WORLD BANK PROJECT
YEAR ENDED 21 DECEMBER 2017
sca Ye  136  .


Supreme Audit Office
Islamic Republic of Afghanistan
Auditor's Report
Date: 27 October 20 18
l i
Ministry of Finance
(oernment of Islamic Republic of Afghanistan
Kabul.
Independent Auditor's Report on the Financial Statenents
1. We have audited the accompany ing stateients of Cash Receipts and Payments (the
-Financial Statements-) of Kabul Urban Transport Efficieney Improvement Project. Grant
\number: 11017061. World Bank Project ID: P131864. (hereinafter referred to as the
-Projecf) tor the linancial year ended 30 Qaws of Solar Year 1396 (21 December2016 to 21
December 2017), and the suimmary of signiticant accounting policies and other explanatorv
notes.
The Ministry of Finance's Responsibility for the Financial Statements
2  The Ministry of inance (the "Ministry") is responsible for preparation and fair
presentation of the Financial Stateniens in accordance w ith International Public Sector
AccountinU Standards 4Fmancial Reporting under the Cash Basis of Accounting,  Ihis
responsibilNity includes designing. implementing and mai ntaining internal control relevant to
Ilie preparation and fair presentation of the financial statenients which are fiee from material
misstatement. whetlier due to firaud or error: selecting and applying appropriate accounting
pol icies; and making accounting estimates that are reasonable in the circunistances.
. ln addition to the responsibility for the preparation and presentation of the financial
statenents deseribed ahove. the Ministr<s polie is also responsible fo ensuring that the
activities. financial transactions and  inlriation  reflected  in  the  financial statements are in
coipliance with ihe Grant Agreement TF 01 7061 entered into between the Islamie Republic
of Afghanistan and the International Development Association acting as administrator of
rant funds for the provision of 1S 1) 90, Mii ion fund ing of tlie Project.
Pae 2 ol4


Auditor's Responsibility
4. Our responsibility is to express an opinion on these Financial Statements based on our
audit, We have co nduictd audit of the financial statements. project operations and related
internal controls in accordance with Ilie International Standards of Supreme Audit Institutions
(iSSAIs). hose standards require that SAO comply with the ethical regiulations and plan
aid perlorimi Ilie andit to obtain reasonable assurance of the financial statenients being free
[toi material niffsstaienient, Those Standards require that SAO express its opi11011 on
whether the financial statenients present  irly, in all  terial respeets, the casli receipis and
paym elts of tle IrIo ctl.
In addition to the responsibilit' to express an opinjion oni Ilie tinancial statemients
described above, or responsibilit includes express ing an opinion on whetier Ilie activities.
1inancial tiransactions and information rellecied in the financial statements are, in all material
respects, in comipljiance with Ilie Projec'Cs Grant agreement. This respoisibi lit i icludes
perloriing procedures to obtai audit evidence abouti wheiher all payments and receipts are
in compliance wk ith tlie terms and conditiens of hlie Grant Agreement.
, An audit involves perfiorming proced ures to obtain suftiicient and appropriate audit
evidence about Ihe amounit sand diselosures in ilie financial stateients. The proced ures
selected depend on Ilie aditlor's juldgemieii. including Ilie assessient of ilie risks ol material
isstatement of the financial statements. wletlier due to fraud or error. In lki g tIlie risk
asscssients. Internal controls relevalit to the enltitys's preparalion and presentation o 1finncial
stateiellits are colisidered in order to design audit procedures that are appropriate in the
Lrunsiites huil nt för Ilie pirpuses of expressilng an opilien on tlie e flöcielles of
internal oinllrol An atidit l-So ilIII1 udes e\1lating Ilie appropliateiiess el "aoutintin  poldes
used. the reasonableness o accountinhg estimliates made by ianagemient, as swell as eva lating
the piesenlation of' the 1inancial stateienis.
7. We believe flhat ilie andit evidencec we have obtained is reasonable and appropriate to
provide a basis for our opinin.
Opinion
8. In our opinion. Ilie Vinancial Siatements present fhirly, in all material respecis, eash
receipts and payienits of Ilie Kahul U 1rhan Tralsport 1fficiency Improvement Projeet I)
Number P- 13 1864 financed lider Grant Number: TF 017061 for the linancial Year ended 30
)aws of Solar Year 1396 (21 lDecember 20 16 to 2 1 December 201 7) in acucordanec sw ith
International Public Sector Acconiing Standards "inancial Reportiig under the Casli Basis
of Accouning'
In our opinion. in all material respects. the activ itransaeions and
in foriaition refleted ii the financial statetients are Jfixi4anc w  ti iie teris alid
conditions ol' tlie Grant Agreeient.
Pal,.c 3 o[l4\ :-'           J


10. Mlnagmcient i etter. attached to this Audit Report. highlighits areas ol improvement in
financial management ineluding comipliance with financial covenants of the Grant .\gieement
and of results ol its operations for the financial ycar ended 30 Qaws el Solar Year l 39o ( 2 1
Ieceiber 20 1 6 (o 2 1 December 20 l 7 ). Tlhese obsertations and recommendatfons have been
ceuinindicaed le and d    \sessed with the Projeet and are iintended to iniprove internal cenlrol s
and result in other operating efIciencies of the Project.
Dr. Moh  u Cd Sharif "Sharifi"
AL  it  -  ral  Af a  s
Aidit Office
P  l  4 ¯


Islamic Republic of Afghanistan
Kabul Urban Transport Efficiency
Improvement Project
World Bank Reference: Project ID P131864; Grant ID 17061
Financial Statements for the year ended
30th Qaws 1396 (21s December, 2017)


Kabul Urban Transport Efficiency Improvement Project
World Bank Reference: Project ID P131864; Grant ID 17061
STATEMENT OF CASH RECEIPTS AND PAYMENTS
FOR THE YEAR ENDED 30 QAWS 1396 (21 DECEMBER 2017)
1396          1395       Cumulative
To Date
Receipts/     Receipts/
Payments      Payments
Controlled by Controlled by
entity        entity
USD           USD           USD
RECEIPTS
Initial Advance                                                   -       5,000,000
Direct Payments    I                                -             -        1,481,890
Replenishments                                10,767,975    12,447,132    34,546,330
TOTAL RECEIPTS                          4     10,767,975    12,447,132    41,028,220
PAYMENTS
Disbursement Category:
Goods, Works, Non-Consulting Servcies,        11,142,261    13,434,895    41,070,193
Consultants' services, Training and Incremental
Costs
Bank Charges                                         75           200          475
TOTAL PAYMENTS                                11,142,336    13,435,095    41,070,668
Excess of Receipts over Payments               (374,361)     (987,963)      (42,448)
Taminat (Net)                                   (433,113)     836,376      1,533,678
Increase/(Decrease) in Cash & Cash Equivalents  (807,474)    (151,587)     1,491,230
Cash and Cash Equivalaents at the beginning
of the year                                    2,298,705     2,450,292
Increase/(Decrease) in Cash & Cash Equivalents  (807,474)    (151,587)
Cash and Cash Equivalents at the end of the year  1,491,230  2,298,705
The accompanying notes form an integral part of this financial statement.
Khalid Payenda
Deputy Minister for Financ,e
Ministry of Finance, Islamic Republic of Afghanistan
Dated: October 8, 2018


Kabul Urban Transport Efficiency Improvement Project
World Bank Reference: Project ID P131864; Grant ID 17061
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 QAWS 1396 (21 DECEMBER 2017)
1. LEGAL STATUS AND ACTIVITY
a. The Kabul Urban Transport Efficiency Improvement Project was set up in April 2014 to
improve road conditions and traffic flows on selected corridors of Kabul.
b. The project is funded by grant number 17061 in the amount of USD 90,500,000 by the
Afghanistan Reconstruction Trust Fund agreement for which was executed in April 2014.
However, the said agreement provided for retroactive financing covering period from
September 15, 2012 till the effectiveness of the grant.
c. The project consists of the following parts:
I. Road Infrastructure
ii. Technical Assistance and Studies
iii. Project Management Support
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 of the Project have been prepared in accordance with the
requirements of the Grant Agreement for the referred to in the preceding paragraph that have
been signed between the Islamic Republic of Afghanistan and the International Development
Association acting as the administrator of the Afghanistan Reconstruction Trust Fund
2, SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Preparation
The financial statements are prepared under the historical cost convention and in accordance
with Cash Basis IPSAS - Financial Reporting under the Cash Basis of Accounting issued by
International Federation of Accountants (IFAC).
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(b) and encompass the operations of the project to the extent
funded by those grant(s).
c. Receipts
These represent amount of funds received from the government towards retroactive
financing.
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 Wart Bank. However,
cheques or withdrawal applications that were ultimately Xejected by the bank gr the World
Bank are reversed in the reporting period.
e. Currency translations
Transactions in currencies other than the reporting cu rMy are'translated into US'Oollar at
the rate of exchange at which the transaction is actuall 4e ujed.
-~~~~ ~   ~ -  --------...  ..-                    - -------


Kabul Urban Transport Efficiency Improvement Project
World Bank Reference: Project ID P131864; Grant ID 17061
3. NOTES TO THE FINANCIAL STATEMENTS\
a. Initial Advance
Initial advance represents the advance given by the World Bank into the designated 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. Taminat
The amount of Taminat reported in the Financial Statements represents net flow arising from
deduction/repayment of security deposit (retention money) during the reporting period.
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. Payments made by third parties
These represent payments directly made by the World Bank, on basis of requests submitted
by the Ministry of Finance in form of a withdrawal application, towards settlement of the
claims, liabilities and contractual obligations against contracts and agreements for or
reimbursement of eligible expenditures of the project as per the financing agreement. These
payments do not constitute cash receipts or payments by the entity and as such are disclosed
in the "Payments by Third Party" column in the statement of Cash Receipts and Payments.
f. 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 financial statements. Thus, the requirement of presenting a comparison
of budget and actual amounts is not considered contextually applicable.
g. Authorisation Date
These Financial Statements are authorised by the Deputy Minister for Finance, Ministry of
Finance or any official acting on his behalf who has been so authorised to act on the date
endorsed on the Statement of Cash Receipts and Payments.
h. Appendices
The accompanying appendices provide additional information and analysis and form an
integral part of these notes, except as indicated otherwise.
i. Others
These Financial Statements are originally,rqpared, i En hsh 4nd then translated into Dan. In
the event of any inconsistency betwee thq,Egllh,and Da ons the English version
shall be considered to be correct.
'%< -


Kabul Urban Transport Efficiency Improvement Project
World Bank Reference: Project ID P131864; Grant ID 17061
APPENDIX Al
SUMMARY OF WITHDRAWAL APPLICATIONS
FOR THE YEAR ENDED 30 QAWS 1396 (21 DECEMBER 2017)
Initial
Description        Application Number  Advance     Amount
USD               USD
DA-A                   22                          6,572,414
DA-A                   20                          1,496,752
DA-A                    9                          2,698,809
V"
--- -----/


Kabul Urban Transport Efficiency Improvement Project
World Bank Reference: Project ID P131864; Grant ID 17061
APPENDIX A2
US Dollar SPECIAL ACCOUNT SUMMARY
FOR THE YEAR ENDED 30 QAWS 1396 (21 DECEMBER 2017)
Account No:                                                               27465
Depository Bank:                                       Da Afghanistan Bank (DAB)
Address:                                                                 Kabul
USD
Opening Balance as per Bank Statement                                 2,316,064
Add;
Replenisments                                                       10,767,975
Total Additions                                                       10,767,975
Deduct:
Payments for Project Expenditure                                    11,575,374
Debit for prior years error by bank                                     6,025
Bank Charges                                                               75
Total Deductions                                                      11,581,474
Closing Balance as per B.S 30 QAWS 1396 (21 DECEMBER 2017)            1,502,564


Kabul Urban Transport Efficiency Improvement Projeet
World Bank Reference: Project ID P131864; Grant ID 17061
APPENDIX A3
US DOLLAR SPECIAL ACCOUNT RECONCILIATION
FOR THE YEAR ENDED 30 QAWS 1396 (21 DECEMBER 2017)
Account No:                                                                  27465
Depository Bank:                                           Da Afghanistan Bank (DAB)
Address:                                                                     Kabul
USD
Closing Balance as per bank statement - 30 QAWS 1396 (21 DECEMBER 2017)   1,502,564
Less:
Exchange gain (to be transferred to Government Account)                    11,334
Closing balance as per financial statements - 30 CAWS 1396 (21 DECEMBER 2017)  1,491,230


Kabul Urban Transport Efficiency Improvement Project
World Bank Reference: Project ID P131864; Grant ID 17061
APPENDIX A5
STATEMENT OF ESTIMATED GRANT AMOUNT
FOR THE YEAR ENDED 30 QAWS 1396 (21 DECEMBER 2017)
(Memorandum Statement - not an integral part of the Financial Statements)
Amount
In currency of commitment
Amount of Grant                                                              USD   90,500,000
Amount disbursed by World Bank until the end of 13961                        USD   41,028,220
Undisbursed Balance                                                          USD   49,471,780
In reporting currency
Amount disbursed by World Bank until the end of 13961                        USD   41,028,220
Equivalent US Dollars for undisbursed amount                                 USD   49,471,780
Total estimated amount of Grant Funds available         c                    USD   90,500,000
Cumulative Payments for expenditure as per the Statement of Cash Receipts & Payments  USD  39,536,990
1. Actual amounts of total disbursement made by the World Bank since the beginning of the project as available from
Client Connection.