THE WORLD BANK AFRICA HIGHER EDUCATION CENTRES OF EXCELLENCE (NA TIONAL UNIVERSITY COMMISSION (NUC) FINANCIAL S TA TEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2018 AUDITED BY OFFICE OF THE AUDITOR-GENERAL FOR THE FEDERATION Plot 273, Samuel Ademulegun Street, Central Business District, Abuja. L AFRICAN HIGHER EDUCATION CENTRES OF EXCELLENCE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 Table of Contents Contents Pages Corporate Information 2 Project Management Team's Report 3-4 Project Management Responsibilities 5 Auditor's Report 6-8 Statement of Financial Position 9 Statement of Financial Performance 10 Statement of Cash flow 11-12 Reconciliation of Cash and Cash Equivalent 13 Statement of Changes in Equity 13 Notes to the Accounts 14-18 AFRICAN HIGHER EDUCATION CENTRES OF EXCELLENCE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 Corporate Information Project Name Africa Centres of Excellence Project (ACE) Project ID 5415-NG Total Project Cost US$ 290.80 million Commitment Amount US$ 150.00 million Responsibility Agency National Universities Commission (NUC) Project Co-ordinator Dr. Joshua Atah SENIOR PROJECT MANAGEMENT TEAM * Dr. Joshua Atah Project Coordinator * Mrs Amos Hauwa Project Accountant * Mr. Jubril Momoh Procurement Officer * Dr. (Mrs.) Chinelo Nwosu Monitoring & Evaluation Officer * Mrs. Adebukola Olatunji Communication Officer * Mr. Matthew Ihayere Internal Auditor Implementing Agency- Africa Higher Education Centers of Excellence Project National Universities Commission, 26, Aguiyi Ironsi St. Maitama, Abuja Auditor- The Auditor-General for the Federation, Plot 273, Cadastral Zone AOO, Off Samuel Ademulegun Street, Central Business District, Abuja. Banker- Central Bank of Nigeria 2 AFRICAN HIGHER EDUCATION CENTRES OF EXCELLENCE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER, 2018 Project Management Team's Report Project overview On 1st August, 2012, The National Universities Commission hosted a meeting with a team from World Bank to discuss on Nigeria's participation in the proposed Regional Higher Education Africa Centers of Excellence Project targeted at Universities with strong postgraduate training and research in Africa. Following preliminary discussions, the countries including Nigeria, the Republic of Benin, Burkina Faso, Cameroon, Ghana, Senegal and Togo agreed to work together and thus the project was launched in 2013. Gambia and Cote d'lvoire subsequently came on board as beneficiaries of the services of these ACEs in the seven countries. Objective of ACE The Africa Higher Education Centers of Excellence Project (ACE) is a World Bank Assisted Project whose major objectives are to promote regional specialization amongst participating Universities within areas that address particular regional development challenges and strengthen the capacities of these Universities to deliver high quality training and applied research. The primary focus of the project is in three (3) thematic areas; * Science, Technology, Engineering and Mathematics (STEM) * Health Sciences and * Agriculture Selection of the ACEs In October 2013, twenty-two (22) centers were selected by the Project Steering Committee in Dakar, Senegal. Out of the (22) selected centers, Nigerian Universities won ten (10). The Universities from Nigeria and their project title are: * Redeemer University Mowe, Ogun State (Africa Center of Excellence for Genomics of Infectious Diseases). o African University of Science and Technology, Abuja (PAN African Materials Institute). * Federal University of Agriculture, Abeokuta (Center for Agriculture Development & Sustainable Environment). * Ahmadu Bello University, Zaria (Center of Excellence on Neglected Tropical Diseases and Forensic Biotechnology). 3 * University of Jos, Jos (Phytomedicine Research and Development). * University of Benin (Center for Excellence in Reproductive Health and Innovation). * University of Port-Harcourt (ACE Centre for Oil Field Chemicals). * Obafemi Awolowo University, Ile Ife (African Center of Excellence on ICT -Driven Knowledge Park). * Bayero University, Kano (African Center of Excellence ACE in Dryland Agriculture). * Benue State University, Makurdi (Center for Food Technology and Research). Governance Structure The ACE project has the following Government Structure: * The Project Steering Committee (PSC) The ACE Project Steering Committee (PSC) provides overall guidance and oversight for the project. The PSC made the final recommendation(s) and selection of the initial 22 ACEs in the region following a technical evaluation by the Independent Evaluation Committee. The PSC will provide oversight and guidance on the project and direct ACEs to ensure the achievement of the project objectives. * At the national level, the project has a National Project Performance & Evaluation Committee (NPPEC). Composition of the NPPE Committee * Executive Secretary, National Universities Commission as Chairman. * All the ten (10) Vice Chancellors of the centers. * All Center leaders. * Representatives of Minister of Education, Finance, Health, Agriculture, Science & Technology, Environment, Power, Works & Housing. 4 AFRICAN HIGHER EDUCATION CENTRES OF EXCELLENCE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 Project Management Responsibilities The International Public Sector Accounting Standards (IPSAS) and the Project Implementation Manual (PIM) require the Project Management Team to prepare financial statement for each financial year that gives a true and fair view state of financial affairs of the ACE at the end of the year and of its excess or deficit. The responsibilities include: * Keep proper accounting that disclose, with reasonable accuracy, the financial position of ACE and comply with the requirements of IPSAS. * Establish adequate internal controls to safeguard its assets and to prevent and detect fraud and other irregularities in line with S.3.3. of PIM. * Prepare annual financial statements in accordance with IPSAS and as provided by S.3.4 of PIM, using suitable accounting policies supported by reasonable and prudent judgments and estimates, and are consistently applied. The Management Team accepts responsibility for the annual financial statement, which has been prepared using appropriate accounting policies supported by reasonable and prudent judgments and estimates, in conformity with International Public Sector Accounting Standard (IPSAS) as issued by International Public Sector Accounting Standard Board (IPSASB) and the requirement of the Africa Higher Education Centers of Excellence Project (ACE) Project Implementation Manual. The Management Team is of the opinion that the financial statements give a true and fair view of the state of financial affairs of ACE and of its excess for the year ended 31st December, 2018. The Management further accepts the responsibility for the maintenance of accounting records that may be relied upon in the preparation of the financial statement, as well as adequate system of the internal financial control. Nothing has come to the attention of the Management Team to indicate that ACE will not remain a going concern for at least twelve months from the date of this statement. Dr. Joshua Atah Mrs. Amo Hauwa (Project oroinator) (Project Accou tant) Date..... . .. ........ Date . ..................... 5 THE AUDITOR-GENERAL FOR THE FEDERATION Audit House, Plot 273, Samuel Ademulegun Street, Central Business District, PM.B. I28, Garki - Abuja, Nigeria. The Project Co-ordinator, Africa Higher Education Centres of Excellence Project, National Universities Commission, Maitama, Abuja AUDIT OF THE AFRICA HIGHER EDUCATION CENTRES OF EXCELLENCE PROJECT PERFORMED BY THE AUDITOR GENERAL FOR THE EDERATION AUDITOR'S REPORT Opinion I have audited the financial statements of Africa Higher Education Centres of Excellence Project for the year ended 31st December, 2018. These financial statements comprise the Statement of Financial Position, Statement of Financial performance, Cashflow Statement and Statement of Net Assets/Equity for the year then ended, and a summary of significant accounting policies and other explanatory information. In my opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Entity as at 31st December, 2018, and of its financial performance and its cash flows for the year then ended in accordance with International Public Sector Accounting Standards (IPSAS). Basis for Opinion I conducted the audit in accordance with International Standards for Supreme Audit Institutions (ISSAls). My responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements Section of my report. I am independent of the entity in accordance with the Code of Ethics for Supreme Audit Institutions together with the ethical requirements that are relevant to my audit of the financial statements and I have fulfilled my other ethical responsibilities in accordance with these requirements and the Code of Ethics. I believe that the audit evidences obtained are sufficient and appropriate to provide a basis for my opinion. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with IPSAS, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Entity's_ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the project or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the entity's financial reporting process. Auditor's Responsibility for the Audit of the Financial Statements My objectives is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with (ISSAls), 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 Financial Audit Methodology (FAM), which is consistent with the Fundamental Auditing Principles (ISSAls 100-999) of the International Standards for Supreme Audit Institutions, I exercise professional scepticism throughout the audit. I 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 my 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 controls. * 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. * Evaluate the appropriateness of accounting policies uses and the reasonableness of accounting estimates and related disclosures made by management. 7 * 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 Entity's ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor's report. However, future events or conditions may cause the Entity 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. I 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 I identify during my audit. I also provide those charged with governance with a statement that I have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be brought to bear on my independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, I determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. I describe these matters in my auditor's report unless law or regulation precludes public disclosure about the matter or, when, in extremely rare circumstances, I determine that a matter should not be communicated in my report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. A. M. AYINE, FCA Auditor-General for the Federation June 17, 2019 8 AFRICAN HIGHER EDUCATION CENTRES OF EXCELLENCE STATEMENT OF FINANCIAL POSITION AS AT 31ST DECEMBER, 2018. NOTES 2018 2017 ASSETS N N Current Asset Cash and Cash Equivalent 2 585,144,434.50 2,363,142,821.73 Total Current Asset 585,144,434.50 2,363,142,821.73 Non-Current Assets Property, Plant and Equipment 3 40,462,388.00 50,955,305.00 Total Non-Current Asset 40,462,388.00 50,955,305.00 Total Assets 625,606,822.50 2,414,098,126.73 CURRENT LIABILITY Taxes 17,805,001.14 10,486,287.49 Other Payable 4 291,121,250.00 - 308,926,251.14 10,486,287.49 316,680,571.36 2,403,611,839.24 EQUITY IDA Credit 2,074,048,623.27 1,505,777,109.69 Accumulated Surplus/Deficit 5 (4,832,778,477.79) (3,139,191,733.07) Prior Year Adjustment 6 - 961,616,036.74 FUND RESERVES General Reserve Fund 3,075,410,425.88 3,075,410,425.88 Total Net Assets 316,680,571.36 2,403,611,839.24 The Notes to the Accounts on pages 14 - 18 are part of these financial st*ements. Dr. Joshua Atah Mrs. mos Hauwa (Project Coordinator) Project Accountant Date: 's (' Date: 9 AFRICAN HIGHER EDUCATION CENTRES OF EXCELLENCE STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENEDED 31Sr DECEMBER, 2018 NOTES 2018 2017 ft f4 Revenue Interest Received from Dollar Account 5,563,160.35 952,501.16 IDA 3,582,282,047.20 3,169,159,428.93 Total Revenue 3,587,845,207.55 3,170,111,930.09 Expenditures Goods and Non-Consulting 7 5,421,602,858.84 4,337,603,724.55 Operating Cost 101,609,471.05 74,045,452.14 Training 39,606,771.25 46,602,903.95 Consulting 25,044,380.18 19,970,409.19 Depreciation 3 11,262,917.00 1,339,820.00 Finance Cost - 117,838.60 Total Expenditure 5,599,126,398.32 4,479,680,148.43 Surplus/Deficit from Operating Activities (2,011.281,190.77) (1,309,568,218.34) 10 AFRICAN HIGHER EDUCATION CENTRES OF EXCELLENCE CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER, 2018 NOTES 2018 2017 f4 f4 Inflows 2,074,048,623.27 3,170,111,930.09 Revenue 1,508,233,424.93 1,505,777,109.69 Total Inflows from Operating activities 3,582,282,047.20 4,675,889,039.78 Cash flow from Operating Activities OUTFLOWS Goods and Non-Consulting 5,421,602,858.84 4,337,603,724.55 Operating Cost 101,609,471.05 74,045,452.14 Training 39,606,771.25 46,602,903.95 Consulting 25,044,380.18 19,970,409.19 Finance Cost 177,838.60 Total Outflows from Operating Activities 5,587,863,481.32 4,478,400,328.43 Net Cash from Operating Activities (2,005,581,483.12) 197,488,711.35 Cash Flow from Investing Activities Interest Earned 5,563,160.35 952,501.16 Cash Refund (94,904,579.72) 6,361,053.40 Net Cash flow from Investing Activities (89,341,419.37) 7,313,554.56 Cash flow from Financing Activities Exchange Rate Gain 317,694,446.06 961,615,236.74 Purchase of Motor Vehicle - (49,615,485.00) Purchase of Laserjet Printer (770,000.00) 11 Net Cash Flow from Financing Activities 316,924,446.06 911,999,751.74 Net Cash Flow from all Activities (1,777,998,407.43) 1,116,862,017.65 Cash and Cash Equivalent at the Beginning of the year 2,363,142,841.93 1,246,280,824.28 Cash and Cash Equivalent at the End of the year 585,144,434.50 2,363,142,841.93 12 AFRICAN HIGHER EDUCATION CENTRES OF EXCELLENCE FINANCIAL STATEMENTS FOR THE YEAR 31ST DECEMBER, 2018. Reconciliation of Cash and Cash Equivalent 2018 2017 Bank Balance at the beginning 2,363,142,841.93 1,246,280,824.28 Cash in Hand Total Cash flow (1,777,998,407.43) 1,116,862,017.65 Bank Balance at the End 585,144,434.50 2,363,142,841.93 AFRICAN HIGHER EDUCATION CENTRES OF EXCELLENCE STATEMENT OF CHANGES IN EQUITY/NET ASSSET FOR THE YEAR ENDED 31ST DECEMBER, 2018. EXCHANGE RATE ACCUMULATED CAPITAL GRANT TOTAL GAIN/LOSS SURPLUS/DEFICIT f4 N f4N BALANCE AS AT 1ST JANUARY, 2018 5,260,053,401.90 1,551,758,972.90 (3,139,191,732.34) 3,672,620,642.46 ADDITIONAL GRANT/FUND 3,582,282,047.20 317,694,446.06 (2,011,281,190.71) 1,888,695,302.55 BALANCE AS AT 31ST DECEMBER, 2018 8,842,335,449.10 1,869,453,418.96 (5,150,472,923.05) 5,561,315,945.01 13 AFRICA HIGHER EDUCATION CENTRES OF EXCELLENCE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2018 Notes to the Accounts 1. Statement of Accounting Policies. * Reporting Entity The African Higher Education Centres of Excellence (ACE) is a World Bank Assisted Project to promote regional specialization amongst participating Universities within areas that address particular regional developmental challenges and strengthen the capacities of these Universities to deliver high quality training and applied research. * Summary of Significant Accounting Policies. * Statement of compliance with IPSAS: The preparation and contents of these Financial Statements are in accordance with the requirements of the International Public Sector Accounting Standards (IPSAS) accrual basis, except that Statement of Budget and Actual of the Coordinating Unit was excluded because it has not been made publicly available as required by IPSAS 24. * Basis of Preparation: The Financial Statements have been prepared under the historical cost convention and in accordance with International Public Sector Accounting Standards (IPSAS) Accrual Accounting, issued by International Public Sector Accounting Standard Board (IPSASB). * Funds: All contributions by the financiers are only recognized when they become receivable and capitalized as IDA Credit/Fund. These funds are subsequently increased or reduced by surplus or deficit from the statement of financial performance. * Basis of Measurement: The Financial Statements have been prepared on a historical cost basis, except for furniture and motor vehicle classified as Property, Plant and Equipment that have been measured at fair value. * Recognition of Revenue and Expenditure: Revenue is recognized to the extent that it is probable that the economic benefits will flow to the projects and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at fair value of the consideration received or receivable, taking into account contractually defined terms of payment in the Project Implementation Manual (PIM). Expenditures are charged to the Statement of Financial Performance when the goods are received or services rendered. The expenses include Goods & Non-consulting, Operating Cost, Consulting, Training and Depreciation. 14 * Property, Plant and Equipment: The only PP&E carried forward to the year under review are Furniture, Computer Laptops and Prado Jeep whose accumulated depreciation was charged accordingly. A HP Laserjet printer was newly bought in December, 2018 and hence, was not depreciated in the year. * Depreciation: Depreciation is calculated on a straight-line basis over the estimated useful lives of Non-current assets. Depreciation starts when an asset is ready for use and ends at the earlier of the date that the asset is de-recognized or classified as held for sale and discontinues operation. Deprecation is recognized in the Statement of Financial Performance at the rate of 20%. * Reporting Currency: The Financial Statements were prepared using the Nigerian Naira as the reporting currency. * Legal Risk: Legal risk is that the Project Management will be exposed to contractual obligations on behalf of the Universities which have not been provided for. The Project Management has a policy of ensuring all contractual obligations are documented and appropriately evidenced to agreements with relevant parties to the contract. * Operational Risk: The underlying risks of applying Project Implementation Manual (PIM) Financial Regulations and decisions to the day-to-day business operations of the ACE. * Financial Accounting Risk:. Financial statements are prepared in a transparent manner that fully disclosed all important and relevant matters as well as accurately reflecting the financial position, results and cash flows of the ACE. 2. Cash and Cash Equivalent f4 Special Account - NUC 16,167,806.00 Special Account - Universities 41,489,171.35 Draw down Account - NUC 62,116,603.72 Draw down Account - Universities 465,370,853.43 585,144,434.50 15 3. Property, Plant and Equipment Motor Vehicle Computer Equipment TOTAL N N N Cost as at 1/1/2018 49,615,485.00 4,019,460.00 53,634,945.00 Additions 770,000.00 770,000.00 Disposal - Cost as at 31/12/2018 49,615,485.00 4,789,460.00 54,404,945.00 Depreciation as at 1/1/2018 a2,679,640.00 2,679,640.00 1/1/2018- Charges for the year 9,923,097.00 1,339,820.00 11,262,917.00 9,923,097.00 4,019,460.00 13,942,557.00 Carrying amount as at 31/12/2018 39,692,388.00 770,000.00 40,462,388.00 4. Other Payable Other payable consists of achieved result for the Centres, processed but yet to be paid by CBN as at the end of the year. University of Jos 144,417,500.00 ABU Zaria 20,816,250.00 Redeemers Universities 107,817,500.00 Council of Vice Chancellors 18,000,000.00 Others 70,000.00 291,121,250.00 16 5. Accumulated Surplus/Deficit. M Balance b/f (3,139,191,733.08) Deficit for the year (2,013,212,690.77) Exchange gain 317,694,446.06 Balance at 31st December (4,832,778,477.79) 6. Prior Year Adjustment For 2017 accounts, a difference of N800 was observed between the Total Net Asset of N2,403,611,839.24 and the Total Equity of N2,403,611,039.24. This was adjusted against the Prior Year Adjustment figure of that year as follows: 961,615,236.74 800.00 961,616,036.74 The Prior year adjustment being carried from 2016 was actually Exchange Rate Gain/Loss. 7. Goods and Non-Consulting consists of the Centre's administrative expenses, Local traveling, transfers to centres in the universities as a result of achieved results and pre-funding activities. 1st Quarter 1,175,863,475.5 2nd Quarter 841,446,268.95 3rd Quarter 2,139,075,565.09 4th Quarter 1,265,217,549.30 5,421,602,858.84 17