PKF MAK ALYANS LLC Accountants & business advisors INTERNATIONAL DEVELOPMENT ASSOCIATION (ADMINISTRATOR) INTEGRATED SINGLE WINDOW OFFICE FOR SOCIAL ASSISTANCE AND EMPLOYMENT SERVICES PROJECT (PROJECT IMPLEMENTATION UNIT) MINISTRY OF EMPLOYMENT AND LABOR RELATIONS OF UZBEKISTAN (EXECUTING AGENCY) RAPID SOCIAL RESPONSE MULTI-DONOR TRUST FUND GRANT No. TF0A0823 SPECIAL-PURPOSE CASH BASIS FINANCIAL STATEMENTS AND STATEMENT OF EXPENDITURE FOR THE PERIOD FROM 19 AUGUST 2015 TO 29 OCTOBER 2018 PROJECT IMPLEMENTATION UNIT UNDER MINISTRY OF EMPLOYMENT AND LABOR RELATIONS OF UZBEKISTAN INTEGRATED SINGLE WINDOW OFFICE FOR SOCIAL ASSISTANCE AND EMPLOYMENT SERVICES PROJECT TABLE OF CONTENTS Page STATEMENT OF MANAGEMENT'S RESPONSIBILITIES FOR THE PREPARATION AND APPROVAL OF THE SPECIAL-PURPOSE FINANCIAL STATEMENTS FOR THE PERIOD ENDED OCTOBER 29, 2018 3 INDEPENDENT AUDITORS' REPORT 4 INTERNATIONAL DEVELOPMENT ASSOCIATION SPECIAL- PURPOSE FINANCIAL STATEMENTS FOR THE PERIOD ENDED OCTOBER 29, 2018: Special-Purpose Statement of Cash Receipts and Payments 6 Special-Purpose Financial Position Statement 7 Special-Purpose Statement of Detailed Costs by Components 7 Special-Purpose Project Designated Account Statements 14-16 Notes to Special-Purpose Financial Statements 8-17 2 PROJECT IMPLEMENTATION UNIT UNDER MINISTRY OF EMPLOYMENT AND LABOR RELATIONS OF UZBEKISTAN INTEGRATED SINGLE WINDOW OFFICE FOR SOCIAL ASSISTANCE AND EMPLOYMENT SERVICES PROJECT STATEMENT OF MANAGEMENT'S RESPONSIBILITIES FOR THE PREPARATION AND APPROVAL OF THE SPECIAL PURPOSE FINANCIAL STATEMENTS FOR PERIOD FROM 19 AUGUST 2015 TO 29 OCTOBER 2018 The Management of the Project Implementation Unit is responsible for the preparation of the Special-Purpose Financial Statements (hereinafter - "Financial Statements") of the "Integrated Single Window Office for Social Assistance and Employment Services Project" (hereinafter - "Project") implemented by the Project Implementation Unit (hereinafter - "PIU") under the Ministry of Employment and Labor Relations of the Republic of Uzbekistan, funded by the International Development Association Grant (hereinafter -"IDA Grant") that present fairly the financial position of the Project for the period from 19 August 2015 to 29 October 2018, and the funds received, and expenditures incurred for the period then ended, in compliance with International Public Sector Accounting Standards "Financial Reporting under the Cash Basis of Accounting" (hereinafter - "IPSAS-Cash Basis"). In preparing the Financial Statements, the management of the PIU is responsible for: * Selecting suitable accounting policies and applying them consistently; * Presenting information, including accounting policies, in a manner that provides relevant, reliable, comparable, and understandable information; * Providing additional disclosures when compliance with the specific requirements in IPSAS-Cash Basis are insufficient to enable users to understand the impact of particular transactions, other events, and conditions on the Project's Special-Purpose Financial Statements; and * Making an assessment of the Project's ability to continue as a going concern. The Management of the Project is also responsible for: * Designing, implementing and maintaining an effective and sound system of internal controls, throughout the Project; * Maintaining adequate accounting records that are sufficient to show and explain the Project's transactions and disclose with reasonable accuracy at any time the fund balance of the Project, and which enable them to ensure that the Financial Statements of the Project comply with specific requirements in IPSAS-Cash Basis; * Maintaining statutory accounting records in compliance with legislation of the Republic of Uzbekistan; * Taking such steps as are reasonably available to them to safeguard the assets of the Project; and * Preventing and detecting fraud and other irregularities. The Financial Statements of the Project for the period from 19 August 2015 to 29 October 2018 were authorized for issue by the Project's Management on October 31, 2018. On behalf of the Project's Management: E. M. Mukhitdinov tN. Radjapov First Deputy Minister PIU Manager 0. Ubaydullaev Financial Management Specialist PKF MAK ALYANS LLC Accountants & INDEPENDENT AUDITOR'S REPORT business advisors To Management of Project Implementation Unit under Ministry of Employment and Labor Relations of the Republic of Uzbekistan Opinion We have audited the Special-Purpose Financial Statements (hereinafter- "Financial Statements") of "Integrated Single Window Office for Social Assistance and Employment Services Project" (hereinafter - "Project") financed from Rapid Social Response Multi-Donor Trust Fund Grant proceed (Grant No.TF0A0823) of the International Development Association (hereinafter - "IDA") which comprise the special-purpose statement of cash receipt and payments for the period from 19 August 2015 to 29 October 2018, the Statement of Expenditure (hereinafter - "SOE"), the statement of Designated Account (hereinafter - "DA") and a summary of significant accounting policies and other explanatory notes. The Financial Statements have been prepared by management of the Project using the International Public Sector Accounting Standards "Financial Reporting under the Cash Basis of Accounting" (hereinafter - "IPSAS - Cash Basis"). In our opinion, I. The accompanying Special-Purpose Cash Basis Financial Statements, in all material respects, give a true and fair view of the Financial Position of the Project as of 29 October 2018, as well as Sources and Uses of Funds, Designated Accounts movements and the outstanding balances for the period then ended, and in all aspects comply with the conditions of the Grant Agreement and in accordance with International Public Sector Accounting Standard; II. Moreover, (a) with respect to the SOE for the period from 19 August 2015 to 29 October 2018 adequate supporting documents, records and accounts have been maintained to support claims to the IBRD for reimbursements of expenditures incurred; and (b) the expenditures included in the withdrawal applications and reimbursed against are eligible for financing under the Agreements. Ill. The Project Designated Accounts Statement for the period ended 29 October 2018 give a true and fair view of the Financial Position of the DA of the Project and of the cash flow for the period then ended. Basis for Opinion We conducted our audit in accordance with the International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Project 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 our audit of the Financial Statements in the Republic of Uzbekistan and we have fulfilled our other responsibilities under these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Key Audit Matters There is no key audit matters to communicate. Responsibilities of Management and Those Charged with Governance for the Special-Purpose Financial Statements The Management of the PIU under the Ministry of Employment and Labor Relations of the RepubliG-of-Uzbekistan (MELR) is responsible for the preparation and fair presentation of these Financial Statements in accordance with the International Public Sector Accounting Standard ("IPSAS"), and for such internal control as management determines is necessary to enable the preparation of Financial Statements those are free from material misstatement, whether due to fraud or error. Tel: +99871 294-73-86 - Fax: +99871 294-73-85 info@pkf.uz, www.pkf.uz - www.pkf,corn PKF MAK ALYANS LLC , 22, Aviasozlar street 1 passage * Tashkent, Uzbekistan * 100016 PKF MAK AI.YANS LLC is a member firm of the PKF International Limited family of legally independent firms and does not accept any responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms. 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. Auditor's Responsibility for the Audit of the Special-Purpose Financial Statements Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: * Identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. * Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Project's internal control. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. * 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 we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's 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. We 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 we identify during our audit. Audit Organization "PKF MAK ALYANS LLC" Authorized audit license issued by the Ministry of Finance of the Republic of Uzbekistan under No.00531 dated 30 January 2008 22, Aviasozlar Street, 1st Passage 100016, Tashkent, Uzbekistan 31 October 2018 5 PROJECT IMPLEMENTATION UNIT UNDER MINISTRY OF EMPLOYMENT AND LABOR RELATIONS OF UZBEKISTAN INTEGRATED SINGLE WINDOW OFFICE FOR SOCIAL ASSISTANCE AND EMPLOYMENT SERVICES PROJECT Special-Purpose Financial Statements under IPSAS-Cash Basis for the period ended 29 October 2018 Tabular amounts are presented in US Dollars SPECIAL - PURPOSE STATEMENT OF CASH RECEIPTS AND PAYMENTS FOR PERIOD ENDED OCTOBER 29, 2018 29.10. 2018 31.12. 2017 31.12. 2016 Cumulative Budget Actual Actual Actual Amount Variance Opening Fund Balances RSR TF Grant - Cash in USD 3265 72224 - - RSR TF Grant - Cash in UZS (USD equivalent) - 2581 - - - Total - 5846 72224 - - Sources of Funds: Funds Received RSR TF Direct Payments 190089 - 2161 192250 RSR TF Grant Initial Advance - - 100000 100000 RSR TF Grant - Disbursements to Designated Account 94 096 59 292 - 153 388 TOTAL OF FUNDS RECEIVED 450 000 284185 59292 102161 445 638 99.03% Uses of Funds: Expenditure Incurred by Component 1. Design and pilot ISWO concept, develop a reform roadmap (300 000) (224 174) (81 000) - (305173) 101.72 2. Strengthen capacity to improve service delivery (70 000) (41 355) (16 322) (9 262) (66 939) 95.63 3. Project Management (80000) (24517) (28348) (20675) (73541) 91.93 TOTAL EXPENDITURE INCURRED (450 000) (290 046) (125 670) (29 937) (445 653) 99.03% FX Exchange Gainl(Loss) - 15 - - 15 Closing Fund Balances RSR TF Grant - Cash in USD - - 3265 72224 - RSR TF Grant - Cash in UZS (USD equivalent) - - 2581 - - Total - - 5846 72224 - Signed on behalf of the Project's Management on 31 October 2018 E. M. Mukhitdinov N.Rajao N. Radjapov First Deputy Minister PIU Manager 0. Ubaydullaev Financial Management Specialist Notes on pages 8 to 17 form an integral part of the Special-Purpose Cash Basis Financial Statements. 6 PROJECT IMPLEMENTATION UNIT UNDER MINISTRY OF EMPLOYMENT AND LABOR RELATIONS OF UZBEKISTAN INTEGRATED SINGLE WINDOW OFFICE FOR SOCIAL ASSISTANCE AND EMPLOYMENT SERVICES PROJECT Special-Purpose Financial Statements under IPSAS-Cash Basis for the period ended 29 October 2018 Tabular amounts are presented in US Dollars SPECIAL-PURPOSE STATEMENT OF FINANCIAL POSITION AS AT 29 OCTOBER 2018 Items Note Periods 29.10.2018 31.12.2017 31.12.2016 ASSETS Cash and cash equivalents 7-8 - 5 846 72 224 TOTAL ASSETS 5 846 72 224 OWN FUNDS/FINANCING IDA/RSR TF Financing 445638 161439 102154 Other Financing - - - Less: Cumulative expenditures, net (445653) (155593) (29930) including: FX Gain 15 - - TOTAL OWN FUNDS/FINANCING - 5 846 72224 TOTAL LIABILITIESOWN FUNDS - 5 846 72224 SPECIAL-PURPOSE STATEMENT OF DETAILED COSTS BY COMPONENT FOR THE PERIOD ENDED OCTOBER 29, 2018 Component Actual Budget Variance 2018 Cumulative 2016-2018 Cumulative 2016-2018 Cumulative RSR Grant 1. Design and pilot ISWO concept, develop a 224 174 305 173 300 000 300 000 -5 173 -5 173 reform roadmap 2. Strengthen capacity to improve service 41355 66 939 70 000 70 000 3061 3 061 delivery 3. Project Management 24517 73541 80000 80000 6459 6459 TOTAL FUNDS' EXPENDITURE 290 046 445 653 450 000 450 000 4 347 4 347 Si ned on behalf of the Project's Management on 31 October 2018 E. M. Mukhitdin ov N. Radjapov First Deputy Minist PlU Manager 0. Ubaydullaev o aFinancial Management Specialist Notes on pages 8 to 17 form an integral part of the Special-Purpose Cash Basis Financial Statements. 7 PROJECT IMPLEMENTATION UNIT UNDER MINISTRY OF EMPLOYMENT AND LABOR RELATIONS OF UZBEKISTAN INTEGRATED SINGLE WINDOW OFFICE FOR SOCIAL ASSISTANCE AND EMPLOYMENT SERVICES PROJECT NOTES TO SPECIAL-PURPOSE FINANCIAL STATEMENTS Special-Purpose Financial Statements under IPSAS-Cash Basis for the period ended 29 October 2018 Tabular amounts are presented in US Dollars 1 THE PROJECT AND ITS OPERATIONS The World Bank's Trust Fund Grant No.AO823 (TF) for the project were approved on 19 August 2015. The Government of Uzbekistan and the World Bank signed the Trust Fund Grant Agreement No.A0823 (TF) on 02 September 2015 on the implementation of the Integrated Single Window Office (ISWO) for Social Assistance and Employment Services Project (the Project) and declared effective on 12 October 2015. The project was estimated to cost US $450 000. The estimated project physical completion date is 29 June 2018 and the Grant application deadline is 29 October 2018. The Republic of Uzbekistan has received a Grant from the International Development Association (IDA - Administrator) - financed through a Recipient Executed Trust Fund Grant from the Rapid Social Response Multi- donor Trust Fund (RSR TF) in the amount of US Dollars 445 056.50 for the implementation of the "Integrated Single Window Office (ISWO) for Social Assistance and Employment Services Project" (Project). The Project Development Objective is to increase coordination among social protection and labor programs and functions, to strengthen capacity of MELR in delivering services to the vulnerable and needy groups of the population and in implementing complex reforms, to establish a solid foundation for implementation of a national social Registry. The project will support development of a detailed blueprint for the implementation of the Integrated Single Window Office (ISWO) for provision of social assistance, social care, and employment services. The ISWO concept then will be piloted in up to two regional offices and evaluated, allowing the Ministry of Labor and Social Protection (MLSP) and lately named the Ministry of Employment and Labor Relations (MELR) to further improve the blueprint based on the learnings from the pilot. While the MELR manages a considerable list of social programs, the priority will be given to the following: employment services, social assistance (including the work with "Mahalyas" - hereinafter "local communities"), and social care for single elderly and disabled. The functional office organization in the location of the pilot will be rationalized and existing premises improved. In addition, an assessment of HR development needs for MELR district offices and local communities involved in service delivery will be conducted to inform customized trainings that the project will provide to strengthen the capacity of MELR district level staff to deliver the new mode of services. Local communities will be among the direct beneficiaries of the project in what the MELR modernized district offices will offer as improved services. A new district office corporate MIS to case-manage operation of the district office will be developed on a pilot basis and installed on a new hardware. Furthermore, it is planned to study and automate the operational interface between the MELR district offices and local communities, as part of the design and implementation of the new district office MIS. The activities under the project, as implemented by the Government, will be broken down into the following three components: Component 1: Design and pilot the ISWO concept, develop a reform roadmap This component will focus on developing and piloting (on the basis of up to 2 MELR district offices) a concept of Integrated Single Window Office (ISWO) for the service provision, with needs assessment and design of a business process and an MIS to automate operation of the district MELR office. Specific activities will include: Assessment of current business processes of service provision at the district and the local communities level, with implications for streamlining operation of the district offices, including application and eligibility verification processes. Development of proposals for optimization of roles, functions, and business processes, development of operating procedures in service provision and benefit delivery. Inventory of the existing software applications and databases supporting operation of the MELR programs. Assessment of capacity of the existing software application packages to meet the needs of various social and employment programs, with the view of operational c6nsolidation. Recommendations for integration of the existing software packages and corresponding databases under a framework of the ISWO, with guidance on implementation of the future centralized system of Registry of social beneficiaries. Design and implementation of a district office corporate MIS as a building block for the future centralized MIS/Registry. The new software PROJECT IMPLEMENTATION UNIT UNDER MINISTRY OF EMPLOYMENT AND LABOR RELATIONS OF UZBEKISTAN INTEGRATED SINGLE WINDOW OFFICE FOR SOCIAL ASSISTANCE AND EMPLOYMENT SERVICES PROJECT NOTES TO SPECIAL-PURPOSE FINANCIAL STATEMENTS Special-Purpose Financial Statements under IPSAS-Cash Basis for the period ended 29 October 2018 Tabular amounts are presented in US Dollars will support the full range of services provided by the district MELR offices, including application, eligibility verification, case management and work with local communities. Subject to further technical assessment, analysis and design of specialized software application supporting operation of local communities' inspectors, including provision of tablet computers to facilitate the work of the said inspectors. High-level design of the future Registry of beneficiaries and corresponding Management Information System (MIS) to be operated by the Ministry at the central level. Functional assessment of existing offices in the pilot locations and recommendations for remapping office spaces to various roles of the staff, including front office and back office, as well as minor office upgrades. Preparations for and implementation of the pilot, including design of the operational documents and public awareness materials, as well as methodology for monitoring of the pilot processes and evaluation of the results. Final package of materials as a Roadmap for implementation of the national rollout, including a safeguards framework, technical specifications, manual to support capacity building, etc. In addition to national and international consulting services, this component will finance limited procurement of computer hardware and office equipment, including, if required, tablet computers, as well as development of specialized software applications and a database, provision of necessary connectivity and power supply as may be needed, limited office upgrade costs, and operating expenses. The office upgrades may include any renovations - such as electricity, plumbing, cosmetic upgrades (walls restoration and painting, windows and doors repairs, etc.) - that do not involve demolitions or changing structural integrity of the buildings otherwise, and that do not trigger safeguards polices, as per further consultations with the safeguards team on the basis of the renovations plan to be produced by the Ministry. Considering the proposed scope of these activities, the project will remain in category 3 but the team will liaise closely with safeguards colleagues to ensure that none of the proposed activities extends beyond this category. Component 2: Strengthen capacity to improve service delivery This component will focus on important activities complementary to the Component 1: * Assess the HR development needs for MELR district office and local government staff; * Design customized training programs for the staff involved in the pilot implementation; * At the level of the district offices, training for MELR officers in client management, case management, specifics of various programs, uses of the new software application, and the computer literacy; * At the local government level, training on the new mode of service delivery; * Delivery of training workshops in the pilot areas; * Define training needs and curriculum for the future stages of the reform. The above activities will be complemented by a campaign of raising awareness among the staff about benefits of the anticipated changes and sensitizing them to the new operational mode. This is to ensure a broad buy-in of the reforms by the staff of the district offices. This component will finance national and international consultancies, as well as training and workshop activities, including associated operating costs. Component 3: Project management This component will finance establishment and operation of a Project Implementation Unit (PIU) within MELR, including the management and fiduciary team of national consultants, and the costs of audit, and operating expenses, as well as various short-term national and international consultancies. Overall implementation responsibility. The MELR will be an Implementing Agency for all components of the Project. The MELR Minister will be the Project Director. The Project Coordination Group (PCG), under the MELR Minister will be set up by the Minister's Order to be in charge of the formal implementation of the Project. The PCG would be headed by a Deputy Minister or Minister's designee, who would be responsible for the overall supervision of the project activities, The PCG will 9 PROJECT IMPLEMENTATION UNIT UNDER MINISTRY OF EMPLOYMENT AND LABOR RELATIONS OF UZBEKISTAN INTEGRATED SINGLE WINDOW OFFICE FOR SOCIAL ASSISTANCE AND EMPLOYMENT SERVICES PROJECT NOTES TO SPECIAL-PURPOSE FINANCIAL STATEMENTS Special-Purpose Financial Statements under IPSAS-Cash Basis for the period ended 29 October 2018 Tabular amounts are presented in US Dollars consist of the managers of the key relevant departments of the Ministry. Their responsibility would be to collectively, ensure that all activities of the project are closely coordinated with various departments of the Ministry. The Minister by its Order will also establish a Project Implementation Unit (PIU). This will be a legal covenant of the project. The PIU would be responsible for the fiduciary and technical aspects of the project. On the fiduciary side, it will include financial management, procurement and compliance with the environmental safeguards (as they relate to the minor civil works and rehabilitation financed under the Project). On the technical side, it will include: a. Prepare the terms of reference (TORs) for the technical assistance and training for the implementation of all the activities under the project; b. Prepare the technical specifications for the services and goods to be acquired for the implementation of all the activities under the project; c. Prepare plans for training activities and study tours to be undertaken during the life of the project d. Prepare technical specifications for the minor civil works (refurbishing) required in the MELR's district-level offices that are pilot locations. The PIU will submit those documents to PCG for review as may be necessary. The PIU Head would be responsible for day-to-day management of the project, including: a. Procurement of goods, services and civil works as well as the selection of qualified consultants and training; b. Ensuring that the minor civil works undertaken against the project funds meet the requirements outlined in this paper; c. Monitoring the progress of the agreed annual project implementation plan (including the updating of the agreed outcome and output indicators), the procurement plan and the budget on a semi-annual basis; and d. Administering incoming and outgoing project management-related communications, including translation and interpretation services, arrangement of meetings, seminars and workshops and performing all the secretarial functions required in the PIU. Some of the above-mentioned functions would require hiring full-time or part-time specialized consultants in the PIU. In addition, the PIU Head, or his designee, would be a member of the Evaluation Committee chaired by the Project Director or his nominee. The Evaluation Committee would open and select bids for goods, services and minor civil works and consultants for the technical assistance and training that would be required for the implementation of all activities under the Project. Financial administration and overall surveillance of the Project is assigned to the IBRD. The budget for whole Project implementation period by categories and sources of funds is presented below: Project Component Project cost Grant Financing % Financing 1. Design and pilot ISWO concept, develop a reform roadmap 300 000 300 000 100% 2. Strengthen capacity to improve service delivery 70 000 70 000 100% 3. Project Management 80000 80000 100% TOTAL 450000 450000 100% 10 PROJECT IMPLEMENTATION UNIT UNDER MINISTRY OF EMPLOYMENT AND LABOR RELATIONS OF UZBEKISTAN INTEGRATED SINGLE WINDOW OFFICE FOR SOCIAL ASSISTANCE AND EMPLOYMENT SERVICES PROJECT NOTES TO SPECIAL-PURPOSE FINANCIAL STATEMENTS Special-Purpose Financial Statements under IPSAS-Cash Basis for the period ended 29 October 2018 Tabular amounts are presented in US Dollars 2 SIGNIFICANT ACCOUNTING POLICIES Basis of preparation These special-purpose Financial Statements have been prepared in accordance with the International Public Sector Accounting Standard (IPSAS) "Financial Reporting under the Cash Basis of Accounting" promulgated by the International Federation of Accountants (IFAC). Those standards require that cash receipts shall be effective when received and expenditures of funds shall be effective when they are paid rather than when incurred. The Financial Statements prepared under the cash basis provide readers with information about the sources of cash raised during the period, the purpose for which cash was used and the cash balances at the reporting date. The measurement focus in the financial statements is balances of cash and changes therein. The Project's special- purpose cash basis Financial Statements are prepared on the basis of cash receipts and disbursements which are a comprehensive basis of accounting. Cash and cash equivalents Cash and cash equivalents are recognized at cost and include cash at cash desk, cash at designated accounts at domestic banks and cash in transit. During FY 2016 - 2018 into USD Designated bank accounts of the Project was totally financed with the amount of the RSR TF Grant disbursements equaled to US Dollars 445 029 (excluding intermediary bank commission held of US Dollars 28). Financing Financing for Designated accounts is recognized when funds are transferred from RSR TF Grant account to the Project Designated accounts opened in the OD TCB "National Bank of Foreign Economic Activity" (NBU) of the Republic of Uzbekistan. Project expenditure The Project's special-purpose cash basis Financial Statements are prepared based upon the accounting records of the PIU, which are maintained in both USD and UZS. The initial accounting records consist of summaries of disbursement documents and other payment vouchers. Accounting of PIU within the Ministry of Labor and Employment Relations is conducted in accordance with the applicable laws of the Republic of Uzbekistan with the specific implementation of the Project, including applying cash method. The policy management programs also include preparation of detailed of cost report on a cash basis in accordance with International Accounting Standards for the Public Sector. The accounting is carried out using the Excel spreadsheets. In accounting, the following articles are used: - Taking into account the actual costs; - Accounting of cash transactions; - Accounting of remuneration; - Settlements with debtors and creditors; -Reporting. The Financial Management of the Project is carried out by the following main points: 1) Analysis of the performance costs; 2) Analysis of cash expenses and for transfers; 3) Analysis of financial condition; 4) An analysis of budget execution. PROJECT IMPLEMENTATION UNIT UNDER MINISTRY OF EMPLOYMENT AND LABOR RELATIONS OF UZBEKISTAN INTEGRATED SINGLE WINDOW OFFICE FOR SOCIAL ASSISTANCE AND EMPLOYMENT SERVICES PROJECT NOTES TO SPECIAL-PURPOSE FINANCIAL STATEMENTS Special-Purpose Financial Statements under IPSAS-Cash Basis for the period ended 29 October 2018 Tabular amounts are presented in US Dollars An analytical account of the sums received by the Project of funding is separate from the breakdown of the total amount financed by components of expenditure. At the end of each month / quarter are counted up all the items of expenditure for the quarter and total year to-date, in order to identify the remainder and in a similar way to keep records of cash expenditure for transfers. Foreign currency translation (i) Functional and Presentation currencies The functional currency of the Project is the currency of the primary economic environment in which it operates. The Project's functional currency is Uzbek Soums ("UZS"), as the major portion of its transactions are in UZS. These special-purpose Financial Statements of the Program are also presented in the presentation currency of US Dollars ("USD") as this is convenient for the readers of the financial statements. (ii) Transactions and Balances The assets' additions and expenditure paid for in UZS were translated into USD using the following principles of transaction: * Monetary assets denominated in UZS have been translated into USD using the rate of exchange of the Central Bank of Uzbekistan ("CBU") on the date of conversion; * All income/expenditure earned/incurred in UZS denominated into USD were recorded as an exchange rate of CBU, effective at the date of conversion; * Gain/Loss resulting from the transaction of UZS into USD: Cash & cash equivalents outstanding as at reporting date are translated into USD at the official rate of the CBU effective at the reporting date. The official exchange rate set by the CBU and effective, as at 29 October 2018 was UZS 8 236.87 to USD 1 (as at December 31, 2017: UZS 8,120.07 to USD 1; 2016: UZS 3,231.48 to USD 1). At present, the UZS is not a convertible currency outside Uzbekistan. Bank Accounts of the Project During the period from July 07, 2016 to October 29, 2018, the PIU held at Uzbekistan's bank for USD and UZS Designated Accounts for RSR TF Grant at named Operational Department Tashkent City Branch (OD TCB) "National Bank for Foreign Economic Relations of Uzbekistan" (NBU). The PlU operates the Designated Accounts in accordance with the provisions laid down in the Grant Agreement. The USD represents revolving funds provided from the RSR Trust Fund Grant to facilitate prompt disbursement of funds. The funds are maintained at OD TCB "NBU". The USD Designated Account is used to cover the RSR Trust Fund's Grant share of eligible expenditures in both local and foreign currencies. The eligible expenditures are reported to the IBRD through Expenditure Reports/SOE. The USD Designated Account is replenished by the RSR TF Grant on the basis of request, prepared by the PIU for validation of USD Designated Account. The UZS Designated Account was opened to convert the funds received into USD Designated Account for RSR TF Grant for payments to suppliers and withdrawal of cash (for salary purposes). Cash & cash equivalents outstanding as at reporting date are translated into USD at the official rate of the CBU effective at the reporting date. As at 29 October 2018, the official rate of CBU set at UZS 8 236.87 per USD1. The outstanding balances of the above accounts as at October 29, 2018 are disclosed in Note 6. 12 PROJECT IMPLEMENTATION UNIT UNDER MINISTRY OF EMPLOYMENT AND LABOR RELATIONS OF UZBEKISTAN INTEGRATED SINGLE WINDOW OFFICE FOR SOCIAL ASSISTANCE AND EMPLOYMENT SERVICES PROJECT NOTES TO SPECIAL-PURPOSE FINANCIAL STATEMENTS Special-Purpose Financial Statements under IPSAS-Cash Basis for the period ended 29 October 2018 Tabular amounts are presented in US Dollars 3 Taxation The PIU, being the state non-commercial organization, is exempted from taxes and levies in line with the Tax Code of the Republic of Uzbekistan. The policy is also applied with respect to personal income tax and single social payments on PlU's personnel salary remuneration granted from RSR TF Grant. 4 SUBSEQUENT EVENTS There are no events after the end of the reporting period, which would require adjustment to or disclosure in these financial statements. 5 APPROVAL OF SPECIAL-PURPOSE FINANCIAL STATEMENTS The special-purpose financial statements were approved by the Management of the Project for issue on 31 October 2018. 13 PROJECT IMPLEMENTATION UNIT UNDER MINISTRY OF EMPLOYMENT AND LABOR RELATIONS OF UZBEKISTAN INTEGRATED SINGLE WINDOW OFFICE FOR SOCIAL ASSISTANCE AND EMPLOYMENT SERVICES PROJECT NOTES TO SPECIAL-PURPOSE FINANCIAL STATEMENTS Special-Purpose Financial Statements under IPSAS-Cash Basis for the period ended 29 October 2018 Tabular amounts are presented in US Dollars 6 Statements of Cash Balances of the Project 6.1. The Project had the following Cash Balances as at October 29, 2018 at OD TCB "NBU": Source of funds Currency Note Account Amount in USD RSR Trust Fund Grant USD 7 Designated account RSR Trust Fund Grant UZS 8 Designated account Total 6.2. The Project had the following Cash Balances as at December 31, 2017 at OD TCB "NBU": Source of funds Currency Note Account Amount in USD RSR Trust Fund Grant USD 7 Designated account 3 265.32 RSR Trust Fund Grant UZS 8 Designated account 2 580.46 Total 5845.78 6.3. The Project had the following Cash Balances as at December 31, 2016 at OD TCB "NBU": Source of funds Currency Note Account Amount in USD RSR Trust Fund Grant USD 7 Designated account 72 223.91 RSR Trust Fund Grant UZS 8 Designated account - Total 72 223.91 PROJECT IMPLEMENTATION UNIT UNDER MINISTRY OF EMPLOYMENT AND LABOR RELATIONS OF UZBEKISTAN INTEGRATED SINGLE WINDOW OFFICE FOR SOCIAL ASSISTANCE AND EMPLOYMENT SERVICES PROJECT NOTES TO SPECIAL-PURPOSE FINANCIAL STATEMENTS Special-Purpose Financial Statements under IPSAS-Cash Basis for the period ended 29 October 2018 Tabular amounts are presented in US Dollars 7 Statement of USD Grant Designated Account Account No. 22696 840 20011449 0002 Depository Bank: Operational Department TCB "NBU" Address: Gafur Gulyam Street, 1, Tashkent 100019 Related Grant No. RSR TF Grant #TF0A0823 (IDA) Currency: US Dollars (USD) 2016 2017 2018 Opening Balance as at 01 January 72224 3265 Cash Inflow: RSR TF Grant Advance 100000 - - RSR TF Disbursement - 59292 94096 Intermediary Bank commissions held (7) (7) (14) Cash Outflow: Transfer into Special UZS Account (Conversion) (27 319) (128 244) (97 347) Financing eligible expenditure (Trip expense) (450) - - Closing Balance as at 31 December /29 October 72224 3265 E. M. Mukhitdinov N. Radjapov First Deputy Minister PIU Manager 0. Ubaydullaev Financial Management Specialist 15 PROJECT IMPLEMENTATION UNIT UNDER MINISTRY OF EMPLOYMENT AND LABOR RELATIONS OF UZBEKISTAN INTEGRATED SINGLE WINDOW OFFICE FOR SOCIAL ASSISTANCE AND EMPLOYMENT SERVICES PROJECT NOTES TO SPECIAL-PURPOSE FINANCIAL STATEMENTS Special-Purpose Financial Statements under IPSAS-Cash Basis for the period ended 29 October 2018 Tabular amounts are presented in US Dollars 8 Statements of UZS Grant Designated Account Account No. 226960003001 14490001 Depository Bank: Operational Department TCB "NBU" Address: Gafur Gulyam Street, 1, Tashkent 100019 Related Grant No. RSR TF Grant #TF0A0823 (IDA) Currency: Uzbek Soums (UZS) USD Equivalent 2016 2017 2018 Opening Balance as at 01 January 2580 Cash Inflow: Transfer from USD Designated Grant Account 27319 128244 97347 Returned amounts 1 3691 1975 FX Gain - - 15 Cash Outflow: Financing of eligible expenditure (27 320) (129 355) (101 917) Closing Balance as at 31 December /29 October - 2580 E. M. Mukhitdinov . N. Radjapov First Deputy Minister PIU Manager 0. Ubaydullaev Financial Management Specialist 16 PROJECT IMPLEMENTATION UNIT UNDER MINISTRY OF EMPLOYMENT AND LABOR RELATIONS OF UZBEKISTAN INTEGRATED SINGLE WINDOW OFFICE FOR SOCIAL ASSISTANCE AND EMPLOYMENT SERVICES PROJECT NOTES TO SPECIAL-PURPOSE FINANCIAL STATEMENTS Special-Purpose Financial Statements under IPSAS-Cash Basis for the period ended 29 October 2018 Tabular amounts are presented in US Dollars 9 Direct Payments #WDA Component 1 Component 2 Total Note 0002 - 1078.60 1 078.60 0003 -1 070.01 1 070.01 0004 -1 091.19 1 091.19 0005 - (1 078.38) (1 078.38) Refunds Application 0012 54236.36 - 54236.36 0013 50 270.97 - 50 270.97 0014 25333.27 - 25333.27 0015 16604.25 - 16604.25 0016 43 062.68 - 43 062.68 0019 581.14 - 581.14 Total 190 088.67 2 161.42 192 250.09 10 Breakdown of Eligible expenditure during the reporting period Items 2018 2017 2016 Total Salary expenses 16 832 29 909 20 213 62 673 Design and pilot ISWO concept 63 668 81 000 1 851 112 433 Consulting services expenses 7848 8532 4800 21180 Seminars' expenses 3923 7790 - 11713 Office and other expenses 5865 2139 457 7414 Audit expenses 3781 - - 3781 Trip expense - - 450 450 Returned amounts / expenses (1 975) 3 707) (1) (4 176) Total expenditure, net 99 942 125 663 27 770 253 375 17