Federal Democratic Republc of Ethiopia MINIST1RY OF AGRICULTURE Date To: Mr. Esayas Nigatu o. Task Team Leader, DRDIP World Bank Ethiopia Country Office Addis Ababa Dear Sir, Subject : Audited financial Statements and ICM report for the year ended 07, July 2019 Enclosed, herewith, please find four original copies of audited report which comprises financial statements and ICM of Development response to Displacement Impacts Project for the year ended 07, July 2019. Yours fait fully, cc: * DRDIP Coordination Office * DRDIP Finance MoANR 4h 4.- 0 6 3 62347 M 0116-46-32-02 Fax No 011646-20-03 3735 0116-46-22-73 Wcbsite www.moa.gov.et XPhID AA A(Am- f-fl4.fL -v N3'' -hM%( hIM Please quote Our Ref. -PTC J?1T+A- Ethionia-Addis Ababa when replying. ZI AUDITORS' REPORT ON THE FINANCIAL STATEMENTS OF MINISTRY OF AGRICULTURE DEVELOPMENT RESPONSE TO DISPLACEMENT IMPACTS PROJECT (DRDIP) AS AT AND FOR THE YEAR ENDED 7 JULY 2019 TAY Authorized Accountants & Auditors Addis Ababa, Ethiopia Tel. 251-11-442-1336 Fax 251-11-442-1338 E-mail: info@tayauditing.com P.O.Box 1335 Addis Ababa, Ethiopia Ethio-china Friendship Street Wongelawit Tadesse Building 1st Floor Website: www.tavaudit.com Ar4ttrs~ TAY INDEPENDENT AUDITORS' REPORT ON THE FINANCIAL STATEMENTS OF MINISTRY OF AGRICULTURE - DEVELOPMENT RESPONSE TO DISPLAVEMENT IMPACTS PROJECT (DRDIP) Opinion We have audited the accompanying financial statements of Ministry of Agriculture -Development Response to Displacement Impacts Project (DRDIP), IDA Credit No.58320 ET for the year ended 7 July 2019. In our opinion, the accompanying financial statements present fairly, in all material respects, the statement of financial position of the Ministry of Agriculture - Development Response to Displacement Impact Project (DRDIP), .IDA Credit No.58320 ET and of its sources and uses of funds for the period then ended in accordance with Generally Accepted Accounting Principles and are in agreement with the records maintained by the Project. In addition, with respect to the fund transferred to communities through Community Investment Fund (CIF) and Common Interest Group (CIG), the fund has been properly managed and accounted for the intended purpose. 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 organization in accordance with the International Ethics Standards Board for Accountants' code of Ethics for Professional Accounts (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Ethiopia, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. Furthermore, we have audited the project's compliance with the provision and covenant of the World Bank Financing Agreement i.e. IDA Credit No.58320 ET. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of the Management for the Financial Statements The management is responsible for the preparation and fair presentation of the financial statements in accordance with the accounting policies of the organization, and for such internal control as management determines is necessary to enable the preparation of a project report that is free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the organization'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 t% .,*uqte the organization or to cease operations, or have no realistic alternative but to do so. member of Kreston International | A glbal network of indepen r*t cu J.ij f nrms Ethio-China Friendship Street, Wengelawit Tadesse Building 1st Flo'o Tel. (011) 442 1336, 442 0062, (011) 470 7092,(011) 470 7094 - Mob.(093) 001 410& )151 i6038139 Fax (011) 442 1338 - e-mail: fhfo@tayauditing.com - www.tayauditing.com - P.O. Box 1335 - AddAb ba Ethiopia Those charged with governance are responsible for overseeing the organization's financial reporting process Auditor's Responsibility for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the Office report as a whole is 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 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. The engagement partner on the audit resulting in this independent auditor's report is Mr. Tesfa Tadesse MSc, FCCA. TAY t Addis Ababa Accou tan & idos November 27, 2019 2 MINISTRY OF AGRICULTURE DEVELOPMENT RESPONSE TO DISPLACEMENT IMPACTS PROJECT(DRDIP) STATEMENT OF FINANCIAL POSITION AS AT JULY 7, 2019 Currency: Ethiopian Birr ASSETS 2018 CURRENT ASSETS Notes Birr Cash at bank and on hand 3 65,660,403.92 41,178,885 Debtors and prepayments 4 29,632,335.32 7,139,197 Total Assets 95,292,739.24 48,318,082 CURRENT LIABILITIES Payables 5 15,004,967.23 19,512,341 REPRESENTED BY Fund Balance 6 80,287,772.01 28,805,741 Total Liabilities and Fund 95,292,739.24 48,318,082 3 AdW. MINISTRY OF AGRICULTURE DEVELOPMENT RESPONSE TO DISPLACEMENT IMPACTS PROJECT(DRDIP) STATEMENT OF SOURCES AND USES OF FUNDS FOR THE YEAR ENDED JULY 7,2019 Currency: Ethiopian Birr Notes 2018 SOURCES Birr Birr MAIN IDA Credit 7.1 686,889,390.77 175,581,185 Community Contribution 7.2 17,758,632.53 15,350,299 704,648,023.30 190,931,484 OTHER Gain on foreign currency exchange 5,078,220.34 15,542,076 5,078,220.34 15,542,076 USES Social and Economic Services and Infastructure 8.1 361,723,389.60 184,207,692 Sustainable Enviornmental Management 8.2 121.518,964.86 58,864,339 Livelihood Programs 8.3 103,229,222.11 61,495,233 Monitoring & Evaluation 8.4 71,553,992.21 43,583,868 658,025,568.78 348,151,133 EXCESS OF SOURCES OVER USES 51,700,674.86 (141,677,573) 01' 4 MINISTRY OF AGRICULTURE DEVELOPMENT RESPONSE TO DISPLACEMENT IMPACTS PROJECT(DRDIP) STATEMENT OF DESIGNATED ACCOUNT- IDA AS AT JULY 7, 2019 IDA Credit Account number 102061300001 Depository Bank National Bank of Ethiopia Related Credit and Grant IDA Loan No. 58320 ET and Project ID No. P152822 Address Addis Ababa, Ethiopia Currency USD USD Birr Opening balance brought forward,8 July 2018 1,442,933 39,372,733 Transferred from World Bank-Credit 24,437,144 686,889,391 25,880,076 726,262,124 Less:- Transferred to Birr account, to Regions & Other expenditures (23,884,462) (673,593,455) Bank charges (23,884,462) (673,593,455) Add:- Gain on exchange - 5,078,220 Ending balance,7 July 2019 1,995,614 57,746,889 5,y MINISTRY OF AGRICULTURE DEVELOPMENT RESPONSE TO DISPLACEMENT IMPACTS PROJECT NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 07 JULY 2019 1. BACKGROUND The Federal Democratic Republic of Ethiopia (GoE) and the International Development Association (IDA) have signed a Financing Agreement (FA) on June 15,2016 for Development Response to Displacement Impacts Project (DRDIP). The project covers a period of five years (from 2016 - 2021). IDA will finance the project by investing 100 Million US Dollar which will be spent in community driven development activities in five targeted regions viz', Afar, Benshingule, Gambelia, Somali and Tigray. The development objective of DRDIP is to mitigate the impact of refugee presence on the hosting communities, through expending access to community demand-driven social and economic services. DRDIP has five components; (i) Social and Economic Service and Infrastructure; (ii) Sustainable Environmental Management; (iii) Livelihoods Program and (iv) Project Management and M&E. i. Social and Economic Service and Infrastructure; - DRDIP will support the Social and Economic Service and Infrastructure which aims to promote refugee hosting communities' access to basic social and economic service and infrastructures prioritized by beneficiary communities. It will strengthen decentralized and participatory planning procedures at the community, Kebele and woreda levels by building community-based institutions and pertinent capacity at both the community and local government levels. The process will follow a community-driven development approach. ii. Sustainable Environmental management: - The objective of this component is to ensure environmental and natural resource are carefully and sustainably managed to support current and future needs and liveihoods of the beneficiary communities. Supply side interventions of this component will support enhanced and sustainable environmental and ecosystem services including integrated natural resource management; development of small scale, micro and household irrigation schemes. On the other hand; demand side interventions of this component will support the reduction of the unsustainable exploitation of natural resource, including mitigation of risks and other challenges and help address gender issues by reducing drudgery (time and energy spent on collecting fuel wood), exposure to risks and violence as well as improving health and indoor air pollution through the use of cleaner fuels and fuel saving cooking technologies. 6 IXX~ MINISTRY OF AGRICULTURE DEVELOPMENT RESPONSE TO DISPLACEMENT IMPACTS PROJECT NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 07 JULY 2019 iii. Livelihood Program: - The objective of this component is to improve livelihoods and increase of refugee hosting communities based on a market-system approach. The component will support intervention aimed at improving the productivity of traditional livelihoods and non-traditional livelihoods. Traditional livelihoods will focus on improving productivity of crops and livestock and improved market linkage and adoption of best practices. Non-traditional livelihoods will be identified based on market assessment to impart skills for increased employability, enterprise development and promote other income generating activities .The component will strengthen existing Community Based Organization (CBOs) that is an organized community group established for discussing and solving social issues in varies aspects of development. It also supports formation of new Community Based Organizations. iv. Project Management, Monitoring and Evaluation: - The objective of this component is to ensure the time implementation of the project according to its core principle and Project Development Objective (PDOs), effective monitoring and Evaluation (M&E) of results, including results to crosscutting issues. M&E activities will include regular monitoring of implementation performance, independent process monitoring (including inter alia regular assessments of community level planning and review of the effectiveness and quality of capacity building efforts). Outcome/impact evaluations at end of project, and annual thematic studies. 2. ACCUNTING POLICIES DRDIP follows the government's accounting policy of modified cash basis of accounting system which is the cash basis of accounting applies except for recognition of Revenue & Expenditure when aid in kind is received. Similarly, all Fixed Assets purchase are charged to expense up on purchase & the project shall maintain a Fixed Assets Register Books accordingly. Transaction occurred in foreign currencies are translated at the prevailing exchange exchange rate at the time of the transaction. 77 MINISTRY OF AGRICULTURE DEVELOPMENT RESPONSE TO DISPLACEMENT IMPACTS PROJECT NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 07 JULY 2019 DRDIP accounting system is a computerized accounting system which is Peachtree accounting software. The accounting cycle for DRDIP is not different from the government accounting cycle. Federal Coordinating Unit (FPCU), Regional (RPCU) and Project Woredas will keep the original book of account for their own financial transactions and posts to the general ledger, Project woreda keeps all financial documents and prepare monthly financial statement using Peachtree accounting program and submit to RPCU.RPCU will prepare quarterly financial statement for its own financial transactions and woreda expenditures and submit to FPCU;FPCU Prepares a consolidated Financial report and submit to the World Bank and Marth period for preparing the accounting report is from 8th July to 7th July of a given year. A0 '-''¼ MINISTRY OF AGRICULTURE DEVELOPMENT RESPONSE TO DISPLACEMENT IMPACTS PROJECT(DRDIP) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JULY 7,2019 Currency: Ethiopian Birr 2018 3. CASH AT BANK & ON HAND Birr Birr Designated Accounts-Federal level IDA Credit Account USD 57,746,889.11 39,372,733 Birr Account at Federal 7,913,501.56 1,801,546 Petty Cash 13.25 4,606 65,660,403.92 41,178,885 4. DEBTORS AND PREPAYMENTS 2018 Birr Birr Advances to implementing partners (Note 4.1) 29,071,532.76 6,658,181 Advance to Staff 506,943.68 167,480 Purchase advance 53,858.88 48,328 Advance to Supplier - 265,208 29,632,335.32 7,139,197 4.1 ADVANCE TO IMPLEMENTING PARTNERS(IPS) 2018 Birr Birr Afar 1,075,896.92 2,666,938 Ethio-Somali 8,150,481.45 1,396,977 Benishangul 2,581,115.98 2,594,266 Gambella 17,264,038.41 - 29,071,532.76 6,658,181 9 MINISTRY OF AGRICULTURE DEVELOPMENT RESPONSE TO DISPLACEMENT IMPACTS PROJECT(DRDIP) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JULY 7,2019 Currency: Ethiopian Birr 2018 5. PAYABLES Birr Birr Accrued liability 471,704.00 15,000 Staff payable 2,237.00 164,181 Payable to region (Note 5.1) 14,447,733.27 18,825,390 Other payable 50.00 10,472 VAT Payable 73,449.57 385,958 Withholding tax payable 9,793.39 55,336 Emplyees' Income tax payable - 56,004 15,004,967.23 19,512,341 5.1 DUE TO REGIONS 2018 Birr Birr Tigray 5,712,483.20 17,033,293 Afar 2,343,499.71 - Benishangul 6,391,750.36 468,551 Gambella - 1,323,546 14,447,733.27 18,825,390 6. FUND BALANCE 2018 Birr Birr Balance as at 8th July, 2018 28,805,742.15 170,483,314 Prior Period Adjustment (218,645.00) - Excess of Sources Over Uses 51,700,674.86 (141,677,573) Balance as at 7th July 2019 80,287,772.01 28,805,741 7. SOURCE OF FUNDS 2018 Sources USD ETB Birr 7.1 IDA Credit 24,437,144 686,889,390.77 175,581,185 24,437,144 686,889,390.77 175,581,185 7.2 Community contribution 17,758,632.53 15,350,299 704,648,023.30 190,931,483.65 10 MINISTRY OF AGRICULTURE DEVELOPMENT RESPONSE TO DISPLACEMENT IMPACTS PROJECT(DRDIP) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JULY 7,2019 8. USES OF FUNDS BY PROJECT COMPONENTS AND SUB-COMPONENTS Currency: Ethiopian Birr % of Budget Project Components & Subcomponents%ofBde Annual Actual Annual Budget Utilization Annual Budget Utilization Variance Rate 8.1 COMPONENT 1-SOCIAL AND ECONOMIC SERVICES AND INFRASTRUCTURE Sub component Community C. expenditure 1.1 in Kind 26,441,499 3,712,270 22,729,229 14% Community C. expenditure 1.1 in Cash 13,220,749 5,973,741 7,247,009 45% 1.1: CIF 378,733,969 334,056,710 44,677,259 88% 1.2: Capacity support for local planning and decentralized services 50,688,464 17,980,669 32,707,795 35% Component Sub total 469,084,681 361,723,390 107,361,291 77% 8.2 COMPONENT 2- SUSTAINABLE ENVIRONMENTAL MANAGEMENT Sub component 2.1: Integrated natural resource management 61,956,956 61,993,090 (36,134) 100% 2.2: Access to Energy 190,863,130 59,525,875 131,337,255 31% Component Sub total 252,820,086 121,518,965 131,301,121 48% 8.3. COMPONENT 3- LIVELIHOODS PROGRAM Sub component 3.1: support to traditional and nontraditional livelihoods 120,078,173 91,273,584 28,804,589 76% 3.2: capacity support for CBOs for livelihood 21,678,503 11,955,638 9,722,865 55% Component Sub total 141,756,676 103,229,222 38,527,454 73% 8.4 COMPONENT 4- PROJECT MANAGEMENT, MONITORING & EVALUATION 63,991,624 71,553,992 (7,562,368) 112% Component Sub total 63,991,624 71,553,992 (7,562,368) 112% GRAND TOTAL 927,653,067 658,025,569 269,627,498 71% Jfl-\ MINISTRY OF AGRICULTURE DEVELOPMENT RESPONSE TO DISPLACEMENT IMPACTS PROJECT(DRDIP) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JULY 7,2019 9. AMOUNT RECEIVED FROM IDA IDA Credit disbursed Received by the Program by the Bank IDA Credit/ USD Rate ETB Withdrawal I 16-Aug-18 1,228,428 1,228,428 27.4327 33,699,107 IDA Credit 2 25-Sep-18 21-Jan-15 5,500 27.5774 151,676 IDA Credit 3 10-Oct-18 493,978 493,978 27.6398 13,653,462 IDA Credit 4 23-Oct-18 3,827,179 3,827,179 27.6969 106,000,986 IDA Credit 5 26-Nov-18 8,000,000 8,000,000 27.8117 222,493,600 IDA Credit 6 19-Dec-18 1,700,052 1,700,052 27.9793 47,566,273 IDA Credit 7 19-Mar-19 3,025,486 3,025,486 28.4427 86,052,997 IDA Credit 20-Jun-19 3,687,036 3,687,036 28.8676 106,435,866 IDA Credit 9-Jul-19 2,469,484 2,469,484 28.6843 70,835,424 IDA Credit 24,437,144 24,437,144 686,889,391 12 MINISTRY OF AGRICULTURE DEVELOPMENT RESPONSE TO DISPLACEMENT IMPACTS PROJECT(DRDIP) LIST OF ACCOUNTING ENTITIES COVERED IN THE AUDIT OF 2018/2019 FOR THE YEAR ENDED JULY 7,2019 There are 22 accounting entities covered in the Financial Statements of the Project:- - Federal Project Coordination Unit (1) - 5 RPCUs and 16 Woredas The audit field works & visits have been performed under the following accounting entities:- RPCU Woreda Awbari Kebre Beyah Afar Asayita Gambella Gog Tigray Asged Thimbla Benishangul Homosha 13 N О м О И И N И t� N М И О 7 N И ..У. z. � � � С w о о а � и и й Q о .а �. ш °1 � й О и � z �-иi О � �U 01 01 О� О 00 00 М �-ы О д' V И И И И И И И И �' М � ^ о[� r t� оо t� t� о[� t� и и и и и и и и и о о о о а Z и и и И и и и и и и и и и и и и и и и оо оо оо и t� оо оо оо оо оо оо оо t� г� г� г� t� t� t r t� t� t� о о о оо j..{ Z� N N N N N N N V д' д' д' 7�' ����� М М М N А М N N N N N N N М М М м м м М М М М М �--� � N W � А о + �+г ;�>'. _� V лr � �;� � aLi V С л �` / �" \, ` �'��а О � `'' �р i=' .. ;" Q1 д, о м л� h,� J..'' 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