O GrantThornton Project Financial Statements and Independent Auditor's Report "Mission Armenia" charitable non-governmental organization JSDF Grant for Strengthening the Livelihoods and Voice of the Poor and Vulnerable Persons in Armenia Project Grant Agreement No. TF013894 As of and for the year ended December 31, 2014 JSDF Grant for Strengthening the Livelihoods and Voice of the Poor and Vulnerable Persons in Armenia Project Project financial statements As of and for the year ended December 31, 2014 Contents Pace Independent auditors report ...... ............. I Statement of cash receipts and payments ............. ....................... 3 Staement of uses of fws by Project activities... ............. ........... 4 Notes to the project financial statements..... ....................... 5 0 GrantThornton Independent auditor's report Qpib.Op.n.OA IR.Lg bpthamU10012 ; +374 10 260 954 - +374 10 260 961 GrantThomton CJSC 8/1 Vaghashyan Sir, 0012 Yerevan, Amenia T +374 10 260 964 F 374 10 260 961 www.granfthon.am To the Assembly of the "Mission Armenia" charitable non-governmental organization, We have audited the accompanying project financial statements of the JSDF Grant for Strengthening the Livelihoods and Voice of the Poor and Vulnerable Persons in Armenia Project (the "Project'), financed by the International Bank for Reconstruction and Development/ International Development Association (as administrator of grant funds provided by Japan under the Japan Social Development Fund) (the "World Bank') Grant Agreement No. TF013894, which comprise the statement of cash receipts and payments, the statement of uses of funds by Project activities as of and for the year ended December 31, 2014, and a summary of significant accounting policies and other explanatory information. Management's Responsibib4y for the Pject Finandal Statements Management of the "Mission Armenia" charitable non-governmental organization is responsible for the preparation and fair presentation of these project financial statements in accordance with the International Public Sector Accounting Standard ("IPSAS") Finandal Reporting Under the Cash Basis ofAavning issued by the International Public Sector Accounting Standards Board of the International Federation of Accountants, the World Bank guidelines, and the relevant points of the Grant Agreement No. TF013894 and for such internal control as management determines is necessary to enable the preparation of these project financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Reaponsibiliy Our responsibility is to express an opinion on these project financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the project financial statements are free from material misstatement. unullan. 9mpIiap, Iwtphpqanlppb Audit Ta. AdvOrY Qrltubp -nPn pbR binMujjrkuL Mre cf Grant Rhon kownal Lw 0 GrantThornton An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the project financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the project financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the project financial statements 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 entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the project financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the project financial statements present fairly the cash balance of the JSDF Grant for Strengthening the Livelihoods and Voice of the Poor and Vulnerable Persons in Armenia Project as of December 31, 2014 and the cash received and cash paid for the year then ended in accordance with the International Public Sector Accounting Standard ("IPSAS") Finandal Reporting Under the Cash Basir ofAtzunting issued by the International Public Sector Accounting Standards Board of the International Federation of Accountants, the World Bank guidelines and the relevant points of the Grant Agreement No. TF01 3894. Basis ofAavunting Without modifying our opinion, we draw attention to note 2 to the project financial statements, which describes the basis of accounting. The project financial statements are prepared to assist the management of the "Mission Armenia" charitable non-governmental organization to meet the requirements of the financial reporting of the World Bank. As a result, the project financial statements may not be suitable for another purpose. May 20, 2015 Gagik Gyulbudaghyan Emil Vassilyan, FCCA Managing Partn Engagement Partner Th 0040 0 unuw m , tmpilp,t tlphpapum wLin d Merbe.drrofr ntmtaemli tLk JSDF Grant for Strengthening the Livelihoods and Voice of the Poor and Vulnerable Persons 3 In Armenia Project Project financial statements As of and for the year ended December 31, 2014 Statement of cash receipts and payments As of and for the year ended December 31, 2014 In US dollars Actual Planned Variance Asof As of As of December December December For the year 31, 2014 For the year 31, 2014 For the year 31, 2014 Project life Cash balance as of January 1, 2014 84,061 Add: cash receipts Grant fund (note 4) 725,370 925,370 Total cash receipts 725,370 925,370 Less: cash payments 1 Consultants' Services, Training, Goods, Small Civil Works, and Operating Casts (note 6) 651,082 767,021 1,075,790 1,191,729 (424,708) (424,708) 2,269,400 2. Sub-Grants - - - - - - 400,000 Total cash payments 651,082 767.021 1,075,790 1,191,729 (424,708) (424.708) 2,669,400 Cash balance as of December 31, 2014 158,349 The project financial statements were approved on May 10, 2015 by: Hripsime Kirakosyan Aram Sargsyan President Financial manager Thisstatement is to be read in conjunction with the notes to and forming part of the project financial statements set out on pages 5 to 12 JSDF Grant for Strengthening the Livelihoods and Voice of the Poor and Vulnerable Persons 4 in Armenia Project Project financial statements As of and for the year ended December 31, 2014 Statement of uses of funds by Project activities As of and for the year ended December31, 2014 In US dollars Actual Planned Variance As of As of As of December For the December December For the year 3142014 year 31,2014 For the year 31.2014 Project life Part 1: Provision of vocational training and boosting self- employment 148,975 152,322 250.930 254,277 (101,955) (101,955) 1,077,000 Part 2: Provision of vital social care and services 177.365 216,760 248.700 288,095 (71,335) (71,335) 576,200 Part 3: Creation of an inclusive environment for people with disabilities and enhancement of their self-advocacy 158,693 166,370 389.960 397,637 (231,267) (231,267) 474,600 Part 4: Monitoring, evaluation and project management 166,049 231,569 186.200 251,720 (20,151) (20,151) 541,600 Total 651,082 767,021 1,075,790 1,191,729 (424,708) (424,708) 2,669,400 This statement is to be read in conjunction with the notes to and forming part of the project financial statements set out on pages 5 to 12 JSDF Grant for Strengthening the Livelihoods and Voice of the Poor and Vulnerable Persons 5 In Armenia Project Project financial statements As of and for the year ended December 31, 2014 Notes to the project financial statements I Activity The Grant Agreement No. TF013894 of the JSDF Grant for Strengthening the Livelihoods and Voice of the Poor and Vulnerable Persons in Armenia Project (the "Project") was signed on March 1, 2013 between the "Mission Armenia" charitable non-governmental organization and the International Bank for Reconstruction and Development/International Development Association (the "World Bank"), as administrator of grant funds provided by Japan under the Japan Social Development Fund. The total amount of the Grant was agreed to be US dollars 2,669,400. The objective of the Project is to pilot self-reliant livelihood and generation of employment opportunities combined with the provision of vital services for the extremely poor and vulnerable groups including persons with disabilities. The Project consists of the following parts: Part 1: Provision of vocational training and boosting self-employment (a) Selection of people with disabilities and people from other vulnerable groups as Project beneficiaries. (b) Providing vocational education and training including, inter alia: (i) the dissemination of information about the above mentioned training, and (i) the provision of necessary equipment for the mentioned training. (c) Conducting on-the-job training based on contractual partnerships with public and private sector institutions. (d) Facilitating the creation of micro-businesses by people with disabilities through, interalia micro. business grant awards to selected people with disabilities. Part 2: Provision of vital social care and services (a) Providing technical assistance to manage the Organization's Multifunctional Service Centers (MSCs) including inter alia: (i) the dissemination of information about the MSCs; and (ii) the selection of people with disabilities and people from other vulnerable groups as Project beneficiaries. (b) Supporting the MSCs services through the provision of kitchen utilities and supplies. (c) Providing vital services to people with disabilities through the MSCs on selected locations of the Member Country including, inter alia, in-home care. . - JSDF Grant for Strengthening the Livelihoods and Voice of the Poor and Vulnerable Persons 6 in Armenia Project Project financial statements As of and for the year ended December 31, 2014 (d) Providing nutritionally balanced meals for people with disabilities through, intera/k (i) the Organization's MSCs on selected locations of the Member Country; and (iii) home delivery for bedridden patients. (e) Providing personal care services for people with disabilities including, interalki 0i assistance with personal hygiene; and (ii) assistance with residential cleaning. (f) Providing health services for selected people with disabilities including, intera/k (i) diagnosis; (ii) medical procedures; (iii) preventive services; and (iv) services to bed-ridden beneficiaries. (g) Providing social and psychological services for selected people with disabilities including, inter a/ia: (i) social and psychological counselling; (ii) assistance for personal development; (iii) referrals to specialized organizations; and (iv) mediation and advocacy efforts. (h) Providing technical assistance to, interka- () recruit and manage volunteers, (ii) collect donations; and (iii) increase financing sustainability by raising contributions from donors. (i) Raising funds from local government, business, and private donors to sustain these activities following the Closing Date of the agreement. Part 3: Creation of an inclusive environment for people with disabilities and enhancement of their self-advocacy (a) Establishing accessible disability resource centers in selected MSCs through, intera6a, (a) improvements of physical conditions of the buildings; and (b) installation of computers and internet connection. (b) Improving accessibility of public sites frequently used by people with disabilities. (c) Developing self-advocacy groups for people with disabilities through, inter alia:(i) training; (ii) train-the-trainers workshops, (iii) developing training materials. Part 4: Monitoring, evaluation and project management (a) Providing technical assistance to the management of the Project, including, inter alia: (i) organization; coordination and implementation of Project activities, (ii) monitoring and evaluation of project activities; and (iii) procurement and financial management; (b) Conducting an independent audit of the Project. (c) Organizing workshops to disseminate information on the Project and facilitate the exchange of experiences. JSDF Grant for Strengthening the Livelihoods and Voice of the Poor and Vulnerable Persons 7 In Armenia Project Project financial statements As of and for the year ended December 31, 2014 In accordance with the Grant Agreement No. TF013894 dated March 1, 2013, the financing of the Project is implemented through the following categories: Percentage of Expenditures to Amount of the be financed Grant Allocated (inclusive of Category (In US dollars) Taxes) 1. Consultants' Services. Training. Goods, Small Civil Works, and Operating Costs 2,269,400 100% 2. Sub-Grants 400,000 100% 2,669,400 The Project is implemented by the "Mission Armenia" charitable non-governmental organization (the "Organization"), which was established by the Ministry ofJustice of the Republic of Armenia on the basis of the collegiums decision #31/6 dated July 12, 1993. The Organization was registered in the Republic of Armenia state register on March 22, 2005. The Organization realizes its activities collaborating with the Government of Armenia, local self- governing bodies, the USAID, the UNHCR, a number of other international organizations as well as the Mission Armenia branches in Australia and the United States. The legal address of the Organization is Yeghbayrutyan str. 22/68, Yerevan, Armenia. The average number of the Organization staff involved in implementation of Project in 2014 was 5 (2013: 5). 2 Significant accounting policies 2.1 Statement of compliance The project financial statements are prepared in accordance with IPSAS FinanialReporing UnderTh& Cash Bauir ofAccounuing the World Bank guidelines and the relevant points of the Grant Agreement No. TF013894. Alternatively, the Organization presents the financial position of the Project as of the reporting date as an encouraged additional disclosure, as prescribed in the part 2 of IPSAS FinanialReporing Under the Cash Basis ofAcounting (refer to note 9). 2.2 Project financial statements The project financial statements include: a) The statement of cash receipts and payments of the Project for the year ended December 31, 2014, showing the World Bank and counterpart funds separately, and the statement of uses of funds by Project activities. b) Accounting policies and explanatory notes (including additional accounting policies and disclosures), covering Summary of summary reports or SOEs used as the basis for the submission of withdrawal applications in the notes, as appropriate; JSDF Grant for Strengthening the Livelihoods and Voice of the Poor and Vulnerable Persons B In Armenia Project Project financial statements As of and for the year ended December 31, 2014 * Statement of designated account in the notes, as appropriate; * Statement of financial position showing accumulated funds of the Project, bank balances, other assets of the Project, and liabilities, if any, as described in the note 2.1. 2.3 Functional and presentation currency The national currency of the Republic of Armenia is Armenian dram. These project financial statements are presented in US dollars (presentation currency). In preparing the project financial statements, transactions in currencies other than US dollar are recorded at the rates of exchange defined by the HSBC Bank Armenia prevailing on the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are retranslated at the rate defined by the Central Bank of Armenia prevailing on that date, which is 474.97 for US dollar 1 as of December 31, 2014 (December 31, 2013: drams 405.64 for US dollar 1). Accumulated figure of exchange rate difference is disclosed in the Statement of financial position under "Exchange rate difference". 2.4 Expenses Expenses incurred in the framework of the Project are recognized on the cash basis of accounting, i.e. when the relevant cash is paid. The expenses are recognized in the statement of cash receipts and payments under the caption "cash payments". Additionally, the Project expenses are disclosed in the statement of uses of funds by Project activities. 2.5 Project financing Financing received in the framework of the Grant Agreement No. TF013894 is recorded in the statement of cash receipts and payments as "cash receipts" and is recognized at each replenishment. In addition, the Project funds received are disclosed in the statement of financial position (refer to note 9). 2.6 The World Bank financing To finance eligible expenditures for the Grant Agreement No. TF013894, the World Bank disburses proceeds from the Grant account using one or more of the disbursement methods, which are stated below- a. Reimbursement The Bank may reimburse the borrower to finance eligible expenditures that the borrower has prefinanced from its own resources. b. Advance The Bank may advance loan proceeds into a Special account of the borrower to finance eligible expenditures as they are incurred and for which supporting documents will be provided at a later date. c. Direct payments The Bank may make payments, at the borrower's request, directly to a third party for eligible expenditures. JSDF Grant for Strengthening the Livelihoods and Voice of the Poor and Vulnerable Persons 9 in Armenia Project Project financial statements As of and for the year ended December 31, 2014 d. Special commitment The Bank may pay amounts to a third party for eligible expenditures under Special commitments entered into, in writing, at the borrower's request and on terms and conditions agreed between the Bank and the borrower. 3 Closing date of the project According to Grant Agreement No. TF013894 dated March 1, 2013, the closing date of the Project was defined as March 1, 2016. 4 Grant fund in US dollars As of For the year ended December 31. December 31, 2014 2014 Designated account advance 100,000 300,000 SOE procedures (note 5) 625,370 625,370 725.370 925.370 Under the method of "SOE procedures" of financing, the Organization requests advance to and documentation of designated account accompanied by the statement of expenditure (SOE). 5 SOE withdrawal schedule For the year ended December 31, 2014 In US dollars Category Application No. Consultants' Services, Training, Goods, Small Civil Works, and Operating Costs 3 DA 115,939 4 DA 80d180 5 DA 82.390 6 DA 143 626 7 DA 203.235 Total 625,370 a Uses of funds by category descriptions The statement of cash receipts and payments discloses the expenses in two categories, one of which is combined, as depicted in the Grant Agreement No. TF013894 However, for the convenience of certain users, the breakdown of uses of funds is disclosed in the table below. In US dollars For the year ended As of December 31, December 31. 2014 2014 Goods 358.870 398.553 Consultants' services 139,023 182,118 Operating costs 98,599 131.760 Training 54,590 54,590 651,082 767,021 JSDF Grant for Strengthening the Livelihoods and Voice of the Poor and Vulnerable Persons 10 In Armenia Project Project financial statements As of and for the year ended December 31, 2014 7 Designated account statement As of and for the year ended December 31, 2014 In US dollars Opening balance as of January 1. 2014 84.061 Add: Cumulative unexplained discrepancy Grant replenishment during the year 725,370 725.370 725,370 Less: Refund to the World Bank from the designated account during the year - Present outstanding amount advanced to the designated account (1) 809,431 Closing balance as of December 31, 2014 158,349 Add: Amount of eligible expenditures paid during the year 651,082 Service charges (if applicable) * 651,082 651,082 Less: Interest earned (if credited into the designated account) Total advance accounted for (2) B0.431 Discrepancy (1) - (2) to be explained JSDF Grant for Strengthening the Livelihoods and Voice of the Poor and Vulnerable Persons 11 In Armenia Project Project financial statements As of and for the year ended December 31, 2014 8 Reconciliation between the amounts received by the Organization and disbursed by the World Bank For the year ended December 31, 2014 In US dollars The The World Category Appl. Organization Bank Difference Consultants' Services, Training, Goods, Small Civil Works, and Operating Costs 3 DA 115,939 115,939 4 DA 80,180 80,180 5 DA 82,390 82,390 6 DA 143,626 143,626 7 DA 203,235 203,235 - 625.370 625,370 - Designated account advance 8 DA 100,000 100,000 - Total 725.370 725,370 - JSDF Grant for Strengthening the Livelihoods and Voice of the Poor and Vulnerable Persons 12 in Armenia Project Project financial statements As of and for the year ended December 31, 2014 9 Statement of financial position As described in the note 2.1, the policy of the Organization is to prepare the project financial statements in accordance with IPSAS Financial Rporting Under the Casb Basis ofAcvunting. However, the Organization also has presented a separate statement of financial position as a disclosure encouraged under IPSAS Financial Reporting Under the Cash Basis ofAcaronting. US dollar As of December As of December 31, 2014 31, 2013 Assets Current assets Balances in bank accounts Designated account 158,349 84,081 158,349 84,061 Advances and prepayments 250 158.599 84,061 Non-current assets Project expenditures 792.603 127.254 792,603 127,254 Total assets 951,202 211.315 Funds and liabilities Funds Grant fund 925,370 200,000 925,370 200,000 Current liabilities Accounts payable 24.927 11.296 Exchange rate difference 905 19 25.832 11.315 Total funds and liabilities 951,202 211.315 -a -m " I .? ..I s' "I -1 .) i • . J