ECAPDEV PROJECT PREPARATION GRANT FOR THE THIRD VILLAGE INVESTMENT PROJECT ECAPDEV PPG GRANT No. TF018709 IMPLEMENTED BY COMMUNITY DEVELOPMENT AND INVESTMENT AGENCY SPECIAL PURPOSE FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR'S REPORT For the period from 4 February 2015 to 30 March 2016 BISHKEK March 2016 I ECAPDEV PROJECT PREPARATION GRANT FOR THE THIRD VILLAGE INVESTMENT PROJECT ECAPDEV PPG GRANT No. TF018709 TABLE OF CONTENTS 3 Page STATEMENT OF MANAGEMENT'S RESPONSIBILITIES FOR THE PREPARATION I AND PRESENTATION OF THE SPECIAL PURPOSE FINANCIAL STATEMENTS 3 INDEPENDENT AUDITOR'S REPORT 4-5 SPECIAL PURPOSE FINANCIAL STATEMENTS For the period from 4 February 2015 to 30 March 2016: Statement of cash receipts and payments 6 Statement of expenditures per components Summary of Summery Reports and SOEs 8 Statement of Designated Accounts 9 Notes to the special purpose financial statements 11-14 ANNEX I. RECONCILIATION BETWEEN THE AMOUNTS SUBMITTED BY THE ARIS AND DISBURSED BY THE WORLD BANK 15 I I I I 2 U STATEMENT OF MANAGEMENT'S RESPONSIBILITIES FOR THE PREPARATION AND PRESENTATION OF THE SPECIAL PURPOSE FINANCIAL STATEMENTS FOR THE PERIOD FROM 4 FEBRUARY 2015 TO 30 MARCH 2016 The management of the Community Development and Investment Agency (hereinafter: ARIS) is responsible for the preparation of the special purpose financial statements of "ECAPDEV Project Preparation Grant for the Third Village Investment Project" (hereafter: the Project) financed by Letter Agreement ECAPDEV PPG Grant No. TFO18709 that present fairly the Project's cash receipts and payments, expenditures per components, summary reports and SOEs, and designated accounts movements for the period from 4 February 2015 to 30 March 2016, in compliance with the International Public Sector Accounting Standard "Financial Reporting under the Cash Basis of Accounting" (IPSAS-Cash Basis) issued by the International Public Sector Accounting Standards Board (IPSASB) within the International Federation of Accountants (IFAC) and the Financial Management Manual for World Bank I Financed Investment Operations (WB Guidelines). In preparing the special purpose financial statements, ARIS's management is responsible for: * Properly selecting and applying accounting policies; * Presenting information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; a Providing additional required disclosures for the period from 4 February 2015 to 30 1 March 2016. ARIS's Management 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 which enable them to ensure that the special purpose financial statements of the Project comply with IPSAS - Cash Basis and the WB Guidelines; * Taking such steps that are reasonably available to them to safeguard the assets of the Project and to affirm that funds received have been used in accordance with the Letter Agreement ECAPDEV PPG Grant No. TFO18709 dated 26 January 2015, and World Bank related guidelines, with due attention to economy and efficiency, and only for the purposes for which the financing was provided; and * Preventing and detecting fraud and other errors. The special purpose financial statements for the period from 4 February 2015 to 30 March 2016 were authorized for issue on 31 March 2016 by the ARIS's Management. On behalf of the ARIS's Mana men Ismailov Kubanychbek i.nushova Ra a Executive Director t "inancial Manager 3 U "UOU-UUEU4S" U'Qe "SOS-AUDIT" LTD INDEPENDENT AUDITOR'S REPORT On the special purpose financial statements of the ECAPDEV Project Preparation Grant for the Third Village Investment Project for the period from 4 February 2015 to 30 March 2016 To the management of the Community Development and Investment Agency (hereinafter: ARIS) We have audited the accompanying special purpose financial statements of the "ECAPDEV Project Preparation Grant for the Third Village Investment Project" (the Project) financed by Letter Agreement ECAPDEV PPG Grant No. TF018709, which comprise the statement of cash receipts and payments, the statement of expenditures per components, the summary of summary reports and SOEs, the statement of designated account for the period from 4 February 2015 to 30 March 2016, and a summary of significant accounting policies and other explanatory notes. Management's Responsibility for the Special Purpose Financial Statements The management of the ARIS is responsible for the preparation and fair presentation of these special purpose financial statements in accordance with International Public Sector Accounting Standard: Financial Reporting Under the Cash Basis of Accounting, (IPSAS- Cash Basis) issued by the International Public Sector Accounting Standards Board (IPSASB) within the International Federation of Accountants (IFAC), and Financial Management Manual for World Bank Financed Investment Operations, and for such internal control as management determines is necessary to enable the preparation of special purpose financial statements that are free from material misstatements, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these special purpose financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (ISAs) as issued by International Auditing and Assurance Standards Board (IAASB) within the IFAC. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the special purpose financial statements are free from material misstatement. An audit involves performing procedures to obtain reasonable audit evidence about the amounts and disclosures in the special purpose financial statements. The procedures selected depend on the auditor's judgment including the assessment of the risk of material misstatement of the special purpose financial statements, whether due to fraud or error. In making those assessments, the auditor considers internal control relevant to the preparation and fair presentation of the special purpose financial statement 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 internal control. P-pnnL qnp[wp Phqfibu Utjwuuh Uungwg4w6 Ur6qwdt 3; p. bpLw0 0037, LLShqpw0jw0 38/55; 9bn. (+37410) 20 11 51: ,wpu' (+37410)20 11 50; www.sosaudit,am; tt-finuLn info@sosaudit.am An Associate of the Crowe Horwath Business Alliance 38/55 A Tigranyan, 0037 Yerevan, RA; Tel.: (+37410) 20 11 51; Fax: (+37410) 20 11 50; www.sosaudit.am; E-mail: info@sosaudit.am I  "UOU-Uflu- S" U (iC I "SOS-AUDIT" LTD I An audit also includes the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the special purpose financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Opinion In our opinion, 1. the special purpose financial statements present fairly in all material respects the cash receipts and payments for the period from 4 February 2015 to 30 March 2016 in accordance with IPSAS-Cash Basis; 2. funds have been used in accordance with the conditions of the Letter Agreement ECAPDEV PPG Grant No. TF018709 dated 26 January 2015 between the International Development Association (IDA) and the Kyrgyz Republic, and World Bank related guidelines, with due attention to economy and efficiency, and only for the purposes for which the financing was provided; 3. supporting documents, records and accounts have been maintained to support claims for reimbursement of expenditures incurred. Expenditures included in the withdrawal applications and reimbursed against are eligible for financing under the Letter Agreement ECAPDEV PPG Grant No. TFO18709; 4. The Designated account used has been maintained in accordance with the provision of the Letter Agreement ECAPDEV PPG Grant No. TF018709, and World Bank related guidelines. Emphasis of matters Without qualifying our opinion we draw your attention to Note 7 of these special purpose financial statements which disclosed that the Project was completed as at the reporting date. "SOS-Audit" LLC 011U0cb 31 March 2016 Manvel G z COC-AYAlT el Khachatryan, FCCA Director Auditor .&o "SOS-AUDIT" c 4,00513 S2 I QpnnL npqwp PhqObu UuwOuh Uunghwgw6 uolwd R9; p. bphw 0037, U.ShqpWju0 38/55; 9b% . (+37410) 20 11 51; 3wpu (+37410) 20 11 50; www.sosaudit.am; tL-fmutn' info@sosaudit.am An Associate of the Crowe Horwath Business Alliance 38/55 A.Tigranyan, 0037 Yerevan, RA: Tel.: (+37410) 20 11 51; Fax: (+37410) 20 11 50; www.sosauditam; E-mail: info@sosaudit.am I I -, I Rr>N We en ås seN -: btt II CNC az~~~~ . 0- 0r i a. IC C2 0 e ~ enn I e a o 00n i eve - e 4. en >0%1yn at -> -:- - " o *m 'I * I aå - CI- ra <0 j 1-- a c oc \.0 m i 1 CD t--n - r< t-r-O c:t-- - rj ny r-- tn fl00 o c CDoC 00 CD cc c c>c cc5 CDc D > C c'nc-c' c c ce cý ýc ý g c, c > l oen 1 1 c oooo eC - .o eov oo oo kr o , - 0 C fn r- t -r rii 1 an * m- kr cct1* mt 0O D e in5n --- - w e n o n n . 1i g.. -in- raes n ou. ca ' 00 m N t .2 g >0 >t0 - a 0 C. -a - oe - ...0 . 0 g e CPN E omn o 2e o ao. e0e > o ta ~ 0>. 4- .;o 121 cmo o la E * Ge E u lu O e o c.u Wp o 80 ä 8 8 Z0 -4 r#) 'E o m d g s uam~~~ 192e& . 88 ~ ~ ~ C 0e c) o E a -- > > u-r , g I ECAPDEV Project Preparation Grant for the Third Village Investment Project I ECAPDEV PPG Grant No. TF018709 Summary of Summary Reports and SOEs For the period from 4 February 2015 to 30 March 2016 (Amounts are shown in US dollars) Payment categories Total Withdrawal Withdrawal (1) Goods, Consultants' application application Services, Traiaing and No value date Workshops, and Operating I Costs 2 20.Jul.2015 94,549.58 94,549.58 3 20.Oct.2015 93,755,08 93,75508 4 1 0.Nov.2015 74,999.94 74,999,94 5 30.Nov.2015 44,912.07 44,912.07 6 17.Dec.2015 44,968.25 44,968.25 7 28.Dec.2015 44,996,41 44,996.41 8 12.Feb.2016 10,553.65 10,553.65 9 30.Mar.2016 2,450.00 2,450.00 Total 411,184.98 411,184.98 Ismailov Kubanychbek -Junushova ahat Executive Director Inancial Manager 31 March 2016 The notes on pages 10-15 form an integral part of these special purpose financial statements. I I I I I I 1 8 I ECAPDEV Project Preparation Grant for the Third Village Investment Project ECAPDEV PPG Grant No. TF018709 Statement of Designated Account For the period from 4 February 2015 to 30 March 2016 (Amounts are shown in US dollars) Financing Agreement ECAPDEV PPG Grant No. TF018709 Bank account number 1280016017009264 Bank Kyrgyz Investment and Credit Bank Bank location Erkindik 21, Bishkek Account currency USD Reporting year 1. Opening balance as at 04.02.2015 2. Add: opening discrepancy 3. IDA advance/replenishment 411,185 4. Less: Refund to IDA from DA 5. Present outstanding amount advanced to DA 411,185 6. DA closing balance as at 30.03.2016 . 7. Add: Amount of eligible expenditures paid 411,185 8. Less: interest earned (if credited to DA) - 9. Total advance accounted for 411,185 I 10. Closing discrepancy (5)-(9) Ismailov Kubanychbek Ju Itahat Executive Director Financial Manager 31 March 2016 The notes on pages 10-15 form an inte ese special purpose financial statements. 1 I I 1 9I I ECAPDEV Project Preparation Grant for the Third Village Investment Project ECAPDEV PPG Grant No. TF018709 Notes to the special purpose financial statements For the period from 4 February 2015 to 30 March 2016 (Amounts are shown in US dollars) 1. General information 1.L The Project In accordance with Letter Agreement dated 26 January 2015, the International Development Association ("IDA", or "WB"), acting as administrator of grant funds provided by the Russian Federation under the Trust Fund for Europe and Central Asia Region Capacity Development, provided Kyrgyz Republic a grant in the amount of 435,000 United States I dollars (USD). The ECAPDEV PPG Grant No. TFO 18709 was provided for implementation of <> (the Project). The Closing date of the Grant expenditures is set 30 November 2015. The Grace Period for submitting withdrawal application for expenditures incurred before the Closing date is four months following the Closing dates: 31 March 2016. 1 1.2. The Project objectives The objective of this project is to support technical assessments and Beneficiary consultation activities to inform the design of the proposed Third Village Investment Project ("VIP-3"), which has the objective of building local capacity for participatory development planning and improving access to quality community infrastructure in targeted areas. The Project consists of the following parts: Part 1: ARIS Organizational and Institutional Mapping Implementation of the ARIS institutional review recommendations to enhance ARIS's performance and effectiveness. Part 2: Technical Supervision Review-Implementation Implementation of the technical supervision review recommendations to ensure the engineering quality of infrastructure micro-projects. Part 3: Baseline Capacity Assessment of Local Governments Collection of baseline information on the capacity of LSGBs to carry out the roles and responsibilities that will be assigned to them during the implementation of the VIP 3. I Part 4: Economic Analysis Implementation Assistance in the implementation and provision of training to ARIS staff on the economic and financial analysis recommendations for the VIP 3, to increase its capacity to train local stakeholders on economic analysis of community infrastructure during the implementation of the VIP 3. Part 5: Improving the Quality and Accessibility of the VIP 2 Operational Manual Revision of the VIP 2 Operational Manual to improve its quality and accessibility. Part 6: Consultations and study tour on community engagement Carrying out of consultations with Beneficiaries', including local communities and local governments, on good practices in community development, provision of relevant training and financing of relevant study tours. 1 10 I ECAPDEV Project Preparation Grant for the Third Village Investment Project ECAPDEV PPG Grant No. TF018709 Notes to the special purpose financial statements For the period from 4 February 2015 to 30 March 2016 (Amounts are shown in US dollars) 1.3. The Project Budget and Financing The Project is 100% financed by ECAPDEV PPG Grant No. TF018709, inclusive of taxes. ECAPDEV PPG Category Grant No. TF018709 Total USD USD (1) Goods, Consultants' Services, Training and Workshops, and erating Costs 435,000 435,000 Total435,000 435,000 1.4. Project Implementation The Project is implemented by Community Development and Investment Agency (ARIS). The ARIS was established on 15 October 2003 according to the Kyrgyz President's Decree for operating control over the Projects financed by the World Bank. ARIS is an independent legal entity, and it is registered in the legal organizational form envisaged by the legislation of the Kyrgyz Republic for non-for-profit organizations. Co-founders of ARIS are Administration of the President of the Kyrgyz Republic, association of legal entities "Association of local self-government bodies of villages and communities of the Kyrgyz Republic" and "Counterpart-Sheriktesh" public association. The work of ARIS is supervised by the Supervisory Board, which is the superior steering body of ARIS. The ARIS address is: 102 Bokonbayeva Street, Bishkek, the Kyrgyz Republic, 720040. 11 ECAPDEV Project Preparation Grant for the Third Village Investment Project ECAPDEV PPG Grant No. TF018709 Notes to the special purpose financial statements For the period from 4 February 2015 to 30 March 2016 (Amounts are shown in US dollars) 2. Summary of significant accounting policies 2.1. Preparation and presentation offinancial statements The special purpose financial statements are prepared in accordance with the International Public Sector Accounting Standard: Financial Reporting Under the Cash Basis ofAccounting (IPSAS-Cash Basis), issued by the International Public Sector Accounting Standards Board (IPSASB) within the International Federation of Accountants (IFAC), and presented in accordance with Financial Management Manual for World Bank Financed Investment Operations (March 2010): RM 3 - Financial Reporting and Auditing. The principal accounting policies applied in the preparation of these special purpose financial statements are set out below. These policies have been consistently applied to all the periods presented. 2.2 Cash basis of accounting Project financing is recognised as a source of project funds when the cash is received. Project expenditures are recognised as a use of project funds when the payments are made. 2.3 Reporting currency The reporting currency of these special purpose financial statements is United States dollars (USD). The cofinancing received and expenditures made in local currency, Kyrgyz Som (KGS), are translated into USD based at the exchange rate prevailing at the date of the transaction as issued by the KICB of the Kyrgyz Republic. The exchange rate defined by the National Bank of Kyrgyz Republic is as follows: 30 March 2016: USD 1 = 70.2004 KGS. 2.4. Taxes The taxes are paid in accordance with the tax regulation of the Kyrgyz Republic. 2.5. Budget Expenditure budget is created based on actual accumulated expenditures for the last period plus the updated procurement plans for the Reporting year. I I I 12 ECAPDEV Project Preparation Grant for the Third Village Investment Project ECAPDEV PPG Grant No. TF018709 Notes to the special purpose financial statements For the period from 4 February 2015 to 30 March 2016 (Amounts are shown in US dollars) 3. Balance Sheet The Balance Sheet discloses assets, liabilities and net assets of the Projects as at reporting date. It is prepared in accrual basis that is transactions are recognized when they occur (and not only when cash is received or paid). Note As at 30 March 2016 ASSETS USD Cash Prepayments Total assets LIABLITIES Payables Total liabilities NET ASSETS Cumulative income ECAPDEV PPG Grant No. TF018709 5 411,185 Other income (accrued interest) 390 411,575 Cumulative expenses Project expenses 4 411,185 Other expenses 390 411,575 Total net assets 4 4. Project Expenditures Budget Execution Cumulative Expenditures as at 30 March 2016 Total bud et Execution Cate or USD USD (1) Goods, Consultants' Services, Training and Worksho s, and O erating Costs 411,185 435,000 95% Total411,185 435,000 95% 5. Financing ECAPDEV PPG Grant No. TF018709 Cumulative as Reporting at 30 March period 2016 USD USD Advances/ (advance recovery) Direct Payments SOE and Summary Report 411,185 411,185 Total 411,185 411,185 Total financing budget Percentage of finance provided as at 30 March 2016 95% 13 ECAPDEV Project Preparation Grant for the Third Village Investment Project ECAPDEV PPG Grant No. TF018709 Notes to the special purpose financial statements For the period from 4 February 2015 to 30 March 2016 (Amounts are shown in US dollars) 6. Schedule of Fixed Assets The schedule of fixed assets procured and received by ARIS for the Project implementation is follows: USD 4 Feb 2015 Additions Deductions 30 March 2016 Office furniture .714 2 714 - 714 - 714 7. Project completion The Closing date of ECAPDEV PPG Grant No. TF018709 is set 30 November 2015. The Grace Period for submitting withdrawal application for expenditures incurred before the Closing date is four months following the Closing date (Grace period). All the transactions were completed as at 30 March 2016 (Reporting Date). As at the date of signing these special purpose financial statements: a. No expenditures related to the Project were incurred after the Closing Date; the payments made during the Grace period related to expenditures incurred before the Closing Date; b. No payments were made after the Reporting date; c. No withdrawals from ECAPDEV PPG Grant No. TF018709 accounts were made after Reporting date; d. No expenditures related to the Project were submitted to the WB after the Reporting date; e. There were no uncovered prepayments or payables outstanding to contractors related to the Project as at the Reporting Date; f There was no outstanding cash balance as at Reporting Date; g. "Third Village Investment Project" ("VIP-3") Financing Agreement was concluded on 12 June 2015 between the IDA and Kyrgyz Republic, and became effective on 26 February 2016. According to it, IDA Credit Number 5601-KG with amount of SDR 4,700,000 and IDA Grant Number D041-KG with amount of SDR 3,900,000 were provided to the Kyrgyz Republic. h. Fixed assets acquired shall be used for the by ARIS office for implementing VIP-3; i. We are not aware about any pending or existing litigations against the Project. 14 ECAPDEV Project Preparation Grant for the Third Village Investment Project ECAPDEV PPG Grant No. TF018709 ANNEX 1. RECONCILIATION BETWEEN THE AMOUNTS SUBMITTED BY THE ARIS AND DISBURSED BY THE WORLD BANK For the period from 4 February 2015 to 30 March 2016 (Amounts are shown in US dollars) Expenditure Category Appl. ARIS WB Difference Advances 1 100,000.00 3 (25,000.00) 4 (29,999.94) 7 (31,996.41) 8 (10,553.65) 9 (2,450.00) (1) Goods, Consultants' Services, Training and 2 94,549,58 94,549.58 Workshops, and Operating Costs 3 93,755.08 93,755.08 4 74,999.94 74,999.94 - 5 44,912.07 44,912.07 6 44,968.25 44,968.25 7 44,996.41 44,996.41 8 10,553.65 10,553.65 9 2,450.00 2,450.00 . 411,184.98 411,184.98 Total 411,184.98 411,184.98 15