AUDITOR GENERAL'S REPORT On the Financial Statement Audit of the Health Systems Strengthening Project (HSSP)/Additional Financing (AF) (IDA-5244, TF-14432LBR & TFA4116) For the fiscal period ended June 30, 2021 December 2021 P. Garswa Jackson Sr. ACCA, CFIP, CFC Auditor General, R. L. Auditor General’s Report on the Financial Statement Audit of the Health Systems Strengthening Project (HSSP)/Additional Financing (AF) For the Fiscal Period ended June 30, 2021 Table of Contents Opinion ................................................................................................................................... 3 Basis for Opinion ...................................................................................................................... 3 Management’s Responsibility..................................................................................................... 3 Auditor’s Responsibility ............................................................................................................. 4 Financial Statements ................................................................................................................ 5 Statement of Receipts and Payments ......................................................................................... 5 Statement of Comparison of Budget and Actual Amounts ............................................................ 6 NOTES TO THE FINANCIAL STATEMENTS .................................................................................. 7 1 Promoting Accountability of Public Resources Auditor General’s Report on the Financial Statement Audit of the Health Systems Strengthening Project (HSSP)/Additional Financing (AF) For the Fiscal Period ended June 30, 2021 ACRONYMS USED Acronyms/Abbreviations/Symbol Meaning AFP Audit Focal Person AG Auditor General COSO Committee of Sponsoring Organization CPA Certified Public Accountant EPHS Essential Package Health Services FSs Financial Statements GMRP Graduate Medical Residency Program GoL Government of Liberia HSSP Health Systems Strengthening Project IAU Internal Audit Unit IBRD International Bank for Reconstruction And Development IDA International Development Association IFRs Interim Financial Reports INTOSAI International Organization of Supreme Audit Institutions IPSASs International Public Sector Accounting Standards ISSAIs International Standards of Supreme Audit Institutions MOH Ministry of Health P’OFM Office of Financial Management NVA National Verification Agency PBF Performance Based Financing PCO Project Coordination Office PIM Project Implementation Manual QPR Quarterly Progress Report SOE Statement of Expenditures ToR Term of Reference LPGMRP Liberia Post Graduate Medical Research programs 2 Promoting Accountability of Public Resources Auditor General’s Report on the Financial Statement Audit of the Health Systems Strengthening Project (HSSP)/Additional Financing (AF) For the Fiscal Period ended June 30, 2021 Dr. Wilhelmina Jallah Minister Ministry of Health Congo Town Republic of Liberia December 31, 2021 Dear Dr. Jallah: RE: AUDITOR GENERAL’S REPORT ON THE FINANCAL STATEMENT AUDIT OF THE HEALTH SYSTEM STRENGTHENING PROJECT (HSSP)/ADDITIONAL FINANCING (AF) Opinion We have audited the accompanying financial statements of the Health System Strengthening Project (HSSP)/Additional Financing (AF) as at June 30, 2021 financed by IDA-5244, TF-14432LBR & TFA4116 which comprises the Statement of Receipts and Payments, Statement of Comparison of Budget and Actual Amounts and a summary of other accounting policies and explanatory notes. In our opinion, the accompanying financial statements IDA-5244, TF-14432LBR & TFA4116 present fairly, in all material respects, the Statement of Receipts and Payments as at June 30, 2021, Statement of Comparison of Budget and Actual Amounts and a summary of other accounting policies and other explanatory notes for the fiscal period then ended in accordance with International Public Sector Accounting Standards (IPSAS) Cash Basis of Accounting. Basis for Opinion We conducted our audit in accordance with International Standards of Supreme Audit Institutions (ISSAIs). 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 entity in accordance with the Code of Ethics for Supreme Audit Institutions together with the ethical requirements that are relevant to our audit of the financial statements in accordance with the World Bank guideline 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. Management’s Responsibility Management is responsible for the preparation and fair presentation of the financial statements in accordance with IPSAS Cash Basis, 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 3 Promoting Accountability of Public Resources Auditor General’s Report on the Financial Statement Audit of the Health Systems Strengthening Project (HSSP)/Additional Financing (AF) For the Fiscal Period ended June 30, 2021 responsible for assessing its 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. The HSSP Management is responsible for overseeing the Project’s financial reporting process. Auditor’s Responsibility 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 ISSAIs 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. Monrovia, Liberia December 2021 4 Promoting Accountability of Public Resources Auditor General’s Report on the Financial Statement Audit of the Health Systems Strengthening Project (HSSP)/Additional Financing (AF) For the Fiscal Period ended June 30, 2021 Financial Statements Health System Strengthening Project (HSP) Additional Financing (AF) Statement of Receipts and Payments For the fiscal period ended June 30, 2021 Notes PLS ENSURE THAT THE FACE AGREE FY FY WITH THE NOTES(RECEIPTS) 2020/2021 2019/2020 US$ US$ Receipts: IDA (World Bank) Fund 1 5,561,242 8,043,932 Other Receipts - -0- Total Receipts 5,561,242 8,043,932 Payment Goods 2 837,011 360,690 Consulting Services 3 2,351,803 4,675,430 Training 4 147,034 338,013 Operating Cost 5 732,704 1,345,537 Sub-Grants 6 1,876,156 1,444,930 Total Payments 5,944,708 8,164,600 Decrease/Increase in cash (383,466) (120,669) Cash at the beginning of the Year 1,107,872 1,228,541 Cash at the end of the Year 7 724,406 1,107,872 The notes found on page 7-17 are integral part of these financial statements 5 Promoting Accountability of Public Resources Auditor General’s Report on the Financial Statement Audit of the Health Systems Strengthening Project (HSSP)/Additional Financing (AF) For the Fiscal Period ended June 30, 2021 Health System Strengthening Project (HSSP)/Additional Financing (AF) Statement of Comparison of Budget and Actual Amounts For the fiscal period ended June 30, 2021 Original Final Actual Percentage Variance Budget Budget Amounts Variance Cash Inflows US$ US$ US$ US$ (%) Authorized 30.72 Allocations/Receipts 8,027,474 8,027,474 5,561,242 2,466,232 Total Receipts 8,027,474 8,027,474 5,561,242 2,466,232 30.72 Cash Outflows Goods 862,630 862,630 837,011 25,619 2.97 Consulting Services 3,068,957 3,068,957 2,351,803 717,154 23.37 Training 279,296 279,296 147,034 132,262 47.36 Operating Costs 1,174,560 1,174,560 732,704 441,856 37.62 Sub-Grants 2,642,032 2,642,032 1,876,156 765,876 29.0 Total Payments 8,027,475 8,027,475 5,944,708 2,082,767 25.9 Net Cash Flows - - (383,466) The notes found on page 7-17 are integral part of these financial statements 6 Promoting Accountability of Public Resources Auditor General’s Report on the Financial Statement Audit of the Health Systems Strengthening Project (HSSP)/Additional Financing (AF) For the Fiscal Period ended June 30, 2021 NOTES TO THE FINANCIAL STATEMENTS General Information and Accounting Policies: The Reporting Entity and Principal address Ministry of Health Health Systems Strengthening Project (HSSP)/Additional Financing (AF) Congo Town, Monrovia Liberia Project Identification Number: P128909 1. Background of the Project On January 23, 2013, the Republic of Liberia and the International Bank for Reconstruction and Development/International Development Association (“World Bank”) entered into a Grant Agreement for the financing of the Health System Strengthening Project (HSSP) under the Ministry of Health. The development objective of the Health System Strengthening Project (HSSP) for Liberia is to improve the quality of maternal health, Child health, and infectious disease services in selected secondary-level health facilities. The project consists of four main components as outline below: • The first component deals with strengthening the institutional capacity to improve the quality of selected health interventions at performance-based Financing (PBF) health facilities. The Subcomponent deals with management and capacity building. It aims to provide intensive technical support to build the institutional capacity required to manage the PBF approach and provided that expected results are achieved, support its long-term sustainability and support technical assistance, capacity development, and independent verification. • The second component is about improving health workers competencies to address key Health-related concerns at selected health facilities. This component complements efforts to improve the quality of care at target health facilities, by improving the availability and competencies of health workers in these facilities, in critical specialist areas- obstetrics, pediatrics, general surgery and internal medicine. • The sub-component supports the design and implementation of a nationally accredited GMRP in defined critical specialist areas and internal medicine, with a cross-cutting focus on anesthesiology. • The third component deal with support to the operational capacity of the Ministry of health (MOH) to effectively manage the project. It includes support to the operational costs of a project- specific unit i.e. the HSSP Coordination Office- within the MoH that is responsible for coordinating project activities. • The fourth component is known as ‘Support to Ebola Emergency Response Outbreak’. This component was added during the Ebola outbreak to provide medical and other supports to the EVD outbreak. 7 Promoting Accountability of Public Resources Auditor General’s Report on the Financial Statement Audit of the Health Systems Strengthening Project (HSSP)/Additional Financing (AF) For the Fiscal Period ended June 30, 2021 In view of the above, the International Development Association (“World Bank”) provided the initial grant of US$850,000.00 to fund the preparation of a full-scale Health System Strengthening Project (HSSP) to address various Secondary level healthcare interventions. On July 3, 2013 the World Bank extended a grant in the amount of US$5,000,000 and a credit facility of US$10,000,000 referenced IDA-5244, to assist in financing the Project. Additional Financing On March 22, 2017, the International Development Association and International Bank for Reconstruction and Development acting as administrator of the Multi-Donor Trust Fund for the Global Financing Facility (GFF) in support of Every Woman Every Child provided a grant to the Republic of Liberia in the amount of US$16,000,000(Sixteen Million United States Dollars) referenced LBR TF-0A4116 for an additional financing to the Health System Strengthening Project (HSSP) of the Ministry of Health. II. Significant Accounting Policies The financial statements have been prepared in accordance with the Cash Basis International Public Sector Accounting Standards (IPSAS). This implies that all expenditures are expensed whether they are revenue or capital in nature and income is recognized when funds are received from the IDA/ADB (World Bank). III. Reporting Currency The Financial reports have been presented in United States Dollars. Transactions in other currencies are translated into United States Dollars and recorded at the rate of exchange ruling at the date of the transaction(s). Balances in other currencies are translated into United States Dollars at the rate of exchange prevailing on the reporting date. IV. Reporting Period The reporting period for the HSSP’s Financial Statements is the fiscal period ended June 30, 2021. (1 July 2020 to 30 June 2021). 8 Promoting Accountability of Public Resources Auditor General’s Report on the Financial Statement Audit of the Health Systems Strengthening Project (HSSP)/Additional Financing (AF) For the Fiscal Period ended June 30, 2021 Health System Strengthening Project (HSSP)/Additional Financing (AF) For the fiscal period ended June 30, 2021 1. IDA/ (World Bank) Fund FY FY 2020/2021 2019/2020 US$ US$ July 6, 2020 636,011 - August 7, 2020 485,385 - August 7, 2020 523,712 - August 7, 2020 49,427 - September 29, 2020 364,124 - November 12, 2020 243,164 - November 28, 2020 371,798 - December 4, 2020 371,219 - January 29, 2021 55,134 January 29, 2021 827,475 - April 14, 2021 607,266 - June 3, 2021 374,719 - June 29, 2021 651,807 - 1-Jul-19 1,121,576 7-Aug-19 238,708 August 7,2019 303,272 8-Aug-19 202,027 15-Oct-19 708,756 15-Oct-19 382,890 15-Oct-19 145,941 19-Nov-19 267,093 10-Dec-19 608,161 17-Dec-19 337,698 17-Dec-19 87,781 27-Dec-19 258,700 24-Feb-20 178,062 3-Mar-20 303,884 3-Mar-20 169,150 3-Mar-20 510,341 3-Apr-20 279,418 28-Apr-20 393,868 29-Apr-10 165,394 29-Apr-20 40,432 1-May-20 418,889 19-May-20 404,257 26-May-20 48,544 26-May-20 131,960 22-Jun-20 337,130 Total 5,561,242 8,043,932 9 Promoting Accountability of Public Resources Auditor General’s Report on the Financial Statement Audit of the Health Systems Strengthening Project (HSSP)/Additional Financing (AF) For the Fiscal Period ended June 30, 2021 Health System Strengthening Project (HSP) Additional Financing (AF) FY FY For the fiscal period ended June 30, 2021 2020/2021 2019/2020 US$ US$ GOODS 2 Strengthening Institutional Capacity Machinery and other Equipment 25,205 305,870 ICT infrastructure, Hardware, Networks and Facilities 89,804 52,725 Furniture & Fixtures 37,165 2,095 Training Equipment and Human Mannequins 48,826 Transport Equipment 636,011 TOTAL 837,011 360,690 10 Promoting Accountability of Public Resources Auditor General’s Report on the Financial Statement Audit of the Health Systems Strengthening Project (HSSP)/Additional Financing (AF) For the Fiscal Period ended June 30, 2021 Health System Strengthening Project (HSP) Additional Financing (AF) FY FY 2020/2021 2019/2020 US$ US$ For the fiscal period ended June 30, 2021 CONSULTING SERVICES 3 Strengthening Institutional Capacity Professionals 172,962 339,887 Non-professionals (Casual Workers) 619,968 171,957 Foreign Travel - Means of travel 18,323 11,070 Domestic Travel- Means 3,900 - Consultancy Services 25,682 45,880 Transfer to UNICEF for Implementation of CHA Program 0 1,121,576 Foreign Travel-Daily Subsistence Allowance 0 6,111 Residential Property Rental and Lease 16,200 27,900 Telecommunications, Internet, Postage and Courier 1,000 1,700 Expert/Specialist Service 1,344,104 2,020,745 Audit Fees 24,000 20,000 Feasibility Studies/Surveys 0 98,008 Electricity Connection (Transformer) 0 62,750 Food and Catering Service 0 1,000 Bank Charges and Other Bank Related Cost 5 70 Transfer to Counties for CHA Programs 0 544,418 Taxes & Duties 125,658 202,358 2,351,803 4,675,430 11 Promoting Accountability of Public Resources Auditor General’s Report on the Financial Statement Audit of the Health Systems Strengthening Project (HSSP)/Additional Financing (AF) For the Fiscal Period ended June 30, 2021 Health System Strengthening Project (HSP) FY Additional Financing (AF) FY 2019/20 For the fiscal period ended June 30, 2021 2020/2021 20 US$ US$ TRAINING 4 Foreign Travel - Means of Travel 0 51,100 Foreign Travel - Daily Subsistance Allowance 0 28,735 Honorarium 0 4,200 Stationery and supplies 2,364 596 Fuel and Lubricants - Vehicles 4,065 3,766 Food and Catering Services 1,500 12,450 Domestic Travels – means of Travels 2,675 0 Domestic Travel - Daily Subsistence Allowance 91,365 60,430 Other General Expenses - Transfer to Counties 45,065 100,396 Printing, Binding and Publications services 0 29,360 Staff Training - Foreign 0 3,480 Workshops, Conferences, symposia and Seminars 0 43,500 TOTAL 147,034 338,013 12 Promoting Accountability of Public Resources Auditor General’s Report on the Financial Statement Audit of the Health Systems Strengthening Project (HSSP)/Additional Financing (AF) For the Fiscal Period ended June 30, 2021 Health System Strengthening Project FY FY (HSP) Additional Financing (AF) 2020/2021 2019/2020 For the fiscal period ended June 30, US$ US$ 2020 OPERATING COST 5 Strengthening Institutional Capacity Domestic Travel - Daily subsistence Allowance 128,070 234,024 Food and Catering Services 2,200 25,222 Vehicle Insurance 66,421 49,789 Fuel and Lubricants – Vehicles 39,322 109,985 Machinery and other Equipment 0 44,880 Printing, Binding and Publications Services 109,090 320,726 Stationery and Supplies 57,626 137,125 Cleaning Material and Services 200 1,105 Specialized Materials and Services 0 6,748 Entertainment Representation and Gifts 0 450 Other Compensations 1,840 300 Taxes & Duties 0 200 ICT infrastructure, Hardware, Networks and 795 0 Facilities Repairs and Maint.-Machinery, Equip. and 70 125 Furniture. Office Materials, Consumables and Services 40 10 Other Operational Cost 0 200 Telecommunication, Internet, Postage & 56,430 37,135 Courier Domestic Travel - Means of Travel 7,030 900 Furniture & Fixtures 3,500 0 Repairs and Maintenance - Civil 30 10 Repairs and Maintenance - Vehicles 67,606 95,726 Subscriptions 35,000 13,238 Advertising and Public Relations 325 4,125 Computer Supplies and ICT Services 0 30,437 Other Office Materials and Consumables 0 2,089 Small Tools/Equipment and Household Materials 0 0 Repairs and Maintenance - ICT Equipment 0 300 Other General Expenses - Transfer to Counties 114,124 174,798 Bank Charges 63,020 35,330 TOTAL 732,704 1,345,537 13 Promoting Accountability of Public Resources Auditor General’s Report on the Financial Statement Audit of the Health Systems Strengthening Project (HSSP)/Additional Financing (AF) For the Fiscal Period ended June 30, 2021 Health System Strengthening Project (HSP) Additional Financing (AF) FY FY 2020/2021 2019/2020 US$ US$ For the fiscal period ended June 30, 2021 SUB-GRANTS 6 Strengthening Institutional Capacity Other General Expenses -0- -0- PBF Incentives to Counties and Hospitals -0- -0- Redemption Hospitals 480,091 349,944 C.B. Dunbar Hospitals 139,122 120,806 Phebe Hospitals 231,769 211,320 Tellewoyan Hospitals 139,809 115,923 Jackson F. Doe Hospitals 177,834 133,252 F.J. Grant Hospitals 95,992 55,112 St. Francis Hospitals 64,696 51,388 Chief Jallahlone Hospitals 87,104 52,756 Rivercess CHT 102,549 111,046 Rivercess (16 Health Facilities) 32,000 0 Sinoe CHT 143,559 148,059 Sinoe (33 Health Facilities) 66,000 0 Gbarpolu CHT 87,630 95,325 Gbarpolu (14 Health Facilities) 28,000 0 TOTAL 1,876,156 1,444,930 14 Promoting Accountability of Public Resources Auditor General’s Report on the Financial Statement Audit of the Health Systems Strengthening Project (HSSP)/Additional Financing (AF) For the Fiscal Period ended June 30, 2021 FY FY Health System Strengthening Project (HSP) 2020/2021 2019/2020 Additional Financing (AF) US$ US$ For the fiscal period ended June 30, 2021 CASH AT THE END OF THE YEAR 7 CBL 1502021935 MOHSW Health Systems Strengthen Pro. 219,013 648,334 Petty Cash Account (Health Syst. Strength. Proj.) 66 1 IB 001-2197-1008460102 MOH HSS AF 459,537 505,327 TOTAL 724,406 1,107,872 15 Promoting Accountability of Public Resources Auditor General’s Report on the Financial Statement Audit of the Health Systems Strengthening Project (HSSP)/Additional Financing (AF) For the Fiscal Period ended June 30, 2021 Cash at the end of the fiscal period June 30, 2021 Of the US$724,406 reported as cash balance, US$724,340 and US$66 are reported as Cash in Bank and cash on hand for the HSSP Original and Additional Financing respectively. Basis of preparation These financial statements have been prepared in accordance with the requirements of the Public Financial Management Act, 2009 and comply with the Cash Basis International Public Sector Accounting Standard (Cash Basis IPSAS): Financial Reporting under the Cash Basis of Accounting. Specifically, the statements are based on cash basis IPSAS. Receipts represent cash received by the entity and payments on its behalf by outsiders during the reporting period while all expenses are recognized in the statement of Cash Receipts and Payments when paid. Note 8 Variances The 79.06% variance for goods is mainly attributed to the delay in the supply and delivery of 10 ambulances given because of the long process of completing the Letter of Credit (LC) and Special Commitment (SC). There was also delay in completing the procurement processes to procure office equipment for supporting unit within the Ministry of Health Central Office. The 69.28% variance for training represents the unspent balance allocated for training given that all training (both international and local) earmarked were cancelled due to the COVID-19 pandemic. The 57.43% variance for operating cost is attributed to the unspent balance allocated to support operational cost for PIU, and other implementing units within the Ministry of Health. All activities associated to operating cost were suspended due to COVID-19. The 31.98% variance for sub-grant represents the unspent balance allocated for PBF incentive to selected counties and hospitals. Performance Based Financing (PBF) incentives earned by counties and hospitals during the last quarter of the fiscal year were paid during the first quarter of the following fiscal year. Additionally, incentive allocated for payment during were not fully earned by these counties and hospitals. 16 Promoting Accountability of Public Resources