CROSS RIVER STATE 11 NATIONAL URBAN WATER SECTOR REFORM PROJECT (FRENCH DEVELOPMENT AGENCY CO-FINANCED) AFD CREDIT NO. CNG 1007 01 L REPORT OF THE AUDITORS ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER, 2016 OKOI OKPEBRI & CO., CHARTERED ACCOUNTANTS CALABAR, NIGERIA CROSS RIVER STATE 11 NATIONAL URBAN WATER SECTOR REFORM PROJECT (FRENCH DEVELOPMENT AGENCY CO-FINANCED) AFD CREDIT NO. CNG 1007 01 L TABLE OF CONTENTS PAGE CORPORATE INFORMATION 1 ACCOUNTING POLICIES 3 AUDITOR'S REPORT 4 STATEMENT OF FINANCIAL POSITION 6 SOURCES AND APPLICATION OF FUNDS 7 NOTES ON THE FINANCIAL STATEMENT 8 CROSS RIVER STATE 11 NATIONAL URBAN WATER SECTORREFORM PROJECT (FRENCH DEVELOPMENT AGENCY CO-FINANCED) AFD CREDIT NO. CNG 1007 01 L CORPORATE INFORMATION 1. THE PROJECT The Cross River 11 National Urban Water Sector Reform Project commenced in November 2005 with the sole aim of providing portable water to the citizens of Cross River State. The Project was initially financed by International Development Association (IDA) and Cross River State Government with the World Bank taking full financing responsibility in October 2006. However, in November, 2012 a co-financing agreement was signed with the FRENCH DEVELOPMENT AGENCY (AFD) for the loan sum of USD43.9M for the purpose of improving water supply in OKPOMA and OBUBRA towns of Cross River State. The AFD component of financing is supervised by the World Bank under a co-financing agreement using World Bank Fiduciary rules. 2. OFFICIAL ADDRESS CROSS RIVER STATE WATER BOARD LIMITED NDIDEM USANG ISO ROAD, P. M. B. 1177 CALABAR, CROSS RIVER STATE 3. BANKERS FIRST BANK PLC CALABAR, CROSS RIVER STATE NIGERIA, OKOI OKPEBRI & CO CROSS RIVER STATE 11 NATIONAL URBAN WATER SECTORREFORM PROJECT (FRENCH DEVELOPMENT AGENCY CO-FINANCED) AFD CREDIT NO. CNG 1007 01 L CORPORATE INFORMATION 4. EXTERNAL AUDITORS OKOI OKPEBRI & COMPANY, CHARTERED ACCOUNTANTS, 6/7 EDEDEM EYAMBA STREET, ATIMBO, P.O. BOX 2322, CALABAR, NIGERIA. PHONE: +234-706-909-7817 E-MAIL: okoiokpebrifca(Dyahoo.com 5. PROJECT'S OPERATING OFFICIALS DR. GODWIN 0. IGILE - PROJECT CO-ORDINATOR ENGR.TIMOTHY E. NTAMU - PROJECT ENGINEER ENGR. JAMES E. EKABUA - PROCUREMENT SPECIALIST MR. ROBERT A. ARAH - HEAD, PROJECT FINANCIAL MANAGEMENT UNIT (PFMU) OSKAR A. AGBOR - PROJECT ACCOUNTANT DICKENS INAH OBETEN - INTERNAL AUDITOR OKOl OKPEBRI & CO 2 CROSS RIVER STATE 11 NATIONAL URBAN WATER SECTORREFORM PROJECT (FRENCH DEVELOPMENT AGENCY CO-FINANCED) AFD CREDIT NO. CNG 1007 01 L STATEMENT OF ACCOUNTING POLICIES a Basis of Accounting The financial statements are prepared under the historical cost convention. b Cash Accounting Cash basis is adopted in the preparation of the Project's financial statements c Fixed Assets Fixed Assets which shall be stated at cost are those intended for use over a period exceeding one year and whose value per unit is not below N100,000. d Depreciation Depreciation is not charged on Fixed Assets. e. Foreign Transactions The transactions arising in foreign currencies are recorded in Naira at the rates of exchange ruling at the time they arise. Assets and liabilities existing in foreign currencies are converted to Naira at the exchange rate ruling at the balance sheet date. OKO OKPEBRI & Co 3 OKOI OKPEBRI & CO.,ddAred,4 6/7 EDEDEM EYAMBA STREET, ATIMBO, GPO BOX 2322, CALABAR, NIGERIA. TELEPHONE: 234-706-909-7817 E-MAIL:okoiokpebrifca@yahoo.com REPORT OF THE INDEPENPENT AUDITORS TO THE MEMBERS OF CROSS RIVER 11 NATIONAL URBAN WATER SECTOR REFORM PROJECT (FRENCH DEVELOPMENT AGENCY CO-FINANCED) We have audited the accompanying project financial statements of Cross River State 11 National Urban Water Sector Reform Project as at 31 December, 2016 set out on pages 6 to 7 and prepared on the basis of the accounting policies on page 3. The Project is financed by AFD CREDIT NO. CNG 1007 01 L Project Management Responsibilities The Project Implementing Unit (PIU) co-ordinates the activities of the Project and Project Financial Management Unit (PFMU) is responsible for the preparation of the financial statements. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances. Auditors' 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 as to 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 auditors consider internal controls 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. OKOI OKPEBRI & cO 4 OKOI OKPEBRI & CO CONTINUATION SHEET 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. 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 Project has kept proper books of accounts and the financial statements give a true and fair view of the financial position and of the source and application of fund of Cross River State 11 National Urban Water Sector Reform Project (AFD CO-FINANCED) as at 31 December, 2016. The Statement of Expenditure (SOE) on page 10 is in agreement with the books of account and adequate supporting documentation has been maintained to support claims to the FRENCH DEVELOPMENT AGENCY for expenditures incurred in line with the credit agreement. The Statement of Special Account (SA) of the Project in Dollars on page 9 has been prepared on the basis of cash deposits and withdrawals for purpose of complying with the credit agreement and give a true and fair view of the beginning and ending balances and the account activity for the year ended 31 December, 2016. 1017' CHARTERED ACCOUNTANTS, CALABAR, NIGERIA. A10Y, 201? CROSS RIVER STATE II NATIONAL URBAN WATER SECTOR REFORM PROJECT (FRENCH DEVELOPMENT AGENCY CO-FINANCED) CREDIT NO. AFD CNG 1007 01 L STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER, 2016 2015 2016 2016 Cumulative Cumulative Transactions N EMPLOYMENT OF FUNDS NOTES N N 1,619,105,875 CIVIL WORKS 1 5,932,457,843 4,313,351,969 12,582,000 DEVELOPMENT CAPITAL EXPENDITUR! 2 176,713,317 164,131,317 6,742,795 DEVELOPMENT OPERATING EXPENDITUR 3 14,857,214 8,114,419 13A 670 6,124,028,375 4w485 597705 CURRENT ASSETS 2202 508.484 CASH & BANK 4 3,890,784,490 1,688,276,006 3.84093954 14A12864 j80 FINANCED BY 3,727,696,272 ADVANCES FROM AFD 6 8,740,191,260 5,012,494,988 - CRSG COUNTERPART FUNDING 7 108,138,594 EXCHANGE GAIN/(LOSS) 8 1,266,818,457 1,158,679,863 5,104,288 OTHER INCOME 9 7,803,148 2,698,860 3,840939154 1O,014j,812 84 61=7 3 10 (The Accounting policies on page 3 and t flotes on pages 8 to 13 form part of these financial statements) ...... . ......... / /. P r je. ......... Project Coordinator S ........... Head, Project Financial Management Unit ........................ Project Accountant OKOI OKPEBRI & CO. 6 CROSS RIVER STATE II NATIONAL URBAN WATER SECTOR REFORM PROJECT (FRENCH DEVELOPMENT AGENCY CO-FINANCED) CREDIT NO. AFD CNG 1007 01 L STATEMENT OF SOURCES AND APPLICATION OF FUNDS FOR THE YEAR ENDED 31 DECEMBER, 2016 NOTES 2016 2015 Transactions Transactions N N SOURCES Advances from AFD 6 5,012,494,988 3,727,696,272 Exchange Gain 8 1,158,679,863 108,138,594 Other Income 9 2,698,860 5,104,288 6,173,873,710 3,840,939,154 APPLICATION Civil Works 1 4,313,351,969 1,619,105,875 Development Capital Expenditure 2 164,131,317 12,582,000 Development Operating Expenditure 3 8,114,419 6,742,795 4,485,597,705 1,638,430,670 NET CASH FLOW 1,688,276,006 2,202,508,484 Cash Balance at 1 January, 2016 2,202,508,484 . Cash Balance at 31 December, 2016 3,890,784,490 2,202,508,484 (The Accounting policies on page 3 and the notes on pages 8 to 13 form part of these financial statements) OKOI OKPEBRI & CO. 7 CROSS RIVER STATE II NATIONAL URBAN WATER SECTOR REFORM PROJECT (FRENCH DEVELOPMENT AGENCY CO-FINANCED) CREDIT NO. AFD CNG 1007 01 L NOTES TO THE FINANCIAL STATEMENT FOR THE YEAD ENDED 31 DECEMBER, 2016 2016 2015 1. CIVIL WORKS Transactions Transactions N N CONTRACTOR. Network Expansion: CGC NIG LTD PAYMENT FOR CONSTIEXTENSN OF WATER DIST. OKPOM, 1,708,597,921 681,297,296 CGC NIG LTD PAYMENT FOR CONST/EXTENSN OF WATER DIST. OBUBRA 2,604,136,801 937,374,658 TAXES ON OKPOMA WORKS 617,247 TAXES ON OBUBRA WORKS - 433,920 TOTAL 4,313,351,969 1,619,105,874 2016 2015 2. DEVELOPMENT CAPITAL EXPENDITURE Transactions Transactions N N CONTRACTOR Consultancy Service SGI CONSULT. PAYMENT FOR OKPOMA SUPERVISION 95,999,866 12,582,000 AIMS CONSULT. PAYMENT FOR OBUBRA SUPERVISION 61,646,104 TAXES ON OKPOMA SUPERVISION 1,267,403 - TAXES ON OBUBRA SUPERVISION 5,217,945 - TOTAL 164,131,317 12,582,000 OKOI OKPEBRI & CO. 8 CROSS RIVER STATE II NATIONAL URBAN WATER SECTOR REFORM PROJECT (FRENCH DEVELOPMENT AGENCY CO-FINANCED) CREDIT NO. AFD CNG 1007 01 L NOTES TO THE FINANCIAL STATEMENT FOR THE YEAD ENDED 31 DECEMBER, 2016 2016 2015 Transactions Transactions 3. DEVELOPMENT OPERATING EXPENDITURE N N Bank Charges 210,690 6,742,795 Audit Fee 598,400 Project Sites Visits and Other Trips costs 1,889,282 PIU & PFMU Operating Costs 5,059,600 Maintenance of Office Furniture 68,500 Maintenance of Vehicles 89,557 Printing & Stationeries 173,000 Meeting Expenses 25,390 - TOTAL 8,114,419 6,742,795 OKOI OKPEBRI & CO. 9 CROSS RIVER STATE 11 NATIONAL URBAN WATER SECTOR REFORM PROJECT (FRENCH DEVELOPMENT AGENCY CO-FINANCED) CREDIT NO. AFD CNG 1007 01 L NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 31 DECEMBER, 2016 2016 2015 4. CASH&BANK N N FIRST BANK DRAW DOWN ACC. NO. 2024103031 45,727,788 24,553,474 FIRST BANK PLC. ACC. NO.2024079170 ( USDSPECIALACCOUNT)US$12,617,166.04@N304.5 3,841,927,059 2,168,464,328 FIRST BANK PLC ACCOUNT NO. 2024079187 (USD INTEREST ACCOUNT) - US$9,141,84@N304.5 2,783,690 351,454 FIRST BANK NGR INTEREST ACC. NO.2024079204 75,037.50 75,142.50 FIRST BANK COUNTERPART FUND ACCT. NO. 2024037099 270,914.39 9,064,084.62 TOTAL AS AT 31 DECEMBER, 2016 3,890,784,490 2,202,508,484 5. STATEMENT OF SPECIAL ACCOUNT US DOLLAR 2016 $ N BALANCE AS AT 1 JANUARY, 2016 10,896,805.67 2,168,464,328 AFD Advances during the year 19,999,980 5,012,494,988 Interest Earned - Dollar Account 7,370.26 2,244,244.2 155 9? 7,183, 93560 CLOSING BALANCE AT 31 DECEMBER, 2016 12,617,166,04 3,841,927,059 WITHDRAWALS for Eligible Expenditure during the year 18,279,619.63 4,497,712,119,47 Earned Interest transferred to Interest Account 7,370.26 2,244,244.2 30,904,155.93 8,341,883,423 OKOI OKPEBRI & CO. 10 CROSS RIVER STATE II NATIONAL URBAN WATER SECTOR REFORM PROJECT (FRENCH DEVELOPMENT AGENCY CO-FINANCED) CREDIT NO. AFD CNG 1007 01 L NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 31 DECEMBER, 2016 6. STATEMENT OF EXPENDITURE (SOE) AFD ADVANCES AMOUNT RATE 2016 PAYMENTS DATE AFD CREDITS EXPECTED (USD) NAIRA N US$ CUMMULATIVE BALANCE AT 1 JANUARY, 2016 20,000,000 3,727,696,272 19,999,980 2016 DISBURSEMENTS: 20/5/16 AFD DISBURSEMENT 10,000,000 196.50 1,964,998,035 9,999,990 22/12/16 AFD DISBURSEMENT 10,000,000 304.75 3,047,496,953 9,999,990 TOTAL 20,000,000 5,012,494,988 19,999,980 CUMMULATIVE AT 31 DECEMBER, 2016 40,000,000 8,740,191,260 39,999,960 7. CRSG COUNTERPART FUNDING 2016 N BALANCE AS AT 31 DECEMBER,2016 - OKOI OKPEBRI & CO. 11 CROSS RIVER STATE 11 NATIONAL URBAN WATER SECTOR REFORM PROJECT (FRENCH DEVELOPMENT AGENCY CO-FINANCED) CREDIT NO. AFD CNG 1007 01 L NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 31 DECEMBER, 2016 8 EXCHANGE GAIN/(LOSS) 2016 N US DOLLAR BUYING AVAILABLE COST $ N BALANCE AT 1 JANUARY, 2016 10,896,805,67 2,168,464,328 AFD Advances during the year 19,999,980 5,012,494,988 Interest Earned - Dollar Account 7_,0 2,44,2442 3090415593 713203,560 CLOSING BALANCE AT 31 DECEMBER 2016 12,617,166.04 3,841,927,059 WITHDRAWALS for Eligible Expenditure 18,279,619.63 4,497,712,119.47 Earned Interest transferred to Interest Account 7,370.26 2,244,244.2 3~0,55-3 8,341,883,423 EXCHANGE GAIN FOR THE YEAR ENDED 31 DECEMBER, 2016 1,158,679,863 OKOI OKPEBRI & CO. 12 CROSS RIVER STATE II NATIONAL URBAN WATER SECTOR REFORM PROJECT (FRENCH DEVELOPMENT AGENCY CO-FINANCED) CREDIT NO. AFD CNG 1007 01 L NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 31 DECEMBER, 2016 9. OTHER INCOME 2016 2015 N N 9.1 RETURNED - GEMS CONSULT 437,616 - 9.2 RETURNED - MONICA KANU 17,000 - 9.3 Interest Income - USD7,370.26 @ N304.5 2,244,244 605,988 Tender fee - 4,475,300 Deposit by OSKAR - 23,000 TOTAL 2,698.860 5,(4,2 OKOI OKPEBRI & CO. 13