The Federal Democratic Republic of Ethiopia Audit Services Corporation INDEPENDENT AUDITOR'S REPORT TO THE SUPERVISING AUTHORITY OF ADDIS ABABA WATER AND SEWERAGE AUTHORITY WATER SUPPLY AND SANITATION PROJECT OFFICE We have audited the accompanying financial statements of Addis Ababa Water and Sewerage Authority, Water Supply and Sanitation Project Office, Urban Water Supply and Sanitation Project - financed under IDA Grant -H287-ET, IDA Credit -4292-ET and IDA Credit-5115-ET which comprise the balance sheet as at 30 April 2018 and the statement of sources and uses of funds for the periods from 8 July 2017 to 30 April 2018, and a summary of significant accounting policies and other explanatory information. Project Office's Responsibility for the Financial Statements The Project Office is responsible for the preparation of financial statements that give a true and fair view in accordance with the accounting policies described in note 2 to the financial statements and for such internal control as management 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 2 251-011-5515222 Fax 251-011-5513083 E-mail: ASC@ethionet.com C 5720 251-011-5535012 251-011-5535015 251-011-5535016 INDEPENDENT AUDITOR'S REPORT TO THE SUPERVISING AUTHORITY OF ADDIS ABABA WATER AND SEWERAGE AUTHORITY WATER SUPPLY AND SANITATION PROJECT OFFICE (continued) Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of Addis Ababa Water and Sewerage Authority, Water Supply and Sanitation Project Office, Urban Water Supply and Sanitation Project - financed under IDA Grant -H287-ET, IDA Credit -4292-ET and IDA Credit-5115-ET as at 30 April 2018 and the statement of sources and uses of funds for the periods from 8 July 2017 to 30 April 2018 in accordance with the accounting policies described in note 2 to the financial statements. Reports on Other Requirements As required by the World Bank guidelines we report that, to the extent we can assess:- - during the year IDA funds have been used in accordance with the conditions of the relevant financing agreements and only for the purposes for which the financing was provided; - goods, works and services financed have been provided in accordance with the relevant financing agreements and disbursement letters; - all necessary supporting documents, records and accounts have been maintained in respect of all Project activities; - our examination revealed no weaknesses or irregularities in the systems of internal controls over financial expenditure other than those mentioned in the management letter; - with respect to statements of expenditure submitted during the periods from 8 July 2017 to 30 April 2018 listed on page 9, in our opinion a) the statements, 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 IDA for reimbursements of expenditures incurred; and c) which expenditures are eligible for financing under IDA Credit No. 4292-ET, IDA Credit No. 5115-ET and IDA Grant No. H287-ET. 30 October 2018 2 Addis Ababa Water And Sewage Authority Water Supply And Sanitation Project Office Urban Water Supply and Sanitation Project Financed under IDA Grant -H287-ET, IDA Credit -4292-ET and IDACredit-5115-ET Balance Sheet As At 30 April 2018 2017 CURRENT ASSETS Ethiopian Birr Ethiopian Birr Notes Letter of credit 16,000,252 338,118,754 Stock 51,144,612 55,867,847 Receivable -Eurpean Union 209,142 209,142 Debtors 3- 105,828,448 152,177,453 Cash and Bank Balances 4 15,984 82.5 11855 173,198,438 628,886,052 LIABILITIES Retention payables 18,084,897 24,799,775 Other payables 5 99 3.112,874 24,424,096 27,912649 NET ASSETS 14,714,3 fl0.114U ACCUMULATED FUND 6 148,774342 The notes on pages 6 to 10 form an integral part of these financial statements 3 Addis Ababa Water And Sewage Authority Water Supply And Sanitation Project Office Urban Water Supply and Sanitation Project Financed under IDA Grant -H287-ET, IDA Credit -4292-ET and IDACredit-5115-ET SOURCES AND USES OF FUNDS For the period from 7 July 2017 to 30 April 2018 SOURCES 2017 Notes Ethiopian Birr Ethiopian Birr IDA Credit -5115-FT Direct payments 71,413,096 137,701,614 SOE withdrawal 81,385,013 296,259,275 Gain on foreign exchange 7,637,251 5,032,757 Other income 273,028 61,062 160,708,388 439,054,708 USES Works and goods 7 583,916,764 584,371,636 Consultancy 27,617,432 17,255,468 Training 1,131,672 1,773,656 Operating costs 241,581 589,248 612,907,449 603,990,009 (DEFICIT) OF SOURCES OVER USES (452,199,061) (164,935,301) The notes on pages 6 to 10 form an integral part of these financial statements 4 Addis Ababa Water And Sewage Authority Water Supply And Sanitation Project Office Urban Water Supply and Sanitation Project - Financed under IDA Grant -H287-ET, IDA Credit -4292-ET and IDACredit-5115-ET DESIGNATED ACCOUNT STATEMENT 30 APRIL 2018 For the period ended 30-Apr-18 Account number 010 1191300006(02615013576000) Depository bank National Bank of Ethiopia Address Addis Ababa, Ethiopia Currency USD USD Balance at 8 July 2017 3,609,943.54 Add:- Replenishment during the period 3,021,365.54 6,631,309.08 Less :-Payments for goods and services 2,971,373.91 Transfer to Birr bank account 3,650,675.50 Bank services charge 9,259,67 (6,631,309.08) Add:- Gain on exchange rate fluctuations - Balance at 30.April 2018 Nill The notes on pages 6 to 10 form an integral part of these financial statements 5 ADDIS ABABA WATER AND SEWERAGE AUTHORITY WATER SUPPLY AND SANITATION PROJECT OFFICE Urban Water Supply and Sanitation Project Financed under IDA Grant -H287-ET, IDA Credit-4292-ET and IDA Credit-5115-ET NOTES TO THE FINANCIAL STATEMENTS 1. PROJECT OFFICE INFORMATION The Water Supply and Sanitation Project Office was established in May 2008 by the Addis Ababa Water and Sewerage Authority to administer the Authority's projects. The Office is in Addis Ababa, Ethiopia, with projects throughout the city. There are currently 40 projects. The financial statements in this report reflect transactions of the Urban Water Supply and Sanitation Project - Financed under IDA Grant -1287-ET, IDA Credit -4292-ET and IDACredit-5115-ET. The Second Urban Water Supply and Sanitation Project was signed between the Federal Democratic Republic of Ethiopia and International Development Association (IDA) at 7 April 2017. The amendment of this Agreement incorporate new Sub-paragraph (d) which reads as "complete the remaining extension of about 4 Kilometres of the Kality trunk sewer line, provide sewer connections to households, and complete the remaining expansion work (about 5%) of kality wastewater treatment plant, including commissioning, testing and hand over of the plant to the Recipient." 2. SIGNIFICANT ACCOUNTING POLICIES a) Basis of preparation These financial statements have been prepared on a modified cash basis of accounting whereby non-monetary assets, excluding stock, are expensed when acquired and monetary assets and liabilities and stock are carried at historical cost. b) Currency These financial statements are presented in Birr. Transactions in foreign currency are translated into Birr at the approximate rate of exchange prevailing at the date of the transaction. Cash balances denominated in foreign currencies are translated into Birr at the exchange rates ruling at the balance sheet date, c) Income Income is recognized when received or receivable. 6 ADDIS ABABA WATER AND SEWERAGE AUTHORITY WATER SUPPLY AND SANITATION PROJECT OFFICE Urban Water Supply and Sanitation Project Financed under IDA Grant -H287-ET, IDA Credit-4292-ET and IDA Credit-5115-ET NOTES TO THE FINANCIAL STATEMENTS 2. SIGNIFICANT ACCOUNTING POLICIES (continued) d) Letters of credit Letters of credit represent balances still outstanding on the unutilized portions of open letters e) Stock Stock is valued on the basis of actual cost. i II 1 7 ADDIS ABABA WATER AND SEWERAGE AUTHORITY Water Supply And Sanitation Project Office Urban Water Supply and Sanitation Project - Financed under IDA Grant -H287-ET, IDA Credit -4292-ET and IDACredit-5115-ET NOTES TO THE FINANCIAL STATEMENTS (continued) 3 DEBTORS [ 2017 Ethiopian Birr Ethiopian Birr Advance payments to contractors 18,366,736 69,750,875 fnter-fund receivable 84,669,628 80,006,583 Advances and prepayments 2,330,832 2,330,832 Sundry 88,287 88,287 Staff 4,737 877 Withholding tax recivable 368,228 - 4 CASH AND BANK BALANCES US dollar accounts - (1,011,130) Birr accounts 15,984 83,523,986 5 OTHER PAYABLES Taxes payable 6,114,683 1,141,138 Suspense 218,574 1,965,793 Sundry 5,942 5 8 ADDIS ABABA WATER AND SEWERAGE AUTHORITY WATER AND SANITATION DEVELOPMENT AND REHABILITATION PROJECT OFFI( Urban Water Supply and Sanitation Project - Financed by IDA Grant -11287-ET, IDA Credit -4292-ET and IDACredit-5115-ET NOTES TO THE FINANCIAL STATEMENTS (continued) 6 ACCUMULATED FUND 2017 Ethiopian Birr Ethiopian Birr Balance at 8 July 2017 600,973,403 766,775,316 Prior year adjustment - (866.612) 600,973,403 765,908,704 (Deficit) of sources over uses (452,199,061) (164.935.301) Balance at 30 April 2018 148,774,342 W.2340 7 WORKS AND GOODS Construction in progress - buildings 256,714,400 2,194,416 - infrastructure 326,567,861 582,177,220 - CIP OF low income 634,503 M891dL4.( S84,371.636 8 DATE OF AUTHORIZATION The Project Office Manager authorized the issue of these financial statements on 30 October 2018. 9 ADDIS ABABA WATER AND SEWERAGE AUTHORITY Urban Water Supply and Sanitation Project - Financed under IDA Grant -H287-ET, [DA Credit -4292-ET and IDACredit-5115-ET SOE WITHDRAWAL SCHEDULE FOR STATEMENTS OF EXPENDITURE submitted during the period from 7 July 2017 To 30 April 2018 Works and Training and goods consultancy Total Total Birr Birr Birr USD Credit No. 5115-ET AAWSP- 067 81,385,012.87 -- 81,385,01287 3,021,365.54 10