TF 0A4619, TFOA4701, MDTF Grant No.TF 18053 and TFOA6267Annual financial audit report for the period ended July 7, 2018(EFY 2010). Attached here with please find the annual financial Audit Report for the year ended July 7, 2018 (EFY 2010) > Annual Audit findings and recommendations (one copy) > Independent auditors' report on the financial statements (one copy) > Independent auditors' report on designated and pool birr account statements Thank you for your usual cooperation. 'TheF Sincerely Yours, zVgale Channel Onc Prorams toordicting Directorute Director CC.O * Ministry of Education o . Addis Ababa * Channel-. One Prnrams, Cordination Directorate * GEQIP program follow up MoF Ah 7.*. 4-hA m h4. )L+*A Tel 251-11-155 24 00, 22 66 98 P.O.Box 1905,1037 Fax 251-11-156 01 24,55 14 96 Addis Ababa-Ethiopia 251-11-155 00 81,83 86 89 251-11-155 11 38 ?%"/-0l Mc& h7A7A+ W'7*9.717 The Federal Democratic Republic of Ethiopia Audit Services Corporation 0 4 JAN 2019 INDEPENDENT AUDITOR'S REPORT ON THE FINANCIAL STATEMENTS OF MINISTRY OF FINANCE GENERAL EDUCATION QUALITY IMPROVEMENT PROGRAM PHASE II We have audited the accompanying financial statements of General Education Quality Improvement Program Phase II of the Federal Democratic Republic of Ethiopia, Ministry of Finance, which comprise the balance sheet as at 7 July 2018, and the statement of sources and uses of funds and the designated account statement for the year then ended and a summary of significant accounting policies and other explanatory information. Responsibility for the Financial Statements The Ministry of Finance (MoF) is responsible for the preparation and fair presentation of these financial statements in accordance with the Ethiopian Government's Manual of the Federal Accounting System which is based on a modified cash basis of accounting and for such internal control as it 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 on Auditing. 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. 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 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. 1 251-011-5515222 Fax 251-011-5513083 E-mail: ASC@ethionet.com 2 5720 251-011-5535012 251-011-5535015 251-011-5535016 INDEPENDENT AUDITOR'S REPORT ON THE FINANCIAL STATEMENTS OF MINISTRY OF FINANCE GENERAL EDUCATION QUALITY IMPROVEMENT PROGRAM PHASE II (continued) We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion the financial statements give a true and fair view of the financial position of General Education Quality Improvement Program Phase II (GEQIP II) of the Federal Democratic Republic of Ethiopia, Ministry of Finance as at 7 July 2018 and of its financial performance and its sources and uses of funds for the year then ended in accordance with the Ethiopian Government's Manual of the Federal Accounting System which is based on a modified cash basis of accounting. Reports on other requirements As required by the World Bank guidelines we report that, to the extent we can assess:- - all external financing has been used in accordance with the conditions of the relevant financing agreements, with due attention to economy and efficiency, and only for the purposes for which the financing was provided; - counter-part funds have been provided and used in accordance with the financing agreement and only for the purposes for which the financing were provided; - goods, works and services financed have been provided in accordance with the relevant financing agreement and disbursement letters; - all necessary supporting documents, records and accounts have been maintained in respect of all Program activities; - the funds disbursed covered expenditures that are eligible for financing under IDA Credit No. 5315 ET, Multi Donors Trust Fund 18053, TF 0A6267, Global Partnership for Education Fund 16684, TFOA4619 and Education for all Fast Track Initiative Catalytic Trust Fund Grant No TFOA4701 - our examination revealed no weaknesses or irregularities in the systems of internal controls over financial expenditure other than those reported in our management letter; and a-sc- * 2 INDEPENDENT AUDITOR'S REPORT ON THE FINANCIAL STATEMENTS OF MINISTRY OF FINANCE GENERAL EDUCATION QUALITY IMPROVEMENT PROGRAM PHASE II (continued) - with respect to IFR based withdrawal applications submitted during the year ended 7 July 2018 and listed on page 12, in our opinion; a) the applications together with the procedures and internal controls involved in their Preparation can be relied upon to support the relevant withdrawals; b) adequate supporting documentation has been maintained to support claims to the World Bank for reimbursements of expenditures incurred; and c) Which expenditures are eligible for financing under IDA Credit No. 5315 ET, Multi Donors Trust Fund 18053, TF 0A6267 ,Global Partnership for Education Fund 16684, Education for all Fast Track Initiative Catalytic Trust Fund Grant No TFOA4619 and TFOA4701 I J a2 S eA/ eP-A CO re 3 January 2019 * 3 MINISTRY OF FINANCE GENERAL EDUCATION QUALITY IMPROVEMENT PROGRAM PHASE BALANCE SHEET AS AT 7 July 2018 2017 Notes Birr Birr CURRENT ASSETS Debtors 3 57,095,157 11,105,175 Cash and bank balances 4 139,537,468 319,728,957 196,632,625 330,834,132 CURRENT LIABILITIES Creditors 5 3.191,353 4,889,682 NET CURRENT ASSETS 41.223 REPRESENTED BY ACCUMULATED FUND 6 193,441.2 325944,4 The notes on pages 6 to 13 form an integral part of these financial statements. 4 MINISTRY OF FINANCE GENERAL EDUCATION QUALITY IMPROVEMENT PROGRAM PHASE II STATEMENT OF SOURCES AND USES OF FUNDS FOR THE YEAR ENDED 7 JULY 2018 Cumulative for the period from Year ended 18 February 2014 7 July 2018 to 7 July 2018 7 July 2017 Birr Birr Birr SOURCES IDA credit and grant 515,382,879 2,310,841,786 191,938,238 Multi donors trust fund 659,523,808 3,172,536,177 1,175,387,779 Global Partners for Education 1,280,437,135 3,117,825,293 211,384,158 Fast Track Initiative Catalytic Trust Fund 189,400,400 189,400,400 - Fund transfer from teachers Development Program (TDP) - 43,575,894 - Gain on foreign exchange 4,843.895 41,296,518 15,599.819 2,649,588,117 8,875,476,068 1,594,309,994 Direct payment and special commitment IDA Credit and grant 73,868,699 331,946,094 214,847,374 Multi donors trust fund 608,825,661 1,128,204,186 356,191,699 Global Partners for Education 31.587,019 31,587,019 - 3,363,869,496 10,367,213,367 2,165,349,067 USES Pre-service education quality improvement 412,858,583 968,856,100 243,268,706 In-service education quality improvement 674,409,533 1,368,683,172 232,593,059 School grants 1,402,612,568 5,391,905,152 1,249,269,775 School improvement program 41,364,721 103,840,353 37,579,221 Teaching and learning materials 759,521,005 1,701,425,102 642,699,270 Capital development for education planning and management 14,424,090 28,448,940 - Capital development for school planning and management - 39,531,810 - Education materials - 63,530,869 12,061,602 Curriculum reforms and implementation 14,751,819 17,614,993 1,178,781 Program coordination 29,201,301 85,982,820 23,922,590 Monitoring and evaluation 3,076,419 15,902,772 3,364,103 Assessment and examination 9,117,744 33,808,683 7,379,053 Inspection 35,961,592 71,255,043 19,552,454 Communication 15,545,610 68,128,640 45,614,638 Licensing 42,673,337 152,226,408 38,661,769 National policy and institution for ICT - 14,830 - Leadership program 10,259,601 12,979,534 2,719,933 Support and capacity building 30,594,751 49,636,874 19,042,123 3,496,372,674 10,173,772,095 2.578,907,077 (DEFICIT)/EXCESS OF SOURCES OVER USES (132.503.1 193.441.272 (4A13558,010) The notes on pages 6 to 13 form an integral part of these financial statements. 5 MINISTRY OF FINANCE GENERAL EDUCATION QUALITY IMPROVEMENT PROGRAM PHASE II USD DESIGNATED ACCOUNT STATEMENT FOR THE YEAR ENDED 7 JULY 2018 For the Year ended 7 July 2018 Account number 0100101300482 Depository bank National Bank of Ethiopia Address Addis Ababa, Ethiopia Related credit IDA Credit No. ET- 5315, Multi Donors Trust Fund Grant No. TF- 18053, TFOA 6267,Global Partnershipfor Education Fund Trust Grant Nos TF-16684 and TF-0A4619,Education for All- Fast Track Initiative Catalytic Trust Fund Grant No TF-0A4701 Currency USD USD Ethiopian Birr Beginning balance 8 July 2017 5,351,756.88 123,780,249.71 Add: Fund received during the year 105,519,848.87 2,644,744,222.00 110,871,605.75 2,768,524,471.71 Less: Transfer to pool Birr account 110,435,833.00 2,761,448,759.94 Transfer to Ministry of Education 186,431.26 5,075,116.82 110,622,264.26 2,766,523,876.76 249,341.49 2,000,594.95 Gain on foreign exchange 4,803.086.55 Ending balance - 7 July 2018 823 .5 The notes on pages 6 to 13 form an integral part of these financial statements. 6 MINISTRY OF FINANCE GENERAL EDUCATION QUALITY IMPROVEMENT PROGRAM PHASE II (GEQIP II) NOTES TO THE FINANCIAL STATEMENTS 1. PROGRAM INFORMATION The objective of the General Education Quality Improvement Program Phase II (GEQIPII) is to support Ethiopia's efforts to increase the quality of general education within its territory through improving teaching and learning conditions in schools as well as enhancing management planning and budget capacity of the Ministry of Education and of the Regional Education Bureaus respectively. In an agreement dated 5 December 2013, under credit number 5315 ET, the International Development Association (IDA) agreed to extend a credit in an amount equivalent to Special Drawing Rights (SDR) variously "credit and financing" to assist in financing the Program which will be supervised through the Ministry of Education with MoF being responsible for overall financial management of the Program. The Program is also financed by:- a) The World Bank administered Grant Agreement Multi Donors Trust Fund Grant No. 18053- USD 212,065,446 and Grant No.TF 0A6267- USD 18,190,979; b) Global Partnership for Education Fund Grant No. 16684-USD 100,000,000; c) Education for all Fast Track Initiative Catalytic Trust Fund Grant No. TF 0A4701-USD 7,000,000 and d) Global Partnership for Education Fund Grant No. TF 0A4619-USD 62,500,000 The government also intends to contribute the equivalent of approximately USD 78 million of its own funds to assist in the financing of the GEQIP Program. The proposed Adaptable Program Loan (APL) will be implemented in two phases. The first phase is for over a period of four years and the second phase is also for over a period of another four years respectively. The second phase of GEQIP has the following parts. Part I - Curriculum, text books and assessment, examination and inspection Part 11 -Teacher development program Part III - School improvement program Part IV - Management and capacity building Part V - Improving the quality of learning and teaching through the use of information and communication Part VI -Program and coordination, monitoring, evaluation and communication of the GEQIP * 7 MINISTRY OF FINANCE GENERAL EDUCATION QUALITY IMPROVEMENT PROGRAM PHASE II (GEQIP II) NOTES TO THE FINANCIAL STATEMENTS (continued) 1. PROGRAM INFORMATION (continued) The above financers Program closing time and application deadline is as follows:- Program Closing Application Deadline Financer Date International Development 31 December 2018 30 April 2018 Association IDA Credit No. 53150 ET Multi Donors Trust Fund 31 December 2018 30April 2018 Grant No. TF 18053 and TF A6267 - Global Partnership for Education Fund Grant No. 16 February 2018 16 June 2018 TF 16684 - Global Partnership for Education Fund Grant No. 31 December 2018 30 April 2018 TF A4619 Education for all Fast 30 April 2018 31 August 2018 Track Initiative Catalytic Trust Fund Grant No. TF A4701 2. SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies adopted by the Program, which are consistent with those applied in the previous years, are stated below. a) Basis of preparation These financial statements are prepared on a modified cash basis and in accordance with the accounting policy of the Government of the Federal Democratic Republic of Ethiopia. b) Currency These financial statements are presented in Birr. Transactions in foreign currencies are translated into Birr at the approximate rates of exchange prevailing at the dates of the transaction. Balances in foreign currencies at the balance sheet date are translated at the rate of exchange prevailing on that date. * 8 MINISTRY OF FINANCE GENERAL EDUCATION QUALITY IMPROVEMENT PROGRAM PHASE II NOTES TO THE FINANCIAL STATEMENTS (continued) 3 DEBTORS 2017 Birr Birr Amhara National Regiona State 2,645,874 1,006,519 Benishangul Gumuz National Regional State 9,576 15,698 Harrari People National Regional State 3,690 7 Oromiya National Regional State 7,699,768 744,005 Southern Nations, Nationalities and People's Regional State 15,073,477 3,395,560 National Regional State of Tigray - 32,547 Addis Ababa University 83,970 79,269 Dire Dawa City Administration 185,575 14 Bahir Dar University - 1,837 Dilla University 1,407,250 172,670 Jimma University - 50 Hawassa University 243 1,948 Mekele University 149,717 11 Ministry of Education 26,447,229 2,955,109 Addis Ababa City Administration 11,445 11,080 Haromaya University 136,306 111,293 Adigrat University - 34,674 Axum University 400,588 - Arbaminch University 5,352 1,760 Medawelabo University 34,500 433,755 Jigjiga University - 1,590,369 Afar National Regional State - 517,000 Assosa University 390,196 - Wollega University 265,961 Wolaita Sodo University 2,004,395 Ambo University 140,045 4 CASH AND BANK BALANCES US Dollar account 6,803,682 123,780,250 Main Birr account 4,410,227 11,301,948 Cash and bank balances in regional states and universities 128,323,559 184,646,759 9 21AKQ 9 MINISTRY OF FINANCE GENERAL EDUCATION QUALITY IMPROVEMENT PROGRAM PHASE II NOTES TO THE FINANCIAL STATEMENTS (continued) 5 CREDITORS 2017 I 2017 Birr Birr Addis Ababa City Administration 100,783 64,808 Amhara National Regional State 2,730 92,795 Benishangul Gumuz National Regional State 20,920 542,695 Dire Dawa City Administration 508 140 Harrari People National Regional State 8,761 424 Ministry of Education 1,219,442 453,530 Oromiya National Regional State 457,729 165,798 Southern Nations, Nationalities and People's Regional State 625,983 1,905,341 Somali National Regional State - - Tigray National Regional State 100 30,763 Afar National Regional State - 158,750 Addis Ababa University 14,772 2,676 Adigrat University - 497,250 Ambo University - 24,915 Arbaminch University 10,003 10,728 Axum University 59,042 23,649 Wollega University 4,404 21,683 Debre Birhan University 40,866 9,780 Dilla University 194,149 289,494 Haromaya University 147,751 5,415 Hawassa University - 129,920 Mekele University 38,277 - Meda-Welabo University 9,791 441,233 Welayta-Sodo University 8,211 - Wollo University - 60 Jimma University 177,370 17,838 Assossa University 13,853 - MoFEC Adminstration 35,908 3.191,353 48962 10 MINISTRY OF FINANCE GENERAL EDUCATION QUALITY IMPROVEMENT PROGRAM PHASE II NOTES TO THE FINANCIAL STATEMENTS(continued) 6 ACCUMULATED FUND Birr Balance at 8 July 2017 325,944,450 (Deficit)/Excess of Sources over Uses of funds of the current year (132,503.178) Balance at 7 July 2018 193,44127 7 DATE OF AUTHORIZATION Channel One Programs Coordinating Directorate Director of The Federal Democratic Republic of Ethiopia, Ministry of Finance authorized the issue of these financial statements on 3 January 2019 IVIEIN IKY UYYE INAINCE GENERAL EDUCATION QUALITY IMPROVEMENT PROGRAM PHASE II IFR BASED WITHDRAWAL SCHEDULE FOR APPLICATIONS submitted during from 8 July 2017 to 7 July 2018 Application Number USD BIRR Balance 8 July 2017 331,836,517.00 6,923,315,356 GEQIP II -055 28,000,000.00 654,379,600 GEQIP 11-056 10,535,833.72 246,229,809 GEQIP II -054 20,000,000.00 467,708,000 GEQIP II -058 7,000,000.00 189,400,400 GEQIP II -057 9,059,957.15 245,137,073 GEQIP II -062 1,751,182.00 47,674,879 GEQIP II -064 28,983,935.48 789,070,253 GEQIP I -063 188,940.52 5,144,208 105,519,848.87 2,644,744,222 437,356,365.87 9,568,059,578 Application for special commitment number GEQIP II SCO04 528,809.22 14,400,110 GEQIP II SCO05 1,451,618.88 39,529,324 GEQIP II SCO06 581,756.80 15,840,598 GEQIP II SC008 1,602,267.86 43,627,991 GEQIP II SCO19 1,234,571.80 33,529,612 GEQIP II SC020 987,948.98 26,782,184 GEQIP II SCO21 17,537,792.06 429,408,899 GEQIP II SC022 2,401,432.34 64,727,308 GEQIP II SC023 545,306.17 14,848,333 GEQIP II SC029 1,159,894.33 31,587,019 28,031,398.44 714,281,379 TOTAL 465.387.764.31 10.282.340.57- 12 ��. 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