GRANT AGREEMENT BETWEEN HASHEMITE KINGDOM OF JORDAN AND WORLD BANK FOR RECONSTRUCTION AND DEVELOPMENT (PROMOTING FINANCIAL INCLUSION POLICIES IN JORDAN PROJECT) PROJECT FINANCIAL STATEMENT 11 APRIL 2022 Ernst & Young Jordan P.O.Box 1140 Amman 11118 Building a better Jordan working world Tel : 00 962 6580 0777/00 962 6552 6111 Fax: 00 962 6553 8300 www.ey.com/me Independent Auditor's Report Grant Agreement Between Hashemite Kingdom of Jordan and World Bank for Reconstruction and Development (Promoting Financial Inclusion Policies in Jordan Project) Amman - Jordan Opinion We have audited the accompanying project statement of cash receipts and cash payments (the statement) of grant agreement between Hashemite Kingdom of Jordan and World bank for reconstruction and development (Promoting financial inclusion policies in Jordan project), which comprise the statement of cash receipts and cash payments as at and for the period from 1 January 2021 to 11 April 2022, and a summary of significant accounting policies and other explanatory information. In our opinion, the project's statement of cash receipts and cash payments as at and for the period from 1 January 2021 to 11 April 2022 has been prepared, in all material respects, in accordance with the accounting policies set out in Note (2). Basis for Opinion 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 Project in accordance with the International Ethics 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 in Jordan, 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. Emphasis of Matters: 1- Basis of Accounting and Restriction of Use We draw attention to note (2) to the statements which describes the basis of accounting. The statements is prepared to assist the Project in complying with the financial reporting requirements of the Project and the regulatory requirements. As a result, the statements may not be suitable for other purpose. Our report is intended solely for the information and use of Management and World Bank for Reconstruction and Development and should not be used by parties other than those specific parties. Our opinion is not modified in respect of this matter. A member firm of Ernst & Young Global Limited EY Building a better working world 2- Project closure and termination We draw attention to Note (1) the financial statements, which indicates that the closing date of the Project was on 11 April 2022. As a result, the financial statements have been prepared on a basis other than going concern basis. 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 the accounting policies set out in Note (2), 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 Project 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 Project or 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. 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 exist. 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. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: EY Building a better working world * 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. When such use is inappropriate and management uses an alternative basis of accounting, we conclude on the appropriateness of management's use of the alternative basis of accounting. We also evaluate the adequacy of the disclosures describing the alternative basis of accounting and reasons for its use. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. * 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. Amman - Jordan 25 July 2022 GRANT AGREEMENT BETWEEN HASHEMITE KINGDOM OF JORDAN AND WORLD BANK FOR RECONSTRUCTION AND DEVELOPMENT (PROMOTING FINANCIAL INCLUSION POLICIES IN JORDAN PROJECT) STATEMENT OF CASH RECEIPTS AND PAYMENTS AS AT 11 APRIL 2022 Since inception From 1 January on 30 October 2021 to 11 April 31 December 2018 to 11 April 2022 2020 2022 Cash Receipts USD USD USD Total fund received from world bank 768,882 86,013 1,049,073 Total receipts from the World Bank 768,882 86,013 1,049,073 Cash Disbursements Financial inclusion 838,576 49,882 1,049,722 Bank commissions 94 84 335 Reversals (984) - (984) Total disbursements 837,686 49,966 1,049,073 Net (shortage) surplus at the end of the periodlyear (68,804) 36,047 - The attached notes from 1 to 3 form part of these project financial statement GRANT AGREEMENT BETWEEN HASHEMITE KINGDOM OF JORDAN AND WORLD BANK FOR RECONSTRUCTION AND DEVELOPMENT (PROMOTING FINANCIAL INCLUSION POLICIES IN JORDAN PROJECT) NOTES TO PROJECT FINANCIAL STATEMENT AS AT 11 APRIL 2022 (1) GENERAL On 30 October 2018, The World Bank for Reconstruction and Development, acting as implementation agent for the Middle East and North Africa Transition Fund, granted the Hashemite Kingdom of Jordan an amount of 1.05 million United States Dollars "USD 1,050,000" to promote financial inclusion and digital financial services by supporting the implementation of Jordan's National Financial Inclusion Strategy through: 1- Operationalizing the financial inclusion implementation unit at the Central Bank of Jordan by way of building the capacity of its staff, improving the existing data infrastructure and hiring a specialized firm to build automated solutions. 2- Developing training and information sharing programs with a view to support Jordan in fulfilling its Maya Declaration commitments and implement the financial inclusion strategy throughout the project life since Jordan is a member of the Global Coalition for Financial Inclusion, and organizing technical workshops and study tours with a view to strengthen the Central Bank of Jordan capacity to implement the national financial inclusion strategy. 3- Establishing the Regulatory Sandbox at the Central Bank of Jordan which allows making experimentation of innovative solutions for entrepreneurs and developers of financial digital application in a secured environment based on specific criteria that strike a balance between encouraging innovation and creativity, on the on hand and enhancing access to formal financial services on the other hand while preserving the integrity and stability of the financial sector, and protecting the rights and data of financial consumers . As the representative of the Hashemite Kingdom of Jordan is the Ministry of Planning and World Cooperation, signed a subsidiary agreement with the Central Bank of Jordan to be the project implementing entity of the grant as required by the agreement signed with The World Bank for Reconstruction and Development. As per grant agreement the closing date of the grant was on 31 December 2021, however and due to remaining request the closure date was 11 April 2022. 1 GRANT AGREEMENT BETWEEN HASHEMITE KINGDOM OF JORDAN AND WORLD BANK FOR RECONSTRUCTION AND DEVELOPMENT (PROMOTING FINANCIAL INCLUSION POLICIES IN JORDAN PROJECT) NOTES TO PROJECT FINANCIAL STATEMENT AS AT 11 APRIL 2022 The grant was be distributed among the project's objectives as follows: USD Financial inclusion 1,049,073 1,049,073 The utilization of the grant amount among the project's objectives is as follows: 11 April 2022 USD Total grant 1,050,000 Amount withdrawn by the Central Bank for Jordan _ (1,049,073) Amount not withdrawn at the end of grant** __ _ 927 **This Balance due to unutilized amount during the grant period. Details of cash disbursements as follow: 11 April 31 December 2022 2020 USD USD Financial inclusion* 838,576 49,882 Bank commissions 94 84 838,670 49,966 2 GRANT AGREEMENT BETWEEN HASHEMITE KINGDOM OF JORDAN AND WORLD BANK FOR RECONSTRUCTION AND DEVELOPMENT (PROMOTING FINANCIAL INCLUSION POLICIES IN JORDAN PROJECT) NOTES TO PROJECT FINANCIAL STATEMENT AS AT 11 APRIL 2022 * The details of the utilized amount for the period from 1 January 2021 to 11 April 2022 are as follows: Eligible % Total Total Amount of from Amount Amount Amount of Invoice Covered Schedule 1 Eligible Paid from Exchange Contract by Application of for Special Rate (Col. 7 USD (Net of Loan/Credit Financing Account (if divided by Item No. Description (Yearly) Retention) USD Agreement (4 x 5) Applicable) Col. 6) Remarks USD USD % USD USD % 1 Services 1,410 1,410 100% 1,410 1,410 100% Financial Awareness Campaign Awards 2 Services 485,307 485,307 100% 485,307 485,307 100% Acquisition of an electronic platform 3 Services 3,927 3,927 100% 3,927 3,927 100% Audit Fees (2019, 2020) Advertising campaign for financial 4 Services 282,088 282,088 100% 282,088 282,088 100% inclusion (Do Company) 5 Services 51,850 51,850 100% 51,850 51,850 100% AFI Fee 6 Services 13,994 13.994 100% 13,994 13,994 100% Operational expenses 838,576 838,576 (2) GENERAL POLIC(ES The financial information for the grant agreement has been prepared in accordance with standard and accounting policies described in Note (3). Receipt, payments and closing account The procedures necessary for managing, maintaining and setting the polices for receipts, payments, bookkeeping and the closing account and other related matters, are organized by the Central Bank of Jordan. Receipts The receipts of the grant agreement consist of the fund received from the World Bank for Reconstruction and Development. Payments Cash payments are paid on the eligible expenditures as per the grant agreement. Functional currency The project financial statements have been presented in United States Dollars "USD" which is the functional currency of the Grant agreement. 3 GRANT AGREEMENT BETWEEN HASHEMITE KINGDOM OF JORDAN AND WORLD BANK FOR RECONSTRUCTION AND DEVELOPMENT (PROMOTING FINANCIAL INCLUSION POLICIES IN JORDAN PROJECT) NOTES TO PROJECT FINANCIAL STATEMENT AS AT 11 APRIL 2022 (3) SIGNIFICANT ACCOUNTING POLICIES Below are the significant accounting policies used with preparation of these financial statements: Receipts The revenues recognized when receiving cash and recorded under the receipts item- Disbursements The disbursements are recognized when they are paid, and then recorded in the books. Expense Expenses is recognized at the time physical cash is paid out. 4