Report No: FIN-2019-61(E) 8 August 2019 MALDIVES CLEAN ENVIRONMENT PROJECT MINISTRY OF ENVIRONMENT FINANCIAL YEAR 2018 Contents Auditor General's Report........ 1 Financial Statement........................... 3 Statement of Receipts and Payments............................. 3 Notes to the Financial Statements.................................. 4 Other lnformation 9 P,y',?. a AUOITIIR GNruS l]TTICI ^il '#. AUDITOR GENERAL'S Rf,PORT ro rHE MrNrsTRY,9"r"ryN"YlB9"NMENr oN rHp, rrNANCrArf $TAIEMEJST or MALDIVES CLEAN ENVIRONMENT PROJECT Opinion We have audited the accompanying financial statementi Statement ofReceipts and Payments for the year ended 3l December 2018 and notes to this statement, which includes a summary of significant accounting policies and other explanatory information set out in pages 3 to 8, of Maldives Clean Environment Project financed by World Bank/International Development Association Grant Agreement (Grant No. Dl99-MV) as of l6 August 2017. In our opinion, the accompanying financial statement presents fairly, in all material respects, the cash receipts and cash payments for the financial year ended 3I December 201 8 and cash balances as at the year then ended in accordance with the Intemational Public Sector Accounting Standard: Financial Reporling under the Cash Basis of Accounting. ln addition, we can provide assurance that: (a) The funds provided under the Grant have been utilised for the pulposes for which they were provided; and (b) The Procurement guidelines of the World Bank have been complied with in the procurement of goods and services under the project. Basis for opinion We conducted our audit in accordance with lnternational Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit ofthe financial statements section ofour report. We are independent ofthe Management in accordance with the Intemational Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code). We have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of management and those charged with governance for the financial statements The Management is responsible for the preparation and fair presentation of this financial statement in accordance with the Intemational Public Sector Accounting Standard (IPSA S Financial Reporting under the Cash Basis ofAccounting. This responsibility includes: designi implementing and maintaining intemal controls relevant to the preparation and fair presentat I Auditor General's Office I Ghaazee tsuilding Amcer Ahmed Magu I Male', Repr:blic ofMaldives +960 332 3939 | inl'o iriaudit.,Io!.i11\' | *wrv.audit.eov.mv of financial statement that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Those charged with govemance are responsible for overseeing the project's financial reporting process. Auditor's responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions ofusers taken on the basis ofthese financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintaln professional scepticism throughout the audit. We also: o ldentify 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 intemal control. o Obtain an understanding of intemal 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 ofthe project's intemal control. o Evaluate the appropriateness ofaccounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management. o 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 lair presentation. We communicate with those charged with govemance of the project regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in intemal control that we identify during our audit. 8th August 2019 +*-AjA Hassan Ziyath Auditor General 2 Auditor General's Officc I Gharvee Building I Ameer Ahmed Magu I Malc', Repr.rhlic ol Maldives +960 332 3939 I inlb daudit.ro!.mv I $\^'$.audil.go!.m\ MALDIVES CLEAN ENVIRONMENT PROJECT - 2OIE MINISTRY OF ENVIRONMENT STATEMENT OF RECEIPTS AND PAYMENTS FOR THE YEAR ENDED 3I DECEMBER 2OI 8 For thc vcar cnded -ll Dec 2018 Cash Receipts Direct /(Payments) Notes Payments by Controlled by World Bank the entity TISD USD RECEIPTS Disbursements from World Bank (DA) l I ,51 7,02s Direct Payments by World Bank (non-DA) 3 34.000 Total Receipts 1,517,025 34,000 PAYMENTS Cl. National Solid Waste Management Strategy 4 7I ,860 and Policy C2. Regional Waste Management Systems 5 89,224 C3. Island Waste Management Systems 6 C4.Project Management 7 256.005 14.000 Total Payments 417.089 34.000 Increase/(Decrease) in Cash 1.099.936 Opening Cash Balance Increase/(Decrease) in Cash I,099,936 Adjustments for exchange rate loss/gain 8 (4) Closing Cash Balance 9 1,099,932 Project Management Unit of the hoject is responsible for the preparation and presentation of the Financial Statements. The Statement of Receipts and Payments for the year ended 3 I December 201 8 was approved by PMU on 8'h August 2019. MlJ a Mr. Ahmed Nizam Mr. Easa Hamdhan Rasheed (Project Manager) (Financial Management Specialist) The accounting policies and notes on pages 4 through 8 form an integral part of the Statement of Receipts and Payments. Envnonment and EneEy, Gleen Buildirg, Handhuvaee Higun, MaE, Maldives. T0lr+(960) 3016300, Fax: +(960) 3018301 , e'mail sec ., MAT,DIVES CLEAN ENVIRONMENT PROJECT _ 20I8 MINISTRY OF ENVIRONMENT NOTES TO THE FINANCIAI, STATEMENTS 1. PROJECTINFORMATION Key Highlights Project Title: Maldives Clean Environment Project Start Date: I 3 September 2017 Project Duration: 75 Months and l5 days. Closing Date: 3l December 2023 Approved Budget: SDR 12,800,000 (Twelve Million Eight Hundred Thousand Special Drawing Rights) U.S. Dollar Equivalent of US$ 17,500,000.00 (Seventeen Million Five Hundred Thousand U.S. Dollars) Funded by: Intemational Development Association (lDA) The World Bank I.I PRO.IECTOBJECTIVES The Project Development Objective is to improve solid waste management (SWM) in selected zones. The proposed project will support development and implementation of the government's nalional waste management strategy and policy, and it will improve capacity across the country for SWM in line with best practice suitable for a high-middle income small island state. I.2 PROJECT COMPONENTS ComDonent l: National Solid Waste Management Strategy and Policy. Component 1.1 Solid Waste Management Strategy: Providing technical assistance for the analysis and implementation of strategic measures addressing current issues on solid waste management, including: (a) preparation ofa National Solid Waste Management Strategyl (b) revision of the National Solid Waste Management Policy; (c) quantum and collection of user-fee and tariffs for the collection and treatment of wastes; (d) reduction at source of select wasle streams and recycling options therefor; (e) analysis of options to increase uptake of bulk water as an altemative to water in plastic bottles; (0 feasibility of a waste tracking systemt (g) development of an exlended producer responsibility strategy for the Maldives; (h) economic incentives for recycling and reuse of waste streams; and (i) designing and implementing national and/or zone-specific information, education and communication campaigns Io promote household waste segregation and minimization, and uptake of bulk water. Component 1.2 Feasibility Studies and Investment Preparation: Providing technical assistance for the carrying out of a best practical environmental option study and investment prefeasibility and feasibility studies for determining the most suitable integrated solid waste management system for Zones IV and V, as well as: (a) the spe cialized environmental and social impact assessments and management plans therefor; facility/systems management plans oJ Environmenl and EneEy. Geen Buibhg, Handwaee Hrgun, MaE, Maldrves. Tel:.(960) 3O18f0, Fax +1960) 301eC01 , emaili sec€h 4 NIALDIVES CLEAN ENVIRONMENT PROJECT _ 2OItt NIINISTRY OF ENVIRONN{ENT Component 1.3 Institutional Capacity Building: (a) Building capacity of local institutions and individuals (including, but not limited to, the Maldives National University, WAMCO, the EPA and rhe WMD) in the solid waste management sector; and (b) supporting the organization of, and participation in, national and international solid waste management events to exchange knowledge, experience and lessons leamt; and (c) operations and maintenance contracls for the Vandhoo Island's Regional Waste Management Center. ComDonent 2: Regional Waste Management Svstems. Component 2.1 Regional Waste Management System in Zone II: (a) Providing equipment, and building storage augmentation facilities and access roads for the operationalization of the Vandhoo Island's Regional Waste Management Cenler. Component 2.2 Regional Waste Management System in Zone IV and V: (a) Establishing a new common final disposal facility for Zones IV and V, including ancillary facilities and related waste management services, pursuant to the studies carried out under Sub-Component 1.2 above; (b) providing support to WAMCO through an intemational contractor for the operation and maintenance of the established facilities; and (c) piloting public auctions of recyclables to scale up recyclable programs for key waste streams. Comoonent 3: Island Waste Manaqement Systems Component 3.1 Island Waste Management System in Zone II: (a) Providing equipment and mobilization assistance Io the ICs in Z.one required to improve I the capacity utilization of the Vandhoo Island's Regional Waste Management Center; and (b) promoting/piloting the use of bulk water dispensers to replace water bottles in Zone II. Component 3.2 Island Waste Management System in Zones IV and V: Preparing and implementing Island Waste Management Plans across the atolls in Zones IV and V. Component 4: Proiect Manasement Strengthening MEE s institutional capacity for Project implementation, through the establishment and maintenance of a Project Management Unit to manage, implement, monitor and evaluate Project activities, including: (a) carrying out financial management, procurement activities; (b) establishing and operating adequate fiduciary and social and environmental management systems, as well as a grievance redressal mechanism; and (c) carrying out the Project's outreach and communications campaigns, as well as managing the grievance redress system. Component 5: Contingency Emergency Respolle Providing immediate response to an Eligible Crisis or Emergency, as needed. To trigger this component, the Govemment of the Maldives would need to declare an emergency or provide a staiement of fact justifying the request for the activation of the use of emergency funding ot Envionm€.lt and E DOy, GGdl &iEhg, Handumrse Hilun. iral6, li&ldiv€s. lot+(960) 3018S0, Far: {960) 301e,S1, emait sec ) MALDTVES CLEAN ENVIRONMENT PROJECT _ 2OI8 MINISTRY O[' ENVIRONMENT I.3 PROJECT FINANCING The project is financed by the Intemational Development Association (lDA). Article 2.01 of the Financing Agreement signed on l6th August 2017 between the Govemment of Maldives and the Intemational Development Association (IDA) states that a grant in an amount equivalent to Twelve Million Eight hundred thousand Special Drawing Rights (SDR 12,800,000) is given to assist in financing the project. Also, As per Schedule 2 - Project Execution - the Govemment of Maldives agreed to finance (a) all land acquisition required for the purpose of the project and (b) All compensation, resettlement and/or rehabilitation payment to Displaced Persons in accordance with the provision of ESAMF and RPF and the ESMP(S). Further, the Govemment of Maldives is to bear all the taxes to be paid in carrying out the project activities. 2. SUMMARY OT'SIGNIFICANT ACCOI.]NTING POLICIES 2.1 Basis of preparation The Statement of Receipts and Payments are prepared in accordance with the Intemational Public Sector Accounting Standards (IPSAS): Financial Reportinpi under the Cash Basis of Accounting, issued by Public Sector Committee of the Intemational Federation of Accountants. The I-inanc ial statement comprises: ) Statement of Cash Receipts and Payments > Notes to the Financial statements, including the summary of significant accounting policies 2.2 Recognition of Receipts and Payments Receipts and payments are accounted for on cash basis. Receipts are recognised when the Maldives Monetary Authority (MMA) receives the funds from the World Bank to the Designated Bank Account (DA) maintained for the project with it. This Designated Account is maintained in United States Dollars (USD). Payments are recognised at the time of outflow of cash either from the DA at the MMA or from the cash account maintained for cash payments. With respect to large intemational payments, In the cases where PMU (with the approval of MoFf) decides to request the WB to pay directly to the suppliers/vendors, the payments are recognised at the time of outflow of the respective payment from the WB directly to the supplier/vendor. These transactions are also recognised within receipts (disbursements) of the project. Financial contributions to lhe projecl from Govemment of Maldives are recognised when cash outflow occurs from the Public Bank Account (PBA) in respect of the project. Such outflows (payments) are also recognised as receipts in the financial statements. The payments are classified in the financial statements based on the relevant components and the sub-components of the project. 2.3 Presentation Currency The Statement of Receipts and Payments has been presented using the United States Dollars (USD). All the figures have been rounded Io the nearest Dollar. Envimm€nlaid Eiorgy, GlEdl&ibng, Handuvarse Higun, irald, Maldirqs. T6[+1960) 3018Cn, Fax +(960]3018'301, emait 6 MALDIVES CI,EAN ENVIRONMENT PROJECT - 2O1E MINISTRY OF ENVIRONMENT 2.4 Foreign Currency Translation Receipts and payments in currencies other than the reporting cunency (USD) are converted at the Mid- Exchange Rate (MMA's published exchange rate less 0.05) existing between the transaction currency and USD at the time ofthe receipt/payment. Cash balances in currencies other than USD as at the end of the reporting period are shown in the financial statement at the exchange rate that was prevailing at the la-st day of the reporting period 2.5 Reporting Period Financial statement is generally prepared for one year (calendar year). Period for which financial statement is prepared is also disclosed on the face of the financial statement. 2.6 Comparatives The comparative figures are not shown, as this is the commencement period 3. Disburseme nts from WB (to DA) 2018 Receipti I)ircct /(payments) Details Paymcnts h1 Controlled by World Ilank the entity (USD) (USD} Disbursement (Receipts) from World Bank (to DA) I ,5 17,025 34,000 Total 1517,025 34,000 4. National Solid Waste Management Strategy and Policy 20ttt Receipts /(payments) l)etails Controlled by the entity (USD) Solid Waste Management Strategy 38,205 Feasibility and lnvestment Preparation for Zone IV & V t3,996 Institutional Capacity Building t9,659 Total 7 t ,860 5. Regional Waste Management Systems 2018 Receipts /(payments) Details Controlled by the entity (USD) Regional Waste Management System in Zone II 89,224 Regional Wastc Management System in Zone M V Total 89,224 ot Envimmdrt and Eneqy, G€€n BuiBhg, Handlwaee Higun, MaL. Maldives. Tet+(960) 301e$0, Fax +{960)30le,S1 email s€cl€h 7 MALDIVES CLEAN ENVIRONMENT PROJECT - 2018 MINISTRY OF ENVIRONMENT 6. lsland Waste Management Systems There were no payments incurred during the year under this component. 7. Project Management 201tt R€ceipls Direct /(payments) Payments I)etails Controlled by By World Bank the entity (USD) (usD) Proiect Management Unit Salary 158,981 34,000 Fiduciary & Tech Cap Building 33,472 Monitoring & Evaluation 735 Incremental Operating Costs 44,680 Equipment llr tl1 Total 256.005 34.(n0 Note: The "Incremental Operating Costs" for the year amounting to USD 44,680/- includes taxes paid from the World Bank Finance amounting to USD 5,415/-, which needs to be reimbursed from the GOM funds to the project. 8. Adjustments for exchange rate loss/gain Accumulated adjustments for exchange rate loss/gain are US$4 as of 3l December 2018. These adjustments reflect the discrepancies caused due to Bank's exchange rate loss/gain as well as the monthly reconciliation adjustments to exchange rate loss/gain. 9. Cash and Cash Equivalents l)rtails As at 3l Dec 2018 USD Cash at Bank (Proiect Bank Account) 1,099,873 Cash in Hand (Petty Cash) 59 Tot l I,099,932 d Ervioomdl and Enoqy, GlB€n BuiBhg. Handuvaee Hi$n, MaE, Maldi\€s. T€Ir{m)3018S0, Fax (960)3018S1. emait 8 MALDIVES CLEAN ENVIRONMENT PROJECT - 2O1E 1!IINISTRY OF ENVIRONMENT OTHER IN}'OR]\'IATION Thc following inlbrmation has bccn provided as additional information. They do not fbrm part o[ thc above financial stalement that has been prescnted under IPSAS cash basis of accounling. I'ixed Assets Details Balance as at I Additions/Transfers Balance as at 31 January 201E December 2018 Machinery & F4uipments 303,433 303,433 Furnitures And Fittings '7 ;791 7,791 Computer Software 45,000 45,000 Total -156.22,1 356,224 and Eneoy, Gre€n BuiEhg, Hanfiuvaee HEun, li&E, li4aldivss. Telrr{960) 3018S0, Fax +(960) 3018S1 , +mait 9