Audit Report of HCFC Phase-Out ODS III Project Grant # TF013968 Ministry of Environment Amman - Jordan for the year ended 31 December 2016 TABLE OF CONTENTS 1. Independent Auditor Report II. Statement of Cash Receipts & Payments IIL Notes to the Financial Statement 2 ft INDEPENDENT AUDITOR REPORT To Ministry of Environment HCFC Phase-Out ODS III Project P127702 Amman, Jordan Opinion We have audited the accompanying special Purpose project financial statement comprising of the statement of Cash Receipts and Payments of HCFC Phase-out ODS III Project P 127702 Grant # TFO 13968 for the year ended 31 December 2016, and the explanatory notes for the period then ended. (a) The general purpose project financial statement presents fairly, in all material respects, the cash receipts and payments Of the Project for the year ended to 31 December 2016 in accordance with the International Public Sector Accounting Standards, under the cash basis of accounting (b) Internal control over financial reporting involved in the preparation of replenishments, direct payments and reimbursement can be relied upon to support the related withdrawals for the period (c) The project was in all material respects in compliance with laws, regulations, guidelines and provisions governed by the Grant agreement Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those provisions and standards are further described in the auditor's responsibilities for the audit of the statement section of our report. We are independent of the project management in accordance with the International Ethics Standards Board of Accountants' Code of Ethics for Professional Accountants, and we have fulfilled our other ethical responsibilities in accordance with this code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Project Management responsibilities Project Management is responsible for the preparation and fair presentation of the statement for and for such internal control as management determines is necessary to enable the preparation of a statement that is free from material misstatement, whether due to fraud or error. Auditor's responsibilities Our objectives are to obtain reasonable assurance about whether the statement 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 documents. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: . ~ '~ . .... ...... 1. Identify and assess the risks of material misstatement, 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 our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. 2. 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 organization's internal control. 3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. 4. Evaluate the overall presentation, structure and contest of the project financial statements including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation, 5. Obtain sufficient appropriate audit evidence regarding the financial information of the project activities within the project to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the project audit. We remain solely responsible for our audit opinion. We communicate with project management regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Other matter: This report is intended solely for the information and use of World Bank, the Government of Jordan, Ministry of Environment and the related project management. Mohammad Qazzaz License # 712 30 Mar h 2017 HYDROCHLOROFLUOROCARBON (HCFC) PHASE - OUT project (ODS III) WB Grant P127702 Statement of Cash Receipts & Payments for the year ended 31 December 2016 amounts in USD Year Dec 2016 Cumu- Financine 2016 lative initial Deposit Transferred from WB 300,000 WB to Designated Account (Replenishments) 435,127 693,767 Direct Transfers from WB to Contractors Total Financing 435,127 993,767 Expenditures Category (1) Sub-grant to Beneficiary Enterprises 288,527 524,520 Category (2) Consultants Services, Training, Goods and Incremental Operating Cost under Component 2 of projects 93,360 100,130 Category (3) Consultants Services, Training, Goods and Incremental Operating Cost and Recurrent Cost under Component 3 of projects 75,199 278,127 Total Expenditures 457,086 902,777 Net Fund (Surplus/Deficit) 90,990 * The attached disclosures are integral part of this statement HCFC Phase-Out ODS III Project Grant # TF013968 Ministry of Environment Amman - Jordan Notes to the Financial Statements 31 December 2016 . General Background Grant Amount: USD 2,783,149 reduced to USD 1,422,299 effective June 2016 Agreement Date: 20 May 2013 The Hashemite Kingdom of Jordan ratified the Montreal Protocol on Substances that Deplete the Ozone Layer and both its London and Copenhagen Amendments. Jordan also ratified the Montreal and Beijing Amendments. The National Ozone Unite (NOU) in the Ministry of Environment (MoEnv) has been empowered to monitor the implementation of ozone depleting substances (ODS) phase-out activities in Jordan in order to fulfill obligations under the Montreal Protocol. The meeting of the parties in 2007 decides to phase-out (HCFCs) as follow: 1. Freezing consumption in 2013 according base line consumption in (2009-2010). 2. Redacting 10% in 2015 according baseline. 3. Redacting 35% in 2020 according baseline. 4. Redacting 67.5% in 2025 according baseline. 5. Redacting 97.5% in 2030 according baseline. 6. Redacting 100% in 2040. In November 2011, the Multilateral Fund for the Implementation of the Montreal Protocol (MLF) approved Jordan's HCFC Phase-out Management Plan (HPMP), which constructs a detailed picture of HCFC consumption and uses by substance and product, presents patterns of growth and identifies priority sectors for receiving MLF funding and achieving its first reductions. HCFC consumption in Jordan is made up of primarily HCFC-141b and HCFC-22 for manufacturing in the foam and refrigeration and air-conditioning (RAC) sectors, respectively, as well as HCFC-22 for servicing installed refrigeration and air-conditioning equipment. The HPMP assumed an average HCFC growth rate of 15%. Using historical consumption figures for each major sector (foam and RAC manufacturing, and servicing) however, variations were seen with the growth rate for HCFC-22-based manufacturing of AC units coming out in front at an estimated 28%. Of the total HCFC-22 consumed in 2010, 25 tons, or 43%, went to AC manufacturing alone. Industrial trends in Jordan and neighboring countries confirm growing demand for air-conditioning with two new enterprises starting operations in 2008 and 2009, enlarging the sector to six HCFC-based manufacturers. The Bank has been engaged with Jordan on Montreal Protocol implementation since the early 1990s. The first Jordan ODS Phase-out Project (P005238) saw the creation of the institutional and regulatory framework for implementing the Protocol as well as the implementation of the first investment activities targeted at reducing CFC consumption. The ODS Phase-out II Project (P049706) continued in the same vein through support for enhancing the institutional 6 I L •ргЕд иацм sа.zпдгриадха put� panraaa.r иацм � spuгt� sа�ги�озах диаиzа��ипиа дааСоад �I�игр.гоаз� :sиогдз�sи�,гд ацд �игр.гоза.z и� �игдипозз� �о sгs�g Чs�� харип �дипозэ� sдг раиг�диг�иz ри� paмoJlo� диаиаиоагли� �о �.тдsтит� ац�, � : игд.го а� �g игдипсьаз��о sтs�� sa�эllod �иl�цпазз�г �и�;���и�т� ,�о �.r�uy�wnr� •г даа[о.тд аЧд�о иогд�диаиzаiдиzт I�гаи�ит� ри� алгд�zдsгиiигр� ацд ао� alq�suodsa.r sr дгиП auozp ��иогд�� - диагииоатnи� �о �адs�иту� и�ги�рzо� ацд 1iгд� 6bZ`ZZ�`Т saan�Ipuadx� ��д+а,�, 6��,` tI-I- sдза�оад �а £ диаиодиzв� аарип дsо� диа.�zпаа� ри� дsо� �итдв.тад� Iидиаиzа.тзиl ри� spoo� `�игигиа�, `sаагп.га� sди�д[nsuo� �£) �о�а��е,� 00£`Z�€ sдзаСо.тд �о � диаиодито� .т�рип дsо� �итд�тад� J�диаита�аиl ртг� spoor,� `�итиг�аг `sазтл.га� sди�дТrгsио� (Z) �©�а���, , [1U0`�Z9 sаsг.гд.гади� �С.твта�аиаg од ди�.г�-qп� f Т) .�гt�адg� _ :�uгnno�io� ацд .zad �е ас� П�цs (да�рпg) alq�д I�м�арцдхм раs�паа ллаи аЧд ,S��итраоао�, �6�`Z�`!�`1 C1S11 �911ь�'slь+���' �Угаис�л,��� 1иrэ�� маЛ2' a�.L 'DS8`Gl9f`7 fIS11 а,� ,�ьпbа �ыr�rэzurt ыи �ыя�r�ра.г �'q �гы�ыt��эа�ь � ;дыыr� �т�д рарыашь �иьS Pl�v� аг�д �rыv �гr�т�о,� fv �гы�ы�и.rалvJ ��1.L 9I(��' выri�г ыI . •h�аl��гдs .��хаиа sд� трглл аи�1 ит sааи�гiддгт � хиаг3�Iа .��.zaua ааогаи �о иогдзпроад ацд од аодааs �� ацд и�.го�sиитд од suz�� дпЧд иотдиалаадит и�е `sагаиа�в рад��а:т хацдо ри� и��у� ацд цдгм иотд�игр.гооз aso�a иг `�итпsапд аlтЧт `sдтип ��' pasr�q ZZ°���Н �о �адихг ри� �игтпда��nи�иz Чдоq и�+� �Il�пдиал2� ад дт �u�moiJ� � `sиогдп�'r�qo Iоаодо.тд 1ва.гдио�ц оллд дs.z� sXi �utдaauz �о� .годааs �иг.zпда�3пи�и� �� а.тгдиа аqд ит дпо-аs�Чд ���Н агтдт�от.тсl од рарiзар �иц u�p.zar�o диаг.ии�алоr�, ацд д�цд дхадио3 ацд иг sт дI � •�игиотдгриоа-ати �о� ри�иаар Ч�гЧ иzо.г� sд�о.гд агггигкксиz вд sд�ип pas��{-�,��ц диагаг�заи� �д�аиа `хадпаца �о иогдапратд � ацд ио pas�tl ао�д ргд�.г � дв мо.г� оа sапитдиоа as�q �ит.тпдз��пи�ит ��г �агиг�иzат ацд д�Чд иалт� а�qиаа.то�иа дои рие a1qг��I�au aq I�гnn дпо-аsпЧд �3�Н ри� �{аиаiз��а �дааиа �о suz.raд ит дэаСотд s�цд �о дз�диz� Т�ио�дви ац1 `���� uzoa� sиотд�.гадо �игд.талиоо иацм sааи�гl�lд� иг ,�эиагаг��а ��.таиа рал�о.гдиzг ох�адsиоигар од �дгип�годдо ацд радиа5а�д доаСо.тд аЧх ц�пог{дi�,т � •(�'итаааиг�иg п.тдад) I I QZ �о риа ацд �Sq zахпдо��nипиг �� аио д� asn �,��Н дnо а$�цд од (�}01� харип) ааддгиzиzо� алгдnоах� �-IVц ат�д ито.г� pip� �ид� иг �игрип� ралгазаа uEp,zo� � •(рр�,`р i од дп �о s�,�� �о ��г„� ат{д иапг�) suorssгura рар�ол� �о .г�а�С ,гад •ba �р�д и©�i�ru.r $'� �S�Ч�по,г од �итдиrгои.iв sд�auaq ад�иzтlа ит paдlnsa.z os�� sвц II ��� aapun uotд�iu�nsuoз �о sиод �,�� tr�g �о дпо-аsвцд aniдr�lnLUri� aгlZ •да�.тг�д дпо-аs�цс� dY1I {}it�Z а�1д ��( (saau�дsqns � ��'�г xauub'„ s� ра��о�диоа� ио��гl ри� s�d� �о иотд�игих�Iа i�дод ри� иогдагьра,т .го� sаsг;тдУадиа од sдu�.z� �итрспо.тд аiгцлг� диаитио.ггли� �о г�,zдsiиту� ацд иг ди�од ��ао� аиого ацд �о �Агавдез � � As for reporting of this grant project management reports the project operations in accordance with International Public Sector Accounting Standards, under the cash basis of accounting. Translation of currencies, Functional currency for the project operations is Jordanian Dinars (JOD) and translated into United States Dollars (USD) at the prevailing exchange rate of USD I = JOD .708, and maintains the accounts in USD. The project also reports all transactions in USD. 3. Designated Account Ministry of Environment opened a bank account (3193/3660/1) in USD as a project designated account with the Central Bank of Jordan. Initial Deposi : Initial Deposit from the World Bank of USD 300,000 was transferred to the Designated Account in February 2014 Disb nements: Disbursements made from the Designated Account during the period are illustrated below in USD: Beginning Balance 112,950 Add: World Bank Replenishment 435,127 Deduct: Payments for Expenditures (457,087) Ending Balance 90,990 4. Uses of grant funds per part (component) in USD: Available Cumulative Fund Component 1 2016 Budget Balance Invest. in HCFC-22 Consui-nption Reduction 524,519.88 628,000 103,480 Component2 Tech. Assist. policies and AC Sector plan Mgt. 100,130.15 352,300 252,170 Component 3 Institutional Strengthening 278,126.73 441,999 163,872 Total Expenditures 902,777 1,422,299 519,522 8 5. Contract Listing fohoe n Stableo sine USD: act The Staso f gne cntracts under the grant as of 31 December 2016 is illustrated in the 9 下一”一hllllllllllllllhllllll－州 ！待 翁