THE PALESTINIAN MINISTRY OF FINANCE AND PLANNING PREPARATION OF PROPOSED WEST BANK WASTE WATER MANAGEMENT PROJECT FUNDED BY THE INTERNATIONAL DEVELOPMENT ASSOCIATION AND MANAGED BY THE PALESTINIAN WATER AUTHORITY PROJECT FINANCIAL STATEMENTS FOR THE PERIOD FROM JANUARY 1, 2015 TO APRIL 30, 2016 TOGETHER WITH INDEPENDENT AUDITORS’ REPORT THE PALESTINIAN MINISTRY OF FINANCE AND PLANNING PREPARATION OF PROPOSED WEST BANK WASTE WATER MANAGEMENT PROJECT FUNDED BY THE INTERNATIONAL DEVELOPMENT ASSOCIATION AND MANAGED BY THE PALESTINIAN WATER AUTHORITY BALANCE SHEET AS AT APRIL 30, 2016 (Currency: USD) April 30, December Note 2016 31, 2014 Assets Current Assets Cash at bank - 90,360 Total Current Assets - 90,360 Total Assets - 90,360 Liabilities and Fund Balance Fund balance - 90,360 Total Liabilities and Fund Balance - 90,360 The accompanying notes form an integral part of these financial statements 3 THE PALESTINIAN MINISTRY OF FINANCE AND PLANNING PREPARATION OF PROPOSED WEST BANK WASTE WATER MANAGEMENT PROJECT FUNDED BY THE INTERNATIONAL DEVELOPMENT ASSOCIATION AND MANAGED BY THE PALESTINIAN WATER AUTHORITY STATEMENT OF SOURCES AND USES OF FUNDS FOR THE PERIOD FROM JANUARY 1, 2015 TO APRIL 30, 2016 (Currency: USD) Period from January 1, 2015 Year Ended Cumulative up to April 30, December 31, to April 30, Note 2016 2014 2016 FUND BALANCE – BEGINNING OF PERIOD / YEAR 90,360 92,980 - SOURCES OF FUNDS Advance payment 1&5 - - 93,000 Recovery from advance payment 1&5 - - 7000 Replenishments received 1&5 - - 51,771 Direct payments to consultant 1&5 - - 364,198 Funds returned to the World Bank 6 (86,935) - (86,935) Total Sources of Funds (86,935) - 429,034 USES OF FUNDS Goods, Consultants' Services and Training under the Project 3&4 3,425 2,620 429,034 Total Uses of Funds 3,425 2,620 429,034 CHANGE IN FUND BALANCE (90,360) (2,620) - FUND BALANCE – END OF PERIOD / YEAR - 90,360 - The accompanying notes form an integral part of these financial statements 4 THE PALESTINIAN MINISTRY OF FINANCE AND PLANNING PREPARATION OF PROPOSED WEST BANK WASTE WATER MANAGEMENT PROJECT FUNDED BY THE INTERNATIONAL DEVELOPMENT ASSOCIATION AND MANAGED BY THE PALESTINIAN WATER AUTHORITY DESIGNATED BANK ACCOUNT STATEMENT FOR THE PERIOD FROM JANUARY 1, 2015 TO APRIL 30, 2016 Account number 0458/1226808/001/3001/000 Depository bank Bank of Palestine Address Ramallah Related loan / credit TF010527 Currency U.S. Dollar (USD) Period from Year Ended January 1, 2015 to December 31, Note April 30, 2016 2014 Balance, beginning of period / year 90,360 92,980 Receipts during the period / year 1 - - 90,360 92,980 Deduct: Payments for project expenditures from designated bank account 3 3,425 2,620 Funds returned to the World Bank 6 86,935 - 90,360 2,620 Balance, end of period / year - 90,360 The accompanying notes form an integral part of these financial statements 5 THE PALESTINIAN MINISTRY OF FINANCE AND PLANNING PREPARATION OF PROPOSED WEST BANK WASTE WATER MANAGEMENT PROJECT FUNDED BY THE INTERNATIONAL DEVELOPMENT ASSOCIATION AND MANAGED BY THE PALESTINIAN WATER AUTHORITY NOTES TO THE PROJECT FINANCIAL STATEMENTS FOR THE PERIOD FROM JANUARY 1, 2015 TO APRIL 30, 2016 (Currency: USD) 1. The Project and its Financing The Palestinian Liberation Organization (for the benefit of the Palestinian Authority) and the International Development Association (the World Bank) signed an advance agreement (the Advance Agreement), dated October 17, 2011, whereby the World Bank proposed to advance, to the Palestinian Authority, an amount not to exceed USD 600,000 from the Trust Fund for Gaza and the West Bank (the Trust Fund), Advance No. TF010527. The aim of the Advance Agreement is to finance a project entitled "Preparation of Proposed West Bank Waste Water Management Project" (the Project), managed by the Palestinian Water Authority (PWA). The objective of the Project is to facilitate the preparation of a proposed project designed to reduce the environmental pollution from wastewater produced in Hebron Governorate, and to provide a reliable supply of treated effluent and bio-solids suitable for reuse in agriculture in the targeted area. The activities of the Project comprise the following parts:  Provision of technical assistance with the Project preparation, including:  Updating of the feasibility study for Hebron Governorate regional wastewater treatment plant, and the proposal for siting and key design parameters,  Development of conceptual designs, civil works packages and proposal for financing, bidding and contracting procedures, and preparation of Project related documentation including the drafting of a project implementation and financial management manual,  Preparation of bidding documents for detailed work packages,  Pre-contract services during the bidding process, and  Execution of an environmental and social impact assessment and related tasks required to conform to the World Bank's social and environmental safeguards requirements.  Financing of incremental operating costs incurred by the Palestinian Water Authority in the preparation of the Project. 6 During the Project period, PWA received the following payments from the World Bank: Amount in Description Date of transfer USD Advance payment (PPA-WWM-1) March 2, 2012 100,000 Project first replenishment (PPA-WWM-2) February 25, 2013 31,203 Project first direct payment (PPA-WWM-3) April 12, 2013 199,746 Project second direct payment (PPA-WWM-4) October 1, 2013 164,452 Project second replenishment (PPA-WWM-5)* October 1, 2013 13,748 Project third replenishment (PPA-WWM-6) November 28, 2013 6,820 515,969 *The total amount of the withdrawal application is USD 20,748. World Bank replenished the amount of USD 13,748 and documented the mount of USD 7,000 in the Client Connection as a recovery from the advance payment. The initial refinancing/ closing date of the Project was December 31, 2012. However, through various amendments to the Advance Agreement, the Project closing date has been extended until April 30, 2016. The Project activities were officially closed on December 31, 2015 and the undisbursed balance was returned to the World Bank in April 2016. 2. Summary of Significant Accounting Policies The Project financial statements are prepared under the historical cost convention. Significant accounting policies follow: - - Basis of accounting - The Project financial statements are prepared using the modified accrual basis of accounting, which is a comprehensive basis of accounting other than International Financial Reporting Standards (IFRS). Sources of funds are recognized either when cash is received by PWA or when direct payment is effected by the World Bank and uses of funds are recognized when cash payments are made by PWA or when expenditure are due for direct payment by the World Bank. - Foreign currency - The Project’s basic functional currency is the United States Dollar (USD). Transactions that are expressed or denominated in other currencies were translated to USD using exchange rates in effect at the time of each transaction. Differences arising from the fluctuations in exchange rates were treated as exchange gains or losses in the statement of sources and uses of funds and designated account statement. 7 3. Goods, Consultants' Services and Training under the Project This item represents the following: Period from January 1, Year Ended 2015 to April December 30, 2016 31, 2014 Audit fees 2,600 2,610 Bank charges 102 10 Advertisement 723 - 3,425 2,620 4. Replenishments and Direct Payments (SOE Procedures) Replenishments (payment from designated bank account) and direct payments represent amounts disbursed by PWA under the Project for the following disbursement categories: Disbursement Category Payment Method Category 1- Payments Goods, from Consultants' designated Services and bank Direct Withdrawal application number Training account payment Total Cumulative amount up to December 31, 2014 425,609 61,411 364,198 425,609 The Period from January 1, 2015 to April 30, 2016 (the Audit Period) Amount recorded by PWA and reported to the World Bank during the Audit Period, but not shown on the client connection 3,425 3,425 - 3,425 Total amount for the Audit Period 3,425 3,425 - 3,425 Cumulative amount up to April 30, 2016 429,034 64,836 364,198 429,034 8 5. Reconciliations between World Bank Records (Client Connection) and PWA Records USD Project accounts per the client connection Advance payment transferred to PWA, net 93,000 Recovery from advance payment 7,000 Replenishment amount to PWA 51,771 Direct payments to consultant 364,198 Less: Funds returned to the World Bank (86,935) 429,034 Project accounts per PWA records Amount recorded by PWA and replenished by the World Bank 51,771 Amount recorded by PWA and recovered from the advance payment 7,000 Amount recorded by PWA and paid directly by the World Bank 364,198 Amount recoded by PWA and reported to the World Bank and not shown in the client connection as of April 30, 2016 6,065 429,034 Difference - 6. Funds Returned to the World Bank Represents the remaining undisbursed balance maintained in the USD designated bank account after the payment of Project’s expenditures up to December 31, 2015. This amount was returned to the World Bank on April 13, 2016 due to the closure of the Project’s activities. 9