Government of the Republic of Malawi LOCAL DEVELOPMENT FUND (LDF) FINANCIAL STATEMENTS FOR THE YEAR ENDED 30m JUNE 2018 FOURTH MALA WI SOCIAL ACTION FUND (SECOND ADDITIONAL FINANCING)- STRENGTHENING SAFETY NET SYSTEMS PRO.JECT- CREDIT 5922 MW AND GRANT 01480 National Audit Office PO Box 30045 Lilongwe March 2019 LOCALDEVELOPMENTFUND (LD~ MASAF 4 -STRENGTHENING SAFETY NET SYSTEMS-SECOND ADDITIONAL FINANCING-CREDIT 5922 MW AND GRANT D1480-MW Table of Contents Page EXECU TI VE DIRECTO R'S REPO RT ...... ........ ....... ... ..... .. ................. ......... ... ...... ...... .... ...... 2 EXECUTIVE DIRECTOR'S REPORT (CONT'D) ........ ......... .. .. ... ....... .. ....... ..... ....... ......... ...3 EXEC UTIV E DIRECTOR'S REPO RT (CONT'D) .. ..... .. .... ....... ... ................. .. ... .... .... ........ .. .4 STATEMENT OF MA NAG EMEN T RESPONSIBILITI ES ....... ...... ...... ........................ ..... ..6 A VD/TOR GENERAL'S REPORT...... ..... .... ... .... ...... ... ... ......... .. .... .. .... ............... ......... ..... ... 7 STATEMENT OF FI NANCI AL POSIT ION AS AT 30THJUNE 2018 ..... .......... ... ..... ... .... ....... .. .......... ................... .... ................ .......... ..... IO STATEMENT OF RECEIPTS AND PA YMENTS PERIOD YEAR ENDED 30TH JUNE 20 18 .... ............... .... ..... .. ... ... ... ........ ....... .... ..... ..... ..... . 11 RECEIPTS AND PAYM E T ACCOU NT FOR TH E DES IGNAT ED AC COUNT FOR THE PERIOD ENDED 301 11 JUNE 2018 ..... .. .. .. .. .. ... .... ... .. ..... .. ... .. .. ... .......... ... .... .. .. .... 12 NOTES T THE FINANCIAL STATEMENTS FOR THE PER IOD ENDED 301 11 JU E 2018 ........ .. ....... ..... .... ... ........ ........ ... ... .. ...... .... ...... 13 NOTES T THE FINANCIAL STATEMENTS CONTlN UED ..... ... ..... .... ... .. ......... .. ...... ... . 15 NOTES T THE FINANCI AL STATEMENTS CONTI NUED .. .. .......... ... ...... .. .............. .. .. 16 ANNEX I: DESIGNATED ACCOUNT MOVEMENT ... ..... .. .. ... .. .. .. .. .... .... ... .............. ....... 19 ANN EX II - FUNDING TO COUNCILS .. ........ ............ ...... ...... ......... .. ... ..... .... ..... ... .... ... .... .20 I j J> :i :. · . LOCAL DEVELOPMENT FUND (LDF) MASAF 4 -STRENGTHENING SAFETY NET SYSTEMS-SECOND ADDITIONAL FINANCING-CREDIT 5922 MW AND GRANT DI480-MW EXECUTIVE DI RECTOR 'S REPORT FOR THE YEAR ENDED 30TH JUNE 2018 I. ESTABLISHMENT OF THE LOCAL DEVELOPMENT FUN D (LDF) - LDF AREAS OF OPERATION The Government establi shed the LDF to support and strengthen decentra lisation process in Malaw i with the overall objecti ve to "empower local commzmities to take part in decision-making processes through improl'ed local governance and developm enl management, in order 1 0 reduce pover1y and imprm·e service delivery. " At the ational Level. the Government established a Techn ical Support Team (TST) of experts responsi ble fo r the day to day operations of projects fin ancing the LDF. T he TST assists in (a) the development of operational procedures. ( b) monitoring of project impl ementation and performance, and provid ing ass istance to Ministries and Local Authorities involved in the implementation of the LDF. Responsible fo r poli cy guidance and approval of plann ing figures is the LDF Steering Committee with the follow ing memberships: Secretary to the Treasury, Principal Secretary fo r Public Sector Reform. Secretary fo r Deve lopment Planning and Cooperati on, Secretary for Local Govern ment and Ru ral Development. representative of Counci l for on-Governmental Organi sations, Executive Secretary of National Local Govern ment Finance Committee. The Steering Committee is supported by the National Technical Advisory Committee. At the Local Assembly leve l, the LDF has fo ur fu nding windows mai ntai ned as budget lines under the control of the Distri ct Commissioner:- • Community Window for micro-projects requested and managed by commun ities using structures at the Vi ll age Develo pment Com mittee level and fi nance services for strengtheni ng economic growth : • Authority Window to finance investments too large fo r direct commu nity management: • Urban Window for developi ng and improving economic services for private investments and especially for low income groups and stimulate economic growth and private investments ; and • Performance Window to finance activities needed to address capacity constrai nts at Village. Area Development, and Local Authority development structures. 2 \ l ' u (', L OCAL DEVELOP MENT FU N D (LOF) MASAF 4 --STR ENG TH EN I NG SA FETY NET SYSTEMS- A DDI T IONAL FI NANC I NG - CREDIT 5922 M W ANO G RANT 0 1480-MW EXECUTI VE DIRECTOR' REPORT (CONT' D) FOR PERIO D EN D ED 30m JUNE 2018 2 FUN DI NG SOU RCES During the year to 30'" June 20 18, the MASA F IV Project received funding from the World Bank through Addit ional financing -Credit no 561 0-M W and Grant 0 045 and Second Additional Financing- Credit no 922-MWand Grant no DI 480M W- which became effective on 18'" August 2015 and I 7'h March 2017 respectively. MASA F IV Ori g in al Fi nancing Under Original Fi nancing. the IDA has provided a total of SDR2 I .4m - Special Drawing Righ ts (USS30.4m) to support implementation of Strengthening Safety Net Systems Project. MASAF IV Fi rs t Additio nal Fina ncing Through Credit no 56 10-MW and Grant 0 045 under Additiona l Financing signed on I 81h August 20 15. the IDA h s provided SDR52 .8m (US$75mill ion) to support implementation of Strengthening Safety Net Systems Project. The programme wi II run up to 3 I" December 2018. MASA F IV Seco nd Ad di tio nal Fina ncing Through Credit no 5922-MW and Grant no 0 1480-MW under the Second Add itional Financing. IDA has provided SORS0.2 m (U $70million) to support impl ementation of Strengthening Safety et Systems Project. The programme wi ll ru n up to 3 1" December. 2019. The Project Deve lopment Object ive (PDO) of the proposed project is "to strength en Ma lawi's social sa fet y net deli ve ry syste ms an d coo rd inatio n across prog ra ms." The PDO would be achieved through the strengthening of a Social Safe ty Nets system, which wou ld increase productive assets and reduce the impact of shocks and vulnerability of th e poor in Malawi and improve coverage of targeted benefits. The overarching goal of the PDO is to red uce vulnerability. In the PDO, strengthening delivery systems w uld mean providi ng coverage and support for the poor and vulnerable househo lds for the purpose of improving incomes. res ilience. assets and ability to manage ri sks. This would be assessed in terms of (i) targeting and coverage of benefits, (ii) adequ acy of the benefit in terms of ability of households to invest in household level assets and human capital. and (iii) capacity of involved institutions to manage the program effi ciently so th at the costs of delivery are within established norms for effecti ve sa fety nets . The Project activities are supported thro ugh three Components and these are: (a) Productive Safety Nets. comprising of three subcomponents: Prod uctive Public Works Programme; Livelihoods and Skills Developm nt ; and Social Cash Transfe r: (b) Systems and Capacity Building: and (c) Project Management. LOCALDEVELOPMENTFUND(LDn MASAF 4-STRENGTHENING SAFETY NET SYSTEMS- SECOND ADDITIONAL FINANCING -CREDIT 5922 MW ANO GRANT 01480-M W EXECUTIVE DIRECTOR 'S REPORT (CONT'D) FOR PERIOD ENDED 30m JUNE 2018 These statements have been prepared to reflect the activities and position of MASAF IV Second Additional Financing, Strengthening Safety Net Systems Project. Credit no 5922-MW and Grant D 1480 for the period ended 30'h June 2018. 3.0 PROGRAMME ACHIEVEMENTS 3.1 Productive Safety nets component (a) Productive Public Works Overall. since 2014. a total of five (5) PWP cycles have been implemented and 985.635hhs 1 reached under the Regular PWP. The Regu lar PWP is following a catchment management and repeater targeting approaches. with 450.000hhs repeated across the cycles. Two 2 cycles of Emergency PWP have been implemented. with each cycle targeting a total of 225,000hhs. Disbursement of 20 percent advance funding approx . US$2.2million (MK l .6billion) to the counci ls for review of safety plan s in all the 28 district councils was made . A Concept Note on ''Enhanced PWP". trai ning for foreme n and extension workers on road templates and technical guidelines was done during the reporting period. Also various community assets have been created totalling 13,564 community subproject, comprising largely afforestation 4,510 projects (4.605 hectares); 5,989 roads constructed/maintained, and 773 small scale irrigation sc hemes: 957 Land conservation . with a few subprojects under sanitation. and fisheries. All the 28 district counc ils have since re vised thei r safety net plans to accommodate new subprojects. Review of safety plans in all the 28 district councils have been undertaken due to ex haustion of projects in the district safety net plans. Resources amounting to MK225. 000,000.00 were di sbursed in total to all the councils. The funds were used on the following activities : a. Orientation of extension workers on the review process b. Consultative meetings with Village Development Committees. including new subproject identification process c. Di strict Executive Committee supervi sion ofVDC consultative meetings; and d. Consolidation of Catchment Management plans (b) Livelihoods and ski lls development During the period under review. the number of groups mobilized were 6,053 groups. COMSI P groups have cumulatively mobi lised a total of MKS. 8billion (approx . US$7 .9million) since 2014. a total of 397 1 A total of 450.000 households arc being repcated across cycles since 2016, and as a result the Project achic,·emen t is 985.935 households and no t cumulative total of a ll cycles. 41 1' ,, cooperatives and clusters with 28,592 members have been supported with an investment grant of MK34 l.9 million (USD468. 356) by Ju ne 20 18. Livelihoods and Skills Development and SCT linkages - a total of 13,166 members have been mobilised into 149 clusters in the MASAF IV Proj ect SCT funded councils ofNkhata Bay and Dedza. Roll out to the 9 new SCTP districts is in progress, with 930 COMSIP SCT groups expected to be formed. (c) Socia l Cash Transfer During the period under revi ew, a total of 2 1,498 households against the initial target of 21. 000 households were receiving Social Cash Tra nsfers in Dedza and Nkhata Bay district councils. 88,000 households have been enrolled in 9 new SCT MASAF IV Project funded districts against the target of 103.000. Data collection through the Unified Benefic iary Registry (U BR) was concluded in Rumphi, Karonga. Kasungu. Nkhotakota. Ntchisi, Dowa, Lilongwe, Chiradzulu and Blantyre district councils and the NLGFC proceeded to undertake benefi ciary enrolment process. 3.2 Sysl"ems and Capacity Building Component The UBR system development was completed and has been used to collect data from the eleven ( 11) district councils. In total. the UBR has registered 725.508 households from the eleven councils (Karonga, Rumphi. Nkhotakota, Kasungu, Dowa, Ntchisi, Li longwe, Ntcheu , Chiradzulu, Blantyre and Phalombe. 3.3 Project Management A beneficiary Technical Audi t was undertaken to ascertain the eligibility of the beneficiaries enrolled under the programme. MASAF IV Project Midline Survey draft re port had been submitted and discussed by the Peer Review team . Carried out Most Significant Change story validation process to ensure that the selected stories carry true facts that reflect the livelihoods im provements achieved by the beneficiaries before the stories are published. Production of Informat ion and Ed ucation Commun ication materials such as branded T-Shirts and vests was done and distributed to councils and other stakeholders . During the period under review. the MASAF JV Project roll ed out a Grievance Redress Mechanism (GRM) for the Public Works Programme in all 35 councils and it is hopefu l that it will be fully utilized in the next PWP cycle planned for August/September 2018 . ,. .. .. ... .. ....... . ,-. feyo Banda EX EC U11 VE DIRETOR 5 i I' ,, ··, LOCAL DEVELOPMENT FUND (LDF) MASAF 4 - STRENGTHENING SAFETY NET SYSTEMS- SECOND ADDITIONAL FINANCING -C REDIT 5610 MW AND GRANT D045-MW STATEMENT OF MANAGEMENT RESPONSIBILITIES FOR THE YEAR ENDED 30m JUNE 2018 The Exec utive Director at Technical Support Team, under the Direc tion of the Secretarv to the Treasury as Controlling Officer and Secretary for Loca l Government and Rural Devel~pment as overseer on programmatic matters. is responsible for preparing the Annual Financial Statements of the LDF in accordance with the financing agreements for the projects supporting the LDF and in line with the Public Finance Management. In preparing the Financial Statements. the Executive Director is required to: a) Select proper and su itabl e accounting policies and apply them consistentl y: b) Make judgements and estimates that are reasonable and prudent: c) Prepare the financial statements on a going concern basis unless circumstances dictate otherwise. d) Comp ly with applicable accounting standards when preparin g the consolidated financial statements, subject to any material departures being discl osed and explained in the conso lidated financial statements The Executive Director and Controlling Officers of all age nc ies utilising LDF funds are responsible for keeping proper accounting records that reflect with reasonab le accuracy at any point in time, the financ ia l pos ition of the compone nts of the LDF under their implementation. Each Contro lling Officer is answerable to the Public Accounts Comm ittee of Parliament. The Secretary to the Treasury. however. takes ove rall answerability to the LDF Funding partners and Public Accounts Committee. The management is of the opin ion that the financial statements give a true and fair view of the financial affairs of the project and of its ope rating resu lt s. The financial statements have been approved by the Local Development Fund on .......... .. ............. .... .... .... and are signed on its behalf by: IRECTOR 4d ACTING DIRECTOR OF FINANCE 6 I: · Telephone : + 265 I 77 0 700 In rep lr please quote i\·u . ...... ... Facsi mile: +265 I 773 07 1 NATI ONA L AU DIT OFFICE +265 I 776 125 P.O. BOX 30045 +265 I 774 138 CAPI TAL CITY ,\ll Communications shouhl he a dtl r essetl to: LI LONGW E 3 :>iational Audit Office MALAW I AUDITOR GENERAL'S REPO RT TO THE EXEC UTIVE DIRECTO R ON T HE FINANCI AL STATEMENTS OF THE LOCAL DEVELOPMENT FUND - FO URTH M L AWI SOCIAL ACTION FUND (SECOND ADDITIONAL FINANCING)- STRE GTHEN I NG SAFET Y NET SYSTEMS PROJECT- CREDIT 5922 MW AND G RANT 0 1480 FOR THE YEAR ENDED 30m JUNE, 201 8 Opinion I have audited the of Financial Statements of Local Deve lopment Fund (Fourth MASA F- Strengthe ing Safety Nets Systems) Proj ect - Credit Num be r 5922-MW , comprisi ng Statement of Financi al Position. Statement of Rece ipts and Payments. Statement of Designated Account and other explanatory notes for the year ended 301h Ju ne. 20 18 as set out on pages l Oto 21 . In my opinion, th e fi nancial statements prese nt fa irl y. in all materia l respects, the fi nancial posi tion of the Local Deve lopme nt Fund (Fourt h MASA F - Strengthenin g Safety Nets Systems) fo r the year ended 30 June 20 18 in accordance with the Internati onal Pub li c Sector Accounti ng Standards (I PSAS) and in the manner req ui red by the Donor. Basis for Opinion I conduct .d my audi t in accordance vith International Standard s of Supreme Aud it Instituti ons (ISSA! s). My re sponsibil ities und er those standard s are further desc ribed in th e A uditor 's Responsib ilities for the Audit ofthe Financial Statements secti on ofm y report. I am independent of the Local Deve lopment Fund in accordance with the Inte rnati onal Stand ard s of Supreme Audit Institutio ns - Code of ethics (I S I 30) as promul gated by th e International Organi sation of Supre e Aud it Institutions (I 1TOSA I). and I have fulfi ll ed my other ethi ca l responsibili ti es in accord ance with these requ irements. I be lieve that the audit evidence I have obtained ,s sufficient and approp riate to provide a basis for my opinion. Key Aud it Matters Key audit matters are those matters that. in my professional judgment, we re of most sign ificance in my au it of the financia l statements of the current period. These matters we re addressed in the context of my audi t of the financial statements as a whole, and in form ing my opini on the re on, and I do not provi ea separ te opinion on these matters. 71i ' ;! !'. I have determined th at there is no need to communicate key audit matters in my report due the nature of the audited entity. Responsibilities of Management for the Project's Financial Statements Management of the Local Development fund is responsible for the preparation and fair presentation of the financial statements in accordance with Internation al Public Sector Accounting Standards (IPSAS) Financial Reporting under the Cash Basis of Accounting (except for capitalization of assets), Donor terms of agreement and financial provisions, and for such internal control as they determine is necessary to enable the preparation of fina ncial statements that are free from material mi sstatement, whether due to fraud or error. This responsibi lity includes designing, implementing and maintainin g inte rn al controls relevant to the preparation of the financial statements that are free from material misstatements, whether due to fraud or error. Auditor's Responsibilities for the Audit of the Project's 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 auditor's report that includes my opinion. Reasonable assurance is a hi gh level of assura nce. but is not a guarantee that an audit conducted in accordance with International Standards of Supreme Audit Institutions (ISSA ls) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if. indi vidua ll y or in the aggregate, they could reasonably be expected to influence the economic deci sions of use rs taken on the basis of these Project's Financial Statements. As part of an audit in accordance with ISSA ls, I exercise professio nal judgment and maintain professional scepticism 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 ri sks, and obtain audit evidence that is sufficie nt and appropriate to provide a basis for my opinion. The risk of not detecting a material mi sstate me nt resulting from fraud is higher than for one resulting from error, as fraud may invo lve collusion, forge ry. intentional omissions, misrepresentations, or the override of internal control. • Obtain an understandi ng 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 expressi ng an opinion on the effectiveness of the intern al contro l. • Eval uate the appropriateness of accounting policies used and the reasonableness of accou nting estimates and related disclosu res made by management. • Eva luate the overal l presentation. structure and con tent of the financial statements. including th e disclosures, and whether the financial statements rep rese nt the underlying transactions and events in a manner that achieves fair presentation . 8 \ (' comm unicate with those charged with governance regarding, among other matters, the planned cope and timing of the audit and significant aud it findings, including any significant deficiencies in internal contro l that I identify during my audit. I also provide th ose charged with governance with a statement that I have complied with relevant ethical requirements regard ing independence, and to commu nicate with them all relationships and other matters that may reasonably be thought to bear on my independence, and where applicable, related safeg ards. From th e matters commun icated wi th those charged with governance, I determine those matters that were of most significance in the audi t of the finan cial statements of the current period and are therefore the key audit matters. I describe these matters in my auditor's report unless law or regulati n precludes public disclosure about the matter or when, in extremely rare circumstances, I deter ine 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. T.he eng gem!Ma tor o the aud it resu lting in thi s inde pendent Auditor General 's report is: Signature:..... .. ....... . ..... _,.,,.,,,,-.~ ,...,.';".,- \C F. t), _.. , . . . . . .~ ~ - --;~:-; ·,:. ~ .1·.··: .', (. \ ' ,1,\\. - I •. ·:;.;.· . ·\· .·. . • --·~. /.'. : THOMAS KB MAKIWA \'')r f' !l'-c·,;-,.,_, ,..,~ ACTING AUDITOR GENERAL I NATIONAL AUDIT OFFICE ', LILONGWE MALAWI Date:.~~ ... ti~Q(t\- ~'() \~ 9jPage LOCAL DEVELOPMENT FUND (LDF) MASAF 4 -STRENGTHENING SAFETY JliET SYSTEMS- SECOND ADDITIONAL FINANCING -CREDIT 5922 MW AND GRANT Dl480-MW STATEMENT OF FINANCIAL POSITION AS AT 30THJUNE 2018 Notes As at 30 June 2018 US $ K Non-Current Assets Social Economic Inve stment s Social Cash Transfcr( SCT) 5 1.089.836 780, 754.235 Total 1,089,836 780,754,235 Property, Plant & Equipment Motor Vehic les 6 217.772 I 56,008.070 Office Equipment 6 155. JOO I I 1.11 1.086 Total 372,872 267,119, I 56 Total Non-Current Assets 1,462,708 1,047,873,391 Current Assets Bank and cash Balances 2.529.032 I 8 I 1.729.389 Total Current Assets 2.529,032 1,811,729,389 Total Funds Employed 3.99),740 2.859 602.780 Financed by : World Bank (IDA )Grant D 1480 an d Credit 5922-MW 7 4,05 2.553 2,903, 167.9 18 Local Authority Capaci ty Enhanceme nt (LA CE) 5 (58 . 166) (41 ,668.95 2) Proj ect Management 5 (2.647) ( 1.896. I 87) Total Finances 3 221 7!l0 2 859.602,:Z!!O Acting Director of Finance ~ .-:;:--, 10 I !' ·· LOCAL DEV ELOPM EN T F'UND ( L DF) MASAF 4 --STR ENG TH ENI G SA FET Y NET SYST EM S- SECOND A DDITIONA L FI NANCI NG -CREDIT 592 2 M W AND G RAN T Dl480-MW STATEM ENT OF RECEIPTS AN D PA Y MEN T S PERIOD YEAR ENDED 30TH J UNE 2018 30th June 20 18 Notes us $ K RECEIPTS IDA Grant 3 4.052,553 2.903,167,9!8 Total Receipts for th e year 4,052 ,553 2,903, 167,918 PAYME NTS Social Cash Transfer 5 1.089,836 780.754,235 Local Authority Capacity Enhancem ent (LACE) 5 58, 166 41.668.952 Project anagernent 5 2,647 t .896.187 Equiprn nt 6 372,872 267, t 19,156 Total Pay ments 1,523,361 1,091,438,529 Closing Balan ce 2,522,032 1,811 ,122,382 11 \ l' ;\ LOCAL DEVELOPMENT FUND (LDF) MASAF 4 -STRENGTHENING SAFETY NET SYSTEMS- SE COND ADDITIONAL FINANCING -C REDIT 5922 MW AND GRANT D1480-MW RECEIPTS AND PAYMENTS ACCOUNT FOR THE DESIGNATED ACCOUNT FOR THE PERIOD ENDED 30m JUNE 2018 30th June 2018 US$ Receipts IDA Grant 4,052.553 Other Receipts-Interest 0 Total Cash Received in year 4,052,553 Payments I. Goods. works. non-consu lting se rvi ces. consultants· serv ices and Operati onal Costs for Part A . l of the Project 156,078 2. Goods. consu ltants· se rvices. Operational Costs and Training for Parts A .2 and A.3 of the Project 518.350 3. COMSIP Grants for Part A.2 (a) of the Project 0 4.Cash Transfer instalments for Part A.3(a) of the Project 8 15.373 5. Goods, non-consultin g se rvices. consultants· services, Training and Operational Costs for Parts B and C of the Project 15 Total 1,489,816 Net Cash Movement 2.562,737 Local Operating Account (554) Advances to Councils (191.139) Opening Balance l July 201 7 0 Total Closing Balance (Designated Account) 2,371.044 LOCAL EVELOPMENTFUND(LD ~ MASAF 4 - STRENGTHE ING S FETY NET SYSTE MS- SECOND ADDITIONAL FINANCI NG -CREDIT 56 10 MW AND GRANT D045- MW NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 3on 1 JUNE 2018 l. Nature of Business Th rough Credit no 5610-MW and Grant D045 under Additi onal Fi nancing signed 011 18 1h August 20 I 5. the ID A has provided SDR52.8 m (US$75million) to support im plementation of Stren gthen ing Safety Net Systems Project. The programme will run up to 31'1 December 20 I 8. 2. Accoun ting Policies 2. l Basis of preparing the Accounts The fin ancial statements ha ve been prepared on the historical cost convention and on a cash basis in accordance with International Pu blic Sector Accounting Standards (IPSAS). except for capitali sation of assets. All receipts and expenses incurred in the pe riod are reflected in the fi na ncial statements. 2.2 Fixed Assets Capital expenditures are capitalized in the year the assets are purchased . There is no pr vision for depreciati on on the fixed assets throughout the Project life. There is no re aluation or im pa irment of assets. The assets are held at cost. 2.3 Grants to Local A sem blies Disbu rsements for Productive Public Works Programme, Livelihoods and Skills Development and Social Cash Transfer are done through tranches. 0 ce disburse ments to Local Assemblies are made. they arc treated as Grants in the fi nancia l statements. 2.4 Foreign Currency Tra nslation Foreign currency transaction fo r th e income and expenditure account items and fixed a sets are tran slate d usi ng the actual exc hange rate at the date of draw down. All local expenditures paid from the local accoun ts/cu rrency are transl ated back to US dollar at the actual exchange rate at which draw-down was converted at the date of transfer from Special/Designated acc ount to loc al acco unt. 13 i LOCALDEVELOPMENTFUND(LD~ MASAF 4 -STRENGTHENING SAFETY NET SYSTEMS- SECOND ADDITIONAL FINANCING -CREDIT 5610 MW AND GRANT D045-MW NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2018 Where the expenditure cannot be full y met from the proceeds of a draw down. and part of the expenditure has to be met from the proceeds of the subsequent draw down. which may have been effected at a different conversion rate. the translation rate of the total expendi ture from the loca l currency to the US dollar is on First in First out {FIFO) basis. Current assets and special/Desi gnated account balances are translated usi ng the rate at the closing date. (Closing Rate Method). 2.5 Receipts Receipts from Development Partners/Donors are stated at actual amounts drawn from the World Bank by way of replen ishment into a Designated/Special Account at Reserve Bank of Malawi and direct payments. 14 \, LOCAL DEVELOPMENT FUND (L DF) MASAF 4 -STRENGTHE NING SAFETY NET SYSTE MS- SECOND ADDITIONAL FINANCI G -CREDIT 5610 MW AN D GRANT D045-MW NOTES TO THE FINANC IAL STAT EMENTS CONTINUED 3- C as h With d rawals from Credit Account Date Details Referen c e USS MK l 11/812017 IDA Grant MASAF 4 Secord Add I MW0108317 4,05 2.553 .00 2.903.167 .918 14 l I I !Total Cash Withdrawals from Credit Financ lna A c c ount Current Year 4,052,553 2.903,167,918 lrotal Cash Wlfhdrawals from fhe Finan c ing Ac c ounts Previous Year lrotal Cash Withdrawals from the Financ ing Ac c ounts 4.os2.ss3 I 2.903,167.918 I lrotal from IDA 4,052 .553 2.903,167, 918 I 4 - Bank Bala ces IS S 1 Kwacha Closing 8 11 lanccs as at 30 June 20 Ill I RBM llolding Account (Part I) 0 () 2 FDH OJ)A 12 Total closin!! Bala nce as at 30 .Ju ne 20 18 2,529,032 1,8 11,72'>.31!9 15 I.·, ,· LOCAL DEVELOPMENT FUND (LDF) MASAF 4 -STRENGTHENING SAFETY NET SYSTEMS- SECOND ADDITIONAL FINANCING -CREDIT 5610 MW AND GRANT D045-MW NOTES TO THE FINANCIAL STATEMENTS CONTINUED 5 - Productive Sa fety Nets. Sys tems and Ca p acit y Building ;ind Project l\lanagement Social Cash Transfer rs s h: Disbursements li1r Social Ca sh Translcr( M/\ Si\F IV ) 1.089.836 780.75-1.2., 5 Total char~ed for SCT (Category 2 & -') 1,089,836 780, 75.t,235 i\dd from previous years 0 0 nalanee Carried forwanl 30 .June 20111 1,os9,s36 I 780, 75-1,235 Local Caeacitr E11/rn11ceme11t (LACE/ 58. 166 -I l.668.51 15 P.iy I nio2 Ntch1si D1stnct l'nunc il Sl'T-Fund$ for Sl'T A,11\·itics -l.-l 15 5-l Pay I no: Chir:idz11lu lJIStnct Cntmc1i SCT-Funds for SCI" Actl\·111cs :: 26 :!018 7.11~{\ itJ l'un.:11a~c of I l Douhk· Drum V 1hra1 mg Kolkr~ ! 55 . !Pt, nn Payrnent!'i Instruction Fun.':!0 18 10.71HI r, I Pay I no6 l.1 1,m~we Dtslnct Council SCT Funds fo r Sornil Cash Ac tiv111cs 3 2o 20 1R Pa~ I 1106 lllantwc District Council SC T-hmds fo r SCT Act1Yll1cs J~0/20 18 Rumphi Dist net Counci l SCI" l"u nds for SCI Act!\ it1cs 3/26/2018 r: 1-no-(,:-,---+-,N-1""'d-,,i- 1'-a,-=- . '1-,l.., )1_ r.,.. st_ 1e_ ic-t""'c_n_111_ '1 ""S ·1 ..cc ..,'(cc ..,. r. ,.:-. u- n..,. ds ro-r-=s-=c"' -=- ·1'""·,-,c -2,- 0 -·t _l\_l_ll<-S-----+-,-,-:-~- '""1.., 1 7. · .,: 77 R---+------+---c- l'o, I no6 ClmadZL1\u D1stnc t C<>u11cil SCT Funds for SCT actl\·i11c, P:i~ I no7 D1stm: t Council SCI -Funt!~ fo r Cash transr~r J '~7.'2018 l';i, I 1108 Purd1asl· or ..i :i.1 mnr Vt.:h1clrs from St,11l'i likJ . f\1 ntors Limitc:U 217.771 72 6 30 ~018 -Ul.5 ~_55 3 00 Clnsmg Balance n 1.o..i3 13 ~- - 19 1 ANNEX II - FUN D! G TO COUNC ILS PWP FUNDING TO COUNCIL FOR THE FINANCIAL YEAR 2017/18 l'WP IT '.':011\G TO C