GOVERNMENT OF THE KINGDOM OF CAMBODIA MINISTRY OF PUBLIC WORKS AND TRANSPORT MINISTRY OF INDUSTRY, SCIENCE, TECHNOLOGY & INNOVATION MINISTRY OF ECONOMY AND FINANCE Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Financial Statements for year ended 31 December 2023 and Report of the Independent Auditors Project Information Project title Water Supply and Sanitation Improvement Project Project ID P163876 Project period 1 August 2019 to 31 December 2025 Project status Active Implementing agency Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation The General Department of Resettlement Project management Ministry of Public Works and Transport: H.E. Kem Borey, Project Coordinator H.E. Samrangdy Namo, Deputy Project Coordinator H.E. Dr. Chao Sopheak Phibal, Component Director Mr. Lun Heng, Component Manager Ministry of Industry, Science, Technology & Innovation: H.E. Houl Bonnarith, Project Director H.E. Tan Sokchea, Project Manager Ministry of Economy and Finance - General Department of Resettlement H.E. Dr. Sdoeung Sokhom, Chairman of Inter-Ministerial Resettlement Committee Source of funds International Development Association IDA Credit No. 6386-KH Government of the Kingdom of Cambodia Project cost IDA: SDR39,300,000 (approximate to US$55,000,000) GKC: US$2,500,000 Total: approximate to US$57,500,000 Reporting period For the period from 1 January to 31 December Principal banker National Bank of Cambodia Auditors KPMG Cambodia Ltd Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Abbreviations CISAs Cambodian International Standards on Auditing CPSAS Cambodian Public Sector Accounting Standards EA Executive Agency GDR General Department of Resettlement GKC Government of Kingdom of Cambodia lAs Implementing Agencies IDA International Development Association FM Financial Management MEF Ministry of Economy and Finance MPWT Ministry of Public Works and Transport MISTI Ministry of Industry, Science, Technology & Innovation Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Contents Pages 1. Statement by the Project management 1 2. Report of the Independent Auditors 2-4 3. Statement of cash receipts and payments 5-6 4. Statement of payments by components 7 5. Statement of designated account 8 6. Notes to the financial statements 9-32 Annex 1: Statement of cash receipts, payments, and comparison of budget and actual payments Statement by the Project management We, the undersigned, do hereby state that in our opinion, the accompanying financial statements, which comprise the statement of cash receipts and payments, statement of payments by components and statement of designated account for the year ended 31 December 2023 and notes as set out on pages 5 to 32 of the Water Supply and Sanitation Improvement Project ("the Project"), financed under the Financing Agreement Number 6386-KH funded through the Intemational Development Association ("IDA") and the Govemment of the Kingdom of Cambodia represented by the Ministry of Economy and Finance, implemented by the Ministry of Public Works and Transport ("MPWT") and Ministry of Industry, Science, Technology & Innovation ("MISTI") (collectively referred to as "Implementing Agencies" or "IAs") and the General Department of Resettlement ("GDR") of the Ministry of Economy and Finance ("MEF"), are present fairly, in all material respects, in accordance with the Cash Basis of Accounting of Cambodian Public Sector Accounting Standards ("CPSAS"). Signed on behalf of the Project management, H.E. Dr. Chao Sopheak Phibal }" H.E. Houl Bonnarith Component Director Project Director Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation H.E. Dr. Sdoeung Sokhom( Secretary of State Chairman of Inter-Ministerial Resettlement Committee Ministry of Economy and Finance Phnom Penh, Kingdom of Cambodia Date: 0 In Q2 4 1 KPMG Cambodia Ltd GIA Tower, Sopheak Mongkul Street, Phum 14 Sangkat Tonle Bassac, Khan Chamkar Mon Phnom Penh, Cambodia +855 (17) 666 537 / +855 (81) 533 999 | kpmg.com.kh Report of the Independent Auditors To the Ministry of Economy and Finance Government of the Kingdom of Cambodia Opinion We have audited the financial statements of the Water Supply and Sanitation Improvement Project ("the Project"), financed under the Financing Agreement Number 6386-KH funded through the Intemational Development Association ("IDA") and the Government of the Kingdom of Cambodia represented by the Ministry of Economy and Finance, implemented by the Ministry of Public Works and Transport ("MPVV"') and Ministry of Industry, Science, Technology & Innovation ("MISTI") (collectively referred to as "Implementing Agencies" or "lAs") and the General Department of Resettlement ("GDR") of Ministry of Economy and Finance ("MEF") which comprise the statement of cash receipts and payments, statement of payments by components and statement of designated accounts for the year ended 31 December 2023 and notes, comprising significant accounting policies and other explanatory information as set out on pages 5 to 32 (hereafter referred to as the "financial statements"). In our opinion, the accompanying financial statements present fairly, in all material respects, the cash balance of the Project as at 31 December 2023 and its cash receipts and payments for the year then ended in accordance with the Cash Basis of Accounting of Cambodian Public Sector Accounting Standards ("CPSAS"). Basis for Opinion We conducted our audit in accordance with Cambodian International Standards on Auditing ("CISAs"). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Project in accordance with the ethical requirements that are relevant to our audit of the financial statements in Cambodia, 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. Emphasis of Matter- comparative information We draw attention to Note 15 to the financial statements which indicates that the comparative information presented as at and for the year ended 31 December 2022 has been restated. Our opinion is not modified in respect of this matter. KPMG Cambodia Ltd. a Cambodiain single rnember private limted compary and a membecr frm of the KPMG global organization of indepencdent member firms affEated wth KPMG inienalionai Limited 2 a private EnglSh conipany imdted by guarantee All rights reseved. Other Matter relating to comparative information The financial statements of the Project as at and for the year ended 31 December 2022, excluding the adjustments described in Note 15 to the financial statements were audited by another auditor who expressed an unmodified opinion on those financial statements on 23 June 2023. As part of our audit of the financial statements as at and for the year ended 31 December 2023, we audited the adjustments described in Note 15 that were applied to restate the comparative information presented as at and for the year ended 31 December 2022 and the cumulative period from 1 August 2019 to 31 December 2022 (not presented herein). We were not engaged to audit, review, or apply any procedures to the financial statements for the year ended 31 December 2022 or cumulative period from 1 August 2019 to 31 December 2022 (not presented herein), other than with respect to the adjustments described in Note 15 to the financial statements. Accordingly, we do not express an opinion or any other form of assurance on those respective financial statements taken as a whole. However, in our opinion, the adjustments described in Note 15 are appropriate and have been properly applied. Other information Management is responsible for the other information. The other information comprises the information included in the Annex I on page i, but does not include the financial statements and our auditors' report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with CPSAS, 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 assessing the Implementing Agency'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 cease operations or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Project's financial reporting process. Auditors' Responsibility for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditors' 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 CISAs 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 this financial statements. 3 As part of an audit in accordance with CISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: * Identify and assess the risks of material misstatement of the financial statements, 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 detecting 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. * 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 the purpose of expressing an opinion on the effectiveness of the Project's internal control. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. * Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Implementing Agency's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Implementing Agency to cease to continue as a going concern. * Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 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. For KPMG CambQdLa-Ltd- Guek Teav Partner Phnom Penh, Kingdom of Cambodia 28 June 2024 4 Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Statement of cash receipts and payments for the year ended 31 December 2023 Cumulative period from Year ended Year ended 1 August 2019 to 31 December2023 31 December2022 31 December2023 IDA Credit Note No.6386-KH GKC Total US$ US$ US$ US$ US$ (As restated) (As restated) Receipts International Development Association 5 3,068,345 - 3,068,345 1,876,596 9,798,005 Government of the Kingdom of Cambodia 5- 1,128,854 1,128,854 2,354,584 3,743,533 3,068,345 1,128,854 4,197,199 4,231,180 13,541,538 Payments by category and financier Goods 6 - - - 25,181 630,105 Works 7 2,521,237 - 2,521,237 1,150,776 4,952,717 Consulting services 8 831,142 - 831,142 648,024 1,898,410 Training costs 9 123,617 - 123,617 75,970 247,484 Operating costs 10 175,676 110,523 286,199 325,979 908,101 Land acquisition and resettlements 11 - 1,164,615 1,164,615 1,720,852 2,885,477 3,651,672 1,275,138 4,926,810 3,946,782 11,522,294 (Decrease)flncrease in Cash (583,327) (146,284) (729,611) 284,398 2,019,244 5 Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Statement of cash receipts and payments (continued) for the year ended 31 December 2023 Cumulative period from Year ended Yearended 1 August 2019 to 31 December2023 31 December2022 31 December2023 IDA Credit Note No.6386-KH GKC Total US$ US$ US$ US$ US$ (As restated) (As restated) Cash at beginning of the year 4 2,183,180 565,675 2,748,855 2,464,457 - (Decrease)/Increase in Cash (583,327) (146,284) (729,611) 284,398 2,019,244 Cash at end of the year 4 1,599,853 419,391 2,019,244 2,748,855 2,019,244 The accompanying notes form an integral part of these financial statements. 6 Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Statement of payments by components for the year ended 31 December 2023 Cumulative period from Yearended Yearended 1 August 2019 to 31 December2023 31 December2022 31 December2023 IDA Credit Note No.6386-KH GKC Total US$ US$ US$ US$ US$ (As restated) (As restated) Payments by components 12 Component 1: Provincial water supply 583,372 64,795 648,167 619,367 3,208,886 Component 2: Provincial sanitation 3,068,300 1,210,343 4,278,643 3,327,415 8,313,408 improvement 3,651,672 1,275,138 4,926,810 3,946,782 11,522,294 The accompanying notes form an integral part of these financial statements. 7 Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Statement of designated account for the year ended 31 December 2023 Cumulative period from Year ended Year ended 1 August 2019 to 31 December2023 31 December2022 31 December 2023 Note MPWT MISTI Total Total Total US$ US$ US$ US$ US$ (As restated) (As restated) Beginning cash balance 841,593 1,341,587 2,183,180 2,350,979 - Receipts Initial designated account by IDA 5 - - - - 2,500,000 Amount disbursement by IDA 5 737,926 452,593 1,190,519 1,037,511 4,581,094 1,579,519 1,794,180 3,373,699 3,388,490 7,081,094 Payments by categories Goods 6 - - - 25,181 630,105 Works 7 643,411 - 643,411 311,691 2,235,806 Consulting services 8 388,149 442,993 831,142 639,024 1,889,410 Training costs 9 69,939 53,678 123,617 75,970 247,484 Operating costs 10 88,975 86,701 175,676 153,444 478,436 1,190,474 583,372 1,773,846 1,205,310 5,481,241 Cash at end of the year 389,045 1,210,808 1,599,853 2,183,180 1,599,853 Represented by: Cash on hand 4 626 238 864 335 864 Cash at banks 4 388,419 1,210,570 1,598,989 2,182,845 1,598,989 389,045 1,210,808 1,599,853 2,183,180 1,599,853 accompanying notes form an integral part of these financial statements. 8 Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Notes to the financial statements for the year ended 31 December 2023 These notes form an integral part, of and should be read in conjunction with the accompanying financial statements. 1. Background and activities The Water Supply and Sanitation Improvement Project ("the Project") was established under the International Development Association ("IDA") Credit Agreement Number 6386-KH signed on 10 June 2019 between the Government of the Kingdom of Cambodia ("GKC") represented by the Ministry of Economy and Finance ("MEF') and the Intemational Development Association ("IDA") of World Bank. The agreement became effective for implementation from 1 August 2019. The amount of funding under the financing agreement to be provided to the Project is SDR39,300,000 (approximate to US$55,000,000) and GKC will contribute an amount of US$2,500,000. GKC has committed to contribute the involuntary resettlement fund. The budget of resettlement activity is only raised when there is an actual payment required. The Project started with the objective to increase access to piped water supply and improved sanitation services and strengthen the operational performance of service providers in selected towns and/or communes. The Project is being implemented by the following ministries: 1. Ministry of Public Works and Transport ("MPVT'); 2. Ministry of Industry, Science, Technology & Innovation ("MISTI"); and 3. The General Department of Resettlement ("GDR"). The Project shall comprise of 2 components/parts as following: Component/Part 1: Provincial water supply (a) Water supply infrastructure development and household connections Carrying out civil works for (i) expansion of the existing water distribution networks in Saen Monourom Town; (ii) construction of a new water production and distribution network in Saen Monourom Town; (iii) construction of a new water production and distribution network in Stoung District; and (iv) construction of necessary elements of small-scale piped water supply systems in selected towns and/or communes. 9 Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Notes to the financial statements (continued) for the year ended 31 December 2023 1. Background and activities (continued) Component/Part 1: Provincial water supply (continued) (b) Project management and institutional strengthening (i) Provision of technical and analytical support for: the development of feasibility studies and follow-on design and documentation for the expansion of water supply systems in Saen Monourom Town and Stoung District, as well as other selected small-scale piped water systems; development of screening and option assessment and, if feasible, development of an output based program for water connection; supervision of water supply works; review the operational status of waterworks in Saen Monourom Town and Stoung District; development of policies, regulation and investment roadmaps for urban water supply; the carrying out of communication campaigns on water safety and other hygiene behaviors; training and capacity building of MISTI and selected water service providers; adaptation and implementation of a social accountability framework for selected water supply services; and (ii) Provision of project management support for part 1 of the project, including day-to-day Project implementation and coordination, technical design, construction supervision and management, and independent monitoring of environmental and social safeguards. Component/Part 2: Provincial sanitation improvement (a) Sanitation infrastructure development and household connections carrying out civil works in Siem Reap City for the: (i) construction of secondary and tertiary sewer network and connection sewers in selected areas of the city; (ii) rehabilitation of three existing wastewater pumping stations; and (iii) augmentation and upgrading of Siem Reap's wastewater treatment plant. (b) Project management and institutional strengthening (i) Provision of technical and analytical support for the preparation and design of secondary and tertiary sewers under Part 2(a) of the Project; light detection and ranging ("LIDAR") mapping for future sewer network design in Siem Reap City; construction supervision of sanitation works; implementation of a sewer connection program, including communication campaigns for sewer connections in Siem Reap City; development of policies, regulations and investment roadmaps for urban sanitation; training and capacity building of MPVVT, Siem Reap Sewerage and Wastewater Treatment Plant Unit, and other selected sanitation service providers; adaptation and implementation of a social accountability framework for sanitation services in Siem Reap City; and 10 Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Notes to the financial statements (continued) for the year ended 31 December 2023 1. Background and activities (continued) Component/Part 2: Provincial sanitation improvement (continued) (b) Project management and institutional strengthening (continued) (ii) Provision of Project management support for Parts 2 of the Project, including day-to-day Project implementation and coordination, technical design, construction supervision and management, and independent monitoring of environmental and social safeguards; and independent financial audits for the Project. The table below sets forth the components and categories of items of payment to be financed out of the proceeds of the IDA credit and the allocation of amount of the credit each such component and category: By category: By category Amount allocated Approximate to No. Item in SDR US$ 1 Goods, Works, Non-consulting services, and Consulting services, Training and Operating Costs for Part 1 of the Project 21,800,000 30,500,000 2 Goods, Works, Non-consulting services, and Consulting services, Training and Operating Costs for Part 2 of the Project 17,500,000 24,500,000 Total 39,300,000 55,000,000 By components: By components Amount allocated Approximate to Implementing No. Item in SDR US$ Agency 1 Provincial Water Supply 21,800,000 30,500,000 MISTI 2 Provincial Sanitation Improvement 17,500,000 24,500,000 MPVVT Total 39,300,000 55,000,000 11 Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Notes to the financial statements (continued) for the year ended 31 December 2023 1. Background and activities (continued) The GKC will contribute US$2.5 million and allocations and withdrawals of the contribution are as follows: By components Amount allocated No. Item in US$ 1 Provincial Water Supply 1,500,000 2 Provincial Sanitation Improvement 1,000,000 Total 2,500,000 2. Basis of accounting (a) Statement of compliance The financial statements have been prepared in accordance with the Cash Basis of Accounting of Cambodian Public Sector Accounting Standards ("CPSAS"). (b) Basis of measurement The financial statements expressed in United States Dollars ("US$") have been prepared under the historical cost convention. 3. Significant accounting policies (a) Fund receipts and payments Fund receipts are defined as the fund received by the Project from the IDA and GKC. This is recognised when received and recorded as gross amounts of bank charges. Payments represents all costs paid to support the objective of the Project and are recognised when paid. 12 Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Notes to the financial statements (continued) for the year ended 31 December 2023 3. Significant accounting policies (continued) (b) Statement of designated account The statement of designated account is prepared in accordance with the Credit Agreement and it purely used to receive and disbursed for payment financed by the IDA credit proceeds. (c) Assetsllnventory The cost of assets/inventory is charged to the statement of cash receipts and payments, statements of payments by components and statement of designated accounts upon acquisition. For control and management purposes, a memorandum account for assets/inventory is maintained by way of assets listing/register. (d) Cash Cash comprise cash on hand, demand deposits and cash equivalents. The Project maintains a designated account with the National Bank of Cambodia in a US$ denominated account. Cash on hand is also maintained in US$. (e) Foreign currency transactions The Project transacts its operations and maintains its accounting records primarily in United States Dollars ("US$"). Transactions in currencies other than US$ are converted into US$ at the rates of exchange prevailing on the transaction dates published by the National Bank of Cambodia. Cash and bank balances in currencies other than US$ are translated into US$ at the open market rates of exchange at the year-end date. All foreign exchange differences are recognised in the statement of cash receipts and payments and the statement of designated account. (f) Commitments Commitments are obligation for contracted services provided. Commitments are not accounted for in the statement of cash receipts and payments. 13 Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Notes to the financial statements (continued) for the year ended 31 December 2023 4. Cash As at As at 31 December 2023 31 December 2022 MPWT MISTI GDR Total US$ US$ US$ US$ US$ (As restated) IDA Cash on hand 626 238 864 335 Designated account (*) 388,419 1,210,570 - 1,598,989 2,182,845 389,045 1,210,808 - 1,599,853 2,183,180 GKC Designated account (*) 57,970 23,178 338,243 419,391 565,675 447,015 1,233,986 338,243 2,019,244 2,748,855 (*) These represent bank balances maintained in separate bank account wth the National Bank of Cambodia, bears no interest and is earmarked specifically for the use of the Project. 14 Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Notes to the financial statements (continued) for the year ended 31 December 2023 5. Receipt Cumulative period from Year ended Year ended 1 August 2019 to 31 December2023 31 December 2022 31 December2023 MPVVT MISTI GDR Total US$ US$ US$ US$ US$ US$ (As restated) (As restated) IDA Initial designated account - - - 2,500,000 Direct payments (*) 1,877,826 - 1,877,826 839,085 2,716,911 Designated account (r) 737,926 452,593 - 1,190,519 1,037,511 4,581,094 2,615,752 452,593 - 3,068,345 1,876,596 9,798,005 GKC Designated account (*) 81,795 60,559 1,486,500 1,628,854 1,854,584 3,743,533 Fund received from other Projects () - - 600,000 600,000 1,150,000 1,750,000 Fund transferred to other Projects (") - - (1,100,000) (1,100,000) (650,000) (1,750,000) 81,795 60,559 986,500 1,128,854 2,354,584 3,743,533 2,697,547 513,152 986,500 4,197,199 4,231,180 13,541,538 (*) Direct payments represent payment made by IDA directly to the contractors and suppliers on behalf of the Project. (r) This represents designated account paid into the Project's account held by MPVT and MISTI financed under IDA Credit No. 6386-KH. (*) This represents designated account paid into the Government counterpart Fund's account held by MPVV, MISTI and GDR forthe Project atthe National Bank of Cambodia. (") These represents fund borrowed from/(retum back to) other Projects that also implemented by the General Department of Resettlement ("GDR") of Ministry of Economy and Finance ("MEF"). 15 Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Notes to the financial statements (continued) for the year ended 31 December 2023 6. Goods Cumulative period from Year ended Year ended 1 August2019 to 31 December2023 31 December2022 31 December2023 MPVVE MISTI GDR Total US$ US$ US$ US$ US$ US$ IDA Designed account Equipment - - - - 24,796 383,096 Fumrture - - - - - 30,355 Vehicles - - - - - 202,960 Software - - - - 385 13,694 - 25,181 630,105 16 Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Notes to the financial statements (continued) for the year ended 31 December 2023 7. Works Cumulative period from Year ended Year ended 1 August 2019 to 31 December 2023 31 December2022 31 December2023 MPWT MISTI GDR Total US$ US$ US$ US$ US$ US$ IDA Direct payments: Waste water network civil work 1A 1,542,854 - 1,542,854 839,085 2,381,939 Rehabilitation of three pumping stations 334,972 - - 334,972 - 334,972 1,877,826 - - 1,877,826 839,085 2,716,911 Designed account Office renovation 2,045 40,904 Mondulkiri water supply phase 1 - - - - - 1,241,845 Waste water network civil work 1A 339,842 - - 339,842 - 339,842 Improvement waste water treat plant 132,377 - - 132,377 309,646 442,023 Rehabilitation of three pumping stations 171,192 - - 171,192 - 171,192 643,411 - - 643,411 311,691 2,235,806 2,521,237 - - 2,521,237 1,150,776 4,952,717 17 Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Notes to the financial statements (continued) for the year ended 31 December 2023 8. Consulting services Cumulative period from Year ended Year ended 1 August 2019 to 31 December2023 31 December 2022 31 December2023 MPWT MISTI GDR Total US$ US$ US$ US$ US$ US$ IDA Designed account Food and accommodation 3,826 3,958 - 7,784 5,541 14,798 International consultant fee 252,746 251,536 - 504,282 377,922 957,094 National consultant fee 131,577 135,150 - 266,727 229,034 810,256 Wthholding tax on international consultant - 28,245 - 28,245 4,721 37,370 Wthholding tax on national consultant - 24,104 - 24,104 21,806 69,892 388,149 442,993 - 831,142 639,024 1,889,410 GKC Designed account National consultant fee - - - 9,000 9,000 388,149 442,993 - 831,142 648,024 1,898,410 18 Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Notes to the financial statements (continued) for the year ended 31 December 2023 9. Training costs Cumulative period from Year ended Year ended 1 August 2019 to 31 December2023 31 December2022 31 December2023 MPWT MISTI GDR Total US$ US$ US$ US$ US$ US$ IDA Designed account: Food and accommodation 27,184 - - 27,184 11,954 51,253 Training and workshop - 53,678 - 53,678 45,722 119,742 Transportation cost 7,668 - - 7,668 3,701 16,543 Venue and material cost 35,087 - - 35,087 14,593 59,946 69,939 53,678 - 123,617 75,970 247,484 19 Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Notes to the financial statements (continued) for the year ended 31 December 2023 10. Operating costs Cumulative period from Year ended Year ended 1 August 2019 to 31 December2023 31 December2022 31 December2023 MPVVT MISTI GDR Total US$ US$ US$ US$ US$ US$ IDA Designed account: Public relation and advertising 3,222 2,006 5,228 9,269 27,232 Administration supplies 12,394 10,453 - 22,847 22,825 78,123 Rental expenses - - - - - 2,600 Staff cost 20,277 18,000 - 38,277 37,469 117,241 Tax expenses 782 1,551 - 2,333 3,116 10,357 Transportation and accommodation cost 12,498 13,340 - 25,838 24,056 64,938 Vehicle operation and maintenance 33,063 25,975 - 59,038 40,696 122,830 Others 6,739 15,376 - 22,115 16,013 55,115 88,975 86,701 - 175,676 153,444 478,436 GKC Designed account: Salary supplement staff 45,720 64,770 - 110,490 172,490 429,526 Others 8 25 - 33 45 139 45,728 64,795 - 110,523 172,535 429,665 134,703 151,496 - 286,199 325,979 908,101 20 Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Notes to the financial statements (continued) for the year ended 31 December 2023 11. Land acquisition and resettlements Cumulative period from Year ended Year ended 1 August 2019 to 31 December2023 31 December2022 31 December2023 MPVVT MISTI GDR Total US$ US$ US$ US$ US$ US$ (As restated) (As restated) GKC Designed account Land acquisition - 1,119,981 1,119,981 1,678,405 2,798,396 Working group - 33,266 33,266 32,217 65,483 Replacement cost study - - 11,368 11,368 10,230 21,598 - 1,164,615 1,164,615 1,720,852 2,885,477 21 Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Notes to the financial statements (continued) for the year ended 31 December 2023 12. Payments by components Cumulative period from Yearended Yearended 1 August 2019 to 31 December2023 31 December2022 31 December2023 MPWT MISTI GDR Total US$ US$ US$ US$ US$ US$ (As restated) (As restated) IDA Component 1: Provincial water supply - 583,372 - 583,372 492,597 2,960,685 Component 2: Provincial sanitation improvement 3,068,300 - - 3,068,300 1,551,798 5,237,467 3,068,300 583,372 - 3,651,672 2,044,395 8,198,152 GKC Component 1: Provincial water supply - 64,795 - 64,795 126,770 248,201 Component 2: Provincial sanitation improvement 45,728 - 1,164,615 1,210,343 1,775,617 3,075,941 45,728 64,795 1,164,615 1,275,138 1,902,387 3,324,142 3,114,028 648,167 1,164,615 4,926,810 3,946,782 11,522,294 22 Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Notes to the financial statements (continued) for the year ended 31 December 2023 13. Summary of withdrawal applications Amount claimed for replenishment Withdrawal Consulting Training Operating application nurnber Initial advances Goods Works services costs costs Resetlement Total us$ us$ us$ Us$ uss uS$ Us$ Us$ Year ended 31 December2023 IDA MPI Direct payment DP-015 10-Mar-23 - - 491,038 - - - - 491,038 DP-016 10-Mar-23 - - 334,972 - - - - 334,972 DP-018 14-Jun-23 - - 397,925 - - - - 397,925 DP-019 27-Jun-23 - - 653,891 - - - - 653,891 Sub-total (A) - - 1,877,826 - - - - 1,877,826 Replenishmrent MPFT-014 10-Feb-23 - - - 127,616 8,287 22,502 - 158,405 MPWT-017 30-May-23 - - - 67,100 21,918 21,207 - 110,225 MPWF-020 24-Aug-23 - - - 160,296 19,119 20,830 - 200,245 MPWT-021 20-Nov-23 - - 200,644 37,773 8,179 22,455 - 269,051 Subtotal (B) - - 200,644 392785 57,503 86,994 - 737,926 Sub-otal (C =A + B) - - 2,078,470 39Z785 57,503 86,994 - 2,615,752 VIST1 ReplenisIment MISIl-013 5-Apr23 - - - 101,497 27,121 29,795 - 158,413 MIS1-014 27-Jun-23 - - - 63,774 12,620 22,604 - 98,998 MIST1-015 5-Sep-23 - - - 161,825 10,942 22,415 - 195,182 Subtotal (D) - - - 327,096 50,683 74,814 - 452593 Total IDAfund (E= C + D) - - 2,078,470 719,881 108,186 161,808 - 3,068,345 23 Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Notes to the financial statements (continued) for the year ended 31 December 2023 13. Summary of withdrawal applications (continued) Amount claimed for replenishment Withdrawal application Date Initial Consulting Training Operating number advances Goods Works services costs costs Resettlement Total US$ US$ US$ US$ US$ US$ US$ US$ Year ended 31 December 2023 (continued) GKC MPWT Replenishment WA-22-002/RGC 1-Mar-23 - - 9,000 - 38,497 - 47,497 WA-23-OO1I/RGC 13-Oct-23 - - - - 34,298 - 34,298 Sub-total (F) - - - 9,000 - 72,795 - 81,795 MISTI Replenishment WA-22-003 1-Mar-23 - - - - 30,426 - 30,426 WA-23-001 26-Oct-23 - - - - 30,133 - 30,133 Sub-total (G) - - - - - 60,559 - 60,559 24 Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Notes to the financial statements (continued) for the year ended 31 December 2023 13. Summary of withdrawal applications (continued) Amount claimed for replenishment application Date Initial Consulting Training Operating number advances Goods Works services costs costs Resettlement Total US$ US$ US$ US$ US$ US$ US$ US$ Year ended 31 December 2023 (continued) GDR Replenishment N/A 3-Feb-23 - - - - - - 110,000 110,000 N/A 25-Sep-23 - - - - - - 1,376,500 1,376,500 Sub-total (H) - - - - - - 1,486,500 1,486,500 Fund transferred between projects N/A 18-Sep-23 - - - - - - 600,000 600,000 N/A 1-Nov-23 - - - - - - (500,000) (500,000) N/A 1-Nov-23 - - - - - - (600,000) (600,000) Sub-total (1) - - - - - - (500,000) (500,000) Total GKC fund (J = F + G + H + 1) - - - 9,000 - 133,354 986,500 1,128,854 Total fund receipts for year ended 31 December 2023 (K=E+J) - - 2,078,470 728,881 108,186 295,162 986,500 4,197,199 25 Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Notes to the financial statements (continued) for the year ended 31 December 2023 13. Summary of withdrawal applications (continued) Withdrawal Amount claimed for replenishment application Date Initial Consulting Training Operating advances Goods Works services costs costs Resettlement Total number US$ US$ US$ US$ US$ US$ US$ US$ Year ended 31 December 2022 IDA MPWf Direct payment DP-012 (L) 25-Aug-22 - - 839,085 - - - - 839,085 Replenishment MPWT-009 4-Feb-22 - 275 12,530 65,433 7,253 14,473 - 99,964 MPWT-010 13-May-22 - 24,796 - 27,330 - 17,073 - 69,199 MPWT-01 I 25-Aug-22 - - 90,755 25,850 12,632 18,045 - 147,282 MPWT-013 4-Nov-22 - - 220,936 87,027 9,328 20,535 - 337,826 Sub-total (M) - 25,071 324,221 205,640 29,213 70,126 - 654,271 Sub-total (N = L+ M) - 25,071 1,163,306 205,640 29,213 70,126 - 1,493,356 MISTI Replenishment MISTI - 009 21-Feb-22 - 9,964 - 23,584 8,155 7,353 - 49,056 MISTI -010 12-Apr-22 - - - 38,636 - 9,852 - 48,488 MISTI - 011 20-Jul-22 - 385 - 48,326 2,893 14,531 - 66,135 MISTI - 012 25-Oct-22 - - - 182,743 15,708 21,110 - 219,561 Sub-total (0) - 10,349 - 293,289 26,756 52,846 - 383,240 Sub-total (P= N + 0) - 35,420 1,163,306 498,929 55,969 122,972 - 1,876,596 26 Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Notes to the financial statements (continued) for the year ended 31 December 2023 13. Summary of withdrawal applications (continued) Amount claimed for replenishment application Date Initial Consulting Training Operating number advances Goods Works services costs costs Resettlement Total US$ US$ US$ US$ US$ US$ US$ US$ Year ended 31 December 2022 (continued) GKC(Q) - - - - - 196,584 2,158,000 2,354,584 Total fund receipts for year ended 31 December 2022 (R= P + Q) - 35,420 1,163,306 498,929 55,969 319,556 2,158,000 4,231,180 Cumulative period from 1 August 2019 to 31 December 2023 IDA MPWT 1,000,000 283,143 3,268,106 749,538 106,809 218,916 - 5,626,512 MISTI 1,500,000 345,553 1,241,845 799,501 89,627 194,967 - 4,171,493 Sub-total (S) 2,500,000 628,696 4,509,951 1,549,039 196,436 413,883 - 9,798,005 GKC MPWT 69,400 - - 9,000 - 170,034 - 248,434 MISTI 57,840 - - - - 213,539 - 271,379 GDR 79,220 - - - - - 3,144,500 3,223,720 Sub-total (T) 206,460 - - 9,000 - 383,573 3,144,500 3,743,533 Total cumulative fund receipts from I August 2019 to 31 December 2023 (U= S + T) 2,706,460 628,696 4,509,951 1,558,039 196,436 797,456 3,144,500 13,541,538 27 Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Notes to the financial statements (continued) for the year ended 31 December 2023 14. Payments commitments As at 31 December, the Project had the following payments commitments: As at As at 31 December 2023 31 December 2022 MPWT MISTI GDR Total US$ US$ US$ US$ US$ Goods 475,000 - 475,000 Works 2,667,459 - 2,667,459 1,630,371 Consulting services 1,079,152 3,369,659 - 4,448,811 1,799,243 4,221,611 3,369,659 - 7,591,270 3,429,614 15. Restatement of comparative information During the preparation of the financial statements for the year ended 31 December 2023, the Project's management had identified errors in the prior years' financial statements relating to the followings: A. Transactions with General Department of Resettlement ("GDR"); and B. Statement of designated account. 28 Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Notes to the financial statements (continued) for the year ended 31 December 2023 15. Restatement of comparative information (continued) The details of the adjustments are as follows: A. Transactions with General Department of Resettlement ("GDR") Transactions of General Department of Resettlement ("GDR") of Ministry of Economy and Finance ("MEF") were not accounted for in the prior year's financial statements, particular in related to the following: () Cash Cash balance as at 31 December 2022 was understated by US$516,358, consist of cash at beginning of the year amounting US$79,210 and increase in cash during the year 2022 amounting to US$437,148. (ii) Receipts Fund receipts from GKC by GDR for the year ended 31 December 2022 and for the cumulative period from 1 August 2019 to 31 December 2022 were understated by US$2,158,000 and US$2,237,220, respectively. (iii) Payments by category and financier The payment on land acquisition and resettlements for the year ended 31 December 2022 and for the cumulative period from 1 August 2019 to 31 December 2022, were understated by US$1,720,852 and US$1,720,862, respectively. (iv). Payments by components Payment for Component 2: Provincial sanitation improvement for the year ended 31 December 2022 and for the cumulative period from 1 August 2019 to 31 December 2022, were understated by US$1,720,852 and US$1,720,862, respectively. B. Statement of designated account Previously, the Project presented all direct payments (receipts) into the statement of designated account whereas management should have only presented payments or expenditures made through the Project's designated account (cash at bank); thus; fund receipts for the year ended 31 December 2022 and for the cumulative period from 1 August 2019 to 31 December 2022 were overstated by the same amount of US$839,085, respectively. Furthermore, the direct payments (expenditures) under the category Works" for the year ended 31 December 2022 and for the cumulative period from 1 August 2019 to 31 December 2022 were overstated by the same US$839,085, respectively. 29 Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Notes to the financial statements (continued) for the year ended 31 December 2023 15. Restatement of comparative information (continued) A summary of the line iems effected by the restatements of the comparative information and correction of those errors is as follows: Statement of cash receipts and payments Year ended Cumulative period from 1 August 2019 to 31 December2022 31 December2022 As previously As previously reported Adjustments As restated reported Adjustments As restated US$ US$ US$ US$ US$ US$ Receipts Government of the Kngdom of Cambodia A (ii) 196,584 2,158,000 2,354,584 377,459 2,237,220 2,614,679 Payments by category and financier Land acquisition and resettlements A (iii) - 1,720,852 1,720,852 - 1,720,862 1,720,862 Cash at beginning of the year A (i) 2,385,247 79,210 2,464,457 - - - (Decrease)Increase in Cash A (i) (152,750) 437,148 284,398 2,232,497 516,358 2,748,855 Cash at end of the year A (i) 2,232,497 516,358 2,748,855 2,232,497 516,358 2,748,855 30 Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Notes to the financial statements (continued) for the year ended 31 December 2023 15. Restatement of comparative information (continued) Statement of payments by components Year ended Cumulative period from 1 August 2019 to 31 December2022 31 December2022 As previously As previously reported Adjustments As restated reported Adjustments As restated US$ US$ US$ US$ US$ US$ Payments by components Component 2: Provincial sanitation improvement A (iv) 1,606,563 1,720,852 3,327,415 2,313,903 1,720,862 3,890,029 31 Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Notes to the financial statements (continued) for the year ended 31 December 2023 15. Restatement of comparative information (continued) Statement of designated account Year ended Cumulative period from 1 August 2019 to 31 December 2022 31 December2022 As previously As previously reported Adjustments As restated reported Adjustments As restated ReceiptsUS$ US$ US$ US$ US$ US$ Receipis Amount disbursement by IDA B 1,876,596 (839,085) 1,037,511 4,229,660 (839,085) 3,390,575 Payments by categories Works B 1,150,776 (839,085) 311,691 2,431,480 (839,085) 1,592,395 32 Ministry of Public Works and Transport Ministry of Industry, Science, Technology & Innovation Ministry of Economy and Finance Water Supply and Sanitation Improvement Project IDA Credit Number 6386-KH Annex 1: Statement of cash receipts, payments, and comparison of budget and actual payments Year ended 31 December 2023 Total Budget Actual Variance US$ US$ US$ % Receipts International Development Association 3,068,345 Government of the Kingdom of Cambodia 1,128,854 4,197,199 Payments by category and financier Goods 475,000 - 475,000 100% Works 5,188,697 2,521,237 2,667,460 51% Consulting services 2,466,695 831,142 1,635,553 66% Training 145,727 123,617 22,110 15% Incremental operating costs 321,657 286,199 35,458 11% Land acquisition and resettlements 1,100,000 1,164,615 (64,615) -6% 9,697,776 4,926,810 4,770,966 49% Decreased in Cash (729,611) Cash at beginning of the year 2,748,855 Decreased in cash (729,611) Cash at end of the year 2,019,244 Payments by components Component 1: Provincial water supply 1,180,615 648,167 532,448 45% Component 2: Provincial sanitation improvement 8,517,161 4,278,643 4,238,518 50% 9,697,776 4,926,810 4,770,966 49%