Kudos Egypt El Besher, Khalil, Mourad & Partners CT-ntemed oo*IntnI and consultai.ts Financial audit of Greater Cairo Air Pollution Management and Climate Change Project financed by International Bank for Reconstruction and Development (IBRD) under Loan Agreement No. 9166-EG, for the period from July 1, 2023 to June 30,2024 I I I I I I gp I U I A I I Page Background 2 Objectives and Scope of Work 3 Results of Audt 4 Management Comments 4 I ANCA IT UMN ndependent Auditor's Audit Report 5 Financial Statements and Notes 8 Independent Auditor's Aud t Report 12 Independent Auditors Audit Report 14 I I I A I p A I I I I I A I p I I Kudos Egypt El Besher, KhaIil. Mourad & Partners cha,rtereud acc nnt s .,,d consulta s IJ To: Ali Abo Senna National Director of the Greater Cairo Air Pollution Management and Climate Change Project Cairo Egypt This report presents the results of our financial audit of Greater Cairo Air Po lution Management and Climate Change Project financed by International Bank for Reconstruction and Development (BRD) and Government of Egypt under Loan Agreemeit No. 9166-EG, for the period from Ju y 1, 2023 to June 30, 2024. The Greater Cairo Air Pollution Management and Climate Change Project loan agreement No. 9166-EG was signed in January 24, 2021 between the International Bank of Reconstruction and Development (IBRD) and the Arab Republic of Egypt whereby the IRD awarded a loan to the Arab Republic of Egypt. IBRD agreed to lend GOE the amount of US$ 200,000,000 towards the cost of reduce air and climate emissions from critical sectors and increase resience to air pollution in Greater Cairo. Project development objective is to reduce air and cimate emissions from critica sectors and increase resilience to air pollution in Greater Cairo. The reduced emissions will lower pollution concentratons and improve air quality. Targeted air pol utants include PM10, while climate pollutants include C02, and SLCPs, including Black Carbon The project main expected key results indicators are the following: a) Reduction in Greenhouse gas emissions (C02 equiva ent) from municipal solid waste (percentage); b) Reduction of large-scale solid waste fires per annum (percentage); c) Creenhouse gas emissions (C02 equivalent) from public buses on selected routes (percent change against normalized baseline); d) Black Carbon emissions from public buses (percent change against normalized baseline); and Targeted people taking self-protective action in response to a ert of a high pollution event (share of surveyed people adopting avoidance behaviour). Loan Agreement No, 9166-EG was not amended through June 30, 2024L On December 2023 global environment facility grant agreement was signed to grant US$9,130,000 to assist in financing the project. We have reviewed the prior independent aud t report dated September 13, 2023 The auditors did not ident fy any question costs or any findings related to internal control structure and/or any nstances of noncompliance w th aws, regiation and agreements terms Therefore, no follow up work was performed of Re-construction and Development ( BRD) resources managed funded project A A The objective of th s engagement is to conduct a financial audit of MOE under Greater Cairo Air Pollution Management and Climate Change Project financed by IBRD under Loan Agreement No. 9166-ES, for the period from July 1, 2023 to June 30, 2024 The specific objectives of this audit assignment are to 1 State whether, the financal statement of the project funded by IBRD under Loan Agreement No. 9166-EG for the period from July 1, 2023 to June 30, 2024 give a true and fair view in all material respects, of the project funds received and expenditures incurred for the period under audit in conformity with international Accounting Standards or another comprehensive basis of accounting. 2 All funds including counterpart funds and other external funds (in case of co-financing) have been used in accordance with the conditions of the loan agreement(s), with due attention to economy and efficiency and only for the purposes for which the funds were provided; 3. Goods, works and services financed have been procured in accordance wth the financing agreement; and have been properly accounted for; 4. Appropriate supporting documents, records and books of accounts relating to all project/program activities have been kept 5. Disbursements of funds have been made based on the Disbursement Handbook and in accordance with the conditions of the Loan agreement, 6. Designated accounts have been maintained in accordance with the provisions of the Loan agreement and in accordance with the Bank's disbursement rules and procedures; 7. Payments made using project/program funds relate to project/program activities as stated in the project/program progress reports; 8. The financial statements have been prepared by project/program management in accordance with applicable reporting framework; 9. There are no ineligible expenditures identffied during the audit. The preliminary planning and audit procedures started on September 30, 2024 and consisted of the following actions: 1. Meeting with the Borrower's management to obtain our understanding about the project activities and ascertain any concerns that should be addressed in our audit. 2. Obtain our understanding of the Borrower's operation, including its organizational structure, and the external and internal factors affecting its operation. 3. dentifying significant accounts and accounting app ications, the important budget lines items, significant provisions of laws and regulations and re evant controls over the Borrower's operations. 4/ Performing a preliminary risk assessment to identify high-risk areas and sample size and the proper audit procedures. The fieldwork segment of our audit commenced on October 2, 2024 and was completed on October 8, 2024 The scope of our work was to audit costs inLurred by MOE financed by IBRD under Loan Agreement No 9166-EG, during the period from July 1, 2023 to June 30, 2024 It also included an examination of the funds received from The BRD during the same period, and reconciliation of the fund balance as of June 30, 2023 with the Borrower's cash balance. W thin each budget line item, we selected transactions on a judgmenta basis to perform a substantive test of details. Our tests of expenditures included but were not limited to the fo lowing: 1. Reconciling MOE's accounting records to the Project Financia Statement issued to IBRD and testing costs for el gibi ity with the relevant financing agreement and adequate supporting documentation, 2 Determining whether the costs incurred by MOE's and funded by The BRD were appropriate, consistent with the terms of the agreement and applicable rules and regulations and adequately supported 3. Testing the adequacy of MOE internal controls to reasonably assure that: * Transactions were executed in accordance with the approved budget and significant provisions of applicable laws and regulations and; * Transactlons were properly recorded, processed and summarized to permit the preparation of the financial statement and to maintain accountability of the project's assets. Our audit did not Identify any questioned cost in expenses incurred by MOE and reported to the International Bank for Reconstruction and Deve opment and during the period July 1, 2023 to June 30, 2024 Our audit procedures did not identify any material reportable condition in connection to the project interna control structure Our audit procedures did not identify any material instance of non-compilance with IBRD internal policies and procedures, agreement terms and applicable laws and regulations. The Management of Greater Cairo Air Pollution Management and Climate Change Project have reviewed the report and agree to it. This report is intended for the information of the Greater Cairo Air Pollution Management and Climate Change Project's management and International Bank for Reconstruction and Development (IBRD) and others within the organization However, this report is a matter of public record and its distribution is not limited Hossam E Besher, CPA E Besher, Khali, Mourad & partners, Kudos Egypt Cairo, October 9, 2024 B I I Kudos Egypt El Besher, Khalil. Mouriad & Pnrtners Ch-tre.d acountants and consultOnt I II To: Ali Abo Senna National Director of the Greater Cairo Air Pollution Management and Climate Change Project Cairo, Egypt * We have audited the Financial Statements of Creater Cairo Air Pollution Management and Climate Change Project under Loan Agreement No. 9166-EG between the Government of Egypt and the International Bank of Re-construction and Development (IBRD), which comprise the Fund Accountability Statement for the period from July 1, 2023 to June 30, 2024, and notes to the financial statements, including a summary of significant accounting policies. * In our opinion, the accompanying Fund accountabi ity statement presents fairly in all materia respects, the financial position of the Project, in accordance with the cash basis of accounting as described in note 2 to the financia statements. * Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current year. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For matter below, our description of how our audit addressed the matter is provided in that context We Draw attention to note (2) to the Financial Statements, which describes the basis of accounting The Financial Statements are prepared to assist the project management to comply with the financial reporting provisions in accordance with the Note (2) of the notes to the Financial Statements. As result, the Financial Statements may not be suitable for another purpose. * We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the financial Statements section of our report. We are independent of the MOE in accordance with the International Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. * Management of MOE is responsible for the preparation and fair presentation of the fund accountability statement in accordance with applicable accounting standards, 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. * In preparing the financial statements, management is responsible for overseeing the project's financial repoiting process. U I I I a Our objectives are to obtain reasonab e assurance about whether the financial statement as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individual y or in the aggregate, they coud reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements * As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: - Identify and assess the risks of material misstatement of the fund accountability statement, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion The risk of not detection a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. p Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for expressing an opinion on the effectiveness of the project's internal control Evaluate the appropriateness of accounting polices used the reasonableness of accounting estimates and related disclosures made by management. - We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings including any significant deficiencies in internal control that we identify during our audit - From the matters communicated with those charged with governance, we determined those matters that were of most significance in the audit of the fund accountability statement of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extreme y rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonab y be expected to outweigh the public interest benefits of such communication. * The project keeps proper accounting records which include all that is required by aw and the statutes of the project and the accompanying financial statements in agreement therewith. This report is intended for the information of the,Greater Cairo Air Po lution Management and Climate Change Project's management and nternational Bank for Reconstruction and Development (iBRD) and others within the organization. However, this report is a matter of public record and its distribution is not limited. 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'� U С? т С) 1.11 t�. h ц. � � � The financial statements are the representation and the responsibility of the project's management, The "Budget" columns represent the total budget amounts approved according to project agreement. The "total Actual Expenditures" columns identify the total costs incurred by the project during the year ended June 30, 2024. The "Questioned Costs" columns represent audit results and are included in the firiancial statements for presentaton purposes only. The financial statements has been prepared on the cash basis. Consequently, revenues are recognized when they are actually received and expenditures are recognized when they are paid. The projects funds received in U.S. dollars, expenditures paid in Egyptian pounds, are divided into 2 treatments as follows * The payment is directly from the designated account of the project, the EOP is converted to U.S. dollars at the actual exchange rate declared by bank on payment day. 0 The payment is from NIB account, the PlU used exchange rate declared by the CBE bank on the day of the transfer made to NIB, then used on all the payments made through NlB. 0 D rect payments by the World Bank is recorded as r.%,-elved from the bank. Qu The Cyprus institute 0 61,589 61,589 The Cyprus Institute 0 122,092 122,092 Lead Advisor for component 1 11,356 25,233 36,589 Technical support for TIU Fnharcing Air quality consultant 0 13,248 13,248 consultant 0 10,182 10,182 Technical support for TIIJ in developing Environmental Experts Registration & Certification program consultart 0 9,271 9,271 Technical support for TIU in Air Quality Management skills training, and developing unrver . ty cu iculum 0 1,888 1,888 I A A I The disbursements under this category consists of the fo lowing: R cinemonics Egypt Consulb,ols 80,904 0 80904 Sets Nort Afr ca 62,191 1,555 63746 Integral Consult 18,803 7260 26063 Consotim (Chemon c & COW) 51.136 51 135 102,271 Consortium (Chemon is & COWl) 158,001 483,306 641,307 Consodium (Chemonics & CO l) 0 225,508 225,508 We for Communicaion 1,837 2,373 4,210 6iShams for contracting 0 21093,213 2,093 213 Technical assistance (Goods) t MOLD & Calyubiya governorate 0 77,788 77,788 Single Use Plastic Bag iSUPB Technical consu tant 0 6,773 6,773 Single Use Plastic Bag ISUPB) Technical consu tanI 0 5,647 5,647 Senior Solid Wase Management Advisor 66.612 9:267 75,879 Solid Waste Management Consultant 8175 6,180 14,355 Project Eng neor 0 7,486 7,486 Component 2 coordinator 0 8,735 8,735 The disbursements under this category consists of the following: The consortium "SETEC ITS - SE TC Egypt - Shaker Consultancy Group - Transport for Cairo LLP 317,613 396,009 713,622 Consultancy fees 2,402 11,063 13,465 Technical Assistance (Goods) to CTA 0 2,526 2,526 I K The disbursements under this category consists of the following: * Communi catons specialist 7,800 5,066 12,866 Media & Branding 4,811 8,950 13,761 R p I AnUA Salaries 322,534 179,373 501,907 Assets 159,513 66,388 225,901 Car rent 31,841 31,111 62,952 Premises rent 13,587 19,137 32,724 COP 27 expenses 64,988 100 65,088 Steering committee 0 11,520 11,520 Operation Manual 0 9,627 9,627 Translation services 9,869 32,276 42,145 Workshop 9,308 17,131 26,439 Tax Services 1,200 0 1,200 Financial Audit 0 8,920 8,920 World Bank Mission Hospitality 13,462 10,472 23,934 OUDA Management fees 4,607 10,988 15,595 Insurance on Assets 1,888 3,741 5,629 Logo Design 0 1,211 1,211 Mid-Term review 0 95,327 95,327 Photography and videography 0 811 811 We are all winners campaign 0 2,808 2,808 Operation expenses 7,665 56,365 64,030 Premises expenses 7,785 17,462 25,247 Bank Charges 7,336 3,826 11162 Car Expenses 1,422 11,093 12,515 Per-diem for technical committees 44 12,177 12,221 IT Consumnables & Maintenance 1,326 12,956 14,282 Stationery 1,757 10,736 12,493 Institutional support 2,705 4,918 7,623 Hosi'tality 190 2,885 3,075 Miscell'aneous expenses 221 1,600 1,821 Greater Cairo Air Po lutio)n Managemnent and Climate Change Project paid IBRD front-end fee on the loan by amount of US$ 500,000 which is equal to (0,25%) of the loan amnount as specified in the loan agreement I I K I Opening Balance 13,992,859 Funds received from the World Bank 3,640,269 Direct Payments 0 Costs incurred during the period from July 1, 2023 to June 30, 2024 4,231,937 Fund Balance as of June 30, 2024 13,401,191 Less: Petty Cash 15,819 Bank Book and statement Balance as of June 30, 2024 13,385,372 Central Bank of Egypt account- US$ 4/082/18853/5 11,142,701 EEAAaccountdepartment/ NlB accouni -EGP 8171693200 55,829,240 11986,573 28.10 OUDA-EGP 100052370072 4.694,268 256,098 18.33 The "Questioned Costs" columns represent the costs questioned during the period July 1, 2023 to June 30 2024 Questioned costs are presented in two separate categories. The "Ineligible" column represents the costs that are not program related, unreasonable, or prohibited by the agreement or applicable laws and regulations. The "Unsupported" column represents the costs that are not supported with adequate documentation. K I I I K I I I I I p U I I Kudos Egypt El Sesher, Kholil, Mourad & Partners 011- ... '. i To: Ali Abo Senna National Director of the Greater Cairo Air Pollution Management and Climate Change Project Cairo, Egypt We have audited the accompanying financial statements of the Ministry of Environment (MOE) under Greater Cairo Air Pollution Management and Cimate Change Project, under Loan Agreement No 9166-EG between the Government of Egypt and the International Bank of Re-construction and Development (IBRD) represented in Fund Accountability Statement for the period from July 1, 2023 to June 30, 2024 and issued our report thereon dated October 9, 2024. We conducted our audit in accordance with International Standards on Auditing (ISA). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Financial Statements is free of material misstatement. The management of MOE is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and in accordance with the terms and agreements; and transactions are recorded properly to permit the preparation of Financial Statements in conformity with basis of accounting described in Note 2 to the Fjnancia Statements. Because of the inherent limitations in any internal control structure, errors or irregularities may, nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. In planning and performing our audit of the Pinancial Statements described in the first paragraph, we obtained an understanding of the internal control structure. With respect to the Internal control structure, we obtained an understanding of the design of relevant policies and procedures and whether they have been placed in operation, and we assessed control risk in order to determine our auditing procedures for the purpose of expressing our opinion on the Financia Statement. I I I Our consideration of the internal control structure would not necessarily disclose all matters in the internal control structure that might he material weaknesses under the international Auditing Standards. A material weakness s a reportable condition in which the design or operation of one or more of the specific internal control structure elements does not reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the Financia Statement may occur and not be detected within a time y period by employees in the normal course of performing their assigned,functions. We noted no matters involving the internal control structure and its operation that we consider material weaknesses as defined above This report is intended for the information of the Greater Cairo Air Pollution Management and Climate Change Project s management and International Bank for Reconstruction and Development and others within the organization However, this report is a matter of public record and its distribution is not lim ted. Hossam El Besher, CPA El Besher, Khalil, Mourad & partners, Kudos Egypt Cairo, October 9, 2024 g I I g I I I I I I I I I I I Kudos Egypt El Besher, Khalil, Mourad & Partners Chartarad jccoamt ants and consultants To: Ai Abo Senna National Director of the Greater Cairo Air Pollution Management and Climate Change Project Cairo, Egypt We have audited the accompanying financial statements of the Ministry of Environment (MOE) under Greater Cairo Air Pollution Management and Climate Change Project, under Loan Agreement No. 9166-EG between the Government of Egypt and the International Bank of Re-construction and Development (BRD) represented in Fund Accountability Statement for the period from July 1, 2023 to June 30, 2024 and issued our report thereon dated October 9, 2024. We conducted our audit in accordance with International Standards on Auditing (ISA) as well as the relevant guidelines of The International Bank of Re-construction and Development (IBRD). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Financial Statements is free of material misstatement resulting from violations of agreement terms and laws and regulations that have a direct and material effect on the determination of the Financial Statements amounts. Complance with agreement terms and laws and regulations applicable to the project is the responsibility of MOE management. As part of obtaining reasonable assurance about whether the financial statement is free of material misstatement, we performed tests of MOE compliance with certain provisions of loan terms and laws and regulations. However, our objective was not to provide an opinion on overall compliance with such provisions. Accordingly, we do not express such an opinion. The results of our tests of compliance disclosed no material incidents of non-compliance with loan agreement document items and conditions as well as applicable Egyptian laws and regulations. I This report is intended for the information of the Greater Cairo Air Pollution Management and Climate Change Project's management and International Bank for Reconstruction and Development and others within the organization. However, this report is a matter of public record and its distribution is not limited. I I Hossam El Besher, CPA E Besher, Khalil, Mourad & partners, Kudos Egypt Cairo October 9, 2024