INTEGRATION OF SOCIAL ACCOUNTABILITY INTO NATIONAL AND SUB-NATIONAL SYSTEMS PROJECT AUDITED FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT 31 DECEMBER 2020 INTEGRATION OF SOCIAL ACCOUNTABILITY INTO NATIONAL AND SUB-NATIONAL SYSTEMS PROJECT Under the Grant Agreement Number - TFOB2195 between the Royal Government of Cambodia and the International Development Association PROJECT INFORMATION PROJECT MANAGEMENT: National Committee for Sub-National Democratic Development Secretariat ("NCDDS"), Ministry of Interior: H.E Ngan Chamroeun, Project Director Mr. Ma Onn Ma On Nath, Project Manager IMPLEMENTING AGENCY: National Committee for Sub-National Democratic Development Secretariat ("NCDDS"), Ministry of Interior PRINCIPAL BANKER: National Bank of Cambodia AUDITORS: BDO (Cambodia) Limited INTEGRATION OF SOCIAL ACCOUNTABILITY INTO NATIONAL AND SUB-NATIONAL SYSTEMS PROJECT Under the Grant Agreement Number - TFOB2195 hetween the Royal Government of Cambodia and the International Development Association CONTENTS PAGE PROJECT MANAGEMENT'S REPORT 1 INDEPENDENT AUDITORS' REPORT 2 -3 STATEMENT OF FINANCIAL POSITION 4 STATEMENT OF SOURCES OF FUNDS AND EXPENDITURES 5 STATEMENT OF CASH RECEIPTS, EXPENDITURES AND COMPARISION OF 6 BUDGET AND ACTUAL AMOUNTS STATEMENT OF DESIGNATED ACCOUNTS 7 NOTES TO THE FINANCIAL STATEMENTS 8 - 14 INTEGRATION OF SOCIAL ACCOUNTABILITY INTO NATIONAL AND SUB- NATIONAL SYSTEMS PROJECT Under the Grant Agreement Number - TFOB2195 between the Royal Government of Cambodia and the International Development Association PROJECT MANAGEMENT'S REPORT The Project Management hereby submits the report together with the audited financial statements of Integration of Social Accountability into National and Sub-National Systems Project ("the Project"), which comprise statement of financial position as at 31 December 2020, statement of sources of funds and expenditures, statement of cash receipts, expenditures and comparison of budget and actual amounts and statement of designated accounts, for the period from 17 March 2020 to 31 December 2020. Responsibility of the Project Management in respect of the financial statements The Project Management is responsible to ascertain that the financial statements of the Project for the period from 17 March 2020 to 31 December 2020 are prepared, in all material respects, in accordance with the basis of preparation and accounting policies set out in Note 2 to the financial statements. In preparing these financial statements, the Project Management is required to select suitable accounting policies and then apply them consistently. The Project Management is responsible for ensuring that proper accounting records are kept which enable the financial statements to be prepared in compliance with basis of preparation and accounting policies set out in Note 2 to the financial statements. The Project Management is also responsible for safeguarding the assets of the Project and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Project Management assumes the responsibility to provide, and has provided, the auditors with all accounting records, supporting and other documents, minutes, and any other pertinent information and explanations, either orally or in writing, necessary for the audit. Statement by the Project Management In the opinion of the Project Management, the financial statements set out on pages 4 to 14 are prepared, in all material respects, in accordance with the basis of preparation and accounting policies set out in Note 2 to the financial statements. Signed on behalf of the Project Management,00 Ngan Chamroeun Project Director Secretary of State, MOI Head of NCDDS Phnom Penh, Cambodia Date: 1 OGI 4I, Tel: +855 23 218 128 Suite 28 Hotel Cambodiana 2 Fax: +855 23 993 225 313 Sisowath Quay www.bdo.com.kh Phnorn Penh Kingdom of Cambodia INDEPENDENT AUDITORS' REPORT TO THE PROJECT MANAGEMENT OF INTEGRATION OF SOCIAL ACCOUNTABILITY INTO NATIONAL AND SUB-NATIONAL SYSTEMS PROJECT Report on the Financial Statements Opinion We have audited the financial statements of Integration of Social Accountability into National and Sub-National Systems Project ("the Project"), which comprise statement of financial position as at 31 December 2020, statement of sources of funds and expenditures, statement of cash receipts, expenditures and comparison of budget and actual amounts and statement of designated accounts, for the period from 17 March 2020 to 31 December 2020 and a summary of significant accounting policies and other explanatory explanation, as set out on pages 4 to 14. In our opinion, the accompanying financial statements of the Project for the period from 17 March 2020 to 31 December 2020 are prepared, in aLL material respects, in accordance with the basis of preparation and accounting policies set out in Note 2 to the financial statements, 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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence and Other Ethical Responsibilities We are independent of the Project in accordance with the Code of Ethics for Professional Accountants and Auditors of the Kampuchea Institute of Certified Public Accountants and Auditors ("Code of Ethics") and the International Ethics Standards Board for Accountants' International Code of Ethics for Professional Accountants (including International Independence Standards) ("IESBA Code"), and we have fulfilled our other ethical responsibilities in accordance with the Code of Ethics and the IESBA Code. Emphasis of Matter - Basis of Accounting We draw attention to Note 2 to the financial statements, which describe the basis of preparation and accounting policies adopted by the Project. The financial statements are prepared to assist the Project to meet its financial reporting requirements. As a result, the financial statements may not be suitable for another purpose. Our opinion is not modified in respect of this matter. Responsibility of the Project Management for the Financial Statements The Project Management is responsible for the preparation of the financial statements in accordance with the basis of preparation and accounting policies set out in Note 2 to the financial statements, and for such internal controls as the Project Management determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error. BDD (Cambodia) Limited, Certified Public Accountants. a Cambodian limited lability company, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BD0 network of indeperdent member firms. 3BDO 3 INDEPENDENT AUDITORS' REPORT TO THE PROJECT MANAGEMENT OF INTEGRATION OF SOCIAL ACCOUNTABILITY INTO NATIONAL AND SUB-NATIONAL SYSTEMS PROJECT (continued) Auditors' Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements of the Project as a whole are 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 the financial statements. As part of an audit in accordance with CISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: * Identify and assess the risks of material misstatement of the financial statements of the Project, 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 the Project Management. * Evaluate the overall presentation, structure and content of the financial statements of the Project, including the disclosures, and whether the financial statements of the Project represents the underlying transactions and events in a manner that achieves fair presentation. We communicate with the Project Management 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 and on behalf of BDO (Cambodia) Limited Lim Seng Siew Certified Public Accountant Phnom Penh, Cambodia Date: 18 October 2021 4 INTEGRATION OF SOCIAL ACCOUNTABILITY INTO NATIONAL AND SUB-NATIONAL SYSTEMS PROJECT Under the Grant Agreement Number - TFOB2195 between the Royal Government of Cambodia and the International Development Association STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2020 Note 31.12.2020 USS ASSET Cash and bank balances 3 180,157 TOTAL ASSET 180,157 FUND BALANCE 180,157 The accompanying notes forn an integral part f the financial statements. 5 INTEGRATION OF SOCIAL ACCOUNTABILITY INTO NATIONAL AND SUB-NATIONAL SYSTEMS PROJECT Under the Grant Agreement Number - TFOB2195 hetiween the Royal Government of Cambodia and the International Develojnnent Association STATEMENT OF SOURCES OF FUNDS AND EXPENDITURES FOR THE PERIOD FROM 17 MARCH 2020 TO 31 DECEMBER 2020 17.3.2020 to Note 31.12.2020 US$ SOURCES OF FUNDS International Development Association 4 275,000 EXPENDITURES BY CATEGORIES Goods 5 35,177 Consulting services 6 44,179 Operating costs 7 15,487 94,843 Excess of sources of funds over expenditures 180,157 Fund balance at beginning of period - Fund balance at end of period 180,157 EXPENDITURES BY COMPONENTS 8 Transparency and access to information 11,188 Capacity development 10,135 National and Sub-National coordination and support 73,520 94,843 The cccomiipanying notes formn an integral part of the financial statements. 6 INTEGRATION OF SOCIAL ACCOUNTABILITY INTO NATIONAL AND SUB-NATIONAL SYSTEMS PROJECT Under the Grant Agreement Number - TF0B2195 between the Royal Government of Cambodia and the International Development Association STATEMENT OF CASH RECEIPTS, EXPENDITURES AND COMPARISION OF BUDGET AND ACTUAL AMOUNTS FOR THE PERIOD FROM 17 MARCH 2020 TO 31 DECEMBER 2020 Actual 17.3.2020 Total to budget 31.12.2020 US$ US$ (unaudited) SOURCES OF FUNDS International Development Association 275,000 EXPENDITURES BY CATEGORIES Goods 154,632 35,177 Consulting services 120,672 44,179 Training costs 197,788 - Operating costs 120,886 15,487 593,978 94,843 Excess of sources of funds over expcnditLres 180,157 Fund balance at beginning of period - Fund balance at end of period 180,157 EXPENDITURES BY COMPONENTS Transparency and access to information 202,514 11,188 Implementation of Joint Accountability Action Plans 41,850 - Capacity development 109,995 10,135 National and Sub-National coordination and support 239,619 73,520 593,978 94,843 The accompaiying noles frin an integral part of'the financial statements. 7 INTEGRATION OF SOCIAL ACCOUNTABILITY INTO NATIONAL AND SUB-NATIONAL SYSTEMS PROJECT Unler the Grant Agreement Number - TFOB2195 between the Royal Government of Cambodia and the International Development Association STATEMENT OF DESIGNATED ACCOUNTS FOR THE PERIOD FROM 17 MARCH 2020 TO 31 DECEMBER 2020 17.3.2020 to Note 31.12.2020 USS SOURCES OF FUNDS Funds received during the year 4 275,000 EXPENDITURE BY CATEGORIES Goods 5 35,177 Consulting services 6 44,179 Operating cost 7 15,487 94,843 Excess of sources of funds over expenditures 180,157 FLInd balance at beginning of year Fund balance at end of year 180,157 REPRESENTED BY: Cash on hand 3 764 Cash at bank 3 179,393 180,157 The accompanying notes form an integral part of the financial statenints. 8 INTEGRATION OF SOCIAL ACCOUNTABILITY INTO NATIONAL AND SUB-NATIONAL SYSTEMS PROJECT Under the Grant Agreement Numher - TFOB2195 between the Royal Government of Cambodia and the International Development Association NOTES TO THE FINANCIAL STATEMENTS 1. PROJECT BACKGROUND Integration of Social Accountability into National and Sub-National Systems Project ("the Project") was established under the Grant Agreement Number - TFOB2195 signed on 17 March 2020 between the Royal Government of Cambodia ("RGC") represented by the Ministry of Economy and Finance ("MEF") and the International Development Association ("IDA") of World Bank. The agreement became effective for implementation from 17 March 2020. The amount of funding under the grant agreement to be provided to the Project is US$1,720,000, with details as follows: Amount of the Grant % of Expenditures to Allocated be Financed Category (expressed in US$) (inclusive of taxes) (1) Goods, Non-consulting services, 1,720,000 100% ConsiLlting services, Operating costs, Training and Workshops, under the Project. TOTAL 1,720,000 The Project started with the objective to improve the performance of public service providers through the development and institutionalisation of national and sub-national government systems for improved transparency, strengthened citizen engagement and responsive action. The Project is being implemented by National Committee for Sub-National Democratic Development Secretariat ("NCDDS"), Ministry of Interior. The Project consists of the following parts: Part I: Transparency and access to infrmation Provision of support to strengthen transparency and import citizen access to information relating to public service performance, budget and expenditure, including: (i) the implementation of Implementation Plan for the Social Accountability Framework ("ISAF") activities through training-of-trainers and organising outreach events; (ii) developing and piloting a set of ISAF administrative tools for district/municipality administrations; and (iii) enhancing and managing an electronic platform for access information. Part 2: Citizen monitoring Provision of support to empower citizen to monitor and evaluate pUblic service and propose actions for imprOvement Using the comrrmunity scorecard process and self- assessment meetings, including: (i) integrating community score care processes into health centers, schools, commine/Sangkat courncils and district/municipality administrations; (ii) training commune, school, health center and district administration staff to conduct self-assessment meetings; and (iii) supporting collaboration between sUb-national authorities and services providers in self-assessment meetings. 9 INTEGRATION OF SOCIAL ACCOUNTABILITY INTO NATIONAL AND SUB-NATIONAL SYSTEMS PROJECT Under the Grant Agreement Number - TFOB2195 between the Royal Government of Cambodia and the International Development Association 1. PROJECT BACKGROUND (continued) Part 3: Anplementation ofJoint Accountability Action Plans ("JAAPs') Provision of support to stakeholders to implement agreed JAAPs, including conducting training for relevant personnel at all levels. Part 4: Capacity development Support: (i) the preparation and revision of necessary documentation to develop new guidelines and training materials for government implementation of ISAF Activities; (ii) strategic planning and training for key stakeholders; and (iii) the preparation of a standardised training cirriculffm and accreditation program for public servants. Part 5: National and Sub-national coordination and support Provision of assistance for the Project management, administration, coordination, and financing of operating costs, including monitoring and evaluation. 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUTING POLICIES 2.1 Basis of preparation The financial statements of the Project, which are expressed in United States Dollar ("US$"), have been prepared in accordance with modified cash basis of accounting. Under this basis of accounting, ftnd received is recognised when received rather than when the right to receive it arises, and expenditure is recognised when it is paid rather than when incurred, except for the advances to implementing agencies, which are initially recognised as receivables and only recognised as expenditures when they have been liquidated by invoices supporting the related expenditures. The Financial statements present sources and uses of funds, and the related financial information in relation to the IDA fund withdrawals and disbursements from the Project's designated account as specified tinder the Grant Agreement NUmber - TFOB2195 between the MEF of RGC and the IDA of World Bank. 2.2 Sources of funds Funds from the IDA are recognised as a sotirce when cash is transferred to the Project's designated account or when direct payments are disbUrsed by the IDA, rather than when committed or bUdgeted. 2.3 Expenditures Expendittire is recognised when payment is made rather than when it is incurred, except as disclosed in Note 2.1 to the financial statements. 10 INTEGRATION OF SOCIAL ACCOUNTABILITY INTO NATIONAL AND SUB-NATIONAL SYSTEMS PROJECT Under the Grant Agreement Number - TFOB2195 between the Royal Government of Cambodia and the International Development Association 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUTING POLICIES (continued) 2.4 Equipment Equipment procured is recognised as expenditure when received or when handed-over from the contractors or suppliers upon the respective acceptance and approval by the Proj ect. 2.5 Cash Cash consists of cash and bank balances with insignificant risk of changes in values. The Project maintains a designated account with the National Bank of Cambodia in a US$ denominated account. A petty cash float is also maintained in JS$. 2.6 Statement of designated account The statement of designated account presents the receipts and payments funded by the IDA in accordance with the financing agreement. 2.7 Foreign exchange differences Expenditures and withdrawals in foreign currencies (other than US$) are converted into US$ at the prevailing exchange rates declared by the National Bank of Cambodia ruling at the date of transactions. Monetary items denominated in foreign currencies are translated in to US$ for reporting purposes at the closing exchange rate prevailing at the reporting date. 3. CASH AND BANK BALANCES 31.12.2020 US$ Cash on hand 764 Cash at bank 179,393 180,157 4. INTERNATIONAL DEVELOPMENT ASSOCIATION 31.12.2020 USS Funds receipts 275,000 11 INTEGRATION OF SOCIAL ACCOUNTABILITY INTO NATIONAL AND SUB-NATIONAL SYSTEMS PROJECT Under the Grant Agreement Number - TF0B2195 between the Royal Government of Cambodia and the International Development Association 5. GOODS 17.3.2020 to 31.12.2020 US$ Computer equipment 33,780 Other equipment 1,397 35,177 6. CONSULTANT SERVICES 17.3.2020 to 31.12.2020 us$ National consultant fee 31,808 Withholding tax on consultant 3,883 NCDDS performance assessment 8,488 44,179 7. OPERATING COSTS 17.3.2020 to 31.12.2020 US$ Administration supplies 1,813 Banking charge 48 Local transportation and mission costs 8,971 Maintenance supplies 1,164 Public relations and advertisement 2,991 Rewards and other compensation 500 15,487 12 INTEGRATION OF SOCIAL ACCOUNTABILITY INTO NATIONAL AND SUB-NATIONAL SYSTEMS PROJECT Under the Grant Agreement Number - TFOB2195 between the Royal Government of Cambodia and the International Development Association 8. EXPENDITURES BY COMPONENTS 17.3.2020 to 31.12.2020 us$ Transparency and access to information: ISAF information and coMmunication consultant 6,626 ISAF information technology 4,562 Capacity development: National monitoring and project supporting visit 10,135 National and Sub-national Coordination and Support: ISAF senior national operation consultant (individual) 8,130 Social accountability consultant (individual) 7,908 ISAF financial management consultant (individual) 8,465 Drivers 500 Computer equipment 35,177 Bank charge for fund transfer from NCDDS to Provinces 48 Procurement publish advertisement 2,991 Office supply 1,813 NCDDS performance 8,488 94,843 9. DESIGNATED ACCOUNTS AND WITHDRAWAL APPLICATIONS 9.1 Statement of designated accounts - IDA Grant US$ Balance as at 13 March 2020 - Add: Total amount advanced during the period 275,000 Deduct: Total amount withdrawn for expenditures during the period (94,843) Balance as at 31 December 2020 180,157 � � 69 О О р � О д Е'и �/'r И � � N N ОЛ и г!j � � С й и � v �"'�" � � Cr О о bл � cr, � � 'у �+ С и С/1 :3 � :� V � � � � Н w у F'. � � b4 и ц� � � � L С и � Уч ;, ' U � �о � � wA °'Cj 0 н � � �� � � � а, .Ч ц ,� r�, и � � о � � � о � т � � � ~ ¢ 7� � и � � � Q � оо � 2; � С7 о� �� �� � z� С а ь�з о о U С 0� '+� �' � о о ,,� с о � и' и, Q � � � п�i r�v и �� о z� � °� а �� а ,Z о� д о- а � � � � N � С � � 3 С � � � � � � � Е-� `� А д А � � ,� q х А �� � N � � о Z � А � о �" Q � � � � � � �" � � а � � � С Q � о � о � � U С +� U � V L � � � � � � 'а о о а А � `� � '� [� о � � о � z � � � �� � � � С � о ,� er и � � г,� � � � г� С � о . д и r� .� � '� � ry Z � а~ а� 14 INTEGRATION OF SOCIAL ACCOUNTA131LITY INTO NATIONAL AND SUB-NATIONAL SYSTEMS PROJECT Un(ler the Grant Agreement Number - TFOB2195 betiveen the Koyal Government of Comhodia and the International DevelopmentAs.voeiation 11. TAXATION CONTINGENCIES The taxation systein in Cambodia is relatively new and is characterised by nUmel-OLIS taxes arid fi-equently changing legislation, which is often unclear, contradictory, arid suh ' ject to interpretation. Often, differing interpretations exist among M1111crOLIS taxation aUthOrities and jurisdictions. Taxes are SUbject to review and investigation by a number of aLith0fitiCS, who are enabled by law to impose severe fines, penalties and interest charges. These facts may create tax risks in Cambodia substantially more significant than in other COUntries. Pro.ject Managernent believes that it has adequately provided for tax liabilities based on its interpretation of tax legislation. However, the relevant authorities may have differing interpretations and the effects COUld be significant. 12. COMPARATIVE FIGURES There are no comparative figUres as this is the first set of financial statements since the commencement of the Project.