AUDITOR GENERAL'S REPORT On The Closeout Audit of the Integrated Public Financial Management Reform Project (IPFMRP) For the Period June 2016 to July 2017 December, 2017 Yusador S. Gaye, CPA, CGMA Auditor General, R.L. Auditor General’s Report On The Audit of the Integrated Public Financial Management Reform Project (IPFMRP) For the Period June 2016 to July 2017 Table of Contents Report on the Audit of the IPFMRP Financial Statements ............................................................. 3 Statements of Receipts and Payments for the Year Ended June 30, 2017...................................... 5 PROJECT DESIGNATED ACCOUNT STATEMENT .......................................................................... 6 Statement of Fund Balance and Cash Status for the Year Ended June 30, 2017 ............................. 7 Statement of Comparison of Budget and Actual Amounts for the Fiscal Year Ended June 30, 2017 .. 8 NOTES TO THE FINANCIAL STATEMENTS....................................................................... 10 1. Background and Information of the Project ....................................................................................... 10 2. Use of Grant Proceeds............................................................................................................................ 10 3. Significant Accounting Policies .............................................................................................................. 11 4 Grant .......................................................................................................................................................... 11 5. Budget Planning Systems, Coverage and Credibility ......................................................................... 12 6. PFM Legal Framwork, Budget Execution, Accounting and Reporting ............................................. 12 7. Revenue Mobilization and Administration ........................................................................................... 12 8. Transparency and Accountability .......................................................................................................... 12 11. Cash paid ............................................................................................................................................... 13 2 Promoting Accountability of Public Resources Auditor General’s Report On The Audit of the Integrated Public Financial Management Reform Project (IPFMRP) for the Period June 2016 to July 2017 December 30, 2017 Christopher Sokpor, PhD Unit Manager Integrated Public Financial Management Reform Project (IPFMRP) Monrovia, Liberia Dear Dr. Sokpor: RE: Report on the Audit of the IPFMRP Financial Statements Opinion In our opinion, the accompanying financial statements present fairly, in all material respects, the Statement of Receipts and Payments, Statement of Comparison of Budget and Actual Amounts, the Designated Account and a summary of 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. We have audited the accompanying financial statements of the Integrated Public Financial Management Reform Project (IPFMRP) as at June 30, 2017, which comprise the Statement of Receipts and Payments, Statement of Comparison of Budget and Actual Amounts and a summary of accounting policies and other explanatory notes. Basis for Opinion We conducted our audit in accordance with International Standard 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 Ministry of Finance and Development Planning (MFDP) 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 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. Responsibilities of the IPFMRP Management for the financial statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Public Sector Accounting Standard Cash Basis (IPSAS), and for such internal control as management determines 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 the going concern and 3 Promoting Accountability of Public Resources Auditor General’s Report On The Audit of the Integrated Public Financial Management Reform Project (IPFMRP) for the Period June 2016 to July 2017 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. Auditor’s Responsibilities for the Audit of the Financial Statements The objectives of our audit 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 the International Standard of Supreme Audit Institutions (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 2017 4 Promoting Accountability of Public Resources Auditor General’s Report On The Audit of the Integrated Public Financial Management Reform Project (IPFMRP) for the Period June 2016 to July 2017 Statements of Receipts and Payments for the Year Ended June 30, 2017 In United States Dollars Notes 2017 2016 Receipts Total Grant 4 4,450,000 5,907,878 Other Income- Sale of Bid 17,950 __ documents Total Receipt 4,467,950 5,907,878 Payment Budget Planning Systems, Coverage 5 143,790 175,735 and Credibility PFM Legal Framework, Budget Ex., 6 1,246,002 2,150,393 Acct & Reporting Revenue Mobilization and 7 214,363 873,470 Administration Transparency and Accountability 8 777,224 1,545,326 Program Governance and Project 9 1,354,080 1,819,997 Management Total Payment 3,735,459 6, 564,921 Excess of Payments over 732,491 (657,043.00) Receipts Fund Balance as at July 1, 620,134 (36,909.00) Cumulative Fund Balance 695,582 (36,909.00) The notes on pages 10 to 14 are integral part of these Project Financial report. 5 Promoting Accountability of Public Resources Auditor General’s Report On The Audit of the Integrated Public Financial Management Reform Project (IPFMRP) for the Period June 2016 to July 2017 PROJECT DESIGNATED ACCOUNT STATEMENT Account Number 02/205/300001/68 Account Type Current Account Depository Bank Central Bank of Liberia Address Warren Street Monrovia, Liberia Related Grant Agreement IPFMRP Grant No: TF 12690, TF A2366, IDA 50260 & AfDB 5900155003751 Currency : United States Dollar In United States Dollars 2017 2016 Total Grant Received 4,450,000 5,907,878 Other Income Sale of Bid Documents 17,950 Total grant income reported 4,467,950 5,907,878 Amount spent (3,735,459) (6,564,921) Balance as at July 1 (36,909) 620,134 Balance as at June 30 695,582 (36,909) 6 Promoting Accountability of Public Resources Auditor General’s Report On The Audit of the Integrated Public Financial Management Reform Project (IPFMRP) for the Period June 2016 to July 2017 Statement of Fund Balance and Cash Status for the Year Ended June 30, 2017 Notes 2017 2016 In United States Dollars A. FUND BALANCE Balance of Project Fund b/f (36,909) 620,134 Add: Total Receipts during the period 4,467, 950 5,907,878 Total fund available for operations 4,431,041 6,528,012 Less: Total payments during the period 3,735,459 6,564,921 Balance of project funds at the end of the year 695,582 (36,909) B. CASH STATUS: Cash at bank 695,582 (36,909) Total cash on hand and in bank 695,582 (36,909) Difference between A and B The notes on pages 10 to 14 are integral part of these Project Financial report. 7 Promoting Accountability of Public Resources Auditor General’s Report On The Audit of the Integrated Public Financial Management Reform Project (IPFMRP) for the Period June 2016 to July 2017 Statement of Comparison of Budget and Actual Amounts for the Fiscal Year Ended June 30, 2017 Uses of funds, by Activity Project Annual Actual Variance within Component Allocation Budget $ $ $ $ Component 1: Enhancing Budget 1,838,000.00 143,000.00 143,790.42 (790.42) 1% Planning System, Coverage and Credibility Component 2: Strengthening PFM 9,581,830.77 1,250,500.00 1,246,001.85 4,498.15 0% Legal Framework, Budget Execution, Accounting and Reporting Component 3: Revenue 5,849,294.50 221,000.00 214,363.00 6,637.00 3% Mobilization and Administration Component 4: Enhancing 6,406,285.00 799,000.00 777,223.77 21,776.23 3% Transparency and Accountability Component 5: Program 7,425,589.73 1,378,000.00 1,354,080.07 23,919.93 2% Governance and Project Management Grand Total 31,101,000.00 3,791,500.00 3,735,459.11 56,040.89 1% Note: the marginal variance noted above were due to normal estimations error between budgeted amounts and actual projections -for which related costs cleared The notes on pages 10 to 14 are integral part of these Project Financial reports. 8 Promoting Accountability of Public Resources Auditor General’s Report On The Audit of the Integrated Public Financial Management Reform Project (IPFMRP) for the Period June 2016 to July 2017 STATEMENT OF FINANCIAL POSITION AS AT JUNE 30, 2017 In United States Dollars Notes 2017 2016 Assets Cash and cash equivalent 695,582 (36,909) Total Assets 669,582 (36,909) Fund Balance Grants 695, 582 (36,909) Accumulated Fund Balance 695, 582 (36,909) The notes on pages 10 to 14 are integral part of these Project Financial reports. 9 Promoting Accountability of Public Resources Auditor General’s Report On The Audit of the Integrated Public Financial Management Reform Project (IPFMRP) for the Period June 2016 to July 2017 NOTES TO THE FINANCIAL STATEMENTS 1. Background and Information of the Project With support from the International Development Association, MTDF, and AfDB; the IPFMR-project is to strengthen the foundation of the overall PFM governance, ranging from planning, budgeting, accounting and reporting, internal audit and controls, public procurement, and revenue management, to external audit and legislative and public oversight. The IPFMR project was approved by the World Bank on December 11, 2011 and other Partners with a grant amount of USD 28.551 Million. The aim of the project is i. Improvement in the efficiency and reliability of the Government’s accounting system; ii. Harmonize the project chart of accounts with the GoL chart of accounts; iii. Finalize the business processes for projects in IPFMR project; iv. Configure the IPFMR project; and v. Conduct testing 2. Use of Grant Proceeds The table sets out the categories of items to be financed out of the grant proceeds, the allocation of the amount of the grant to each category and the percentage of expenditure for items to be financed in each category: Category Amount of grant % of allocated expenditure expressed in to be USD financed Budget Planning System, Coverage and 1,838,000.00 100 Credibility PFM Legal framework, Budget Ex., Acct & 9,581,831.00 100 Reporting Revenue Mobilization and Administration 5,849,294.00 100 Transparency and Accountability 6,406,285.00 100 Program Governance and Project Management 7,425,590.00 Total 31,101,000.00 10 Promoting Accountability of Public Resources Auditor General’s Report On The Audit of the Integrated Public Financial Management Reform Project (IPFMRP) for the Period June 2016 to July 2017 All categories of expenditure shown in these financial statements are fully financed based on the percentage below: % of Expenditure IDA grant 18 MDTF 66 AfDB 16 Total 100 3. Significant Accounting Policies Basis of accounting The financial statements have been prepared in accordance with the Cash Basis International Public Sector Accounting Standards (IPSAS) and in the manner required by the Project Grant Agreement as required by the World Bank’s Operating Policies and Procedures and PFMU’s Financial Management manual. 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 World Bank. Reporting currency Financial reports have been presented in United States Dollars. Transactions denominated in other currencies are translated into United States Dollars and recorded at the rate of exchange ruling at the date of transactions. Balances denominated in other currencies are translated into United States Dollars at the rate of exchange prevailing on the reporting date. 4 Grant Grant from IPFMRP is held in deferred income account when received and are only recognized in the project’s income statement when utilized. Grant Receipt 30 June 30 June 2017 2016 IPFMRP/MOF012-TF – 12690 2,935,259 IPFMRP/MOF016-TF -12690 704,482 IPFMRP/MOF 005-TF AfDB 1,268,137 IPFMRP/MOF 009-TF 12690 1,900,000 IPFMRP/MOF 001-TF A2366 2,550,000 4,450,000 5,907,878 11 Promoting Accountability of Public Resources Auditor General’s Report On The Audit of the Integrated Public Financial Management Reform Project (IPFMRP) for the Period June 2016 to July 2017 NOTES TO THE FINANCIAL STATEMENT (Continued) In United States Dollars 5. Budget Planning Systems, Coverage and Credibility 30-Jun 30-June 2017 2016 Fiscal Reporting and Fiscal policy review Fiscal Budget Framework 101,575 89,582 42,215 86,153 143,790 175,735 6. PFM Legal Framwork, Budget Execution, Accounting and Reporting SIFMIS Rollout to M& As 1,116,698 1,655,546 Strengthening Financial Standards, Accounting and Reporting 32,200 - Treasury, Cash, Debt and Aid Management 8,054 154,238 Establishment of County Treasuries 28, 959 264,357 Donot Project Financial Management/Use of Country System 60,091 76,252 1,246,002 2,150,393 7. Revenue Mobilization and Administration Tax Automation (SIGTAS) 92,500 227,484 Establishment of Revenue Authority 121,863 645,986 214,363 645,986 8. Transparency and Accountability Srengthening Public Procurement Oversight 19,870 196,506 Strengthening Internal Audit and Control 111,031 343,972 Strengthening External Audit 261,381 528,984 Enhancing Legislative Oversight 17,995 265,564 Civil Society and Social Accountability 366,947 210,300 777,224 1,545,326 12 Promoting Accountability of Public Resources Auditor General’s Report On The Audit of the Integrated Public Financial Management Reform Project (IPFMRP) for the Period June 2016 to July 2017 9. Program Governance and Project Management In United States Dollars Program Coordination and Financial Management 491,560 331,447 Institutional and Capacity Building 615,801 1,167,804 Monitoring and Evaluation/ Change Management 68,900 83,276 Project Fiduciary 177,819 237,470 1,354,080 1,819,997 10. Cash receipts through grant and other Sources MDTF 4,450,000 4,639,741 sale of bid documents 17,950 1,268,137 4,467,950 5,907,878 11. Cash paid Budget Planning Systems, Coverage and Credibility 143,790 175,735 PFM Legal Framework, Budget Ex., Acct & Reporting 1,246,002 2,150,393 Revenue Bobilization and Administration 214,363 873,470 Transparency and Accountability 777,224 1,545,326 Program Governance and Project Management 1,354,080 1,819,997 Total Payment 3,735,459 6,564,921 13 Promoting Accountability of Public Resources Auditor General’s Report On The Audit of the Integrated Public Financial Management Reform Project (IPFMRP) for the Period June 2016 to July 2017 NOTES TO THE FINANCIAL STATEMENT (Continued) 12. Analysis Variance Uses of funds, by Activity within Component Project Annual Actual Variance Component 1: Enhancing Budget Planning Systems, Allocation Budget Coverage and Credibility $ $ $ $ Enhanced Macro-Financial Framework 355,000.00 0.00 0.00 0.00 Financial Reporting and Fiscal Policy 292,000.00 101,000.00 101,575.00 -575.00 Review Enhanced Budget Framework 1,191,000.00 42,000.00 42,215.42 -215.42 Sub- Total 1,838,000.00 143,000.00 143,790.42 (790.42) Component 2: Strengthening PFM Legal Framework, Budget Execution, Accountability and Reporting Review of PFM Legal Framework 50,000.00 0.00 0.00 0.00 SIFMIS Rollout to Me-As 8,114,350.77 1,121,000.00 1,116,697.65 4,302.35 Strengthening Financial Standards, Accounting and Reporting 32,500.00 32,500.00 32,200.00 300.00 Treasuary Cash, Debt and Aid Management 34,480.00 8,000.00 8,054.00 -54.00 Establishment of County Treasuries 494,000.00 29,000.00 28,959.20 40.80 Donor Project Financial Management/ Use of County 856,500.00 60,000.00 60,091.00 -91.00 System Sub- Total 9,581,830.77 1,250,500.00 1,246,001.85 4,498.15 Component 3: Revenue Momilization And Administration Capacity Development of Customs 200,000.00 0.00 0.00 0.00 Tax Automation (SIGTAS) 2,000,000.00 100,000.00 92,500.00 7,500.00 Establishment of Revenue Authority 3,649,294.50 121,000.00 121,863.00 -863.00 Sub- Total 5,849,294.50 221,000.00 214,363.00 6,637.00 Component 4: Enhancing Transparency and Accountability Strengthening Public Procurement Oversight 313,000.00 20,000.00 19,869.70 130.30 Strengthening Internal Audit and control 1,567,609.00 111,000.00 111,030.96 -30.96 Strengthening External Audit 3,259,398.00 270,000.00 261,380.96 8,619.04 Enhancing legislative Oversight 630,000.00 18,000.00 17,995.00 5.00 Civil Society and Sosial Accountability 636,278.00 380,000.00 366,947.15 13,052.85 Sub-Total 6,406,285.00 799,000.00 777,223.77 21,776.23 Coponent 5: Program Governance and Project Management Program Coordination & Financial Management 1,782,051.73 500,000.00 491,560.07 8,439.93 Institutional and Capacity Building 4,192,088.00 630,000.00 615,801.00 14,199.00 Monitoring & Evaluating Change Management 489,500.00 68,000.00 68,900.00 -900.00 Project Fiducialry 961,950.00 180,000.00 177,819.00 2,181.00 Sub- Total 7,425,589.73 1,378,000.00 1,354,080.07 23,919.93 Grand Total 31,101,000.00 3,791,500.00 3,735,459.11 56,040.89 Note: the marginal variance noted abovewere due to normal estimations error between budgeted amounts and actual projections -forwhich related costs cleared 14 Promoting Accountability of Public Resources