WORLD BANK WOZAB!QUE Received by Datt: To: IRI34 MUNICÍPIO DE MAPUTO CONSELHO MUNICIPAL GABINETE DE DESENVOLVIMENTO ESTRATÉGICO E INSTITUCIONAL (GDEI) AO Banco Mundial Att.: André Herzog - Project TTL MAPUTO Sua Ref. N° N. Refr. N°: 121 /GF/GDEI/CMM/2016 Data: 30/06/2016 ASSUNTO: ENVIO DA CARTA DE RECOMENDAÇÕES DA AUDITORIA Vimos por este meio submeter a vossa consideração o Relatório de Auditoria referente ao exercício económico de 2015, composto pelos seguintes documentos: 1. Demonstrações Financeiras do PROMAPUTO II; 2. Carta de Recomendações do PROMAPUTOII Com os nossos Melhores Cumprimentos. O Dire o Ja Cruz/ Conselho Municipal, Praça da Independência Caixa Postal, 251 Maputo Telefone+258 (21) 321501/356159 fax (21) 321501 eloitte. Conselho Municipal de Maputo PROMAPUTO II - Segunda fase do Programa de Desenvolvimento Municipal do Municipio de Maputo Audited Financial Statements 31 December 2015 Audit. Tax. Consulting. Financial Advisory. Corporate Finance. PROMAPUTO II - Segunda fase do Programa de Desenvolvimento Municipal do Municipio de Maputo Funded by World Bank - International Development Association (IDA) Credit Number: 4811 MZ AUDITED FINANCIAL STATEMENTS Period 1 January to 31 December 2015 Table of contents Page Management approval of financial statements 1 Independent Auditor's Report 2 Statement of Source and Application of funds 4 Special Account Statement 5 Notes to the annual financial statements 6 Annexes: 1. Contracts Control 2. Special Account Bank Reconciliation 3. Loan Commitment MANAGEMENT APPROVAL OF FINANCIAL STATEMENTS These financial statements are the responsibility of the Maputo Municipal Council (CMM) management. The external auditors are responsible for independently reviewing and reporting on these financial statements. The financial statements set out in this report have been prepared by management in accordance with generally accepted accounting practices. They are based on appropriate accounting policies which have been consistently applied and which are supported by reasonable and prudent judgments and estimates. The financial statements set out on pages 4 to 9, have been approved by the management of CMM and are signed on their behalf by: 1 e o itte . Caixa Postal 4318 Deloitte &Touche D Maputo Mogambique (Mogambique) Lda Chartered Accountants and Management Consultants Registration No: 5917 Av Zedequias Manganhela 267 Edificio JAT IV5 Andar Tel: +258 21320955 / 21430594 Fax: 258 21429163 www.deloitte.com To Maputo Municipal Council (CMM) Maputo Municipal Development Program II Credit Number: 4811-MZ Av. Ho Chi Min, 251, Praga da Independ4ncia Maputo Report of the Independent auditors We have audited the accompanying financial statements of PROMAPUTO II - Segunda fase do Programa de Desenvolvimento Municipal do Municipio de Maputo, executed by the Maputo Municipal Council under the Financing Agreement 4811-MZ of the International Development Association which comprise the Statement of Source and Application of Funds as at 31 December 2015 and the Special Account Statement as at 31 December 2015, and a summary of significant accounting policies and other explanatory notes. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with cash basis accounting for the purposes of reporting to the International Development Association and the Government of Mozambique. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies. 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 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 qualified audit opinion. 2 Directors: X Botha MJJarvis J Machado Associate of Deloitte Africa, a Member of Deloitte Touche Tohmatsu Limited Basis for Qualified Opinion The cash receipts and disbursements from the Government of Mozambique (counterpart funds) are managed through bank accounts held by the Maputo Municipal Council, which include transactions other than the PROMAPUTO II transactions. The controls over the movements in these accounts are not sufficient for us to be able to conclude that the amounts shown in the financial statements as Counterpart funds USD 7 191 159 are not materially misstated. Qualified Opinion In our opinion, except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph, the financial statements, as set out on pages 4 to 9, present fairly, in all material respects and in terms of the agreement with IDA, the financial position of the PROMAPUTO II - Segunda fase do Programa de Desenvolvimento Municipal do Municipio de Maputo, for the period 1 January to December 2015, and the cash receipts and payments for the period then ended in accordance with the cash basis of accounting promulgated by IFAC, and generally accepted accounting principles applicable to projects of similar size and complexity in Mozambique. With respect to applications made under the statement of expenditure procedures shown on page 7, adequate supporting documents has been maintained to support claims to the International Development Association for reimbursements of expenditure incurred and this expenditure is eligible for financing under the Financing Agreement 4811 MZ. With respect to the Government of Mozambique funds, except for the possible effects of the matter described in the Basis for qualified opinion paragraph, adequate supporting documentation has been maintained to justify payments made and such expenditure is eligible for financing under the Financing Agreement 4811 MZ. Basis of accounting Without modifying our opinion, we draw attention to Note 2 to the financial statements, which describe the basis of accounting. The financial statements are prepared for the purposes of reporting to the International Development Association and the Government of Mozambique. As a result, the financial statements may not be suitable for another purpose. Maputo, 29 June 2016 Deloitte & Touche (Mogambique), Lda Per Aneliya Nikolova Partner 3 PROMAPUTO II - Segunda fase do Programa de Desenvolvimento Municipal do Municipio de Maputo Funded by World Bank - International Development Association (IDA) Credit Number: 4811 MZ STATEMENT OF SOURCE AND APPLICATION OF FUNDS/FINANCIAL POSITION Period 1 January to 31 December 2015 (Amounts expressed in US Dollars) Description Notes 31.12.2015 Cumulative to 31.12.2015 Initial deposit in the special account - 2101 513 Opening balance on 1 January 2015 6984747 - Source: 17155797 80066338 Replenishments 3 8780068 42009869 Direct payments 4 1 184065 1 836727 Counterpart funds 5 7191 159 36218360 Others 505 1 382 Applications 15831481 73858787 Direct payments 4 1 184065 1 836727 Counterpart direct payment 5 7 191 159 36 218 360 Special account payment 6 7448454 35638221 Others 7803 165479 Closing balance as at 31 December 2015 8 309 063 8 309 063 4 PROMAPUTO II - Segunda fase do Programa de Desenvolvimento Municipal do Municipio de Maputo Funded by World Bank - International Development Association (IDA) Credit Number: 4811 MZ SPECIAL ACCOUNT STATEMENT Period 1 January to 31 December 2015 (Amounts expressed in Dollars) Description Notes 31.12.2015 Cumulative to 31.12.2015 Initial deposit in the special account - 2101 513 Opening cash balance 6984747 - Add: 8780573 42011251 Replenishments 3 8780068 42009869 Others 505 1 382 Deduct: 7456257 35803701 Special account payment 6 7448454 35638221 Others 7_803 165 479 Closing balance on 31 December 2015 8309063 8309063 Represented by: Millennium BIM Account no.: 2165410551USD 8 309 063 8 309 063 5 PROMAPUTO II - Segunda fase do Programa de Desenvolvimento Municipal do Municipio de Maputo Funded by World Bank - International Development Association (IDA) Credit Number: 4811 MZ NOTES TO THE FINANCIAL STATEMENTS Period 1 January to 31 December 2015 (Amounts expressed in Dollars) 1. DESCRIPTION OF THE PROJECT In 2011 the Maputo Municipal Council launched a second phase of Municipal Development Program for Maputo (PROMAPUTO II) for the next five years, as a way to meet the requirements of the level of services demanded by the citizens. In order to undertake this program the Government of Mozambique (GoM) has negotiated with the International Development Agency (IDA) a credit concession for the second Phase (2011- 2015). The implementation strategy for the program objectives entails a significant increase of the internal capacities of the Maputo Municipal Council (MMC) as a way to manage, maintain and develop quality in the delivery of services to the citizens. From this strategy, the structuring importance of IDA bases and the strengthening of the Municipal Finances shall bring forth results to the whole program, i.e., in the delivery of services to the citizens. The program will strengthen the City Council's institutional and financial capability to support the achievement of long term services delivery goals. The program is structured in five fundamental components, namely: * Component A: Institutional Development; * Component B: Financial Sustainability; * Component C; Urban Planning; * Component D; Urban Infrastructure Investment and Maintenance, and; * Component E: Metropolitan Development, The PROMAPUTO 11closing date is 31 December 2015. The IDA may process eligible withdrawal applications which shall be received within four months after the closing date for expenditures made or payments due for goods, works or services delivered or performed prior to the closing date. 2. Summary of significant accounting polices The following is a summary of the significant accounting policies followed in the preparation of these financial statements. 2.1 Basis of preparation These financial statements were prepared on the basis of cash receipts and disbursements and are not intended to be a presentation in conformity with International Financial Reporting Standards. Consequently, funds and the related cash balances are recognised when received rather than when earned and expenses are recognised when paid rather than when incurred. The financial statements are prepared for the purposes of reporting to the International Development Association and the Government of Mozambique. As a result, the financial statements may not be suitable for another purpose. 2.2 Fixed assets Fixed assets acquired on account of the Program are expensed on acquisition. 2.3 Purpose of the financial statements The primary objective of the financial statements is to report on the receipts and payments of the Program's activities to the providers of the funds: the International Development Association and the Government of Mozambique. 2.4 Currency The reporting currency is US Dollars (USD) as this is the currency agreed with the International Development Association for financial reporting purposes. Transactions in other currencies are translated at the exchange 6 PROMAPUTO II - Segunda fase do Programa de Desenvolvimento Municipal do Municipio de Maputo Funded by World Bank - International Development Association (IDA) Credit Number: 4811 MZ NOTES TO THE FINANCIAL STATEMENTS Period 1 January to 31 December 2015 (Amounts expressed in Dollars) rate established by the Commercial Bank ruling at the date of the bank disbursement. 2.5 Counterpart funds and payments Counterpart funds consist of funds transferred to the Program by the Government of Mozambique and counterpart payments consist of disbursements made with these funds. For the purpose of the Statement of Source and Application of Funds these payments are presented simultaneously as cash receipts and cash disbursements. These receipts and disbursements are translated from Mozambique Metical (MZM) to USD employing the exchange rates of a commercial bank ruling on the date of the transaction. 3. Replenishments The Program money is received from the World Bank, from funds made available by the International Development Agency, through a special account in USD maintained at Millennium BIM. The replenishments in 2015 can be analysed as follows: Application number Requested Replenished Not replenished Application no 37 6 942 196 6 942 196 Application no 30 1 837 872 1 837 872 - 8 780 068 8 780 068 _ 4. Direct payments The payments made directly by the World Bank through withdrawal applications can be detailed as follows: Appl. no. Beneficiary Sub- Category USD Equivalents Comp. Summary 52 Construg6es Gabriel Couto C1 1 194 367 51 Afaplan Plan E Gestao De Pr D1 3 5 296 49 Sara Candiracci D1 3 5 880 48 Construcoe Gabriel Couto D1 1 72 273 47 Afaplan Plan E Gestao De Pr D1 3 1 371 46 Esri Portugal Sistemas E C1 3 84 865 44 Sara Candiracci C1 3 5 880 43 Sara Candiracci C1 3 5 880 42 Construcoe Gabriel Couto C1 1 320 921 41 Cardno Emerg Markets Usa, Ltd C1 3 19200 40 Sara Candiracci C1 3 5 880 39 Afaplan Plan E Gestao De Pr C1 3 1 342 38 Esri Portugal Sistemas E C1 3 31 771 36 Afaplan Plan E Gestao De Pr D1 3 22 196 35 Sara Candiracci D1 3 5 880 34 Sara Candiracci D1 3 5 880 33 Cardno Emerg Markets USA, Ltd C1 3 312 238 7 PROMAPUTO II - Segunda fase do Programa de Desenvolvimento Municipal do Municipio de Maputo Funded by World Bank - International Development Association (IDA) Credit Number: 4811 MZ NOTES TO THE FINANCIAL STATEMENTS Period 1 January to 31 December 2015 (Amounts expressed in Dollars) 32 Sara Candiracci C1 3 5 880 31 Esri Portugal Sistemas C1 3 65 306 29 Sara Candiracci C1 3 5 880 28 Sara Candiracci C1 3 5 880 1 184065 5. Counterpart funds and payments The payments made directly by the Maputo Municipal Council comprise works, goods and equipment, consultancy services, services, operating costs and compensation for displaced people. These transactions are presented simultaneously as direct receipts and payments and can be analysed as follows: Category Maputo Municipal Council Works 738 927 Goods & equipments 92 139 Consulting services 212 549 Services 4510307 Operating costs 225 389 Compensation for displaced people 619 368 Other operating costs 792 480 7 191 159 - 6. Special account payments Applications consist of payments made through the special account other than the payments made by the Maputo Municipal Council. The payments made in 2015 can be analyzed as follows: - Expense category Notes Component Component Component Component Component Total (A) (B) (C) (D) (E) Works 6.1 - - 1428842 1621571 - 3050413 Goods &Equipments 6.2 719057 - 74036 - 121815 914908 Services 6.3 132621 97975 - - 10002 240 598 Operating Costs 6.4 95466 175 775 97 949 - - 369 190 Training 6.5 108 627 10575 8 100 - - 127 302 Consultant Services 6.6 623 180 70 016 1 709 860 298487 44 500 2 746 043 1678951 354341 3318787 1920058 176317 7448454 6.1. Works Description 31.12.15 C1 Urban Planning (Obras do Bairro Jorge Dimitrov) 1 428 842 Urban Infrastructure Investiment and Maintenance (Reabilitaro da Av. D1 Julius Nyerere) 1 621 571 3 050 413 8 PROMAPUTO II - Segunda fase do Programa de Desenvolvimento Municipal do Municipio de Maputo Funded by World Bank - International Development Association (IDA) Credit Number: 4811 MZ NOTES TO THE FINANCIAL STATEMENTS Period 1 January to 31 December 2015 (Amounts expressed in Dollars) 6.2. Goods & Equipment Description 31.12.15 Al Organizational and Human Resource Development (Furniture, equipment and vehicles) 625 453 A2 Organizational and Human Resource Development (Motorcycle & vehicles) 93 605 C1 Urban Planning (Acquisition of licences & maintenance) 74 036 El Metropolitan Development (Acquisition of vehicles, IT equipment) 121 815 914 908 6.3. Services Description 31.12.15 Al Organizational and Human Resource Development (Catering services during trainning) 132 621 B1 Financial Sustainability (Public Information campaigns -TAE & IPRA) 97 975 El Metropolitan Development (Acquisition of vehicles, IT equipment) 10 002 240598 6.4. Operating Costs Description 31.12.15 Al Organizational and Human Resource Development (Bank Charges) 95 466 B1 Financial Sustainability (Trainees salaries; Travel & Perdiem) 175 775 C1 Urban Planning (Obras de furo e sistema de abastecimento de bgua no bairro de 97 949 Chihango) 369 190 6.5. Training Description 31.12.15 Al Organizational and Human Resource Development (Training) 108 627 B3 Financial Sustainability (Perdiem) 10 575 C1 Urban Planning (Formago e Perdiem) 8 100 127 302 6.6. Consultant Services Description 31.12.15 Al Organizational and Human Resource Development (Salaries and wages) 573 500 BI Financial Sustainability (Perdiem) 3 600 B2 Financial Sustainability (Audit) 66 416 C1 Urban Planning - Technical Assistance 1 759 540 D1 Urban Infrastructure Investiment and Maintenance (Fiscalizag5o das obras da Julius 298 487 Nyerere) El Metropolitan Development -Technical Assistance 44500 2 746 043 9 Contracts Control ANNEX 1 PROMAPUTO II 31.12.15 Reference Conti Category Beneficiary Contract inount paid Balance valued USD as at 31 December 2015 A1.1.5.1/CS/01C Consulting Services Abdul Latif Manuel 93 120 55 872 37248 D1.2.1.1/CS/01 Consulting Services Afaglan, SA 1 200 000 1 082 268 117 732 A1.4.1/CS/02d Consulting Services Alda Rom5o Sa6de Saide 63000 62750 250 Al.1.5.1/CS/04 Consulting Services Alfredo B.T.N. Guirrugo 169 000 156 000 13000 Al.1.5.1/CS/01 Consulting Services Amina Bacar 25200 22850 2350 A1.1.2.1/CS/02 Consulting Services Ant6nio madureira JOnior 11 250 3232 8018 C1.2.1.1/CS/01 Consulting Services AVISI/Synergia/Khandlelo 149 995 134 995 14999 C1.2.1.5/CS/01 Consulting Services Bruno Miguel Silva 9659 4744 4 915 A1.1.5.11CS/05 Consulting Services Cndido Quaresma 72 000 36000 36 000 A1.3.1.3/CS/04 Consulting Services Carlos Natividade 47000 4700 42300 C1.2.1.4/W/04c Works Ceta. SARL 1 855 617 57 948 1 797 669 C1.1.3.2/CS/06 Consulting Services COBA 152 090 41 584 110 506 A1.1.1.1/CS/02 Consulting Services COWI 240 663 84232 156 431 C1.2.1.4/OC/06 Services ECOAGUAS 255 493 31 297 224 196 C1.2.1.4/OC/001 Services EDM 529 582 66652 462 930 C1.1.2.2/CS/03b Consulting Services ESRI-Portugal - ADENDA 159 472 117 021 42 450 Al.2.2.2/CS/Ole Consulting Services Fernando Vieira 84 550 69 850 14 700 D1.2.2.1/W/03 Works Gabriel Couto 6 854 862 3278 808 3576 055 C1.2.1.3/CS/Olb Consulting Services Marcia Oliveira 58750 43750 15000 C1.2.1.4/W/03 Worke MCA - Mocambique 1 608 122 1 066 040 542 082 C1.2.1.4/CS/04 Consulting Services MFC - Consultores 430 092 32663 397 429 A1.1.5.1/OC/01 Goods Mohamed & Companhia 2818 1 401 1 417 B2.3.2.2/CS/02 Consulting Services Pwc 92 222 66 416 25 806 C1.1.2.2/CS/02b Consulting Services Rafael Jos§ 80040 53 820 26 220 C1.2.1.4/CS/06 Consulting Services Victor rangel 68 182 41 802 26380 14312778 6616695 7696083 Special Account Bank Reconciliation ANNEX 2 31.12.15 Bank Name: MILLENNIUM BIM Bank Account nO.: 2165410551USD USD Special account Balance as per bank statement as at: 31112/2015 8 309 063 ADD: Deposits in Transit: - Other Reconciling Items: DEDUCT: Outstanding Checks: Other Reconciling Items: - Adjusted bank balance 8 309 063 Balance per Entity's General Ledger 8 309 063 Loan Commitment IDA - USD/XDR ANNEX 3 31.12.15 XDR Category Categor Description Allocated Documented/ Documented/ Committed Available Disbursed Undisbursed 31.12.15 1 Works A:1cA.2c Bc Cd Da, Db Dd E.2b 13 360 000.00 8 592 334.24 4 767 665.76 - 4 767 665.76 2 Goods execep Parts A.1(i) 2480000.00 2141 873.72 338126.28 - 338126.28 3 Consulting Services 10 400 000.00 6 848 039.93 3 551 960.07 - 3 551 960.07 4 Training 920000.00 506065.56 413934.44 - 413934.44 5A Services other than CS Parts A. 1(e) 500 000.00 420 975.10 79 024.90 - 79 024.90 5B Services other than CS Parts E.1(b) 3270000.00 3063633.74 206 366.26 - 206 366.26 5C Services other than CS Parts Bc Cc Cd 330 000.00 182 468.49 147 531.51 - 147 531.51 6 Operating Costs except A.1(h) A.2(e) 650 000.00 486 612.55 163 387.45 - 163 387.45 7 Compen or Displac people financed by CMM - - - - - 8 UNALLOCATED 1 090 000.00 - 1 090 000.00 - 1 090 000.00 33 000 000.00 22 242 003.33 10 757 996.67 - 10 757 996.67 DA-A Maputo Municipal Dev. Prog - 8517566.14 (8517566) - (8517566) 33 000 000.00 30 759 569.47 2 240 430.53 - 2 240 430.53 USD Category Categor Description Allocated Documented/ Documented/ Committed Available Disbursed Undisbursed 31.12.15 1 Works A:1cA.2c Bc Cd Da, Db Dd E.2b 18 513 352.80 11 906 655.33 6606 697.47 - 6606697.47 2 Goods execep Parts A.1(i) 3436610.40 2968058.67 468 551.73 - 468 551.73 3 Consulting Services 14 411 592.00 9489534.37 4922057.63 - 4922057.63 4 Training 1 274871.60 701 270.23 573601.37 - 573601.37 5A Services other than CS Parts A.1(e) 692 865.00 583 357.83 109 507.17 - 109 507.17 5B Services other than CS Parts E.1(b) 4 531 337.10 4245 369.18 285 967.92 - 285 967.92 5C Services other than CS Parts Bc Cc Cd 457 290.90 252 852.06 204 438.84 - 204 438.84 6 Operating costs except A.1(h) A.2(e) 900 724.50 674 313.61 226 410.89 - 226 410.89 7 Compen or displac people financed by CMM - - - - - 8 UNALLOCATED 1 510445.70 - 1 510445.70 - 1 510445.70 45 729 090.00 30 821411.27 14 907 678.73 14 907 678.73 DA-A Maputo Municipal Dev. Prog - 11 803 046.93 (11 803047) - (11 803047) 45 729 090.00 42 624 458.20 3104632 - 3104632 USD DA-A for IDA (11 803047) Special account CMM 8 309 063 Expenditure for current reporting period via the IDA 2452470 Exchange rate differences 1 041 514 11 803 047 Note: On 31 December 2015, XDR 1.0 = USD 1.38573