Islamic Republic of Afghanistan Supreme Audit Office AUDIT REPORT FY 1397 (2018) ProectID rnubrPoetNm P157035 A2839 Afghanistan Technical Assistance Facility Dcbr0 0.JrJLlS3o)I ;Jp Islamic Republic of Afghanistan Reference Number: . Supreme Audit Office Date: Auditor General's Report 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 Statements of Cash Receipts and Payments (the "Financial Statements") of Afghanistan Technical Assistance Facility Project bearing World Bank Project ID Number P157035 financed under Grant ID A2839 (hereinafter referred to as "Project") for the financial year ended on 30 Qaws 1397 (21 December 2018), which comprise a 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, the cash receipts and payments of the Project for the financial year ended on 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/ or Financing Agreement. Basis for Opinion We conducted our audit in accordance with International Standards of Supreme Audit Institutions ("ISSAls") Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the 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 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. Page 1 of 3 Responsibilities of Ministry of Finance for the Financial Statements The Ministry of Finance 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 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 users taken on the basis of these financial statements. As part of an audit in accordance with ISSAls, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: * Identify and assess the risks of material misstatement of the financial statements, 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. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. * 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 and whether they are in compliance with the terms and conditions of 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. Page 2 of 3 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 intended to improve internal control and results in other operating efficiencies of the Project. Moh mad Nale Haqmal Audit r Gener Suprem t Office Page 3 of 3 Islamic Republic of Afghanistan Afghanistan Technical Assistance Facility World Bank Reference: Project ID P157035; Grant ID A2839 Financial Statements for the year ended 30th Qaws 1397 (215t December, 2018) Afghanistan Technical Assistance Facility World Bank Reference: Project ID P157035; Grant ID A2839 STATEMENT OF CASH RECEIPTS AND PAYMENTS FOR THE YEAR ENDED 30 QAWS 1397 (21 DECEMBER 2018) 1397 1396 Cumulative Receipts! Receipts/ To Date Payments Payments Controlled Controlled by entity by entity USD USD USD RECEIPTS Initial Advance - - 400,000 Replenishment 139,552 739,680 879,232 TOTAL RECEIPTS 139,552 739,680 1,279,232 PAYMENTS Disbursement Category: Goods, Non-Consulting Servcies, Consultants' services, Incremental Operating Costs and Training 220,304 890,204 1,252,607 Refund to Donor 26,550 26,550 Bank Charges 25 25 75 TOTAL PAYMENTS 246,879 890,229 1,279,232 Increase/(Decrease) in Cash & Cash Equivalents (107,327) (150,549) Cash and Cash Equivalaents at the beginning of the year 107,327 257,876 Increase!(Decrease) in Cash & Cash Equivalents (107,327) (150,549) Cash and Cash Equivalents at the end of the year 107,327 The accompanying notes form an integral part of this financial statement. Zabid Hamdard Deputy Minister for Finance Ministry of Finarce, Islamic Republic of Afghanistan Dated: November 13, 2019 Afghanistan Technical Assistance Facility World Bank Reference: Project ID P157035; Grant ID A2839 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 QAWS 1397 (21 DECEMBER 2018) 1) LEGAL STATUS AND ACTIVITY a) The Afghanistan Technical Assistance Facility was set up in July 2016. The objective of the Project is to generate high quality knowledge products relevant to Afghanistan's macroeconomic policy and development planning. b) The project is financed by a grant from the Afghanistan Reconstruction Trust Fund bearing reference number A2839 in the amount of USD 5,000,000. c) The project consists of the following Parts: i) Strengthening Macro Fiscal Policy Management ii) Strengthening Development Planning 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 signed between the Government of the Islamic Republic of Afghanistan and the International Development Association acting as the administrator of the Afghanistan Reconstruction Trust Fund in July 2016. 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 grants and aid received during the period and the amount of taxes collected but not transferred until the end of the financial year, 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 ultimat9 rejected by the bank or the World Bank are reversed in the reporting period. Afghanistan Technical Assistance Facility World Bank Reference: Project ID P157035; Grant ID A2839 e) 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. 3) NOTES TO ACCOUNTS a) Receipts These represent grants and aid received during the period, b) initial Advance Initial advance represents the advance given by the World Bank to open the special account less withdrawal applications approved by the World Bank but not paid to the special account because they were directed toward a reductiob in the Initial advance. c) 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. 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 financial statements. Thus, the requirement of presenting a comparison of budget and actual amounts is not considered contextually applicable, f) 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. 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, Afghanistan Technical Assistance Facility World Bank Reference: Project ID P157035; Grant ID A2839 APPENDIX Al SUMMARY OF WITHDRAWAL APPLICATIONS FOR THE YEAR ENDED 30 QAWS 1397 (21 DECEMBER 2018) Initial Description Application Number Advance Amount USD USD Refunds Application Ran :RN000000339421 (26,450) DA-A 3 139,552 Afghanistan Technical Assistance Facility World Bank Reference: Project ID P157035; Grant ID A2839 APPENDIX A2 US Dollar SPECIAL ACCOUNT SUMMARY FOR THE YEAR ENDED 30 QAWS 1397 (21 DECEMBER 2018) Account No: 27595 Depository Bank: Da Afghanistan Bank (DAB) Address: Kabul USD Opening Balance as per Bank Statement 107,327 Add: Replenishment from Donor 139,552 Total Additions 139,552 Deduct: Payments for Project Expenditure 220,304 Refund to donor 26,550 Bank Charges 25 Total Deductions 246,879 Closing Balance as per B.S 30 QAWS 1397 (21 DECEMBER 2018) Afghanistan Technical Assistance Facility World Bank Reference: Project ID P157035; Grant ID A2839 APPENDIX A3 US DOLLAR SPECIAL ACCOUNT RECONCILIATION FOR THE YEAR ENDED 30 QAWS 1397 (21 DECEMBER 2018) Account No: 27595 Depository Bank: Da Afghanistan Bank (DAB) Address: Kabul USD Closing Balance as per bank statement - 30 QAWS 1397 (21 DECEMBER 2018) - Closing balance as per financial statements- 30 QAWS 1397 (21 DECEMBER 2018) Afghanistan Technical Assistance Facility World Bank Reference: Project ID P157035; Grant ID A2839 APPENDIX A4 COMPONENT-WISE DISBURSEMENTS FOR THE YEAR ENDED 30 QAWS 1397 (21 DECEMBER 2018) (not an integral part of the Financial Statements) 1397 1396 Cumulative To Project Component Date USD USD USD Strengthening Macro Fiscal Policy Management 220,304 890,204 1,252,607 Strengthening Development Planning Bank Charges 25 25 75 TOTAL PAYMENTS 220,329 890,229 1,252,682 Afghanistan Technical Assistance Facility World Bank Reference: Project ID P157035; Grant ID A2839 APPENDIX A5 STATEMENT OF ESTIMATED GRANT AMOUNT FOR THE YEAR ENDED 30 QAWS 1397 (21 DECEMBER 2018) (Memorandum Statement - not an itegralpart 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 13971 USD 1,252,781 Cancelled USD 3,747,219 Undisbursed Balance USo - In reporting currency Amount disbursed by World Bank untill the end of 1397' USD 1,252,781 Equivalent US Dollars for undisbursed amount USD - Total estimated amount of Grant Funds available USD 1,252,781 Cumulative Payments for expenditure as per the Statement of Cash Receipts & Payments USD 1,252,682 1. Actual amounts of total disbursement made by the World Bank since the beginning of the project as available from Client Connection. ItI