씸 4: <13ITO~N cYWESTERN HUB'. \ Project Name Water and Sanitation Services Improvement Project Implementing Entity Lake Victoria North Water Services Board PROJECT GRANT/CREDIT NUMBER 5103 KE ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED JUNE 30, 2018 Prepared in accordance with the Cash Basis of Accounting Method under the International Public Sector Accounting Standards (IPSAS) Water and Sanitation Services Improvement Project -Additional Financing Reports and Financial Statements For the financial year ended June 30, 2018 CONTENTS PAGE 1. PROJECT INFORMATION AND OVERALL PERFORMANCE...............................................................................i 2. STATEMENT OF PROJECT MANAGEMENT RESPONSBLITIES......................................................................ix 3. REPORT OF THE INDEPENDENT AUDITORS.........................................................................................................x 4. STATEMENT OF RECEIPTS AND PAYMENTS FOR THE PERIOD ENDED 30TH JUNE 2018......................... 1 5. STATEMENT OF FINANCIAL ASSETS AND LIABILITIES AS AT 30TH JUNE 2018 ........................................ 2 6. STATEMENT OF CASHFLOW FOR THE PERIOD ENDED 30T JUNE 2018 ....................................................... 2 7. STATEMENT OF COMPARATIVE BUDGET AND ACTUAL AMOUNTS........................................................... 4 8. NOTES TO THE FINANCIAL STATEM ENTS .......................................................................................................... 5 9. PROGRESS ON FOLLOW UP OF AUDITOR RECOMMENDATIONS ................................................................ 17 Water and Sanitation Services Improvement Project -Additional Financing Reports and Financial Statements For the financial year ended June 30, 2018 1. PROJECT INFORMATION AND OVERALL PERFORMANCE 1.1 Name and registered office Name: Water and Sanitation Services Improvement Project -Additional Financing Objective: The development objectives of the project are to: (a) increase access to reliable, affordable and sustainable water supply and sanitation services; and (b) to improve the water and wastewater services in the areas served by LVNWSB, CWSB and AWSB. This will be achieved by (i) Rehabilitating selected existing water production, transmission, storage and distribution facilities and wastewater collection, treatment and disposal facilities; (ii)expanding piped water supply services to under-served areas through the extension of primary and secondary distribution pipes where required (this would include service expansion into urban slums / informal settlements through a balanced program including the involvement of communities in decision making); and (iii)refining and strengthening the institutional structure, emphasizing on increasing accountability and transparency of the institutional, governance and management framework. REGISTERED OFFICE Lake Victoria North Water Services Board P.O. Box 673-50100, Kefinco House, Off Kakamega-Kisumu Road KAKAMEGA. 1.2 Project Information Project Start Date: The project start date is 14/12/2012 Project End Date: The project end date is 31/12/2019 Project Manager: The project manager is Eng. Christopher Bwire Project Sponsor: The project sponsor is World Bank and Government of Kenya 1.3 Project Overview Line Ministry/State The project is under the supervision of the Ministry of Water and Department of the Sanitation. project Project number 5103 KE Strategic goals of the The strategic goals of the project are as follows: project (i) increase access to reliable, affordable and sustainable water supply ii Water and Sanitation Services Improvement Project-Additional Financing Reports and Financial Statements For the financial year ended June 30, 2018 and sanitation services (ii) to improve the water and wastewater services in the areas served by LVNWSB, CWSB and AWSB Achievement of The project management aims to achieve the goals through the following strategic goals means: (i) Rehabilitating selected existing water production, transmission, storage and distribution facilities and wastewater collection, treatment and disposal facilities (ii) Expanding piped water supply services to under-served areas through the extension of primary and secondary distribution pipes where required (this would include service expansion into urban slums / informal settlements through a balanced program including the involvement of communities in decision making) (iii) Refining and strengthening the institutional structure, emphasizing on increasing accountability and transparency of the institutional, governance and management framework. Other important The project has three major components: (1) support to the Athi Water background Services Board (including limited complementary support to the Water information of the Services Regulatory Board and the Water Appeals Board through technical project assistance, goods and works); (2) support to the Coast Water Services Board; and (3) support to the Lake Victoria North Water Services Board. These are summarized below. Within each component, there are two main subcomponents for water and sewerage infrastructure rehabilitation and expansion that are focused on increasing the access of safe water and sanitation services to the beneficiaries. A further subcomponent of institutional strengthening o f WSBs and WSPs is included under each component and is focused on the quality, reliability, affordability and sustainability of service provision to beneficiaries and the long term viability and sustainability of service provision institutions. Included under the institutional strengthening subcomponent is limited support to operational costs of new WSPs to cover cost of electricity, chemicals etc. The support to Lake Victoria North Water Services Board is under component 3 of the project and details of this component are described below:- Current situation that The project was formed to intervene in the following areas: the project was (i) increase access to reliable, affordable and sustainable water supply formed to intervene and sanitation services (ii) to improve the water and wastewater services in the areas served by LVNWSB, CWSB and AWSB Project duration The project started on 14 December 2012 and closed 31 December 2019 111 Water and Sanitation Services Improvement Project-Additional Financing Reports and Financial Statements For the financial year ended June 30, 2018 1.4 Bankers The following are the bankers for the current year: (i) Special Account: CFC STANBIC BANK KENYA CBK/GOK PART3 LAKE VICTORIA NORTH SERVICES BOARD Account No 0100000488277 (ii) Project Account: Standard Chartered Bank Kakamega Branch KAKAMEGA. 1.5 Auditors The project is audited by the; Auditor General Kenya National Audit Office P.O. Box 30084-00100 NAIROBI. 1.6 Project Governance The Project's governance framework requires the stakeholders to uphold the highest professional, ethical, moral and legal standards. This is achieved through effective segregation of duties with clear checks and balances as articulated in the Project Loan/Credit Agreement, the PFM Act, 2012, the Project Design Report, the Implementation Manual and the Finance and Procurement Manuals. 1.6.1 The Project Steering Committee (PSC) This Committee is responsible for overseeing the implementation of the Project, approving the annual work plan and budget, and ensuring that the activities are in compliance with the donor and government policies. IDA, World Bank These are the project sponsors. They are responsible for reviewing and approving the project's withdrawal applications, expenditure justifications, no objection requests, reviewing and approving the annual work plan and budget, expenditure category reallocation request, and participating in implementation support missions. iv Water and Sanitation Services Improvement Project-Additional Financing Reports and Financial Statements For the financial year ended June 30, 2018 The Parent Ministry The parent ministry ensures that the Project's budget is captured in its development projects and disburses the government counterpart funding. The ministry reviews and tracks the Project's annual work plan and budget against the set targets and makes the approvals. The parent ministry also oversees the execution of the project coordinating team. The Auditor The Supreme Audit Institution in Kenya, that is, the Office of the Auditor General, is mandated by the Constitution of Kenya Chapter 12, Part 6, and Article 229 which establishes the Office of the Auditor General. Chapter 15, Article 248, Section 3 and Article 249, Section 2 (a) and (b) and section 10 of the Public Audit Act, 2015 provide for the independence of the Office of the Auditor General. The Auditor General is mandated to audit all national government entities, which include government development projects and present these statutory financial statements to the Parliament. This facilitates the submission of the audited report to the project's sponsors by 31 December each year. Project Coordinating Team (PCT) This team is based in Kakamega and is responsible for the project management and coordination functions. The PCT comprises of the Project Coordinator and a team of Technical Officers. The PCT is also supported by other administrative staff. These key staffs, which form the project coordinating team that is involved in the day to day management of the project and its implementation, are: Names Title designation Key qualification Responsibilities CPA Anthony Ag.Chief Executive MBA,CPA(K) Accounting Officer Kisaka Officer till 18th April 2018 Eng Boniface Ag.Chief Executive BSc(Civil Accounting Officer Mulama Officer Engineering) from 19th April 2018 Eng. Peter Ouma Chief Manager BSc(Civil Project Coordinator Technical Services Engineering) resigned on 27th December 2017 Eng. Christopher Chief Manager BSc(Civil Project Coordinator Bwire Technical Services Engineering) from 28th December 2017 CPA Fredrick Toloyi Manager Finance B.com,CPA(K) Project Accountant v Water and Sanitation Services Improvement Project-Additional Financing Reports and Financial Statements For the financial year ended June 30, 2018 1.7 Funding summary The Project is for duration of 7 years from 2013 to 2019 with an approved budget of US$ 35,912,500 equivalent to Kshs 3,630,832,758 as highlighted in the table below: Below is the funding summary: Source of Donor Commitment- Amount received to date Undrawn balance to funds - (30 June 2018) date (30 June 2018) Donor Kshs Donor Kshs Donor Kshs currency currency currency (A) (A') (B) (13') (A) -(B) (A')-(B') (i) Loan/Grant IDA 33,412,500 3,378,077,258 31,746,678 2,920,426,998 1,665,822 457,650,259 (ii) Counterpart funds Government 2,500,000 252,755,500 2,077,106 210,000,000 422,894 42,755,500 of Kenya Total 35,912,500 3,630,832,758 33,823,784 3,130,426,998 2,088,716 500,405,759 1.8 Summary of Overall Project Performance: As at the end of the financial year the Board had received from IDA a total of USD 31,746,678 which is approximately 95% of the project value. The procurement of consultancies and goods were concluded. The rate of expenditure picked up during the year most contracts were still at implementation stage. During the year we spent a total of Ksh 586,400,441 it is expected that most of the contracts will be concluded in financial year 2018/19. Challenges faced during implementation were: a) The lengthy procurement process with a lot of consultation between the Board and the World Bank. b) Land compensation for way leaves and project sites. c) Inadequate counterpart funding d) Insecurity in pastoralist communities vi Water and Sanitation Services Improvement Project-Additional Financing Reports and Financial Statements For the financial year ended June 30, 2018 1.9 Key achievements of strategic goals Project Description Achievements Construction of Ellegirini Pipeline and expansion of * Works completed and being operated by Kapsoya Treatment works. Eldowas. New Naiberi Treatment works of capacity 2,000m3/day, New Kapsoya Treatment Plant of Capacity 3,500m3/ day and rehabilitated old Kapsoya Treatment Works of capacity 3,500m3/day all now operational. Project was commissioned by the Deputy President. Benefiting 70,000 people Construction of Water and Sanitation facilities for * 25km pipeline extension and 5nr ablution Informal Settlements in Mumias blocks constructed. * Works Completed and Contractor discharged * Serving 10,000 people Construction of Upstream Water Treatment Works * Works completed and being Operated by and Distribution Lines, (Additional investment in the newly formed Cherangany-Marakwet Kapcherop) Water and Sanitation Company (Chemawasco). Contractor discharged * New Water Supply system of capacity 1000m3/ day serving about 15,000 people. Equipping of Drought Boreholes and Civil Works * Equipping with solar for Kapkobil, Sangach, Liter, LVNWSB -Lot 1 (Elgeyo Marakwet County) and St Mary's Mon in Elgeyo-Marakwet were completed and handed over to Elgeyo-Marakwet County. Boreholes completed serving 10,000 people. Equipping of Drought Boreholes and Civil Works * Solar equipping for Mosoriot, Kabiemit and LVNWSB - Lot II Kiptenden boreholes in Nandi and Trans Nzoia Counties respectively were completed and handed over to the respective counties for operation. Serving 6,000 people. Equipping of Drought Boreholes and Civil Works * Solar equipping for Ejinja, Eshisiru and Shikulu LVNWSB-Lot III- Busia & Kakamega Counties boreholes in Kakamega County and Ageng'a and Namboboto in Busia Counties were completed and now operational. Serving 12,000 people Equipping of Drought Boreholes and Civil Works * Solar equipping for Tabani, Mitua Girls and LVNWSB-Lot IV- Bungoma County Tongaren Boreholes completed and handed over to Bungoma county Government. Serving 6,000 people. Equipping of Drought Boreholes and Civil Works * Solar equipping for Nakalela, Ekoporuth, Lokale RVWSB-Lot I-Turkana County Akwan and Lobei boreholes completed and handed over to Turkana County Government. Serving 10,000 people. Equipping of Drought Boreholes and Civil Works Equipping and Civil works Ortum, Kokokwochy, RVWSB-Lot II-West Pokot County Kongelai boreholes completed and being operated by the West Pokot County Government. Serving 6,000 people vii Water and Sanitation Services Improvement Project-Additional Financing Reports and Financial Statements For the financial year ended June 30, 2018 Equipping of Drought Boreholes and Civil Works * Equipping and Civil works for Kishemoruak and RVWSB-Lot IV-Narok County Eor Ekule Boreholes have been completed and opertaionalised * Serving 4,000 people. Equipping of Drought Boreholes and Civil Works * Solar equipping and civil works for Gunga LVSWSB-Lot I-Homabay & Migori. borehole completed and operationalized. Serving 2,000 people Equipping of Drought Boreholes and Civil Works * Solar equipping and civil works for Nyamila LVSWSB II-Homabay and Migori Counties and Kangeso borehoels have been completed, (Kangeso & Nyamila boreholes) operationalized and handed over to the Communities. Serving 4,000 people Rehabilitation/ Expansion of Water Supplies for * Construction works at 88%. The Project will LVNWSB - Kwanza Water Supply serve 40,000 people. Rehabilitation/ Expansion of Water Supplies for (a) Construction works at 85%. The Project will RVWSB-Suswa Water Supply serve about 20,000 people. Rehabilitation / Expansion of Water Supplies for * Construction works at 94%. The Project serves RVWSB - Kapenguria Water Supply 10,000 people Rehabilitation /Expansion of Water Supplies for * Works for Kapnosgei and Kamasai RVWSB-Kapindaram operationalized (boreholes). Serving 5,000 people Construction of plinths/ gutters for plastic water tanks Works for installation of rainwater harvesting 10,0001ts for LVNWSB systems completed for LVNWSB serving 20,000 people 1.10 Summary of Project Compliance: The financial statements have been prepared in accordance with Cash-basis IPSAS financial reporting under the cash basis of Accounting, as prescribed by the PSASB The financial statements comply with and conform to the form of presentation prescribed by the PSASB. The financial statements comply with the financing agreement and project appraisal document. The accounting policies adopted have been consistently applied to all the years presented. Vi1 Water and Sanitation Services Improvement Project-Additional Financing Reports and Financial Statements For the financial year ended June 30, 2018 2. STATEMENT OF PROJECT MANAGEMENT RESPONSIBILITIES The Accounting Officer, Lake Victoria North Water Services Board and the Project Coordinator, are responsible for the preparation and presentation of the Project's financial statements, which give a true and fair view of the state of affairs of the Project for and as at the end of the financial year ended on June 30, 2018. This responsibility includes: (i) maintaining adequate financial management arrangement and ensuring that these continue to be effective throughout the reporting period; (ii) maintaining proper accounting records, which disclose with reasonable accuracy at any time the financial position of the Project; (iii) designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of the financial statement, and ensuring that they are free from material misstatements, whether due to error or fraud; (iv) safeguarding the assets of the Project; (v) selecting and applying appropriate accounting policies; and (vi) making accounting estimates that are reasonable in the circumstances. The Accounting Officer, Lake Victoria North Water Services Board and the Project Coordinator accept responsibility for the Project's financial statements, which have been prepared on the Cash Basis Method of Financial Reporting, using appropriate accounting policies in accordance with International Public Sector Accounting Standards. The Accounting Officer, Lake Victoria North Water Services Board and the Project Coordinator are of the opinion that the Project's financial statements give a true and fair view of the state of Project's transactions during the financial year/period ended June 30, 2018, and of the Project's financial position as at that date. The Accounting Officer, Lake Victoria North Water Services Board and the Project Coordinator further confirm the completeness of the accounting records maintained for the Project, which have been relied upon in the preparation of the Project financial statements as well as the adequacy of the systems of internal financial control. The Accounting Officer, Lake Victoria North Water Services Board and the Project Coordinator confirm that the Project has complied fully with applicable Government Regulations and the terms of external financing covenants, and that Project funds received during the financial year/period under audit were used for the eligible purposes for which they were intended and were properly accounted for. Approval of the Project financial statements The Project financial statements were approved by the The Accounting Officer, Lake Victoria North Water Services Board and the Project Coordinator on 24th September, 2018 and signed by them. Accounting Officer Projecttoordinator Project Accountant Eng Boniface L. Mulama Eng Christopher Bwire CPA Fredrick Toloyi ICPAK Member no.5922 ix REPUBLIC OF KENYA Telephone: +254-20-342330 P.O. Box 30084-00100 Fax: +254-20-311482 E-mail: oag@oagkenya.go.ke NAIROBI Website: www.kenao.go.ke OFFICE OF THE AUDITOR-GENERAL REPORT OF THE AUDITOR-GENERAL ON WATER AND SANITATION SERVICES IMPROVEMENT PROJECT (IDA CR. NO.5103-KE) FOR THE YEAR ENDED 30 JUNE 2018 - LAKE VICTORIA NORTH WATER SERVICES BOARD REPORT ON THE FINANCIAL STATEMENTS Qualified Opinion I have audited the accompanying financial statements of Water and Sanitation Services Improvement Project (IDA Loan Cr. No.5103-KE)) set out on pages 1 to 17, which comprise the statement of financial assets and liabilities as 30 June 2018 and the statement of receipts and payments, statement of cash flows and statement of comparison of budget and actual amounts for the year then ended, and a summary of significant accounting policies and other explanatory information in accordance with the provisions of Article 229 of the Constitution of Kenya and Section 35 of the Public Audit Act, 2015 and Financing Agreement No.5103-KE dated 21 June 2012 between the International Development Association (IDA) and the Republic of Kenya. I have obtained all the information and explanations which, to the best of my knowledge and belief, were necessary for the purpose of the audit. In addition, the accompanying special/designated account statement presents fairly, in all material respects, the funds received into and disbursements made from the special/ designated account of the project during the year ended 30 June 2018. In my opinion, except for the effect of the matters described in the Basis for Qualified Opinion Paragraph, the financial statements present fairly, in all material respects, the financial position of Water and Sanitation Services Improvement Project as at 30 June 2018, and of its financial performance and its cash flows for the year then ended, in accordance with International Public Sector Accounting Standards (Cash Basis) and comply with the Financing Agreement No.5103-KE dated 21 June 2012 and the Subsidiary Loan Agreement dated 17 December 2012. Basis for Qualified Opinion 1. Exclusion of Retention Money from Statement of Receipts and Payments The statement of receipts and payments excludes retention money of Kshs.109,260,820 which ought to have been reflected as part of payments to a deposit account pending release to relevant contractors for various projects once prescribed conditions are met. This has therefore understated the receipts and payments account while exposing the Project to the risk of not having these funds available whenever they become due to the contractors. Report of the Auditor-General on the Financial Statements qf Water and Sanitation Services Improvement Project (IDA Cr. No.5103-KE) for the year ended 30 June 2018 Promoting Accountabilify in the Public Sector In the circumstances, it was not possible to ascertain completeness of the payments reported in the financial statements. 2. Accuracy, Presentation and Disclosure of the Financial Statements The financial statements have not been prepared in compliance with the guidelines and reporting template provided by the Public Sector Accounting Standards Board in the areas stated below: a) The statement of receipts and payments has recorded both grants and loans from external development partners as a block figure, failing to distinguish loan from grant for appropriate disclosure. This distorts the true position of the funding. b) There are no annexes for pending bills, retention money and summary of fixed assets register. c) There is no description of receipts and payments utilization together with any challenges encountered. d) The cumulative receipts reflected in the statement of receipts and payments amount to Kshs.2,915,278,261 inclusive of miscellaneous receipts while the funding summary statement reflects Kshs.3,130,426,998, resulting to a variance of Kshs.215,148,737. A reconciliation provided for this variance indicate that an amount of Kshs.301,062,017 is held in the designated account. However, no evidence has been availed to support the balance. e) The project financial statements reflect a total of Kshs.577,421,000 received from IDA as disbursements towards implementation of the project. However, the special account statements reflect no withdrawal from the account during the year under review. No reconciliation has been provided to explain the variation in the two sets of statements. . In addition, Part 'B' of the special account statement reflects cumulative balance of USD 8,596,670.07 transferred to the local project bank accounts, but project management had not submitted expenditure returns to National Treasury as at 30 June 2018 as required in the financing agreement. In the circumstances, it was not possible to ascertain the accuracy of the balances in the financial statements. The audit was conducted in accordance with International Standards of Supreme Audit Institutions (ISSAls). I am independent of Water Services and Sanitation Improvement Project in accordance with ISSAI 30 on Code of Ethics. I have fulfilled other ethical responsibilities in accordance with the ISSAI and in accordance with other ethical requirements applicable to performing audits of financial statements in Kenya. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Report qf the A uditor-General on the Financial Statements of Water and Sanitation Services Improvement Project (IDA Cr. No.5103-KE) br the year ended 30 Jume 2018 2 Key Audit Matters Key audit matters are those matters that, in my professional judgment, are of most significance in the audit of the financial statements. There were no Key Audit Matters to report in the year under review. Other Matter Project Implementation Status As at 30 June 2018, the project had received 95% of the funding. However, in terms of implementation of the planned project objectives, no project status report was availed to confirm the implementation level. REPORT ON COMPLIANCE WITH LAWFULNESS AND EFFECTIVENESS IN USE OF PUBLIC MONEY Conclusion As required by Article 229(6) of the Constitution, except for the matter described in the Basis for conclusion on compliance with lawfulness and effectiveness section of my report, I confirm that, nothing has come to my attention to cause me to believe that public money has not been applied lawfully and in an effective way. Basis for Conclusion The Project undertook various works for water supply projects during the year under review. However, some of the projects as detailed below, were not implemented efficiently, effectively and in compliance with the Water Act, 2016; general conditions of contract in terms of specifications and drawings; Project Financing Agreement; the Public Finance Management Act, 2012 and the Regulations 2015. 1. Kishermuruak Water Project Contrary to provisions of Section 5 of the Water Act, 2016, which requires that every water resource be vested in and held by the National Government in trust for the people of Kenya, the Rift Valley Water Services Board and the project accounting officer are yet to secure the site of Kishermoruak water resource. Even though a consent (deed of gift) was signed between the land owner and the Kishormoruak Community, the project manager has not followed up or acquired ownership of the site on which project is located. Further, item No.3.5.4 in the bills of quantities in regard to supply and installation of reverse osmosis treatment plant amounting to Kshs.4,000,000 had not been implemented as at the time of audit, more than one and half years after the expiry of the expected completion date of 24 March 2017. Report of the A uditor-General on the Financial Statements qf Water and Sanitation Services Improvement Project (IDA Cr. No. 5103-KE) fbr the year ended 30 June 2018 3 2. Kongelai & Kasepa Boreholes Kongelai borehole was sank to a depth of 140 meters deep and capped on 27 November 2014 with a tested yield of one (1) cubic meter per hour as indicated in the test pumping report. The borehole works were completed and handed over on 18 September 2017, about 3 years after sinking. However, the borehole completion report indicated that the yield rate of 1 cubic meters per hour was not achieved and instead the borehole returned a lower rate of 0.4 cubic meters per hour. The project management have attributed the reduction in rate to the long period taken before equipping the borehole. This assertion casts doubt on the long-term viability of the borehole. Similarly, Kasepa borehole was sank to a depth of 120 meters and capped on 12 December 2014 with a tested yield of 3 cubic meters per hour as indicated in the test pumping report. However, during equipping the depth of the borehole was noted to be 98m instead of 120m as indicated in the borehole completion report resulting to a variation of 22 meters. Further, the yield rate was found to be too low at 0.29 cubic meters per hour to allow any motorized pumping. The variation between the test pumping reports and the boreholes completion reports means that there may have been inaccuracies in the test pumping analysis which may have resulted in the management of the project equipping boreholes which may not achieve the intended purpose and may result in loss of public funds if the boreholes do not meet the objective of supplying water to the intended users. 3. Liter Water Project Liter Water Supply Project was undertaken within the compound of Liter Girls High School in Elgeyo Marakwet County. The drilling of the borehole, equipping and civil works were done during the year under review and prior financial years. As at the time of audit, all the structures as per the bills of quantities were complete. However, the water supply was not in use since the water was found to be too saline and unfit for human consumption as per the testimonies of the school administration who were the intended beneficiaries of the project. In addition, it was noted that no public participation was undertaken before the identification, budgeting and implementation of the project as the school principal indicated that they would have preferred the development at another source preferably a water spring where they get their current supply. The supervision and implementation of the project may have been poor as the salinity should have been detected at the time of test pumping before the equipping of the borehole begun which could have saved the project Kshs.7,961,200 spent on equipping of the borehole. 4. Kapcherop Water Supply Kapcherop water supply was undertaken at a contract price of Kshs.114,586,833 with Kshs.14,254,490 having been paid during the year under review and a final completion certificate issued on 6 June 2018. During an audit visit to the project site on 9 October 2018, it was observed that the project has not been operational for more than three Report of the Auditor-General on the Financial Statements qf Water and Sanitation Services Improvement Project (IDA Cr. No.5103-KE) for the year ended 30 June 2018 4 months as a result of clogging of the intake caused by siltation around the intake area, which would have been avoided had a proper feasibility study of the location done and the project designs taken into account the risks of the topography of the site. This view was corroborated by a technical audit report which reviewed the status of substantial completion on 19 October 2017 and noted that environmental and water quality issues were not taken into account during feasibility study, preliminary and detailed design and implementation process to ensure issues pertaining to water quality, health and safety are well captured and implemented. The report concluded that in its current state, the water project cannot meet the intended purpose of provision of adequate, quality and affordable water as per the Board's mandate and community expectation. The contractor was subsequently discharged from site and issued with a final completion certificate on 6 June 2018 without having further evaluation of the project to ensure that the issues raised in the report had been addressed. My responsibility is to express a conclusion based on the review. The review was conducted in accordance with ISSAI 4000. The standard requires that I comply with ethical requirements and plan and perform the review to obtain limited assurance on whether the activities, financial transactions and information reflected in the financial statements are in compliance, in all material respects, with all the authorities which govern them. A review is limited primarily to analytical procedures and to inquiries, and therefore provides less assurance than an audit. I have not performed an audit, and accordingly, express my conclusion in the form of limited assurance, which is consistent with the more limited work I have performed under this compliance review. I believe that the evidence I have obtained is sufficient and appropriate to provide a basis for my conclusion. REPORT ON INTERNAL CONTROLS EFFECTIVENESS, GOVERNANCE AND RISK MANAGEMENT SYSTEMS Conclusion As required by Section 7 (1) (a) of the Public Audit Act, 2015, based on the procedures performed, I confirm that, nothing has come to my attention to cause me to believe that internal controls, risk management and overall governance, were not effective. Basis for Conclusion My responsibility is to express a conclusion based on the review. The review was conducted in accordance to ISSAI 1315. The standard requires that I plan and perform the review to obtain limited assurance on whether effective processes and systems of internal control, risk management and governance, were maintained in all material respects. The matters reported are limited to the deficiencies identified during the audit which I have concluded are material to be reported on. I have not performed an audit, and accordingly, Report of the Autditor-General on the Financial Statements of Water and Sanitation Services Improvement Project (IDA Cr. No. 5103-KE) for the year ended 30.Jne 2018 5 express my conclusion in the form of limited assurance, which is consistent with the more limited work I have performed under this review. I believe that the evidence I have obtained is sufficient and appropriate to provide a basis for my conclusion. Responsibilities of Management and those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Public Sector Accounting Standards (Cash Basis) 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. In preparing the financial statements, management is responsible for assessing the Project's ability to continue to sustain services, disclosing, as applicable, matters related to sustainability of services and using the applicable basis of accounting unless the management either intends to liquidate the Project or to cease operations, or have no realistic alternative but to do so. Management is also responsible for the submission of the financial statements to the Auditor-General in accordance with the provisions of Section 47 of the Public Audit Act, 2015. Those charged with governance are responsible for overseeing the Project's financial reporting process, reviewing the effectiveness of how the entity monitors compliance with relevant legislative and regulatory requirements, ensuring that effective processes and systems are in place to address key roles and responsibilities in relation to governance and risk management, and ensuring the adequacy and effectiveness of the control environment. Auditor-General's Responsibilities for the Audit of the Financial Statements The audit 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 my opinion in accordance with the provisions of Section 48 of the Public Audit Act, 2015 and submit the audit report in compliance with Article 229(7) of the Constitution. 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 and weakness 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. In addition to the audit of the financial statements, a compliance review is planned and performed to express a conclusion with limited assurance as to whether, in all material Report qf the Auditor-General on the Financial Statements of Water and Sanitation Services Improvement Project (IDA Cr. No. 5103-KE) for the year ended 30 .June 2018 6 respects, the activities, financial transactions and information reflected in the financial statements are in compliance with the authorities that govern them in accordance with the provisions of Article 229(6) of the Constitution and submit the audit report in compliance with Article 229(7) of the Constitution. The nature, timing and extent of the compliance work is limited compared to that designed to express an opinion with reasonable assurance on the financial statements. Further, in planning and performing the audit of the financial statements and review of compliance, I consider internal control in order to give an assurance on the effectiveness of internal controls, risk management and governance processes and systems in accordance with the provisions of Section 7 (1) (a) of the Public Audit Act, 2015 and submit the audit report in compliance with Article 229(7) of the Constitution. My consideration of the internal control would not necessarily disclose all matters in the internal control that might be material weaknesses under the ISSAls. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Because of its inherent limitations, internal control may not prevent or detect misstatements and instances of non-compliance. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate. As part of an audit conducted in accordance with ISSAls, I exercise professional judgement and maintain professional skepticism throughout the audit. I 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 my 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 and for the purpose of giving an assurance 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 the management. * Conclude on the appropriateness of the management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Report qf the Audibor-General on the Financial Statements qf Water and Sanitation Services Improvement Project (IDA Cr. No.5103-KE).for the year ended 30 June 2018 7 Project's ability to continue to sustain its services. If I conclude that a material uncertainty exists, I am required to draw attention in the auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my audit report. However, future events or conditions may cause the Project to cease to sustain its services. * 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. * Obtain sufficient appropriate audit evidence regarding the financial information and business activities of the Project to express an opinion on the financial statements. * Perform such other procedures as I consider necessary in the circumstances. I 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 are identified during the audit. I also provide management with a statement that I 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 my independence, and where applicable, related safeguards. FCPA Edward R. 0. Ouko, CBS AUDITOR-GENERAL Nairobi 27 December 2018 Report of the Auditor-General on the Financial Statements qf Water and Sanitation Services Improvement Project (IDA Cr. No.5103-KE) for the year ended 30 June 2018 8 Water and Sanitation Services Improvement Project-Additional Financing Reports and Financial Statements For the financial year ended June 30, 2018 3. REPORT OF THE INDEPENDENT AUDITORS x Water and Sanitation Services Improvement Project -Additional Financing Reports and Financial Statements For the financial year ended June 30, 2018 4. STATEMENT OF RECEIPTS AND PAYMENTS FOR THE PERIOD ENDED 30TH JUNE 2018 Note FY 2017/2018 FY 2016/2017 Cumulative Reciepts Reciepts to-date Reciepts and and Reciepts and and Payments by Payments Payments by Payments the entity by third the entity by third parties parties Kshs Kshs Kshs Kshs Kshs RECEIPTS Transfer from Government entities 25,000,000 60,000,000 210,000,000 Loan/Grant from external development 8.4 577,421,000 741,499,000 2,619,364,981 partners Miscellaneous receipts 8.5 9,632,461 17,673,483 - 85,913,280 Total receipts 612,053,461 819,172,483 2,915,278,261 PAYMENTS Goods, Works, Training and Services 8.6 and)Services 8.6 280,151,678 466,608,248 1,429,280,016] (a)(b)(d)(Loan) Goods, Works and 8 7 Services C(Grant) 284,107,611 325,563,219 1,056,135,4% Operating costs 8.8 22,141,152 25,617,795 152,814,53- TOTAL PAYMENTS 586,400,441 817,789,262 2,638,230,04( WaSSIP Refund SURPLUS/DEFICIT FOR THE YEAR 25,653,020 1,383,221 277,048,21! The accounting policies and explanatory notes to these financial statements are an integral part of the financial statements. The entity financial statements were approved on 24th September, 2018 and signed by: Accounting Of icer Proj ecttoordinator Project Accountant Eng Boniface L. Mulama Eng Christopher Bwire CPA Fredrick Toloyi ICPAK Member no.5922 1 Water and Sanitation Services Improvement Project-Additional Financing Reports and Financial Statements For the financial year ended June 30, 2018 5. STATEMENT OF FINANCIAL ASSETS AND LIABILITIES AS AT 30TH JUNE 2018 Note 2018 2017 Kshs Kshs FINANCIAL ASSETS Cash and Cash Equivalents Bank Balances 8.10A 277,048,216 251,395,195 Imprests and Advances 8.10B - . TOTAL FINANCIAL ASSETS 277,048,216 251,395,195 REPRESENTED BY: Cash and cash equivalents b/fwd 8.11 251,395,196 250,011,975 Surplus/Deficit for the year 8.12 25,653,020 1,383,221 Prior year adjustments - . NET FINANCIAL POSITION 277,048,216 251,395,196 The accounting policies and explanatory notes to these financial statements form an integral part of the financial statements. The financial statements were approved on 24th September, 2018 and signed by: Accounting Officer Proj e8t-'oordinator Project Accountant Eng Boniface L. Mulama Eng Christopher Bwire CPA Fredrick Toloyi ICPAK Member no.5922 2 Water and Sanitation Services Improvement Project-Additional Financing Reports and Financial Statements For the financial year ended June 30, 2018 6. STATEMENT OF CASHFLOW FOR THE PERIOD ENDED 30TH JUNE 2018 2018 2017 Kshs Kshs Receipts for operating income Transfer from Government entities 25,000,000 60,000,000 Proceeds from domestic and foreign grants 284,107,611 325,563,219 Miscellaneous receipts 9,632,461 17,673,483 Payments for operating expenses Purchase of goods and services 22,141,152 25,617,795 Net cash flow from operating activities 296,598,920 377,618,907 CASHFLOW FROM INVESTING ACTIVITIES Acquisition of Assets 564,259,289 792,171,467 Net cash flows from Investing Activities 564,259,289 792,171,467 CASHFLOW FROM BORROWING ACTIVITIES Proceeds from Foreign Borrowings 293,313,389 415,935,781 Net cash flow from financing activities 293,313,389 415,935,781 NET INCREASE IN CASH AND CASH EQUIVALENT 25,653,020 1,383,221 Cash and cash equivalent at BEGINNING of the year 251,395,196 250,011,975 Cash and cash equivalent at END of the year 277,048,216 251,395,196 The accounting policies and explanatory notes to these financial statements form an integral part of the financial statements. The entity financial statements were approved on 24th September, 2018 and signedby_ Accounting Offier Proje&oordinator Project Accountant Eng Boniface L. Mulama Eng Christopher Bwire CPA Fredrick Toloyi ICPAK Member no.5922 3 .-. � � г, ,--• ,� � оо а, о о � й � � й о � v °о � с° ° о�о о� 1 о� й о �-С й 'i. 11 �7, v 'а' д� сиv �и,' пк ш � � N � � й ; о rn и r� � оо г-+ с� н о � � � v °о °Oа � � � � .`�д � � о ' с� � � о � ^'� i�-i .н � О С'� е-1 �[1 О t"'� r�1 t"� [М l0 Lч � .� � и N � о�о � eN-i ооо о0 N а�о N � �� N N �о N N tt� � и Q v ,� � i ° о rn,-, � о rn � о о � '"'� ''✓ °о °т° .г'о °о °° � °о о° у �ц °о � о снi � о°о N � �'� о т � е1+ с+� � о ем � � 1� �� ао N\ N 00 N N � � cv с� �о т с� �о .� .� �cs w � су н N (� Q1 r � � �� и , � о � rn ' о ,� rn ' о ' >С '�' о О Е'i и °о .`�о т °о .�о � °о а� .� о о �ыл у � F,,,i � � �.. 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С� w ш ш � С� у й й� �� � � .. а' У � •`J •V сб О О � ч�-' � О О � ,� р" +-�' О bA �� � с4 Е� д: �� Ео-� а.� с� С7 О Ео-� й z Q W Water and Sanitation Services Improvement Project-Additional Financing Reports and Financial Statements For thefinancial year ended June 30, 2018 8. NOTES TO THE FINANCIAL STATEMENTS The principal accounting policies adopted in the preparation of these financial statements are set out below: 8.1. Basis of Preparation 8.1.1. Statement of compliance and basis of preparation The financial statements have been prepared in accordance with Cash-basis IPSAS financial reporting under the cash basis of Accounting, as prescribed by the PSASB and set out in the accounting policy note below. This cash basis of accounting has been supplemented with accounting for; a) receivables that include imprests and salary advances and b) payables that include deposits and retentions. The financial statements comply with and conform to the form of presentation prescribed by the PSASB. The accounting policies adopted have been consistently applied to all the years presented. 8.1.2. Reporting entity The financial statements are for the Water and Sanitation Services Improvement Project- Additional Financing under National Government of Kenya. The financial statements encompass the reporting entity as specified in the relevant legislation PFM Act 2012 . 8.1.3. Reporting currency The financial statements are presented in Kenya Shillings (KShs), which is the functional and reporting currency of the Project and all values are rounded to the nearest Kenya Shilling. 8.2. Significant Accounting Policies a)Recognition of receipts The Project recognises all receipts from the various sources when the event occurs and the related cash has actually been received by the Government. *Transfers from the Exchequer Transfer from Exchequer is be recognized in the books of accounts when cash is received. Cash is considered as received when payment instruction is issued to the bank and notified to the receiving entity. 9 External Assistance External assistance is received through grants and loans from multilateral and bilateral development partners. 5 Water and Sanitation Services Improvement Project -Additional Financing Reports and Financial Statements For the financial year ended June 30, 2018 SIGNIFICANT ACCOUNTING POLICIES (Continued) Donations and grants Grants and donations shall be recognized in the books of accounts when cash is received. Cash is considered as received when a payment advice is received by the recipient entity or by the beneficiary. In case of grant/donation in kind, such grants are recorded upon receipt of the grant item and upon determination of the value. The date of the transaction is the value date indicated on the payment advice. Proceeds from borrowing' Borrowing includes Treasury bill, treasury bonds, corporate bonds, sovereign bonds and external loans acquired by the Project or any other debt the Project may take on will be treated on cash basis and recognized as a receipt during the year they were received. Undrawn external assistance These are loans and grants at reporting date as specified in a binding agreement and relate to funding for the Project currently under development where conditions have been satisfied or their ongoing satisfaction is highly likely and the project is anticipated to continue to completion. An analysis of the Project's undrawn external assistance is shown in the funding summary * Other receipts These include Appropriation-in-Aid and relates to receipts such as proceeds from disposal of assets and sale of tender documents. These are recognised in the financial statements the time associated cash is received. b) Recognition of payments The Project recognises all payments when the event occurs and the related cash has actually been paid out by the Project. * Compensation of employees Salaries and Wages, Allowances, Statutory Contribution for employees are recognized in- the period when the compensation is paid. * Use of goods and services Goods and services are recognized as payments in the period when the goods/services are consumed and paid for. If not paid for during the period where goods/services are consumed, they shall be disclosed as pending bills. * Interest on borrowing Borrowing costs that include interest are recognized as payment in the period in which they incurred and paid for. 6 Water and Sanitation Services Improvement Project -Additional Financing Reports and Financial Statements For the financial year ended June 30, 2018 SIGNIFICANT ACCOUNTING POLICIES (Continued) * Repayment of borrowing (principal amount) The repayment of principal amount of borrowing is recognized as payment in the period in which the repayment is made. The stock of debt is disclosed as an annexure to the consolidated financial statements. * Acquisition of fixed assets The payment on acquisition of property plant and equipment items is not capitalized. The cost of acquisition and proceeds from disposal of these items are treated as payments and receipts items respectively. Where an asset is acquired in a non-exchange transaction for nil or nominal consideration and the fair value of the asset can be reliably established, a contra transaction is recorded as receipt and as a payment. A fixed asset register is maintained by each public entity and a summary provided for purposes of consolidation. This summary is disclosed as an annexure to the consolidated financial statements. c) In-kind donations In-kind contributions are donations that are made to the Project in the form of actual goods and/or services rather than in money or cash terms. These donations may include vehicles, equipment or personnel services. Where the financial value received for in- kind contributions can be reliably determined, the Project includes such value in the statement of receipts and payments both as receipts and as payments in equal and opposite amounts; otherwise, the contribution is not recorded. d) Cash and cash equivalents Cash and cash equivalents comprise cash on hand and cash at bank, short-term deposits on call and highly liquid investments with an original maturity of three months or less, which are readily convertible to known amounts of cash and are subject to insignificant risk of changes in value. Bank account balances include amounts held at the Central Bank of Kenya and at various commercial banks at the end of the financial year. For the purposes of these financial statements, cash and cash equivalents also include short term cash imprests and advances to authorised public officers and/or institutions which were not surrendered or accounted for at the end of the financial year. Restriction on cash Restricted cash represents amounts that are limited/restricted from being used to settle a liability for at least twelve months after the reporting period. This cash is limited for direct use as required by stipulation. Amounts maintained in deposit bank accounts are restricted for use in refunding third part deposits 7 Water and Sanitation Services Improvement Project -Additional Financing Reports and Financial Statements For the financial year ended June 30, 2018 SIGNIFICANT ACCOUNTING POLICIES (Continued) e) Accounts receivable For the purposes of these financial statements, imprests and advances to authorised public officers and/or institutions which were not surrendered or accounted for at the end of the financial year is treated as receivables. This is in recognition of the government practice where the imprest payments are recognized as payments when fully accounted for by the imprest or AIE holders. This is an enhancement to the cash accounting policy. Other accounts receivables are disclosed in the financial statements. f) Pending bills Pending bills consist of unpaid liabilities at the end of the financial year arising from contracted goods or services during the year or in past years. As pending bills do not involve the payment of cash in the reporting period, they recorded as 'memorandum' or 'off- balance' items to provide a sense of the overall net cash position of the Project at the end of the year. When the pending bills are finally settled, such payments are included in the statement of receipts and payments in the year in which the payments are made. g) Budget The budget is developed on a comparable accounting basis (cash basis), the same accounts classification basis (except for accounts receivable - outstanding imprest and clearance accounts and accounts payable - deposits, which are accounted for on an accrual basis), and for the same period as the financial statements. The Project's budget was approved as required by Law and National Treasury Regulations, as well as by the participating development partners, as detailed in the Government of Kenya Budget Printed Estimates for the year. The Development Projects are budgeted for under the MDAs but receive budgeted funds as transfers and account for them separately. These transfers are recognised as inter- entity transfers and are eliminated upon consolidation. A high-level assessment of the Project's actual performance against the comparable budget for the financial year/period under review has been included in an annex to these financial statements. h) Third party payments Included in the receipts and payments, are payments made on its behalf by to third parties in form of loans and grants. These payments do not constitute cash receipts and payments and are disclosed in the payment to third parties column in the statement of receipts and payments. During the year no disbursements were received in form of direct payments from third parties. 8 Water and Sanitation Services Improvement Project-Additional Financing Reports and Financial Statements For the financial year ended June 30, 2018 SIGNIFICANT ACCOUNTING POLICIES (Continued) i) Exchange rate differences The accounting records are maintained in the functional currency of the primary economic environment in which the Project operates, Kenya Shillings. Transactions in foreign currencies during the year/period are converted into the functional currency using the exchange rates prevailing at the dates of the transactions. Any foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statements of receipts and payments. j) Comparative figures Where necessary comparative figures for the previous financial year/period have been amended or reconfigured to conform to the required changes in financial statement presentation. k) Subsequent events There have been no events subsequent to the financial year/period end with a significant impact on the financial statements for the year ended June 30, 2018. 1) Errors Material prior period errors shall be corrected retrospectively in the first set of financial statements authorized for issue after their discovery by: i. Restating the comparative amounts for prior period(s) presented in which the error occurred; or ii. If the error occurred before the earliest prior period presented, restating the opening balances of assets, liabilities and net assets/equity for the earliest prior period presented. 9 Water and Sanitation Services Improvement Project-Additional Financing Reports and Financial Statements For the financial year ended June 30, 2018 8.3 RECEIPTS FROM GOVERNMENT OF KENYA These represent counterpart funding and other receipts from government as follows: 2017/18 2016/17 Cumulative Kshs Kshs to-date Counterpart funding through MEWNR Counterpart funds Quarter 4 25,000,000 60,000,000 210,000,000 25,000,000 60,000,000 210,000,000 8.4 LOAN/GRANT FROM EXTERNAL DEVELOPMENT PARTNERS During the 12 months to 30 June 2018 we received funding from development partners in form of loans negotiated by the National Treasury donors as detailed in the table below: of Date received Amount in Loans Total amount Rem Po r loan received in in Kshs currency cash FY 2017/18 FY 2016/17 FY 2015/16 FY 2014/15 FY 2013/14 FY 2012/13 USD Kshs Kshs Kshs Kshs Kshs .e ved Vorld Bank ic, I ai TDA) 3/12/2013 5,180,447 433,240,783 Project Ao lorld a' ID A) 6/18/2013 4,479,006 1 385,294,080 Project Ao ank(IDA) 21/01/2014 882,500 FOREX DI 1C, I ai IDA) 3/13/2014 1,656,533 143,140,584 Project Ao lorld at 'IDA) 3/13/2014 1,296,126 131,816,014 Project Ac, ank(IDA) 2/12/2015 2,272,729 206,953,520 Project Ac u' 'IDA) 1/7/2016 4,000,000 404,000,000 Project Ao lorld i IDA) 3/22/2017 3,253,630 337,499,000 Project Ac mk(IDA) 3/22/2017 746,370 77,421,000 Project Ac Fc j a 'IDA) 6/30/2017 5,739,458 500,000,000 Project Ao 'orld n IDA) 11/10/2017 724,169 Designate r0-d nk(IDA) 1/30/2018 1,515,710 Designate 31,746,678 577,421,000 741,499,000 131,816,014 206,953,520 528,434,664 433,240,783 10 Water and Sanitation Services Improvement Project-Additional Financing Reports and Financial Statements For the financial year ended June 30, 2018 8.5 MISCELLANEOUS RECEIPTS FY 2017/18 FY 2016/17 Cumulative Kshs Kshs Kshs Interest income 9,632,461 17,673,483 85,913,280 9,632,461 17,673,483 85,913,280 11 Water and Sanitation Services Improvement Project-Additional Financing Reports and Financial Statements For the financial year ended June 30, 2018 NOTES TO THE FINANCIAL STATEMENTS (Continued) 8.6 Loan 2018 2017 Works Kshs Kshs Construction of Elligirini Pipeline and and expansion of Kapsoya Treatment works. 159,271,591 307,727,522 Construction of Water and Sanitation facilities for Informal Settlements in Mumias - 2,582,251 Construction of Upstream Water Treatment Works and Distribution Lines, (Additional investment in Kapcherop) 14,926,462 55,124,700 Total 174,198,052 365,434,473 Consultancies Supervision Informal Settlements in Mumias - 461,479 FS study review, design and Supervision of Kapsoya Treatment Works and Supervision of Elligirini Pipeline 9,473,265 23,013,300 Consultancy services for communication - 1,702,470 Carry out Water and Sanitation Service Levels Survey in the Board Area 6,558,465 2,586,686 Consultancy for Energy Audit for Eldowas - 504,000 Consultancy for Eldoret water master plan 37,329,299 14,538,140 Consultancy for Eldoret sanitation master plan - 18,752,548 TA for Ressetlement Action Plan(RAP) for Kipkarren dam Water Supply,Ellegirini/Kapsoya Project,Additional 524,000 1,500,000 Works for Kapcherop Projects Feasibility Study ,Detailed design and supervision for a gravity Scheme for Indigeneous People(Kapcherop) - 2,251,012 Consultancy, preparation of investment plan for LVNWSB 4,130,280 1,032,570 Intergrated sanitation master plan for eldoret and selected satelite towns. 40,547,586 12 Water and Sanitation Services Improvement Project-Additional Financing Reports and Financial Statements For the financial year ended June 30, 2018 Total 98,562,896 66,342,205 Goods Water Metering Programme for WSPs (in Lots) Lot 1: Ordinary Meters; Lot 2: Zonal/ Bulk meters - 5,645,313 Procure/ Upgrade billing/ accounting software for WSPs/ WSB 2,380,000 Total - 8,025,313 Training LVNWSB 70,300 11,742,335 WSPs 7,320,430 15,063,922 Total 7,390,730 26,806,257 TOTAL LOAN (WORKS+CONSULTANCY+GOODS+TRAINING) 280,151,678 466,608,248 8.7 Grants GRANTS 2018 2017 WORKS Kshs Kshs Grant - Drought Mitigation Drilling and capping of Drought Boreholes LVNWSB 6,700,357 695,268 Drilling and capping of Drought Boreholes RVWSB 5,539,244 - Equiping of Drought Boreholes and Civil Works LVNWSB 72,986,528 94,907,892 Equiping of Drought Boreholes and Civil Works RVWSB 13,853,351 49,559,592 Equiping of Drought Boreholes and Civil Works LVSWSB 14,990,163 25,710,303 Rehabilitation/Expansion of Water Supplies for LVNWSB - Kwanza Water Supply 39,606,057 33,434,687 Rehabilitation/ Expansion of Water Supplies for RVWSB-Suswa Water Supply 39,402,320 31,190,902 13 Water and Sanitation Services Improvement Project-Additional Financing Reports and Financial Statements For the financial year ended June 30, 2018 Rehabilitation/Expansion of Water Supplies for RVWSB-Kapenguria Water Supply 10,610,670 28,153,853 Rehabilitation/Expansion of Water Supplies for RVWSB-Kapindaram 24,761,144 9,070,982 Construction of plinths/ gutters for plastic water tanks 10,0001ts for LVN, LVS AND RV WSBs 2,380,898 5,281,940 Total 230,830,732 278,005,419 Consultancy Carry out strategic drought mitigation studies/plan 22,416,224 8,045,260 Preparation of EIA & RAP for drought boreholes- LVNWSB - 1,695,553 Design for civil works and supervision of drought boreholes-LVNWSB 4,538,700 6,388,620 Preparation of EIA & RAP for drought boreholes- RVWSB - 2,500,000 Design for civil works and supervision of drought boreholes-RVWSB 7,200,000 - Preparation of EIA & RAP for drought boreholes- LVSWSB - 1,250,000 Design for civil works and supervision of drought boreholes-LVSWSB 5,476,575 6,720,248 Design and Supervision for Kwanza Water Supply Project 1,209,600 1,607,280 Design Review and construction supervision for Suswa,Kapindaram and Kapenguria Water Supply Projects in RVWSB 5,715,360 3,816,960 TA for EISIA and RAP for Kwanza water supply 3,762,178 2,171,711 TA for EISIA and RAP for Suswa, Kapenguria and Kapindarum 1,143,492 4,455,463 Consultancy for individual survey of Asega Dam 1,814,750 6,394,875 Total 53,276,879 45,045,970 Goods Provision of Mobile treatment units - 2,511,831 Total - 2,511,831 14 Water and Sanitation Services Improvement Project-Additional Financing Reports and Financial Statements For the financial year ended June 30, 2018 TOTAL GRANTS (WORKS+CONSULTANCY+GOODS+TRAINING) 284,107,611 325,563,220 8.8 Operating Costs 2018 2017 Kshs Kshs Fuel ,advertisements, staff travel,M&E and others 22,141,152 25,617,795 8.9 CASH AND CASH EQUIVALENTS C/FWD 2018 2017 Kshs Kshs Bank accounts (Note 12A) 277,048,216 251,395,195 Cash in hand - - Cash equivalents (short-term deposits) Outstanding imprests and advances (Note 12B) - 277,048,216 251,395,195 2018 2017 Kshs Kshs 8.10 Bank Accounts Local Currency Accounts Standard Chartered Bank [A/c No 0102002530002] 277,048,216 251,395,195 Total local currency balances 277,048,216 251,395,195 Total bank account balances 277,048,216 251,395,195 8.11 A Cash and cash equivalents b/fwd 2018 2017 Cash and bank balances b/fwd from previous period 251,395,195 250,011,975 8.11 B Retention/Contractors Deposit fund Included in the cash and bank balances is an amount recovered from contractors and held as retention 2018 2017 Kshs Kshs 15 Water and Sanitation Services Improvement Project-Additional Financing Reports and Financial Statements For the financial year ended June 30, 2018 Contractors retention held as at 30th June 109,260,820 63,448,603 8.12 Surplus/Deficit for the year Difference between receipts and payments 25,653,020 1,383,221 8.13 PENDING BILLS 2018 2017 Kshs Kshs Pending bills at reporting date 2,018,750 6,417,520 2,018,750 6 417 520 8.14 STATEMENT OF SPECIAL (DESIGNATED) ACCOUNT ACTIVITY The balances in the Project's Special Deposit Account as at 30th June 2018 are not included in the Statement of Financial Assets since they are below the line items and are yet to be drawn into the Project Account as a voted provision. Below is the Special Deposit Account (SDA) movement schedule which shows the flow of funds that were voted in the year. These funds have been reported as loans/grants received in the year under the Statement of Receipts and Payments. 2018 2017 USD USD OPENING BALANCE 5,739,458 3,308,652 Add; Total amount deposited by World Bank 2,239,879 6,430,806 TOTAL 7,979,337 9,739,458 Deduct; Total amount withdrawn: Transferred to Project Account 4,000,000 CLOSING BALANCE 7,979,337 5,739,458 The Special Deposit Account reconciliation statement has been attached as Appendix to support these closing balances 16 o�i о, � � � о� � � � � � w С д, ~ � ы '� с, о °' и � Е �т °� � ? � � w F � О a�i 0.-' � с°а � ° � w � ° о '� � � о � и � � � � � � � � � � с", оиi о о � a�i � � � � � ш � � 3 � гх R; � я. О > � � ,� 'С °и ''r �'С! � s.. bA N А�, �. рД а�"�i b°А .� С 4� � � О � �С� � � �' ° � � � ,v � � � G. � � ,с� � bA � w. N я+ а� W а> isи � у Ct Г3ч � О. �. р�, � О. С. 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