SOCIAL INVESTMENT AND LOCAL DEVELOPMENT PROJECT IBRD LOAN NUMBER 8483-AM IMPLEMENTED BY ARMENIAN TERRITORIAL DEVELOPMENT FUND SPECIAL PURPOSE FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR'S REPORT For the year ended 31 Deceamber 2019 YEREVAN July 2020 CONTENT page $TATEMFN '0F MANAGEMENT RESPO4SIBILITY FOR THE PREPARATION AND PRESENATATIOlI OF THE FINANCIAL STATEMENTS .... INDEPENDENT AUDITOR'S REPORT. ..... STATEMENT C1F CASH RECEIPTS AND PAYMENTS. STaTLEMENT OF USES OF FUNDS BY PROJECT ACTVI TY NOTES TO i-IE SPECIAL PURPOSE FINANCIAL ST ATEME4TS... ...... A4NF¯x 1 RECO CLI ATION rTWEEN THE AMOUNTS SUBMITTED BY THE ATDF AND D15BLJRSED BY TPE WORLD BAK..- .. STAEEMENT C MANA4GLMLNT RESPONSBILITY FOR THE PREPARATION AND PRESENATATrON OF THF F1NANCIAI TATEMENTS h. inrragpin-n. uf the .:rir-,-n Terr·ioi DvLopmer:t Fund p'ATDF' rsponsible krr thp r9 epdrLcn ri: I.-C sprP.cia. purpose fiøa..iia. stitemenits of "SOC lrive5rrent a-id Lnrcal eu.pent Proje.- ' 'proQci·) 'nan:ced by Lcan Agreenont ISRD2 L ïan NUrnber 848S.AN. dated 8 A%iriL 21 -i-Luar Arree.ciiL- that pit'net fairly lit.' Projec's casl receipts aind payrnents, and -xpt· citi.re pI rrmDoiiu s fnr the ye.ar ended .21 December 2019, in complïµiarre with tie 1.L·nrir bla PLti Sect: Accounting Standard "Fir%ånci-al RepofLinig under tlic Cash Basis of A.cointing' liPSAS-Cas· Bnris) issued :y- the lnterrai iora. Publc Sect)r Accounlin 5ta-ida:ds 13ard IPSASS vitnir the iliurnaliGnatl rL.Jr;tin of A: rnta- IFAC and tL, Financial M-lagePr-nt a- L ir Wui -11 Barik F:ri:rinced irlrvLmert Opeiatio)n (WB Guidelinesi, Ir :rP:larIilg thu pecias jurpcr,e filetiat stateìïenits, ATDF'S mdalgement Is I'elIXnsible for: 4 Propc-rty selecting ann appl.ying accoIJn:ing plicis; P'eseiung informåtiors including a:c,)Lnting policies, in a manner that provides relevant. reaLl L., coinpa'aL i ad under stanida ble nfw matinn: * trov:01119 addfiont !eqijirFd dilusures for thu year ended 31 DPc 2W59. å1iFij'og;:·emir |:, u|lsr; reSQO'inh|Je fa:-|- D i-pienie'rrig and maiiitaining an eff`ctive and sound 'ystem Dr internai controts, r hr g-u.ru : the '' .: ·:vaw~dIIii! a:'deu. hl .ri..1' r(ernds tlial are 5tdricieril to show and exrliin the PrQjLjjt'- t-ar:sdt.in15, 3rtJ which enab:.c t·em to cismre rhal the sperial purpo.. finan:-a. slåtLrn-nt.S orf r.u P oject coiip!y jt.h ;PSS - -ns Sa.(: and the W U Ckd.lfri Ta.iig ,uc.-r s-, p ila, are re-soil a'ailibe to them· Lo s3fegiard - assets at th' Projecl : . o aff i: ., :e n h ,_. bcr.n Lisec i a 'z.rrdan::e ilLi t he I c·t Ahp u ..ement a1id 'Av'..d flrk '.éer: ··.ideL-:s. /ith cue atteintion to ,.ornny an elfiiency, ard orily for the purpum. fr w·i:n ine f·r vaïr.irE . wa· provided; 3nd Ire- ing and det r ud and outhe errors, e - iat -or-:. f in,nc: at s-a t Pmints f?C Lhe year endJ 31 Dec 20 19 were author i2£d f nr is.sue n ji iu.y 0ZO by the ATFI-', ,Manaq--nenl. Ar tur Soghorniryan L-von Dijivari FeuLIvE Direcror jNnrial an Admiistrative Director INDEPENDENT AUDITOR'S REPORT To the Manaoement of the Armenian Territorial Development Fund Opinion We have audited the special purpose financ,iaL statements of "Social Investnent and Local Development Project" f"Project"j financed by Loan Agreenient IBRD Loan Number 8483-AM dated 8 April 2015 ("Loan Agreement"), and Implemented by Armenian Tesritorial Development Fund CADF"J. whiCh comprise of the statement of cash receipts and payments and the statement of expenditures pei components for the year ended 31 December 2019, and notes to the special purpose financial statements, including a sumrmary of significant accounting policies. In our opinion, the accompanying financial statements present fairLy, in all material respects, the cash flows tar the year ended 31 Decernber 2019 in accordance with International Public Sectr Accountins Standards: Financaf Repart" Under the Cash Basis of Accountng, (tP545-Cash 80sisJ, 60sis for Opin!oN We conductcd our audit in accordance with International Standards on Auditing (iAs) as issued by International Auditing and Assurance Standards Board (IAA5F) of the International Federation of Arcountants *IFAC). Our responsibilities under those standards are further described in the Au.ditor's Responsfbiltfes for the Audit of the Frrortcaij Statements section of our report. We are independent of the Project and of the ATDF in accordance with the rtterrioronal Ethis Standards crd for Accoutants' Code of Ethts for ProfessJormal Accountants (1ES8A Code), and we have fulfilled our other ethical requirements in accordance with IESSA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to prvade a basis for our opinion. Emplsis of Matter- Cash Bo5s of Acceuting Without mod fying our opinior, we draw your attention to Note 2 to the financial, statements, which describes that financiat statements are prepared in accordance with cash basis framework, as a result, they may not be suitable for another purposes. Empiasis of Matter -Subsequent everts Wi thout qualifying our opinion, we draw attention to Note 11.2 to the financial statements, which describes the possible effect of the impact of COVID-19 epidemic on the project aftet the reporting date. Rpspqnsib ities of the Managemnwt for the Finandia Statements Maragement of the ATDF is responsible for the preparation and fair presentation of the special purpose financial statements in accordance with IPSAS-Cash Basis issued by the International Publie Sector Accounting Standards Board frPSASR) of the JFAC and Financial Management Manual for World ank Financed Investment Operatons '"WIB Guidelines"), ard for such internal control as management determines is necessary to enable the preparation of special purpose financfal statements that are frev ir=m material misstatement, whether die to fraud or error Audftors Responsibi?ity for the Audit of the Specal Purpose Financia? Statements Our objectives are to obtain reasonable assurance about whether the special purpose financial statements as a whole are tree from raterial misstatement, whether due to fraud or error. and to IssuE an auditor's report that includes our opinion. Reasonable assurance is high Level of assurance, but is not a guaranty that an audit conducted in accordance with ISAs will always detect a material rmistatement when it exists. Mis.tatements. arise from fraud and error arid are considered material if, individualty up in the aggregate. they couLd reasonably be expected to influence the vconorm decisions of users taken an the basis of these special purpose firancial statements. As part of an audit in accordance with t5As, we exercise professional judgement and maintain professionaL skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the special purpose finarcial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient aid approriate to provide a basis for our opinion, The risk. of not dete:,peiiditures incrirreo Defore Ehu Clusing date is set iiii:yi)IJ is after the C(os ing da tåe 30 Apri 1, 702 2. 1.2. The Pi-ojpct's ohjL-,rtive The objective uf Ilie Pmiect ls to 'Inrp,,rjvcå quiqlity and use of. 3nd access to, community jud inter- mm n -ni ýnit%j ! ri t i ålc i n rp. TI---- DrLyj,_-(.1 å c.misis jf olLca. nR ý . ris: Uj rmnåriw:c Oe-je[Lpýii(ýnt and Capavly ýurlådrriåig w l oi:åal LeveåL Caråå,ýinn uut corånrn,,vi-y iiiiý-rrj,F)ri7jects I&Iiei-oprujuctr,), väth the assisLårice of Pr.o)eci ("PICs"), inclucling, inter-aliq; (i) the coilslruc.linn. renu-fation, lelå;,:ýUW.jýåijcin, c-xpariskin of keý social ýrifia.s'ýrLirliure cowerimg education, heaUM, avid socia[ 00 the inslakläticynirph;.4biýitatiöii cit voater supply all(] sänitarion systems- 1,-) 1 exv( - i joå nif ni i ii o f iåå i i'gni ion Find rura I elecl r i l-karion works and i iiw 5 thp instalja tior) u ei ier My i-, f f iciericy so i ut iorA% f or puý)lic i nf råsirw tlerp~ 2. Prnvidi:ååig - iý i I ! cåch 67.31, assistance- to erisii råý, propef Jesiglår, -wc! supervi sion 9 1 Mjcmproj'ectås, nå-110 : ii i ý ii sue..1x i01 I-ni. an I f ina ne lat cåpacity bu-Såld, ng at coi vimuriity level, 3. FrnviýJåirig IL i ri it ure and equipment for infraslructusf,- ýrårsfestfflenis bmef it ecl by su-7h as reliabf[itiii,ý;.1 ichooks, klildei,giirL[!rii and communmy ccritw,; as viell u% far other infraý,jructuily irå accordance vyfth criåterin set forth in ther {)ljlpratinnak Ki v k E. 5n 70 4 Jýui - Com rnun i ly See! iåi, nvffl Fconon-,åi c Develupmen t. l ni tiatives, 1 SKJIJ>JCJ;åjq Lv Arwenja's turiicirinl refývrrr thrcuqh ;_arvonq out of inriu:-yativE- developråneråil init iii-goLvin.R corýso,HclaU-J cýirrim,,ini'ties, ruIffirig: ýii teö"111i,`ä, IG ens,_!re prop-r design and suppråvi%ion of SuboiojLcts; IOJA;J i i i) i ns-li Luli u; id 1, a vid f irýaviva l ca pdJ ly bui Iding a-t cownruni ty U-vej, 1'-'rov id-ii-.p f lir 11 IL r e mr eq uipill eýi' f or 5n f rast ructure beni--fited by Subilr,.nj Fm-tK, Pý,rr, Irrst i Lätioråa ý ýLrcåi igthizninR a n: R. 3 - Financial (ei::'tii m .r;d Au.JiLiiig T priincip c. acconting policies applied in tle preparatiun of' ".hst -4:cil purpose lirLnricial ·:1.i.v.·: rc s.et r iit befw, Tnhee polcies have been cor-s;sLer.Ly dpplied tr all t1ic periods pr escnted. 2. 2 Cash basis of ace rijnn ting T spEcial pirprse financal stalements are prepre and presentÉd usirig the cash basis o accoi~irr'. (sht basi; " a cas,s of cc0ui1tir1ÿ under wihich transactinns and other events are reccgni7ed )111 'l' ·her ri;h :^ï i t c--cu1iwi:·.er iS ccc e. ved w le dd. Finanrial ·1;9teients prepared uide Ue uIh basis provide infnrrmation about the sources of casih ia%e1i diiring Ili': eriJ. Lic pur3ose for which cash wa5 uSPd and the cash balances at tie 23 itporting currency SFijject nancial sree1 arr pre:ted irn Uited States DolLars (USD>. 2.4 Fureign crrrerjcy transoctorns I C'i ci renc 5 ·,. c.irer:y oL!L lIri Ih reporlin' C.rrencyof tbe PrGject. Proje'ct :rrFi:nts are malilairie.J in US"G a:id ArmErian Drans AMD), Danrtciior5 in forei'gr cu',enr.ics å' tra1nla-ed to presentati o'- currency at e;xchanye atle ii l dare; -n tese lnu'cLiors. Settlement rate of forergn currerky over functiounal currency s:a b. islied |y th Central BRank of the Repjbtc of ArrrL lia (lh- C BÅ is ta ken as the exchange rate. -u' rui:i.ii. o' ti-ie )oerrment of tle Repubi.it uf Årurniv , comrrunities ar.d olher donors, aiid .w).-Aent.wi cuïi'.ct:rs ar Li.pliers expressed iri ÅN,D arL' pcesented in USE> at the official e:<.h--re rate d·: rd by LiU CRA at he :la.e of transfer. IIhe eDcaIIg rnte dEined by the CBIA as t J1 DLt 2018 is: USD 1 - 48376 AMD, Thep exchange It deirned b-y the CRA as a- 31 Dec 2019 fs USD 1 - 479.70 AMD, 2.5 &udguting Aeuikl. 'Judgels ler irld:r' and e:pendi.urL% are based on appreved budget of liu pruject a re.:1ïii l iu . 1 2. .. ;u :it.. U:adg._•. ·s ,i ;rtd i1ed on -Ctåa. d,uiluLaoLd ::xr -erdite 'r rhe last period pJS ..' tC pi U:LL E":nlii t pla'-is f:-r/ tle p i- . 2 6 Txes A.t ap:icabLe taXIes are jaid in accrdance with tax regulations of the Repubic el Armenia. iJ, Sunmaiy Repr.u as änd SEs B') LOii Nuriflnt S433- ÅM For e yeur erded 3? Deceiber 20 9 Expenditure category (3) Gods, A pi. (2) Werks, consutants tatiin (1) Works, goods godS and services (4) Operating nurn- /abe dàte and consultants' consiL.tants y when cash is - cvr dr paid)j. Note 3L 12.2019 3112.2018 ASSETP Cash 6 1,180,088 1,118 505 Frepaymoei'ts aid l ivabtes 7 wc 34,931 167.621 Iotal asisets 1,21 5,9O 1,286,126 LIABILITIES Paya bes 8 69,596 _ _18Q2 Total Liabilities 69,596 926 NE ASETS CurnuLdLive irccme Funds 10iS Lcan 814- 21,271,181 17,620,757 RA GEvernerni 7,635,614 6,262 fé9, .3"irnïrity contribition i,782,456 1,538,565 C1nsors curibution /3,28 73,284 30,76535 25,514,774 Cimuilativc expenses -'rjt vx;enses (29,619,955? (24,364,251i (29.619,955) {24, 364, 254) -igo n rrency gaIinItos-0 _2.843 (3,320) TutaL net assets 1,145.423 1,147,200 6. CASHI Account AcrQit held at Urider lying 31 12.2019 31. 7.1 B - Cur rency USD USD Lk,syrat-d acr)uni 1:lU1D Treasury USD 871.912 7B1:845 amjio AraIati bank AMD 191,780 3336-42 .CCuI ireasury AMD 113,377 lnn I' r lr'iutioin Ararat bank ArD 19 18 3180,08 _1,11B,505 7, lPrepayments and re('ivables 31 Dec 2019 31 Dec 2018 USD 'rLpdyrriP'nts :nn Woriks - 167,6 A.r.iifls rece-v.dL;.lv rrom other D(OJ els' 34,931 34>931 167,621 I' ri C..I-mI---.., [.jr's lur anraher -project, Ihe runey wa retlirned 1i1 2020. 8. Paiyables 31 Dec 2019 31 Dec 2018 USID 13.51 On Works Retent10ro 69596 38,839 Othr pa?aöles 87 69,596 138,926 1 Retentiols o' S5 arp he!d frGm Lfïe lumpletEd service irvoices as guaranty for the quality or thi wn'k, ? 5 . .i paid after signi:ïy t,c final act, and the remnainrg 2.5:, are kept for up to or yex, ä RL:ra nty :.r LIiC quality orf pe'foriried wur:. nr paid o-A the bai. uf a one-y'ear bank guatanly. 9. Fiaricing 9. L BRRD L oan Nuiber 8483 -AM Year erded Cumulative as 31 Dec 2019 at 31 Dec 019 USDUS Acvrince; ladvance !teovcry, 1 700.tÖ5 5CF and S11i:iary Sheet5 3650424 194%,181 Front -elij I .75, CA r- Total 3,65424 ¯ 21271,181 -3al n:iï. gHr 30 000,000 [eiCiiLage of finar: .e prsr iJed as at 31 Dec 2019 -1% 9.2. Governrnnt of the RQpubfic of Armena co-finndring Year erkded Curmulative as 31Dec2019 at31Der201q USD 1)USD Coiitrihutions i casli 1,35346 1,635614 Total 1,353,446 7r635 614 l1L. Lirannir: b|Cgei 11011000 Por .Ci -a o f1, ancc pro- 'ld a at 3 Gec 2019 69% 9.3. CoMnUMty Co1r ibulon Year ended Curnulative as 31 Dec 2019 at 31 Dec 201t9 .U5D U5D (:iit eil:it ons in casi 74L891 1.27..6 Tta243,91 172,56 Toät. finanrins h.idge 1915.000 P I age ot l innr provided as at 31 DrNc 2019 93 9.4. Dorors' tonurbuticn arid other inrone Year ended CuMul1.:iVe as 31 Dec 2019 at 31 Deu 2019 .JSD} U50 Cc'iv ibuliens in )u1 ord fee _675547. 7l IJ fotal~ 20.396,254 7,639.ý847 1,441,428 280 29½,5 1,44,42, 72,830 2ý, SUi,3159 Projert budg!et prøgress Cumul3tive Bud Category _as at 31,12.2019 Budget Implementation US) USD % rlA . rth s rvi und Prrec L 2 2, 6644 3 2962. 200 2 'A'kG uod% ani ccnsLLLi der'Ar ullder Far: 3 1 e_Pi Feet 3,541,99 123;66 000 5. Gosls r -Ln.i'r ts' services i ilc.ud-ui 'nr - F'ojcct a.d rl u-rU Trainin Lin uri Part C nf the 1610?4 296.00 56% -uje: I 4. Opcra g cw t_nd-r_Part. C ni LI Prrre1 1u-0!,983 ¯4,20G000 1 '. Fm'i-r3-p IC 75 75,000 Total 29,550,359 43,000,000 69 1. Events after the reparting data Ap..i.ffl.s Df compersalr'on lý aPPLtt.li:nn N 48 Ina inlude; xpcrdilurk-5 relating to the Reporting ycar in the arrruunt of 5R. .2 ÆISD ui. 1.ril(.'i tr 'ANB On 13 Feiruary 2020 and approvEd or: 14 Februar y 12G. 2 COVID-f19 eprderrrc ...rri1: ; :re::our ,- i· .,r-Ilav r uS ICOVU 1f 19 epidr rr: ir r|-'e wor Ld. as w 1I a' R epu . it. of a111Vrm G en'r-rl. L.w-ree oil derlarin9 StaLe of Ecreigncv from MArch 16 to Augus. 12. 2920 r'irou-ih.ot. A..ucriaF, 111e Pr:-:ec' Ilanagemeri-. believ s Lhat the siluatFGn 1noy have a r:e dti.ee i ;. -.- ti'. u ije c:, in partri[l il may Ledd lo: Delays in the wofks, " D14?.51 57,140.51 er' c:- urn:er Part A :3f tu-l, Prrject 43 105, 586-9' 105, 586.95 4.4 99, 5199 99, 51 .99 45 ^33,156.13 133,156.3 - 46 107 971,91 1 G7 971,91 417 11&,096 15 118 096.15 - 1,506 213.f64 1 506 213.64 -38 14,470.01 ~184,i470. 01 39 5. 2 3 8.2 85. 2 38.82 - 401 55193 55 ,,89,. - 41 191.259-40 1,91.294 I. Works, guoc: and cnsultaïLs' 42ri6,d91.84 86091.g4 services Lndpr Part B of t|i P.oject 43 12715. 57 127,15 j7 45 176.973.89 176-97-89 46 ~ 659,945.74 69957 47 36{ 867.77 36N 867.77 J L:uors, cci it tll:oSUI esel"4 5,218.13_ '5218 13 iiI'tL.L'iinP for Projecl audNji anu TI Iuiue inuvr Parr.C ul the2rcjt'c 5,218.13 5,21B.13 8 . .372.4B - 39 25,436.97 25,436,97 . 40 1L08j6..46 13,O86.46 ¯ 1 230.87 3,30.7 rLIi.·. ~'geci 43 5.68.__ 5.18.1 441 ,4.5 1..0. 4 /1 14149 46 27,635 82 27j,l65.1 47 1,8-2481,8 1 l5z 201,507,34 201,507.34 ToZ iM ,35.425 16,423.58