HST, Chartered Certified Accountants A t oh fn1 and Authorized Auditors N %+C: FreF (Member of Deloitte Touche Tohmatsu Limited) 5th Floor, Mina Building Ethio-China Friendship Avenue P.O.Box 1608 Addis Ababa Ethiopia Tel.: (+251) 11 552 7666 67, 011 552 7750 51, 011 552 4666 Fax: (+251) 11 552 8384 www.deloitte.com taebru@deloitte.com sgizaw(deloitte.com AFRICAN UNION COMMISSION, SUPPORT FOR CAPACITY DEVELOPMENT OF THE AFRICAN UNION COMMISSION AND OTHER AFRICAN UNION ORGANS PROJECT (P126848), GRANT No. IDA H939-3A, CONTRACT NO. AUC/CDP/LCS/01-2015 FUNDED BY THE INTERNATIONAL DEVELOPMENT ASSOCIATION FOR THE YEAR ENDED 31 DECEMBER 2016 3.1 INDEPENDENT AUDITORS' REPORT Opinion We have audited the accompanying financial statements of 'Support for Capacity Development of the African Union Commission and Other African Union Organs Project (P126848) GRANT No. IDA H939-3A, Contract No. AUC/CDP/LCS/01-2015 funded by the International Development Association (IDA), which comprise the Statement of Financial Position as at December 31, 2016, the Statement of Income and Expenditure for the year then ended and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the project as at December 31, 2016, and its financial performance for the year then ended in accordance with International Public Sector Accounting Standards (IPSAS) and the accounting policies as set out in notes 3.4.1- 3.4.6. 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 Financial Statements section of our report. We are independent of the Commission in accordance with the ethical requirements that are relevant to our audit of the financial statements, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Public Sector Accounting Standards (IPSAS) and the project's accounting policies set out in notes 3.4.1- 3.4.6. of this report and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. 8 AFRICAN UNION COMMISSION, SUPPORT FOR CAPACITY DEVELOPMENT OF THE AFRICAN UNION COMMISSION AND OTHER AFRICAN UNION ORGANS'PROJECT (P126848), GRANT No. IDA H939-3A, CONTRACT NO. AUC/CDP/LCS/01-2015 FUNDED BY THE INTERNATIONAL DEVELOPMENT ASSOCIATION FOR THE YEAR ENDED 31 DECEMBER 2016 3.1 INDEPENDENT AUDITORS' REPORT (Continued) 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 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 these financial statements. 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 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 Commission's internal control. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the 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. We communicate with the management 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 Addis Ababa HST, Ch tered Certified Accountants 31 May 2017 and Authorized Auditors (Member of Deloitte Touche Tohmatsu Limited) 9 AFRICAN UNION COMMISSION, SUPPORT FOR CAPACITY DEVELOPMENT OF THE AFRICAN UNION COMMISSION AND OTHER AFRICAN UNION ORGANS PROJECT (P126848), GRANT No. IDA H939-3A, CONTRACT NO. AUC/CDP/LCS/01-2015 FUNDED BY THE INTERNATIONAL DEVELOPMENT ASSOCIATION FOR THE YEAR ENDED 31 DECEMBER 2016 3.2 STATEMENT OF FINANCIAL POSITION AS AT 31 " DECEMBER 2016 31st December 31st December 2016 2015 Notes USD USD ASSETS Cash and Bank Balance 848,909.11 5,081,757.02 Accounts Receivable 3.4.10 23,726.32 142,740.50 TOTAL ASSETS 872,63 43 5.224.497.52 EQUITY Accumulated Surpluses (Deficit) 3.4.11 33,327.47 (1,124,482.98) Total Equity 33,327.47 (1,124,482.98) LIABILITIES Accounts Payable 3.4.12 839,307.96 6,348,980.50 Total Liabilities 839,307.96 6,348,980.50 TOTAL EQUITY AND LIABILITIES 872.635,3 5.224.497.52 The financial statements on page 10-16 were approved by the African Union Commission management on 031 May 2017 and signed on its behalf by: iodun Ade As ietou Diouf Head of External Resource Management Division Director of PBFA 10 AFRICAN UNION COMMISSION, SUPPORT FOR CAPACITY DEVELOPMENT OF THE AFRICAN UNION COMMISSION AND OTHER AFRICAN UNION ORGANS PROJECT (P126848), GRANT No. IDA H939-3A, CONTRACT NO. AUC/CDP/LCS/01-2015 FUNDED BY THE INTERNATIONAL DEVELOPMENT ASSOCIATION FOR THE YEAR ENDED 31 DECEMBER 2016 3.3 STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 31ST DECEMBER 2016 Notes USD USD 2016 2015 INCOME Grants received during the year ..4.7 7,055,014.24 8,333,913.47 Foreign exchange gain 4,314.18 Other income 3.4.8 47,437.55 7,106,765.97 8,333,913.47 EXPENDITURE BY COMPONENT Strengthening Institutional Capacity 3.4.9.1 4,915,277.02 7,932,752.29 Coordinate Member States Common Positions on AGOA 3.4.9.2 287,287.11 240,131.14 Project Management and Learning 3.4.9.3 736,386.89 398,595.37 Project Audit Fee 10,004.50- 3 0418 Total expenditure (5,948,955.52) (8,574,482.981 Accumulated Surpluses (Deficit) for the year 1,157,810.45 (240,565 11 AFRICAN UNION COMMISSION, SUPPORT FOR CAPACITY DEVELOPMENT OF THE AFRICAN UNION COMMISSION AND OTHER AFRICAN UNION ORGANS PROJECT (P126848), GRANT No. IDA H939-3A, CONTRACT NO. AUC/CDP/LCS/01-2015 FUNDED BY THE INTERNATIONAL DEVELOPMENT ASSOCIATION FOR THE YEAR ENDED 31 DECEMBER 2016 3.4 NOTES TO THE FINANCIAL STATEMENTS 3.4.1 Basis of preparation The financial statements have been prepared in accordance with International Public Sector Accounting Standards (IPSAS) and the AUC financial rules and regulations. 3.4.2 Income Income represents amounts received in USD from the International Development Association. Income is recognised when the funds are received into the project's bank. 3.4.3 Expenditure Expenditure represents amounts disbursed and costs incurred denominated in USD. 3.4.4 Taxation Income received by the project is not subject to tax since it is exempted from any form of tax as it is an African Union project and the commission has Headquarters Agreement with the host country, the Federal Democratic Republic of Ethiopia, for exemption of any taxes. 3.4.5 Foreign currency transactions Cash receipts and payments arising from transactions in currencies other than the reporting currency are recorded in the income financial statements using the actual rate of exchange. Cash balances held in foreign currency are reported using the closing rate. Any gains or losses on foreign currency transactions/balances area dealt with in the statement of income and expenditure. 3.4.6 Currency The financial statements are presented in US Dollar (USD). 12 AFRICAN UNION COMMISSION, SUPPORT FOR CAPACITY DEVELOPMENT OF THE AFRICAN UNION COMMISSION AND OTHER AFRICAN UNION ORGANS PROJECT (P126848), GRANT No. IDA H939-3A, CONTRACT NO. AUC/CDP/LCS/01-2015 FUNDED BY THE INTERNATIONAL DEVELOPMENT ASSOCIATION FOR THE YEAR ENDED 31 DECEMBER 2016 3.4 NOTES TO THE FINANCIAL STATEMENTS (Continued) 3.4.7 Receipt during the year Date per Amount per receipt Application no. receipt USD Withdrawal account 13 7/5/2016 856,882.00 Withdrawal account 11 14/6/16 4,557,913.36 Withdrawal account 10 22/6/16 248,960.88 Withdrawal account 9 3/11/2016 1.391,258.00 7.055.014.24 3.4.8 Other income Other income is in respect of refunds from air ticket cost. 13 AFRICAN UNION COMMISSION, SUPPORT FOR CAPACITY DEVELOPMENT OF THE AFRICAN UNION COMMISSION AND OTHER AFRICAN UNION ORGANS PROJECT (P126848), GRANT No. IDA H939-3A, CONTRACT NO. AUC/CDP/LCS/01-2015 FUNDED BY THE INTERNATIONAL DEVELOPMENT ASSOCIATION FOR THE YEAR ENDED 31 DECEMBER 2016 3.4 NOTES TO THE FINANCIAL STATEMENTS (Continued) 3.4.9 Expenditure 3.4.9.1 Strengthening Institutional Capacity 2016 2015 USD USD Consultancy Services for Development of Standard Operating - 54,011.04 Procedures of AHRM (Develop, update and review Policies) Phase II & III - Consultancy services for Organization and Functional review of AU 1,199,377.21 1,540,188.56 Consultancy Services to Reengineering AUC's recruitment/ Selection Process (AHRM) - 130,734.29 Support for the promotion of Peer-to- Peer learning for key decision makers with strategic partners 37,425.29 Develop capabilities in the area of process improvement to promote 106,830.90 - and sustain positive changes AP HCM Configuration Review Consultancy Services (MIS) Phase I 333,228.18 - and II Consultancy service for Data Migration to the new Data Centre (MIS) 117,328.00 29,332.00 Consultancy Services to conduct a feasibility study and draw a road 29,597.00 - map for implantation of e-procurement (PTSD) Support for the acquisition of ICT Equipment and Conference Management Equipment - 2,823,751.35 Production of promotional Materials for sensitizations of Supply 23,211.42 - Chain Management activities of the AU: AU procurement manual, AU Warehouse guidelines, AU fixed asset or (property plant and equipment) policy. Consultancy services for the learning and development Strategy for AUC and develop a culture of continuous improvement by all staff through skills training 601,284.74 545,337.48 Phase I - Consultancy services for organization and functional review of the AU - 328,074.00 Setup of the African Union Academy - 81,132.03 Consultancy services to develop and implement a process - 38,609.08 improvement approach for AUC Consultancy Services to design and Deployment of Data Centre and Microsoft Enterprise Agreement 1,209,764.82 - Support the Smooth Running of The IT Infrastructure (IT Consultant) - 6,117.48 Support the smooth running of IMIS 81,010.06 Training SAP Academy (Preparing SAP training module and provision of training) - 39,000.00 Production and dissemination of promotional items for DIC 52,979.38 Marketing the AU, social media outreach and flagship program on Google, Facebook, Twitter and Purchase of web template and graphics (DIC) - 1,043.00 14 AFRICAN UNION COMMISSION, SUPPORT FOR CAPACITY DEVELOPMENT OF THE AFRICAN UNION COMMISSION AND OTHER AFRICAN UNION ORGANS PROJECT (P126848), GRANT No. IDA H939-3A, CONTRACT NO. AUC/CDP/LCS/01-2015 FUNDED BY THE INTERNATIONAL DEVELOPMENT ASSOCIATION FOR THE YEAR ENDED 31 DECEMBER 2016 Advertising and Branding African Union for Information and Communication Directorate (DIC) 19,000.00 1,043.81 Multimedia Experts for testing and expanding live streaming coverage of meeting and events (DIC) - 6,600.00 16,965.14 - Internal Communication Expert (DIC) Communication Specialist Consultant (DIC - 47,198.86 Supply, Delivery and Installation of Smart Conference Computers for Delegates Tables in the African Union Commission to Enhance Communication, Feedback and Participation - 913,651.20 Strategic Plan for African Court on Human and Peoples' Rights 28,476.00 - Outreach Programme - Judicial Dialogue - 145,707.75 Benchmarking on the Information and Case Management System by 61,677.10 - the Judges and Staff Establishment of Courtroom Technology 228,204.36 - Installation of Local Area Network for the Court 145,651.08 - SAP Grant and Budget Module 72,769.61 129,418.88 Publication of policies and other material - 11,444.04 IPSAS Implementation Specialized workshop/seminar - 113,510.68 Consultancy service to review International Public Sector Accounting - Standards (IPSAS) Compliance Development of Accounting Policy - Production of Video Documentary on feasibility of the Institutional 10,270.64 Reform Centralized facilitator-led training - 186,127.65 Capacity Building/Exchange Program - 16,561.82 Policy Formulation, Approval and Implementation/Risk Assessment 95,030.54 - and profiling Roll out of e-payment System 33,044.27 - Optimize full utilization of existing SAP (open text, Mobility, BI, 229.01 - WPB), IT infrastructure Solutions, Rollout to RO and Implement Innovative IT Solutions Organise PBFA team Building & Performance Evaluation Workshop 94,311.53 - Conduct Budget Sensitization Workshop 8,659.04 - Workshop on structural & admin reforms for the PRC - Douala - 243,869.48 Facilitate the establishment and operations of stakeholder platforms (Trade Union Forum; AU-CSO Consultations; Interfaith Dialogue and Diaspora RCC and International CSO Forum 51,013.64 222,157.34 Involvement of Multi-Sectorial African Diaspora Community in AU Agenda - 106,715.74 Consultation and Coordination with Member States on the 209,212.90 - Implementation of AU Decisions on Diaspora Establishment and Support of Diaspora Networks - North America, 70,266.79 - Middle East, Australia and Europe Development of Project Implementation Plan - Encyclopaedia 55,374.90 - Africana Project (EAP) 15 AFRICAN UNION COMMISSION, SUPPORT FOR CAPACITY DEVELOPMENT OF THE AFRICAN UNION COMMISSION AND OTHER AFRICAN UNION ORGANS PROJECT (P126848), GRANT No. IDA H939-3A, CONTRACT NO. AUC/CDP/LCS/01-2015 FUNDED BY THE INTERNATIONAL DEVELOPMENT ASSOCIATION FOR THE YEAR ENDED 31 DECEMBER 2016 Understanding the AU 20,834.42 Interfaith Dialogue 12,346.4 AU Audit Committees (i.e. PRC subcommittee and IAPC) and AU 47,490.49 Management Workshop on Enterprise Risk Management (ERM), Online Certification in International Public Sector Accounting Standards (IPSAS) for Internal Auditors, and Certification in SAP Modules - Enterprise Resource Planning (ERP) Consultancy Services for the development of a Continental Balanced 13,826.89 Scorecard for the AU. 4.9.15.277.02 7.932.752.29 3.4.9.2 Coordinate Member States Common Positions on AGOA Coordinate Member States Common Positions on AGOA 300.00 30,000.00 Organise a Meeting of the Committee of Senior Officials on the CFTA - 172,272.69 Meetings of Various Technical Working Groups - 37,858.45 Legal Associates Programme 286,987.11 _ 287.27.11 240.31.14 3.4.9.3 Project Management and Learning Project Running Cost 736,386.89 398,595.37 73,8.9 39,9.37 3.4.10 Receivables Travel advance 21,451.40 142,740.50 Supplier advance 2 274.92 23,726.32 12O4050 3.4.11 Accumulated Surpluses (Deficit) Fund Balance Brought Forward (1,124,482.98) (883,913.47) Current Year Surpluses (Deficit) 1,157,810.45 (240,569.51) 33-3274 (1.124,482.98) 3.4.12 Accounts Payable Payable to suppliers 818,396.05 6,348,980.50 Regional offices claims from HO 20,911.91 839307.9-6 6.4.9050 16