THE UNITED REPUBLIC OF TANZANIA NATIONAL AUDIT OFFICE REPORT OF THE CONTROLLER AND AUDITOR GENERAL ON THE AUDIT OF FINANCIAL STATEMENTS OF THE SECOND WATER SECTOR SUPPORT PROJECT (WSSP II) UNDER THE MINISTRY OF WATER FOR 15 MONTHS UP TO 30TH JUNE, 2018 CREDIT NUMBER (REGULAR) 5950-TZ CREDIT NUMBER (REGULAR) 5949-TZ Controller and Auditor General, National Audit Office, Audit House, 4 Ukaguzi Road, P.O. Box 950, 41101 Tambukareli, Dodoma, Tanzania. Tel: 255 (026) 2321759, Fax: 255 (026) 2117527, E-mail: ocaq@nao.go.tz Website: www.nao.go.tz December, 2019 AR/WSSP II/CG/2017/18 TABLE OF CONTENTS A bbreviatio ns............................................................................................................................ iii 1.0 GENERAL INFORMATION..................................................................1 1.1. M andate ..................................................................................... 1 1.2. Vision, Mission and Core Values.......................................................... 1 1.3. Audit Objectives ........................................................................... 2 1.4. Audit Scope ................................................................................. 2 1.5. Audit Methodology ......................................................................... 2 2.0 INDEPENDENT REPORT OF THE CONTROLLER AND AUDITOR GENERAL .........4 ii Controller and Auditor General AR/ WSSP Il/CG/20 17/18 Abbreviations CAG Controller and Auditor General International Ethics Standards Board for IESBA Accountants' Code of Ethics for Professional Accountants IPSAS International Public Sector Accounting Standards International Standards of Supreme Audit Institutions NAO National Audit Office PAA Public Audit Act No.11 of 2008 URT United Republic of Tanzania WSSPII Second Water Sector Support Project Co r ad A r Giii Controtler and Auditor General AR/ WSSP Il/CGI20 17/18 1.0 GENERAL INFORMATION 1.1. Mandate The statutory duties and responsibilities of the Controller and Auditor General are given under Article 143 of the Constitution of the URT of 1977 (revised 2005) and in Sect. 10 (1) of the Public Audit Act No.11 of 2008. 1.2. Vision, Mission and Core Values Vision To be a highly regarded Institution that excels in Public Sector Auditing. Mission To provide high quality audit services that improves public sector performance, accountability and transparency in the management of public resources. Core Values In providing quality services, NAO is guided by the following Core Values: V Objectivity: We are an impartial public institution, offering audit services to our clients in unbiased manner. V Excellence: We are professionals providing high quality audit services based on standards and best practices. V Integrity: We observe and maintain high standards of ethical behaviour, rule of law and a strong sense of purpose. V People focus: We value, respect and recognize interest of our stakeholders. / Innovation: We are a learning and creative public institution that promotes value added ideas within and outside the institution. " Results Oriented: We are an organization that focuses on achievement based on performance targets. / Team work Spirit: We work together as a team, interact professionally, and share knowledge, ideas and experiences. We do this by:- * Contributing to better stewardship of public funds by ensuring that our clients are accountable for the resources entrusted to them; * Helping to improve the quality of public services by supporting innovation on the use of public resources; * Providing technical advice to our clients on operational gaps in their operating systems; * Systematically involve our clients in the audit process and audit cycles; and * Providing audit staff with appropriate training, adequate working tools and facilities that promote their independence. © This audit report is intended solely for the information of Ministry of Water and the World Bank. However, upon release by the World Bank, it becomes a public record and its distribution may not be limited Controller and Auditor General ARIWSSP IIICG/2017/18 1.3. Audit Objectives To obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error and are prepared in accordance with an applicable financial reporting framework; and whether laws and regulations have been complied with. 1.4. Audit Scope The audit was carried out in accordance with the International Standards of Supreme Audit Institutions (ISSAIs) and other audit procedures as were deemed appropriate under the circumstances. This covered the evaluation of the effectiveness of the financial accounting system and internal control over various activities of the Ministry of Water. The audit was conducted on a sample basis; therefore, the findings are confined to the extent that records, documents and information requested for the purpose of the audit were made available to me. Audit findings and recommendations arising from the examination of the accounting records, appraisal of the activities as well as evaluation of the Internal Control System which requires management's attention and actions, are set out in the Management Letter issued separately to the Ministry of Water. As auditor, I am not required to specifically search for fraud and therefore, my audit cannot be relied upon to disclose all such matters. However, my audit was planned in such a way that I would have reasonable expectations of detecting material errors and misstatement in the financial statements resulting from irregularities including fraud. The responsibility for detection, prevention of irregularities and the maintenance of an effective and adequate system of internal control rests with the management of the Ministry of Water. 1.5. Audit Methodology My audit approach included tests of the accounting records and other procedures in order to satisfy the audit objectives. My audit procedures included the following: * Planning the audit to identify and assess risks of material misstatement, whether due to fraud or error, based on an understanding of the entity and its environment, including the entity's internal controls. * Obtain sufficient appropriate audit evidence about whether material misstatements exist, through designing and implementing appropriate responses to the assessed risks. 2 Controller and Auditor General AR/WSSP II/CG/2017/18 * Form an opinion on the Financial Statements based on conclusions drawn from the audit evidence obtained. 3 Controller and Auditor General AR/WSSP ll/CGI2017/18 2.0 INDEPENDENT REPORT OF THE CONTROLLER AND AUDITOR GENERAL Permanent Secretary, Ministry of Water, Government City, Maji Street, P. 0. Box 456., DODOMA. Report on the Audit of Financial Statements for Second Water Sector Support Project (WSSP II) the financial year ended 30th June, 2018 Unqualified Opinion I have audited the accompanying 15 months Financial statements of Second Water Sector Support Project (WSSPII) which comprise the statement of financial position as at 30th June, 2018 and the statement of financial performance, the statement of changes in net assets the cash flow statement and the statement of comparison of budget and actual amounts for the year then ended, as well as the notes to the financial statements, including a Summary of significant accounting policies. In my opinion, the accompanying Financial Statements present fairly in all material respects, the Financial Position of Second Water Sector Support Project (WSSP II) as at 30th June, 2018, and its financial performance and its cash flows for the period then ended in accordance with International Public Sector Accounting Standards (IPSAS) Accrual basis of accounting and in the manner required by the Public Finance Act, 2001 (revised 2004). 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 the Audit of the financial statements section of my report. I am independent of Water Sector Support Project (WSSP II) 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 my audit of the financial statements in Tanzania, and I have fulfilled my other ethical responsibilities in accordance with these requirements and the IESBA Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. 4 Controller and Auditor General AR/WSSP IIICGI2017/18 Information Other than the Financial Statements and Auditor's Report Thereon Management is responsible for the other information. The other information comprises of the Statement by Permanent Secretary and the Declaration by the Head of Finance but does not include the financial statements and our auditor's report thereon. My opinion on the Financial Statements does not cover the other information and I do not express any form of assurance conclusion thereon. In connection with my audit of the financial statements, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work I have performed on the other information that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard. 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. These matters were addressed in the context of my audit of the financial statements as a whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters. I have determined that there are no key audit matters to communicate in my report. 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 IPSASs, 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 entity'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 entity or to cease operations, or has no realistic alternative but to do so. 5 Controller and Auditor General ARIWSSP II/CGI2017/18 Those charged with governance are responsible for overseeing the entity'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 auditor's 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 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. In addition, Sect. 10 (2) of the PAA No.11 of 2008 requires me to satisfy myself that, the accounts have been prepared in accordance with the appropriate accounting standards. Further, Sect. 48(3) of the Public Procurement Act No.7 of 2011 requires me to state in my annual audit report whether or not the audited entity has complied with the provisions of the Law and its Regulations. Report on Other Legal and Regulatory Requirements Compliance with the Public Procurement Act, 2011 In view of my responsibility on the procurement legislation and taking into consideration the procurement transactions and processes I have reviewed as part of this audit, I state that, Second Water Sector Support Project (WSSP 11) Project procurement transactions and processes have generally complied with the requirements of the Public Procurement Act No.7 of 2011 and its underlying Regulations of 2013 as amended in 2016. Charles E. KiKre, CONTROLLER AND AUDITOR GENERAL 4th January, 2020 6 Controller and Auditor General AR/CGIWSSP 11/2018/19 National Audit Office of Tanzania, Audit House, 4 Ukaguzi road, P.O BOX 950, 41104 TAMBUKARELI DODOMA. Tel: 255 (026) 2321759 Fax: 255 (026) 2117527 Email: ocag@nao.go.tz Website: www.nao.go.tz Copy to: The Chief Secretary, State House, 1 Julius Nyerere Road. Chamwino, P.O. Box 1102, 40400 DODOMA Permanent Secretary and Paymaster General, Ministry of Finance and Planning, Treasury Square Building, 18 Jakaya Kikwete Road, P. O. Box 2802, 40468 DODOMA. World Bank Representative, 50 Mirambo Street, African Development Bank Group, P.O. Box 2054, DAR ES SALAAM. 7 Controller and Auditor General AR/CG/WSSP 11/2018/19 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER (VOTE49) SECOND WATER SECTOR SUPPORT PROJECT FINANCIAL STATEMENTS MINISTRY OF WATER (VOTE 49) FOR 15 MONTHS ENDED 30TH JUNE, 2018 PAGE Statement of the Permanent Secretary 1-10 Statement of Management Responsibility 11 Declaration by the Head of Finance 12 Commentary on the Financial Statements 13-16 FINANCIAL STATEMENTS Statement of Financial Position 17 Statement of Financial Performance 18 Statement of Changes in Net Assets/Equity 19 Statement of Cash Flows 20 Statement of Comparison of Budget and Actual Amounts 21 Notes to the Financial Statements 22-35 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER (VOTE49) SECOND WATER SECTOR SUPPORT PROJECT FINANCIAL STATEMENTS MINISTRY OF WATER (VOTE 49) FOR 15 MONTHS ENDED 30TH JUNE, 2018 ABBREVIATIONS AFD Ag6nce Frangais6 de D6velopment BWBs Basin Water Boards BWOs Basin Water Offices DAWASA Dar es salaam Water Supply and Sewerage Authority DAWASCO Dar es salaam Water Supply and Sewerage Corporation DDCA Drilling and Dams Construction Agency DUWSSs Department of Urban Water Supply and Sanitation ESIA Environmental and Social Impact Assessment EWURA Energy and Water Utilities Regulatory Authority FY Financial Year FYDP Five-Year Development Plan IDA International Development Association IDB Internal Drainage Basin lAs Implementing Agencies IFMS Integrated Financial Management System IPSAS International Public Sector Accounting Standards IWRM Integrated Water Resource Management IWRMD Intergrated Water Resources Management Development plan LGAs Local Government and Authorities MIS Management Information System MKUKUTA Mkakati wa Kukuza Uchumi na Kuondoa Umaskini Tanzania MoEST Ministry of Education, Science and Technology MoFP Ministry of Finance and Planning MoHCDGEC Ministry of Health, Community Development, Gender, Elderly and Children MoU Memorandum Of Understanding MOW Ministry of Water NAWAPO National Water Policy NRW Non Revenue Water NWIF National Water Investment Fund NWSDS National Water Sector Development Strategy RSs Regional Secretariat SDGs Sustainable Development Goals WUA Water User Association WRM Water Resources Development WSSA Water Supply and Sanitation Authority iv THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER (VOTE49) SECOND WATER SECTOR SUPPORT PROJECT FINANCIAL STATEMENTS MINISTRY OF WATER (VOTE 49) FOR 15 MONTHS ENDED 30TH JUNE, 2018 ABBREVIATIONS (CONTINUED) WSDP Water Sector Development Program WB World Bank SWAP Sector Wide Approach to Planning TDV Tanzania Development Vision TZS Tanzanian Shilling UWSAs Urban Water Supply Authorities THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER - VOTE 49 SECOND WATER SECTOR SUPPORT PROJECT FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30TH JUNE, 2018 STATEMENT BY THE PERMANENT SECRETARY 1. INTRODUCTION The financial statements for 15 months ended 30th June 2018 is prepared in pursuant to Section 25(4) of the Public Finance Act, 2001 (revised 2004) and its regulations and Accounting Circular No.3 of 2017/18 on closure of financial year. The report provides comprehensively explanations of the physical and financial achievements of the Water Sector Support Project 11 attained during the reported period. The Ministry excelled to implement the earmarked project and activities with the best practice in financial management and accountability, fiscal control and provision of quality services to customers in order to achieve the strategic objectives. The set of Financial Statements comprehensively provide the relevant information concerning the approved budget, fund released, expenditure and operational achievements made during 15 months period ended 30th June, 2018. Management Structure The Ministry of Water is headed by a Minister under the assistance of the Deputy Minister. Permanent Secretary is the Accounting Officer who is overall in charge of day to day activities assisted by the Deputy Permanent Secretary. The Ministry has seven divisions and five units led by Directors and Heads of Unit respectively. Divisions of the Ministry of Water comprise of; Water Resources and Management, Urban Water Supply and Sanitation, Policy and Planning, Administration and Human Resources Management, Procurement Management, Programme Coordination Design and Delivery Unit and Water Quality Services. Furthermore the five Units include; Finance and Accounts, Government Communication, Legal, Internal Audit, Central Stores. THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER - VOTE 49 SECOND WATER SECTOR SUPPORT PROJECT FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30TH JUNE, 2018 STATEMENT BY THE PERMANENT SECRETARY (CONTINUED) 2. IMPLEMENTATION OF THE APPROVED BUDGET EXPENDITURE AND REVENUE ESTIMATES FOR 2017/2018 This report presents an overview of the financial performance of the WSSP II for 15 months period ended 30th June 2018 based on financial transactions carried out during that period under review. During the 15 months period ended 30th June, 2018 the project received a total of TZS 12,696,466,552.45 out of the budgeted funds of TZ 141, 046,596,133 and utilized TZS 265,037,545.60 during the period under review. The implementation of the activities was carried out as per approved Annual Work plan and the activities which were not implemented were carried forward to the subsequent year. 2 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER - VOTE 49 SECOND WATER SECTOR SUPPORT PROJECT FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30TH JUNE, 2018 STATEMENT BY THE PERMANENT SECRETARY (CONTINUED) Financing of WSSP II Total financing of the Project amounts to USD 230m made up of IDA US$225m (US$100m from Regular Credit and US$125m from Scaling Up Facility -SUF) and GoT US$5m. Project components are as shown in the table below: Financing Component Sub-Component IDA GoT Component 1: 1.1 Strengthening WRM Integrated Water Institutions US$13.3m Resources 1.2 Improvement WRM Management- Information-Hydromet Services US$15.5m USD50m 1.3 Water Security and Conservation US$21.2m Component 2: Dar 2.1 Investment in Water Supply es Salaam Water Improvement US$56m US$1m Supply 2.2 Performance Based NRW Improvement- Reduction in Dar es Salaam US$20m US$87m 2.3 Institutional restructuring/Reform and Utility_ _ US$1Om Component 3: Dar 3.1 Waste Water Treatment and es Salaam Sewerage Investment US$65m US$2m Sanitation improvement US$84 3.2 Off-Grid Sanitation US$15m US$2m Component 4: Project 4.0 To provide capacity building Management and and Technical Assistance to Implementation MoW, DAWASA and Basin Water Support US$9m Offices US$9m TOTAL US$225m US$5m 3 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER - VOTE 49 SECOND WATER SECTOR SUPPORT PROJECT FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30TH JUNE, 2018 STATEMENT BY THE PERMANENT SECRETARY (CONTINUED) 2.1. Expenditures In the financial year 2017/18 the project received a total of TZS 12,696,466,552.45 which comprise of TZS 1,106,856,450 as project preparation advance and TZS 11,589,610,102.45 as the first disbursement and TZS 265,037,545.60 where utilized, the unspent amount was then carried forward to the next financial year for its implementation. Summary below depicts the analysis for the financial year 2017/18 2017/18 Budget Actual 141,044,596,181 12,696,466,552.45 3. Internal Control System Accounting System is fully computerized under Integrated Financial Management System (IFMS). It operates by using EPICOR Accounting Software package which is controlled by the Ministry of Finance and Planning. The Ministry also has developed Water Sector Management Information system (MIS) which is the web based system used to convert data ( budget, plans, procurement activities, tenders, contracts and financial data) from internal and external sources into information, that is in an appropriate form of report, to decision makers and officers at all levels from all Implementing Agencies so as to enable them make timely and effective decisions for planning, directing and controlling the activities for which they are responsible especially in managing WSSP 11 which is under activities WSDP II a, projects and resources. 4 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER - VOTE 49 SECOND WATER SECTOR SUPPORT PROJECT FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30TH JUNE, 2018 STATEMENT BY THE PERMANENT SECRETARY 4. Operational Achievements During the 15 months ended 30th June, 2018 the Ministry recorded some achievements through implementation of water projects as shown here under:- i. Consolidation of Data, information and models on water resources; nationally and at basin level and preparation of Intergraded Water Resources Management Development Plan (IWRMD Plans). Interim report accepted. ii. Ongoing contract for preparation of the Financing option for the Water resources Management (Inception report accepted). iii. Assessment of status and challenges for 137 hydromet stations in all Basins for rehabilitation and data management. iv. Conducting water quality monitoring for water supplied to the communities by WSSAs, LGAs and strategic water bodies to safeguard public health. v. Preparation of User Requirement Specification for Laboratory Information Management System. 6.Challenges and constraints Ministry experienced a number of challenges and constraints during the course of implementing of WSSP 11 2017/2018 budget and plan;- i. Pollution of water sources by human activities ii. Decline of water resources iii. Inadequate number of staff in all water quality laboratories affects performance of water quality activities 5 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER - VOTE 49 SECOND WATER SECTOR SUPPORT PROJECT FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30TH JUNE, 2018 STATEMENT BY THE PERMANENT SECRETARY (CONTINUED) 4.2. Future Outlook/Way Forward The Ministry will continue to put more emphasis on the following priority areas as stipulated in the Ministry Strategic Plan:- i. Effective support for investment and institutional development - capacity building, ensuring National Basins Boards (NWBs), catchment water committees and WUAs are fully functional and strengthening of multi-sectoral dialogue forums on water resources management to be done. ii. Develop guidelines for operation and maintenance and harmonize with project design manual. iii. Building capacity to MoW and its Implementing Agencies on water supply and sanitation projects. iv. Enhance collaboration between Ministry of Water, MOFP and PO - RALG and strict monitoring of funds for intended purpose; v. Controlling physical losses through rehabilitation of infrastructure and review of regulatory frameworks to illegal connections and vandalism of water infrastructure; vi. Promoting private sector involvement through PPP initiatives in the water sector. 6 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER - VOTE 49 SECOND WATER SECTOR SUPPORT PROJECT FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30TH JUNE, 2018 STATEMENT BY THE PERMANENT SECRETARY (CONTINUED) 5. COMMITTEES OF THE MINISTRY The Ministry has committees which aim to facilitate enhancement of proper governance and management of public resources. 5.1. Audit Committee The Audit Committee of the Ministry was established by the Accounting Officer as stipulated in regulation 30 of the Public Finance Regulations (2004). The Committee meets on quarterly basis; however when it is necessary, extra-ordinary meetings are convened. Composition of Audit Committee of the Ministry is outlined below: S/N Name of Member Designation Position Qualification I Mrs. Nadhifa Kemikimba Director of WQ Chairman Master degree Water Quality Mgt 2 Mr. Eng. Jackson Mtazamba Assistant Director-DRWS Member Master in Engineering 3 Mr Paul Sulley Assistant Director Policy Member Master in and Planing Economics 4 Mr Robert Biah CIA Medical Store External CPA(T) Deportment Member 5 Mrs Maua Monella HRO Secretary Master of Public -- - --- -- _____ _____ Adm n in HRM Objectives of the Committee The committee's objectives are to assist the Accounting Officer to enhance internal control by fulfilling stewardship, leadership and control responsibility in managing resources of the Ministry. Responsibilities and duties of Audit Committees is stipulated in Regulation 32(1) (a)-(g) of the Public Finance Act 2001 (amended in 2004). 5.2 Inspection and Acceptance Committee The committee was established to cater for the functions established under The Regulation 244 and 245 of the Public Procurement Regulations, 2016; which states that the accounting officer shall for each tender, including call off orders, appoint a goods inspection and acceptance committee which shall: 7 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER - VOTE 49 SECOND WATER SECTOR SUPPORT PROJECT FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30TH JUNE, 2018 STATEMENT BY THE PERMANENT SECRETARY (CONTINUED) a) inspect the goods at the office of the procuring entity or, user, or at the site specified in the contract and any inspection at any other site shall be with a prior consent in writing of the procuring entity; b) inspect and count the goods in order to ascertain whether they are correct and complete in accordance with the agreement; 5.3 Ministerial Tender Board Section 31 of Public Procurement (Amendment) Act, 2016 requires a public body to establish a tender board for procurement of goods, services, works and disposal of assets. The Ministerial Tender Board has been appointed by the Permanent Secretary to oversee the procurement activities in the Ministry as required by Public Procurement (Amendment), Act 2016. Members of the Board which were appointed under S31 (2) of Public Procurement (Amendment) Act, 2016 are as listed below; S/N Name of Member Designation Position 1. Mr. Barnabas Ndunguru Director Administration Chairman 2- Mr. Hamza Sadiki Director-WR Member 3. Mr. Ahadi E. Msangi Chief Accountant Member 4. Mrs. Catherine Bamwenzaki Assistant Director-RWS Member 5. Mr. Chacha Chandy Assistant Director-WQ Member 6. Eng. Christian William Assistant Director-DWSS Member 7. Mrs. Agnela Nyoni Director Policy and Planning Member 8 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER - VOTE 49 SECOND WATER SECTOR SUPPORT PROJECT FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30TH JUNE, 2018 STATEMENT BY THE PERMANENT SECRETARY (CONTINUED) 5. Employees Welfare The Ministry recognises the significance of improving the welfare of its staff and has all along facilitated various staff welfare programs. A healthy relationship continues to exist between Management and trade union, the Workers Union (TUGHE) is well recognised; their views and concerns are always discussed in Workers Council, acknowledged and taken into account in decision making and implementations. Also, employees are closely involved in major changes affecting their performance and welfare through meetings, briefings and internal communications. Through training opportunities, the Ministry offers sponsorship to its employees on both short and long term courses within and outside the country on various disciplines to ensure that staff are adequately trained at all levels. 6. Disabled Persons It is the Ministry's policy to give equal employment opportunity to disabled persons for vacancies they are able to fill. The Ministry takes all the necessary measures possible to ensure the disabled staffs are well facilitated. Furthermore, infrastructures are designed to accommodate an easy access by disabled persons. 7. Cross-Cutting Issues The Ministry has been implementing HIV/AIDS interventions programmes in work places by providing effective education and necessary care support to people living with HIV/AIDS. The Ministry has conducted various campaigns fostering HIV/AIDS initiatives measures, mainstreaming gender balance, environmental and related issues. HIV/AIDS spread protections and taking care for infected employees by providing food and nutrient allowances. Also, the Ministry involve stakeholders in various matters such as formulation of policies, regulations and guidelines. 9 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER - VOTE 49 SECOND WATER SECTOR SUPPORT PROJECT FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30TH JUNE, 2018 STATEMENT BY THE PERMANENT SECRETARY (CONTINUED) 8. CONCLUSION The recorded operational achievements were possible through cooperation of staff and stakeholders of the Ministry. The Ministry will continue to implement priority areas as per the frameworks outlined in the Medium Term Strategic Plan and improve working systems and financial management by taking into account the consideration of good governance, accountability and transparency. NAME: Prof. Kitila A Mkumbo DATE; 03/01/2020 PERMANENT SECRETARY 10 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER - VOTE 49 SECOND WATER SECTOR SUPPORT PROJECT FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30TH JUNE, 2018 STATEMENT OF MANAGEMENT RESPONSIBILITY Management of the Ministry of Water is responsible for the preparation of the Financial Statements, which give a true and fair view of the entity's state of affairs and its operating results in accordance with International Public Sector Accounting Standards (IPSAS) on Accrual Basis, in conformity with the provision of the Public Finance Act No. 6 of 2001 section 25 (2) & (4) (as revised in 2004). This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and presentation of the financial statements that are free from material misstatement, whether on account of fraud or error, selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances which provide reasonable assurance that the transactions recorded are within statutory authority, and properly record the use of all public financial resources accordingly. To the best of our knowledge the system of internal control has operated adequately throughout the reporting period and that the records and underlying accounts provide a reasonable basis for preparation of the Financial Statements for 15 months ended 30th June, 2018. Procurement of goods, works and consultancy and non-consultancy service to the extent that they are reflected in these financial statements have been done in accordance with the Public Procurement (Amendment) Act, 2016 and amendment Regulations 2016. We accept responsibility for the integrity of these financial statements, the information they contain and their compliance with the Public Finance Act No. 6 of 2001 (as revised in 2004) and its Regulations; International Public Sector Accounting Standards (IPSAS) Accruals basis; and Guidelines issued or may be issued from time to time by Paymaster General and Accountant General. In our opinion, nothing has come to the attention of the Management that the financial statements doesn't present fairly all material respect of the operations of the entity and will not remain a going concern for the next twelve months from the date of these statements. Prof. Kitila A Mkumbo ' Date: 03/01/2020 11 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER - VOTE 49 SECOND WATER SECTOR SUPPORT PROJECT FINANCIAL STATEM ENTS FOR 15 MONTHS ENDED 30TH JUNE, 2018 DECLARATION BY THE HEAD OF FINANCE The National Board of Accountant and Auditors (NBAA) according to the power conferred under the Auditors and Accountants (Registration Act. No. 33 of 1972 as amended by act No. 2 of 1995, requires the financial statements to be accompanied with the declaration issued by the head of Finance and Accounting responsible for the preparation of financial statements of the entity concerned It is a duty of the professional Accountant to assist the board of Management to discharge the responsibility of preparing the financial statements of the entity showing true and fair view of the entity position and performance with accordance with applicable international Accounting Standards and statutory financial reporting requirements. Full legal responsibility for the preparation of financial statement rests with the Management under Directors Responsibility statement on earlier page. . /. ....... being the Head of Finance /Accounting Of the Ministry of Water (Vote 49) hereby acknowledge my responsibility of ensuring that financial statements for 15 months ended 30th June, 2018 have been prepared in compliance with applicable accounting standards and statutory requirements. I thus confirm that the Financial Statements give true and fair view position of WSSP II under the Ministry of Water (Vote 49) as that on sate and that they have been prepared based on properly maintained financial records. Signed by: AHADI E MSANGI, Position CHIEF ACCOUNTANT NBAA membership No. ACPA 2734 Date 03/01/2020 12 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER - VOTE 49 SECOND WATER SECTOR SUPPORT PROJECT FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30TH JUNE, 2018 COMMENTARY ON THE FINANCIAL STATEMENTS 1. INTRODUCTION This part of a report provides insightful narrative information in regard to financial results pertaining to 15 months ended 30th June 2018 for the Second Water Sector Support Project (WSSP II). The WSSP 11 implemented its annual budget based on prepared and approval annual work plan thus any commitments which has not been implemented in the year under review are being carried forward in the subsequent year for implementation. An over view of financial performance of WSSP 11 for 15 months period ended 30th June 2018 is outlined in the table below: 2017/18 Budget IActual 141,044,596,182.00 12,696,466,552-45 Percentage of Expenditure on Receipt The project was signed on 20th March, 2017 with the effective date of 90 days after signing the contract which was June, 2017. The first disbursement of TZS 1,106,856,450 was rnade on 17 April, 2017 as advance for project preparation. During the financial year 2017/18 the Project received TZS 11,589,610,102.00 on 28th June, 2017 two days before the closure of the financial year and this was mainly due to a number of reasons including the merger of DAWASA and DAWASCO which require restructuring and amendments of the financing agreements before disbursement of funds from the World Bank thus contributing to low percentage on the utilization of Project funds. Implementation of the WSSP 11 is based on activities most of which require procurement procedures to be followed and approval from the World Bank obtained for their implementations. Most contracts were not signed during the period under review which further contributed to low utilisation of funds. 13 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER - VOTE 49 SECOND WATER SECTOR SUPPORT PROJECT FINANCIAL STATEMENTS oTH 2018 FOR 15 MONTHS ENDED 30 STATEMENTS (Continued) COMMENTARY ON THE FINANCIAL 2. Receipts Exchequer ReceiptslEarmarked Project view Was TZS The total Fund received during the period under e 106,856,450 as 11,589,610,102.45 as the first project disbursement and TZS 1 a project preparation advance. 3. SUPPLIES AND CONSUMABLE GOODS nt TZS During the 15 months ended 30th june 2018, the ySSP . spe 21,000,000 under the supplies and consumable goods category. 4. CURRENT GRANTS TRANSFERS AND SUBSIDIES. No transfer had been made by WSSP 11 in the 15 months period that ended 30th June 2018. O RPRY LN N 5. PURCHASES AND CONSTRUCTION OF PROPERTY, PLANT AND EQUIPMENT ent to acquire or construct During the period under review, no funds were sp Property, Plant and Equipment. 6. OTHER EXPENSES In 15 months that ended 30th June 2018 TZS 244,037,545.60 was incurred under other expenses being consultancy services fees. 7. LIABILITIES AT THE END OF THE YEAR period ended There were no outstanding liabilities reported in the 15 months 30th June 2018. 8. CONTINGENT LIABILITIES the Ministry during the 15 months No Contingent liabilities were reported by ended 30' June 2018 14 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER - VOTE 49 SECOND WATER SECTOR SUPPORT PROJECT FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30TH JUNE, 2018 STATEMENTS (Continued) COMMENTARY ON THE REVISED FINANCIAL 9. COMMITMENTS The Ministry has great commitments in ensuring that all signed contracts amounting to TZS 2,224,476,568.3 are executed as planned in order to achieve WSSP II objectives. A detail of signed contracts is provided under Note 27. 10. LOSSES WSSP II had no losses during the period ended 30th June 2018 11. GUARANTEES No guarantee contracts were enter in the period under review. 12. EXTRA ORDINARY ITEMS There were no extra ordinary items, which have been recorded by the project. 13. RELATED PARTY DISCLOSURES The WSSP 11 has key personnel who are paid salaries by the Ministry hence no statutory allowance paid from the project funds. 14. PURCHASE OF INTANGIBLE ASSETS In the 15 months period ended 30th June 2018 there was no funds spent on purchasing intangible assets. 15. REPAYMENT OF LOAN AND INTEREST During the period under review no repayment of Loan/interest has been made. 16. POLITICAL AND CHARITABLE DONATIONS There was no contribution/donation to either political parties or charitable organization during the 15 months ended 30th June 2018. 15 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER - VOTE 49 SECOND WATER SECTOR SUPPORT PROJECT FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30TH JUNE, 2018 COMMENTARY ON THE REVISED FINANCIALSTATEMENTS (Continued) 17. CONCLUSION The Ministry continues to improve financial management and compliance with IPSAS accrual basis during the reporting period for the 15 months ended 30th June, 2018. This has enhanced the financial reporting in Governance and provides transparency of financial information. Prof. Kitila A. Mkumbo Date 03/01/2020 ACCOUNTING OFFICER 16 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER - VOTE 49 SECOND WATER SECTOR SUPPORT PROJECT FINANCIAL STATEMENTS FOR 15 MONTS ENDED 30 JUNE, 2018 STATEMENT OF FINANCIAL POSITION AS AT 30TH JUNE, 2018 NOTES ASSETS TZS Current assets Cash and Cash equivalent 24 12,503,628,812.64 Restricted Asset- LC 0.00 inventories 0.00 Prepayments 0.00 Trade and other receivables 0.00 12.503,628,812.64 Non-current assets Property, Plant and Equipment 0.00 0.00 Total Assets 12,503,628,812.64 LIABILITIES Current liabilities Trade and Other Payables 0.00 Deferred Income Revenue Nature 21 12,431,429,006.85 12,431,429,006.85 Non-current liabilities Deferred Grants Income 0.00 0.00 Total liabilities 12,431,429,006.85 Net assets 72,199, 805.79 NET ASSETS Accumulated Surpluses/(Deficits) 72,199,805.79 TOTAL NET ASSETS 72,199805.79 Prof. Kitila A Mkumbo Date 03/01/2020 ACCOUNTING OFFICER 17 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER - VOTE 49 SECOND WATER SECTOR SUPPORT PROJECT FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30 JUNE, 2018 STATEMENT OF FINANCIAL PERFOMANCE FOR THE 15 MONTHS ENDED 30TH JUNE, 2018 Details NOTES TZS Revenue Amortized Revenue from non-exchange 20 265,037,545.60 transactions Gain on Exchange Translations 26 72,199,805.79 Total Revenue 337,237,351.39 Expenses Accrued Expenses 0.00 Supplies and Consumables 22 21,000,000.00 Current Grants, Transfers and Subsidies 0.00 Other Expenses 23 244,037,545.60 Depreciation Expenses 0.00 Total expenses 265,037,545.60 Surplus/(Deficit) 72,199,805.79 Prof. Kitila A Mkumbo Date 03/01/2020 ACCOUNTING OFFICER 18 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER - VOTE 49 SECOND WATER SECTOR SUPPORT PROJECT FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30 JUNE, 2018 STATEMENT OF CHANGE IN NET ASSETS FOR THE 15 MONTHSENDED 30TH JUNE, 2018 Description Accumulated Total Surplusl(Deficit) Surplus/(Deficit) during the period 72,199,805.79 72,199,805.79 Closing Balance as at 30th June,2018 72,199,805.79 72,199,805.79 Prof.Kitila A Mkumbo Date 03/01/2020 ACCOUNTING OFFICER 19 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER - VOTE 49 SECOND WATER SECTOR SUPPORT PROJECT FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30 JUNE, 2018 STATEMENT OF CASH FLOW FOR THE 15 MONTHS ENDED 30TH JUNE, 2018 Notes TZS CASH FLOWS FROM OPERATING ACTIVITIES Receipts Fund received from the World Bank 25 12,696,466,552.45 Payments Supplies and Consumables 22 (21,000,000.00) Other Expenses 23 (244,037,545.60) Net cash flows from operating activities 12,431,429,006.85 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of PPE 0.00 Net cash flows from investing activities 0.00 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long term borrowing 0.00 Net cash flows from financing activities 0.00 Net increase in cash and cash equivalents 12,431,429,006.85 Cash and cash equivalents at the beginning of the year 0 Gain due exchange rate fluctuations 72,199,817.32 Cash and cash equivalent at the end of the year 12,503,628,824.17 Prof. Kitila A. Mkumbo Date 03/01/2020 ACCOUNTING OFFICER 20 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER - VOTE 49 SECOND WATER SECTOR SUPPORT PROJECT FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30 JUNE, 2018 STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNT FOR THE 15 MONTH ENDED 30TH JUNE, 2018 Receipts Budgets Actual Difference IDA/WB 141,046,596,133 12,696,466,552.45 128,350,129,030.55 GoT 0.00 0.00 0.00 Total 141,046,596,133 12,696,466,552.45 128,350,129,580.55 Payments Water Resources 14,624,798,216 244,037,545.60 9,438,251,520.10 Wami/Ruvu Basin 9,123,289,209 0.00 9,123,289,209.00 Water Quality 1,191,750,220 0.00 1,191,750,220.00 DAWASA 111,880,615,493 0.00 111,880,615,493.00 Project Mgt 4,226,142,995 21,000,000.00 4,205,142,995.00 Total 141,046,596,133 265,037,545.60 140,781,558,587.40 Prof. Kitila A. Mkumbo 03/01/2020 ACCOUNTING OFFICER 21 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER (VOTE49) WATER SECTOR DEVELOPMENT PROGRAMME FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30 JUNE, 2018 NOTES TO THE FINANCIAL STATEMENTS 1. GENERAL INFORMATION The Ministry of Water and is located along the Maji street area in Dodoma City: Website www.maji.go.tz.and email iecu@aMOW1.qogtz PLACES OF BUSINESS BANKERS I Maji Street Bank of Tanzania, P.0 Box 456 2 MIRAMBO STREET DODOMA P.0 BOX 2939, 11884 DAR ES SALAAM LAWYER BANKERS II Attorney General, National Microfinance Bank (NMB) Bank House Branch B 9Samora- Avenue DAR ES SALAAM DAR-ES-SALAAM ACCOUNTING OFFICER, BANKERS III Prof. Kitila A Mkumbo, CRDB Bank Ltd, Government City Azikiwe Premier, Gormn City P. 0. Box 268, P.O Box 456 DAR-ES-SALAAM DODOMA AUDITORS Controller and Auditor General, National Audit Office, Audit House 4 Ukaguzi Road P.0 Box 950, 41104 Tambukareli Dodoma, Tanzania 22 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER (VOTE49) WATER SECTOR DEVELOPMENT PROGRAMME FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30 JUNE, 2018 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 2. BASIS OF PREPARATION These financial Statements comply with International Public Sector Accounting Standards for accrual basis of Accounting; the measurement bases applied is historical cost The financial statements have been prepared on a going concern basis. Moreover, the financial Statements have been prepared in accordance with Public Finance Act of 2001 (revised 2004), and Comply with the requirements of International Public Sector Accounting Standards (IPSAS). The financial statements are presented in Tanzania Shillings (TZS) 3. AUTHORIZATION DATE The Financial Statements were authorized for sue on ________ 2019 by: Prof Kitila A Mkumbo Accounting Officer 4. REPORTING ENTITY The Financial Statements for WSSP II are under the Ministry of Water (Vote 49) which encompasses the reporting entity as specified in the relevant legislation and requirement of section 25 of Public Finance Act No. 6 of 2001 as revised in 2004 and Section 4.09 (b) of the Financing Agreement between the United Republic of Tanzania and International Development Association for the implementation of Water Sector Support Project II (WSSP II) using common implementation arrangement. 23 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER (VOTE49) WATER SECTOR DEVELOPMENT PROGRAMME FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30 JUNE, 2018 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 5. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS 5. 1 Sustainability of Service Delivery The Financial Statements have been prepared in the assumptions that the entity will continue in operation and meet its statutory for the foreseeable future. Nothing has come to our attention to indicate that the entity will not remain sustainable to provide the service of implementing the project for at least the next twelve months from the date of this statement. 5.1 Materiality Material omissions or misstatement of items are material if could, individually or collectively, influence the decisions of users made on the basis of the Financial Statements. Materiality depends on the nature and size of omission or misstatement judged in the surrounding circumstances. 6. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies adopted is accrual which will be consistently followed as shown below: 6.1 Reporting period Normal financial year of the WSSP 11 is that of Government, which runs from 1st July to 30th of each year. However, these are the first Financial Statements of the project to be prepared, and their reporting period is 15 months from April 2017 to 30th June 2018. 6.2 Reporting currency and translation of foreign currencies 6.2.1 Functional and reporting currency Items included in Financial Statements of the Government are measured using currency of the primary economic environment in which the government operates ("the functional currency"). The Financial Statements are presented in Tanzanian Shillings (TZS), which is the Government's functional and presentation currency. 6.2.2 Transaction and balances in foreign currencies Foreign currency transactions are translated into Tanzanian shillings using the exchange rates prevailing at the dates of the transactions. Foreign exchange 24 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER (VOTE49) WATER SECTOR DEVELOPMENT PROGRAMME FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30 JUNE, 2018 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) Gain/ losses resulting from translation at year end exchange rate of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Financial Performance. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 6.3 Revenue from non-exchange transactions Revenue from non-exchange transactions includes receipts from non- exchange transaction to be recognized in full as revenue and should appear in the Statement of Financial Performance unless a liability is also recognized in respect of the same flow for unfulfilled conditions attached to that revenue. 6.4 Receipts. Receipt represents cash received by the entity during the financial year and comprises funds from the World Bank. 6.5 Exchequer Issue. These are moneys received from the Consolidated Fund upon the authority of a warrant under the hand of the Paymaster-General addressed to the Accountant-General as part of Government funding for the project as per the Financing Agreement with the World Bank. 6.6 Other transfers These are recognized when it is probable that the future economic benefits or service potential associated with the asset will flow to the entity; and the fair value of the asset can be measured reliably. The Ministry has Institutions under its control that receives subsidies from the Government. 6.7 Unspent balance Any amount remained in fund account at the end of financial year, are carried forward to the next financial year to be used on activities intended earlier. 25 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER (VOTE49) WATER SECTOR DEVELOPMENT PROGRAMME FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30 JUNE, 2018 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 6.8 Value Added Tax The WSSP 11 is exempted from paying VAT for Goods purchased and Services received. 6.9 Comparatives There are no comparative figures since these are the first Financial Statements to be prepared. 7.0 Cash and Bank Balances 7.1 Cash and Cash Equivalents Cash and Cash equivalents in the statement of financial position comprise Cash at Banks and in hand. 7.2 Receivables and Inventories 7.2.1 Advances and other receivables Receivables are disclosed in the Financial Statements at original historical cost. Bad debts are written - off, with the approval of Parliament when identified and are reflected in the Statement of Losses. 7.2.2 Inventories Inventories are stated at the lower of cost and net realizable value. Costs incurred in bringing each product to its present location and condition, are accounted for as follows: i. Raw materials - purchase cost on first in first out basis; ii. Stationeries and other consumables - cost is determined on first in first out basis; iii. Finished goods and work in progress - cost of direct materials and labour and a proportion of manufacturing overheads based on normal capacity but excluding borrowing costs. Net realizable value is the estimated as selling price in the ordinary course of business, less applicable variable selling expenses. 26 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER (VOTE49) WATER SECTOR DEVELOPMENT PROGRAMME FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30 JUNE, 2018 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 8.0 Property, Plant and Equipment Property, plant and equipment is stated at cost, excluding the costs of day- to-day servicing, less accumulated depreciation and accumulated impairment in value. Such cost includes the cost of any replacement parts in accordance with the related recognition criteria. 9.0 Depreciation: The Government has adopted straight line method for depreciation of Public Assets which is allocated systematically over the useful life of the respective assets as issued in Government Asset Guideline on 10th December, 2012 and the accounting policies applicable. The depreciable amount of an asset shall be allocated on a systematic basis over its estimated useful life. The prevailing International Standard for depreciation shall be applied over the useful life of the assets. In accordance with the Generally Acceptable Valuation Principles (GAVP), depreciation for valuation purposes shall be the adjustment made to the replacement cost to reflect physical deterioration, functional and economic obsolescence. No adjustment have been made during the financial year under review because the Project had no items of PPE was acquired since the project started. 10.0 Estimated Useful Life (EUL) Assets ran an economic life peculiar to themselves depending on make, constant handling and operational use. Some assets are continued in use much beyond the EUL due to periodical maintenance and repairs. Assets expected life are projected in ranges as follows: Description Years Administration assets Leasehold land Over the lease term Buildings 25 Plant and machinery 15 Furniture, fixture and equipments 5 Motor vehicles " Heavy duty (5 tons and above) 10 * Light duty (below 5 tons) 5 Motor cycle 7 Computer hardware 4 Infrastructural assets Leasehoid land Over the lease term Plant and machinery 15 27 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER (VOTE49) WATER SECTOR DEVELOPMENT PROGRAMME FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30 JUNE, 2018 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) Furniture, fixture and equipment 10 Motor vehicles Heavy duty (5 tons and above) * Light duty (below 5 tons) 5 Motor cycle 7 Computer hardware _ 5 The carrying values of cash - generating property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of financial performance in the year the asset is derecognized. The residual values, useful lives and methods of depreciating property, plant and equipment are reviewed, and adjusted if appropriate, at each financial year end. When each major inspection is performed, its cost is recognized in the carrying amount of property, plant and equipment as a replacement if the recognition criteria are satisfied. *Spot maintenances are evaluated on individual basis to determine whether they meet the recognition criteria for an asset, or need to be expensed 28 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER (VOTE49) WATER SECTOR DEVELOPMENT PROGRAMME FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30 JUNE, 2018 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 11. Land Land consists of (i) land and (ii) developed land (if the land element is material); where the Government has obtained ownership document such as title deeds. If cost can be measured reliably land is then measured on cost basis. If the land element is not material, developed land is ungrouped together with buildings under property, plant and equipment in land and building category. Land is not depreciated. 12. Projects expenditure WSSP 11 projects are a series of undertakings by an accounting entity with specific objectives and a defined time frame and could be either: 1. Jointly funded by the Government and a development partner II. Fully funded by a development partner 13. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS The preparation of the Financial Statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future. 29 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER (VOTE49) WATER SECTOR DEVELOPMENT PROGRAMME FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30 JUNE, 2018 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 14. Future changes In Accounting Policy Standards issued but not yet effective up to the date of issuance of the entities Financial Statements. The entity intends to adopt IPSAS 28 to 32 when they become effective. IPSAS 28 to 30 covers all aspects of accounting for and disclosure of Financial Instruments and IPSAS 31 deals with accounting for Intangible assets not dealt with other IPSAS. IPSAS 32 covers Service Concession Arrangements 15. Exchange Rate All monetary amounts in the Financial Statements are expressed in Tanzanian shillings, the legal tender shown as TZS. The Tanzanian Shilling closing rate was applied for major currencies. The Tanzanian Shilling closing rates (the Bank of Tanzania mid rates) for major currencies were which was used in the Financial Position- Currency 30th June 2018 United States Dollar (USD) 2,266.43 British Pound 2,963.71 Euro 2,529.27 Swedish Kronor 260.43 Japanese Yen 19.67 30 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER (VOTE49) WATER SECTOR DEVELOPMENT PROGRAMME FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30 JUNE, 2018 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 16. RISK MANAGEMENT The WSSP 11 is facing number of events that threaten attainment of its objectives. The risks are mitigated and addressed as and when they occur.. A major risk that WSSP II facing is Operational Risks, hence WSSP 11 is faced by such risk due to its mandate and obligations, as a result exposing in great chances of being involved in misuse of resources i. Financial Management/liquidity risk Financial management risks relate to the availability of adequate funding for the WSSP II operations. The chief risk in this area is that demand for services might put excessive pressure on budget. Risks encompassing the entire scope of general financial management, Potential factors to consider include; Cash flow adequacy and Management thereof; financial losses; Wasteful expenditure; Budget allocations; financial statement integrity; and increasing operational expenditure. ii. Economic Environment Risk Risks related to WSSP 11 economic environment. Factors to consider include: Inflation and Foreign exchange fluctuations. iii. Political environment Risk Risks emanating from political factors and decisions that have an impact on the WSSP II mandate and operations, possible factors to consider include: political pressure; Local, Provincial and National elections. iv. Contract management Risk Risks related to the WSSP II dependence on the performance of the Contractor, Consultant or Service provider. Risk in this regard could be that there is the likelihood that a service provider might not perform according to the service level agreement entered into with a Ministry. Non performance could include: Outright failure to perform; not rendering the required service in time; Not rendering the correct service; and Inadequate/ poor quality of performance. 31 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER (VOTE49) WATER SECTOR DEVELOPMENT PROGRAMME FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30 JUNE, 2018 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) v. Procurement Risk Risks relating to the Ministry's material resources, possible aspects to consider include: Availability of material; Costs and means of acquiring / procuring resources; and the wastage of material resources and the Controls in place are Transparency, identification of needs, development of specifications, contract documents, contract negotiation, contract management, Evaluation of offers, identification preferred suppliers and selection of procurement methods e.g. NCB, ICB, single source. vi. People Capability Risk Capability risks relate to the ability of our staff to deliver consistently high- quality services to all our clients. The Mitigating actions are: Continue to recruit staff with the appropriate qualifications, skills and experience; continue to implement strategy for building capability. Our focus on learning and development assists staff in gaining the qualifications and skills necessary for their roles. 17. ORIGINAL AND FINAL APPROVED BUDGET AND COMPARISON OF ACTUAL AMOUNT The approved budget is developed in the form of Annual Work plan for the activities which are to be implemented and approved by the World Bank on Cash basis from 1st April, 2017 to June 2018 whereas the Financial Statements are prepared on Accrual basis as per IPSAS 24 on the Presentation of Budget information in Financial Statements. During the period under review all budget items have huge variances due to some constraints that were mainly caused by the merger of DAWASA and DAWASCO that require restructuring and amendments of the Financing Agreement which in turn recognised DAWASA as independent implementers of some projects financed by the WSSP II. 18. EVENTS AFTER REPORTING DATE There was no event after reporting period during the year under review Note. 19 RELATED PARTY TRANSACTIONS There were no related party transactions during the year under review. 32 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER (VOTE49) WATER SECTOR DEVELOPMENT PROGRAMME FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30 JUNE, 2018 NOTES TO THE FINANCIALSTATEMENTS (CONTINUED) Note 20- Amortised Revenuel Deferred Revenue B/f 0.00 Cash Received 12,696,466,552.45 Total Funds Available 12,696,466,552.45 Less; Deferred Revenue C/f 12,431,429,006.85 Total 265,037,545.60 Note 21- Deferred Revenue Deferred Revenue B/f 0.00 Cash Received from WB 12,696,466,552.45 Commitments 0.00 Interest Received 0.00 Funds available 12,696,466,552.45 Less; Amortized during the year 265,037,545.60 Total 12,431,429,006.85 Note 22- Supplies and Consumables Goods Diesel 1,200,000.00 Ground Transport (Bus, Train, Water) 0.00 Office Consumables 0.00 Per Diem - Domestic 19,000,000.00 Per Diem - Foreign 0.00 Printing and Photocopy paper 800,000.00 Printing and Photocopying Costs 0.00 Printing Material 0.00 Upkeep Allowances 0.00 Total 21,000,000.00 33 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER (VOTE49) WATER SECTOR DEVELOPMENT PROGRAMME FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30 JUNE, 2018 NOTES TO THE FINANCIALSTATEMENTS (CONTINUED Note 23 - Other Expenses Accrued Other Expenses 0.00 Audit Fees 0.00 Consultancy Fees 244,037,545.60 Contingent Liabilities 0.00 Valuation fees 0.00 Total 244,037,545.60 Note 24 - Cash and Cash Equivalents Designated Account Balance 12,119,608,411.49 Unspent Amount with lAs/MoW 384.020,401.00 Total 12,503,628,812.64 Note: 25 FUNDS RECEIVED FOR WATER SECTOR SUPPORT PROJECT II Date Payee Name Mow/Other BOT USD Exchange Equivalent in TZS Reference Reference Rate 17 April ALLOCATION 5543/AXXXIIl/279 1041725658 500,000.00 2213.7129 1,106,856,450.00 2017 FROM IDA/WB | 28 Jun ALLOCATION 5543/A/XXXVI/2067 1061843026 2,569,544.00 2,255.1881 5,794,805,051.23 2018 FROM IDA/WB 28 Jun ALLOCATION 5543/A/XXXVI/2067 1061843026 2,569,544.00 I2,255.1881 5,794,805,051.23 2018 FROM IIDA/WVB Total FY 2017/2018 5,639,088.00 12,696,466,552.46 Note: 26 Other Income-Gain on Exchange Translation Currency Balance on Exchange rate Equivalent in TZS 30th June 1US$ to TZS 2018 Balance as per Designated Account USD 5,347,444.40 2,266.43 12,119,608,411.49 Balance as per Cash Book TZS 12,047,408,605.70 Gain due to exchange rate fluctuations 72,199,805.79 34 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF WATER (VOTE49) WATER SECTOR DEVELOPMENT PROGRAMME FINANCIAL STATEMENTS FOR 15 MONTHS ENDED 30 JUNE, 2018 NOTES TO THE FINANCIALSTATEMENTS (CONTINUED SECOND WATER SECTOR SUPPORT PROJECT (WSSP II) COMMITIMENTS AS ON 30th JUNE 2018 Note; 27 S/N Contract No. Contract Description Amount TZS Consultancy services for preparation 1,180,545,600.00 of Integrated Water Resources ME-011/2016 Management and Development Plan S 217/CONTRAC-/24 (IWRMDP) based on the completed Water Resources Management and Development Study for Wami/Ruvu Basin Consultancy services for 645,510,968.30 2 ME-011/2016- Development of Water Resources 2017/CONTRACT/06 Management Financing Options Study _ Consultancy Services for 398,420,000.00 Consolidation of Data, Information 3 ME-011/2016- and Modules from Intergraded 2017/CONTRACT/22 WRMDP and Preparation requires specifications for WRIS AND WEB PORTAL TOTAL 2,224,476,568.30 35