U U U U I I I AUDIT REPORT ON THE ANNUAL FINANCIAL STATEMENTS OF I7 LESOTHO MATERNAL AND NEW BORN PBF (HSPE) PROJECT - MINISTRY OF HEALTH GOVERNMENT OF LESOTHO FOR THE YEAR ENDED 31 MARCH 2020 I I I AUDITOR - GENN RAl P.O. BOX 502 I MASERU 100 UU LE THO Ll HEALTH SECTOR REFORM PROJECT MINISTRY OF HEALTH GOVERNMENT OF LESOTHO LESOTHO MATERNAL AND NEW BORN PBF (HSPE) PROJECT FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2020 TABLE OF CONTENTS PAGE Report of the Auditor General 1-3 Project Sources and Uses of Funds - Maloti 4-5 Project Sources and Uses of Funds - US Dollars 6-7 Use of Funds by Project Activities - Maloti 8-9 Use of Funds by Project Activities -US Dollars 10-11 I Notes to the Financial Statements 12-13 The accompanying financial statements set out on pages to were approved on ........... ............... ...................... ... 2020 and signed by: *.* * * * * * * * * * ** .ee .**** ..*.*.** PRINCIPAL SECRETARY DIRECTOR, FINANCE MINISTRY OF HEALTH MINISTRY OF HEALTH [I (I REPORT ON THE AUDITED FINANCIAL STATEMENTS OF LESOTHO MATERNAL AND NEW BORN PBF (HSPE) PROJECT - MINISTRY OF HEALTH FOR THE YEAR ENDED 31 MARCH 2020 Opinion Sheeran and Associates, under Section 24 (1) of the Audit Act 2016, have audited the financial statements of Lesotho Maternal and New Born PBF (HSPE) Project (the project) set out on pages 4 to 13, which comprise the statement of sources and uses of funds for the year ended 31 March 2020, and notes to the financial statements, including a summary of significant accounting policies and other explanatory notes. In my opinion, the accompanying financial statements present fairly, in all matrrial respects, the cash and cash equivalent position of the Project as at 3 . March 2020, and its financial performance for the year then ended in accordance with International Public Sector Accounting Standards (IPSAS). Basis for Opinion I conducted my audit in accordance with International Standards of Supreme Audit Institutions (ISSAIs). My responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of my report. I am independent of the project in accordance with the International Ethical Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) together with the requirements that are relevant to my audit of project financial statements in Lesotho, and I have fulfilled my other ethical responsibilities in accordance with the requirements of IESBA Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Key Audit Matters Key audit matters are those matters that, in my professional judgment, were at most significance in my audit of the financial statements of the current period. There were no key matters identified during the course of the audit. 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 IPSASs, 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'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 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 My 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 audit report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISA 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. As part of an audit in accordance with ISA, I exercise professional judgment and maintain professional skepticism throughout the audit. I 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 my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve LI 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. U * 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 Project's ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my audit report to the related disclosures in the financial statements or, if such disclosures [J are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my audit report. However, future events or conditions may cause the Project 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. I 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 I identify during my audit. I also provide those charged with governance with a statement that I have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on my independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, I determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit L matters. I describe these matters in my audit report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, I determine that a matter should not be communicated in my report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. OFFCE OF THE AUD TO . G ' R L M. M. BESETSA (MS) dWJJ9RGEdE AL ACTING AUDITOR-GENERAL 2 9 SEP 2(20 P.O. 80X 502 MASEPUl00, L OTHO U HSRP - Health Sector Reform Programme - Lesotho SOURCES AND USES OF FUNDS - PBF (HSPE) Project Year finishing at 3110312020 MalotU Page in Sources of Funds Lesoltro Va*uA Health PBF PPA 3an Lesothe Maternal Health PBF IDA sa - TU 0e0 VMe Lesolho Ma erna Health PBF BRD 324N2 45s17 UNFPA Purca se of PBF FP Indicators - mce 2NV92M Total Soures of Funds #n *7 Total Financing nAWMraat Uses of Funds By Category Uses of Funds By Category - PBF PPA 2,AaXs Consultancy Serwces 2O.'94 Civi Works Training wm Operatng Costs a74,42 Uses of Funds By Category - PBF IDA " 4* Goods, S/works & POC for Health Serv Pro, 7 W7 e72a as Consultancy Servces 4a ms Tra nrng 7 d42= Operating Costs as PPF Refinancng Proc of goods other than Sub 1A Uses of Funds By Category - PBF IBRD Goods, S/works & POC for Health Serv Proj Consultancy Services a d 2nn77 $4s Operating Costs 187 C4 us '05 Uses of Funds By Category - UNFPA 20 Consultancy Services CivE Works Goods Training Operating Costs 211o320 Total Uses of Funds By Category tsnns 172.0 Total Expenditures awayes cas,m - TornPro - HSRP - LOSOTHO Printed on 211092020 at 6:48 prn U HSRP - Health Sector Reform Programme - Lesotho SOURCES AND USES OF FUNDS - PBF (HSPE) Project Year finishing at 3110312020 Maloi Page 212 '737- Receipts Less Expemlturess Foreign Exchange Difference -7e M3 Encasbement Evoluion 8son3 Opening Cash Balances ,n Opening Cash BaLamce Lesotho Mala Health PBF USD Nc smase Lesotho Matema Health PBF LSL Ac os Total Opening Cash Balance Total Opening Cash Ass!? Net Cash Available m *rY3 Closing Cash Balances Lesotho Malemal Health PBF USD A/c Lesotho Matemal Health PBF LSL A/c Total Closing Cash Balances ik?P3r f TomPro - MSRP - LOSOTHO Printed on 2110912020 at 6:-48 pmn U HSRP - Health Sector Reform Programrnme - Lesotho SOURCES AND USES OF FUNDS - PBF (HSPE) Project Year finishing at 3110312020 US Dollars (1 USD =18 LSL) Page 1/2 Cumultive6 Months Sources of Funds Lesto Vatfr-al Health PBF PPA A97 Lesle Maternal realth PBF IDA 4AS e.324.311 Lesotho Maternal Health PBF IBRD 21t9 3,StS248 UNFPA Pur0hase of PBF FP Indicators S s9w 24214 Total Sources of Funds assm7rams Total Financing 7ss2 6rs5 Uses of Funds By Category Uses of Funds By Category - PBF PPAss Consultancy Services 2M247 Ci Works Goods Training Operatg Costs mm Uses of Funds By Category - PBF IDA Goods S/works & POC for Health Serv Pro) s sens4W C,orsultancy Sevices 2 %7 A Traning OpeTatng Costs 1121A PPF Refinancing Proc of goods other than Sub 1A Uses of Funds By Category - PBF IBRD Goods, Stworks & POC for Health Serv Prol 2se e Consultancy Services Operatig Costs aa ns Uses of Funds By Category - UNFPA 1.6 Consultancy Senrices Civil Works Trainrng Operating Costs S vh Total Uses of Funds By Category 1IA2,733 MAZ? Total Expenditures TomPro - HSRP - LOSOTHO Printed on 2110912020 at 6:51 pm HSRP - Health Sector Reform Programme - Lesotho SOURCES AND USES OF FUNDS - PBF (HSPE) Project Year finishing at 3110312020 US Dollars (1 USD =18 LSL) Page 22 Receipts Less Expenditures ase Forin Exchange Difference 4120 420 Emcashernent Evoluion -amse Opening Cash Balances Ope-ning Cash Balance A Lesotha Mateal Health PBF USD Nc LesoTo Matemal Health PBF LSL Ac 20 .2 Total Opening Cash Balance ans Total Opening Cash ano Net Cash Available 0a Closing Cash Balances Lesoto Maternal Health PBF USD A/c Lesto'e Materna Health PBF LSL AJc O Total Closing Cash Balances as a' H1 16A(v.TomPro-RHSIRP -LOSOTHO Printed on 211091020 at 6:51 pm . . . . . . . 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SCOPE The period covered by the financial statements is from I April 2019 to 31 March 2020. The Project Accounting Unit (PAU) maintains accounts in respect of funding provided by donors. The accompanying financial statements, cover funding under WORLD BANK- PERFORMANCE BASED FINANCING. Separate statements have been prepared in respect of each of the donors. A consolidated set of financial statements has also been prepared to include all donors providing finance for the Health Reforms and for which the Ministry of Health Project Accounting Unit maintains accounts or keeps track of expenditure. 2. BACKGROUND: The Government of Lesotho is undergoing comprehensive reform of its health sector. This endeavour is being led by the ministry of Health and supported by the Ministry's external partners through a sector-wide programme towards coordination and harmonization of all the Health Sector partners, with the objective of the operational isation of a Sector Wide Approach (SWAP). In broad terms, the efforts are directed towards achieving universal access to essential health care services, social justice (so that those in greatest needs will be given priority) and equity, such that every person regardless of social standing will receive the same treatment. 12 HEALTH SECTOR REFORM PROJECT MINISTRY OF HEALTH GOVERNMENT OF LESOTHO LESOTHO MATERNAL AND NEW BORN PERFORMANCE PBF (HSPE) FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2020 NOTES TO THE FINANCIAL STATEMENTS 3. ACCOUNTING POLICIES: Basis of Accounting The financial statements have been prepared on the IPSAS Cash basis. On this basis revenue is recognized when received rather than when earned, and expenses are recognized when paid rather than when incurred. Foreign Currency Translation: Foreign currency receipts and payments in Lesotho have been translated at the rate ruling on the date of the translation. Monthly Financial Statements are converted to Maloti and/or US Dollar equivalent at the average rate for the month in which the transactions occur using exchange rates supplied by the Central Bank of Lesotho for purposes of comparison. The conversion of the financial statements for the year has been made at the weighted average rate for all the monthly transactions throughout the year. I