Dire Dawa Polytechnic College East Africa Skills for Transformation and Regional Integration Project (EASTRIP)(163399) Auditor's Report and Accounts For The Year Ended 07 July 2024 ASGB Partners Auditors LLP Certified Audit Firm Tel. +251 (0) 114 16 23 71 Mobile +251(0) 930 01 35 63/4 Fax +251 (0) 114 66 4134 P.O.Box.20038 Addis Ababa, Ethiopia email: info@asgbpartners.com DIRE DAWA POLYTECHNIC COLLEGE EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT IDA LOAN NO. 6335 ET AND GRANT NO. D395 - ET TABLE OF CONTENT FOR THE YEAR ENDED 7 JULY 2024 Content E Independent Auditor's Report 1-2 Statement of Financial Position 3 Statement of Source and Uses of Funds 4 Statement of Designated Account 5 Statement of Net Asset 6 Notes to the Financial Statements 7-11 ASGB Partners Auditors LLP Certified Audit Firm TeL Office -251 (0)114 16 23 71 Mobile +251(0) 930 01 35 63/64 E-mail: infoLiasghpartners.com Fax +251 (0)114 66 41 34 P. & Box 20038 Addis Ababa. Ethiopia INDEPENDENT AUDITOR'S REPORT ON THE ACCOUNTS OF DIRE DAWA POLYTECHNIC COLLEGE- EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT Opinion We have audited the accompanying financial statements of the Dire Dawa Polytechnic College, set out on pages 3 to 11, which comprise the statement of financial position as at 07 July 2024, statement of sources and uses of funds, and statement of designated account for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the financial statements present fairly, in all material respects, the financial position of the East Africa Skills for Transformation and Regional Integration Project implemented by the Dire Dawa Polytechnic College at 07 July 2024 and of the Statement of Sources and Uses of Funds for the year then ended on the basis of accounting described in Note 2 of the financial statements and the financial management policy of the Ministry of Labour and Skills adopted for the project. In addition, the Project was, in all material respects, in compliance with the Financing Agreements and Contracts. With respect to the statements of Sources and use of funds submitted during the period listed on page 4, in our opinion : a) The Statements, together with the procedures and internal controls involved in the preparation can be relied upon to support the related withdrawals; b) The project accomplishment on the basis of budget to actual expenditure is only 22.69 %. showing poor performance. c) The proceeds of the Designated account have been used exclusively for eligible expenditures and Provisions and Covenants of the Financing Agreement and Separate Agreement have been complied. Special opinion We have performed audit procedures to check the Eligible Expenditure Program (EEP) submitted to the World Bank for the achievement of Disbursement Linked Indicators/ Result (DLI/DLR) and the funds released are in line with the achievement of these DLRs for the period from 08 July 2023 to 07 July 2024. In our opinion, the funds are disbursed to the project in line with the achievement of each DLR that is allocated for each fund disbursement. Bosis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Furthermore, we have audited the Project's compliance with the provisions and Covenants of the International Development Association (Credit No. 6335.ET and Grant No. D395-ET) Financing Agreement. 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 Organisation in accordance with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (IESBA Code), together with other ethical requirements that are relevant to our audit of the financial statements in Ethiopia, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation of the financial statements that give a true and fair view in accordance with the Modified Cash Basis of Accounting described in Note 2 of the financial statements and with the requirements of applicable national laws, and for such internal controls as management determine are 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 assessing the Organisation's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Organisation or to cease operations or have no realistic alternative but to do so. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements 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, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. In addition, we are required to audit all EEPs submitted to the World Bank in support of requests for achiev ment of isbursement Linked Indicators (DLIs) and examine expenditures for eligibility based on cr ra defin d in the terms of the financing agreement in the Project Appraisal Document. ASG Partners uditors LLP Certified Audit irm Addis Ababa, E hiopia 08 January 2025 2 DIRE DAWA POLYTECHNIC COLLEGE EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT IDA LOAN NO. 6335 ET AND GRANT NO. D395 - ET STATEMENT OF FINANCIAL POSITION AS OF 07 JULY 2024 CURRENCY: ETHIOPIAN BIRR Notes 2024 2023 ASSETS Cash at bank and in hand 3 113,692,172 167,127,502 Account recievable 4 107,335,891 121,600,275 221,028,064 288,727,777 CURRENT LIABILITIES Account payable 5 7,246,955 2,935,685 NET ASSETS 213,781,108 285,792,092 REPRESENTED BY Fund Balance 6 213,781,108 285,792,092 3 DIRE DAWA POLYTECHNIC COLLEGE EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT IDA LOAN NO. 6335 ET AND GRANT NO. D395 - ET STATEMENT OF SOURCES AND USES OF FUNDS FOR THE YEAR ENDED 07 JULY 2024 CURRENCY: ETHIOPIAN BIRR SOURCES Note 2024 2023 MAlN IDA Credit 7 60,150,821 167,318,553 OTHER 8 (1,290,103) 4,313,299 TOTAL SOURCES 58,860,718 171,631,853 USES 9 1.1: Strengthening governance and management of the College 19,412,794 12,058,110 1.2: Institutionalizing Industry Links 818,321 117,600 1.3: Developing market relevant and competency based training programs 1,039,787 2,623,455 1.4: Training ofthe Institute managers and teachers/trainers 921,786 3,591,124 1.5: Prov[sion of key training facilities and equipment 108,679,014 56,890,405 1.6: Outreaching and support for non-project national TVET - 692,387 TOTAL USES 130,871,702 75,973,080 EXCESS OF( USES)/ SOURCE (72,010,983) 95,658,772 4 DIRE DAWA POLYTECHNIC COLLEGE EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT IDA LOAN NO. 6335 ET AND GRANT NO. D395 - ET STATEMENT OF DESIGNATED ACCOUNT FOR THE YEAR ENDED 7 JULY 2024 IDA Credit Account No. 0102401300005 Depository Bank National Bank of Ethiopia Related Credit and Grant Credit No. 6335-ET and Grant No. D395-ET Address Addis Ababa, Ethiopia Currency USD Date Exc. Rate USD Birr Balance brought forward 08-Jul-23 55.8533 2,829,726 158,049,586 Add:- Transferred from World Bank - Credit 25-Jun-24 57.2915 1,049,908 60,150,821 3,879,634 218,200,407 Less Transferred to Birr account 1,647,521 116,291,421 Add :- Gain/(Loss) on foreign exchange difference - (1,290,103) Balance carried forward 2,232,113 100,618,883 5 DIRE DAWA POLYTECHNIC COLLEGE EAST AFRICA SKILL FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT IDA LOAN NO. 6335 ET AND GRANT NO. D395 - ET STATEMENT OF NET ASSET FOR THE YEAR ENDED 07 JULY 2024 CURRENCY: ETHIOPIAN BIRR Balance at 08 July 2022 190,133,320 Surplus for the year ended 07 July 2023 95,658,772 Balance at 08 July 2023 285,792,092 Deficit for the current Year (72,010,983) Balance at 07 July 2024 213,781,108 6 DIRE DAWA POLYTECHNIC COLLEGE EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION PROJECT IDA LOAN NO. 6335 ET AND GRANT NO. D395 - ET NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 07 JULY 2024 CURRENCY: ETHIOPIAN BIRR 1. BACKGROUND The East Africa Skills for Transformation and Regional Integration ( US$293 million, out of which 150 million is for Ethiopia) was approved by the World Bank- IDA financing in October 2018 to address critical skills shortage in growing sectors including agriculture, energy, ICT, manufacturing, and transport in Ethiopia, Kenya, and Tanzania and to promote regional integration. The East Africa Skills for Transformation and Regional Integration Project (EASTRIP) brings a regional approach to developing the specialized TVET skills by creating a small cluster of regional TVET Centers of Excellence. Each center will specialize in specific sectors and occupations with niche programs in highly specialized TVET diploma and degree programs, as well as industry recognized short-term courses. Mobility of students, graduates, and faculty will facilitate a healthy exchange of skilled labor within the region so that each country does not have to produce all the skills at once. The sharing of standards, cUrriculum, and training facilities will help reduce costs for each center. At the same time, demonstrations will help inform and guide the broader array of national TVET reforms in these countries. The regional TVET Centers of Excellence can serve the labor needs of major regional infrastructure projects. The Project has three main components: Component (a) Strengthening selected Regional Flagship TVET Institutes for high- quality skills development in priority sectors, Component (b) Creating national TVET enabling environments, and Component (c) Enhancing regional collaboration in TVET and project coordination. The Project runs from October 2018 up to December 2024, and one of the selected vocational school selected for this Project in Ethiopia is Dire Dawa Polytechnic College (DDPTC) . Per letter no. I.F.R.E 4/2/ 677 written by the Federal Democratic Republic of Ethiopia, Ministry of Finance to the World Bank, the project has been extended for 24 months until 31 December 2026. Dire Dawa Polytechnic College (DDPTC) established in 1986 in cooperation with the Former Soviet Union (FSU) and the Ethiopian Government as Dire Dawa Technical School in the City Administration of Dire Dawa. Subsequently, by the year 2005, the college was re-established as higher TVET Institution by proclamation with main objectives of producing competent middle level skilled workforce to the local and national industries; create employment opportunities for the citizens; capacitating micro, small and medium level enterprises; and improve their entrepreneurships, productivity and competitiveness. Currently, the college is providing formal, non-formal and informal TVET short and long-term programs in various occupations under the 12 departments. 2. ACCOUNTING POLICIES EASTRP follows the government's accounting policy of modified cash basis of accounting system with double entry recording taking into account the decentralized accounting structure of the project. In preparation and presentation of the financial statement, the project uses principal policies such as 7 DIRE DAWA POLYTECHNIC COLLEGE EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION Project IDA LOAN NO. 6335 ET AND GRANT NO. D395 - ET NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 07 JULY 2024 CURRENCY: ETHIOPIAN BIRR 2.1 INCOME AND EXPENDITURE RECOGNITION The income is recognized on the basis of actual cash receipt where as expenditure recognition on modified basis. 2.2. FIXED ASSETS Fixed asset acquired for the project are shown as an expenditure in the year it occurs and reported on memorandum records. 2.3 FOREIGN CURRENCY TRANSACTION Transaction in foreign currencies are translated using the exchange rate prevailing on the date of the transaction. 3 CASH AT BANK AND IN HAND 2024 2023 National Bank of Ethiopia DA, Acct. No. 0102401300005 100,608,699 158,049,585 Commercial Bank of Ethiopia Acct. No. 1000325279878 13,083,414 9,070,795 Cash in hand 59 7,122 113,692,172 167,127,502 2024 2023 4 ACCOUNT RECEIVABLES Project advances 106,864,317 121,386,701 Receivable from employee 371,574 213,574 Other receivable 100,000 107,335,891 121,600,275 5. ACCOUNT PAYABLE 2024 2023 Retention 7,239,140 2,490,627 VAT payable 5,644 68,986 Withholding tax 2,172 23,945 Employment income tax - 166,642 Other payable 93,127 Pension contribution - 92,358 7,246,955 2,935,685 6. FUND BALANCE 2024 2023 Balance brought forward 285,792,092 190,133,320 Add : Excess of source over uses (72,010,983) 95,658,772 Balance carried forward 213,781,108 285,792,092 7. SOURCE Date USD Exc. Rate 2024 2023 IDA Credit 25-Jun-24 1,049,908 57.2915 60,150,821 167,318,553 1,049,908 60,150,821 167,318,553 8. OTHER INCOME 2024 2023 Gain/(Loss) on foreign currency exchange (1,300,287) 4,313,299 Other income 10,184 - (1,290,103) 4,313,299 8 DIRE DAWA POLYTECHNIC COLLEGE EAST AFRICA SKILLS FOR TRANSFORMATION AND REGIONAL INTEGRATION Project IDA LOAN NO. 6335 ET AND GRANT NO. D395 - ET NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 07 JULY 2024 CURRENCY: ETHIOPIAN BIRR 9. USES OF FUNDS BY PROJECT COMPONENTS AND CATEGORY Planned/ Actual Budget Utilization Budget utilization variance %age 1.1: Strengthening governance and management of the College 61,606,917 19,412,794 42,194,123 31.51% 1.2: Institutionalizing Industry Links 440,000 818,321 (378,321) 186% 1.3: Developing market relevant and competency based training programs 9,020,000 1,039,787 7,980,213 12% 1.4: Training of the Institute managers and teachers/trainers 17,034,600 921,786 16,112,814 5.41% 1.5: Provision of key training facilities and equipment 487,903,900 108,679,014 379,224,886 22.27% 1.6: Outreaching and support non- project national TVET 825,000 - 825,000 0.00% 576,830,417 130,871,702 445,958,715 22.69% 9 о о _� ©._� т��и ь.а ги с т т т h' � ц а ш и о г� v .� в rv " й й '� о гч G� .. ..к ..�... т б С' с-1 tT 40 и П'1 С: �. м�.... г N '? �д v и v г~ м о д �., `т е rч ,-_ ��� о т n. ,� © ? ,-ь гч м О а � т м 2 � � W =� ьл °r.i и г� .� ш v } ° о rv т rn оо ц са м �s � й й м.л � сп � °Е о У са т и оа � rv и ш пi � rn а� с7 и м r г-, � 4° а ш ш и � f+' �z } д И � N з � `В Э � ,-�`, °о с-оэ а° °о °а .�`-� Е С сп о о а rn о а з � ц б/ о°с � м о N°м Е ш ы о о en аа оо �j � н Сгi h 1� �А т w � � n ш с и т�� и т v ц� о и а,� ш N ai � °о л ",тй �.� н и: гч` rг й ai °� �° гт-г...."� �:�...iл rv �w омi О а �� п� r� гл т ц 7 ш ^ Т Са м-�. с75� � N fl0 © С О м ^� н н т� n R м � v а1 о сп ш w о й ; "� 4 °л' г' о °м а н Е о го _ .... _. .. �� ..� н О О О О�, ��,.... 4 м У о а, о о �г os о а ~€ �, н о й v rп й о � '°� ц.. ш a�i ��-+ � rn � а� ., " � й оа о r r� � и .� w и с и Н ц t� Q О О С] о h '�Ьf �. с° О С7 О О � Q � G� О о�.Р Q� С3 V � а ,-к' с,Э й са гп й д � .-, v т т о пь н г � vл а� л v oi оо с€f р = сл я� о w ш � � С с и а � � ш С „' С r а а ш г � >. � € С ш а и ;� ... сг д � �' Ё ш � � гп г с v с ш а � � ro � L в й а г�v гсо °' � � � �, ° б Q У � � а а Z W � � ,а_ � � :� 0. м ш С, .- а � ор 4 � г � � и � � сл � С `� � б � , С L ��, � "4'�1 С � ... ¢ U � ° �, '° п� � а �� Z Q �� �гw г .� v .. € т °-� ,/�. 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