Islamic Republic of Afghanistan Supreme Audit Office AUDIT REPORT FY 1397 (2018) Project ID Grant Number Project Name Women Economic Empowerment- P163267 TF-0A5400 National Priority Program (WEE-NPP) December 2019 ala Islamic Republic of Afghanistan Re c Supreme Audit Office Reference Nu mber: . ae7 Auditor General's Report To His Excellency Minister of Finance Government of Islamic Republic of Afghanistan Report on the Audit of the Financial Statements Opinion We have audited the accompanying Statement of Cash Receipts and Payments (the "Financial Statements") of Women's Economic Empowerment National Priority Program (WEE-NPP), Project ID P163267, Grant Number TF-OA5400, (the Project) implemented by the Ministry Of Labor, Social Affairs, Martyrs and Disabled (MOLSAMD), for the financial year ended 30 Qaws 1397 (21 December 2018), which comprise the summary of significant accounting policies and other explanatory notes forming part of the Financial Statements. In our opinion, the accompanying financial statements present fairly, in all material respects, cash receipts and payments of the Project for the financial year ended 30 Qaws 1397 (21 December 2018) in accordance with Cash Basis IPSAS (International Public Sector Accounting Standard) - "Financial Reporting under the Cash Basis of Accounting" and comply with the terms and conditions of Project's Grant Agreement. Basis for Opinion We conducted our audit in accordance with International Standards of Supreme Audit Institutions ("ISSAIs"). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit ofthe Financial Statements section of our report. We are the Supreme Audit institution (SAI) of Islamic Republic of Afghanistan and independently derive our legal mandate from the Supreme Audit Office Law and in accordance with the Code of Ethics implemented by the SAO based on the ISSAI 130- Code Page 1 of3 ofEthics together with the ethical requirements that are relevant to our audit of the financial statements in Afghanistan and applicable to SAO auditors including external experts for the audit, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics of SAO. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of Ministry of Finance for the Financial Statements The Ministry of Finance (the Ministry) is responsible for the preparation and fair presentation of the project financial statements in accordance with International Public Sector Accounting Standards "Financial Reporting under the Cash Basis of Accounting" and for such internal control as the Ministry determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error and, selecting and applying appropriate accounting policies. The Ministry is also responsible for ensuring that activities and financial transactions and information reflected in the Financial Statements are in compliance with the Project's Grant/ or Financing Agreement. Those charged with governance of the Ministry are responsible for overseeing the Project's financial reporting process. Auditor's Responsibilities for the Audit of the Financial Statements Our 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 our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISSAls 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 uss.-taken on the basis of these financial statements. As part of an audit in accorda ith ISSAls, we exercise professional judgment and maintain professional skeptici yghout the audit. We also: * Identify and assess the ris sf material misstatement of the financial statements, whether due to fraud or error, desi n -derform audit procedures responsive to those risks, and obtain audit evidence that i 14*ient and appropriate to provide a basis for our opinion. The risk of not detecting a r1 misstatement resulting from fraud is higher than for one resulting from error, as fra y involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. * 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 Project's internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Page 2 of 3 * Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. * Evaluate the financial transactions and information reflected in the financial statements whether they are in compliance with the terms and conditions of the Project's Grant/ or Financing Agreements. We communicate with those charged with governance of the Ministry 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. We also provide those charged with governance of the Ministry with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. Report on Other Requirements Management Letter highlighting the areas of improvement in financial management including the compliance with covenants of the Grant/ Financing Agreements and results of its operations for the financial year ended on 30 Qaws 1397 (21 December 2018) has been attached to this report. These observations and recommendation have been communicated to and discussed with Project management and are intended to improve internal control and results in other operating efficiencies of the Project. Moha nad Naiem H mal Audito General Supreme Audit Office Page 3 of 3 Islamic Republic of Afghanistan Women's Economic Empowerment National Priority Program World Bank Reference: Projeet ID P158768; Grant ID A5400 Financial Statements for the year ended 3Oth qaws 1397 (21st December, 2018) Women's Economic Empowerment National Priority Program World Bank Reference: Project ID P163267; Grant ID A5400 STATEMENT OF CASH RECEIPTS AND PAYMENTS FOR THE YEAR ENDED 30 QAWS 1397 (21 DECEMBER 2018) 1397 1396 Receipts Receipts/ Payments Payments Controlled Controlled Cumulative by entity by entity To Date USD USD USD RECEIPTS Initial Advance 145,360 145,360 Replenishments 276,387 276,387 TOTAL RECEIPTS 276,387 145,360 421,747 PAYMENTS Disbursement Category: Goods, Non-Consulting Services, Consultant's Services, Training, Workshops and Incremental Operating Costs 177,889 43,523 221,412 Innovation Fund Grants - - Bank Charges 50 25 75 TOTAL PAYMENTS 177,939 43,48 221,487 Increase/(Decrease) in Cash & Cash Equivalents 98,448 101,812 200,260 Cash and Cash Equivalaents at the beginning of the year 101,812 - Increasel(Decrease) in Cash & Cash Equivalent 98,448 101,812 Cash and Cash Equivalents at the end of the year 200,260 101,812 The accompanying notes form an integral part of this financial statement. Zahid Hamdard Deputy Minister for Finance Ministry of Finance, Islamic Republic of Afghanistan Dated: November 27, 2019 Women's Economic Empowerment National Priority Program World Bank Reference: Project ID P163267; Grant ID A5400 SIGNIFICANT ACCOUNTING POLICIES & NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 QAWS 1397 (21 DECEMBER 2018) 1) LEGAL STATUS AND ACTIVITY a) The Women's Economic Empowerment National Priority Program was set up in July 2017 to facilitate the preparation of the proposed program designed to support the establishment of a national priority program on Women's economic empowerment that advances women's access to economic assets and opportunities. b) The project consists of the following parts: i) WEE-NPP Coordination and Program Management ii) Technical Assistance, Analytic Work and Capacity Building iii) Innovation Fund c) The Project is funded by a grant bearing reference number A5400 from the Afghanistan Reconstruction Trust Fund in the amount of US$ 5,000,000. d) The significant terms and conditions that determine or affect the availability of the funding assistance are primarily the presentation of eligible expenditures to donor within the period as per and in accordance with the financing agreement. e) These financial statements have been prepared in accordance with the requirement of the development grant agreement signed between the government of the Islamic Republic of Afghanistan and the International Development Association (acting as Administrator of the Afghanistan Reconstruction Trust Fund). 2) SIGNIFICANT ACCOUNTING POLICIES a) Basis of Preparation The financial statements are prepared bathe historical cost convention and in accordance with Cash Basis IPSAS - Ape b$ Reporting undet the Cash Basis of Accounting issued by International Federatiowh4T bcountants (IFAt). b) Reporting Entity These financial statements are for the Project referred to in para 1(a) which is funded by the grant(s) as specified in para 1(c) and encompass the operations of the project to the extent funded by those grant(s). c) Receipts These represent grants and aid received and taxes collected but not transferred to the government's revenue account during the period. d) Payments Payments made from Special Account are recognised in the financial statements based on the date the cheque is issued and direct payments by World Bank are recognised on the date on which the withdrawal application for the payment is submitted to the World Bank. However, cheques or withdrawal applications that were ultimately rejected by the bank or the World Bank are reversed in the reporting period. Women's Economic Empowerment National Priority Proram World Bank Reference: Project ID P163267; Grant ID A5400 3) NOTES TO THE FINANCIAL STATEMENTS a) Initial Advance Initial advance represents the advance given by the World Bank into the designated bank account of the project. b) Reporting Currency The reporting currency is US Dollars. Since US Dollars is the principal disbursement currency of the donor, the financial statements are not prepared in the Afghani which is the currency of Afghanistan. c) Currency Translations Transactions in currencies other than the reporting currency are translated into US Dollar at the rate of exchange at which the transaction is actually executed. d) Bank Charges The Ministry of Finance has negotiated with Da Afghanistan Bank that bank charges will not be charged on the transactions in the US Dollar Special bank account of the grant. Bank Charges may be levied by intermediary banks on deposits into the Special Account and balances returned to the World Bank. e) Comparison of Budget and Actual Amounts The Project, being the reporting entity for the purpose of these financial statements, in its capacity as such does not make its annual approved budget publicly available nor is its budget explicitly available publicly in the compiled approved budget in a manner purposeful to the context of these fi*cial statements. Thus, the requirement of presenting a comparison of budget 4 ctual amounts is not considered contextually applicable. -f f) Authorisation Date These Financial Statements are au hor@e.y the Deputy Minister for Finance, Ministry of Finance or any official acting on bI& lif who has been so authorised to act on the date endorsed on the Statement of Ca ipts and Pay#ants. g) Appendices The accompanying appendices provide additional information and analysis and form an integral part of these notes, except as indicated otherwise. h) Others These Financial Statements are originally prepared in English and then translated into Dari. In the event of any inconsistency between the English and Dari versions, the English version shall be considered to be correct. Women's Economic Empowerment National Priority Program World Bank Reference: Project ID P163267; Grant ID A5400 APPENDIX Al SUMMARY OF WITHDRAWAL APPLICATIONS FOR THE YEAR ENDED 30 QAWS 1397 (21 DECEMBER 2018) Description Application Number Initial Advance Amount USD USD DA-A 3 122,544 DA-A 2 153,843 Women's Economic Empowerment National Priority Program World Bank Reference: Project ID P163267; Grant ID A5400 APPENDIX A2 US Dollar SPECIAL ACCOUNT SUMMARY FOR THE YEAR ENDED 30 QAWS 1397 (21 DECEMBER 2018) Depository Bank: Da Afghanistan Bank Address: Kabul SA # 27616 USD Opening Balance as per Bank Statement 101,812 Add: Receipts from Donor 276,387 276,387 Less: Payment for project expenditures 177,889 Bank Charges 50 177,939 Closing Balance as per B.S 30 QAWS 1397 (21 DECEMBER 2018) 200,260 N'P, Women's Economic Empowerment National Priority Program World Bank Reference: Project ID P163267; Grant ID A5400 APPENDIX A3 US Dollar BANK RECONCILIATION FOR THE YEAR ENDED 30 QAWS 1397 (21 DECEMBER 2018) Account No: Depository Bank: Da Afghanistan Bank (DAB) Address: Kabul USD Closing Balance as per bank statement - 30 QAWS 1397 (21 DECEMBER 2018) A/c No. 27616 200,260 Closing balance as per financial statements - 30 QAWS 1397 (21 DECEMBER 2018) 200,260 Women's Economic Empowerment National Priority Program World Bank Reference: Project ID P163267; Grant ID A5400 Appendix A4 STATEMENT OF ESTIMATED GRANT AMOUNT FOR THE YEAR ENDED 30 QAWS 1397 (21 DECEMBER 2018) (Memorandum Statement - not an integral pat of the Financial Statements) Amount In currency of commitment Amount of Grant USD 5,000,000 Amount disbursed by World Bank untill the end of 1397' USD 421,747 Undisbursed Balance USD 4,578,253 In reporting currency Amount disbursed by World Bank untill the end of 1397' USD 421,747 Equivalent US Dollars for undisbursed amount USD 4,578,253 Total estimated amount of Grant Funds available USD 5,000,000 Cumulative payments for Expenditure as per the Statement of Cash Receipts & Payments USD 221,487 1. Actual amounts of total disbursement made by the World Bank since the beginning of the project as available from Client Connection in currency of commitment.