I " %: t tI MINISTRY OF TREASURY AND FINANCE BOARD OF TREASURY CONTROLLERS EDUCATION INFRASTRUCTURE FOR RESILIENCE PROJECT Implemented by MINISTRY OF NATIONAL EDUCATION Financed Under World Bank Grant Agreement Numbered TF0A4341 As of December 31, 2018 and For the Year Then Ended Prepared by Ethem AKIN Neslihan YIKILMAZ Tung ERSEVER Senior Treasury Controller Senior Treasury Controller Treasury Controller isuX Report's Number o 144/8 61/3 46/3 z INDEPENDENT AUDITOR'S REPORT May 30, 2019 CONTENTS EX EC U T IV E SU M M A R Y ..................................................................... I............................................ .. .................................... 1 A . Proje ct Sum m ary y .................................................................................................................................................................. 2 B . O b jectives of A udit ................................................................................................................................................................. 2 C. Scope of A udit ........................ ................................................................................................................................................... 3 D . A udit R es ul ts .........................................................................................................................................,............. ...................... 3 E. M anagem ent R ecom m enda ti on ....................................................................................................................................... 3 INDEPENDENT AUDIT REPORT'S & FINANCIAL STATEMENTS OF THE PROJECT ....................................,..4 IN D EPEN D EN T A U D IT O R 'S S R E PO RT ................................................................................................................................. 5 O pinion ....................................................................................................................................................................................... 5 B as is of O pinion ..................................................................................................................................................................... 5 G o in g Concern ......................................................................................................................................................................... 6 A N N EX 1: Financ ial IStatem ents ............................................................................................................................................... 8 EXECUTIVE SUMMARY REPUBLIC OF TURKEY MINISTRY OF TREASURY AND FINANCE Board of [reasury Controllers EXECUTIVE SUMMARY A. Project Summary The Grant Agreement between the Ministry of National Education, Directorate for Construction and Real Estate and International Bank for Reconstruction and Development (World Bank) for Education Infrastructure for Resilience Project, Grant Numbered TF0A4341 was signed on 27.01.2017 and received a grant of 142.800.000,00 Euro. Project is financed by the EU Regional Trust Fund (FRIT) source and is implemented by the Ministry of National Education, Directorate for Construction and Real Estate. The objective of the Project is to support the Recipient in improving access to education by Syrians under Temporary Protection (SuTP] and Host Communities through the expansion of disaster resilient education infrastructure in Priority Provinces. The Project consists of the following parts: * Part A: Supporting School Infrastructure Investments * Part B: Enhancing Quality Learning Environment * Part C: Project Management and Technical Capacity Building for Infrastructure Within the scope of Project, the following 3 Special Designated Account was opened in Vakifbank. * Non-interest bearing EURO Account which has TR38 0001 5001 5804 8016 4085 71 account number * Interest bearing EURO Account which has TR69 0001 5001 5803 8016 3123 23 account number * Non-interest bearing TL Account which has TR13 0001 5001 5800 7305 4919 49 account number B. Objectives of Audit The objectives of our audit are; a] To give an opinion on whether the financial statements, prepared as of December 31, 2018 and for the period then ended, present fairly, in all material respects, the financial position of the project in accordance with the cash receipts and disbursements basis of accounting, b) To determine, as of December 31, 2018, whether the Ministry of National Education, Directorate for Construction and Real Estate has complied, in all material respects, with the rules and procedures of the Grant Agreement numbered TF0A4341, 2 REPUJBLIC OF TURKEY NINISIRY OF TREASURY AND FINANCE Board of Treasury Controllers c) To examine whether adequate supporting documentation has been maintained to support claims to the World Bank for reimbursements of expenditures incurred with respect to SOEs and evaluate eligibility of these expenditures for financing under the Grant Agreement. C. Scope of Audit We have performed an audit of financial statements of Education Infrastructure for Resilience Project as of December 31, 2018 in accordance with the cash receipts and disbursements basis of accounting. Since, financial tables of the project in 2017 have not been audited; we have started our audit period from January 27, 2017 when the grant agreement was signed. Thus, this report covers the period between January 27, 2017 and December 31, 2018. We have also performed a compliance audit on whether project activities are in line with the Grant Agreement. Our audit was conducted in accordance with International Standards on Auditing published by International Federation of Accountants (IFAC) applicable to the audit of financial statements and compliance auditing. There was no limitation in our scope for the Project's audit. D. Audit Results For the financial statements of project; our audit resulted with an unqualified opinion. As of December 31, 2018, Ministry of National Education, Directorate for Construction and Real Estate has complied, in all material respects, with the rules and procedures of the Grant Agreement numbered TF0A4341. In addition, with respect to SOEs, adequate supporting documentation has been maintained to support claims to the World Bank for reimbursements of expenditures incurred; and which expenditures are eligible for financing under the Grant Agreement numbered TFOA4341. E. Management Recommendation Since we have not identified any findings during our audit, we have not issued a Management Letter. 3 INDEPENDENT AUDIT REPORT'S & FINANCIAL STATEMENTS OF THE PROJECT REPULIC OF TURKEY MINISTRY OF TREASURY AND FINTNCE Board oF TreasUry Controllers INDEPENDENT AUDITOR'S REPORT TO MINISTRY OF NATIONAL EDUCATION Opinion We have audited the Statement of Sources and Uses of Funds, Statement of Cumulative Investments, Statement of Requests for Reimbursement (SOE Statement) and Statement of Special Account of the Education Infrastructure for Resilience Project as of December 31, 2018, and for the period between 27.01.2017-31.12.2018, and a summary of significant accounting policies and other explanatory information. The financial statements have been prepared by Ministry of National Education, Directorate for Construction and Real Estate based on financial reporting provisions of the Grant Agreement Numbered TF0A4341. In our opinion; a) The accompanying Statement of Sources and Uses of Funds, Statement of Cumulative Investments, Statement of Requests for Reimbursement (SOE Statement) and Statement of Special Account present fairly, in all material respects, the financial position and cash flows of the Education Infrastructure for Resilience Project as of December 31, 2018 and for the period then ended in accordance with the provisions of the Grant Agreement Numbered TF0A4341. b) Ministry of National Education, Directorate for Construction and Real Estate, as of December 31, 2018 has complied with, in all material respects, the requirements of the Grant Agreement Numbered TF0A4341. c) With respect to SOEs, adequate supporting documentation has been maintained to support claims to the World Bank for reimbursement of expenditures incurred, and these expenditures are eligible for financing under the Grant Agreement Numbered TF0A4341. Basis of Opinion We conducted our audit 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 this report. We are independent of the Ministry of National Education, Directorate for Construction and Real Estate within the meaning of "IFAC Code of Ethics for Professional Accountants" and ethical requirements and have fulfilled our other responsibilities under those ethical requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 5 REPUBLIC OF TURKEY MINISTRY OF TREASURY AND FINANCE Board of T reasLul Controllrs Going Concern The Projects financial statements have not been prepared using the going concern basis of accounting. The project will end on December 31, 2020. Responsibilities of Management and Those Charged with Governance or other appropriate terms for the Financial Statements Ministry of National Education, Directorate for Construction and Real Estate is responsible for the preparation and fair presentation of these financial statements in accordance with Grant Agreement Numbered TF0A4341, 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. Those charged with governance are responsible for overseeing the Ministry of National Education, Directorate for Construction and Real Estate's financial reporting process. Auditor's Responsibilities for the Audit of the Financial Statements The objectives of our audit 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 planning and performance of 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 entity's internal control. 6 REPLBLIC OF TURKEY MINISTRY OF FREASURY AND FINANCE Board of Treasurx Controllers * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. * 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 are required to 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. We are also required to provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. Ahmet TUTAL Acting Chairman of Board of Treasury Controllers. Akif Bile t BOYACIOLU (Audit Partner) Vice Chairman Ethem AKIN Neslihan YIKILMAZ Tung ERSEVER Senior Treasury Controller Senior Treasury Controller Treasury Controller Date: 30/05/2019 Address: Ministry of Treasury and Finance Board of Treasury Controllers 06510, Emek, ANKARA/TORKIYE 7 ANNEX I: Financial Statements о v' r- с� о � а о т м о М °с7 й•.о � о й'9_ 4л С] И о.+г7 ,��. С? 'цц? � _ С} � t7? �О� !Л б��.. Q о� V' гп О 1� С? CV ' а ,� � � г W. _ ,� , t�q г� г г �. Q3 М О ��"'! . с7. � � � � т � .г. ц� п� . т �.� � � 4' 1+ t� Qт .-t�' .� N М Q; 45 � [iS ��� Q) as ц4 �j U Ci � w д и, с пs �' �ti= г. а и ао гб оо о са о о rs � 'R `� О 7�3 С? V' 6 � Q О� 09 О Г О М � 's � �" о'сУ t0 С� Сд Q. � а б � � с7 i'� © N � [] с0 М f7 ' � 4�'J C4i? �� � ' � �" Ш } ��,, У) . ц7 � у� � CD ц5 N, Q� а . oi � �*+ О �С - вч вэ о� цi �_ м , `n у О �` � , сsомом о м с: '�г"� G д_ СЛ_�. О� О д> О р - V С? 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Lfa � О. � И. EJJ � И Gэ � � Уь. [Л �,. tC} lГ) � � .., � �, � 4(} r�- s� и и и с�, г=� � � О т © О т � и и � и т � т � � т Q t1 � ,.,.,, С Z � ° L 1- ° L U � с�`л �N� U, й � �Q .�� J .�� � г а� � �� � � U Q � г '.� ОС? Оа �г С � _� � D р р �г О � �-' -� � а' N� О ® c�j � 4 Н i1C � Q � о о � � а � ,tг � сЛ с1 � _ Q � ` 41t � � � i±} - � MINISTRY OF NATIONAL EDUCATION DEPARTMENT OF CONSTRUCTION AND REAL ESTATE EDUCATION INFRASTRUCTURE FOR RESILIENCE PROJECT Grant/Project No:TFOA4341 SPECIAL ACCOUNT TABLE VAKIFBANK MoNE Branch SPECIAL ACCT. NO: TR69 0001 5001 5803 8016 3123 23 - TR38 0001 5001 5804 8016 4085 71 *As of December 31, 2018 and for the Year Then Ended (in Euro) Cash at the beginning of the period 0,00 Checking Account Balance 0,00 Deposit Account Balance 0,00 Transfers to Special Account 32-520 455,42 a)*Advance 30.000.000,00 b) SOE Procedures 2.520.455,42 c) Summary Sheet 0,00 Refunds to Special Account 0,00 10ther Incomes (Interest Incomes) 62.145,341 Special Account Total Amount 32.582.600,76 Expenditures 2.520.455,42 Commissions Paid to the Central Bank 0,00 **Total Uses from Special Account 6.995.252,43 Checking Account balance of the end of the period 25.587348,33 -Deposit Account balance of the end of the period 010011 Total Closing Balance 25.587.348,331 ** The World Bank's Advance Ceiling Limit was increased to EUR 30, 000, 000 with EUR 17, 600, 000 approved on 0 1. 11. 2018 and transferred to the special account on 0 7.11.2018. The reason for this is that the last SoE table of the year dated 20.11.2018 is declared as 12.500. 000 EUR. This advance limit increase was conected with the application of SoE application dated 14.01.2019 and adjusted to EUR 30. 000. 000. **In 2017, the Ministry of Treasury and Finance did not carry out any audit because of the lack of adequate transactions in Education Infrastructure for Resilience Project implemented by the World Bank. The above mentioned amounts cover the cumulative data from the beginning of the project (15.05.2017) to the end of 31.12.2018. 1 M met ORLIQ Head o C struction Works Department MINISTRY OF NATIONAL EDUCATION Construction and Real Estate Department Education Infrastructure for Resilience Project Grant/Project No: TF0A4341 As of the Year ended in 31.12.2018 (Cumulative) NOTES ABOUT THE PROJECT FINANCIAL NOTIFICATION 1. PROJECT OBJECTIVE AND STRUCTURE It is aimed with Education Infrastructure for Resilience Project executed by WB under EU FRIT funds to ensure the maintenance of the school-aged Syrian students under Temporary Protection in Turkey and the construction of educational buildings and annexes for this objective planned by MoNE. It is determined via World Bank (WB) acting as the executer of the grant funds extended by contributors (donors) of Education Infrastructure for Resilience Project, a grant in the amount of Euro 142.800.000 will be extended to the Republic of Turkey. The Project Closing Date is December 31, 2020. The Project is designated under the Construction and Real Estate Department and executed via the following officials and consultants under the coordination of the Head of Department. Order Title Number Type of Employment No 1 Head of PI 1 Public Official 2 Project Director 1 Public Official 3 Project Coordinator 1 Public Official 4 Deputy Coordinator 4 Public Officials 5 Planning Unit 4 Public Officials 6 Tendering Unit 4 Public Officials 7 Monitoring and Evaluation 3 Public Officials, I Consultant (WE) Unit 8 Visibility Unit 3 2 Public Officials, 1 Consultant (WB) 9 Communication Unit 2 1 Public Official, I Consultant 10 Enviromental and Social 3 Public Officials Impacts Units 11 Engineering Prjects Unit 5 Public Officials 12 Implementation and Field 7 5 Public Officials, 2 Consultants (WB) Unit 13 Consultancy Unit 3 2 Public Officials, 1 Consultant (WB) 14 Finance Unit 5 4 Public Officical, 1 Consultant (WB) 15 Contract Management Unit 3 2 Public Officials Total 49 2. PRIMARY ACCOUNTING POLICIES a) Project; is financed via the grant extended by the World Bank (WB). b) The payment under the Project is made to person or institutions providing the construction works, good and services via the special account, c) Funds for the Project will be used under the provisions of "Regulation on "Prin iples and Procedures on the Expenditures and Accounting of the Grants Transferred from th European (r Commission or International Organizations to Public Administrations" published by the Ministry of Finance" published in Official Gazette dated 27.11.2007 and No. 26713. d) All documents and records regarding to the Project are kept by the Construction and Real Estate Department. e) The accounts are prepared on the basis of the cost date and in compliance with the uniform chart of accounts in the accounting standards. f) The financial charts out of the special account chart are prepared on the accrual basis. According to the accrual basis, financial transactions and evidences are recorded in the accounting records when they are occurred without considering if a receipt or payment is made together with becoming a party to any right or obligation emerging from such evidence and record. The special account chart will be drawn up by grounding on receiving or paying cash or similar amounts. g) Accounting transactions are recorded in EURO which is the currency of the provided financing via the grant agreement signed between the World Bank and Ministry of National Education. However, an accounting record in Turkish will be kept in parallel with the accounting record kept in EURO as almost all transactions are made in Turkish Liras. h) Procured inventories or real assets are recorded as project components or general management costs over the cost amount received on the procurement date. There is no depreciation record regarding the project assets. Inventories or real assets obtained from the Project sources are reflected on the budget accounts and depreciation records are followed in the accounting records of the general budget. i) Transactions with currencies other than Euro are accounted for at the Bank's exchange rate at the time of the transaction. 3. FINANCIAL NOTIFICATIONS The utilization of Fund is restricted only with the project objective in compliance with the grant agreement between Ministry of National Education and the Wolrd Bank (WB). The unused project funds at the end of the project shall be returned from the Special Account in compliance with the relevant provisions of the grant agreement. 4. GRANT OF WORLD BANK As the Grant Agreement signed between World Bank and Ministry of National Education in January 27, 2017 is financed by a Multinational Fund the Republic of Turkey is not obliged to any repayment regarding the grant except in cases related to ineligible circumstances. 5. STATEMENT OF THE SPECIAL ACCOUNT IN DECEMBER, 312018 The available balance in the special account in EURO in December 31, 2017 includes the followings (There is no bank vault or cash other than the balance in the bank special account): Special Account Balance (Vakifbank) 25.587.348,33 TOTAL 25.587.348,33 F ih e t ORU Head of ons ruction Works 0 partment 11V i INFORMATION NOTE: AB OUT EDU CA.TI .ON INFRASTRUCTUREFO b RES'ILIFNCE PRO_JEFCT The Grant Agreement of Education Infrastructure for Resilience Project with no. TF0A4341 was signed on 27.01.2017 between Ministry of National Education and World Bank (WB) amounted to Eurol42.800.000 Project objective; It is aimed with Education Infrastructure for Resilience Project executed by WB under EU funds to ensure the maintenance of the school-aged Syrian students under Temporary Protection in Turkey and the construction of educational buildings and annexes for this objective via MoNE by planning. Project Closing Date; is December, 31 2020. The Project will be completed as of this date. *Project Financial Status as of December 31,2018; Information about Incomes Information about Costs Amount of the Provided Source from the Number The Project World Bank (VB) of Number of Special Income from Actualized Total Grant Payment Signed Expenditure Balance of . .AMOunt Account the Previous Income in the Income Docume Contract Year (2017) Current Year nt 12.506.500,89 20.076.099,87 32.582.600,76 281 38 6.995.252,43 25.587.343 * In 2017, the Ministry of Treasury and Finance did not carry out any audit because of the lack of adequate transactions in the Education Infrastructure for Resilience Project implemented by the World Bank. The above mentioned amounts cover the cumulative data from the beginning of the project (15.05.2017) to the end of 31.12.2018. tih Mehmet ORUQ Head f Co truction Works Department