KURDISTAN REGIONAL GOVERNMENT MINISTRY OF PLANNING - GENERAL DIRECTORATE OF CAPITAL INVESTMENT BUDGET MODERNIZATION OF PUBLIC FINANCIAL MANAGEMENT SYSTEMS PROJECT (P151357) - COMPONENT 3 STATEMENT OF CASH RECEIPTS AND PAYMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 GENERAL DIRECTORATE OF CAPITAL INVESTMENT BUDGET MODERNIZATION OF PUBLIC FiNANcAL MANAGEMENT SYSTEMS PROJECT - COMPONENT 3 STATEMENT OF CAsH RECEIPTS AND PAYMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 PAGES INDEPENDENT AUDITOR'S REPORT STATEMENT OF CASH RECEIPTS AND PAYMENTS NOTES To THE STATEMENT OF CASH RECEIPTS AND PAYMENTS 2-6 Independent Auditor's Report To the Project Management Team (PMT) of the Modernization of Public Financial Management Systems Project - Component 3 General Directorate of Capital Investment Budget Ministry of Planning - Kurdistan Regional Government Report on the audit of the Statement of Cash Receipts and Payments Our opinion In our opinion, the statement of Cash Receipts and Payments presents fairly, in all material respects, the cash receipts and payments for the year ended 31 December 2020 in accordance with International Public Sector Accounting Standards (IPSAS) under the basis of preparation described in Note 2.1 to the accompanying statement. What we have audited We have audited the accompanying Statement of Cash Receipts and Payments (the "Statement") of the "Modernization of Public Financial Management Systems Project - Component 3" (the "Project") implemented by "General Directorate of Capital Investment Budget" (the "Project") for the year ended 31 December 2020 and notes to the statement, including a summary of significant accounting policies and other explanatory information. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the Statement of Cash Receipts and Payments section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Project in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code). We have fulfilled our other ethical responsibilities in accordance with these requirements and the (IESBA Code). Basis of accounting and restriction on distribution We draw attention to Note 2.1 to the Statement, which describes the basis of preparation. The Statement is prepared to assist the Project to comply with the laws, regulations and provisions under the Loan Agreement (the "Agreement") signed between the International Bank for Reconstruction and Development - World Bank (the "World Bank") and the Republic of Iraq. As a result, the Statement may not be suitable for another purpose. Our report is intended solely for the Project and the World Bank and should not be distributed to or used by parties other than the Project and the World Bank. Our opinion is not modified in respect of this matter. Responsibilities of management and those charged with governance for the Statement of Cash Receipts and Payments Management is responsible for the preparation and fair presentation of the Statement in accordance with IPSAS under the basis of preparation described in Note 2.1 to the accompanying Statement, and for such internal control as management determines is necessary to enable the preparation of the Statement that are free from material misstatement, whether due to fraud or error. In preparing the Statement, management is responsible for assessing the Project ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and 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. Those charged with governance are responsible for overseeing the Project financial reporting process. PricewaterhouseCoopers "Jordan" - Erbil Branch, Empire Business Complex, Building C5, Section B, Fourth Floor, Erbil, Kurdistan, Republic of Iraq T: + 964 (0) 770 465 3377, www pwc.com/me Auditor's responsibilities for the audit of the Statement of Cash Receipts and Payments Our objectives are to obtain reasonable assurance about whether the Statement as a whole 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 this Statement. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: * Identify and assess the risks of material misstatement of the Statement, 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. * 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. * Conclude on the appropriateness of management's use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Project's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the Statement or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Entity to cease to continue as a going concern. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates, if any, and related disclosures made by management. * Evaluate the overall presentation, structure and content of the Statement, including the disclosures, and whether the Statement represents the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance 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 PricewatrhouseCoopers "Jordan" L.L.C - Erbil Branch 'riK iTAq 261ti 1W& ,L GENERAL DIRECTORATE OF CAPITAL INVESTMENT BUDGET MODERNIZATION OF PuBiuc FINANCIAL MANAGEMENT SYSTEMS PROJECT - COMPONENT 3 STATEMENT OF CASH RECEIPTS AND PAYMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 Cumulative from the For the year For the year Inception ended 31 ended 31 date to 31 December December December Notes 2020 2019 2020 USD USD USD Bank balance at i January 5 269,454 256,562 - -69,454 256,562 - CASH RECEIPTS Direct payments to contractors 3 757,404 369,456 1,219,483 Transfers from the World Bank 4 24,446 104,686 63o,432 781,850 474,142 1,849,915 CASH PAYMENTS Public investments management strengthening (735,592) (348,863) (1,114,119) Public procurement modernization (7,788) (19,497) (226,192) Project management and reform coordination (36,673) (92,890) (238,353) (780,053) (461,250) (1,578,664) Net increase in bank balance 1,797 12,892 271,251 Bank balance at 31 December 5 271,251 269,454 271,251 Zagross Fatah Agha Hidayat aker Deputy Minister of Planning- Head of PMT Fin ial Officer Zagros Fatab Deputy Minister of Planning The attached notes from i to 7 are an integral part of these financial statement GENERAL DIRECTORATE OF CAPITAL INVESTMENT BUDGET MODERNIZATION OF PUBLIC FINANCIAL MANAGEMENT SYSTEMS PROJECT - COMPONENT 3 NOTES To THE STATEMENT OF CASH RECEIPTS AND PAYMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 ft) GENERAL INFORMATION 1.1 General information The Republic of Iraq was granted a loan for the amount of USD 41.5 million from the World Bank - International Bank for Reconstruction and Development (the "World Bank") for the implementation of Modernization of Public Financial Management System Project in Iraq and Kurdistan Region. The loan agreement number 8683-IQ (the "Agreement") of the Modernization of Public Financial Management Systems Project was signed between the Republic of Iraq and the World Bank on 20 December 2016 (the "Inception date") with a project implementation period between the years 2017 and 2021. The loan is repayable by the Republic of Iraq between 15 March 2022 and 15 September 2o26 in the form of io semi-annual repayments. The objective of the project is to improve financial information management and transparency, cash management, public investment management and public procurement modernization at selected federal and governorate agencies. The Modernization of Public Financial Management Systems Project is distributed into Component 1, 2, and 3. Component 3, Public Investment Management and Public Procurement at the Kurdistan Regional Government level (the "Project"), is distributed to the General Directorate Capital Investment Budget - Ministry of Planning - Kurdistan Regional Government (GDCIB). GDCIB's share of the total loan, under Component 3, is USD 4.59 million. GDCIB is responsible for directing the economic development of Kurdistan Region by setting priorities for capital investment budget and approving funding for projects. 1.2 Project Information The primary objectives of the project are: * Modernization and strengthening of Kurdistan Region's public investment management system, including through: (i) the carrying out of an efficiency and functional review of the General Directorate of Capital Investment Budget within Ministry of Planning Kurdistan Region; (ii) updating and improving project appraisal methodologies and guidelines, including instructions, guidelines and templates; (iii) strengthening and further development of the Kurdistan Development Management System (KDMS) through the establishment of an integrated bank of investment projects, to support investment planning and decision making, to track and monitor investments, and to serve as an investment project registry; and (iv) capacity building. " Modernization and strengthening of public procurement in Kurdistan Region, through: (i) supporting the implementation of procurement regulations, including strengthening the capacity of policy unit functions, the development of a complaints mechanism system, and provision of training to relevant agencies; (ii) development and rollout of standard bidding documents and framework agreements; (iii) the establishment of an electronic procurement portal; and (iv) capacity building and professionalization of the public sector procurement workforce and for private sector stakeholders. GDCIB will implement the above under the Project Coordination Unit (PCU) based in the Ministry of Planning - Kurdistan Region. A Project Management Team (PMT) has been established to manage the project during its 5 years implementation period. The PMT is responsible for implementation, management and planning, procurement and financial management and reporting according to the World Bank guidelines and procedures in coordination with the PCU. 2 GENERAL DIRECTORATE OF CAPITAL INVESTMENT BUDGET MODERNIZATION OF PUBLIC FINANCIAL MANAGEMENT SYSTEMS PROJECT - COMPONENT 3 NOTES TO THE STATEMENT OF CASH RECEIPTS AND PAYMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 (2) SUMMARY OF SIGNIFicANT AcCOUNTING POLICIES The accounting policies used in preparation of the statement of the project. These policies have been consistently applied to all the years presented, unless otherwise stated. 2.1 Basis of preparation The Statement of Cash Receipts and Payments was prepared under the cash basis of accounting as defined by the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants (IFAC). Under the cash basis of accounting, cash receipts are recognized when cash is received and cash payments are recognized when payments are made. 2.2 Foreign currency transactions The U.S. dollars. is the project reporting and functional currency. The books of accounts are held in U.S. dollars. Transactions denominated in other currencies are translated to USD using the exchange rate prevailing at the date of transactions. 2.3 Receipts Cash receipts represents balances transferred from the World Bank and deposited into the project's designated bank account with Trade Bank of Iraq. Cash receipts are recognized when cash is received. 2.4 Payments Disbursements represents cash payments incurred in the normal course of the Project operations. Payments are recognized when the disbursements are made. 2.5 Capital expenditures Capital expenditures incurred to acquire fixed and other assets are recognized in the statements of Cash Receipts and Payments when the payment is made for these assets. 2.6 Provisions Provisions are not recognized when there is an existing legal or contractual obligation as results of the Project operations. Provisions are recognized in the statements of Cash Receipts and Payments when the provision payment is made. 2.7 Contingent liabilities Contingent liabilities are not disclosed in the statements of Cash Receipts and Payments. Liabilities are recognized when the payment is made. 3 GENERAL DIRECTORATE OF CAPITAL INVESTMENT BUDGET MODERNIZATION OF PUBLIC FINANCIAL MANAGEMENT SYSTEMS PROJECT - COMPONENT 3 NoTEs TO THE STATEMENT OF CASH RECEIPTS AND PAYMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 DIRECT PAYMENTS TO CONTRACTORS The World Bank makes payments directly to third parties (suppliers, contractors, or consultants) for eligible expenditures. The entity only controls the amounts paid to the project's designated bank account; other amounts paid directly by the World Bank to contractors are under the control of the World Bank. The following direct payments were made by the World Bank to a contractor: From the From the During the Inception date Inception year ended 31 to 31 date to 31 December December December Date 2020 2019 2020 USD USD US D 1o February 2018 - 7,695 7,695 17 April 2018 - 4,950 4,950 24 May 2018 - 9,900 9,900 24 May 2018 - 11,750 11,750 6 July 2018 - 1,650 1,650 12 July 2018 - 12,000 12,000 14 August 2018 - 29,050 29,050 13 November 2018 - 15,628 15,628 18 January 2019 - 19,400 19,400 31 January 2019 - 62,514 62,514 2 April 2019 - 7,500 7,500 26 April 2019 - 134,175 134,175 12 July 2019 - 4,192 4,192 2 August 2019 - 7,500 7,500 24 September 2019 - 134,175 134,175 16 January 2020 147,592 - 147,592 16 January 2020 98,394 - 98,394 23 January 2020 12,388 - 12,388 ii February 2020 7,500 - 7,500 26 May 2020 24,777 - 24,777 6 July 2020 73,796 - 73,796 5 August 2020 49,197 - 49,197 2 September 2020 7,500 - 7,500 2 October 2020 44,725 - 44,725 14 October 2020 14,025 - 14,025 14 October 2020 44,725 - 44,725 28 October 2020 44,725 - 44,725 24 November 2020 33,036 - 33,036 4 December 2020 68,074 - 68,074 13 December 2020 79,162 - 79,162 20 December 2020 7,78 - 7,788 757,404 462,079 1,219,483 There were no direct payments made by World Bank to contractors in 2017. 4 GENERAL DIRECTORATE OF CAPITAL INVESTMENT BUDGET MODERNIZATION OF PuBLIC FINANCIAL MANAGEMENT SYSTEMS PROJECT - COMPONENT 3 NOTES TO THE STATEMENT OF CASH RECEIPTS AND PAYMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 (4) TRANSFERS FROM THE WORLD BANK Funds received for the Project from the World Bank that were deposited into the designated bank account with the Trade Bank of Iraq to finance eligible Project expenditures were as follows: From the From the During the year Inception date to Inception date to ended 31 31 December 31 December December 2020 2019 2020 Date USD USD USD 26 September 2017 280,000 280,000 13 March 2018 - 21,376 21,376 2 April 2018 - 42,559 42,559 15 May 2018 - 6,723 6,723 23 May 2018 - 40,055 40,055 6 June 2018 - 14,291 14,291 13 August 2018 - 50,671 50,671 15 August 2018 - 14,134 14,134 18 September 2018 - 7,834 7,834 11 November 2018 - 5,100 5,100 11 November 2018 - 18,557 18,557 1 February 2019 - 23,437 23,437 17 April 2019 - 6,517 6,517 30 May 2019 - 6,587 6,587 1 August 2019 - 42,352 42,352 1 October 2019 - 6,172 6,172 11 December 2019 - 19,621 19,621 ii March 2020 10,546 - 10,546 13 November 2020 13,900 - 13,900 24,446 605,986 630,432 (5) CASH AND BANK BALANCES The balances of the bank account with Trade Bank of Iraq balances were as follows: 2020 2019 USD USD Cash at bank 271,251 269,454 271,251 269,454 5 � а и и о rэ ;� с са v � а о т и си '��' � СС? =fЭ ''С? Q тf н D OQ � �5 р С"�] � СТ N �[ R С��. н н � h R� � н С] � N � � �С1 tC � � � � �' C�S Q г� г� � с и кп о г� о сч w о с о н и са о � � � а � � Q °; � © � а h © � �а, Q аа � . � � ^б � n т �О др � �, СЧ � �.. '� С�ч'i � h н Q � Ч Са � � .-i О F�ч � ++ "С� у � � 'г7 рД О С О О © С� С Сз С [� С б а О О � � b t� ^v О с� С: f7 О а С и р О t? О� а � �+' 8% О С О О С Q О G О °? д О С С3 О � и' �'� � � �Т � н � � а rJ 4 � а й fl Crs ti� � С VJ О О cJ �,.� е6' © � О t,, Ш � � � н н ,� N ++ � 6�i � � c�U � ы а � t� с+3 � г- со м б, cn �D г� со Сп °'' .� i Ci CV м�в GL Стr н н �w гч N N н н tЧ N О � � Г� Г� и � � � � 47� � С�: Гrг � fi4 � �'г G4 F�i Гх 'С', � +�+ � 0.' '�" R. д-� Fiп � F'Эы Сл С1. �L Р.г А� Р�ч СА+ й�.� � , ��, о о о с� о о сэ о о а D о с Q сэ • � а � � � � � � � � � � � � � � � � о � � � � � с� � с� � � � � � � с� � с� � � ц � � � � � � � � х � `� х � � � � � � о � � у ,. н н � =j с � �[S] Q Ь� ,�"�, S�C � �а+, ин Q CQ б' � '�'� � 4 �s 'b й ш т � Q со ev Q ° °' r°� г°и а �' � V � .д ,г� �' � � а st�� �' N �а'+ � a�i � ш ш �7" � 'ь ы ы а�] й V ° � 'G � ь'�д д�-ь е°,, .L N � � � С а � о � .-c.s " у,а °' °-"С � В т a�i .�' ы ш гп � о ;� д � � � з � �. � v � ..`�� � � а"ь � °' а � п а rn о ��б д а1 и а � � н, А а, д д W ы � ,.� N СЧ N N Г+1 N � N N Ci Н тi .# н �D „у .` 1^(� �� C�J 4Уг�hЧJ CL1 "� � � � � -д � � Е � � � � � � � � � �� � о� о а а � ой й .Q ш � � �*' � р +� � �' �. � � �, � О сиа �`„ar о .� .� .с о w .� � о о a�i о � � �.-. w w w w � fV � а`"i ,b г-' � ar w`' ¢�i а�'.� а�г гд7-' ti ы г�''. �-у s.. �� ГУ, С � -д С ла �а ��а 'ts со ro� 'b г� г�а �n .с а �i � � � �- � � О � О� � С � О� Я д С сб3 r�д д cCU д м С? � s. � С � �,, п! � �гЕ +„ � cJ �,,, � G � � � �'� � � � � у � С � � � G � у а � � � �д �рΡ�+ �� Q �� ы� ы с � � ы адi �� ы w � ы ы � цr w cwj ^ и н .� � � °' °' � � i � � � � � у Rч � U С3 W � '� о� �с о о о гда � Q� с�а c�v и � Q ��„ ,+�. © � � д � � а � � д. р, я. � .� с, .� � � ,G � �s, а � �' Q � •:' � � -�? .ц .:г � ,ц -� �= .�, � .� � .v � д � � •n . . 0 О F 'гд О ,� � �' Р.� � R�. р�. .Г,`". � ^w� � `а' о .а о � О � Q' 1 i г i , гд. 0.. L�и 0.i р., � �+ � N i i � ь � �"j � Е' ;� у � � м м cv cv cv rэ .м а� т га н м cv, +? �� с4°у � � .с, ео м м г{э м�а ra ь+� �о г�з rз .и м cn с*� со г�а м1 � � ` Wм � ++ +� а.+ � G .и '.G ++ . 'i.' i"ч Я G` +.+ ++ м @ С�: � С С. � С G-` � С � К D':,.," ' G G"° F о Сч о ы^ч '^' Cr д L". � сС V аз ш д а.г 4 а� аа а� а� ',д. аз w си а> v т;;, ш;;, ar у аэ б аг ' U (� G С'++ С++�� С ❑ д С пs д � G С сд С ст С F-., G � лм �� I�`1 � О о� О R3 О д д д� О."д,, О О�' С р р С fl� '� О� о � � � д гi а с а� а е�. а а. •- с. ьд г�. д. �о su. � с,,�.�t а'�'п сг г � � � 'м р � � � 'b С ^R � � � � � �С д � �'С С � � � F� � б � �� � �+ � Lг1 �° ��'j � М о о й" О k О д С д б о i О О � О д О д р � р'� О `�' ��` � V V С U б и сэ с� и {? U..ь� U сэ +� U О U б U.ь., с� д U G) О С+ С7 О tiD и �.� а.� Q.� .д �� и,.� и пд .� и.� U� V� и� о � G�) �н ,��+G3�� � ии и сл гл г%и и сли и гл и и и � GENERAL DIRECTORATE OF CAPITAL INVESTMENT BUDGET MODERNIZATION OF PuBuc FINANCIAL MANAGEMENT SYSTEMS PROJECT - COMPONENT 3 SCHEDULE OF ACTUAL VERSUS BUDGETED CAsH RECEIPTS AND PAYMENTS FOR THE YEAR ENDED 31 DECEMBER 2 020 (UNAUDITED) Other Supplementary Information Schedule of Actual Versus Budgeted Cash Receipts and Payments GENERAL DIRECTORATE OF CAPITAL INVESTMENT BUDGET MODERNIZATION OF PUBLIC FINANCIAL MANAGEMENT SYSTEMS PROJECT - COMPONENT 3 SCHEDULE OF ACTUAL VERSUS BUDGETED CASH RECEIPTS AND PAYMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 (UNAUDITED) Our audit of the accompanying Statement of Cash Receipts and Payments of the Modernization of Public Financial Management Systems Project - Component 3 for the General Directorate of Capital Investment Budget for the year ended 31 December 2020, has been made primarily for the purpose of expressing an opinion on the statement taken as a whole. The Schedule of Actual Versus Budgeted Cash Payments (the "Schedule") as set out on the following page is presented for analysis purposes only. Accordingly, we do not express any opinion thereon. Budget variances, if any, are subject to World Bank approval. � о ©о .ю о и � �, a�i «oi �о р м �°' д �n м� с � �� и� � � � � о v � Г. � � О � о N �v � � с `� � м .`�п ''� с� со °� � � � У7 cs и : � � д '' � � � гг� � � � � � д � о о с°� с°а °о �, д а о с� о о о о о © � � О ооС до- � у N W � � � � �Lк-' �' аа � А" ¢� ы v � � и � � � � о и W � �� д � о �� � � .� � � :' `� � � '��j � � � а � и, � � ¢ � � о % �� � � vц ��� � WN ° � � � w � � �: °A �� `�w � � � �� �� � � � � � и w � �' � � �з ,.�� � W � =� 'о �а ®� � А с�, о�- w ш � �.� , � � � � м ,� а с� . � � � А :�%з с`�'� с+7 �' с асэ � � � � � � � � � U��� Gг7 fl о о� ����� � � � о А � w� � '^ � ,-� .д � ��Я� й й гn �7 � � w�Q�� G7�`�r�зw