2 EAC- MRH PROJECT JUMUIYA YAAFRIKAMASHARIKI AUDITED FINANCIAL STATEMENTS OF MEDICINE REGULATORY HARMONIZATION PROJECT FOR THE YEAR ENDED 30 JUNE 2017 AUDITED FINANCIAL STATEMENTS OF EAC- MRHP FOR THE YEAR ENDED 30 JUNE 2017 Table of Contents 1. BACKGROUND OF THE PROJECT .................. ..... ...................... .......... ................ 5 2. CORPORATE GOVERNANCE STATEMENT ..................................................... ... 9 3. RISK MANAGEMENT AND INTERNAL CONTROL ........ .. .............. .... ... ....... ..... .. 10 4. STATEMENT OF THE SECRETARY GENERAL'S RESPONSIBILITIES .......... 13 5. REPORT OF THE AUDIT COMMISSION ON MEDICINE REGULATORY HARMONIZATION PROJECT FOR THE YEAR ENDED 30 JUNE 2017 ......... .... .......... 15 6.1 STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2017 ......................... .............. 19 6.2 STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30 JUNE 2017 ...... 20 6.3 STATEMENT OF CHANGES IN NET ASSETS/ EQUITY AT 30 JUNE 2017 ....................... 21 6.4 CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2017 .................................. 22 6.5 STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS FOR THE YEAR ENDED 30 JUNE 2017 23 6.6 STATEMENT OF SPEGAL ACCOUNT ACTlVIlY FOR THE PERIOD ENDED 30TH JUNE 201724 6.7 NOTES TO THE FINANCIAL STATEMENTS .................................................................... 25 GENERAL INFORMATION ........................................................................................................25 6.7.1 SUMMARY OF SIGNIFICANT ACCOUNTING POUGES .................................................. 25 6.7.2 ARTHIMETICAL NOTES TO THE FINANGAL STATEMENTS ....................•......................30 East African Community Audit Commission @2017 Page 2 of33 AUDITED FINANCIAL STATEMENTS OF EAC- MRHP FOR THE YEAR ENDED 30 JUNE 2017 ORGANISATION INFORMATION CHIEF OFFICERS Dr. Stanley Sonoiya Principal Health Officer Jane Mashingia Senior Health Officer Patrick Mwesigye Project Coordinator Daniel Murenzi eHealth and Informatics Officer Justine Katesigwa Project Accountant Nancy Cherotich Pharmaceutical Program Assistant REGISTERED East Africa Community OFFICE P.O Box 1096 EAC Headquarters Afrika Mashariki Road Arusha Tanzania AUDITORS AUDIT COMMISSION BANKERS Designated bank account Kenya Commercial Bank Ltd AccountNo.3300705770 P.O Box4605 Arusha, Tanzania East African Comlllllnity Audit Commission @)Ol 7 Page 3 of33 AUDITED FINANCIAL STATEMENTS OF EAC- MRHP FOR THE YEAR ENDED 30 JUNE 2017 East African Commumty Audit Commission @)017 Page 4 of33 AUDITED FINANCIAL STATEMENTS OF EAC- MRHP FOR THE YEAR ENDED 30 JUNE 2017 1. BACKGROUND OF THE PROJECT The East African Community Medicines Regulatory Harmonization (EAC-MRH) project aims at improving access to safe, efficacious, affordable and good quality medicines by harmonizing medicines regulation systems, requirements and procedures in accordance with national and international policies and standards. In addition, the initiative is in line with the provisions of the Treaty establishing the East African Community; in its chapter 21 article 118, which provides for Partner States to corporate and collaborate in health matters. The East African Community MRH Programme was officially launched on 30th March , 2012, in Arusha , Tanzania with the purpose to improve access to safe, efficacious and good quality essential medicines for the treatment of conditions of public health importance The Project goal is to have a harmonized and functioning medicines regulatory system within in accordance with national and internationally recognized policies and standards [WHO& ICH] The Project Objectives are : • To implement an agreed common technical document for registration of Medicines in the EAC Partner States • To implement a common information management system for medicines registration in each of the EAC Partner States NMRAs this is linked in all Partner States and EAC Secretariat • To implement a quality management system in each of the EAC Partner States NMRAs • To build regional and national capacity to implement Medicines registration harmonization in the EAC • To create a platform for information sharing on the harmonized medicines registration system to key stakeholders at national and regional level • To develop and implement framework for mutual recognition based on Chapter 21 , Article 118 of the East African Community Treaty The Project has several milestones listed below: a. An agreed CTD for registration of Medicines implemented in all 6 NMRAs by end of year 5 b. A common integrated IMS established and linked in all NMRAs and EAC Secretariat by end of year 4 c. QMS implemented in each NMRAs by end of year 5 d. Institutional, human and infrastructural capacity built by end of year 5 & capacity building programmes institutionalized into the existing structures e. Governments commitment, industry buy-in & commitment and public awareness created East Africa11 Commu11ity Audit Commission @201 7 Page 5 of 33 AUDITED FINANCIAL STATEMENTS OF EAC- MRHP FOR THE YEAR ENDED 30 JUNE 2017 f. A framework for mutual recognition of regulatory decisions developed and implemented by end of year 5 1.1. Human Resource As at 30th June 2017, the MRHP had the following human resource capacity:- EAC-MRHP 30/6/2017 30/6/2016 Project Staff 3 10 Subtotal 3 10 1.2. The Budget The Budget of the EAC - Medicine Regulatory Harmonization Project for the financial year 2016/17 was USO 2,897,461 1.3 Achievements during the year The achievements on joint activities are fisted befow: At National levels a total of 5,095 Applications for registrations have been • received and 2,796 applications have been approved for registration • At regional level under joint procedures, 38 applications have been received and assessed; and 8 of them approved for registration at national levels • Up to April 2017 a total of 13 pharmaceutical manufacturing sites were jointly inspected by EAC Inspectors with technical support from WHO and Swissmedic of which 10 have been issued with Certificates • Industry is very exited about the joint inspections as it creates more time for working under reduced inspections. • Under Integrated IMS implementation in NMRAs is ongoing starting with Uganda NDA, implementation started December 2016 and in March 2017 for Rwanda where import and export modules are in use • Other NMRAs in the EAC, Zanzibar is ready for implementation and Burundi the portal is ready. • All NMRAs have videoconference facilities and including EAC - Secretariat since Sept 2014 and by November 2016 all NMRAs received 2 data servers. • TFOA has been the only ISO 9001 :2008 certified until 2015 version requirements while NOA, PPB and ZFOB have plans to acquire certification by June 2018 Pharmacovigilance East African Community Audit Commission @2017 Page 6 of33 AUDITED FINANCIAL STATEMENTS OF EAC- MRHP FOR THE YEAR ENDED 30 JUNE 2017 • Harmonized system strengthening tools have been approved in March 2017 . • PV National System assessed in Feb -March 2017 and results discussed • With technicar read by AU -NEPAD , PV business pran is being deveroped and expected to be availed by Sept 2017 Capacity Building and institutional strengthening Programme - Twinning between NMRAs in capacity building exchanges and four sessions have been conducted in areas of Medicine Evaluation and Registration (MER) the last in Burundi and one dossier was assessed - QMS, Tanzania Food and Drugs Authority underwent assessment for ISO 9001 :2015 certification and obtained, while Kenya (PPB), Uganda (NOA) have concluded the external reviewers and are finalizing with the procurement for the auditors. For Tanzania (ZFDA) , external audits have been concluded and waiting for certification . 12 staff from Burundi and Uganda received training on the use and application of the IMS - On the other hand each Partner State NMRA and EAC Secretariat were given 2 data servers - March 2017 training of 57 staff in advanced GMP and data integrity for medicines registration Institution and regulatory systems strengthening Three (3) Regional Centers of Regulatory Excellence (RCOREs) established and are operational a- Medicines Evaluation and Registration lead by TFOA & SOP-MU HAS, 1O experts in Good Clinical Trial Practice in Addis Ababa at the end of June 2017; b- Pharmacovigilance systems strengthening and Harmonization lead PPB & University of Nairobi; we started negotiations with USAID and 900 ,000 USO has been secured for the first year 2017/2018 and will be reviewed annually; c- GMP inspections lead by NOA & University of Makerere - licensing Tanzania Moshi -SLF-KSP & Purdue University (USA) - training in Core Regulatory sciences - Draft and costed Pharmacovigilance system strengthening business has developed and will be ready for consideration and approval by the 15th Sectoral Council as part of post current EAC-MRH Project implementation Regional policies towards reforming the regional pharmaceutical sector - Regional Pharmaceutical Policy, Legal and Regulatory Reform , drafts are ready for consideration by the 15th Sectoral on Health ; - NMRAs Resource Mobilization and Financial Sustainability model, report availed with support from consultants hired by the WB is available; East African Community A11dit Commission @201 7 Page 7 of33 AUDITED FINANCIAL STATEMENTS OF EAC- MRHP FOR THE YEAR ENDED 30 JUNE 2017 - NMRAs medicines regulatory decisions Information Sharing , Cooperation framework is ready; - Plans to establish the East African Medicines and Food Safety Commission ; a draft concept note and proposal are available for consideration by the 15th Sectoral Council. Activities planned for future implementation: • Continue with Joint Dossier Assessment under Partner States Joint Scheme • Continue with Joint GMP inspections into pharmaceutical plants in the region and outside • Fast tracking of implementation of the Quality Management System in the Republic of Kenya (PPB), Uganda (NDA), URT -Zanzibar (ZFDB) and later Rwanda MoH and Burundi (DMPL) • Development and implementation of the standard treatment guidelines for the region • To develop and implement a regional essential medicines and health technologies list • Continue with approval and implementation processes of the regional pharmaceutical policies, its strategic plan and EAC Partner States NMRAs Cooperation Framework Agreement • Establishment of a regional pooled bulk procurement for medicines and health technologies mechanisms • Implementation and domestication of the regional pharmaceutical policy, its strategjc plan and Cooperation Framework Agreement across Partner States NMRAs • Implementation of activities gearing toward strengthening of the pharmacovigilance system in the EAC Partner States • Fully implementation of the Integrated Information Management System in all NMRAs • Finalize development of EAC -MRH Project phase Ill and continue with resources mobilization • Working towards establishment of the EAC -MRH Project into a Regional Programme • Domestication of harmonised guidelines on regulation of Vaccines, Biotherapeutics and Biosimilars • Build technical capacity in Bioequivalence studies, specialized medical products (Vaccines, Biologicals and Nouvelle Medical Products regulation • Plan a 6 months transition period to enable finalization of the ongoing preparation of phase Ill • Supporting countries to use existing platfonns for infonnation sharing • To start discussions with NMRA to have a focal person to follow up on activities implementation and coordination at national level East Africa11 Comnumity Audit Commissio11 @2017 Page 8 of33 AUDITED FINANCIAL STATEMENTS OF EAC- MRHP FOR THE YEAR ENDED 30 JUNE 2017 2. CORPORATE GOVERNANCE STATEMENT The implementation of the project activities is vested with the Steering and Executive Committees. The MRHP Steering Committee is responsible for providing Policy and strategic oversight to the project, while the Executive Committee is responsible for overseeing project operations. Meetings of the two committees will continue to regularly consider budgetary strategy, assess project outcomes, monitor risks, make policy and resourcing decisions, and review requests for changes in project scope. Internal Auditor reports to the Audit and Risk Committee on , among other things, the status of compliance risk management in EAC and significant areas of non-compliance. The impact of new and proposed legislation and regulations (if any) is assessed by management and material regulatory issues and legislative developments are escalated to the Audit and Risk Committee. East African Community Audit Commission @2017 Page 9 of33 AUDITED FINANCIAL STATEMENTS OF EAC- MRHP FOR THE YEAR ENDED 30 JUNE . 2017 3. RISK MANAGEMENT AND INTERNAL CONTROL Overview of EAC's risk management framework The East African Community (EAC) is responsible for the risk management and internal control system of the project EAC is committed to a process of risk management that is aligned to the principles of sound corporate governance recognizing that the management of risk is an important strategy for the achievement of the EAC Mission and supporting objectives. The project management is task to ensure that the adequate internal financial and operational control systems are developed and maintained on an ongoing basis in order to provide reasonable assurance regarding: • The effectiveness and efficiency of operations • The safeguarding of the project assets • Compliance with signed grant agreement and other applicable laws and regulations • Reliability of accounting records • Responsible behavior towards all stakeholders Approach to Risk Management A description of EAC's approach to risk management covering a summary of the overall methodology and the management of individual types of risks is included in the EAC Risk Management Framework, Policy and Strategy (2011) and expounded as below. The EAC's risk management framework is based on a well-established governance process, with different lines of defense and relies both on individual responsibility and collective oversight, supported by a comprehensive reporting and escalation process. The EAC's internal audit function independently audits the adequacy and effectiveness of the EAC's risk management framework. The head of Internal audit reports and provides independent assurance on the same to the audit and Risk committee and has unrestricted access to the Secretary General and the chairman of the Audit and Risk Committee. a) Operational risk Operational risk is the potential for loss resulting from the inadequacy of, or a failure in internal processes, people, systems or external events . The Project recognizes the significance of operational risk, and the fact that it is inherent in all business units. b) Occupational health and safety The health and safety of our employees, our partners and other stakeholders continues to be a priority. The Project seeks to effectively identify, reduce or East African Commanity Audit Commission @2017 Page 10 of33 AUDITED FINANCIAL STATEMENTS OF EAC- MRHP FOR THE YEAR ENDED 30 JUNE 2017 control accidents or injuries to employees, contractors and clients. The Project continues to focus on ensuring compliance with current legal and regulatory framework and ensuring that occupational health and safety procedures are closely linked to the operational needs of the business. c) Reputational risk Safeguarding the Project's reputation is of paramount importance to its continued operations and is the responsibility of every member of staff. Reputationaf risks can arise from social , ethical or environmental issues, or as a consequence of operational risk events. The Community's strong reputation is dependent upon the way in which it conducts its business, but it can also be affected by the way in which its clients, to whom it provides services, conduct themselves. Effective management of all operating activities is required to establish a strong internal control framework to minimize the risk of operational and financial failure and to ensure that a full assessment of reputational implications is made before strategic decisions are taken. Management structure The Project Coordinating Team within the Health Department of the Secretariat, including financial management, procurement, health, accounting, and monitoring and evaluations and informatics specialists to assist the Secretariat carry out its tasks in the project. The current management team has been disclosed on page 3. Employees· welfare Management - Employees' Relationship Currently the EAC MRH Project has ten employees. The relationship between the employees and management was good. There were no unresolved complaints. EAC Secretariat is equal opportunity employer. It gives equal access to employment opportunities and ensures that the best available person is appointed to any given position free from discrimination of any kind and without regard to factors like gender, marital status, tribes, religion , nationality and disability which does not impair ability to discharge duties. Medical Assistance The EAC Secretariat has arranged medical facility which is available to all recruited staff and their immediate family members. Currently this service is provided by AAR (T). Persons with Disability The recruitment policy of the EAC Secretariat does not discriminate against persons with disabilities, rather the ability to discharge their responsibility. East African Community A udit Commission @2017 Page 11 of33 AUDITED FINANCIAL STATEMENTS OF EAC- MRHP FOR THE YEAR ENDED 30 JUNE 2017 Employee Benefit Plan EAC Secretariat employment contracts provides for gratuity benefit at a rate of 25% of the basic salaries for the tenn of employment at the end of the contract. Gender parity The EAC Secretariat has no gender bias. Men and women are equally eligible for holding any office of the EAC Secretariat provided that they possess the required qualifications and proven competence. Currently the EAC MRH Project team is made up of three females and seven males. Related party transactions Transactions with related parties are disclosed under Note 11 to the financial statements. Accounting policies A summary of key accounting policies is in Note 2 to the financial statements and were consistently applied during the year under review. Environmental control programme The East Africa Community (EAC) preserves the environment through tree planting within and outside its offices and is committed to making sure that all internal and external surroundings of its offices are clean . Political and charitable donations The Medicines Regulatory Harmonization (MRH) project did not make any political and charitable donations. Prejudicial issues In the opinion of the EAC Secretariat, there are no serious unfavourable matters that can affect the MRH project Corporate social responsibilities The EAC encourages employees' initiatives on participating in corporate social responsibilities activities. However during the period under review the EAC Secretariat did not engage in any corporate social responsibility activities. East Africa11 Comnumity Audit C.ommissio11 @2017 Page 12 of33 AUDITED FINANCIAL STATEMENTS OF EAC- MRHP FOR THE YEAR ENDED 30 JUNE 2017 4. STATEMENT OF THE SECRETARY GENERAL'S RESPONSIBILITIES The Treaty for the Establishment of the East African Community and the Financial Rules and Regulations require the Secretary General to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Community. These annual financial statements have been prepared in accordance with International Public Sector Accounting Standards, under the Accrual Basis of Accounting. The financial statements are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgment and estimates. They have been presented to ensure comparability with the EAC annual financial statements of previous periods and with financial statements of other entities. The statements have been prepared as general-purpose financial statements intended to provide information about the financial position , financial performance, and cash flows of the EAC that is useful to a wide range of users. The Secretary General is responsible for establishing and maintaining a system of effective internal control designed to provide reasonable assurance that the transactions recorded in the books of accounts and reported in these annual financial statements are within the statutory authority and reflect with reasonable accuracy the receipt and use of public financial resources by the EAC. The Secretary General is responsible for and acknowledge the ultimately responsibility for the system of internal financial control established by the EAC and place considerable importance on maintaining a strong control environment. To enable the Secretary General to meet these responsibilities, the Secretary General sets standards for internal control aimed at reducing the risk of error or deficit in a cost effective manner. These standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures, and adequate segregation of duties to ensure an acceptable level of risk. To ensure that theses controls are monitored throughout the EAC and all employees are required to maintain the highest ethical standards in ensuring the EAC business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the EAC is on identifying, assessing, managing and monitoring all known forms of risk across the Community. While operating risks can be fully eliminated, the Community endeavors to minimize it by ensuring that appropriate infrastructure, controls, systems and ethical behavior are applied and managed within predetermined procedures and constraints. The Secretary General is of the opinion, based on the information and explanations given by management that the system of internal control provides reasonable assurance that financial records may be relied on for the preparation of the financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or deficit. To East African Community Audit Commission @2017 Page 13 of 33 AUDITED FINANCIAL STATEMENTS OF EAC- MRHP FOR THE YEAR ENDED 30 JUNE 2017 the best of my knowledge, the system of internal control has operated adequately throughout the reporting period. The financial statements set out on the pages below which have been prepared on a Going Concern Basis, were approved by the Secretary General on the date indicated below. etary General accepts responsibility for the integrity of the financial statements ation conta·ned therein for the period under review. Amb. Liberat Mfumu Hon. Jesc riyo Ambassador Deputy Secretary General SECRETARY GENERA (Finance and Administration) East Africa11 Community Audit Commission @2017 Page 14 of 33 AUDITED FINANCIAL STATEMENTS OF EAC- MRHP FOR THE YEAR ENDED 30 JUNE 2017 5. REPORT OF THE AUDIT COMMISSION ON MEDICINE REGULATORY HARMONIZATION PROJECT FOR THE YEAR ENDED 30 JUNE 2017 The RT. Honorable Speaker, East African Legislative Assembly REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS Opinion We have audited the financial statements of the Medicine Regulatory Harmonization Project set out on pages 19 to 33 which comprise the statement of financial position as at 30 June 2017, and the statement of financial performance, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information. In our opinion, the financial statements present fairly, in all material respects, the financial position of Medicine Regulatory Harmonization Project as at 30 June 2017, and of its financial performance and its cash flows for the year then ended, in accordance with International Public Sector Accounting Standards and comply with the Grant Agreement No. TF010846 and TFOA2289 dated 11 May 2016. Basis Opinion The audit was conducted in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Project in accordance with the ethical requirements of International Ethics Standards Board for Accountants (IESBA) Code of Ethics for Professional Accountants and Article 134(4) of the Treaty for Establishment of the East African Community, 1999 and we have fulfilled our ethical responsibilities in accordance with these requirements and the ISAs. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial statements of the current year. These matters were addressed in the context of the audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, a description of how the audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the Auditor's ResponsibiUties for the Audit of the Financial Statements section of the report, including in relation to East African Co11111umity Audit Commission @2017 Page 15 of 33 AUDITED FINANCIAL STATEMENTS OF EAC- MRHP FOR THE YEAR ENDED 30 JUNE 2017 these matters. Accordingly, the audit included the performance of procedures designed to respond to the assessment of the risks of material misstatement of the finandal statements. The results of the audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements. No. Key Audit Matter How the Audit Commission addressed the key audit matter 2.0 Under absorption of Donor Revenue Each project has a definite grant The following audit procedures were period within which the agreed performed in response to this activities must be completed. matter: • Reviewed the financing The Revised Grant Agreement dated agreement and annual work plans 11 May 2016 for the Medicine • Reviewed the progress reports Regulatory Harmonization indicates and compared the budgets and the project will be completed by 29 activities implemented during December 2017. There is a risk that the period. the project activities will not have been completed on time and donor money will be refunded to the donor. There is also a risk that the overall objectives for the project will not be achieved due to non-implementation of some project activities Responsibilities of Management for the Financial Statements The Secretary General and the Project Coordinator are responsible for the preparation and fair presentation of the financial statements in accordance with International Public Sector Accounting Standards and Section II (C) of the Grant Agreement and for such internal control as the management determines is necessary to enable the preparation of financial statements that are fr~ from material misstatement, whether due to fraud or error. In preparing the financial statements, the management are 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 the management intends to cease operations of the Project, or have no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Project's financial reporting process. East African Comrmmfty Audit Commission @2017 Page 16 of33 AUDITED FINANCIAL STATEMENTS OF EAC- MRHP FOR THE YEAR ENDED 30 JUNE 2017 Audit Commission's Responsibilities for the Audit of the Financial Statements The audit objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes 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 judgement and maintain professional skepticism throughout the audit. We also: • rdentify and assess the risks of materia( 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 the management. • Conclude on the appropriateness of the management' 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 the 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 audit report. However, future events or conditions may cause the Project to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. East African Community Audit Commission @1017 Page 17 of 33 AUDITED FINANCIAL STATEMENTS OF EAC- MRHP FOR THE YEAR ENDED 30 JUNE 20 17 Audit Commission's Responsibilities for the Audit of the Financial Statements 'Th e ::u:li: cLj~':ti'h', Lire tc1 obtair, 1e)!o.1abi,' ,·;;Jr-Jr1:e ,1l_}CL,t ,·-reth~·r tr,: fh,rn cial statements as a whole are free from material misstatement, whether due to frau d or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a hig,·, lt:-v2l of assurance, but is not a guarance-e that an auoit eu,·,aucted i n accordance with ISAs will always detect a material misstatement when it exist s. Missta tc>mems c.an anse from fraud 01 erru, dna are consi dered rnat erial if, individually or in the aggregate, they coula reasonably be expected to influence t he economic aeci ions of users taken on the basis of these financial stacements. As pa rt d a'l audit in accordance with ISAs 1rve ex~rcise profess1,Jnal 1 udgernent and maintain professional skept cism tnroughout i:he au01t. We also : • Identify and assess the n sKs of material m1sscatement of ti e financial s~ateme nts, whetne' due to fraua or error. de.:,ign and perform au c;it procedures respon s·ve t o these risks, and obtain audit evidence that is sufficient and aporopriate to provide 2. basis for our opimon . Tne risk ot nm: deteccing a mate rial misstai:ei11e-11t resulting fro11 ·f raud 1s I ·gher than for one r,2sult1119: from error, as fraLd may involve collusio1 , for~erv, ·:·i:en'cionat o'Tissions, r~1·sr2oresentations. c,r ~12 override of internal concroi. • Obta;r an ,mderstanding of internal contr2t rele,,cn t to t he audii: in oraer to desi gn auci it crocedJres trat are apprn:iriate i11 ,~,e :::1rcumstanc2s. m.t not for the pur:;ose of 2;~x~ssing an opini c" on :r,e cf fee ~;veness of tr 1e t".'rc_1eci:'s iritern al control • E\al-Jat2 ~11e apcl:u.' ·ia,eress of :t:.:ccunt:;ng -10'. c12s usea and t.he "eascnableness of accc)uricim~ est 1 mdl2s and retai.:el.. 01scio::. 1•• '"es made by the management. • Conclude on the appropriateness of the management' use of the going concern basis of accoL1ntin~ and based '.Jr the 2Ldit: evid.once obtained whether a materi al uncenair1ry 2xiscs rel3 ted rn evf·rit:s er condi11ons rhat may cast sign1f cant dou bt1 o. tne i=>rnj=cc's abiiity to cont' nue 2.s a ~0in~ concern. 1.c we conclude tha t a materi3l uncertainty exists, we are required to draw atte ntion in the auditor' s report to the related disclosures in the financial statements or, if such aisclosures are in~r\::c;L at:e. '::., rnoci"ry our o :irrio'L < 1ir ~cndus ions are based on tre au di t ence,h.P ~D' ::1iricd UJ to the daie uf O'Y auc· · re:- 1 't. rlo .;evt=.; , i, r:.."·"'= cv.er1ts or ccnui 1.1ons r,,c1> c..au!>e che ?rojeCL i.u .:edSE tc., cor;t1,1ue as a going cu11c21, ,. • EvaLuate the overall oresentatior, structure and content of the finan cial statement.s, H'cludhg i:re 01sctc,,ures, 3'ld "'r.etrier the f:nanc al scaterne nt s rep,·ese,1t -::~-2 u1a2 .. v~ng transac:10'ls ana 2 '2rt~ 1~ a manne .. i:r2c ,?;ci,1eves fair presertatlO" --. East A..fi·icrm Comnwnit1 -1 rulit Commi.Hio11