AUDIT REPORT ON THE ANNUAL FINANCIAL STATEMENTS OF PRIVATE SECTOR COMPETITIVENESS AND ECONOMIC DIVERSIFICATION PROJECT PHASE II (ADDITIONAL FINANCING) MINISTRY OF TRADE AND INDUSTRY FOR - THE YEAR ENDED 31 MARCH 2019 AUDITOR - GENLRAL P.O. BOX 502 MASERU 100 LESOTHO I-I MINISTRY OF TRADE AND INDUSTRY PRIVATE SECTOR COMPETITIVENESS AND ECONOMIC DIVERSIFICATION PROJECT II ADDITIONAL FINANCING FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31ST MARCH 2019. INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT: P144933 CREDITNO. IDA59610-LSO L I INTERNATIONAL DEVELOPMENT ASSOCIATION (IDA) CREDIT NO. 59610-LSO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDEDMARCH 31s 2019 TABLE OF CONTENTS A uditor's R eport .................................................................................... 1-4 IDA Additional Financing Sources and Uses of Funds by Components ($) ............... 5 IDA Additional Financing Sources and Uses of Funds by Components (M) ................ 6 IDA Additional Financing Sources and Uses of Funds Categories ($) ..................... 7 IDA Additional Financing Sources and Uses of Funds Categories (M) ................... 8 Schedule of W ithdrawal Applications ............................................................. 9 N otes to the Financial Statem ents ................................................................10-12 APPROVAL OF THE FINANCIAL STATEMENTS The attached financial-statements set out on page 5 to 12 were approved by the management of the Project on nd signed on its behalf by: PRINCIPAL SEGRETAKY PROJECT MANAGER MINISTRY OF TRADE AND INDUSTRY PRIVATE SECTOR COMPETITIVENESS PROJECT OFFICE OF THE AUDITOR - GENERAL P.O. BOX 502, MASERU 100 LESOTHO REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS OF PRIVATE SECTOR COMPETITIVENESS AND ECONOMIC DIVERSIFICATION PROJECT PHASE II (ADDITIONAL FINANCING) - MINISTRY OF TRADE AND INDUSTRY FOR THE YEAR ENDED 31 MARCH 2019 Opinion I have audited the financial statements of Private Sector Competitiveness and Economic Diversification Project Phase II (Additional Financing) ("Project") set on pages 5 to 12, which comprise sources and uses of funds as at 31 March 2019, Comparison of Budget and Actual Performance for the year then ended and other explanatory notes. In my opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Project as at 31 March 2019, and its financial performance and its cash flows for the year then ended in accordance with International Public Sector Accounting Standards (IPSASs). Basis for Opinion I conducted my audit in accordance with International Standards of Supreme Audit Institutions (ISSAIs). My responsibilities under those standards are further described in the Auditor's Responsibilities for independent of the Organisation in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to audit of the financial statements in Lesotho, and I have fulfilled my other ethical responsibilities in accordance with these requirements arid the IESBA Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Key Audit Matters Key audit matters are those matters that, in my professional judgment, were of most significance in my audit of the financial statements of the current period. There were no key audit matters identified during the course of audit. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with IPSA5s, 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 as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Project or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Project's financial reporting process. Auditor's Responsibilities for the Audit of the Financial Statements My 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 audit report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISSAIs 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 ISSAIs, I exercise professional judgment 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, 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. * Conclude on the appropriateness of 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 Project's ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my audit 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 continue as a going concern. * 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. I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit. I also provide those charged with governance 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. From the matters communicated with those charged with governance, I determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. I describe these matters in my audit report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, I determine that a matter should not be communicated in my report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. OFFICE OF TI AUITR GERA AUDITOR GEHERAL MONICA M. BESETSA DATV SEP 2019 For AUDITOR-GENERAL MASEUJ. LE....T.. Private Sector Competitiveness and Economic Diversification Project II- Lesotho SOURCES AND USES OF FUNDS BY COMPONENTS FOR IDA ADDITIONAL FINANCING IN US DOLLARS FOR THE YEAR ENDED 31ST MARCH, 2019 201712018 201812019 Cummulative Designation Opening Cash Balances IDA Additional Financing Designated Account 000 162850 17 162 850,17 IDA Addilional Financing Maloti Account 0 00 55 377 23 55 377 23 Sub total 0.00 2t8 227.40 213 227.40 Add Sources of Funds IDA Credit additional Financing 50000000 111535500 1 61535500 Direct Payments from IDA 1 58642011 158642811 Other Income 3454 42 3454,42 Reimbursement from IDA Phase II 20 122.90 20 122,90 Reimbursement from EDSP 3564819 35648,19 Sub total 800 000,00 2 761 008,62 3 281 008,02 Total Financing N0 000,00 2 979 238,02 3479 234,02 Less Uses of Funds by Component Improving Business Environment Business Reg Industry Licencing & Constr Permit Reform 872 916,33 872916,33 Improving Access to Finance 256629,32 256 62932 Trade Facilitation and Logistics 1 753,35 940 150,98 941 904.33 Sub total 1 753.35 2089 696,63 2 071 449,98 Support Economic Diversification Support Investment Promotion & Incr Linkages 13 030.61 93944.43 106 975,04 Support Tourism Sector 217 508.65 217 508,65 Expand Commercial Horticulture 18 110,61 108 296.21 126 406,82 Lesotho Enerpnse Assistance Programme 0,00 Sub total 31141,22 419749,29 450890,61 Project Implementauion Support Project Implementation Support 272 084 81 373 01386 645098,67 Sub total 272084,81 373 013,86 64 099867 Total Expenditures 304 979,38 2 82 459,78 3 167 439,16 Foreign Exchage Difference *23 206,78 .15 816,09 179 204,53 Closing Cash Balances IDA Addrional Financing Designated Account 162850,17 87 442 12 87 442 12 IDA Additional Financing Maltoi Account 55377,23 45 150,21 45150,21 Petty Cash Total Closing Cash Balances 218 227,40 132 592,33 132 592,33 GRAND TOTAL 600 000,00 2 979 238,02 3 479 236,02 Page 5 Private Sector Competitiveness and Economic Diversification Project II - Lesotho SOURCES AND USES OF FUNDS BY COMPONENTS FOR IDA ADDITIONAL FINANCING ONLY IN MALOTI FOR THE YEAR ENDED 31ST MARCH, 2019 2017/2018 201812019 Cummulative Designation M M M M M Opening Cash Balances IDA Additional F:nancing Designated Account 0,00 1 923455,93 1 923 455,93 IDA Adddonal F'nanc ng Moloti Account 000 654 071,53 654 071,53 Sub total 0,00 2 577 527,46 2 677 527,48 Add Sources of Funds IDA Credit addilinnal Financing 6 80 500.00 16 087 100,01 22 892 600,01 Direct Payments from IDA 21 814 25B,09 21 814 258,09 Other Revenue 49 246.04 49 246,04 Reimbursement from IDA Phase 242 199.22 242 199.22 Reimbursement from EDSP 414709.68 414 709.68 Sub total £ 80500.00 38 607 513,04 45 413 013,04 Total Financing 6805 500,00 41185 040,50 47 990 640,80 Less Uses of Funds by Component Improving Business Environment Business Reg. industry Licencing & Constr Permit Reform 11 822 226,45 11 822 226,45 Improving Access to Finance 3630362,83 3 630 362,83 Trade Facirlation and Logistics 2062872 13 160 197,71 13 180 026.43 Sub total 20 628,72 28 512 786,99 28 633 416,71 Support Economic Diversification Support Investment Promotion & Inc Linkages 153 35073 1 319 525,42 1 472 87615 Support Tourism Sector 3078417,54 3078 417 54 Expand Commera -lorticulture 21797930 1 516 581,95 1 734 561,25 Lesotho Enterprise Assistance Programme 0 00 0,00 Sub total 371 330,03 5 914 524,91 6 205 654,94 Project Implementation Support Project implementation Support 330938025 518646787 8 495 848,12 Sub total 3 309 380,25 5 186 467,87 6 495 848,12 Total Expenditures 3701 339,00 39 713 779,77 43 415 118,77 Foreign Exchage Difference 526 633.54 462 412,70 2 641 748,30 Closing Cash Balances IDA Additional Financing Designated ACCount 1 923 455 93 1 275220 90 1 275 220.90 IDA Additional Financing Maloli Account 654 071 53 658 452.53 658 452.53 Petty Cash Total Closing Cash Balances 2 577 527,46 1 933 673,43 1 933 673,43 GRAND TOTAL 6 601 500,00 41 165 040,60 47 990 540,50 Page 6 Private Sector Competitiveness and Economic Diversification Project - Lesotho SOURCES AND USES OF FUNDS BY CATEGORIES FOR IDA ADDITIONAL FINANCING IN US DOLLARS FOR THE YEAR ENDED 31ST MARCH 2019 Designation 2017/2018 201812019 Cummulative Opening Cash Balances IDA Addtr al Financing DesignatedAccount 6) 162 850,17 162550,17 IDA Addibnal Financing Maot, Account 0 f3 55 37723 55377,23 Sub total 0,00 216 227,40 216 227,40 Add Sources of Funds DA : redl Additional F nanci.g 5'. .i0J V I 115 355.00 161535500 Direct Payments from CA '566428.11 1556428,11 Othe revenue 3454.42 345442 Reimt.rsemenl fmm IDA Phase i 2012290 20122.90 Reimbursement Irom EDSP 35648,19 35646 19 Sub total w 000.00 2761 008,62 3 261 008.62 Total Financing 5 000,00 2 979 236,02 3 47 236,02 Less Uses of Funds by Category Goods 000 505294.29 50529429 Wwks 0,00 33 505,61 33505,61 Non Z-sulting Services 0.00 10 39.40 10730.40 Cons -11ing Services 280 354.2f 2 -39 170.62 2327524.87 Trar:nng Workshops 14 645 40 201 228.25 215873,65 Operating Cosa 197973 72 521.61 74 501 34 Matching Grant 0,00 Sub total 304 979,30 2 662 459.78 3 167 439,16 Total Expenditures 304 979,38 2062 459.78 3 187 439,16 roreign Exchange Dilference 2320678 156109 179 204.53 Closing Cash Balances DA Additons Financing Designated Account 162 850 17 67442 12 67442 12 .DA Additiona: Financing Maloti Account 5537723 45150,21 45150,21 Petty Cash 0,00 Total Closing Cash Balances 211 227,40 132 592.33 132 592.33 GRAND TOTAL 500 000,00 2 979 236,02 3 479 236.02 6. Other disclosures: 5.1 As at the end of the financial year, the Project had a tax liability of M I12,258.45; these were for payments made during the last days of the month. 12