I I I Lao PDR Mobilizing Ethnic Communities for Improved Livelihoods and Wellbeing Project (Funded by International Development Association, I acting as administration of the Japan Social Develpoment Fund, under Grant Number TFO97786) IReport of the Project's Management and Audited Financial Statements For the period from 1 October 2015 to 22 April 2016 I I I I I I I I I I I I I I I Lao PDR Mobilizing Ethnic Communities for Improved Livelihoods and Wellbeing Project - JSDF Grant No. TF097786 CONTENTS Pages General information 1 Report of the Project's Management 2 Independent auditors report 3-4 Statement of receipts and disbursements 5 Statement of fund balance 6 Notes to the financial statements 7 - 12 I I I I I I I I I I I U I I I Lao PDR Mobilizing Ethnic Communities for Improved Livelihoods and Wellbeing Project - JSDF Grant No. TF097786 GENERAL INFORMATION Lao PDR Mobilizing Ethnic Communities for Improved Livelihoods and Wellbeing Project Lao POR Mobilizing Ethnic Communities for Improved Livelihoods and Wellbeing Project ("the Project") is implemented by the Poverty Reduction Fund ("PRF") of the National Leading Board for Rural Development and Poverty Alleviation, Prime Minister Office, under the subsidiary grant agreement signed by the Government of Lao PDR ("GoL") and the PRF on 8 July 2011. The implementation of the Project was approved by the Japan Social Develpoment Fund ("JSDF") on Disbursement Letter dated 22 April 2011, and the Project implementation period commences from 22 April 2011 to 22 April 2015. The implementation of the Project was extended to 22 April 2016. The overall objective of the Project is to pilot an innovative livelihood focused community-driven development program in the selected poverty reduction priority districts in Huaphan and Savannakhet provinces. The specific parts of the Project are: a) Formation of Community Sefl-Help Groups and Capacity Building of Local Service Providers; b) Community Asset Creation; c) Participatory Pro-Nutrition Assessment and Activites; and d) Monitoring and Impact Evaluation of Activities. The Project is managed by the management of PRF. Project activities mainly cover five poverty reduction priority districts in Huaphan and Savannakhet provinces, enabling 28,800 households in ethnic communities in rural areas in Lao PDR to improve their livelihoods and wellbeing through group-based activities. The eligible expenses that will be financed out of the proceeds of the grant are allocated to the following categorises: - Category 1: Goods, Training and Consultancy - Category 2: Incremental Operating Costs - Category 3: Sub-grants under Part (b) of the Project I JSDF Grant No. TF09T786 The Project has been financed by the International Development Association ('IDA"), acting as administrator of the JSDF. The accompanying financial statements are for the JSDF Grant No. TF097786, I JSDF through the IDA signed Grant Agreement No- TF097786 on 22 April 2011, and Disbursement letter dated 22 April 2011 agreed by IDA and MoF for financing of USD 2,621,500 in respect of the Project I I I I U Lao PDR Mobilizing Ethnic Communities for Improved Livelihoods and Wellbeing Project - JSDF Grant No. TF097786 REPORT OF THE PROJECT'S MANAGEMENT MANAGEMENT'S RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS The Project's Management is responsible for the preparation of the Project's financial statements which compnse the statement of receipts and disbursements for the period from 1 October 2015 to 22 April 2016 and the statement of fund balance as at 22 April 2016 together with the explanatory notes thereto. In preparing the financial statements, the Project's Management is required to: w adopt accounting policies as described in Note 3 to the financial statements and apply them consistently in accordance with the requirements of JSDF for Government-executed projects' financial statements, w make judgements and estimates that are reasonable and prudent; P maintain proper financial operations and controls: I maintain adequacy of the management structure and general control environment; w ensure that all non-expendable properties are used solely for and by the Project, and maintain proper control over those properties, and U comply with the related grant and financing agreements. The Project's Management is responsible for ensuring that proper accounting records are kept which disclose, with reasonable accuracy at any time, the funds requested, authorized for, received and disbursed by the Project and to ensure that the accounting records comply with the accounting policies described in Note 3 to the financial statements The Project's Management is also responsible for safeguarding the assets of the Project, and for taking reasonable steps for the prevention and detection of fraud and other irregularities The Project's Management confirms that they have complied with the above requirements in preparing the financial statements. 1 APPROVAL OF THE FINANCIAL STATEMENTS We hereby approve the accompanying financial statements for the period from 1 October 2015 to 22 April 2016 and as at 22 April 2016 which are prepared in accordance with the accounting policies as described in Note 3 to the financial statements and comply with the related grant and financing agreements, cial statements are prepared to assist the Project's Management in meeting the reporting ir of the JSDF As a result, the financial statements may not be suitable for any other rpose ect Management: r unkouang Souvannaphanh Ms. Boualy Sayavong Executive Director Head of Finance and Administration Vientiane, Lao POR 30 September 2016 U I 2 I 2 nqh Roal . Nl onqwil il ann V sIwlji I Building a better working world Reference: 60826839/18850058 INDEPENDENT AUDITORS' REPORT To: The Management of Lao PDR Mobilizing Ethnic Communities for Improved Livelihood and Wellbeing Project The Japan Social Develpoment Fund We have audited the accompanying financial statements of Lao PDR Mobilizing Ethnic Communities for Improved Livelihood and Wellbeing Project under Grant No. TF097786 ("the Project") as set out on pages 5 to 12, which comprise the statement of receipts and disbursements for the period from 1 October 2015 to 22 April 2016, the statement of fund balance as at 22 April 2016 and the notes thereto ("the financial statements"). The financial statements have been prepared by the Project's management in accordance with the accounting policies as described in the Note 3 to the financial statements. Management's responsibility for the financial statements The Project's management is responsible for the preparation of the financial statements in accordance with the accounting policies as described in Note 3 to the financial statements, and for such internal control as management determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error. Auditors' responsibility Our responsibility is to express an opinion on the 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 financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the preparation of the 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 Project'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 financial statements, We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion I In our opinion, the financial statements of the Project for the period from 1 October 2015 to 22 April 2016 and as at 22 April 2016 are prepared, in all material respects, in accordance with the accounting policies as described in Note 3 to the financial statements. I I U I EY Buiding a better I working world Accounting policies and restriction on use We draw attention to Note 3 to the financial statements, which describes the accounting policies adopted by the Project This report is entended for the information of the Project, the JSDF and the Government of Lao PDR and not for other purpose. However, upon release by the JSDF. this report will be a matter of public record and its distribution will not be limited We do not, in giving this opinion accept or assume responsibility for r rpose or to any other person to whom this report is shown or into whose hands it may e expressly agreed by our prior consent in writing Vientiane, L *oNRo.O I I I I I I I I I I I I U Lao PDR Mobilizing Ethnic Communities for Improved Livelihoods and Wellbeing Project - JSDF Grant No. TF097786 STATEMENT OF RECEIPTS AND DISBURSEMENTS for the period from 1 October 2015 to 22 April 2016 3 Currency: $US For the period from For the year 1 October 2015 to ended 30 Notes 22 April 2016 September 2015 Receipts Funds from JSDF 4 1033,449 Total receipts - 1,033,449 Disbursements Category 1 Goods, Training and Consultancy 18821 357954 Category 2 Incremental Operating Costs 10648 69290 Category 3 Sub-grants under Part (b) of the Project 9551 910786 T q sbursements 5 39,020 1,338,030 ents (39,020) (304,581) I ouang SuanpnhMs. Boualy Sayavong oag Souvannaphanh Executive Director Head of Finance and Administration Vientiane, Lao PDR 30 September 2016 I5 Iurny U FoIh eidfrm Frteya 1Icoe 05 oedd3 Ioe 2An 06 Spebr21 I ,3,4 I ,3,4 188135I5 I064 9,5 I I Lao PDR Mobilizing Ethnic Communities for Improved Livelihoods and Wellbeing Project - JSDF Grant No. TF097786 STATEMENT OF FUND BALANCE as at 22 April 2016 Currency $US 22 Apni 30 September Notes 2016 2015 Opening fund balance 39,463 344,044 Net disbursements (39.020) (304,581) Closing fund balance 443 39,463 Represented by: Cash on hand and cash at banks 6 443 37329 J.I)443 39,463 ouang Souvannaphanh Ms. Boualy Sayavong Executive Director Head of Finance and Administration Vientiane, Lao PDR 30 September 2016 I I I I I I I I * 6 I I Lao PDR Mobilizing Ethnic Communities for Improved Livelihoods and Wellbeing Project - JSDF Grant No. TF097786 NOTES TO THE FINANCIAL STATEMENTS as at and for the period from 1 October 2015 to 22 April 2016 1. PROJECT BACKGROUND Lao PDR Mobilizing Ethnic Communities FOR Improved Livelihood and Wellbeing Project Lao PDR Mobilizing Ethnic Communities for Improved Livelihoods and Wellbeing Project ("the Project") is implemented by the Poverty Reduction Fund ('PRF") of the National Leading Board for Rural Development and Poverty Alleviation. Prime Minister Office, under the subsidiary grant agreement signed by the Government of Lao PDR ("GoL') and the PRF on 8 July 2011 The implementation of the Project was approved by the Japan Social Develpoment Fund ("JSDF") on Disbursement Letter dated 22 April 2011, and the Project implementation period commences from 22 April 2011 to 22 April 2015 The implementation of the Project was extended to 22 April 2016, The overall objective of the Project is to pilot an innovative livelihood focused community- driven development program in the selected poverty reduction priority districts in Huaphan and Savannakhet provinces. The specific parts of the Project are: a) Formation of Community Sefi-Help Groups and Capacity Building of Local Service Providers; b) Community Asset Creation; c) Participatory Pro-Nutrition Assessment and Activites; and d) Monitoring and Impact Evaluation of Activities. The Project is managed by the management of PRF. Project activities mainly cover five poverty reduction priority districts in Huaphan and Savannakhet provinces, enabling 28,800 households in ethnic communities in rural areas in Lao PDR to improve their livelihoods and welibeing through group-based activities The eligible expenses that will be financed out of the proceeds of the grant are allocated to the following categorises: - Category 1: Goods, Training and Consultancy - Category 2: Incremental Operating Costs - Category 3: Sub-grants under Part (b) of the Project JSDF Grant No. TF097786 The Project has been financed by the International Development Association ("IDA"), acting as administrator of the JSDF. The accompanying financial statements are for the JSDF Grant No. TF097786- JSDF through the IDA signed Grant Agreement No. TF097786 on 22 April 2011, and Disbursement letter dated 22 April 2011 agreed by IDA and MoF for total financing of USD 2,621,500 in respect of the Project. The Project is expected to be completed by 22 April 2016. I I I7 I U Lao PDR Mobilizing Ethnic Communities for Improved Livelihoods and Wellbeing Project - JSDF Grant No. TF097786 NOTES TO THE FINANCIAL STATEMENTS (continued) as at and for the period from 1 October 2015 to 22 April 2016 2. BASIS OF PREPARATION The Project's financial statements comprise the statement of receipts and disbursements and the statement of fund balance which are expressed in United States Dollars ("USD"), These financial statements are prepared by the Project's management in accordance with the accounting policies as described in Note 3. The Project maintains its accounting records in USD. The financial statements are prepared solely to assist the Project's management in meeting the reporting requirements of the JSDF 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 3.1. Funds from JSDF Funds from JSDF represent fund under Grant Agreement No- TF097786 which are U recognized as receipts when cash is credited to the Project's Designated Account, 3.2. Disbursements I Disbursements are recognized when documents substantiating the Project's transactions are submitted and approved and payment is made, except for sub-grants to Koum Bans (group of villages) where disbursement is recognized when cash is transferred from the Project's bank accounts to Koum Bans, I 3.3. Advances 3 Advances, which comprise mainly of amounts advanced for the Project's activities, are recorded as such in the statement of fund balance when paid. When the advances are liquidated, the related expenses are recognized in the statement of receipts and * disbursements. 3.4. Fixed assets Fixed assets procured are recognized as expenditures in full in the statement of receipts and I disbursements when received or when handed-over from the contractors or suppliers upon the respective acceptance and approval by the Project and when payment is made, Accordingly, fixed assets are not recognized in the statement of fund balance at the end of the year, The Project maintains a fixed asset register for control and monitoring purposes, which includes vehicles, furniture and fittings, computers and office equipment h .5. Foreign exchange differences Disbursements and withdrawals in foreign currencies other than US are converted into SD at the actual exchange rates ruling at the dates of transactions. Fund balance denoted in foreign currencies are translated into USO at the closing exchange rate at the reporting date. Foreign exchange differences are recognized in the statement of receipts and disbursements. I8 Fiedaset FIe sespoue r eonzda xedtrsi uli h ttmn frcit n I Lao PDR Mobilizing Ethnic Communities for Improved Livelihoods and Wellbeing Project - JSDF Grant No. TF097786 NOTES TO THE FINANCIAL STATEMENTS (continued) as at and for the period from 1 October 2015 to 22 April 2016 4. FUNDS FROM JSDF Currency: $US For the period from 1 October For the year Withdrawal Application 2015 to 22 April ended 30 No. Date of receipt 2016 September 2015 JSDF TF097786 Application No 030 24 October 2014 56,242 Application No. 031 12 November 2014 - 178937 Application No. 032 26 November 2014 - 193,637 Application No. 033 22 December 2014 - 123,051 Application No. 034 20 January 2015 - 133,138 Application No 035 16 February 2015 - 32,117 Application No. 036 02 March 2015 - 67,027 Application No 037 09 March 2015 - 84,317 Application No. 038 30 March 2015 - 135,722 Application No 039 28 April 2015 - 29,261 Total replenishments of designated account No. 0000010056200100 1,033,449 I I I I I I I I I I I9 I I Lao PDR Mobilizing Ethnic Communities for Improved Livelihoods and Wellbeing Project - JSDF Grant No. TF097786 NOTES TO THE FINANCIAL STATEMENTS (continued) as at and for the period from 1 October 2015 to 22 April 2016 5. DISBURSEMENTS For the period from 1 For the year Accumulated October 2015 ended 30 as at 22 April to 22 April September I Total budget 2016 2016 2015 I Category 1: Goods, Training and Consultancy Training, Monitoring costs and Information, Education and Communication (lEC) materials 500,000 499,979 9,458 91,783 Local consultancy 560,000 545,573 - 155,826 International consultancy 310,500 347,986 9,363 110,345 1,370,500 1,393,538 18,821 357,954 Category 2: Incremental Operating Costs Incremental Operating Costs 118,000 122,367 10,648 69,290 118,000 122,367 10,648 69,290 Category 3: Sub-grants Sub-grants under Part (b) of the Project 1,133,000 1,105,153 9,551 910.786 1,133,000 1,105,153 9,551 910,786 Total disbursement 2,621,500 2,621,058 39,020 1,338,030 6. CASH ON HAND AND CASH AT BANKS Currency: $US 30 September Note 22 April 2016 2015 Cash on hand - 51 Cash in Project's operating accounts at provinces 6.11 - 27,472 Cash in Designated Account 61.1 443 9,806 1443 37,329 I I I * 10 I I Lao PDR Mobilizing Ethnic Communities for Improved Livelihoods and Wellbeing Project - JSDF Grant No. TF097786 NOTES TO THE FINANCIAL STATEMENTS (continued) as at and for the period from 1 October 2015 to 22 April 2016 6.1 Cash in Designated Account In accordance with the financing agreement of the Project, the following Designated Account is maintained in UJSD at the Bank of Lao PDR: Account No.: 0000010056200100 Depository: Bank of Lao PDR Address: Yonet Street, Vientiane, Lao PDR Related Grant JSDF Grant Agreement No, TF097786 Currency: USD I The purpose of the Designated account is to receive fund from JSDF on Grant Agreement No. TF097786 for transferring to operating accounts and for certain direct payments to suppliers, contractors and service providers- I The Designated Accounts are non-interest bearing. Movement of the special account is as follows: 6.1.1 Account activities For the pefod from For the year ended 1 October 2015 to 30 September 22 Ap!n/2016 2015 Opening balance 9,806 193,758 Add: JSDF replenishment (Note 4) - 1,033449 Opening balance of: Cash on hand 51 544 Advances 2,134 12,462 Cash in Project's operating accounts at provinces 27,472 137280 U Ddut:39,463 1,377,493 Total disbursement during the year (Note 5) (39,020) (1,338030) Ending balance of: Cash on hand (Note Q) (51) Advances (Note 7) (2134) Cash in Project's operating accounts at provinces (Note 6) (27,472) (39,020) (1,367,687) Ctosing balance (Note 6.1.2) f:3 9,806 CahoIad(oe6 Idacs(oe7 Iahi rjc' prtn consa 9*86 9375 I ,3,4 I Lao PDR Mobilizing Ethnic Communities for Improved Livelihoods and Wellbeing Project - JSDF Grant No. TF097786 NOTES TO THE FINANCIAL STATEMENTS (continued) as at and for the period from 1 October 2015 to 22 April 2016 6. CASH ON HAND AND CASH AT BANKS (continued) 6.1 Cash in Desginated Account (continued) 6.1.2 Account reconciliation Cuirrency:, $US For the period from For the year ended 1 October 2015 to 30 September 22 April 2016 2015 Amount advanced by JSDF to the Special Account during the year 61,190 250,000 Amount recovered by JSDF (60,747) (188,810) Outstanding amount advanced to Desingated Account at the end of the year 361,190 I Closing balance of Designated Account (Note 6) 443 9,806 Add Amount wtthdrawn but not yet claimed _________ 51,384 Outstanding amount advanced to Designated 6,9 Account at the end of the year _ 4 1,9 7. ADVANCES Currency:- $US 30 April 30 September 2016 2015 Advances mh Vientiane - Advances at provinces ________2,134 _____________2,134 I 8. PROJECT CLOSING PROCESS I In ccodace ithth ageemntsiged eteenJSFo the romuFo the a r nddaed 2 April 011, te perid from1 October 2015 to 30 Spi 06itefnlo eraigpmeroth Project-~~2 Afe ta,tesrlscsbaaewiletansfre /o So 20 6 Ags 2015 * 12 AmutavneIyJSFt h pca